Keeping Credit Lines Open

The other night I (Mister here for this post) was hanging out with some friends, nerding it up, when the topic of dinner came up. I had come prepared with snacks (more on packing snacks in a future post). After some discussion (“we had pizza last night,” “I’ve eaten Chinese three times this week”), they eventually settled on ordering Indian food.

That’s when things got weird. Suddenly the group was embroiled in a game of hot potato: who could afford to throw the group order on their credit card? “Not me!” “No way.”

Finally, one brave soul consented: “As long as we keep it under $100.”

I watched it all go down in disbelief. Sure, it was near the end of the month, and I know it’s not a competition, but I could cover 10 times that amount on my card if I needed to and still have money left over for some palak paneer.

I know $100 may seem like a lot to my fellow frugalites but it’s really not. What if your cat gets sick? Or your phone gets stolen? Or you need to do some emergency home renovating?

Screen Shot 2015-04-07 at 4.32.12 PMMiss tries not to use more than 1/4 of a card’s credit. So far, so good for this month!

More to the point, what else are you buying that you’ve exhausted all but $100 of your credit limit?! Sure, credit limits vary, but any card worth its salt should allow at least several hundred dollars of purchases, if not thousands. And keeping $100 of that available is just good common sense. Imagine being stuck with a broken-down car and not being able to pay for a new battery or tire on the fly. Scary! And this is credit we were talking about, not even actual money.

The Indian food situation highlighted for me one of the greatest benefits of pursuing financial independence: no longer having to worry about money.

It may seem counterintuitive, but despite being frugal people, Miss and I don’t spend a lot of time worrying about money. We’re never juggling credit cards or counting the days until the next paycheck so that we can make rent. We just enjoy our lives (most of the good stuff is free or cheap anyway). When something comes up that we need (or just want, though those purchases usually come after some consideration), we don’t agonize over the decision or check our balance before purchasing it. We just do it.

I know financial independence feels like (and likely is!) years away, but remember, savings aren’t a binary thing. It’s a spectrum. Of course the goal is to reach the point where you can subsist entirely off your savings without having to work, but simply the pursuit of financial independence can have significant benefits. We get a real kick out of watching our retirement accounts grow. We love knowing that we have a plan and that are using it to take control of our lives and our future.

onionsMister chopping onions for our homemade curry stir-fry

Also, we make a mean Indian curry dish.

DIY: Surprise Party

Mister just celebrated a birthday, and Miss threw him a surprise party. As with everything we do, the question was, how do we maximize fun and minimize cost? After all, the goal is to enjoy time with good friends, not impress them with a lavish gathering.

rsz_colorful_drawingA simple gathering with friends is right up Mister’s alley

The idea: Mister had been inundated with work and other commitments, to the point that his birthday was slowly creeping up and without a plan in sight. Miss was out of town visiting family the week before, but knew Mister was batting around the idea of having a get-together another weekend later…it was the perfect recipe for a surprise party.

The location (cost: free) : Miss asked a couple of friends with a row house (we and most of our friends live in apartments) if they’d be willing to host a party. And they were! Phew.

The invitations (cost: free): Miss secretly emailed Mister’s buddies to fill them in. The party would start at 2:30pm, between lunch and dinner time, so planning a full meal wasn’t necessary. Everyone was asked to contribute a beverage, and Miss was in charge of the dessert.

IMG_1394Someone even brought “birthday beer”!

The decorations (cost: $2, plus $10 for the friend who bought balloons and party hats): Miss bought a birthday banner and birthday candles from a dollar store and another friend bought a pack of balloons and party hats. The host also had a few decorations on hand.

The food (cost: about $5): Miss got baking on a cookie cake at 6am the morning of the party while Mister dozed in the bedroom. Thank goodness, he stayed asleep long enough to make the 9 x 13-inch dessert and then stash it away for transport. When the party extended into dinner time, guests chipped in for various pizzas that they wanted to have delivered from a nearby pizza joint.

IMG_1366Not the prettiest of cakes, but healthy cookie cake is Mister’s favorite

The set-up (cost: free): We hosted our usual Saturday morning group workout (more on cheap and free fitness in future posts!) at our apartment. Luckily, one of the friends who participated was going to the surprise party a few hours later. So Miss handed off the banner, candles, and cookie cake to her after the workout. She and the balloon-buying friend generously went to the party house early enough to set things up.

