In 2007, I graduated university with a degree in computer engineering, took a job with a fortune 500 company, and bought a brand new house. For the first time in my entire life, I felt like an adult. With this new paycheck coming in every two weeks, I could have anything I wanted. And as luck would have it – I had expensive taste!
I decided my first purchase would be a $3K HDTV. I added a PlayStation 3 and assorted accessories to the shopping cart, and raced back to my new house to get everything set up.
That night, as I sat on the floor in that empty house, watching the Simpsons on my new TV, my girlfriend (now wife) convinced me that something was fundamentally wrong.
I glanced over to her. She looked beautiful in the glow of the giant TV.
“Yes my darling?”
“We have no furniture.”
She was right. In all of the excitement of my spending spree, I somehow forgot furniture! No problem. I reached for the credit card, and a quick $10K later, our entire house was filled with high-end furniture. Fancy leather sofas, king size beds, the works. It felt great- for the past five years I had been a broke college kid, but now, I was a respectable grown-up.
Over the years, my spending habit got worse. Two brand new cars at $25K a piece? That seemed normal. A $40K wedding and a fancy Bahamian honeymoon? Sure that was expensive but we could afford it. $13K in restaurants spending in a single year? I liked to think of us as food connoisseurs. Besides, why shouldn’t I treat myself? I was putting a full 6% into my 401K every year to get my employer match. So I continued on my adventures in spending.
Before I knew it, my life had become quite full. Food and water delivery services, monthly massages at the spa, fancy dry cleaning bills, season tickets to various entertainment venues, expensive martial arts hobbies. You name it, I had it. But as my life, and subsequently my bank statements filled up, I wasn’t getting any happier. It was actually the opposite- I was more stressed than ever before. But I just couldn’t put my finger on the problem.
By 2013, I decided changing employers would shake things up and give me a much-needed morale boost, so I jumped to another big firm in the area. The pay bump and new faces helped a bit, but within a few months, I became unhappy once again. What was wrong? I spent over $100K on toys the previous year. Why weren't Amazon purchases fixing my problem?
It was around this time that a friend pointed me to a blog called Mr. Money Mustache. He thought it might help give me some perspective on money, so I glanced over a few posts. “What an interesting website” I remember thinking at the time, unaware that my life was about to change very, very quickly.
A few weeks later, my wife was in a terrible car accident. The Honda was totaled, but thankfully she walked away with only minor injuries. Soon after, the insurance company sent us a check for $10K- the depreciated value of the $25K car she purchased new just a few years earlier.
That night, as we sat on the fancy leather sofa in our filled-to-the-brim-with-stuff house, my wife once again convinced me that something was fundamentally wrong.
“Yes my darling?”
“We need to stop spending our money.”
Once again, she was right. We binged through a dozen MMM articles together that night. This strange concept – that someone could save enough money to stop working in less than ten years – it consumed me. I worked out the math for myself. I checked the numbers twice, looking for a mistake. It was real – Financial Independence was a way to add control and meaning back to our lives. We took the $10K insurance check and put it into Vanguard instead of buying a second car. It was a new financial beginning for us.
The results were dramatic. By 2015 we cut our expenses by two thirds, allowing us to max out our 401(K)s and pay down our mortgage. In the years that followed we saved over $300K, and are now on track to reach Financial Independence sometime in the next two years. What does that mean? It means my wife and I can actually stop working by age 35! It means we can live our lives the way we want, on our own schedules, without the need to worry about money.
What was our spending breakdown before and after the 180? How were we able to lower our spending so significantly? What if you don't have an engineering salary? All this and more … on the next Financial 180.