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Shortest Path to Financial Independence

What would you give up if someone said to you, “if you give up five things, you can quit your job tomorrow and won’t ever have to work again”? What else would you give up if you instead had to give up ten things? Fifteen things?

At some point it may not be worth it and you’d rather keep your job but I imagine the list of things you’d be happy to give up could be pretty long.

I actually thought about this a lot recently when creating the budget for The Perfect Life. After determining what kind of life would make my wife and I happiest, I sat down to figure out exactly how much the perfect life would cost.

Definition of Financial Independence

Before I describe the shortest path to financial independence, it’s probably a good idea to reiterate my definition of financial independence.

To me, financial independence is having enough income from your assets to cover your essential expenses so that you can survive without ever having to work again. Never having to work again is very different from never working again. Since I plan on working in some capacity after I achieve FI (on things I want to work on, rather than what my boss wants me to work on), I’m not concerned with saving up enough money to cover my discretionary expenses. I’d rather reach FI as quickly as possible, quit my full-time job, and then slowly build up the amount of “fun money” I have by doing work that I enjoy.

As Mr. Money Mustache described in his First Retire, Then Get Rich article, it’s likely you will make more money and spend less post-FI than you anticipate. Therefore, I’m happy with this plan and am in no way worried about living a boring life after financial independence.

So how can you achieve financial independence as quickly as possible?

List Current Essential Expenses

The first thing you should do is list your current essential expenses. This will allow you to understand how much you spend per month and will help you better predict how much you will need to spend after you quit your job.

The following list represents my current monthly expenses. These are my half of the expenses that my wife and I split 50/50 (My Wife’s Not a Fientist so we split all of our household expenses).

$300 – Mortgage
$125 – Property Tax
$20 – Home Insurance
$130 – Utilities
$10 – Cell Phone
$175 – Groceries
$70 – Car Insurance
$175 – Gasoline
$165 – Health Insurance
$25 – Misc.

So to achieve financial independence while maintaining our current standard of living, I would need to generate $1,195 of cash flow from my investments, per month, to cover my half of our expenses.

Assuming a 4% withdrawal rate*, that means I would need $358,500 in savings to achieve FI.

Predict Future Essential Expenses

The number you computed in the previous step assumes your post-FI life will resemble your current life. Most likely, this will not be the case. When you no longer have to work, the number of expenses that you incur should decrease.

This step is the fun part. If you really envisage your post-FI life, you can quite happily drop expenses that are no longer necessary or important to you.

Here are my projected future expenses:

$300 – Rent and Utilities
$10 – Cell Phone
$175 – Groceries
$100 – Travel
$50 – Health Insurance
$50 – Misc.

My post-FI life will only cost $685 per month! Now, I only need to save $205,500 to reach financial independence!

I will highlight some of the key differences between my current and future expenses to give you an idea of why your post-FI life could be much cheaper than your current life.

Housing

We currently own a house but plan on renting after reaching FI. There are a few reasons for this:

  • No Irregular Expenses – If a pipe bursts or the roof leaks, I don’t want to have to pay for it and I don’t want to budget for it. I just want to pay $x a month and not worry about any additional expenses.
  • Just Enough House – Right now, we have a two-bedroom, two-bathroom house but only my wife and I live there. We bought a two-bedroom house so that we could have guests and potentially have space for a nursery, if we decided to have a baby. For the most part, however, this second room has been unused. Renting will allow us to get exactly the right sized house for our current needs. We’ll be able to spend less on a studio or a 1-bedroom place and then move somewhere bigger if we do eventually need another bedroom.
  • Less Stuff – Rather than maintain a house full of belongings, we’re going to sell mostly everything we own and then rent furnished houses/apartments instead. The less stuff we have, the less we’ll feel attached to a particular place, the more money we’ll have in the bank, and the more flexible we’ll be.
  • Geographic Arbitrage – As I mentioned in The Perfect Life article, I also plan on using geographical arbitrage to bring my FI date even closer. By living somewhere like Thailand for a portion of the year, the income from my United States investments and businesses will go much further than if I lived in the States. Renting will allow us to easily move to cheaper places, as needed or desired.