The arrival (cost: $4 for our two round-trip bus tickets): This was the fun part. Miss and Mister traveled to our friend’s house under the pretext of helping him unpack some boxes. When we walked in, behold, there were a dozen or more of Mister’s friends, yelling “happy birthday!”

So our total cost for the surprise party was $21, including travel and the decorations that friends contributed (thanks again! 🙂 ) For that, we got an afternoon of relaxing with friends, and merriment was had by all.

Living In the Moment

Last week we discovered our target date for financial independence: September 2018, about 3.5 years from now. Three-and-a-half years feels far away, but less so compared to the decades of retirement that we hope will follow.

The old adage, “goals without deadlines are just dreams,” holds true. Study after study shows that people who set goals with timelines are way more likely to accomplish them. Setting a date helped shift our perspective; suddenly retirement feels tangible and achievable.

So if you have a big, long-term goal in mind (retirement or otherwise!), do the math. Make a plan, start making changes, and enjoy watching your goals get closer and closer.

O7A9fAvYSXC7NTdz8gLQ_IMGP1039Cliche, but true: every journey has to start somewhere…

Long-term thinking defies popular culture’s insistence on instant gratification, which equates “living for the moment” with spending money and wasting time. After all, the saying goes, you’re only young once.

You are only young once. But that’s why you should spend your time fulfilling your dreams, not chasing down someone else’s. We believe that there’s a profound difference between living “for the moment” and living “in the moment.”

Living for the moment means ignoring consequence and mortgaging your future for the present. Just like some people enjoy smoking cigarettes despite the long-term health risks, overspending just hobbles your future self. Spending beyond one’s means is often the path of least resistance, and research shows that humans are “generally not inclined to do what makes us happiest, actually. We do what’s easy.” Yet, having debt can “eliminate all the happiness that you can get from spending your money.” There are better ways to pursue fulfillment.

Living in the moment means appreciating the present without sacrificing the future. We try to seek out activities that bring joy now and freedom later, so that we feel empowered, rather than hamstrung, by the budgets we’ve set for ourselves. Our most fun times are picnics in the park, game nights with friends, and playing Ultimate Frisbee on a warm summer day — all of which are free or cheap.

game nightA game night Mister and Miss hosted a few weeks back

Per the inimitable Bruce Lee: “If you love life, do not waste time, for time is what life is made of.”

Defining Financial Independence, Part III

We figured out over the last two weeks that $600,000 will be enough money to retire on, since it should return around $30,000 per year. That covers our current expenses (budgeted here), with the exception of cheaper housing: once retired, we’ll move to a city that doesn’t regularly feature on lists of most expensive cities in the country.

IMAG0437At least we get a lot of beauty in our pricey city

So how long will it take to hit our magic number of $600,000, and how do we make that happen?

You can use the same calculators mentioned in part II of defining financial independence. We tried both CNN Money’s more detailed version, and’s simpler calculator, to compare, each assuming a conservative rate of return of 5% (on a good year, we may get a little more!).’s calculator suggests we can top $636,000 in 4 years by plugging along on our current savings plan: Miss puts $1500 into a 401(k) every month, while Mister socks $330 into his 403(b), and we’re both saving about $1000 monthly in more liquid accounts (more on our thrifty savings and brokerage accounts–and the extensive research Miss did to select them–in future posts). Splitting the difference between the projected three-year amount of $560,746, 3.5 years is about when we could expect to have $600,000.

Screen Shot 2015-03-09 at 3.09.19 PM’s calculation

As an extra check, we also used the CNN Money calculator, which differentiates between taxable and tax-deferred inputs. It produces a slightly lower estimate for our savings after four years.

Screen Shot 2015-03-09 at 2.39.53 PM

CNN Money’s calculation

The two calculators generally predict that we’ll reach $600,000 before four years, probably around the 3.5-year mark.

