Quit Like a Millionaire Summary

"Money is the most important tool we have to improve our quality of life." But if that's true, how can ordinary people use it to escape the rat race and retire decades early?

1. Follow the Math, Not the Heart

Passions can be misleading when making life-altering decisions. Kristy Shen highlights that emotions often lead to less practical choices, especially when choosing a career or area of study.

She shares her own decision-making process as an example. She wanted to pursue creative writing, but when she considered the financial return of various degrees, engineering stood out as a more lucrative path. By crunching the numbers, she realized that writing offered only a marginal monetary benefit over working minimum wage, while engineering promised a significantly higher income.

Pursuing a high-paying job, even if it wasn’t her passion, gave her the financial freedom to explore creative writing later without the pressure of relying on it for income. Passions also evolve. Studies show that people’s dreams change over time, further demonstrating that practical decision-making pays dividends in the long run.

Examples

• Engineering degrees in Canada came with a $40,000 higher annual income than an average writing profession.
• Kristy reached financial independence through an engineering salary, allowing her to write full-time later in life.
• A study published in Science revealed significant changes in people’s passions over a ten-year span, challenging the “follow your heart” mantra.

2. Avoid Debt Like the Plague

Debt may seem manageable at first, but its compounding nature makes it a trap. Kristy explains how debt is a hindrance to building wealth and achieving financial independence.

Drawing on her Chinese heritage, she shares how her culture emphasizes saving and avoiding debt. By using the “Rule of 72,” she explains how debt doubles shockingly fast when left unchecked. For instance, credit card debt with a 20 percent interest rate doubles in just 3.6 years, meaning a $1,000 loan can quickly spiral out of control.

To escape debt dependency, she advocates a mindset shift: pay for things outright instead of borrowing whenever possible. This keeps you in control rather than putting you in someone else’s power.

Examples

• In 9 years, the interest on a $1,000 debt at 20 percent balloons to nearly quadruple its original size.
• Traditional Chinese values see debt as putting oneself under another's authority, which fosters frugality.
• The Rule of 72 shows how interest on investments or debts grows exponentially over time.

3. Attack Consumer Debt First

Consumer debt, with its crushing interest rates, should be eliminated before savings and investments. Kristy calls it a "vampire" that drains your financial lifeblood.

Her advice is straightforward: cut discretionary spending, prioritize debt repayment, and take advantage of balance transfer offers with zero percent introductory rates. Tackling the debt with the highest interest rate first ensures you stop paying exorbitant sums to lenders. Refinancing can provide temporary relief, but only if you use the time wisely to pay down debts.

Living frugally and making sacrifices might be challenging, but it’s necessary to break the chains of high-interest repayment. Kristy emphasizes treating this as a financial emergency to regain your independence.

Examples

• Credit card interest rates often exceed 20 percent, making them a high-priority target.
• By focusing on one debt at a time and paying just the minimums on the others, you can eliminate the most expensive obligations first.
• Zero-interest grace periods give borrowers time to pay off existing debts without accumulating further interest.

4. Spend on Experiences, Not Things

Kristy challenges conventional consumer culture by advocating for spending money on experiences that generate lasting happiness rather than material goods that provide fleeting pleasure.

She explains the psychology behind this: buying something new, like a designer bag, releases a rush of dopamine. However, as your brain adjusts, the thrill diminishes quickly, leading to buyer’s remorse or an endless chase for the next high. Experiences, on the other hand, often create lasting memories and deepen personal fulfillment.

Readers of Kristy’s blog frequently reported being happier when they spent money on travel, hobbies, or classes, rather than piling up expensive possessions.

Examples

• Neuroscience research shows that expectations often surpass actual pleasure from material purchases, reducing satisfaction.
• Vacations or learning new hobbies provide personal growth and lasting joy, unlike shopping sprees.
• In Kristy’s experience, readers with minimal possessions but rich memories were consistently more content.