Renting smaller apartments/houses in cheaper places allows me to decrease my future monthly expenses by $275 per month. This equates to $82,500 less savings I need to accumulate for FI! It’s pretty amazing to be able to achieve financial independence a couple of years sooner, just by getting rid of things I’m not going to miss (i.e. a second bedroom).

Transportation

Sadly, we currently require two cars for my wife and I to get to work. The costs associated with these cars is ridiculous and if I never have to own a car again, I won’t. Post-FI, we won’t need to own a car.

Not having a car may result in additional rent and public transportation costs, as accounted for in the future budget, but by cutting out automobile ownership from our future expenses, I was able to decrease my future monthly expenses by a further $145.

Other Expenses

I’m sure there are many expenses in your life that you’d be happy to substitute for free alternatives post-FI if you take some time to think about it. There’s a big, exciting world out there with many amazing, free things to do so why not start with those and then move on things that cost money after you get bored of all the free options? Library books instead of TV. Running instead of gym membership. Rock climbing on actual rocks instead of on a fake climbing wall that costs money to use. You get the idea.

Why Wait Until FI?

This exercise may help you decrease your current expenses even before you achieve financial independence. If you ask yourself, would I give up x if it meant I could quit my job tomorrow and you answer yes, why would you continue paying that expense now? It is obviously not that important to you so why not remove that expense and instead use that money to get one step closer to achieving FI?

Supplemental Income for Discretionary Spending

The beauty of saving enough to only cover your essential expenses is that it will force you to really scrutinize your discretionary spending after you achieve FI. If you have to go out and make extra money to buy something, you’ll most likely only buy things you really need or desire. You will truly be trading your free time for stuff so you will most likely only do that for things that are really important to you.

Again, why wait?

There’s no need to wait until FI to see if you can limit your discretionary spending to what your supplemental income can provide. If you start developing supplemental income streams by doing things you enjoy now, you’ll be able to increase your savings rate while cutting out the discretionary expenses that really aren’t meaningful to you.

Conclusion

In conclusion, here are the simple steps to achieve financial independence as quickly as possible:

  • Record your current essential expenses
  • Envision your Perfect Life
  • Use your current expenses to help predict the future essential expenses in your perfect life
  • Determine what assets are needed to provide the necessary cash flow to cover your future essential expenses
  • Save and invest your way to that target
  • Enjoy FI

What would you consider giving up if it meant you could quit your job tomorrow?

Addendum – Due to the ongoing debate about the 4% safe-withdrawal rate, I figured I’d update the post to include links to some great articles about the subject. I’m interested in hearing your opinion so feel free to chime in below or send me an email. Do you think 4% is a safe withdrawal rate?

- For 4% – Mr. Money Mustache
- For 4% – JLCollinsNH
- Against 4% – Financial Mentor
- Against 4% – Schof


Image: hko_s

44 comments for “Shortest Path to Financial Independence

  1. greg
    January 15, 2013 at 9:48 am

    why keep quoting the 4% “safe withdrawal” figure?

    I’m partially in this boat: http://financialmentor.com/free-articles/retirement-planning/how-much-to-retire/are-safe-withdrawal-rates-really-safe

    • The Mad Fientist
      January 15, 2013 at 11:23 am

      Hi Greg, thanks for the link. That was a long but interesting article and he raises some good points.

      I agree that no single safe withdrawal figure can apply to every situation but since it is necessary to make assumptions when planning, I’m happy using the popular 4% rule.

      My esteemed colleagues Mr. Money Mustache and Jim Collins both have great posts discussing the 4% rule that you should check out, if you haven’t already. Mr. Money Mustache’s article actually sounds like it was written specifically as a rebuttal to the Financial Mentor’s post.