Of course, that number doesn’t account for inflation, but it also assumes static income, no reduction in spending, and a middle-of-the-road return rate. A slew of things could speed up our saving: salary increases; moving to a cheaper apartment or house, or a great year for mutual funds. Passive income could help, too: credit card rewards of up to 6% on certain kinds of purchases (more on those in a future post) or occasional gifts from family members (like Miss’s grandmother covering a flight home for the holidays) will reduce projected costs a bit and pad the bottom line. So we hope these types of extra income will roughly offset inflation; that leaves us pretty comfortable with identifying 3.5 years as a reasonable target date.

Measuring from now (March 2015), that makes September 2018 our goal date for financial independence. By then, Mister and Miss will be in their early 30’s. We plan to be married and hopefully thinking about having a kid. In the mean time, we’ll keep plugging along and saving as much as possible to make this goal a reality!

Drumroll, please…it’s September 2018!

It’s also important to note that the $600,000 figure is what we estimate being able to live off of without any income from other sources; it’s basically planning for never working again. But in reality, part-time or contract work is a real possibility that would grow the nest egg even further after formally retiring.

As we’ve said before, financial independence isn’t about not working, it’s about not having to do work you find unfulfilling, so that you can choose to live and work (or not work) on your terms.

Defining Financial Independence, Part II

Mister and Miss figured out last week that we currently spend about $42,000/year, largely due to our exorbitant housing costs ($24,800/year; and that’s after searching high and low for the best possible deal in our area!). Retiring will free us up to move somewhere with cheaper housing, so our projected future expenses will be about $30,000/year.

So we need to determine what amount of money in the bank can be reasonably expected to earn up to $30,000 in annual returns without us having to do anything or add to it. And that will be our magic number for financial independence.

don't just stand thereLike anything, the hardest part is getting started. We needed to
evaluate our financial situation and savings goals up-front.

There are several online calculators (like this one from CNN money, or this simpler one from that can help, but it ultimately comes down to how much you’re investing and your expected rate of return.

The rough formula is: Initial amount * expected rate of return over one year = return for one year

We’re comfortable assuming a rate of return of 5% (after covering that little thief known as inflation), which is steady but fairly conservative. With our money in a selection of moderate to aggressive, sufficiently diversified ETFs and mutual funds from low-cost brokers (more on thrifty investing strategies in future posts), we’re just trying to match the market and get decent returns.

That means that our formula is: Initial amount needed * .05 = 30000

…which solves for $600,000. And that’s our magic number! We can expect an initial investment of $600,000 to generate the $30,00 we will need each year (with more reasonable housing costs; otherwise that $30,000 assumes a continuation of our current thrifty ways).

An aside on the psychology of all this: it’s one thing to save day in and day out for a nebulous goal like vacation or even early retirement. But Mister and Miss felt it was important to have specific numbers in mind. It makes everything feel much more tangible and achievable, and pinpoints when we’re actually ready to retire down the line (otherwise, we’ve read that it’s tempting to keep working forever, just to make the safety net bigger). With a concrete goal of $600,000 to shoot for, it’s really invigorating to watch ourselves get a little bit closer every month.

unsplash_5288cc8f3571d_1There’s no point in saving up to retire early if we never do it–
so we need to know what number will actually signal, “it’s time!”

Next week, Defining Financial Independence, Part III will explore our calculation of an even bigger milestone — our target date for actually reaching that $600,000.

Defining Financial Independence: Part I

What qualifies as “financial independence”? How much money is enough money to retire early? Everyone will have a different number depending on lifestyle and location. Mr. Money Moustache and his wife accrued about $600,000 before they “retired” at 30. Mike and Lauren are aiming to save about $400,000 before taking the plunge.

The number ultimately comes down to a) expected annual cost of living, and b) what lump sum of money is needed to earn that much in annual returns. This post will cover our calculation of the first half of that equation: annual expenditure.

We started by assessing our current expenses, as follows. It’s important to be as thorough and realistic as possible. To calculate her monthly food costs, Miss actually added up every single supermarket and restaurant purchase she made in January 2015, a typical month in which she ate out with friends a few times. They totalled $416, so Miss knows that a monthly food budget of $450 is actually feasible. Mister considers buying his lunch to be a personal failing, so his food budget is a tad smaller.

Screen Shot 2015-02-26 at 8.44.11 AM

Our budget shows that we spend about $42,000 annually.

