We entered this journey already on it.
With the arrival of our first son, I left the work force. We planned for it only in that we decided it would be great for a parent to stay home, but we did not prepare financially. One salary in Seattle and another kid later, I re-entered the workforce with $20k in debt. That meant we lived beyond our means by $5k/year for four years. Which – probably a shocking thing for the FI community to hear – isn’t bad considering where we were living and not being of the FI-mindset. And we were not depriving ourselves. But we also lived in a very walkable neighborhood – it wasn’t unusual to not use the car all week – and didn’t pay for daily childcare.
We knew exactly what we were doing and we took (baby) steps to minimize that:
Cut magazine subscriptions
Reduced cell phone and internet bills
Stopped dry cleaning
Ate out less
But we also did a lot of things on the opposite end of that spectrum:
We vacationed. A lot. Mostly weekend warrior trips around the PacNW, but also CA, Whistler, HI and East Coast trips. Miles/points paid for some at first, but certainly not all.
We went out. A lot. We lived in an incredible neighborhood with great restaurants, breweries, bars and live music. We couldn’t resist.
We paid a monthly fee for a babysitting service. Then paid them by the hour when we used them!
I could go on with both fronts. This was pre-FI and I don’t regret it, but it’s funny to look back and try to see the logic in these decisions.
So when I say we were already on the journey, we had already trimmed a lot of the unnecessary monthly bills about 10 years ago. It was the FI community that gave us the nudge to take savings a lot more seriously and be a lot more budget-minded. We’re almost 10 months in and we’ve taken the basic steps:
already paid off one credit card and have a plan to pay off all debt
I thought a W4 adjustment would be a logical optimization because we had a large tax return and it would be great to have a bigger paycheck instead. But I can’t figure out what our ideal withholdings should be on our W4. Files jointly with two kids … he claims 1, I claim 2. I see conflicting information on the internet and I’m confused. At the same time, the IRS calculator is not available while they’re updating it for 2018 tax law changes.
Maybe understanding this will hit me on the head or maybe it’s no big deal. A large tax return isn’t the worst thing in the world. But until then, I’m just keeping on the road of spending less, saving more, and reducing debt.
We’re about 2 months into this journey to financial independence and we had an awesome month in June! We knocked out some serious budgeting, reduced bills where we could and made a serious debt reduction plan.
The fun stuff:
We’re tracking and budgeting with Every Dollar. I can’t say it’s any better than Mint because I haven’t used Mint as heavily. And now I’m too deep into it with Every Dollar to quit. From May to June we spent $7,000 less … WHAT? How is that possible? Home improvements in May: kitchen table, plumber, etc. We’ve only been in this old house a year, so home improvements are definitely a part of the budget for now. (OK. I spent too much on that table, but I love it and we’ll have it forever.) And we had to pay upfront for summer childcare for two kids – this means we won’t have childcare come out of our budget for 3 months. Despite those large expenses, we still came out of June having spent less on “stuff” and more on debt and savings.
Cutting R’s mobile phone data – using wireless where possible (home, office) and not letting the kids use it – cut the bill in half! From $104 to $49 per month! DING DING DING!
Credit card payments – the first one we’re paying off received weekly payments last month. Being our first full month, we weren’t sure what was going to shake out and where. Happily, we were able to make 3 extra payments! That debt pay off schedule is moving on up like … the Jeffersons. (I had to.)
Account consolidation: Definitely a work in progress. We transferred several 401k and IRA accounts from all over the place into Vanguard accounts. Phew. There were some seriously high expenses that I never knew to look for with other institutions.
With that … my fail. July has just begun and already I’m an FI failure! I spent way too much on a frame. That’s right. A frame. It’s a beautiful, old blueprint of our house and it was screaming to get out of the dusty tube and into a frame on the wall. And the architect was the great uncle of a good friend. That same friend who’s married to the person that introduced us. Pretty wild, right? But it’s really big, so … yeah, I’m justifying another big purchase. I promise I’ll be good for the rest of the month. Bring lunch every day, take the train vs drive and park. And perhaps less wine with dinner.