      I tend to agree with both MMM and Jim that the 4% figure is actually quite conservative. In my own personal calculations, I often use a 5% withdrawal rate but I decided to be more conservative for this article and use the standard 4% instead.

      A reason I believe 4% is reasonable, especially for myself and for Mad Fientist readers, is because early/semi retirees will have much more flexibility than the retirees that the Financial Mentor is writing for. You’ll notice in his article that he references $2.5 million and $3.3 million nest eggs in his article. I hate to make another assumption but I assume people with nest eggs that large most likely have much higher expenses and more financial obligations (i.e. bigger mortgages, boat loans, expensive habits, etc.) so it may be harder to adjust their lifestyles when the economy changes. For me, however, if I start withdrawing 4% from my portfolio but then the market tanks, I’ll be able to move somewhere where the cost of living is less and potentially pick up part-time work that I enjoy so that I can withdraw less from my portfolio during the downturns.

      I agree that 4% is not perfect but since we can’t predict the future, no number we use to plan for the future will be perfect.

      What withdrawal percentage do you use when planning for retirement?

  2. January 15, 2013 at 9:23 pm

    very nice post, MF….

    I especially liked your assessment of the renting advantage. In fact I’ve just linked to in in my post: http://jlcollinsnh.wordpress.com/2012/02/23/rent-v-owning-your-home-opportunity-cost-and-running-some-numbers/

    Thanks, too, for linking to my article on withdrawal rates in your response to Greg.

    • The Mad Fientist
      January 16, 2013 at 12:20 am

      Thanks, Jim!

      I actually have you to thank for pushing me along the rental path. Your Rent vs. Buy article (i.e. the one you linked to) made me see renting in a new light and then our subsequent conversations definitely made me realize that my home-owning days are numbered.

    • January 18, 2013 at 10:16 pm

      These figures may be a wee bit optimistic seeing as they don’t account for pesky things like taxes and unplanned expenses. But it’s a great goal to shoot for. It’s a great feeling when you realize these sorts of goals are eminently attainable, even on a middle class salary.

      As for the rent decision, jl, I especially love your idea about using the REIT yield as a model opportunity cost. (Suppose I should have said that on your blog, but I’m saying it here because it came to mind in light of your comment)

      • The Mad Fientist
        January 19, 2013 at 12:55 am

        The figures are very optimistic! Even though I technically could “retire” with only $200K saved up, I’m going to continue working until 2015 and should have quite a bit more than that, when all’s said and done. I just wanted to compute the minimum amount it would take to cover my essential expenses to see how little I would actually need to survive. You’re definitely right that it’s a great feeling seeing how attainable FI really is!

        Taxes should be negligible at the low income levels quoted in the article, assuming the income is from qualified dividends and/or long-term capital gains. There will definitely be some unplanned expenses that come up though so I should maybe bump up my “Misc.” category budget a bit more. I plan on using other passive income streams to cover my discretionary spending and hopefully that side income can also be used to cover some of the bigger unplanned expenses, if necessary.

        Thanks a lot for stopping by, Sean! I can’t believe you have time to read and comment on other people’s blogs during your thirty-day, daily post challenge! Very impressive!

  3. January 19, 2013 at 2:46 am

    Do you think budgeting $50 per month forever for health is reasonable? You might be able to find a catastrophic insurance for now, but any health insurance that provides some basic coverage is going to cost more right? Also your transportation is included in the rent and utilities after FI?

    We have done this exercise as well. Unfortunately our “FI number” is quite high right now. But major part of it due to our high rent in Southern CA, so once we move to Vancouver, WA (we are implementing the geographic arbitrage but within the Western US) we should be able to bring that down quite a bit.

    I feel everyone should do an analysis like this, whether they want to achieve FI or not. It puts several things into perspective.