Unfortunately, over half of that is housing because we live in one of the most expensive cities in the US–ouch! There are benefits, of course, from cheap date nights — this was our second date — and free museums (and the zoo!) to awesome, complimentary workouts around town, but we know that our annual spending could go way down in nearly any other metropolitan area in the country.

So we definitely plan on moving whenever we retire and no longer need to be close to certain jobs. A new monthly rent or mortgage cost of around $1,000 would reduce our annual expenses to about $30,000. That number aligns with the national mortgage payment average of $1,061 per month; as radical savers, we will aim for a modest home that’s a great value, so our monthly housing cost will probably be even smaller. But we’ll go with the figure of $1,000 because we like safe bets (always better to overestimate spending, rather than savings!). And that’s without considering that other things, like food and transportation, would likely be cheaper elsewhere, too.

Other than on housing, an annual budget of $30,000 assumes a continuation of our current choices like forgoing a car (and therefore car insurance, repairs, etc.) and cable (we watch a few shows online; more on cutting the cable cord in a future post). We might have to get a car at some point, but being able to live comfortably without one will be an important factor in our choosing where to live. That’s actually what financial independence is all about–having the freedom to choose a place where you can have whatever lifestyle you want!

So how much money do we need to save to cover the $30,000/year expenses we anticipate having once we retire? Check out “defining financial independence, part II,” next week! Thereafter, “defining financial independence, part III” will detail how we identified our retirement goal date. We’re so excited to work toward that day!

When a Deal is Not a Deal

I love a good discount. Seeing a big red 50% off on your favorite brand (pro tip: I try not have favorite brands of anything — more on that later) can be exhilarating, even — okay, especially — when it’s something I wouldn’t normally buy.

But there’s some sneaky psychology at work here. I know for myself when I see a big discount, my brain immediately starts to look for needs that that purchase can fill.

REI is my personal kryptonite: I could totally use ice climbing shoes! I wonder what elk jerky tastes like? OMG TOE SOCKS! SHUT UP AND TAKE MY MONEY.

And Miss has an unhealthy obsession with Target’s one spot (basically their dollar store aisle). Our cup overfloweth with cutesy plastic plates. Seriously, we are in intervention territory:

Adorable.Miss brought a lot of cute plates into the relationship. That bumblebee?! Adorable!

But this is completely the wrong approach. Shopping smart means trying to find those things (and only those things!) that will fill the needs you already have.

As a compulsive coupon-chaser, it took me a long time to learn this, but it can be summed up in one sentence:

It’s not on sale if you weren’t already planning to buy it.

Paying full price for something you really want or need is much, much better than buying something you don’t at half off.

Here’s the rule that I use:

If you found it, it’s a good deal. If it found you, it’s not.


DIY: Almond Milk

We drink a lot of almond milk.

Miss gradually switched from soy to almond milk a few years ago, and Mister fell in love with the stuff when Miss used to stash groceries at his old apartment.

We realized that between using several cups in our morning smoothies (more on our cheap, healthy smoothies in a future post), having a glass with spicy dinners, and occasionally using it to bake, we were going through several cartons of almond milk every week! Even with Trader Joe’s $2.99 half-gallons, that totaled around $10/week or $500/year.

Miss wondered how much time and effort it would take to cut down that cost, and began looking at almond milk recipes. We played with a few from various blogs and eventually settled on a variation of this recipe. Our even simpler version contains no sweetener, just:

  • One cup of almonds (preferably soaked)
  • A full blender of water
  • One teaspoon of vanilla
  • …and that’s it!

IMG_0318A full carton of the homemade stuff

We blend everything together for a few minutes and then strain it our nut milk bag (for a one-time hit of $8.99). You can re-use the almond grounds for one more blend, so just re-fill the blender, add another teaspoon of vanilla, and blend again! We repeat this with two or three cups of almonds until we have enough almond milk to make it through the week.

IMAG0546TJ’s has the cheapest almonds we’ve seen outside of bulk stores

With a 16 oz. bag of almonds from Trader Joe’s or Whole Foods (for $6.49 and $6.59, respectively), one gallon’s worth is about half the price of the same store-bought amount. That’s $250 in our pockets over the year, for 10 minutes of labor once a week. Plus, the homemade stuff avoids any questionable chemicals used to preserve store-bought almond milk. Win, win!

