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 spending that got you there.
That all said, I could technically spend much more than I do.
I earn five-figure and growing dividend income from my FIRE Fund.
Dividend income covers my essential expenses.
It’s a pretty wonderful life position to be in.
I’m very fortunate. And very grateful.
My overall passive income is north of $1,500 per month – and growing.
That’s not all.
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.
I’m living my best life these days. This is what it costs.
With that introduction out of the way, let’s get into my real-life spending for September 2019…
|Rent & Utilities||$527|
This month was actually really, really solid in terms of spending.
Most categories were at or below long-term norms. I feel pretty good about where things landed.
But the bottom line was higher than usual.
That was obviously due to the Health/Personal/Toiletries spending category. It was about twice as high as normal.
I have to use specialized shaving products that I can’t find here in Thailand. So I order them online. Unfortunately, my skin is extremely sensitive, and I suffer from a number of skin conditions that necessitate certain products. It’s just something I deal with.
Anyway, I tend to order these products once a year and stock up. I usually order from the retailer’s shop on Amazon, have the package shipped to my virtual Traveling Mailbox shipping address, then have it forwarded to Thailand.
But the products were out of stock when I checked.
I then figured I’d check directly with the retailer (King of Shaves), which is based out of the UK. They have an online retail store, so I ordered the products directly and had them shipped to my address in Thailand. This seemed to be even faster and cheaper than the other way I was doing it, which is awesome.
However, the retailer uses DHL. And using DHL as a courier is apparently a no-no here in Thailand, which I found out the hard way.
There seems to be a weird relationship going on between DHL and Thai customs, which has been discussed ad nauseam throughout various online forums. DHL packages reportedly get stopped every time, upon which time questionable fees and sky-high taxes get assessed. I was quoted fees and taxes that were more than three times the cost of the package. I was also told I might need some kind of import license for a small handful of products that cost about $50. Umm, no. That’s ridiculous.
I thought I was out the money. I was okay with eating the charge, but I did decide to contact the retailer directly about the issue and let them know that they should probably stop using DHL to ship to Thailand.
The retailer had no idea about it. But they went to bat for me and got involved, only to be shocked about the information they were receiving from the people over here.
The retailer is now going to rethink using DHL and/or even shipping to Thailand at all.
But it ended up okay for me.
The retailer refunded me the entire cost of the package, as they were unable to recover the package or help me in any way (even after offering to pay fees/taxes on my behalf). Kudos to them. A+ customer service.
Fortunately, after some time had passed with this entire process, the products were back in stock over at the Amazon online store. I went my usual route and had it forwarded, except I did have to place a rush on the package because I was running out of the products I had left on hand. Rushing a package overseas is not cheap, so this entire episode did cost me a little bit of money.
Other than that saga, everything else was great about the spending this month.
The Food category surprised me. It came in low.
I’ve been eating more Western and international food, as I discussed last month. That would ordinarily increase spending in this category. But Oh was working more late nights throughout September, which left me eating dinner by myself a few more evenings than usual. That had the effect of lowering spending in that category.
I do expect a higher level of overall spending for October, though.
I’ll soon book a trip to Bangkok and Isan.
Oh and I will be traveling south in late November, which we’re excited about. I always look forward to spending time in crazy Bangkok. And it’s been a while since she’s visited her family just outside Korat. We’ll take a bus to Isan after spending a few days in BKK.
Most of the related travel expenses (like airfare and accommodation) will be be showing up in October’s expense report.
Other than that, I don’t anticipate anything else of note for October. The month is going well, thus far. Most spending categories are at or below long-term norms.
I hope all of you had a great September 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.