    • The Mad Fientist
      January 19, 2013 at 10:58 am

      Hi Suba, I’m glad you brought up health insurance. I decided to leave off my explanation for why my health insurance costs will decrease after FI, in order to keep the post a bit shorter, but it is important to note why. Our plan after FI is to live for 6 months in Scotland (my wife’s home), travel around for 1-3 months in America (visiting my friends and family), and live for 3-5 months somewhere else in the world (Southeast Asia, South America, or another low-cost destination). Since we’ll be based in the UK, the majority of our year will be health insurance free (thanks to the NHS). The other six months of the year, we’ll be able to cover ourselves with a travel insurance policy. These policies can usually be purchased for £300 per year in the UK, so $50 a month seemed like a conservative estimate for half-a-year’s worth of insurance (this UK-based travel blog article discusses travel insurance costs).

      You’re right though that $50 per month probably won’t be sufficient in perpetuity. The numbers in this article serve as a baseline for what I need to survive. This is how much I’ll need to quit my job and live the life I plan on living immediately after FI. If 5 years after FI I decide that I really want to live in America full time again, I’ll have to increase my health insurance budget by either decreasing some of my other costs or by earning more money through part-time work that I enjoy. The main message of this post is that you don’t necessarily have to wait until every possible future expense is covered…just make sure you can survive in a lifestyle you want to live and then if you need to earn more money to change or enhance that lifestyle, you can do so. A lot of people think, oh I need $2.5 million to retire so that every possible expense that I could incur will be covered. That may be true for someone retiring in their 70s but for someone in their 30s, I say, cover your essentials, start living a free life as soon as possible, and earn more if you want to change your lifestyle later.

      As far as transportation is concerned, it has been included in the ‘Rent and Utilities’ and ‘Travel’ categories. The ‘Rent and Utilities’ is a bit high, so that we can live in central locations and not have to rely on paid transportation too much. The ‘Travel’ category covers our flights between Scotland, America, and whichever other country we decide to live in but it also covers things like taxis and buses (I’m accumulating millions of frequent flyer miles between now and when I reach FI so that our airfare costs will be extremely low…more on this in future articles).

      I agree that everyone should do this exercise and I loved reading about your early retirement plan. Thanks for the comment and I look forward to reading about your USA geographic arbitrage over at Wealth Informatics!

      • RemyMarathe
        November 12, 2013 at 9:42 am

        But someone retiring in their 30s will be in their 70s someday. Are you going I get to 2.5mil on part time work after FI?

        • The Mad Fientist
          November 13, 2013 at 9:42 am

          Hi Remy,

          No, but I won’t need anywhere near 2.5 mil. Again, the numbers in the article are just a baseline for what I will need to survive. I plan to have significantly more than the baseline when I eventually quit my job so the surplus savings will continue to grow until standard retirement age.

          The main point of the article is to motivate you to look at your expenses to see what you are really happy trading your freedom for. We often spend money on things without really thinking about it so cutting out the things that you are happy to give up now will help you reach FI much sooner.

  4. Prob8
    January 19, 2013 at 9:26 pm

    Great goals! It’s nice to see your journey play out. Since you are now talking about Thailand in your early retirement plan I thought I would point you to someone very interesting. When you have a minute, google “Paul Terhorst.” Since you are traveling in FI circles, you’ve probably already come across his name and read his book “Cashing in on the American Dream: How to Retire at 35.” In case you haven’t, he and his wife retired at the age of 35 back in the 80′s with about $500k. They have been perpetual travelers ever since – spending significant amounts of time in Thailand, Argentina and other parts of the globe. He would be a wonderful person to feature on your next podcast if you can get him. I consider him to be one of the grandfathers of the FIRE movement.

    • The Mad Fientist
      January 20, 2013 at 1:19 am

      Hey Prob8, good to hear from you again!

      I actually hadn’t come across Paul Terhorst before but I’ve just been reading about him for the last hour and I definitely like what I see. The first line in one of his articles is, “You should retire overseas, for at least part of the year.” That is exactly my plan!

      Thanks a lot for letting me know about him. You are right, he would be a great podcast guest so I’ll see what I can do. It looks like he is living the kind of early retirement I’ve been planning so it’d be great to talk to him about his experiences, especially since he’s been doing it for so long.

