Before I go into the mechanics of saving money, I will get some details out of the way. First off, I actually started writing this blog in January. I wrote around 40 posts since then but never published or shared them. I wanted to make sure I could stick to this lifestyle before committing to a blog. Second, I am married but my wife and I split most major costs. That means we split the $1,430 rent for our 1 bedroom Queen Anne apartment. We split other things like costs of internet and car insurance but outside of these expenses, we do not have any other costs. We paid our car off and we rarely drive it. My wife pays for the gas which amounts to $15-$20 a month because she uses the car and I try not to. Yes, spitting costs gives me a higher opportunity for savings. Every family decides how to handle money and this is what we came up with several years ago. We might change it someday but as of now, that is what we are doing.
Ok, down to the meat of it. When I came home from Germany in December of 2015, I took look at my life and what is important. Living in Germany gave me a different perspective. I met a lot of people who valued personal life balance and traveling over making money and trying to move up in their respective careers. These were some of the most balanced and happy people I've ever come into contact with. That made me think about what is most important in my life both professionally and personally. I realized that flexibility is what I desire most. Flexibility to always choose where and how I spend my time. I started thinking about the last year and a half and how the fellowship gave me the flexibility to research and work in areas that gave me extreme personal happiness. On top of that, I had flexibility to travel throughout Europe which was a dream.
Armed with this knowledge, I started devising a plan that would allow me to reach my goal. I looked at my situation and saw how lucky I actually was.
1. Coming back to the USA, I got a good job that allows me to work on projects I find interesting and that I think pays a very reasonable salary.
2. I lived within walking distance of work. That means no need to drive and spend money on gas and or car repairs.
3. I had no real debt to speak of outside of student loans. (Separate blog coming)
4. I live in a state with no income tax.
5. Groceries are not really taxed in Washington State.
6. I have no children. (Do not take this personally my children having friends)
7. My wife is super motivated and earns enough to split bills.
After doing some online research, I came across internet heroes like Mr. Money Mustache, JL Collins, Early Retirement Extreme and Go Curry Cracker. I realized after weeks of reading that I was in the absolute perfect position to join the Financial Independence/Early Retirement (FIRE) crowd. I looked within and knew that I needed to start tracking my spending and understand where every single dollar I spent was going. I downloaded a money tracking spreadsheet and started tracking where every single cent went. It became clear that I spent a shit load of money on restaurants, bars and unnecessary grocery shopping. This does not account for other worthless crap that had no use. I decided to stop cold turkey and focus spending my money on what makes me happy. That means I would not spend money mindlessly but with purpose.
The first couple weeks and months were hard. I stopped going for lunchtime coffee breaks and started bringing extra coffee from home. I packed every lunch and turned down opportunities to go out and eat with co-workers. I started planning my dinners better for the week so I would not be too tired after work and just eat out. On the weekends, I started eating my meals at home instead of several meals out. We do eat out once every weekend but now we think about it. A bi-product of this is we realized eating out once a week made it more special.
I walked to work and used the bus in town instead of taking our car. I dropped our full insurance to liability since the car is shit old anyways and has 147,000 miles on it. I own it outright so we decided to keep it until it dies but we will not put any real money into it. I gave myself a budget for entertainment each month and try to stick to it. Sometimes I use it on drinks at the bar with friends but that is not as often as it used to be. Sometimes we see a movie or two a month but again it as not as often as it used to be. Instead we try to enjoy the beauty and opportunities around Seattle that cost nothing. Last night we went out to dinner and then went to Gasworks park and watched the sun set and read books. We were not the only ones there I can promise you. We have people over and enjoy our rooftop views of Seattle and the landscape. When I go grocery shopping, I got away from buying quick convenient pre-made meals that were expensive as a single meal and pulled out my crock pot. That has allowed me to bring my per meal cost down dramatically. I used to somehow spend $120-$150 a week on food for myself. My grocery bill now hovers around $50-$65 a week. I eat pretty healthy and have a lot of veggies and fruits in my diet.
These changes allowed me to see massive savings opportunities. Below is how I have seen these savings grow.
- We have an automatic pension system at work that takes slightly under $400 a month from my checks. That accounts for $2400 of my savings in the first 6 months. It is automatic but it counts.
- We also have something called a deferred compensation account which is the government 401K. I started maxing that account out at $1500. I will write about this later but I choose a S&P index fund and plow all money into it. That accounts for $8,000 of my savings in the first 6 months of this year. These numbers are a little strange because I did not contribute the full amount the first couple of months. I am now putting in extra to max it for the year.
- I topped off my savings account and added $1500. I wanted to have easy accessible money at hand if needed.
- I opened a personal brokerage account with TD Ameritrade. Despite fully funding my government retirement accounts, I found I still have leftover money each month. I started plowing $1300 to $1700 a month into a low cost S&P index fund. That accounts for $6500 of additional savings.
- $2400-Pers II
- $8,000 Deferred Compensation Account
- $1500 Savings Account
- $6500 TD Ameritrade Personal Brokerage Account
- Grand Total=$18,400 in six months
Again none of this would be possible without bringing down my living costs. I spend around $1300-$1500 a month. Sometimes it is slightly more. I also realized that my savings rate the last 6 months is much higher because we have not traveled yet this year. After 1.5 years of constant traveling we took a pause. We will be going to the East coast later this year a few times which means that I will not save $18,000 like I did in the first 6 months of this year. However; I will max out my Deferred Compensation to the tune of another $9,000 and my Pers II pension account will take another $2200. That is another guaranteed $11,200 for my savings this year. I am pretty confident I can at least save $1,000 a month on top of all of this for another $6,000 but we will have to see. It is hard to forecast what types of expense we will have with our travels or if other issues will come up. I should be able to save at least 50%-60% of my take home pay for the entire year.
My aim over the next couple months is to talk more in depth about my financial past, share mistakes, share struggles while also giving tips on frugal living in Seattle. I have already written a few blogs about things to do in Seattle and hope that this will be helpful for other Seattleites. Follow along if you find this interesting!
PS: The pictures have nothing to do with the subjects but are some of my favorite from my travels in Europe. Maybe just motivation for me to keep saving for more independence.