Time to open up the books on how much money I spent last month.
Managing expenses is absolutely critical to becoming financial independent at a young age.
In fact, I’d argue it’s much more important to be an excellent saver than an excellent investor in this regard.
And in order to save, you must limit expenses.
Making more money is great, but not locking down the appropriate lifestyle first by adopting a scarcity mindset will almost surely result in lifestyle inflation.
Someone earning $100,000 per year but spending $90,000 per year will probably never retire (and certainly not early), but someone earning $40,000 annually and spending just $20,000 of it per year will become financially independent in a reasonable amount of time (likely within a decade or so).
I consistently saved well over 50% of my net income in order to go from below broke in 2010 to financially independent in 2016. In fact, I was routinely hitting monthly savings marks above 70%.
And I was working a regular, middle-class job during much of that period.
Everything was hinged upon my ability to live below my means, enjoy most elements of frugality and minimalism, and totally believe in a future me who was already financially independent and taking advantage of that freedom.
While I no longer have to (or really even attempt to) maintain a high savings rate, keeping my expenses low is still vital to maintaining my financial freedom.
You can’t get to a point to where your passive income starts to cover expenses, then just ramp up spending. You have to more or less maintain the same lifestyle that got you there.
That all said, I could technically spend much more than I do.
Passive income covers my essential expenses.
I earn five-figure and growing dividend income from my FIRE Fund.
And I have passive online income, including royalties from my two best-selling books: The Dividend Mantra Way and 5 Steps To Retire In 5 Years (also available in paperback).
It’s a pretty wonderful life position to be in. I’m very fortunate. And very grateful.
All in, passive income is north of $1,400 per month – and growing.
But I also earn a rather significant amount of active income from my ongoing writing and coaching efforts.
As such, the early retirement math has been rendered moot for me (as it will be for almost anyone in FIRE).
However, I don’t ever want to regularly rely on that active income.
If I were to rely on it, I wouldn’t be financially independent any longer. In addition, relying on that income would likely negate a lot of the enjoyment I get out of writing, turning work into a job.
I may sometimes use some of that excess income for travel or other extraordinary personal spending, but this is a complementary and voluntary addition to my everyday life that’s supported by passive income.
That everyday life, by the way, is fun, free, and functional. There’s no sacrifice. Even though I don’t spend very much, I don’t ever wake up and feel like I’d be much happier if I suddenly spent a lot more money. That’s not how happiness works.
While my ability to live on relatively little and still feel happy has been built on an overall life philosophy, that ability has been further bolstered in a major way by relocating to Chiang Mai, Thailand indefinitely as a dividend expat. I’ve taken maximum advantage of geographic arbitrage.
Because the cost structure here is so much lower than what exists in the US, I don’t have to watch and stress over every penny in order to get my spending down to a level that’s roughly in line with my passive income.
If anything, I spend exactly zero effort in managing my expenses these days. The “effort” has been replaced by a structural realignment of expectations and beliefs, along with a major move abroad that takes advantage of geographic arbitrage.
With that introduction out of the way, let’s get into my real-life spending for February 2019…
| Rent & Utilities | $466 |
| Food | $400 |
| Health/Personal/Toiletries | $113 |
| Coffee Shops | $80 |
| Amusement | $65 |
| Transportation | $30 |
| Gym | $29 |
| Mobile Phone | $16 |
| Gifts | $11 |
| Total: | $1,207 |
To track and manage your expenses, I recommend Personal Capital and Mint.
That’s about as good as the spending gets for me these days. Almost came in below the $1,200 mark. Incredible. I don’t believe I’ve spent less than this while living abroad. In fact, this is one of the “cheapest” months I’ve ever had.
The currency exchange rate (dollar to baht) has worked against me over the last year or so. This just goes to show you how little the minutiae that people tend to concentrate on actually matters.
It was one of those months where there were no surprises. Everything just “clicked”. Plus, there were only 28 days, so the shortened month helps.
Still, serving up an expense report like this is really awesome. I mean, I’m not even putting in any effort here. I’m living the life I always dreamed of. This is simply what it costs. It’s way different than it was a few years back, when it took extreme effort on my part to spend this little. Even though I don’t genuinely desire much in life, accommodation alone can very expensive in the US.
February was no doubt aided by the mild weather here in Chiang Mai. I didn’t have to go too crazy with air conditioning in January. But the electric bill will start creeping up over the coming months.