      Thanks again and I’ll be sure to let you know if I’m able to get in touch with him!

      • Prob8
        January 20, 2013 at 1:25 pm

        No problem and good luck. His book is what started my quest for early retirement – although the investment advice is a bit dated. Another couple who are in the same camp are Billy and Akaisha Kaderli. Again, these are sort of the grandparents of the movement. Although in their 60′s now, they retired at 38 with $500k or so. They also spend a large portion of their time overseas – mostly southeast Asia. Both the Terhorsts and Kaderlis focus on expense management to achieve a full life of travel and fun. The Kaderlis have also written several books avaiable on their website – unfortunately, not for free. They tend to do more interviews so they would be a podcast option too.

        • The Mad Fientist
          January 20, 2013 at 3:37 pm

          Wow, two more really interesting early retirees! Hopefully I can speak the them at some point as well.

          Thanks a lot for giving me more people I can look up to. It is really encouraging that both couples have been living that type of life for so long and still seem to be enjoying themselves.

  5. January 27, 2013 at 10:33 pm

    Nice article, Brandon! I like your thinking about retirement as a state of happy affair.

    “Never having to work again is very different from never working again.”

    I believe that once you have enough F-You money(as my friend Jim says), you surprisingly will make more money in retirement. Why? It’s because you will do what you love most without being slaved to work that you hate doing daily.

    • The Mad Fientist
      January 28, 2013 at 11:59 pm

      Thanks, Shilpan! It’s great to hear you say that!

  6. Jeff
    March 18, 2013 at 7:33 am

    Hi Brandon,
    I’ve enjoyed your podcasts. I’d been reading the MMM blog for some time and recently started Jim Collins blog. I love Jim’s investment series. I’m so glad that your readers suggested Paul Terhorst and the Kaderli’s for interviews. I had thought of suggesting them as we’ll and I hope you will be able to arrange them. Some other suggestions for podcast interviews: Charles Long, author of How to Survive without a Salary. I have three editions of his book and still learn something with each rereading. Also Steven Catlin who wrote Work Less Play More, which included a focus on semi- retirement and extended time away from work.
    I’ve been reading this material and planning (or dreaming) of financial independence sine the 80s. Still working on it but getting closer. My plan will be to live at least part of the year in Mexico (my wife’s home country). Again, thanks for making these podcasts happen. I look forward to the next set of them.

    • The Mad Fientist
      March 18, 2013 at 10:16 pm

      Hey Jeff, glad you enjoyed the podcasts! I’m currently arranging my next interview so hopefully I’ll be able to get another episode released soon.

      I just requested How to Survive Without a Salary from my library so I’m looking forward to reading it when it arrives. I’ll be sure to let you know what I think after I finish it. I’m also going to see if I can get Work Less Play More because I’ve not read that yet either.

      Since you were kind enough to recommend some books to me, I’ll return the favor. Jim Collins, who you mentioned, suggested I read How I Found Freedom in an Unfree World by Harry Browne and it was incredible! I definitely recommend it if you haven’t read it already.

      You mentioned that you plan on spending some time in Mexico after you reach FI…where exactly in Mexico? I’d love to spend an extended period of time there at some point so I’d be interested to hear where you plan on going.

      • Jeff
        March 19, 2013 at 7:11 am

        Brandon,
        Thank for the book recommendation. I’ve not read that book yet, but I’ll check it out. My wife’s family is from the state of Colima, a small state on the Pacific coast. We probably will spend most of our time there since many friends and family are in that area. My wife still has an apartment in Mexico City so I could see us spending some time there as well. It can be a fascinating place, though it can also be overwhelming and traffic can be a nightmare. The metro is pretty good and very cheap. Though it is super crowded during rush hour. Last trip we waited on the platform over an hour waiting for the crowds to die down to just very full levels. Another town I really like is San Miguel de Allende, as well as the nearby town of Guanajuato. Both are beautiful colonial towns in the highlands between Mexico City and Guadalajara. San Miguel has a good size expat community, is famous as an artist colony, and has a reputation as a magical place. I’m looking forward to discovering more places in Mexico when we have the time to make some extended trips and to explore. You might want to check out the Kaderli’s website for their reports of their travels in Mexico and Central America – retireearlylifestyle.com. Thank you for your reply and your interest in our plans.

