Spending
When my income finally rose to the point where I was easily making ends meet, I noticed that I spent whatever was in my checking account and every month. This was surprising to me as the amount of the deposit varied quite a bit. And I couldn’t tell you what I spent more on in the good months. That meant that whatever it was I was wasting money on didn’t make me happier, so I decided to stop myself from doing that.
I had my paycheck deposited into my savings account and I worked out a sort of “allowance” for myself, since I hate budgeting. I calculated my worst months pay, and that was my allowance. And then I forgot about it- for a couple of years. Meanwhile my earnings went up a bunch. But I didn’t really need to spend more money- my allowance was plenty. So my savings and investment account grew rapidly. I accidentally prevented myself from participating in lifestyle inflation. Cool.
Saving
Sadly, you are not allowed to have a temper tantrum when you have a bad day at work. What I did instead was increase my 401k contribution percentage when I had a bad day. This works especially well in my field of finance, as I had more bad days when the stock market was down. I bought even more shares when they were on sale.
Peer Pressure
We kept our old friends even when we started out-earning them. We kept our spending the same while our income was rising. We certainly know people who spend more lavishly than we do, but we haven’t made an effort to hang out with them. Instead, we kept our old circle of friends who like to come over and watch a football game with us or go boating on the local river. No one has ever invited us to join them on a Safari or South American hunting trip- thank goodness. Peer pressure is real, so we’re careful who we hang out with.
Debt
We hated debt. After we married, we sold my house and paid off his. We never borrowed money for a house or car after that- ever again. The lack of any kind of payments allowed us to save crazy amounts of money.
Location
We live in a very low cost of living area. Our state has extremely low property taxes, and property is cheap. We have a lovely home on 7 acres that we couldn’t have afforded in many places. Since we make a good deal more than average for our area, we ARE the Joneses. My kids never (okay, almost never) complain that their stuff is not as cool as their friends’ stuff- and we still save a lot. It isn’t as easy to find a higher earning job in a low cost of living area, but if you can do it, your income can go a long way to advancing your FIRE goals.
Next post- Dumb Things We Did, and How Much They Cost Us…
What did you do that helped you on the path to FIRE?
