Money story: Our financial 180

This guest post from Joel is part of the “money stories” feature at Get Rich Slowly. Some stories contain general advice; others are examples of how a GRS reader achieved financial success — or failure. These stories feature folks from all stages of financial maturity. Today, Joel shares how he and his wife made a “financial 180”, going from extreme spenders to extreme savers.

Hi, I'm Joel!

Last November, I quit my job as a software engineer to retire early at the ripe old age of thirty-three. I had reached financial independence — that point where you've saved enough money that you never need a job again.

Life's been pretty great since then. I work on fun stuff — like writing and music — on my own schedule. I take care of the household chores and cook dinner for my wife (who still works…for now). I have plenty of time left in my days to spend goofing off with family and friends.

You might think that if I managed to retire at such a young age that must mean that I had this money thing figured out all along. Nothing could be further from the truth. In fact, just a few years ago, I was stuck in a job I hated with no way out. I wanted to escape.

This is the story of how my wife and I made a financial 180, going from zeroes to heroes in just a few short years.

An Expensive Past

In 2007, I graduated college with a degree in computer engineering, took a job with a fortune 500 company, and bought a brand new house. For the first time in my life, I felt like an adult. With a big paycheck coming in every two weeks, I could have anything I wanted. As luck would have it, I wanted a lot — and I had expensive tastes!

I decided my first purchase would be a $3500 high-def television. I added a PlayStation 3 and assorted accessories to the shopping cart, and raced back to my new house to get everything set up.

That night, as I sat on the floor in that empty house, watching The Simpsons, my girlfriend (now wife) convinced me that something was fundamentally wrong.

“Joel,” she said.

I glanced over to her. She looked beautiful in the glow of the giant television. “Yes my darling?” I said.

“We have no furniture,” she said. She was right. But we had an awesome TV!

In all of the excitement of my spending spree, I somehow forgot furniture. No problem. I reached for the credit card, and $10,000 later, our house was filled with furniture: fancy leather sofas, king-sized beds, the works. It felt great! For the previous five years, I'd been a broke college kid. Now, I was a respectable grown-up.

As the years passed, my spending habit worsened. By 2012, we were spending six figures a year on… Stuff.

  • Two brand-new cars at $25,000 a pop? That's normal, right?
  • A $40,000 wedding and a fancy Bahamian honeymoon? Sure, that was expensive but we could “afford” it.
  • $13,000 in restaurant spending during a single year? We liked to think of ourselves as food connoisseurs.

Why shouldn’t I treat myself? I was putting a full 6% into my 401(k) every year to get my employer match. That was more than most Americans. I was being smart! So, I continued my adventures in spending.

A Crash Course in Life

Before I knew it, our life was full: food and water delivery services, monthly massages at the spa, fancy dry cleaning bills, season tickets to various entertainment venues, expensive martial arts hobbies. You name it, we had it.

But as our life — and bank statements — filled up, we weren’t getting any happier. It was actually the opposite. We were more stressed than ever before! We just couldn’t figure out the problem.

In 2013, I decided changing employers would shake things up and give me a much-needed morale boost, so I jumped to another big firm in the area. The pay bump and new faces helped a bit, but within a few months, I was unhappy once more. What was wrong? I had spent thousands of dollars on toys the previous year. Why weren't Amazon purchases fixing my problem?

What I needed was a way out of the life we had built for ourselves.

You'd think a high tech job would be interesting, but over the years I realized it’s all the same: Write yet another version of an already existing widget for a program that's behind schedule and over budget. Changing jobs didn't help. New code, new cubicle, same prison sentence. The fluorescent lights taunted me as I stared at the blue skies outside. I couldn't go out and enjoy it; I was always too far behind on my tasks. I tried coming to work earlier, staying later, working through lunch.

Nothing helped.

I was trapped.

It was around this time that a friend pointed me to a blog called Mr. Money Mustache. He thought it might help give me some perspective on money, so I glanced over a few articles. “What an interesting website,” I remember thinking at the time, unaware that my life was about to change in a very big way.

