Current and future Early Retirees,
I want to thank all of you for giving me the strategies to pursue being financially independent. I am a 25 year old that lives in Austin, Tx. I make about 65k USD working in Software Management.
Here are the steps I’ve taken over the last year and how it has impacted my savings rate while improving my overall quality of life:
Stopped renting big house in the suburbs, started renting a small house downtown. It is the same rent but now I can bike everywhere.
Cook more at home
Eat at restaurants less frequently
Work out outside or from home
Cancelled gym membership
Generally be outside more often
Planted a garden on my porch
Got cheaper car insurance
Bike wherever I can
Homebrew my own beer and cider
Got a raise at work, used all of it to increase savings. No lifestyle creep
Got a library card
Have a cheap media center pc hooked up to TV for movies/tv/games
Buy clothes less frequently
Patch holes in clothes for minor rips
Stopped going out for lunch
Use more fans and blankets and less air conditioning
Insulated the doors and windows in the house
Track spending every month in Mint
Reduce taxes by utilizing more tax advantaged accounts
Occasional sublet in an extra room
Immediately sell vested ESPP shares instead of holding on to them, reinvest in index funds in IRA or taxable account
Hang out with grad student friends over work friends. Grad student friends drink cheap drinks, play board games, and host house parties. Work friends go to expensive restaurants and events.
Go on cheaper, more fun dates like going dancing instead of sitting at the movies
Get a cheaper cell phone plan
Increased 401k contribution to maximum of 17.5k USD
Opened IRA and Roth IRA with Vanguard
Opened a taxable account with Vanguard
Maxed out 2013 IRA 5.5k USD
Maxed out 2014 IRA 5.5k USD
Next Steps:
Sell my car if I can live as if I did not have a car for a few months. I currently only drive for groceries and going to work.
Switch over to a High Deductible Health Plan so I can utilize a HSA
Results
Before (as percent of salary)
6% 401k contribution
15% ESPP contribution (treated as savings)
19% total taxes
60% expenses (~$3200 a month)
3% employer 401k match (Free money)
2.5% bonus from ESPP discount (Free money)
total: 105.5% of base salary
After (as percent of salary)
27% 401k contribution
15% ESPP contribution (sold as soon as they vest and reinvested in index funds)
5% Additional savings in taxable account
15% total taxes
38% expenses (~$2000 a month)
3% employer 401k match
2.5% bonus from ESPP discount
total: 105.5% of base salary
TLDR: Over the last year thanks to reddit.com/r/financialindependence and MMM I have:
Boosted Savings from 26.5% to 52.5% of my pre-tax salary
Cut Taxes from 19% to 15% of my pre-tax salary
Cut Spending from 60% to 38% of my pre-tax salary
