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 simply 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 even really 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.
My basic expenses in life are covered by passive income. I earn five-figure and growing dividend income from my FIRE Fund. And I have passive online income like royalties from my best-selling book. All in, passive income is north of $1,300 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 chasing after financial freedom).
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 regular, everyday life which is underpinned by passive income.
Moreover, my everyday life is fun, free, and functional. It’s completely delightful. It’s customized for me and by me. There’s no sacrifice. I don’t ever wake up and feel like I’d be much happier if I spent a lot more money. That’s not how happiness works.
While my ability to live on relatively little and be very happy and fulfilled 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.
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 March 2018…
| Rent & Utilities | $464 |
| Food | $460 |
| Health/Personal/Toiletries | $112 |
| Amusement | $63 |
| Coffee Shops | $55 |
| Transportation | $36 |
| Gym | $30 |
| Gifts | $17 |
| Mobile Phone | $16 |
| Everything Else | $10 |
| Total: | $1,259 |
To track and manage your expenses, I recommend Personal Capital and Mint.
The Everything Else spending was related to a new computer bag I picked up during March.
Spending less than $1,300 for a life that is carefree and without any measure of real caution or sacrifice is pretty incredible, all in all.
To give some context to this, I’m confident this same lifestyle, if it were to be lived in the US, would require a seven-figure portfolio’s passive income. As such, moving abroad has turned me into a millionaire, relatively speaking.
Paramount to my relatively low spending is my furnished one-bedroom apartment. This apartment would be four times or five times more expensive in an equivalent city/area in the States. Since housing is the largest single expense for most of us, maximizing this area of your life sets everything else in motion.
I’m eating out for every meal, which is almost exclusively delicious and healthy Thai food. This is very different from my life in the States, where I was rarely eating out of the house. Instead of PB&J at home, it’s pad kra pao at a market. Works for me.
I’m at the coffee shop – my happy place – at least six days per week. I’m able to be at the coffee shop twice as much as I used to be because it costs half as much to go. And I’m able to enjoy it more when I feel like I’m getting a good value. It’s tough to enjoy a small coffee when it costs $4.50. It bums me out a little bit.
And my disposition has become much more gregarious and outgoing since moving here, which has translated into being out of the apartment more and thus spending more on entertainment.
This month was a bit notable due to some travel. My girlfriend and I spent a few days at Koh Samui in March, where food and transportation are significantly more expensive than in Chiang Mai. I spent slightly more than I otherwise would have as a result of that.
Also, keep in mind that I’m regularly paying for two people, particularly on food, as I don’t ask, want, or need my significant other pitching in on fried rice. But if I were single and spending on just me, I would have came in closer to $1,000 (with most of the savings being on food and amusement) total for March.
Toiletries were awfully expensive this month. For some strange reason, I went through razors like crazy. I’m hoping I have better luck in that department in April. If my laser hair removal would have been successful, I could almost completely eliminate razors from the budget (and the associated time for shaving), which would be really nice. I may actually look into completing the laser hair removal here in Thailand. I believe it’ll be much cheaper here.
Of course, there was also the hospital visit during the month of March.
Overall, I’m quite pleased with this level of expenditure. This is for a full-out life that has no compromise.
But I say that with my own perspective on compromise and sacrifice. The lifestyle I love to live might seem very spartan to some; it might seem luxurious to others. However, that doesn’t matter at all. All that matters to me is that I’m happy.
The US dollar has lost a little strength since I moved here, making things here in Thailand a touch higher when I convert my dollar into baht. But it’s negligible.
I’ll also note that there’s no visa costs in this report. That’s because I’m staying in Thailand on a one-year ED visa, which was settled earlier this year. As such, there’s very 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 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. I could spend less (especially on housing), but I have no desire or need to. I could also spend quite a bit more, but I equally lack that desire and need.
How was your spending for March? Did you meet your expectations? Why or why not?
Thanks for reading.
Image courtesy of: Stuart Miles at FreeDigitalPhotos.net.
P.S. If you’re interested in becoming financially independent at a young age, which will involve controlling expenses, check out some amazing resources that personally helped me become financially free at 33.