Soon after, my wife was in a terrible car crash.

She was visiting her mom in south Florida when a sheriff's officer ran a red light with no sirens and T-boned her in an intersection. My wife's Honda was totaled, but thankfully she walked away with only minor injuries. Soon after, the insurance company sent us a check for $10,000 — the depreciated value of the $25,000 car she purchased new just a few years earlier.

Our Financial 180

That night, as we sat on the fancy leather sofa in our filled-to-the-brim-with-stuff house, my wife once again convinced me that something was fundamentally wrong.

“Joel,” she said.

“Yes my darling?” I said.

“We need to stop spending our money,” she said. As is often the case, she was right, and I knew it.

That night, we both binge-read the Mr. Money Mustache website. I became consumed by this strange concept of financial independence, the idea that somebody could save enough money to retire in ten years (or less).

I worked out the math for myself. I checked the numbers twice, looking for a mistake. But it was real. Financial independence really was a way to escape the daily grind, a way to add control and meaning back into our lives. We took the $10,000 insurance check and put it into a Vanguard index fund instead of buying a second car.

It was a new financial beginning for us.

As we began slashing our expenses, we realized that most of the luxuries we purchased to make ourselves happy were superficial. The new house and cars, the fancy furniture, it was all a sham. None of it actually brought us any long-term happiness. After a few months, the shininess fades, and you're back to square one. It’s called lifestyle inflation.

Worse, the things we sacrificed for those luxuries — control of our own schedules, free time for friends and family — really would contribute to our happiness, if only we had time for them! Once we figured this out, we worked hard to increase our saving rate as much as possible.

We turned money management into a game. Every month, we'd look for one improvement we could make to our budget. Before long, we got pretty good at saving money! The results were dramatic.

This graph shows how we slashed our spending:

We drastically cut our spending...

And this graph shows the simultaneous rise in our savings:

Our dramatic financial 180!

By 2015 we'd cut our expenses by two thirds, allowing us to max out our 401(k)s and pay down our mortgage. In the years since, we've saved hundreds of thousands of dollars. And just after my 33rd birthday, less than five years after our financial 180, I was able to quit my job — for good!

A Team Effort

I know this story sounds like sunshine and lollipops, but turning things around was not easy. And the turnaround didn't happen overnight. It was gradual. We made a ton of mistakes along the way:

The list goes on and on and on.

Despite the mistakes, my wife and I were determined to work together as a team to turn our finances around and to learn as much as possible.

We devoured financial independence blogs like Mad Fientist, 1500 Days, and Frugalwoods. We read books such as Your Money or Your Life and The Millionaire Next Door.

We worked together on our impulse spending by creating shopping lists before stepping foot into our favorite stores (Best Buy for me, Target for the wife). If it wasn't on our list, we didn't buy it. To reduce our restaurant spending, We learned to cook each other's favorite meals instead of going out to eat every night. The key here is that we each put in the work — together. We communicated our goals. We were both invested in turning our financial situation around, and so we were fully committed to making it work. At the end of each month, we'd sit down together to scrutinize our credit card statements and cut all nonessential expenses.

Gradually, our hard work started paying off. All of the individual improvements we made added up to something enormous.

We tracked our net worth as it grew. This helped form a mission statement for my blog: to document our journey, and help as many people as possible save up their own FU money, replace fear with flexibility, and avoid all the mistakes we've made in the past!

Why did we pursue financial independence? To spend more time with family and less time at unfulfilling jobs. To pursue creative endeavors with no pressure to turn a profit. To live our lives the way we want, on our own schedules, without the need to worry about money ever again.

Want to get started on your own financial 180? The math is easy. Create a gap between what you earn and what you spend. Build a wealth snowball. If you can save half your income, your working career will only be around a decade long! I know, I know. It sounds crazy — but it's true.

