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US lawyer lives on rice and beans on a six-figure salary so he can retire early

Some people will do anything to escape the rat race.

Just ask Daniel, 36, a Manhattan corporate lawyer earning US $ 270,000 (NZ $ 429,000) a year, who told Suzy Weiss of the New York Post that he lives in New Jersey to avoid city taxes, lives on rice and beans, owns a patched-up suit for work weekends, and layers up during the winter instead of turning the heat on – all so he can save 70 per cent of his salary and retire early.

It's working: He's saved more than US $ 400,000 and is set to retire in three years, Weiss wrote.

Other six-figure earners Weiss talked to have similar goals and are pulling out all the stops to reach them, from banning buying drinks to wearing shoes that are falling apart.

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They all hope to join the "Financial Independence, Retire Early" movement that was popularized when Your Money or Your Life was published 20 years ago. It's nothing new – but more millennials are becoming interested in the community, according to Weiss.

Living on less helps early retirees stay on track

Being content with less and refusing to succumb to lifestyle inflation are the tickets to stay on track to retire early.

JP Livingston, who runs a personal-finance blog called The Money Habit, built a nest egg of more than US $ 2 million before retiring at 28. Livingston worked in Manhattan's finance industry and earned US $ 100,000 in her first post-grad job, she previously told Business Insider.

But determined to retire early, she tucked away 70 per cent of her take-home pay. In an effort to be more frugal, she bought furniture from Craigslist and chose a more modest living situation than she could afford – with a three-floor roommate on the Upper East Side for US $ 1050 a month (reasonable) rent in a New Yorker's eyes).

Even those not working in traditional high-salaried careers make do with a frugal lifestyle. Consider Joe and Ali Olson, who quit their jobs as public-school teachers in their early 30s with US $ 1m in the bank. They saved 75 per cent of their income and lived in a 400-square-foot home, saving their annual expenses of about US $ 20,000, Business Insider reported previously.

One must commit to a frugal lifestyle to retire early. (File photo).


One must commit to a frugal lifestyle to retire early. (File photo).

Frugality is the key to wealth building

Regardless of early-retirement goals, frugality is the key to wealth building.

Look no further than Warren Buffett, who still lives in the modest home in Omaha, Nebraska, that he bought for US $ 276,700 (in today's dollars), or Richard Branson, who is famously frugal when it comes to buying luxury items.

Frugal lifestyles help millionaires get rich in the first place, according to Sarah Stanley Fallaw, research director for the Affluent Market Institute and an author of The Next Millionaire Next Door: Enduring Strategies for Building Wealth, In which she surveyed more than 600 millionaires in America.

She studied the most predictive characteristics of net worth and found that six behaviors, which she called "wealth factors", were related to net worth potential, regardless of age or income. One of those is frugality: a commitment to saving, spending less, and sticking to a budget.

"Spending above your means, spending instead of saving for retirement, spending in anticipation of becoming wealthy makes you a slave to the paycheck, even with a stellar income level," she wrote.

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