Maybe it was coming of age during the Great Recession and seeing their parents' retirement savings disappear. Or perhaps they're motivated by the ideas of investment and wealth management. Or maybe they just don't like their day jobs.
Whatever the case, a small group of American millennials are bucking the trend and saving gobs of money in order to achieve FIRE or financial independence, retire early.
Inspired in part by the personal finance bible, Your Money or Your Life by Vicki Robin and Joe Dominguez, these folks are pinching their pennies in their twenties and thirties in order to build up big nest eggs.
Some don't mind retiring on drastically reduced means, living as a family of 4 off $20,000 a year while others store enough away to live comfortably as millionaires. Whether they land on the high or low end of the spectrum, considering that 1 in 3 Americans have less than $5,000 saved for retirement, the FIRE community's goals are lofty.*
Intrigued by the movement, I emailed some of the top bloggers in the space to ask them, "What are the craziest ways that you've pinched pennies in order to achieve financial independence (and) retire early?" Here are their answers.
Because for some people, life is more important than work.
Tanja Hester of Our Next Life
Saving lots of money at a lucrative job in her twenties and thirties, Tanja Hester achieved financial independence thanks to prudent wealth management.
1. Turned the thermostat to 55 degrees during the winter.
I keep our house at 55 degrees during the wintertime. The first gas bill my husband and I got after we moved into our house in Lake Tahoe was north of $400. At the time, we were only heating the house to all of 62 degrees, so we decided then that we were going to get that bill down. We experimented with how low we can take the temperature and the answer is 55 degrees. Any colder and we actively shiver…which is unhealthy. But 55 degrees we can handle by bundling up. We warn guests who visit in the winter!
2. Collected coupons, spending only $100 a month on groceries.
This was a short-lived thing, because it is so time-consuming and ultimately not worth it, but I had an extreme couponing phase. I would walk around our old neighborhood in Los Angeles to collect a few dozen coupon inserts that no one had claimed and then I'd lug my big coupon binder into multiple stores every week to get the best deals. During that time, I spent less than $100 a month on groceries for 2 of us in expensive Southern California. But we mostly ate the junk food the coupons covered, and ultimately decided our health was worth more than that.
Tanja Hester retired early at 38 from a career in political consulting, along with her husband Mark Bunge who was 41, and blogs about early retirement at Our Next Life. She is also the author of Work Optional: The Non-Penny-Pinching Guide to Retiring Early that comes out in March 2019.
Sam Dogen of Financial Samurai
Focusing on retirement, Sam Dogen stashed away gobs of money working in investment banking.
3. Shacked up in a New York City studio apartment with a friend.
As a first- and second-year investment banking analyst in Manhattan, I lived with my high school buddy in a studio for 2 years to save about $1,000 a month in rent apiece. The studio was above a noisy subway line that kept us awake all the time with its screeching. Meanwhile, my financial analyst cohorts were all living in swanky 1-bedroom apartments or had their parents buy their condos for them.
4. Worked 14-hour days to snag free dinner and breakfast.
For the first 2 years in New York City, I worked 14-hour days in order to eat free dinners and bring home free fruit and cereal for breakfast. I'd get in at 5:30 a.m. and stay until 7:30 p.m. because that's when the free cafeteria opened.
Sam Dogen started FinancialSamurai.com in 2009 as a way to cope with the crisis. In 2012, he negotiated a severance after 13 years in finance in order to be free. He now spends time taking care of his baby boy, writing about personal finance, and playing tennis in San Francisco.
"J" of Millennial Boss
A blogger in the FIRE Financial Independence, Retire Early community, J is saving (and investing) money in her twenties.
5. Chose a fake engagement ring.
My engagement ring is fake (the stone is moissanite which is created in a lab) and no one knows. It cost $300 and I get compliments on "my diamond" all of the time!
6. Carried a wedding dress onto the plane instead of checking luggage.
I fit everything I needed for my wedding weekend, including shoes, accessories and extra clothes, into a backpack because I didn't want to pay for a checked bag. I carried my wedding dress onboard with me. That was all I needed.
J is the twentysomething blogger behind Millennial Boss and Fire Drill podcast. Follow her journey to financial independence as the young homeowner pinches pennies and makes smart investments.
Drew of Guy on FIRE
Thanks to extreme saving techniques, Drew is stashing away tons of money for retirement in his twenties.
7. Lived in a 52-square-foot room.
House hacking allowed me to get rid of my biggest expense and live for free. In fact, I actually get paid to live. The craziest example was living in a 52-square-foot room. I decided to live in the smallest room of my second rental property, which was a complete fixer-upper. I could have lived for free and still made a profit by living in any of the rooms. However, I wanted to optimize my cash flow so I settled for the 52-square-foot room.
8. Drove a 20-year-old car.
Most of my friends rushed to buy new cars after landing their first job. Cars destroy wealth creation since they are a depreciating asset and lose their value over time. Plus they require a lot of upkeep. One of my friends bought a $30,000 car that ended up costing him over $240,000.
I decided to buck the trend and drive my old car until she was 20 years old and had traveled over 200,000 miles. Driving an old or used car saved me over $6,000 a year. This is a great way for anyone to crush their savings in their twenties. Some may say my car was embarrassing…they may have been right. She was old, dented, and the radio didn't work the last 6 months. I would say she had character and was dependable.
Drew is an average 20-something living in Washington, D.C. He is an outdoor enthusiast who loves the mountains and is always up for an adventure. Drew is also an avid D.C. sports fan, obsessed with real estate, and a self-proclaimed foodie.
Bryce and Kristy Shen of Millennial Revolution
Kristy Shen and her husband travel the world while in retirement thanks to their wealth management skills and smart investments.
9. Refused to buy a house.
This was the most counter-intuitive one that we did, since the common wisdom (not to mention our Asian upbringing) was screaming at us: buy a house now or buy never! But when we ran the math, nothing about buying in a high-cost city like Toronto made sense and we decided to buck convention and follow the math instead of doing what everyone else was doing.
Turns out, we were proven right and that decision allowed us to become millionaires at the age of 31 since we were able to take all that money that we would have put toward a down-payment and mortgage, and invest it instead. Most people don't understand how expensive owning a home is and get suckered into making the worst financial mistake of their life based on nothing more than feelings. It pays to run the numbers!
Bryce and Kristy used to live in one of the most expensive cities in Canada, but instead of drowning in debt, they rejected home ownership. What resulted was a 7-figure portfolio, which has allowed them to retire at 31 and travel the world. Their story has been featured on The New York Times, CBC, the Huffington Post, CNBC, BNN, Business Insider, and Yahoo Finance.
*Northwestern Mutual, 1 in 3 Americans have less than $5,000 saved for retirement, May 8, 2018.
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