As for what to do with all the almond meal produced along the way? We’ve been experimenting! More on our failures (almond bread) and successes (protein bars) in a future post. 🙂

IMAG0548Yep, that’s a lot of almond meal


Life is Short; Don’t Buy the Shoes!

We often use the excuse of time to justify short-sighted spending. After all, what’s the point of having money or accolades in old age if you haven’t had a hell of a ride getting there? So we hear adages like, “life is short. buy the shoes!”

My mother raised me to look for a deal, so I always bought clothes and shoes on sale, even at stores like Target and Express (I’ve never been one for designer labels). But I bought  anything that I liked and expected to use eventually, even if it was an eighth sweater or sixth pair of jeans. My valuations gradually changed in my early 20’s as I started earning my own money and began asking myself, for instance, “will this dress bring me $30 of joy?” If not, I didn’t buy it.

Recently, my definition of a smart buy has shrunk again because I believe that the exhilaration of financial freedom will beat the pleasure of wearing hot new shoes in the mean time, even if they are just $15 a pop. After all, I barely wear the many heels I have now, and they’re plenty cute! As Mister often says about things on deep discount, “is it really a deal if you weren’t going to buy it anyway?”

IMG_0308Miss’s many heels

Like anything, it’s about balance. I’ll certainly use the philosophy of living well to justify spending money on an experience (like occasional mud runs with Mister or a pricey plane ticket to attend a good friend’s wedding). Those are rare or once-in-a-lifetime events, and special occasions with people I love are always worth more than their price tags.

And Mister and I still buy household items that make our lives more convenient (though we’re working on making our own toothpaste and cleaning products; more on those in future posts).

But I made a big plunge for 2015: I decided in late 2014 not to buy any clothes or shoes for an entire year. 32 days into the new year, I still feel hesitant and nervous about my decision, as though it’s extreme and impossible. It is extreme, but that’s why I selected this challenge–to prove to myself that I have plenty, and to re-set my mentality of what is “wanted” versus “necessary.”

addtext_com_MTIyODUwMjg0MTk1Yep, Miss has a lot of clothes

My favorite jeans might rip, but I have second- and third-favorite jeans that need wearing, too. If my standard work flats wear out, I also have back-ups for those. I want to use this year to get value out of the thousands of dollars I’ve already spent on a closet-full of clothes accumulated over the years. I’m still nervous, and I’m sure I’ll be excited to replace some items in early 2016, but I’m also really excited to prove to myself that I can do this. Wish me luck!

Why “Retire”?

If you mention the prospect of financial independence to friends and family, this is a question you will hear a lot. Most people have a singular understanding of “retirement:” relaxing in old age with activities like lying on a beach chair and drinking margaritas, after decades of 9-5 work.

old-450742_640The typical idea of retirement

Let’s dispel this myth right now:

It’s not about being lazy.

Lazy (and mind-numbing!) is spending hours on Facebook and Reddit because you finished your work by noon but aren’t allowed to go home until five. Lazy is watching TV all evening to “unwind” and eating frozen pizza because you’re too exhausted at the end of the day to go do something fun or cook for yourself.

It’s about doing what makes you happy.

It’s about spending time with the people you love. It’s about pursuing your interests and your passions. So we define retirement as not needing any particular job, or being tethered to 9-5 employment.

For Mister, retirement will mean taking Miss to the park for an impromptu picnic on a Wednesday because the weather is just so perfect; laying in the grass and watching the dogs play; learning German; reading; writing; perfecting our pancake recipe; contributing to open source software projects; playing the ukulele; volunteering; and doing pull-ups off a tree branch.

IMG_0317Mister grooving on his ukulele

For Miss, retirement will mean waking up early excited for the day, but not because an alarm signals the need to get to the office; exercising midday when the weather is great and the sun is up; researching global human rights issues for whatever freelance projects strike her fancy; and reading whenever a book is too good to put down.

IMG_0314The books Miss currently has underway

So don’t call it retirement. Call it freedom. Call it a chance to inject whatever meaning you choose into your life. Instead of waiting 40 years for the chance to finally stop working, we should be actively pursuing a lifestyle that allows us to finally start working on the things that matter to us.