A Software Engineer's Path to Financial Independence and Early Retirement (FIRE)

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My Thoughts on the Uber Frugal Month Challenge – January 2020

My Thoughts on the Uber Frugal Month Challenge

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Every January and July, the Frugalwoods organize the Uber Frugal Month Challenge. During this month, all participants are encouraged to learn about their spending habits and develop the skills to reduce all types of expenses. I went through this learning experience and found it really useful, so I strongly recommend it to everybody.

In this post I present my thoughts for each day of the Uber Frugal Month Challenge. I want to clarify that both the daily topics (as shown in the title of each section below), as well as the “Today’s Action” paragraph are copied from the Uber Frugal Month Challenge. My thoughts are shown in the remaining part of each section.

Day 1: Welcome to the first day of the Uber Frugal Month Challenge!

Today’s action: Write down why you’re participating in the Uber Frugal Month as well as your answers to the questions in this post.

My thoughts: I had already documented a very similar set of questions in my first blog post, titled “Your Plan to Achieve Financial Independence“, so I will reuse some of those answers while answer this day’s questions.

Step 1: Establish your goals.

  1. My goal is to have the option to stop work anytime I want. I actually love my work right now, but I can’t predict if this will be true N years in the future as well. So, I am more interested in Financial Independence (FI) than to Retire Early (RE).
  2. In order to get an idea about the power that FI has, you can read the real experiences from hundreds of people, who already had F-you Money, and were facing issues at work. There is a great (very long) forum thread at the Mr Money Mustache forum.
  3. My goal is to be FI within the next 10 years, i.e. within my late 40s.
  4. I don’t currently think that I’d change something if I reached FI. At this point, I just want to have the option to be free from work. I haven’t decided what I’d do with this option yet.
    • I enjoy reading about the experiences from other people, who already reached FIRE. The Mad Fientist has blogged about his during the 1st2nd and 3rd anniversary after after reaching FIRE.

Steps 2-11: Review, categorize, reduce expenses

I did a very lengthy analysis of my 2019 expenses, where I categorized them and provided multiple ways to reduce them. This can be found in my post “Our 2019 Expenses and Tips for Cost Cutting“.

You can always find our latest monthly and annual expenses reports here.

Day 2: Where are you going?

Today’s action: Write your long-term goal on a piece of paper and put it in your wallet.

My thoughts: As I wrote in Day 1, my long-term goal is to be Financially Independent (FI) within the next 10 years. The sooner the better 🙂

Day 3: My foolproof way to fight impulse spending

Today’s action: Enact the 72 hour waiting period starting today and continuing for the rest of the month

My thoughts: As is shown in our monthly and annual expense reports, most of our expenses are fixed (e.g. mortgage, daycare, groceries, etc). We already prioritize our purchases, so impulse spending is not a big problem for us.

Day 4: Would you rather watch TV or have $91K?

Today’s action: Use this calculator to determine how much money you’d have in the future if you eliminated a few recurring expenses and instead invested them.

My thoughts: It is indeed amazing to understand the power of compounding. It’s no wonder that Einstein said that “Compound interest is the 8th wonder of the world. He who understands it, earns it; he who doesn’t, pays it.”. If you want to understand how financial calculators work and review their underlying assumptions, you can also check my post “How to Create your Own Financial Calculator“.

Day 5: GROCERIES! OMG groceries.

Today’s action: Make this week’s grocery list with these parameters in mind.

My thoughts: Groceries are a very high expense for your family, by choice. We eat healthy, organic food and we cook daily at home. As a result, our grocery bill is over $1,000 every month 🙁 At the same time, we’re doing our best to keep it as low as possible. I have also writtem additional tips about how to reduce high grocery bills.

Here are my suggestions:

  1. Compare prices: Prefer Costco, Trader Joe’s, Aldi and other lower cost grocery stores.
  2. Create a meal plan: Every Friday at the dinner table we discuss what we’re going to eat next week (breakfast, snacks, lunch and dinner). Then we write down an explicit shopping list for all the ingredients that we need (as well as their quantities). We create a shared list using a cell phone app. For each line item we write down the store that we’ll buy it from (based on previous experience regarding their prices). Currently, we are quite knowledgeable about the relative prices, however in the beginning we spent quite some time to compare store prices (as I mentioned in suggestion #1) and finalize where we’ll buy each item from.
  3. Only shop with a shopping list. Also, only shop once a week: Once a week we do our weekly food planning and create a shopping list. This way we are targeted when we go to the store. Before we started using a shopping list, we did lots of impulse buying and had to throw away lots of items when they went bad. We also went to the store every couple of days, because were always missing items when we were trying to cook for the next day.
  4. Buy items when they are in discount: Use the retail store’s mobile application to find out which items are in discount and which ones will be in discount the following week(s). When an item is in discount, buy it in bulk. This applies especially to items with long shelf life, such as dry grains, dry legumes, flour, nuts, seeds, etc.
  5. Buy items from the bulk section: This is almost always a cheaper option than buying packaged items. However, you should do your own research, because the corresponding packaged items might be cheaper due to discounts.
  6. Buy a mini freezer to store items: We bought an Insignia 10.2 cu ft mini freezer from Best Buy and it has been very useful, as we use it to store the items that we buy in bulk, especially meat, fish, seafood, frozen vegetables and frozen fruit (see suggestion #4 above)
  7. Local farms: Search your area for local farms that might sell produce directly to consumers, in order to avoid the additional markup from retailers/wholesalers. For example, during the last few months we reduced our weekly expenses by 40%, because we were buying fresh organic in-season produce from a local farm.
  8. Amazon Rewards Visa Signature credit card: Receive 5% cash back at Amazon and Whole Foods, after you become an Amazon Prime member (which has an annual fee of $99). If you are not an Amazon Prime member, then you will receive 3% cash back. So if you spend more than $4,950 in these two stores, then it’s worth to become a Prime Member.
  9. Costco order history report: You can talk to Costco customer service (e.g. via the costco.com website) and ask for a full history of all your purchases. They will email you a pdf with the date, item number, product description, department number, and cost. This is a great way to understand where you are spending your money at Costco (and price compare with other places as well)
  10. Kroger Order History: If you have a Kroger Shopper’s Card (e.g. from Fred Meyer), then you can login to the website and see the list of purchased items. Unfortunately, there is no way to download this list, so there is a lot of manual work to analyze your purchase habits at Kroger.

Day 6: Where’s your money at?

Today’s action: Sign-up for Personal Capital (which is free) and run through the other steps listed here.

My thoughts: I have written a very detailed post about how to invest successfully at “8 Critical Decisions for a Successful Investing Strategy“. More specifically, that post is a guide about how to answer the following 8 questions:

  1. Investment order: How do I prioritize, which account to contribute my money to (e.g. 401k, pay credit cards, taxable accounts, etc)?
  2. Asset selection: Should I buy stocks, bonds, mutual funds, index funds, cryptocurrency, derivatives, etc?
  3. Asset allocation: What % of my funds should I put in each asset category?
  4. Asset rebalancing: What do I do when my current asset allocation is different than my target one due to stock/bond market fluctuations?
  5. Fund selection: What are the specific funds that I should purchase?
  6. Asset location: How to split my money between each investment account?
  7. Market timing: The current market is at an all-time high/low. Should I invest all my money at once? What if the stock market decreases and I lose my money?
  8. Withdrawal order at retirement: From which account do I withdraw my funds at retirement?

Day 7: How much is your cell phone bill?

Today’s action: Switch to an MVNO for your cell phone service (if you’re not already using a low-cost provider or a low-cost plan).

My thoughts: MVNOs are an amazing option. Currently we have 2 lines with Unlimited Calling/Data/SMS at T-Mobile and we only pay $72/month (which could go down to $50-55/month, if we both use less than 2GB data). We do enjoy the Unlimited options, so even though we could pay slightly less by switching to an MVNO, we prefer to stay at T-Mobile due to the low cost. I have previously written about my tips regarding how to lower your cell phone bill.

Some suggestions:

  1. Skip Verizon & AT&T. Check T-Mobile: I used to be an AT&T customer and paying $200/month. I switched to T-mobile and paying less than $80. T-Mobile is having great deals to acquire more customers.
  2. Look at Mobile Virtual Network Operators (MVNOs): MVNOs lease the networks from the Big3 Operators (Verizon, AT&T, T-Mobile) and provide much cheaper plans for the same quality. Mint has an option for $15/line/month. Ting rates can go even lower, if you are using little data and don’t talk a lot on the phone.
  3. Check your minute/text/data usage and find the best plan that works for you: Yes, we are still using unlimited options. However, this might not be the best option for you. For example, if you only talk on the phone for 5 minutes on workdays and use less than 100MB of data, then why paid for unlimited?