Maybe it's time to make a financial 180 in your life. Ten years from now, you'll be glad you did!

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Susan @ FI Ideas
Susan @ FI Ideas
2 years ago

“The fluorescent lights taunted me as I stared at the blue skies outside.” — what a visual. Congratulations on making it out into the real light. I love your story.

Beth
Beth
2 years ago

That line caught my imagination, too. Nice turn of phrase!

WantNotToWantNot
WantNotToWantNot
2 years ago

Inspiring story that is so well told!

A reminder that if you have an SO, working as a team, being on the same frugal page is essential to building wealth, which seems to be the current theme on JD’s blog right now.

Jason@WinningPersonalFinance
2 years ago

Fantastic post Joel. It’s great to read your financial story from the beginning like this. It’s amazing that you turned it all around in only 5 years. I also had a similar expense cutting experience. I’m 2.5 years in right now.

To me the following quote is what FI is all about. “The fluorescent lights taunted me as I stared at the blue skies outside. I couldn’t go out and enjoy it” if can’t enjoy your life, what’s the point?l to killing your elf at work?”

S.G.
S.G.
2 years ago

Good job on getting the math tk work for yiu and achieving your goals! I find this post very interesting because I am reading a story under the FI story. In act 1 Joel achieved a difficult degree after a lot of hard work. This allowed him to secure a high status job and do things thay felt valuable. In act 2 Joel’s job has become less meaningful and interesting and the status indicated by stuff is changed to the status indicated by wealth. He is unhappy because his self perception has shifted from high value contribution with high status… Read more »

S.G.
S.G.
2 years ago
Reply to  J.D. Roth

I am not 100% on it yet. But it has to do with seratonin and how success and failure effect seratonin and how seratonin controls mood.

If I’m understanding right, the higher status you perceive yourself in the combination of hierarchy that matters to you (social, financial, career, church, etc) the higher your seratonin and lower your stress. Therefore you are more likely to be *happy* on a regular basis.

There’s a lot more than that and we can take it offline if you want sources etc. Trying to condense it into a comment is a fools errand.

S.G.
S.G.
2 years ago
Reply to  J.D. Roth

And I think “purpose and passion” are a little different than what I’m talking about. “Purpose” and “meaning” are close. But, and we’ve disagreed on this before ;), I think “passion” is wrong. I am working on the best word, but right now “success” probably comes closest. But only in the sense of setting difficult goals and achieving them. Passion might direct what those goals are, and success doesn’t have to be in your job.

Luis A
Luis A
2 years ago
Reply to  S.G.

“Perceived location in status hierarchies” I think you’re onto something here. Financial independence, yes. Retire early, not necessarily. It’s probably because many of us enjoy playing the game of “perceived location”.

Alix
Alix
2 years ago

What a great story! I wish I’d been a fraction as financially aware in my late 20s/early 30s as you are now, Joel. I’m 53, want to retire *yesterday*, and, even though I save roughly 35-40% of my income, I can’t do it. My bank’s online ‘are you ready for retirement’ quiz practically laughs at me.

Take heed, youngsters! Save early and often! 🙂

Beth
Beth
2 years ago
Reply to  Alix

Amen! I’m in my late 50’s and coming to this very late but with my eye on actually retiring at 65!

Alix
Alix
2 years ago
Reply to  Beth

Go for it, Beth!!

Bill
Bill
2 years ago

Some people love their life work — as in “Find something to do that you love and you will never feel like you have worked a day in your life”…… said at a retirement dinner by an agriculture county agent who worked with 4-Hers, FFAers, and farmers. He loved being outdoors and got to do that the major part of the time. He loved seeing youngsters growing up and achieving their goals. So that is the key. If you love being a nurse or a teacher, be one…. and if you love being a blogger, go for it. Caring about… Read more »

