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 May 2018…
| Rent & Utilities | $518 |
| Food | $395 |
| Health/Personal/Toiletries | $128 |
| Coffee Shops | $91 |
| Amusement | $71 |
| Gym | $29 |
| Transportation | $28 |
| Mobile Phone | $16 |
| Gifts | $11 |
| Everything Else* | $15 |
| Total: | $1,298 |
To track and manage your expenses, I recommend Personal Capital and Mint.
*Everything Else includes expenses that I don’t have a regular budget for. In this case, it was two small umbrellas. My girlfriend and I both owned larger umbrellas that I thought were too cumbersome to carry around the city. So I picked up two very small umbrellas that roughly fit in the palm of my hand.
My expenses these days are extremely consistent. I’m coming in at somewhere between $1,250 and $1,300 per month, just about every month. Some things go up a bit. Some go down. And the exchange rate impacts things to a negligible degree. But this consistency is something that makes planning and FIRE very manageable.
As I’ve noted before, this level of consistency was always tough for me in the States. That’s because of the different cost structure. One minor unexpected issue in the US can cause a significant disruption to one’s spending. But everything is so cheap over here, it’s hard to really run into any big surprises.
Rent was a touch high this month, though. That number includes electricity, which is what caused the number to spike. I ran A/C a lot in April (with that usage reflected on May’s bill). Like, really a lot. That’s because it was hot here in Chiang Mai. Like, really hot. But Oh, my significant other, brought a fan into the apartment, which has really helped moderate the inside temperature, air flow, and overall comfort level without using the A/C too often in the living area (although we still use the A/C quite a bit at night when we sleep).
The rest of the spending was more or less within expectations. I spent a bit much on toiletries, but I’m glad to report there was a sale on Fusion razors during June. So I really stocked up on those (helping lower July’s expenses). Razors account for the majority of that expense category.
But food was surprisingly light this month. I believe that’s the least I’ve spent on food since I got to Chiang Mai. I wasn’t trying to spend less, but it’s neat to see that I came out where I did. The food spending, as I’ve shared before, is practically for two people, as I pay for Oh and I whenever we go out to eat (she’s with me much of the time).
It was another month where I lived to the fullest in every way imaginable. I never once made a decision based around spending or cost. I just went about doing what makes me happy, and the amount you see here is the cost of that.
I’ll quickly point out that there’s no visa expense 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 May? 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.
Hi Jason,
Food expensive is super low there ($395), but you’ve been eating almost everyday at high quality restaurants.
Spending less than $1300 per month for a luxury life is incredibly amazing. You income and quality of life is growing, but you keep your expenses as low as possible. Keep it up 🙂
Best Regards,
FJ,
I really love life over here. Couldn’t be happier! 🙂
Hope you had a great month, too.
Cheers!
Always good to follow and get updates on how you’re doing.
You’re rapidly approaching a year abroad – what are you plans as your Visa gets closer to end of term?
w2r,
Hey, great to see you around again. 🙂
I plan on getting another visa when my current visa expires. Not planning on leaving Thailand at any point.
Best wishes.
Hi Jason,
I follow you from Brussels. In my “everything else” line I put assurances, taxes and “social security” expenses (I am European). Do you have something planned in case of accident or illness? Thanks in advance!
titus,
Thanks for following along. 🙂
I’ve covered the idea/cost structure of accidents/illnesses here:
https://www.mrfreeat33.com/three-reasons-why-i-dont-have-or-want-health-insurance/
https://www.mrfreeat33.com/my-recent-experience-with-visiting-a-hospital-in-chiang-mai-thailand/
But that’s just me. You should follow a plan that works best for you and your situation/goals.
Cheers!
Hi Jason, just a quick question.
Roughly you make $12,500 from your dividend income plus book sales.
If, for example, your expenses are $1300 for the month but in total you make $1800, what do you do with the excess? Do you invest that to bump up your future income or do you keep it somewhere safe? (like a bank) etc.
Appreciate you sharing such information with us, I really like the quality of the posts.
BHL,
Happy to answer.
My active income is significantly higher than my passive income. That income is allocated across the following: business expenses, business taxes, philanthropy, excess personal expenses, cash, investing.
It’s the same as it’s been for years, really. The only difference today relative to maybe a few years ago is the philanthropy.
Best regards!
Rock on brother. You have your expenses below your passive income. And your strategy ensures your passive income will outpace inflation, passively!
FV,
Thanks, man!
It’ll be fun to see the delta between passive income and expenses, say, 10 years from now. The organic dividend growth should be pretty impressive by then. 🙂
Hope you had a great month, too!
Cheers.
Jason –
Solid month, still. Big question – how good is that coffee? It has to be incredible – what’s been the go to style that you like to drink?
-Lanny
Lanny,
Ha!
The coffee scene here is amazing. And the quality of the product is outstanding. Puts the coffee in the States to shame.
My usual is an iced caramel macchiato. They start making it for me before I even order. 🙂
Best wishes!