Day 8: Is your partner on board?

Today’s action: Talk about money with your partner–not just today–on a regular basis. Establish a framework for these conversations: when and how do you both work best? I know couples who communicate about their finances via email and others who sit down with a glass of wine after the kids are in bed. Figure out what works for your personalities and then stick with it.

My thoughts: I am REALLY glad that my wife is finally on board 🙂 I believe that the turning point for this decision was when we both watched the “Playing with FIRE” documentary, which I strongly recommend. This documentary shows how an actual couple is currently going through the initial decisions to reach FIRE. This connection with real people (as opposed to actors) was very helpful to help bring her on board.

Day 9: What’s your credit card strategy?

Today’s action: examine your credit card usage: 1) Are you paying your credit card bills in full every month? 2) Are you earning rewards that are useful to you?

My thoughts: I believe that it’s really important to customize your credit card rewards strategy based on 1) your goal, e.g. cash back, travel rewards, etc and 2) your spending. For example, if you want to maximize cash back and you buy a lot from Amazon, then you should get a different credit cards than if you travel a lot and want to maximize travel rewards for Marriot hotels.

I have written an extensive post about this topic at “Our Credit Card Rewards Strategy“.

Day 10: Frugality gives you options

Today’s action: Make a list of all the things you could do if you were financially independent.

My thoughts: Here are the top 5 items where I want to spend more time with (without any particular priority order):

  1. This blog: I want to grow the user base and connect with more readers
  2. The gym: Being healthy should be top priority for everybody
  3. My family: Find more activities to spend time with my children
  4. Learning: I am fascinated by the capabilities of Deep Learning and would love to become more capable in developing AI/ML models
  5. Traveling: I would love to explore new countries and cities

Day 11: How do you grocery shop?

Today’s action: Go through your typical grocery routine (where you shop and what you buy) and identify opportunities to save.

My thoughts: I covered this topic in Day 5.

Day 12: Banish excuses!!

Today’s action: Examine the underlying reasons for any knee-jerk excuses you’re experiencing during this Challenge.

My thoughts: Our family is high income, high expenses. I believe, though, that the majority of our expenses (e.g. mortgage, daycare, groceries, utilities, etc) are a result of a lifestyle that we don’t want to sacrifice. Indeed I’ve seen other FIRE bloggers, who have a budget for groceries that is 20% or less than ours, but we have already made our choices. My opinion is that as long as each person is aware of the consequences of each action and have made an informed decision to accept them, then I don’t consider them as an excuse that needs to be banished.

Day 13: You look good (and spending money won’t change that)!

Today’s action: Evaluate any spending that’s related to your appearance (clothing, makeup, haircuts, manicures, etc) and decide if there are less expensive DIY alternatives, or, if you could go without any of these things.

My thoughts: Here are some actions that we have taken in this area to reduce our costs:

  • For me and my son:
    • DIY haircut at home: We bought the Wahl Deluxe Chrome Pro haircut kit, and we cut out hair at home. For the price of 1 haircut, we have eliminated the reasons to pay for haircuts again!
  • For my wife:
    • No makeup: I asked my wife when was the last time that she bought makeup and she told me that it’s been so long that she can’t remember 🙂
    • Cheaper manicures and haircuts: Just by looking around my wife has found some places that cost 50% or less than the price that she used to pay in the past, without any difference in quality. Typically in the higher end places you play an additional amount for the environment and not for the service itself.

Day 14: How much money is your money earning?

Today’s action: Open a high-interest savings account (if you don’t already have one). It’s one of the easiest, no-brainer ways to earn extra cash.

My thoughts: As I wrote in the post “8 Critical Decisions for a Successful Investment Strategy“, I truly agree with the fact that your cash should be saved in a high-interest savings account. I recommend one of the following:

  1. Alliant Credit Union
  2. Ally
  3. Capital One

I also wanted to add, though, that my opinion is to keep only a small emergency fund in cash during the accumulation phase. Most of your money should be invested in index funds and bond funds. In our case, we typically don’t keep more than $3k in a savings account at any given point in time, so the actual interest that we earn from the savings account is trivial.

Day 15: Treat Yo’self!!!

Today’s action: Squelch the urge to treat yourself by reminding yourself of what you really want out of life (hint: it’s probably not a latte).

