On August 1, 2016, Brandon — the blogger behind financial independence blog the Mad Fientist — retired at 34.
My colleague Libby Kane talked to Brandon — who doesn’t use his last name online for privacy reasons — about his journey to early retirement, where he revealed that he saved and invested around 70% of his take-home income in order to reach his goal.
While I have no plans to retire early, I wanted to see firsthand how attainable that lifestyle is. After crunching the numbers with my editor for a solid half-hour, we concluded there was no way I could put away 70% of my total income for a month and still afford both rent and food, so I aimed to save 50% of my disposable income instead.
Because I live in New York City, my rent is higher than it would be in most places in the country. And since I wasn’t going to move out of NYC just for the duration of a month-long experiment, to make the project more realistic I decided to count disposable income as everything after rent. So after paying rent, I put half of what remained of my monthly paycheck in savings and lived off the other half for the entirety of September.
While I’m lucky to have more than enough to continue to live comfortably, it was immediately challenging to adapt to a much lower budget than I was used to. But it didn’t prove impossible.
With 50% of my income in savings, my budget came down to around US$550 for the month -- after taking out some fixed costs.
After determining how much disposable income I'd have for the month -- calculated by subtracting my rent from my monthly take-home income and then dividing by two -- I immediately accounted for non-negotiable expenses. This included $116 toward an unlimited monthly subway pass and $60 dues for a leadership class I'm enrolled in, as well as utilities and tithes.
I'm still on my parents' health insurance, and my gym membership and 401(k) are automatically deducted from my paycheck.
With my fixed costs taken out, I was left with around $550 for the month for everything else, including groceries, laundry, and entertainment.
WEEK 1: I went into the challenge expecting it to be unbelievably hard -- especially in New York City.
I'm frugal by nature, but I still love to indulge in everything New York has to offer. While I monitor my spending, I'm quick to say yes to dinners out, ice cream dates, and spontaneous adventures.
I also knew going in that I needed to save up for a bachelorette party I was attending in Nashville at the end of the month. I considered pushing the challenge back a month, since I knew the party would be hard on my budget. But the thing is, there's always something. If it wasn't the bachelorette party this month, it would be attending two weddings in October, going out of town for Thanksgiving in November, or holiday shopping in December.
But once I mentally committed to the challenge -- and didn't allow myself any leeway for failure -- it became much easier to pare down my spending.
September 1st fell on a Friday, so I started the challenge by tackling weekend spending temptations head-on.
While it's relatively straightforward to curb my spending during the week -- pack a lunch every day, hit the gym instead of the bar after work -- weekends tend to be full of expensive activities, from late-night cab rides and mozzarella stick deliveries to $18 eggs at brunch the next morning.
I started Labour Day weekend off with breakfast with a friend at an oatmeal bar in the West Village. I was more than ready to fork over $5 for a bowl of hearty oats, but my friend graciously bought mine as a belated birthday gift -- before I even had a chance to tell her about my new savings goal. Win!
Besides catching up over breakfast instead of dinner, a few more key decisions kept the three-day weekend under budget. For one, I stayed in town instead of heading out of NYC as several of my friends did. Thanks to multiple other trips and weddings lined up for fall, I opted back in June to save money and stay home for Labour Day.
I took advantage of my free time over Labour Day to relax, cook my own meals, and train for my upcoming half marathon.
My low-key weekend consisted of a lot of running and pasta at home, instead of going shopping or ordering takeout. On Labour Day, a friend and I packed a picnic and headed to Prospect Park in Brooklyn to enjoy the nice weather, rather than spending the day ordering drink after drink at an outdoor bar.
However, I did splurge on a spontaneous dinner out that Saturday -- and I don't feel bad about it. I savoured each bite of my $18 meal -- bell pepper bruschetta and cheesy lasagna -- and wouldn't have given up a single moment of quality time with my friend. Though it was only Day 2, I knew right away I didn't want to spend the month isolating myself and being so frugal that I was miserable.
I also used my laid-back weekend to head to Trader Joe's, where I picked up groceries for the first two weeks of the month.
For around $24.67, I came home with two bushels of $0.19 bananas and three cans of black beans, as well as 'luxury' items, such as kale and red bell pepper. I don't eat much meat and cook pretty simple meals, so my grocery bills tend to be low, but this month I aimed to get them even lower.
Instead of buying all new ingredients for the week, I took stock of what I already had in my apartment -- pasta, lentils, frozen shrimp, and brown rice -- and built out meals from there. I also relied on staple meals such as rice and beans or pasta with veggies. Cheap carbs helped me stretch my budget without sacrificing calories.
I realised that I tend to buy more groceries than I need and end up not using all of them. I get excited when I see a new flavour of tea and buy it before finishing the other three half-used boxes I already have at home, and I've had the same bag of brown rice sitting in my cabinet for months. But this month, I tried to use up my staples instead of spending more money on new items when I felt like I had nothing in the house.
A few days after my shopping trip, I also lucked out when Barilla handed out free meal kits outside of my gym, complete with a full box of pasta and jar of pesto.
