Saturday Critical Concept – Low Fixed Living Costs

by | 22Sep2018 | Critical concept, Saving, Savings rate, Spending | 0 comments

Welcome to the Saturday Critical Concept. Each Saturday we take a weekly concept from Jonathan Clements‘ blog Humble Dollar and “militarize” it for you. Jonathan Clements was a longtime personal finance columnist for The Wall Street Journal, and he offers great advice at the best price you can get…free. Here is this week’s critical concept:


LOW FIXED LIVING COSTS are the key to a high savings rate. By keeping your mortgage or rent, car payments, utilities, insurance premiums and other fixed costs to 50% or less of pretax income, you not only increase the sums available for discretionary “fun” spending like vacations and eating out, but also make it easier to save.


Low fixed living costs are not only the key to a high savings rate, but also to an early retirement.

Why can I retire in 4 years if I want to? Because I have no mortgage and no debt. In other words, I have very low fixed living costs that consist of the real estate taxes on my house and basic subsistence like food and utilities.

What’s left over after these low fixed costs are paid can go to variable costs like entertainment, travel, and eating out. All of these can be adjusted as the financial markets and my own individual investment returns allow.


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