Katie
Katie
2 years ago
Reply to  Bill

I agree, I’ve always tried to make my work align with my values and passions. But, it’s frustrating to know that my compensation will never be close to what Joel made in his twenties. I’ve never spent 6 figures, because most librarians never make 6 figures (certainly not in rural Maine). It’s a good thing I love my work, because even with careful money management I’ll be doing it for another 30+ years. I’ve paid off student loans, I’m able to travel a bit, my retirement fund is on track, and I should be able to buy a house someday… Read more »

Crew Dog
Crew Dog
2 years ago
Reply to  Katie

True, but Amy Dacyczyn managed to do quite well with just her husband’s enlisted military salary and her side hustles. Don’t be discouraged! Check out her book(s), and be encouraged. The Complete Tightwad Gazette: Promoting Thrift as a Viable Alternative Lifestyle (1998) is a compendium of her newsletters. *And* she lived in Maine, so the tips should be relevant.

Sandi Kay
Sandi Kay
2 years ago

What are you doing about health insurance? It’s the big elephant in the room, tying us to a job with employer benefits these days.

Alix
Alix
2 years ago
Reply to  Sandi Kay

Probably through his wife’s job.

JC
JC
2 years ago
Reply to  Sandi Kay

We were able to limp along with Cobra, then Cal-Cobra (we lived in California at the time), Individual Insurance, and Obama Care until we finally qualified for Medicare. It was a long, trying, 10 years, but we finally made it to Medicare.

Joel
Joel
2 years ago
Reply to  Sandi Kay

Hey Sandi good question… for now, I am indeed on my wife’s insurance. Next year, when she’s ready to quit, we’ll sign up for a high deductible ACA plan. We’ll qualify for a subsidised rate because our “income” (money withdrawn for our annual spend) in FI will be so low. If the ACA is no longer an option next year, we’d consider signing up for a health share ministry, or perhaps even moving to a state that had its own private health exchange, since we won’t be tied to one location for work anymore. Health insurance is tricky: there’s no… Read more »

Ian
Ian
2 years ago
Reply to  Sandi Kay

This is the same issue that we faced. We retired middle of last year not real early I’m 59. My wife qualifies for Medicare I don’t. Being 59 my unsubsidized plan was $845 per month Given our income last year we wouldn’t have qualify for a subsidy. So we took another option, we started travelling internationally mostly to low cost destinations. Which has the side benefit of cutting our expenses. The plan is that if the ACA ends up going away (with it’s subsidizes or maybe anyway) we will expat until I qualify for Medicare, with my international plan I… Read more »

t @Career Crisis Accountant
t @Career Crisis Accountant
2 years ago

I love your story Joel! Definitely, an awesome turnaround that you and your wife made! It is also great that you and your wife did it together. I’m more on the FI train than my wife is but she is supportive and I know that I will get her full-on the train soon! 🙂

Accidental FIRE
Accidental FIRE
2 years ago

This is so great man, and well written. Kudos to you guys for turning tings around so drastically. It’s awesome to hear stories like this!

Not Big Spender
Not Big Spender
2 years ago

Joel, I love your story. Our story is similar except that in our case we aren’t spending the money on unnecessary luxuries, it seems to be going on regular living expenses, mostly spent on groceries and other household things which appear to be necessary, with nothing to show for it other than mounting credit card debt. Do you have any any advice on how to cut these kinds of expenses?

S.G.
S.G.
2 years ago

Specific to groceries: Plan your meals, including sales. Shop from a list. Eat more chicken (which you can usually find on sale somewhere). Keep your receipts and track how much you’re spending per meal. Track what and how much you’re throwing away. I was wondering how I was spending so much on groceries. Then I watched my husband pack his lunch: $5-8 in meat for his sandwich, $3 in apples, and $1.50 protein shake. Those were 3 non-negotiable items for his taste and weight maintenance and I have just had to learn to budget appropriately. But we can afford it… Read more »

lmoot
lmoot
2 years ago

For me I saved in food costs by not purchasing packaged goods. For example, instead of getting a package of rice and seasonings or bean soup mix, buy bulk rice and beans and add your own seasonings. Cook things that could easily use sale items or left overs, like stews. Instead of getting rotisserie chicken, bake your own whole chicken or Cornish hens. My store sells frozen Cornish hens on sale for around $3, and I’ll buy 5 of them and put them in the freezer. Cut the bulk of the meat off for meals or sandwiches, and use the… Read more »