My thoughts: Great advice! Easier said than done, though 🙂

Apart from the monetary decision (e.g. why would I pay $5 for a latte), one additional thing that has helped me stopped buying treats is to think of the health costs and especially the calories. My thought process is “why would I buy this treat and gain 300 calories, if I need to run 30 minutes in the treadmill to burn them?”.

Day 16: Plan ahead for frugality wins!

Today’s action: Think through a typical week and identify every opportunity where you can plan ahead and save money.

My thoughts: Some areas where we do plan ahead:

  1. Grocery shopping: Every weekend we write down a list of the foods that we’ll cook during the week. My wife has done a lot of price comparisons, so she knows which one of the nearby grocery stores has the lowest price for each ingredient.
  2. Travel: We use Google Flights and Airbnb to plan our trips many months before the trip itself
  3. Black Friday and other discount shopping days: We tend to buy our expensive appliances during Black Friday or some other day with massive discounts. Some examples of items that we bought in massive discount include TV, appliances, furniture, etc.

Day 17: Time vs. Money… or can you have both?!?

Today’s action: Identify areas in your life where you can save both time and money. Acknowledge and embrace your imperfections. My favorite way to do this is by making a list of all the things in my life that aren’t perfect but that make me happy anyway.

My thoughts: Here is what we’ve done to save both time and money:

  1. DIY haircut at home: As I wrote in Day 13, we have bought the Wahl Deluxe Chrome Pro haircut kit, and we cut out hair at home. For the price of 1 haircut, we have eliminated the reasons to pay for haircuts again!
  2. Glasses from Zenni Optical: Instead of visiting all the nearby opticians and buying glasses that cost $600+, we now browse the vast supply of options at Zenni Optical and we pay less than $100 for a pair of glasses (most of which is covered by insurance anyway).
  3. Listening to audiobooks: Instead of buying books, we’ve switched to listening to audiobooks from Overdrive for free.
  4. Amazon: We do most of our shopping at Amazon. The “Everything Store” saves us time and money

Day 18: Eat ALL The Things! Better have some emergency frozen food!!

Today’s action: Start combing through your pantry, freezer, and fridge and make plans for all the foodstuffs you find. Plot out what you want to buy or make for your emergency frozen meal stash and write it on your grocery list.

My thoughts: A few months ago we bought a 10.2 cu ft chest freezer from Insignia. We filled it with frozen cooked food and we defrost the food anytime that we don’t have time to cook.

Day 19: How to live a luxuriously frugal life

Today’s action: Examine areas in your life where frugality makes you feel deprived. Brainstorm ways to optimize or make substitutions for these things.

My thoughts: Mrs Frugalwoods provides great examples to save money, such as volunteering to a yoga studio and attend classes for free. This is a great opportunity to save money, however due to our busy schedules, time is huge constraint for us. We need to dive deeper into this idea, though, as the potential is very high.

Day 20: Fighting Lifestyle Inflation From The Inside Out

Today’s action: Make a list of everything you’re thankful for.

My thoughts: Here is my list of top 5 things that I’m thankful for:

  1. My wife and children
  2. My parents
  3. My health
  4. My education
  5. My job

Day 21: But it’s only $5!

Today’s action: Write down everything you’re tempted to buy because it’s only $…… and add it all up.

My thoughts: Top 7 things that we are typically tempted to buy:

  1. Coffee from coffee shops
  2. Sodas at restaurants during meal
  3. Desserts after the meal in a restaurant
  4. Pop corn and sodas at movie theaters
  5. Lunch instead of getting lunchbox from home
  6. Snacks instead of preparing homemade snacks for the kids
  7. Gas from the closest gas station, instead of going to the cheapest one

Day 22: Empower yourself

Today’s action: Do something yourself that in the past you’ve paid someone to do (hint: you don’t have to start with renovating your kitchen, you could start small with making your own coffee instead of buying it this morning).

My thoughts: YouTube videos are an amazing way to learn how to do things quickly. Here are some actual examples of things that I did with my wife after watching YouTube videos:

  1. Fixed the garbage disposal
  2. Fixed a leak in the toilet
  3. Tightened a loose handle for the water faucet in the kitchen
  4. Seeded the lawn
  5. Fixed the glass door in the bathroom
  6. Filled in the holes in the drywall
  7. Painted the wall in the children’s room
  8. Installed wallpaper in the children’s room

Day 23: Impress yourself

Today’s action: Take note of anything you’re doing to impress other people, but that you don’t derive enjoyment from. Then consider what would happen if you stopped doing those things.