        • The Mad Fientist
          March 19, 2013 at 3:38 pm

          VisitMexico.com says that “Colima has been named one of the safest and most livable cities in Mexico” so that definitely sounds like a great place to spend some time, especially since you have friends and family there.

          I made a note of the other places you recommended as well so that I can look into them more when we start researching additional post-FI destinations.

          Let me know what you think about that book if you end up reading it and please keep me posted on your Mexican retirement plans!

        • May 28, 2013 at 11:49 pm

          I’ve also been to San Miguel de Allende and Guanajuato, although it has been many years ago.

          Based on the little I know of Mexico, were I to consider living there these towns would be very high on my list!

          • Jeff
            May 29, 2013 at 7:30 am

            Both San Miguel and Guanajuato are gorgeous towns with active expat communities (especially San Miguel). We have several nieces in Guanajuato. You do need to be able to walk a lot to get along well in either place. I think housing costs cover a wide range, with some very expensive places in both.
            Jim, I see you spent some time in Ecuador (and have a trip planned this summer). Are you considering moving abroad on a long term basis?
            By the way, Jim I’ve really enjoyed your blog and the investment articles. I’ve enjoyed Brandon’s podcasts and hope to hear some more of them.

          • May 29, 2013 at 10:41 am

            Hi Jeff…

            Yep, walkability and being car-free are definitely part of their charms.

            We are thinking of moving abroad a few years down the line. Right now my wife is still working at a job she loves and our daughter is still in school just two hours away in RI.

            In all likelihood, she’ll also be living abroad so that might influence where we go. Short of that, Ecuador would be the place were we going right now. Ideally we’d like to spend a year or two in each place and then move on in the slow travel fashion.

            Glad you are enjoying my blog! Brandon and I have been talking about doing another podcast together. I also happen to know he’s got one in the works that I am very much looking forward to listening to!

            Cheers!

      • Jeff
        May 21, 2013 at 9:07 pm

        Brandon,
        I did read the Harry Browne book you suggested. Took some time to finish. Very interesting ideas, though several of the concepts were a bit much for me. Though from the author’s comments to the newer edition, he has changed some of his ideas as well – such as his ideas on marriage. Anyway, it certainly made me think and stretch my perceptions. Any new podcasts in the works?
        Jeff

        • The Mad Fientist
          May 21, 2013 at 10:02 pm

          Hey, great to hear from you again, Jeff. I definitely agree some of the concepts in the Harry Browne book were a bit much but the book as a whole changed my mindset quite a bit. As someone who is pursuing early financial independence, I was already challenging the norms relating to work/career/money/etc. but after reading the book, I now find myself challenging everything. I don’t just do something because I’m told to anymore or because that’s the way it’s always been done. I definitely agree with you when you said it made you think and stretch your perceptions.

          I actually read the Charles Long book you recommended but forgot to send you a message about it. I ordered it from my library when you recommended it to me and it came in just a week later. I enjoyed it and the conserver lifestyle he described is very appealing, albeit maybe not to the extreme that he described. I haven’t read the Steven Catlin book yet but it is still on my reading list so I’ll hopefully get a chance to read it this summer. I’ll let you know what I think afterwards.

          I do have a another episode of the podcast coming up soon, actually. I finished the interview just over a week ago and finished editing the audio yesterday. I’m really excited to get it released so look out for it sometime early next week.

          Thanks for letting me know what you thought of the book and I’ll be in touch again soon.

  7. andria
    March 20, 2013 at 4:35 pm

    This is a great article and a eye opener. Thank you!!!

