The California Dream:
I admit, I subscribed to the very popular Southern California theory that in order to survive here, you needed to make a salary of at least $100K and up. Make the money, spend the money, make the money, spend the money. I was just spinning my wheels and really never saving anything. All of my friends were doing exactly the same so I thought it was normal and took it for granted I was going to be working until I died in order to afford the California dream.
Wife Interjection: Yup, he was a PRO at spending money when we met!
What changed my mind:
I cannot say there was an A-HA moment, it was really a gradual result of researching financial freedom podcasts, frugal living blogs, and a concerted effort to lower and understand our monthly expenses and what is needed to maintain our lifestyle. Gradually, after going through everything with a fine tooth comb, we were able to lower our expenses from $6000 in 2013 to where they are now at $3500 per month with NO change in our lifestyle other than positive ones. There were some key factors that made this possible. The biggest was selling our residence. We waited until the market was strong and after much analysis felt the time was right to go for it. This saved us $800/month and the funny part was, we were able to rent a nicer and bigger place than what we had in the exact same area we lived in, AND banked a large profit on the sale! The other biggie as you might have guessed was transportation. In another effort to save monthly expense in my business, I had given up my rented office space and now work from home. Thus, I no longer needed my Infiniti SUV which was costing me extra in insurance, gas, maintenance, and car payments. Timing was right, since my father in law was giving away his car, a 1997 Honda Civic LX with low mileage. The old me would’ve NEVER been seen in this car. The new me takes pride in my fiscally responsible and frugal “LX“.
Wife Interjection: I never understood the Infiniti’s appeal, those 20″ tire rims? Still reminds me of that scene from “Spinal Tap” with the amp that goes to 11.
It’s the little things:
So those were the big ticket items, but there were other savings we were able to take advantage of. We had been spending a lot on vacations before we bought our condos in Mexico. Through changing our credit card to an Amex Starwood and using it to pay for business expenses which racks up the points, we almost always are able to get free rooms. We also started flying out of Tijuana, which we are lucky to be able to do here in San Diego. Finally, since we both have flexible schedules, we are able to book flights during low cost fare times.
Eating out and going out expenses were another line item that was dragging our budget down. Much of that was because I was working outside of the home and buying lunches almost every day out. Working from home changed that to almost never. We still enjoy an occasional night out, but both of us agree, we prefer casual beachy restaurants to fancy ones anyway!
Wife interjection: what a win-win, he’s saving money and eating healthier!
There are many other little expenses that can be saved on when you start looking into it. In working from home, both of us are saving on dry cleaning and clothing. We do not use a credit card, we always pay with cash or a debit card, so we try to keep “shopping” to a minimum and only on items that we truly need.
Living the life:
It is a very freeing feeling to know as a self-employed person, that I don’t have to kill myself every single month to meet my expenses. Now, if I have an off-month, I don’t have to stress out. With expenses of $3500, I only truly need to make $60K a year in order to cover our expenses with enough left over to invest. Every nickel over that amount I make goes into the retirement fund and gets us that much closer to full retirement. Mind you, we live in a very expensive part of San Diego for the school district. We don’t have a big house, we have a nice air-conditioned 2 bedroom townhouse for the 3 of us. Sure, the kitchen is not “modern”, it is circa 80’s oak with white appliances, but it’s functional and plenty big enough for us. I guess I challenge all of you to re-think what makes you happy. Is it a big house? Is it a fancy car? A remodeled kitchen? Is it luxury vacations? Are these things worth you being a slave to your job for the rest of your life? Which ones could you give up? I think most people given the choice and really thinking about it with an open mind would prefer to work less and give up the rat race.
Wife interjection: Boy, I never even considered that I would be “free” at the age of 47! When hubby gave me the choice of keeping the condo and continuing to work full time at a career that I hated, or selling it and reducing my job to only managing our rental condos, I said “let’s do it” without any hesitation.
The journey continues:
You might think we are “there”. That is not the case, we are still working towards full retirement and over the next few years will make even more changes to get there. Once our son goes off to college, we plan to reduce our expenses even further by moving to a lower rent area in San Diego. The goal for full retirement in the next 4 years is to be fully financially independent and travel the world at a slow pace spending at least a month at each destination and keeping to a rent of no more than $1000 per month at each location. In this era of airbnb, it is a very do-able goal.