The first step in my early retirement journey.

<This is a popular post on the blog… just note that it’s by a contributor, not the main author of SkillsFIRE>

I decided I wanted to retire early back in January 2011. Most retirement books and blogs focus on when to take social security or how to save up a million dollars over many years. Personal finance books told me to save 10% (or even 15% if you’re feeling wild). I wasn’t seeing any results from the traditional advice.

The first step:
I was a typical young professional when I started: cell phone with data plan ($100/month), brand new car with huge car loan ($400/month), high rent, a long commute…you get the picture. I calculated how much discretionary income I had every month after paying my bills and it was a measly sum. I was making good money, but I still couldn’t manage to save more than a couple 100 dollars every month. I was frustrated – I knew that I couldn’t achieve my goals at the rate I was going.

I decided to lower or eliminate my expenses everywhere I could. It was a very tough process. I was always tired after work and had no interest in looking for a cheaper apartment or selling my car, but it was a vital first step to getting on the right track for early retirement.

Since I was lacking in motivation, I started with the small expenses:

– Cell phone: I was stuck in a two year contract with a big name cell phone provider. I logged on to their website and read my phone agreement. It turned out that the early termination fee was pro-rated, so it was much cheaper than I expected to get out of the contract. I then calculated how much I would be saving every year by purchasing a prepaid phone. I saved hundreds of dollars over the term of the contract by paying the ETF and buying a prepaid phone. My main priority when reviewing expenses was to eliminate as many recurring expenses as possible. By canceling my cell phone plan and switching to tracfone, I no longer had a monthly payment. I now have a separate savings account at my bank where I keep windfalls (credit card rewards, refunds, etc) to purchase more minutes when I run out. This feels much better to me than paying $100/month.

This is the phone I have:
It is widely available (I picked mine up at Target), only $17, and is technically a smart phone. I can access the internet at 5 cents/minute if I really need to check my email. It also has a camera and mp3 player. I don’t feel deprived at all without my apps or whatever else makes smart phones so exciting.

– Food/Drink. This was a huge area of savings for me. I started bringing lunch to work with me. When coworkers asked if I wanted to go out, I told them I was trying to save money. I would play a “game” with myself and try to eat every single thing I had in the pantry and fridge before going shopping again. This is a good way to get rid of stuff that’s still good, but you haven’t used in the months since you bought it.

Once I had lowered the small expenses as much as I could, I began to see savings and feel the reward of my efforts. This was a good time for me to think about the big expenses and re-think necessities.

– Commute. I moved from the city I went to college in (which was 1 and 1/2 hrs away in traffic) to a city much closer to my work. This cut my commute down to ten minutes, which meant less spending on gas, insurance, and maintenance.

– Car. I sold my new car and bought an old Toyota Corolla with a large down payment. Sure, I didn’t look nearly as cool driving around in it, but this meant that hundreds of dollars were freed up every month to save.

– Student Loans. I graduated with relatively little student loan debt, but it was always a looming black cloud in my financial world. I began aggressively paying off the balance.

I eventually made a pretty extreme move in order to save money. I was living in an expensive part of California (Silicon Valley) and the cost of living seemed atrocious. I was making plenty of money, but I couldn’t keep nearly as much as I wanted to every month. My solution? I moved to Austin, TX. The cost of living was a whopping 41% cheaper here. Granted, I make less money now, but I am actually able to save much more than when I was making over $10k more every year. I am able to live in half of a 2bd apartment for $400/month, take public transit to work (this has eliminated need for a car and all the expenses associated with owning one), and buy cheaper groceries. Also, there is a lot of free entertainment (it’s the live music capital of the world) and they have great community resources, like an epic library and numerous well kept parks and trails.

I’m not suggesting everyone should move across the country to save money. Just take a hard look at expenses. Can you live without a car? Can you move closer to work and bike? Can you rent a room in a house instead of having your own apartment?

Again, this is a difficult process. I basically turned my life upside down when I decided I wanted out of the rat race, but I feel much better about life now. I don’t worry about being able to meet commitments if I were to lose my job and I am able to sock away more than I spend every month. It was worth it.

Leave a comment


  1. m741

     /  November 12, 2011

    The phone is a big expense I think a lot of younger people ignore. But it’s expensive, the going rate for unlimited data (the best kind of data, right?) is $80/month. That’s more than I pay for the rest of my utilities.

    To further reduce phone expenses, I use Google Voice (free inside the US). When I know I’ll be talking with family for 20 minutes or half an hour, I don’t want to pay for those minutes when I can get them free.

    As for commuting, to me the monetary costs are incidental. The time savings can really make a huge difference in quality of life.

  2. barb

     /  November 12, 2011

    Great story and very brave too!
    Do you consider yourself out of the rat race, ie California rat race ?
    Now that you made a move to a better way of life, Austin TX, would you consider working longer b/c it sounds like the move was the best thing you every did.
    Good luck

  3. MATXM

     /  November 12, 2011

    My data was more than $80 because I had to pay more so that I could get my outlook work emails on my phone. I was basically paying $20/month to get emails in the middle of the night saying “Do this ASAP in the morning!”. I now feel like a recovered workaholic.

    Good point about Google Voice. Similarly, I save money by texting from Google Chat within Gmail. It doesn’t require an extra phone number and appears as a normal chat window in my email. Very convenient and free.

    @barb Thanks! I am not yet out of the rat race. I still work an office job (although it is infinitely better than my previous position, it’s good that I’m out of SV). Now that I’m in Austin, I’m still hoping to retire between the ages of 25-28. The money I’m saving here makes it more feasible and I have an even greater desire to have complete freedom to explore my new city.

  4. I must say this is a great article i enjoyed reading it keep the good work 🙂

  5. Austin is my favorite city. I’m hoping to move back there myself in a year or two. Congrats on figuring it all out so young. Wish I’d come to the same conclusions when I was your age. I’m going to have to settle for retiring at 45. Still far better off than most.

  6. Congrats on all of your success!

    I live in Dallas and have been to Austin a few times. Every time I go, I have a blast and I’m eager to go back. Texas is such a cheap part of the country to live in – enjoy the fruits of your wise decision.

  7. MATXM

     /  January 24, 2012

    Thanks for all the encouraging words =)


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