    • The Mad Fientist
      March 20, 2013 at 5:06 pm

      I’m glad you enjoyed it! Thank a lot for stopping by and hopefully I’ll hear from you again soon!

  8. March 21, 2013 at 7:12 am

    Where do you think is the best place in the us to perform geographic arbitrage? If you can in the us…

    • The Mad Fientist
      March 21, 2013 at 7:33 am

      You definitely can perform geographic arbitrage in the US. For example, I used to work remotely for a company in Boston while living in rural Vermont. My expenses were about half of what they were when I lived in Boston but I was still earning a Boston-level salary.

      The scenario I described could be replicated all over the country. Find a job in a big city but work remotely a few hours away in a rural community. That way, you’ll still earn the big city bucks but you can enjoy a much lower cost of living.

  9. March 21, 2013 at 6:43 pm

    Great post. One thing I’d challenge you on: owning a car. I’ve had one since I was 17, and LOVE having a car to get me from point A to point B. Thing is, I want FI more. So I yesterday donated my car to charity, and am now walking/bussing/Zipcar-ing my way around. No repair costs, insurance, gas, oil changes…no saving for a new car. Goodbye Saturn SL1, Hello Carsharing

    • The Mad Fientist
      March 21, 2013 at 9:49 pm

      Trust me, I can’t wait to get rid of the cars. If I never had to own one again, I’d be a happy man.

      Rural Vermont isn’t exactly the ideal place to be carless though so we’ll hang on to them for the next two years until we move abroad.

  10. March 27, 2013 at 11:42 am

    You are really paring down expenses! I’m guessing you know Jacob’s blog, Early Retirement Extreme. Sorry to hear about your car situation–that is really a money suck. I hate biking, but I want to live a sustainable life, and, I don’t want to own an expensive, pain-in-the-butt car. So I do carsharing–this is truly changing my life!

    • The Mad Fientist
      March 27, 2013 at 5:07 pm

      Yes, I’m a big fan of Early Retirement Extreme but I don’t think I’ll ever be as hardcore as Jacob. Living abroad for part of the year will allow me to enjoy a quality of life similar to the one I enjoy now but at a much lower cost.

  11. Alan
    July 28, 2013 at 10:57 am

    Did not realize that there is a huge community exist for FI online. A bit embarass at myself for still working when I have almost 1M USD and my living expense (excluding travel) is 1K per month. I spend maybe 8K a year on travel for mileage running, flying parents in business class etc from the miles game hobby. This blog gives me serious encouragement to quit in a few years… When I do quit, I will move back come to cut my living expense further (single), and I take my parents to travel using the miles and points I earn. (took them to Arctic last month, and cross country road trip in Australia.)

    • The Mad Fientist
      July 28, 2013 at 12:57 pm

      You definitely have no reason to be embarrassed. You have saved up almost $1 million and you still keep your expenses low so that’s a great achievement!

      I’d love to hear more about your trip to the Arctic. Was it amazing?

      • Alan
        August 3, 2013 at 2:49 am

        Spent two nights at Longyearbyen Radisson Blu using 50000 club Carlson points. (second night free) spent 75000 UA miles for intra Europe ticket from Istanbul to Longyearbyen that I get from mileage running. I did a fairly expensive day trip cruise to a Russian settlement ( over 200 USD) but my parents just walked around in the small town (expensive and they don’t care so much). Also travel to Almaty and Bishkek, Tromso, Slovenia with them on the same trip. Then I traveled to Budapest, Belgrade and then Romania for one more week! Most nights are hostels for me, or club Carlson, two nights using Choice points in Tromso.

        use plenty of travel hacking skills in this trip to save a lot of money as we flew all long haul in business class.

        While I am into FI, but my personal goal is to travel to every single country in the world.

        I derive utility by spending money wisely, I really see no point being wasteful even when I have money. I spend a lot of money in good promotions whenever there exists one, like club Carlson 50000 points per stay in 2011/2012 etc, or buy points from daily getaway in discover America or US airways Grandslam, or US share iles promotion.

