Living frugally is probably the number one thing to look at for those who want to retire early. We already know the formula: earn well, live frugally (aka save as much as you can) and invest wisely. Write down a plan and follow it no matter what. But what about the details of frugal living? How to get through them, become financially independent and still live happily?
Living frugally – the 1st pillar of early retirement
While some things are difficult to envision, try to look out for examples. This family of 4 lives on $14k a year. This family lived a year on extreme frugality. If they can do it, you can do it too!
In this post, I’ll tell you that living frugally actually means and how I do it.
What exactly do I save on?
If you stop to think about them, our culture is geared towards spending money. We are constantly bombarded with ads that prompt us to buy. We end up buying a lot of things by impulse, not because we really want them or need them.
I’ve decided to do it differently. I spend money on what I need the most, or what leaves me truly happy. You have to ask yourself the same question: what does leave you truly happy: a new car, a new smartphone, new clothes very season or being able to retire early? I am not saying that the latter is the right choice, I am simply saying that it is what I want. In the following, let me share some tips:
Home and car
As I wrote last week, I am moving to a very small condo in one of my multi-unit properties. I think I haven’t shown my car yet, so here is it:
Although a beautiful, reliable VW from 1999, it only cost me €3000. My family was quite surprised when I bought “such an old car” for “someone with a PhD and a large salary”. Guess what, I could not regret it less. I absolutely love my car. 🙂
This car serves me extremely well. First, it is a classic over here. Second, it is super reliable. Third, it has a huge trunk and can take up to 5 people. No other car would make out my happiness, really. Well, to be fully honest, a brand new Mercedes A45 would probably make me a little bit happier, but it would cost me €27000 more. €27000 is what I need to live comfortably for 2,5 years, so choosing between these cars having in mind that the Passat will allow me to retire at least 2,5 years before is a no brainer, even from the happiness point of view.
Food
Pretty simple – I never ever throw away food. I plan every meal accordingly and I buy food for them – not more, and rarely less.
Coupons
I’ve been less of a coupon freak. Back in the day, I use to literally go through every coupon magazine and collect tons of coupons, filter them out, and spend them or change them for money. I was a coupon machine. Today, my time is way more valuable than that. If you have spare time and you get bored easily, do search for coupons, they can save you a lot of money.
Today, I still chase coupons and try to take advantage of sales, but I am not a coupon freak anymore. I think that the time I would invest into finding coupons is way better invested in my online and Real Estate businesses and this blog. Plus, having a growing blog does leave me happier than saving a few bucks at the supermarket.
Family
Pretty difficult to deal with, I gotta be honest. My family does not understand why I want to be so frugal. If you hold a PhD and your family think you have a large salary, they won’t understand why you don’t want to go out for lunch or take advantage of Black Fridays. My family knows that I have CFS but they don’t really know I want to retire in my 30s. Plus, they don’t have a very frugal background, so frugality is not something they are really used to.
Gifts
This is the hardest part of saving. I use to give my relatives and friends pretty generous gifts, and ever since I started to work on my early retirement, I changed that. It is not exactly like I give them crappy presents now, but I try to go for something cheap that either they really need or looks expensive. For women, I tend to give flowers more often.
Let me know about you – how do you save and what tricks do you use?