Extreme Retirement Planning is a financial movement that I discovered a few weeks ago. At least, that’s when I heard of that terminology for being frugal. As it happens, I’ve been implementing some of those ideas for the past year or two. But these Extreme Retirement Planning (ERP) folks crank it up to 11 and that’s where I have something to learn.

Concept in a Nutshell

• Save as great a % as possible (up to 85% or more) of net income (post tax dollars).
• Live off as little spendable income, including cutting out luxuries and vehicles, to the greatest degree possible.

What’s the result? Being able to “retire” in 4-15 years on the lower level of income that the ERPer has become accustomed to.

What Does This Mean for Me?

If I can live off of $1000 / mo while putting the rest of my take home cash into savings, for the next 7 years, I can retire in 2020. And by retire, I mean live off of the expected 4% growth on my principle even after factoring in 3% inflation. Then at that point, any income that I make is free to fritter or save because my daily costs are taken care of.

Assuming that there are two people working at this level of income, then living off $2000/mo as a family isn’t too tough in some parts of the country. And retiring in 7 years wouldn’t be too bad either :).

I’ll explore this concept more as I dig into trimming my excess spending.

Credit for the concept and basic calculations goes to Mr. Money Moustache.