You keep your expenses low! Do you think you’ll ever increase your monthly spends? As such, your passive income alone covers these, so do you still invest the rest?
Love reading expenses reports, thanks for sharing!
Nicola,
Thanks for dropping by! 🙂
That’s a good question. But I don’t plan on increasing the spending. Not in terms of my everyday life. There’s no need to, and I’m really fortunate about that. I’ve found a great balance. I’m really happy with everything. I’ve been able to slide into this super amazing groove over here. And it’s easier to do that because of the cost structure. That said, there will be occasional “bursts” in spending, mostly related to travel. As I’ve written about, I want to eventually spend at least some of the spring/summer outside Thailand. Gonna work my way up to that.
I invest some of the active income still. Not a huge priority, but I still love investing and expanding my options a bit. I went over stock purchases from last month when I updated the FIRE Fund.
Best regards!
Jason, I love that you have coffee as its own line item! I know it is in expenditure order, but in my mind, it should be at the top of the list. I guess we all have our priorities… ha ha. I love seeing real life disclosures like this. It is inspiring. As always, I relate it to what I experience in life, and am reflecting on my $1900 / mo mortgage, $12.5 / year property tax, $2350 / mo warehouse rent, most recent $300 Costco run, $150 / mo Internet / Cable, $200 / mo mobile, $400 / mo transportation, $160 / mo gym, etc etc. At least my coffee is inexpensive! LOL… I am thinking about dumping the coffee and pouring some vodka after listing those things out. If I only drank… #ThailandHereICome
Andrew,
Ha! I’m with you. Coffee for life. The coffee shop is my “office”. I absolutely love it there. They know what I’m ordering before I even get to the counter. 🙂
Wow. Those expenses. You would literally be a god over here. It would be almost impossible to spend that much. It’ll be fun to see what you think of the place when you make it over here. Central America is definitely different from the States. But this is on another level.
Best wishes!
Did I mention that I just finished my taxes and owe $23+k? God help me… I am not sure if I am laughing or crying right now… and yes sir, getting there will be great. Of course, once I hand my business off to another company to run, my revenue will decrease dramatically – probably on order of 1/2, so it is all relative. Time will tell how much I have, what I can afford, etc, but I am excited about the possibilities and look forward to seeing where it all takes me!
I don’t think I am a Central American person right now… perhaps down the road I would take advantage of the Pensionado Program in Panama, but I am starting to read more about how the Asian countries, most notably Thailand, are starting to address the growing population of seniors over there – Thailand has the #1 fastest growing senior population, and a number of companies are setting up communities to cater to both their native seniors as well as foreign retirees coming from China, Japan, UK, US – Chiang Mai has one called the Care Resort. This article mentioned that there is a big push to make English a 2nd language there to help facilitate more expatriates making the move, and am curious if you have seen evidence of this.
Andrew,
I think you’d be just fine over here, from what I know. It’s a very low hurdle to clear to come over and live a very wonderful life. Fear holds people back. I’ve met 22-year-old people who came over here with a few grand, built online businesses, and are rocking out. So it’s all perspective. It didn’t take that much courage for me to make the leap.
As for older people, I don’t see it. I was just out for the first night of Songkran tonight. It’s nothing but young people everywhere you look. If anything, I feel old over here. Haha!
Best regards.
Thanks for sharing this Jason! This makes me want to move to Thailand right now. I had a passive income last month of $2012.09. I can be finally be financially free with those kind of expense!! lol I wish. I still have a lot to go to get to that point, but I am getting closer!
FV,
Well, Thailand’s not for everyone (nor would I like it to be). But the quality of life that one can have for the cost of living is probably unmatched anywhere else in the world. 🙂
Every month is another step closer. Keep it up!
Cheers.
“To give some context to this, I’m confident this same lifestyle, if it were to be lived in the US, would require a seven-figure portfolio’s passive income. As such, moving abroad has turned me into a millionaire, relatively speaking.”