In addition, I met up with quite a few readers over the course of February. Most elected to pay for lunch when we met, so that reduced my spending on the Food budget line a tad. I’m a cheap date, though, since I typically spend $1.50 or less on lunch. Maybe I should start meeting readers at expensive restaurants. Ha!
Looking forward, though, I already know March’s spending is going to be significantly higher than this.
We celebrated Oh’s birthday early in March. I gave her a neat gift that she was very overjoyed with. And we had an amazing sushi dinner together.
Also, I had to renew my driver’s license early in March, then have it forwarded to me. This goes against my plan to never renew my license. Unfortunately, I had zero choice about it. Even though I don’t drive, and even though I’ll probably never again use this license for anything, my credit card got flagged for fraud and requires a valid license to prove my identity.
Otherwise, everything is wonderful. I couldn’t be happier with my FIRE lifestyle over here in Thailand. Spending $1,200 on a dream life – for two people – is amazing. There’s not much else to say.
I hope all of you had a great February in terms of sticking to your budgets. It’s so important to manage those expenses, both before and after retirement.
Let’s continue to make the most of every dollar and every second!
I’ll quickly point out that there’s no visa expense in this report. I’m staying in Thailand on a one-year ED visa, which was settled earlier this year. As such, there are little ongoing costs to maintaining that. But I think you could go ahead and add $100 or so (based on the visa costs stretched out over a year) to the above expenses to get a full look at what life is costing me here.
And, of course, this factors out any outgoings that wouldn’t exist if I didn’t have an online business (business expenses, business taxes, philanthropy, student loans, etc.).
This level of spending on the essentials is a comfortable base for me. I suspect that I’ll be more or less in this range of spending most months, outside of occasional travel and the annual visa concerns. Of course, I could spend less (especially on housing), but I have no desire or need to. Likewise, it’s easy to spend quite a bit more, but I equally lack that desire and need.
How was your spending for the past month? Did you meet your expectations? Why or why not?
Thanks for reading.
Image courtesy of: imgflip and Warner Bros. Pictures.
P.S. If you’re interested in becoming financially independent at a young age, which will involve controlling expenses, check out some amazing tools and services that personally helped me become financially free at 33.
My expenses for February were $1100, so around $100 dollar lower than yours. I spent more on rent but you spent more on groceries. My average is $1250 though, so I consider it an improvement. However, I’d still like to bring that grocery bill down a bit more. I’m thinking of tracking individual grocery purchases for a month to see where I can make improvements.
Living in a cheaper country is definitely one of my goals. It must be nice to not have to worry as much over your expenses. Thanks for your article!
Clarence,
Nice job there!!
Yeah, I could spend this little in the US. Did it for a while. But it really comes down to quality of life. If I wanted this exact lifestyle, on an apples-to-apples basis, accounting for two people, it would easily be three times as much. Perhaps four times as much. It’s not just about spending as little as possible. It’s about getting as much life as possible. Did the frugal miser thing in the States. Not interested. I’m interested in quality of life. 🙂
Likewise, I could spend less than $500/month here. Quite easily. Again, not interested.
Also, I actually spent almost $0 on groceries. Just the occasional snack at home. I eat out at markets and restaurants every day.
But it sounds like you’re maybe on your way to FIRE. In that case, spending as little as possible is paramount. That short-term “sacrifice” is well worth the long-term reward of FIRE, in my view. Keep it up.
Thanks for dropping by!
Cheers.
Hi Jason,
Can vouch for those bills too. Food is cheaper in CM and of better quality than anywhere else
in Thailand. It’s night and day, like getting a two for one deal everywhere you eat. As low as 79
cents a plate in some places, again good quality too.
Also we’ve had free bus transportation from Central Festival Mall outside the Starbucks to 4 different parts of town. Extra bonus points there..
Smoke is actually not that bad either, they’ve obviously never experienced Portland back in 2017 where it was pretty much a smoke fog with minimal visibility and embers everywhere.
Only thing I can say is you might not want to move, you might be in for some disappointment..
Regards,
DN
DN,
I hear that. Man, I looked all over the world. Spent about six months on my little “project”, trying to find that intersection between high QOL and low COL. Thailand in general, and Chiang Mai specifically, was the best I could come up with. I’ve not regretted my choice for a single second. 🙂
That said, I could probably live a very nice life in many places across Thailand. It’s an amazing country. The more I see of it, the more I love it.
Best regards!