S.G.
S.G.
2 years ago
Reply to  lmoot

Your advice can be good, depending on where a person is in their journey. But if someone isn’t far enough the thought of the work you’re talking about can be overwhelming. For example, I disagree on the rotisserie chicken. Sure, it’s easy to roast a chicken if you know how, but if you go to Costco and get a $5 chicken that is $2.50 raw at the grocery store, and then only if you get a great price you’ve done pretty well. We eat a lot of those chickens because they save so much time and are cheaper than the… Read more »

Joel
Joel
2 years ago

For groceries, Aldi changed everything for us. By switching from Publix to Aldi, our grocery bill literally cut in half every week! We gradually started buying less meat and fewer convenience items as well, and more produce. We got better at cooking meals we loved to reduce food waste. We play a game called the $3 rule where we see if we can keep the majority of items in the cart under $3. At Publix this was impossible, at Aldi, it was a fun challenge. I wrote a post on the blog comparing food prices at the different popular grocery… Read more »

VJ
VJ
2 years ago

This is my first comment/reply to any blog post, so apologies if I am breaking any rules (such as no cross linking to other blogs etc). I listen to a few podcasts, and I came across $5 dinners blog (http://www.5dollardinners.com/). That is NOT my blog and I have NOT gone through it in depth, but based on what I heard in the podcast, I think it could be useful to you.

Alea
Alea
2 years ago

Sorry, but your wife gets practically killed by a police car, and there was only a $10K check from insurance? No way, even with minor injuries.

Other than that, congrats.

Joel
Joel
2 years ago
Reply to  Alea

Alas, $10k was all we got. We did speak to lawyers… no one wanted to get involved with a lawsuit against the Sherrif’s office. To be honest, we were both so shaken up by the whole thing that we just wanted the whole ordeal to be over. We didn’t even agree to fight to get her deductible back. What’s done is done, the wife is alive and healthy, and the awakening the accident provided (and subsequent discovery of the FI community) is more valuable than anything we could have won in court!

Steve
Steve
2 years ago

Congrats to you for making such a bold (and unusual to some) decision. I like the idea of building a wealth snowball. Great way to visualize saving and investing.

Joe M
Joe M
2 years ago

What was your annual household income over these years?

Joel
Joel
2 years ago
Reply to  Joe M

The wife and I had pretty decent salaries during our working years, ranging from $50k out of college to just under $100k right before quitting. Not high by west coast standards, but decent for east coast. I imagine on one income it would have taken us closer to 10 years to reach FI (depending on markets, etc), instead of 5.

Peter Payne
Peter Payne
2 years ago

Great post. Greetings from rural Japan.

My own strategy for success is to focus on my business, located here in rural Japan, though we sell to people all over the world. As an American I can live in cheap rural Japan where there are great hot springs, but invest in the U.S. Work hard enough that you can’t spend the money you make, or have a company that handles reasonable expenses (phone, car, etc) so I can invest my own money, are part of our strategy.

Nomi
Nomi
2 years ago

I can’t get the graphs to display! I’ve tried 3 different browsers. Did you take them down?

Andrew
Andrew
2 years ago

Can you explain how you saved over $300,000 between 2015 and 2016? When your expenses only dropped by about $70-80,000 per year. I know there will be some compound interest gain from savings but the numbers don’t add up for me at all.

Your article focuses on saving a few dollars on your grocery shopping (which is good) but you also bought a new house, new car, and by your own admission made “poor investment decisions”. How did you end up with close to a million dollars in savings after just 5 years while doing that?

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