Yup. Andrew above in the comments hit the nail on the head with expenses here, and every month when I look at our breakdown..just knowing that we’d need 7 figures to cover our basics is upsetting news. We simply can’t trim anymore, where we are. I can imagine that once we get our net worth into the mid 6-figure range, we’re going to figure out how to make that work instead, likely by moving to a cheaper COL area. Maybe join our friends in Thailand. 🙂
Jamie,
Absolutely. Geographic arbitrage isn’t just an international idea. I took advantage of that when I moved from MI to FL. And one could easily do so in the States today (moving to a cheap locale somewhere in the Midwest, say). Takes creativity and effort to live on less in the States, but it can certainly be done (as I did for years).
Cheers!
Hi Jamie, I retired to central Florida in 2004 ( at 43 years young ) I bought a small house on just under 1/2 ac of land, paid cash, the annual taxes are just $286 🙂 The house is just right sized 2br and about 680 sq ft so our elect bills are usually less than $100 per mo so our housing costs are very very low.
When I lived in Mass ( Taxachusetts LOL ) back in 2003 – 2004 my RE taxes alone were $9,300 per year ! If you do your home work there are still places were its not crazy expensive to live.
I’m actually getting the itch to be an “off grid” however that’s getting more difficult here in the USA as we get more and more regulated 🙁
Make a plan while saving ( as Jason has pointed out many times ) with a vision and a goal and you to will make it 🙂
Hi Jason,
Thanks for posting your spending details. It is definitely a helpful insight into cost of living in Chiangmai Mai. My wife and I also hope to spend several months in Thailand/Asia on our way to semi retirement 🙂
Just curious, do you not count expenses you have in US too as part of living abroad ? (mail forward scans, etc).
regards,
Shun
Shun,
Happy to share and provide some perspective. 🙂
Those expenses will be reported as they come up. I think my subscription with Traveling Mailbox renews in the fall.
Cheers!
Hi. Are you investing in Asian stocks also?
Pauline,
https://www.mrfreeat33.com/retiring-abroad-doesnt-mean-its-suddenly-necessary-to-invest-in-your-local-market/
Cheers.
Jason, have you ever tried out one of the old school razor systems? The base is more expensive (probably $25 for the handle and head system), but then blades have gone down to maybe 10 cents a blade for me now. Was an adjustment because they are actually sharper than Gilette blades, but better shaving creams and soaps have allowed the right blade for my face to glide better, and I have a very enjoyable shave on the cheap now!
Just a thought if you don’t go the laser route. I also started using this Turkish shaving soap called Arko that lathers quite well. Price has gone up recently, but $17 buys a 12 pack with each individual bar lasting 4-6 months for me. 6 years for $17 (used to be $12!), Pretty awesome value to price ratio!
Sounds like life is going well, I’m very happy for you man.
Jason,
I tried one of those way back when. Just didn’t work for me. I think my ultimate solution will be to complete laser hair removal. Then I won’t have to deal with it almost at all. 🙂
Thanks for stopping by. Life is very good. I hope it’s just as good for you!
Cheers.
Thanks for sharing. It’s really cool that your housing cost is the same as your food cost. In Portland, our housing cost is 5x food. That’s way too high.
Do you work in a coffee shop? I think there are co-work space now, right? I can’t concentrate in a coffee shop.
Your entertainment expense is really low too. Nice job.
Have a great day!
Joe,
The cost structure across the board over here is pretty amazing. This life would surely be at least three times as much in the States.
I write at the coffee shop. I really love it. I have this little place I go to almost every day. It’s my “happy place”. 🙂
Portland is a wonderful city. I enjoyed my visit last year. If I were to live in the States, it’d be near the top of my list. But the COL has really spiked in recent years (at least partly due to its allure).
Best regards!
A luxury life at extreme lower cost !!! Awesome Jason & enjoy your life there 🙂
Thank you for sharing!
FJ,
I’m super, super fortunate. It’s a dream come true. 🙂
Hope all is just as well for you and yours!
Best regards.