My thoughts: Great advice! Lots of things to think about in this area. I highly recommend the related book “The Subtle Art of Not Giving a F*ck: A Counterintuitive Approach to Living a Good Life” by Mark Manson.

Day 24: How DIY Projects Improved My Marriage

Today’s action: Sit down with your partner and discuss what you could insource, both to save money and also to deepen your relationship. If you don’t have a partner, make arrangements with a friend to start up a frugal barter and trade.

My thoughts: Most of the items that I wrote about in Day 22 were DIY projects that we implemented with my wife.

Day 25: Why do I spend money?

Today’s action: Write down all the reasons why you spend money and reflect on whether or not they’re valid. For the not-so-valid reasons, brainstorm other activities you could do instead of shopping, such as: volunteering, taking a walk, cooking a meal for friends, starting a new hobby, joining a choir, etc.

My thoughts: I document this in my monthly and annual expense reports.

Day 26: Become a more interesting person… through frugality!

Today’s action: Identify a secondary benefit–beyond saving money–that you’ve experienced through your frugality.

My thoughts: Since I started this journey to FIRE, I learned a lot about investments, taxes, retirement, etc. It allowed me to avoid getting stressed about money and to start this blog, where I can connect with other like-minded people. Hopefully, by sharing this knowledge, I’ll be able to help more people reach FIRE earlier.

In addition, since I’ve started this blog, I’ve been learning about website building, WordPress, website performance optimization, SEO, growing my audience, etc. I also (finally) created a Twitter account and Facebook page and started connecting with so many other FIRE bloggers. And there is so much more to learn!

Day 27: Frugality and friendships: totally compatible!

Today’s action: Evaluate how you spend time with your friends and make a list of frugal substitutes for anything that’s pricey.

My thoughts: There are 3 main things that we do with our friends:

How we spend time with friendsFrugal substitute
Watch a movie at the cinemaWatch a movie at home
Go for food in a restaurantInvite friends for food at home
Take children to a playgroundFind a free playground or have children play at home

Day 28: When less is more

Today’s action: Ponder this: When are you most content? Can you be content with fewer things? With spending less money?

My thoughts: I am most content, when:

  1. I’m spending productive time with my family
  2. I’m learning something new
  3. I’m being recognized for my contributions

None of these is linked with spending money or buying things.

Day 29: You are destined for more than buying stuff

Today’s action: Write down five words that define you and what’s most important to you. Are any of those words related to your material possessions?

My thoughts: My five words are:

  1. Family
  2. Fun
  3. Learning
  4. Recognition
  5. Status

Day 30: There’s no perfect time to start being frugal

Today’s action: Reflect on why you decided to take this Challenge and how you overcame excuses and obstacles this month.

My thoughts: I started this challenge to learn more ideas about how to become more frugal. I focused more on the daily lessons and actions than on directly minimizing my spending. However, the net result is that this January our spending was 17% lower than last January ($7.5k vs $9k), as is shown in the “January 2020 Expense Report“. One reason that this amount was not even lower is because we have a high amount of fixed expenses (around 80% of the total expenses).

Day 31: Frugality is not deferred spending

Today’s action: Reflect on what this month was like for you. What was difficult? What surprised you? Could you live like this for the long-term?

My thoughts: Throughout this journey I did a lot of deep thinking that increased my self-awareness. There were lots of cost-cutting ideas that I had already thought about, however I also learned a lot. One realization that I had is that there is no silver bullet. Instead, frugality is a mindset change. The only way to drastically reduce expenses is to always be focused on the long-term goal, which is FIRE. Having a methodology to reduce expenses is much more important than to reduce expenses for a short period of time. In our case, I think that we are getting there. We will never be really really frugal, but we can definitely become much better.

In summary, I strongly recommend the Uber Frugal Month Challenge to everybody!

About Me

I am an engineer with 15+ years in the tech industry, including roles at Google, Amazon, and Microsoft. I've been a Software Engineer, Product Manager, and Technical Program Manager. I also have an MBA from Kellogg School of Management with Majors in Finance and Marketing.

What drives me? A passion for empowering engineers to achieve Financial Independence and Retire Early (FIRE). I reached FIRE, when I turned 40 years old. Whether it's through personal finance strategies or career insights, I'm here to guide you on this path. Have questions or need advice? Feel free to reach out!

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