Expenses were really smooth for February here too. I’ve been FIRE for a hair under two years now, so most of the “unknowns” are buttoned up and I finally feel in the groove. Totally get what you mean when you say everything just “clicked”. It’s a great feeling when results aren’t too far off from expectations.
March will be the real stress test, as I look to move closer to Portland. It’ll be more expensive, and I’ll be going from owner to renter. But the benefits and new opportunities will be worth it. Well, *should* be worth it.
And that’s the magical part. Even if this doesn’t work out, the strength of the FIRE mindset (IMO) is the flexibility to re-calibrate one’s lifestyle if things seem off. That alone is worth everything it took to get here!
Mike,
That’s great. Glad to hear you also had one of those smooth months where everything just “clicked”. It’s always nice to see that. Not just in terms of limiting costs. But really just in terms of smooth sailing in life. 🙂
Totally agree with that last part. I’ve been working on a post that talks about that – the resiliency and lack of fragility that FIRE can provide for. My move abroad has no doubt been aided by that resiliency. If you’re a more sheltered and fragile American, it’d probably be a lot more difficult to do what I did. The financials of FIRE make you more flexible, but I actually see the whole FIRE concept as something that creates a much more adaptable person in general. My mindset is, in my opinion, a greater asset than any financial asset I own.
Best wishes.
It’s great to see this! I can’t help but to compare our two very different lives and expenses… and quickly come to the conclusion you’ve got it right and I’ve got it SO wrong. My mortgage alone is double your whole month’s expenses! Crazy! Fortunately, I’m on a path to fix it, but that path has been trail-blazed by good folks like you who walk and share your journey making it much easier for the rest of us! Thank you and keep up the great work!
DP,
Hey, I appreciate the kind words. I don’t think I’m necessarily “right”, but I suppose it’s always nice to hear someone tell you you’re right. 😂
Seriously, though, there’s really no right or wrong way to go about it. It’s just life. Gotta do what makes you happy. I’m fortunate that I’ve found a great path that fills me with joy. And a lot of choices I’ve made don’t have anything to do with money. For example, I never wanted to own a home. I could be given a billion dollars, but I’d still not have a house. Not having children was also a choice that had nothing to do with finances. I guess I’m lucky in that I enjoy cheap hobbies and love living in a place that has an advantageous cost structure.
“The man is richest whose pleasures are cheapest.” – Henry David Thoreau.
Best regards.
Thanks for sharing Jason. What a month. That’s a really affordable month.
Hopefully your March isn’t too expensive with you celebrating Oh’s birthday. Have fun 🙂
BHL,
Thanks, bud!
Hope you had a great month, too. 🙂
Cheers.
I spend about $30 a week on gas in the cooler months. That’s your transportation cost for an entire month. Factoring in other automobile expenses I’m certainly spending much more than $30 a week. My food expense matches yours. But I only ate out once VS you being fully served all the time.
I see one recurring problem with your expenses. Every month I see a gift expense. But the gifts are not finding their way to me. I appreciate the thought though.
Freddy
Fred,
The gifts aren’t finding their way to you?! That’s odd. You might want to check with your mailman. 😂
Cheers.
$1,200 for two? I thought it was one. That’s really good. It always feel great when everything clicks. It’s rare for us to have a good month like that. Something always come up.
February was pretty good for us. We moved to our duplex. We live in one unit and rent out the other.
Our cost of living should be a bit lower going forward. The neighborhood is really nice too. Now, we just need to sell our old condo. Carrying 2 mortgages is already starting to get painful.
Take care,
-Joe
Joe,
Yeah, the spending is practically for two people. Oh is with me most of the time and I take care of everything. It’s pretty incredible. I honestly didn’t think it’d be quite this cheap when I first moved here. I spent my first month not even looking at the budget. I would just record the expenses, not look at the running total, and live my life. I wanted to see what it came out to if I were uninhibited with the spending. Came out to less than $1,300. I almost couldn’t believe it.
Good luck with selling the old condo. Sounds like you’re enjoying the new setup. Congrats on that!! 🙂
Best wishes.
Wow your doing a great job! Ive been following you since dividend mantra and when you were writing for seekingalpha as well. My expenses are over twice that and thats taking care of just myself. Cant wait till I become a digital nomad like yourself. Im thinking croatia or somewhere in eastern europe though.
Reidar,
Thanks so much!
It’s been an incredible journey. I started blogging about all of this back in March 2011. Almost exactly eight years ago. I couldn’t be happier with how it’s all turned out. 🙂
Best of luck getting to where you want to be!
Cheers.