WEEK 2: I spent the next weekend basking in the last few days of summer and exploring all the cheap and affordable activities NYC has to offer.
My friend Kelly came to visit the second weekend of September, and we spent our time together as tourists: eating authentic New York bagels, riding the Staten Island ferry, and catching an amateur comedy show.
WEEK 3: I barely made a dent in the number of free activities available in NYC, so the next weekend I set out to check a few more things off my bucket list.
I spent the weekend swiping my unlimited MetroCard like it was an AmEx as a friend and I roamed from brunch in Brooklyn (free, thanks to a press event) to the Roosevelt Island tram to a stroll across the Manhattan Bridge.
Despite my limited budget, I realised I didn't have to sacrifice my social life. Instead of staying in and watching Netflix for a month, I made a point of finding creative ways to fill my time -- and I was rewarded with great memories.
I made another grocery run during the third week of September, where I spent $34 to get through to the end of the month.
The biggest percentage of my disposable income by far goes to meals out each month, so I knew I needed to buy groceries that I would want to eat -- or else it was going to be a long month.
While I consciously tried to keep my grocery bill low, I concentrated more on cooking my own meals than buying the cheapest ingredients available. My budget was stricter than normal, but by no means impossible. Buying quality ingredients helped curb temptation to indulge in more restaurant meals.
I also lucked out with more freebies when an ice cream truck down the street from the Business Insider office provided a free soft serve break.
As the end of the month drew closer, I grew used to saving wherever I could -- but I still missed my old, carefree habits.
Despite falling into a comfortable routine with my limited budget, as the month dragged on it became harder -- and more annoying -- to stick it out. I missed eating out! I wanted to go shopping!
But holding firm to my savings goal forced me to evaluate my priorities and decide what was truly worth spending money on, like dinner with friends or a weekend trip.
The biggest overall expense for the entire month was the weekend I spent in Nashville for my friend's bachelorette party. Throughout the course of four days there, I shelled out $180 on food, Uber rides, and many, many drinks. Prior to the weekend, I also spent $70 on a gift for the bride.
Expensive? Yes. But completely worth it.
Outside of the weekend away, the overwhelming majority of my budget went toward food and drinks -- which shouldn't come as a surprise at all if you've read this far into this story. Including groceries, a handful of meals out, and several bottles of water purchased in the middle of a run, I spent about $200 in this category.
The rest of my monthly expenditures -- roughly $120 -- were split between necessities like shampoo and laundry and little splurges, such as getting cheap pedicures with my roommate and sending a friend flowers after she had a baby.
I was able to stick so closely to my budget partly thanks to long-term decisions made earlier in the year. I booked my ticket to Nashville back in April (on points!), and the women who planned the bachelorette party reserved the Airbnb months in advance, so I only included the things I paid for during the weekend itself in my final tally.
Looking back at the spreadsheet of what I spent, I see places where it would have been possible to cut even more and finish under budget: I could have been more diligent about not eating out or planning ahead to avoid paying for bottles of water.
But I'm glad I didn't. Even $20 over, I was still able to save 49.9% of my disposable income for the month without feeling like I was sacrificing my entire social life.
In addition to boosting my savings, the month taught me a few important lessons about the ways I handle money.
Strategic splurges are worth it.
As I mentioned, I knew my friend's bachelorette party would cost me more than a typical weekend at home. But I was more than happy to do it -- she's a close friend and I'm overjoyed to celebrate her upcoming marriage with her. Though it cut into my limited budget for the month, I carefully planned around expenses like this in my yearlong budget, curbing my shopping and passing on weekends away.
Spending money on experiences and relationships is a worthwhile splurge to me, and the trip to Nashville ended up being one of my favourites of the year.
Don't ignore easy ways to save.
CVS's ridiculously long receipts aren't just a running joke -- they're coupons, and they're actually helpful. I started paying much closer attention to where I could get a few dollars off and how I could combine rewards to maximise my savings, and it paid off. I saved around $12 in September, which might seem like small potatoes at face value, but $12 (or more) a month adds up.
Spending money is not a bad thing, but wasting it on unnecessary purchases is.
I firmly believe that investing in a quality item or splurging on dinner with a friend is a justifiable expense. But I found several avoidable ways I had been wasting cash.
For example, whenever I have plans to meet a friend after work for a non-food-related activity, I stop by Chipotle or somewhere similar to grab dinner. Over the course of the past month, I started packing a quick meal instead and saved at least $50. I plan to continue being mindful about these seemingly innocuous purchases going forward and concentrate on making meals out a social activity, not something I do out of laziness.
Choosing to save so much is a privilege.
Money is personal. And while financial independence or early retirement isn't one of my main priorities, I'm grateful that I have the opportunity to choose to work toward that if I want to. I'm blessed with a good job and comfortable lifestyle, and this challenge reminded me to never that for granted.
Cutting back on spending doesn't have to mean pinching pennies or living on nothing. My biggest takeaway from this challenge is that there's always room to improve my finances -- save more, invest smartly, give generously -- while still enjoying a full lifestyle.