Forget for a moment about the really successfully people who have so much money that they don’t need to make choices. Most of us don’t fall into THAT category. We have limited money and we need to make choices. In fact, I would say making hard choices is the single most important factor that differentiates ourselves from the masses of people who making the same living as us.

Today, the hard choice I will be discussing is about freedom versus luxury.

Personally, I prefer freedom because the things I enjoyed requires time, not money. I enjoy reading comic books for example. These things can be borrowed from the library at literally no cost. All I need is time. Similarly for blogging. I enjoyed typing articles but I don’t have the time to do it everyday.

So, I don’t need a lot of money to retire. Just enough to cover my expenses and I am good to go.

The only thing I need money for is traveling. Again, that can be done with limited money if I don’t stay in 5 star hotels and eat at expensive restaurants.

I have absolutely no desire for designer wear, sports cars or luxury condos, even though I owned all of them. That is life’s irony isn’t it? I bought all these mostly for the wife but they give me no pleasure personally.

Why desiring freedom can lead to early retirement

If you are like me and enjoy the freedom to do the things you liked, then early retirement is a real possibility. Here is how the numbers can work:

• Low cost of living: having a freedom lifestyle carries very little cost. This means the passive income you need to cover the monthly expenses can be relatively little. For example, if I had no condo or car, my monthly expenses can be reduced by SGD2,500. That is a huge savings. This means I can save SGD30,000 in a year or SGD300,000 in 10 years!

• More savings: With a lower spending rate, I can save more. Imagine the 300k above being saved and invested in an instrument that gives 4% return. This will give me around SGD12k per year without adding any compounding effect. Further assuming you need SGD30k a year for your living expenses, the 12k means that you already achieved 40% of the target.

As you can see, making a choice yields a double benefit of monthly expense reduction, and passive income increase. Both work together to shorten your years to retirement.

By making hard choices, you are choosing one lifestyle over the other. Luxury living has its perks but it is not for me. The enjoyment of any luxury goods is always temporary while the benefits of a freedom lifestyle is there to enjoy for ages.

What should you choose, my dear readers. A lifetime of luxury living with work being the necessary fuel or a lifestyle of freedom with very little luxury enjoyed?