Many people who pursue FIRE start out with high salaries. They come out of school and get a high paying job in tech or business. After a few months, they decide to search the internet for what they should do with their extra money. They find Mr. Money Mustache (or another FIRE blogger) and the rest is history.
Our story is not a typical FIRE narrative. Unlike the typical narrative, we did not start out with high salaries.
After we graduated from college and moved to New Jersey, Corey started working part-time at a university. He made $12/hour. I made $10/hour plus performance pay for fundraising as a street canvasser in New York City.
We were somehow making ends meet in a HCOL area, and we were paying cash for Corey’s graduate school tuition.
We were determined not to take on any debt, so we found the cheapest apartment we could. Turns out, it had cockroaches. When we’d turn on the lights, we’d see cockroaches scurrying to get out of view. Luckily, we solved that problem cheaply by loading up the edges of each room with containers of cockroach bait.
We were fortunate to live within one block from our local grocery store, ShopRite, one of the cheapest chain grocery stores in the area. For Valentine’s Day that first year, I remember going to the store and getting ingredients to make fettucini alfredo. We felt super fancy because we spent a bit more on groceries that week to “treat ourselves.”
Our entertainment consisted of walking to the RedBox in the ShopRite parking lot and renting a $1 DVD. Netflix was too expensive! Luckily, there were some hiking trails nearby, so when the weather was nice, we had free fun activities.
Our first few years in the “real world” were rough. We were committed to living within our means at all costs and were frugal by necessity. This commitment helped to set us up for the financial freedom that we are now experiencing in our 30s.
What We Did in Our 20s Set a Foundation for Financial Freedom in our 30s
It’s hard to believe that only ten years ago, we were renting Red Box movies and treating ourselves to homemade fettucini alfredo. Last year, at the age of 31, after I took a 6-month career break to deal with a health issue, I went back to work part-time.
Part of the reason why I went back to work part-time was to continue managing my health issues. The other part was that we realized that I could. Our lives would be better, and it had very little financial ramifications.
We spent our 20s building up our financial freedom. We increased our income, and we kept our spending in check.
By the age of 31, we realized that we had reached Coast FI. Coast FI is when you have enough invested to have a comfortable future retirement. This gave us the financial freedom that we needed to start slowing down and be more intentional about our lives.
Increasing our Income
I don’t want to give the impression that frugality alone can pave your way to financial freedom. For us, frugality played an important part. Increasing our income played an equally (if not more) important part. In the last 10 years, our careers have grown significantly from our starting point of $10-12/hour.
Corey’s Income Growth
After Corey’s first year at the university, he took a slightly higher-paying full-time role. The great thing about this job was that it paid for him to take two classes/semester. Because of this, he decided to work full-time and go to school part-time.
After another year, he transferred to a higher-paying full-time role (still within the university so he still got free school). The great thing about this next job was that it provided him with A LOT of downtime. He was able to use his excess mental energy on a side hustle. Over the course of 3-4 years, he was able to generate substantial income on the side.
After a few years, he decided that he no longer wanted to pursue his graduate degree (luckily, we hadn’t been paying for it nor did we take out any loans). When he no longer needed the tuition remission benefit, he transferred into working an operations role in a small nonprofit. One interesting thing is that he actually built up the skills and experience he needed to be successful in this new job through his side hustle.
The nonprofit was small to start. He has now been there for 8 years, and it has grown 10 times larger since he started. During this rapid period of growth, he has been promoted 4 times and has tripled his salary.
My Income Growth
After my year of street canvassing, I did a year-long AmeriCorps fellowship where I earned $11,000/year. I was placed within a nonprofit organization. While this was extremely low pay, the fellowship provided the experience I needed to launch my nonprofit career.
After my fellowship ended, the nonprofit organization hired me on full-time. I stayed with this organization for 3 more years and was promoted once more. During this time, I also got a master’s degree part-time (while working full-time).
This education allowed me to transition into a new role in the human resources field. Over the course of 4 years, I doubled my salary by switching careers and then being promoted twice.
When I decided to work part-time earlier this year, I took a 50% pay cut. There is one great thing about focusing on increasing my income early in my career. I now still make more money than I did working full-time before I transitioned into human resources.
How We Increased Our Income
We focused on increasing our income in many ways.
1. Formal and Informal Learning Opportunities
We used every opportunity we could for learning both inside and outside of our jobs. I did AmeriCorps to gain experience, even though it paid me very little for a period of time.
Corey pursued a side hustle that provided him with the skills that he needed to pursue a nonprofit operations role.
My master’s degree enabled me to transition in human resources. This was a field I was more interested in, and it provided higher salaries.
2. Joining Small and Growing Organizations
By joining organizations that were small (but growing), we knew that we’d have opportunities to take on new responsibilities over time. It’s not actually a cliche to say that if you join a small organization or start-up that you can “grow with the organization.” We’ve both seen this to be the case.
3. Switching Jobs or Career Paths
While neither of us would be considered “job hoppers,” switching jobs provided us with increased income over time. Switching from a part-time to a full-time job at the university provided Corey with free tuition. Joining the nonprofit later completely shifted his career trajectory. When I transitioned into HR, I doubled my income over the course of 4 years.