Way to keep your expenses low Jason. The fact that your passive income is enough to cover your expenses is great and ideal for anyone wanting to achieve financial independence. I totally now see why you were able to achieve FI so early – by saving well over 50% of your savings for years. I’m right around the 45% mark and will likely increase that overwhelmingly when I move locations because of work and where I will be making more income. I know my expenses will theoretically be more because the location is expensive, but I’m planning on keeping my expenses (especially living expenses) as low as possible which will help the bottom line.
DP,
You’re on the right path over there! 🙂
Your savings percentage is absolutely critical. Everything revolves around that. 50% was kind of my “line in the sand”. I didn’t like coming in under that mark. I routinely came in well above it. I can’t remember how many times I exceeded a 60% savings rate in a month. Probably dozens of times.
Best of luck with getting over 50%. 45% is still fantastic, but higher is obviously better (if you’re interested in hitting FIRE quicker).
Cheers!
Spending for me was very low in march 🙂 I managed to save 65% of my net income. April so far seems to maybe hover around 50%. Keep enjoying the good life in CM
NG,
That’s great work there. 65% is very impressive. I know firsthand how challenging it is to hit that mark.
Thanks for sharing!
Best regards.
Hi Jason,
I added those itemized numbers. Twice. Came out to $1263. I think your total is $4 dollars low.
Either way, though, that’s not a bad number – you live a great life for less than $16K/year.
Almost forgot!
“How was your spending for March? Did you meet your expectations? Why or why not? ”
Yes! I came in $90.32 under budget for March 2018. Mainly due to not eating out, and reduced alcohol purchases.
DL,
Awesome stuff. Glad you came out under budget. Nice work!!
I report these expenses as they are in Mint (where I keep track of expenses). Mint rounds individual expense categories up/down to the nearest dollar, but the grand total (the sum at the bottom) is all expenses added up and then rounded up/down to the nearest dollar.
Cheers!
Hi Jason,
I think you know about numbeo.com where you can compare the cost of living in different cities/countries of the world.
Was wondering from your own experience if the prices for Chiang Mai/Bangkok are accurate enough?
https://www.numbeo.com/cost-of-living/city-estimator/in/Chiang-Mai
There is an estimator on their website that lets you calculate roughly your cost of living in a particular city depending on your lifestyle choices.
I’m a Romanian living in the UK for the last almost 3 years and want to move back to my home country in about a year where I’ve invested in real estate taking advantage of geographic arbitrage.
My portfolio next time this year will be a paid-off two bedroom apartment and around 600EUR/730USD in net rental income after taxes and maintenance cost.
My initial plan was to go for 1000EUR in passive income but that means another 3 years and in the last few months I said screw it it’s enough. As funny as it sounds I had enough of delaying gratification.
Was comparing Brasov, a city in the heart of Romanians mountains, where I will move to with Chiang Mai and a thing that was striking was how cheap eating out was there compared to even Eastern Europe but how expensive the food is in the supermarkets (if buying western) it’s like no point at all in cooking there.
What do you think, is that a doable budget for a single guy if I’ll cook most of my food and eat out occasionally because the other costs look quite similar in some cases even cheaper? I will supplement my income also with 2 days a week of remote freelance work.
Many thanks Jason!
TheJoneses,
I’ve looked at Numbeo quite a few times in the past. I think it’s fairly accurate on average, but its accuracy seems to vary depending on the city and who’s using/inputting the data. Since its user driven, there is always the possibility for distortion. That said, I think the Chiang Mai numbers are pretty reasonable.
The only city I’m familiar with (in terms of COL) in Romania is Bucharest. I took a good look at it for a variety of reasons. It helps that Romania is not in the Schengen yet (making long-term living there still possible for an American).
One of the best data points you can rely on when you’re making a call on the feasibility of living somewhere on a certain amount of income is to simply look at what the average person is making in a particular location. My initial inclination is that $730/month is probably a pretty good salary for someone living in Brasov. And if you’re a driven and frugal person who appreciates having an edge in life, you’re probably going to do at least as well as the average person. That tells you a lot right there.
As for Chiang Mai, I think someone can very easily live here on that kind of monthly income. I covered that idea here:
https://www.mrfreeat33.com/can-you-retire-in-thailand-with-200000/
Hope that helps!
Best regards.