J –
Hilarious and thanks for sharing! I am sure it has to beat the coffee in the states to shame, where we, more than likely, go for the least cost least quality coffee… agh… and still pay higher than normal for it!!!
-Lanny
Hi Jason
Its great to see you able to cover all your monthly expensive with a passive dividend income. That’s so cool. I have to say it looks like your Happiness meter is on full. Wish you the best.
Cheers
Michael,
The happiness meter is cranked up all the way. I worked hard to get here, but I’m incredibly fortunate. Just enjoying the moments. 🙂
Hope you had a great month on the spending front, too.
Best regards.
Jason,
I know you have posted that you enjoy working on your physical fitness. Do you think you could write a post on what you do to stay in shape, i.e. your weekly fitness routine? Also, could you take a few pictures of what the gym looks like that you use? Just curious to see what it looks like compared to US gyms. I would imagine they are pretty much the same.
One motivation for me to retiree as soon as possible is that I would like to have more time to devote to physical fitness. I’m guessing you would agree it can be hard to devote enough time to it while working full time.
chomper,
Yeah, that’s a great idea. I’ve actually written about it casually over the years, even covering what I was doing with workouts at any particular time, but it never seemed to generate much interest. However, I do quite honestly write primarily for my own personal enjoyment these days (rather than to, say, drive readership), so it’s a subject I definitely would like to tackle a bit more at some point. I would say I’m just as passionate, if not more passionate, about fitness as I am finance. I’m a certified personal trainer, actually. And I could even maybe see myself doing something with that down the road. We’ll see.
I would not necessarily agree that it’s hard to devote time to it while working full time. If you don’t make time, you won’t have time. I’ve been exercising since I was 11. And I’ve never stopped. I even remember working until 9 p.m. at a dealership in Ann Arbor on our late Mondays (this is going back years), yet I’d still pull up to the gym at around 9:45 and get a good workout in. I feel quite strongly that it’s a vital component to a happy and healthy life.
That said, FIRE allows for far more of our limited resources to be allocated toward all of our endeavors of choice, exercise included. The funny thing is, I spend less time in the gym in terms of how long I’m there per session (relative to how long I would spend when I still had a job). That’s because I’m more driven and efficient, bolstered by extra energy (because I don’t have a job draining me all day long). Likewise, these sessions add a ton of energy to the rest of my life, so it’s a thing that just feeds back into itself. I love it.
I can take a picture of the gym. For me, the gyms here are different in that the low-end gyms tend to be poorly equipped with old machines and weights. And the high-end gyms can be somewhat expensive (over $50/month). A gym membership is one of the only things that isn’t cheaper over here. But that depends on where you’re coming from in the States. Gyms were pretty cheap for me in Florida. They had a Crunch Fitness up the road from me that ran just $10/month – and it was huge. On the other hand, the YMCA that was very close to our rented condo ran quite a bit more – and it was pretty old. Andrew, a reader and a friend, has a gym membership in NYC that, I think, he said runs well over $100/month. YMMV.
Best regards.
I agree, Jason, that working full time and working out are compatible. I find that around 2-3 pm, my energy starts to flag. Rather than sitting there for hour staring at my screen and pretending to work, I do a hard workout, and come back much more focused and productive than before. Both my work and my health benefit.
Entrepreneur,
We’re on the same page.
I don’t think I would have had the same energy to do all that I did (11-hour workdays, full-time blogging, investing, etc.) in order to get here without the exercise. You think you’re expending, but you’re really building up.
Cheers!
I’m very impressed that you have such level of consistency in your monthly expenses. It shows a level of discipline that I don’t have, but wish I did. I also wish I read this post at the beginning of the week instead of the end. My expenses were literally out of control. I gambled and lost a minimum of $480 at the casinos, and ate out everyday of the week. Sufficed to say that it was no surprised that, as I am writing this comment, I’m broke!
If I followed your example and get my expenses (and impulses) under control, I’d be much better off today. Good article.
DP,
Wow. Sorry to hear of the recent troubles over there. But at least it was a cheap lesson. $480 isn’t very much money in the grand scheme of things. But seeing how that played out for you is a valuable lesson that was probably worth much more than you paid for it.
I’m sure you’ll be back on track in no time. You clearly have some measure of guilt over it, so that’ll motivate you to turn the ship around and avoid repeating those actions.
Cheers!
Hello Jason,
I enjoy your posts. A question that continues to pop up up in my mind is how do you plan to pay for future health care costs which should increase substantially as you accumulate years? Do you expect dividend growth/income to cover such later?
R,
I’ve covered that here:
https://www.mrfreeat33.com/three-reasons-why-i-dont-have-or-want-health-insurance/
And I showed a real-life example of healthcare (including costs) here:
https://www.mrfreeat33.com/my-recent-experience-with-visiting-a-hospital-in-chiang-mai-thailand/
I’d only be concerned about this if I still lived in the States, where paying astronomical costs are practically guaranteed.
Cheers!