5. The Hidden Costs of Homeownership

Kristy debunks the myth of real estate as the ultimate investment. Her analysis shows that hidden costs often eat away at profits, leaving homeowners with little to no actual gains.

She details maintenance, taxes, insurance, and realtor fees, which add up significantly over years of ownership. Many homebuyers overlook these when calculating their return on investment. Additionally, the interest on mortgages further chips away at profits—most of the payments in the early years go toward interest instead of the principal.

Kristy encourages readers to make informed decisions using tools like the “Rule of 150,” which calculates the true monthly cost of homeownership compared to renting.

Examples

• A theoretical homeowners’ $344,739 profit lost nearly 98 percent to costs and interest.
• A 6 percent realtor’s fee on a property worth $844,739 exceeds $50,000.
• Kristy skipped buying in Toronto because the Rule of 150 showed renting was far cheaper.

6. Use the Rule of 150 to Choose Renting or Buying

Kristy’s “Rule of 150” offers a simple way to decide whether buying a home makes financial sense. The rule factors in hidden costs such as interest, taxes, and maintenance.

If your calculated homeownership cost (150 percent of your mortgage payment) is greater than renting a similar property, it’s better to rent. This approach lets you use extra savings for more profitable investments.

When Kristy applied this rule while living in Toronto, she realized buying a million-dollar apartment would drain her finances. Instead, she redirected her savings into index funds.

Examples

• The Rule of 150 turns a $1,500 mortgage into a $2,250 true monthly cost.
• In most cities, rent is significantly lower, allowing tenants to save money.
• Kristy’s investments grew while homeowners faced stagnant housing markets.

7. Invest in Index Funds, Not Individual Stocks

Kristy advocates low-risk investing through index funds instead of trying to time the market by picking individual stocks.

Index funds allow investors to bet on the overall market rather than taking a gamble on specific companies. They carry a lower chance of significant losses since the included stocks adjust automatically based on performance.

By choosing major market indexes like the S&P 500, Kristy avoided active fund manager fees, saving thousands compared to traditional investment strategies.

Examples

• Index fund fees are just 0.04 percent compared to actively-managed funds at 1 percent or more.
• The S&P 500 automatically rebalances, dropping poor performers and doubling down on high-value stocks.
• Kristy avoided the risks of company-specific investments while still growing her portfolio.

8. Focus on Savings, Not Just Income

Early retirement is not about how much you earn, but how much you save. Kristy emphasizes cutting costs, building a frugal lifestyle, and creating a high savings rate.

She shows that saving even a small percentage of your salary can dramatically shorten your working years. Lower expenses also reduce the size of your target portfolio, accelerating your retirement timeline. Even those earning median income can retire decades early with disciplined budgeting.

Kristy gives the example of a typical couple saving $12,724 annually, who could retire in just three decades.

Examples

• A 10 to 15 percent savings rate reduces working life by 5 years.
• A $40,000 annual spending target requires a smaller portfolio than a lavish lifestyle.
• A median-earning family retired 11 years early using structured savings.

9. Think Small to Retire Sooner

Kristy introduces alternative strategies like downsizing or living overseas to reduce the amount of money you’ll need for early retirement.

By using geographic arbitrage, you can retire in countries with lower living costs while maintaining the same quality of life. Additionally, partial retirement allows you to work part-time, requiring a smaller portfolio to cover expenses.

She shares how living in affordable destinations like Vietnam lets retirees cut costs without sacrificing comfort or enjoyment.

Examples

• Geographic arbitrage in Vietnam cuts costs to $1,130 a month for a luxurious lifestyle.
• Part-time work can cover shortfalls, reducing your nest egg requirements.
• Reducing annual costs by $10,000 lowers the necessary portfolio size by $250,000.

Takeaways

1. Use the Rule of 150 to determine the true cost of homeownership compared to renting.
2. Invest in low-risk index funds to grow savings without unnecessary fees or risks.
3. Save aggressively, and consider frugal living or geographic arbitrage to cut retirement timelines.