4. Negotiating Salaries for New Roles, Raises, and Promotions
We have negotiated our salaries every time we started with a new organization or were promoted to a new role. Most companies have a salary range that they can offer. Because they expect people to negotiate, they often initially propose a salary that’s lower than what they are authorized to provide.
5. Building a Side Hustle
Building a side hustle can help to bring in extra income to help pay for necessary or discretionary expenses. It can also help you build new skills that will enable you to take steps forward in your career. Because Corey ran a website as part of his side hustle, he was able to translate that experience to working in nonprofit operations.
Keeping Our Expenses Low
As we increased our income, we kept our expenses fairly low. We grew the gap between our income and expenses so that we could save more money each year. Here are some of the ways we kept our expenses low.
No Student Loans
We are very fortunate to have parents who communicated that debt was a big deal. From a young age, we knew that we should do everything we could to not take on student loans or any other kind of debt.
Corey and I met in college. We both chose to attend an inexpensive school that costs less than $15,000/year for tuition, room, and board. We both got scholarships that covered a significant part of our education costs. We both also worked on campus, in dorms, or with student organizations that provided us with stipends that we could use toward tuition.
I was lucky that my parents could help with the costs of tuition. Because I received scholarships that covered almost my full costs, they generously paid $15K for me to study abroad for a semester. Had I not done that, my total college costs would have been about $6,000.
Corey’s total out of pocket costs for his bachelor’s degree was about $5,000. He was able to pay for the full cost without taking out loans through a variety of on-campus jobs that he held and work that he did over the summers.
For graduate school, we also didn’t take on any loans. We covered them through our own cash flow from working full-time or through tuition remission.
Keeping Costs Low on the Big 3: Housing, Transportation, and Food
When focusing on personal finance, some people say that you should focus on the “latte factor.” This means paying attention to small things that can add up over time. While this could be helpful, we recommend focusing on the largest line items in your budget first.
We did eventually move out of the cockroach-infested apartment after just one year. After that, we lived in small 1 bedroom apartments until we bought our 2 bedroom condo in 2014.
Choosing to live in small places has allowed us to keep our housing costs low. In fact, our mortgage on our 2 bedroom condo is lower than what we paid in rent in our most recent 1 bedroom apartment.
Choosing to live small has allowed us to live very close to public transportation. We rely on public transportation to commute to work and whenever we need to get downtown.
We’ve also been a 1 car household for 9.5 of the 10 years we’ve been married. When we were 22, we bought a used (reliable) car in cash that we kept for about 9 years. Not having a car payment and only needing to pay for insurance on one vehicle helped us to keep our monthly costs low.
When we finally decided to get a new (to us) car a couple of years ago, we saved up for it and paid cash.
Another benefit of us not having two cars is that we can rent out our unit’s second parking spot to a neighbor which brings in a nice $200/month.
We started out being very conscious of our food spending and kept our costs very low. For the first few years, we didn’t go out to eat ever unless we had a gift card or someone else was paying.
The fact that we splurged on the ingredients to make fettucini alfredo for Valentine’s Day will tell you something about our food spending.
As we earned more money, we loosened our grip on this part of our budget. When I learned that I needed to eat gluten-free, we loosened it even more. This was an area of lifestyle inflation for us that we’ve reigned back in over the last couple of years.
Being Mindful of Travel and Entertainment Expenses
We still tried to have fun, but we knew we didn’t have a lot of money. We did the best we could to have fun within our means.
For those first few years, instead of taking big trips, we’d go camping or rent a cabin or house through VRBO (Airbnb didn’t exist back then!).
We’ve never had cable. We’ve always utilized an antenna and started using online streaming services later.
We spent little on entertainment. We’d see a movie every once in a while. Only within the last few years have we started going to concerts. We enjoy hiking, biking, and being outdoors, so we have a lot of free activities we really enjoy. We also love hanging out with friends and playing board games (also free)!
Necessary Frugality Helped us Achieve Financial Freedom
We needed to live extremely frugally in our first few years. In 2009, we spent about $30,000 in a high cost of living area for two people.
The need to live frugally for our first few years helped us to set-up our finances in a way that allowed us to save for the future.
I’ve heard people say a similar thing about debt. While they wish they hadn’t incurred it in the first place, they are sometimes thankful for the process of paying it off. It helped them to build the discipline to be good with money.
For us, it was making such low incomes when we first started our careers. While I wouldn’t wish an $11,000/year salary on anyone, I am thankful that it helped us build the discipline to build wealth.
Ways to Achieve Financial Freedom
Some of you reading this might already be at a level of financial freedom where you are able to design your lives now. If that’s you, great! Go check out this post instead: Why You Should Design Your Life Before Reaching Financial Independence.
For those of you who are wondering how to build up financial freedom so that you can design your life in the future, here is our list of learnings. Everyone’s story is different, so I’d encourage you to figure out what advice would work for you and leave what doesn’t.
1. Cultivate the money mindset that you will live below your means, even if it requires sacrifice for a period of time.
I encourage you to build this money mindset if at all possible.
