My journey of becoming financial independence by 35 years old
Most of us, as soon as we graduated from college got a job. We’d almost immediately do these things that causes the inflation the monthly expense tremendously without us realizing it.
1. Get a new and impressive cellphone – iPhone, or Samsung Galaxy, Nexus or what ever the flavor has you fancied for a long time.
2. Get rid of the old beat up college car and signed a 5-years car loan
3. Get a bigger flat, being on your own, having your own space
4. Treat yourself to really nice restaurant, clothes, and vacation when the money has barely pouring in. On that note, starting new job, you’d eat out more with people at work.
5. Get engage and paid for elaborate wedding party as soon as you save enough money for the fancy 100 guest at a country club, etc. 😛
Point #1 – Cellphone, it will always change. My guess is you’ve already gotten what is working just fine. Why change? Have it until it break. If you do feel like you’re dying to get the next best thing, list it on craigslist to get most of it back. But the item that you’ve gotten for $1200 is probably worth $200 – $350 on craigslist or ebay. Ouchy! High price phone go with high price plan.
What I still do is I’m still on Pay-As-You-Go plan, pay by the minutes for emergency situations. I pay $100/yr and for the money that I don’t use, I add $10/year, to keep my golden status. Then I have magic-jack, which is now has a app that I can make call from my smart phone from 2011 (still work just fine). I can make phone call from my cell phone as long as there is wireless. Compare with $50-$100/mo or $600-$1200/year on just cellphone service plan?!!! OR $30/year from cell phone and magic jack!! Oh yeah!!
Point #2 – Yes, the car is old and beat up, but it has been working. And No, the cost of fixing it is not more than what you’ve paid for a brand new car. Says your engine has a leak. Cost of repair is $200-$400 if you can find an independence mechanic to fix it. So that’s only cost 1 car payment. New break pads only cost $100-$200. Timing belt $100-$200. and non of these things have to be done immediately, fix as it come. And the whole year worth of car payments is still more than what you’d paid for the repair for the old car. Trust me on this, I driven my Honda Civic 1995 to 2012 for 315,000 miles. I bought it in 2003 when it was 150,000 miles for $2000.
If you really don’t want to deal with the fixing. Buy a new used car. Because as soon as you drive the brand new car out of the dealership parking lot. You’ve just thrown $3000 out the window.
Point #3 – You lived with roommate for 4 years before, why not tolerate it for another 2-4 years. Or share with your girlfriend/boyfriend, if roommate doesn’t work out, I’m sure you can still work out a 6mo – 1 year contract. Still save you at least $500/mon on rent and utilities. That’s $6000/year in saving.
Point #4 – Eating out is a big thing. It costs upward $14 – $50/meal, when you can still have steak for dinner for $15 per pound, that’s dinner for 2. A little bit of asparagus and potato on the side (you can grill these on the same pan with the steak, no problem), your meal looks like a $50 steak dinner. If you go to fancy restaurant, their menus are very simple. Their dishes are also very simple, and they charge everything a la cart. You can change it up a bit with Salmon, Scalop, Shimp, Lobster. All premium food but very affordable.
$50/dinner/week x 52 weeks = $2,600/year
$10/lunch/day/5days/52 weeks = $2600/year **sometimes you eat left over from lunch??!!
$10/dinner/day/7 days/52 weeks = $3,640/year
Anyhow the cost of eating out is $8,840/year. Ouchy.
If you would settle for $50-$100/week on grocery. I guarantee you get the best steak, fruits and vegetables you want. And more importantly, you take care of your body with less fattening food from the restaurants
Point #5 – Yeah, throughout the year, I’ve seen people with upward of $150K in debt and when they first graduated, they would make minimum payment, but still save $25-$50K for the wedding. You get married so you have a companion for the rest of your life, your life partner in everything. Nobody like to sign up for $150K debt that only paying at the minimum. Years later, the size of the wedding, nobody remember, but what you remember is from the photos, why not paying a guy go to the beach or a nice botanical garden and have an elaborate photo taken day? Instead of $15K just for the country club rental?
If you tally these numbers up, you can easily save $25k on your first year out. Within 4 years, you will get $100k just from pure savings alone from the lifestyle inflation. That’s what I did.