        While it is nice to retire early, I do think that if I spend 4%, there is still a small chance of ruin, and also, there is a possibility of living the life to fullest – like going to antartica (which is expensive). I want to save up a bit more before I retire officially.

        Do u keep track of your Social security benefits? Would u count on that for FI?

        • The Mad Fientist
          August 3, 2013 at 8:58 am

          Wow, that trip sounds incredible! I can’t believe there’s a Radisson Blu in Longyearbyen.

          I also took advantage of the 50K Club Carlson promotions in 2011 and 2012. It’s great that the value of those promotions has doubled for us, since we both have the Club Carlson card now.

          I got some Choice points in last year’s Discover America promotion but I didn’t get any more this year because I wasn’t sure I’d use them before they expired.

          I don’t keep track of Social Security and I don’t factor that in to my FI calculations. If I do end up getting some benefits, it will just be a nice bonus.

          Let me know if you start planning another amazing trip!

  12. Pichirino
    February 19, 2014 at 5:53 pm

    It’s the first time in which i’ve seen a budget where costs aren’t ridiculous for (motivated) americans to have.Impressed you manage to keep them so low,it requires optimizing and being happy with simple things.

    My costs are quite similar as 27 year old except for rent or a mortgage which I won’t have.Like you I share costs with my SO.

    I’ve got rid of the car completely myself which means I take public transport and a 1.5 mile walk daily to work and back.Very worth it in $ savings.

    I see you included travel for your activities and a small misc of 50,but how will you account for “have fun” activities like going to the movies,etc.Just curious since my share pre-FI budget looks like this,just for kicks lets assume its in $ :

    Utilities-100
    Groceries-200
    Transport-100
    Misc -100
    health ins-0 (free here)

    On a caribbean island so for fun I use the beach and sea as diversion and spending time with family and friends doing free activities,but i’m pretty introvert so my ideas of diversions are not your average plans and occasionally I will use the misc to buy lunch for colleagues(who return the favor)

    FI at 150.000 if I consider using 500 for as my after FI budget,which scares me a bit so I’m still considering if I want to work part time or full time after reaching FI to try to reach at least double this amount to take every worst case scenario into consideration.

    Still I convince myself,being able to have your passive income cover your basic expenses will be really worth it.

    • The Mad Fientist
      February 20, 2014 at 10:17 am

      I can’t wait until we go car-free later this year because that will reduce our expenses even more.

      As far as how I fund my “have fun” activities, I have supplemental income I use for that. I’m a professional software developer and over the years I’ve created a few iPhone and web applications that generate a consistent stream of passive income each month. I use that income for my discretionary spending.

      That’s great you are able to keep your costs so low while still having a really nice life on a Caribbean island!

      Working part time after FI is a great way to supplement your FI savings and is something I’m considering as well (see semiretirement). There are many fun jobs I can think of that I would enjoy doing part time so I may pick up some part-time work after leaving my full-time job this year. We’ll see though…it’s possible I’ll enjoy being jobless even more than I expect I will :)

  13. James
    February 24, 2014 at 1:55 pm

    My wife and I don’t separate our expenses – I think it would be awkward that “I” had paid off “my portion” of “our house” and she needed to keep paying on “her” portion of the house or rent. Multiply that times all the other expense categories….that would seem to lead to some hurt feelings at some point.
    In marriage, two shall become one, although I’m sure you’re attempted to get her on your team, it sounds like she’s not joining you yet. Does she see the value of being able to live on air (or close to it!) as your future numbers describe? My wife and I are moving forward together and it’s so much more joyful, I wish that for you and your wife!

    • The Mad Fientist
      February 25, 2014 at 9:49 am

      Yeah, it’s probably not for everyone but it definitely works for us. It’s good that we make roughly the same amount of money so it’s not awkward in the sense that one person has much less money left over after the essential expenses are paid.

      My wife and I are actually more on the same page with our financial goals these days (check out her guest post) and I agree that it’s made the journey much more enjoyable!

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