I know that sometimes debt is the thing that helps to get someone into a better situation. If that is you, I only urge you to be smart about it.
I’m not talking about sacrificing things that add value to your life in order to have a high savings rate either. That might not be worth it. For us, it was important for us to be able to make ends meet before adding little luxuries into our lives, like eating out occasionally.
2. Increase Your Income
There are many ways to go about increasing your income. You could:
- Be proactive and take on more responsibility at work
- Seek out formal and informal education and training
- Switch jobs or career fields
- Negotiate your incoming salary and raises
- Start a side hustle
3. If possible, don’t take on new debt.
If possible, build up an emergency fund and savings for big purchases. Doing this allowed us to cover costs like car maintenance and medical bills without taking on debt to pay for them.
4. If you have debt, pay it off ahead of schedule.
Fortunately, we didn’t have student loans to pay off because we would not have been able to pay them on our low incomes. While I’ve never had debt (beyond debt related to our condo), I know many people who have. Many of these people recommend paying off debt ahead of schedule. This allows you to pay down the principal more quickly and pay less interest.
5. Figure Out What You Value
If you know what you value and what brings happiness to your life, you can be more mindful of where you spend money. It will allow you to intentionally inflate your lifestyle in areas that you know will add happiness to your life.
An example of high-value lifestyle inflation for us was having in-unit laundry. After using a laundromat for 4 years, we were ready to do laundry in the comforts of our own home.
It will also allow you to keep your costs low on everything else. If you do end up inflating your lifestyle on things that don’t add value to your lives, you can always cut back on them later. This happened to us specifically with food spending. As our income increased, we started eating out or ordering take-out much more often. When we realized that it wasn’t adding to our happiness, we decided to cut back on it.
6. Build the Habit of Saving and Investing
Even if you can only put aside a small amount of money into savings and investments, you should start anyways! Even if it’s just to get a 401K retirement match or to put a few hundred dollars in a Roth IRA, it builds your investment habit. Slowly increasing it over time is a lot easier than starting. Even a small amount of money will grow significantly over time!
Deferring Spending (For a Time) Was Worth it to Build Financial Freedom
I often say that I don’t feel like I’m sacrificing anything on my path to reach financial independence. This is especially true now that we’ve adopted the Slow FI mentality and taken advantage of the freedom we already have to work part-time.
Looking back though, we did make sacrifices to get to this point. Today, I would not be willing to live a similar lifestyle to what I did when I was 23. Living in a cockroach-infested apartment and traveling to the next town to do laundry are sacrifices that I’m currently not willing to make.
At the time, I didn’t register it as a sacrifice. Yes, I looked around and I saw friends going out more often, having a gym membership, or taking a big vacation. I knew I couldn’t afford it. Taking on debt to do those things never crossed my mind. It didn’t feel worth the consequences later.
I supposed a better term for what we did was to defer, not sacrifice. We put off having some of the experiences that others were having until we knew we could afford it.
Now, we have the financial freedom to spend money on almost anything we want. This process taught us to spend money on things that we value, and we now choose to not spend money on many of the things we couldn’t afford earlier.
This deferral (or sacrifice) now allows us to focus more of our time and energy on things that we value.
I really like this narrative! Saving and being frugal is important but so is increasing your income. There are so many different factors that affect whether or not you achieve financial freedom. It’s nice to see a more balanced and nuanced picture!!
Thanks, Gov Worker for the comment. We definitely would not have achieved any kind of financial freedom had we not focused on increasing our incomes. However, there are definitely people with high incomes that spend everything they earn, so both are definitely important!
Agree 100% that it’s a combination of keeping expenses in check and strategically growing your income. Also agree that you can achieve FIRE in a HCOL area — we did it in NYC and followed a similar trajectory to yours (we’re in our late 40’s now so older than you). Regarding the big expenses, I would also add student loan debt to that, since it is significant to many — figuring out how to keep those costs manageable by consolidating or working for firms that offer repayment as a benefit are a couple of options. Kids are another big expense so establishing good habits early before kids come into play is one way to do that. We had our kids early (one came when we were 25, the other at 30) but we were able to keep our good money habits and grow our income as our family grew.
Thanks for sharing! Neither of us had student loan debt, so we know woefully little about consolidating debt, which I’m sure is helpful for a lot of people. We also don’t have kids, so we haven’t had to figure out how our spending would change there either.
We love hearing stories of people who were able to FIRE in HCOL, with kids, and/or student loans!
I liked reading about your life story, it reminded me of when we started out 38 years ago. Back then, personal finance didn’t exist as it does now. We made many mistakes, but none were catastrophic. We are looking forward to retiring with dignity in a few years. Hubby is working to 65 for health insurance. It is the big unknown and he likes his work. No retiree health insurance for us. I am already retired. We live a simple life like you do, spending time with our granddaughter is our greatest joy. Thanks for sharing your story, I love your can-do attitudes.
Thank you for your comment! I think we are so lucky to have all of these personal finance resources at our disposal. I’m not sure if I went back, I’d do anything differently. I really think I did the best with what I had at the moment.
I wish you the best of luck in your retirement!