reflection woman writing notebook

One year ago, Corey and I officially decided to start our journey to financial independence. We were on vacation in Maine when we talked through the details. This ranged from practical items like looking at our spending and identifying areas to reduce our spending, to ideological and what this new journey would mean for us.

Even though we knew things would be different, I don’t think either of us expected to see this transformation, both in our life as well as in our approach to money.

As I now look back on one year into our journey to financial independence, our life is very different today than it was a year ago. Financial independence played a huge role in redefining our lives.

While a lot has changed, I don’t want to exaggerate the point. There are still many things that have stayed the same:

  • We still live in Boston, a HCOL area. We didn’t pick up and move to another location with a lower cost of living.
  • We still live in our lovely 2 bedroom condo steps from public transportation. 
  • We didn’t completely cut everything fun out of our budget. 
  • We traveled even more than we did last year. Our travels took us to Central America, Vermont, Cape Cod, and we’re getting ready to go to Washington DC in September. 
  • Almost every weekend is spent hanging out with our friends. 
  • We even still occasionally go out to eat, attend concerts, get trapped in solve escape rooms, and go to see (mainly Marvel) movies in the theatre. 

To those on the outside looking in, our life might look pretty much the same. 

The one noticeable difference is that I am working fewer hours. In the last year, I made the decision to quit my anxiety-inducing job and cut my income in half to work part-time. While Corey got a nice promotion with a raise in January, our household income has actually gone down.

The biggest change over the past year is not easy to spot from a distance. The biggest difference is us.

We are different.  We’ve grown and learned more about what we want out of life, and we actually believe those things are possible. 

Our mindsets have shifted in dramatic ways. These shifts have changed the ways that we think, act, and interact with the world around us.

What We Learned in Year 1 of our Financial Independence Journey

I was living someone else’s narrative before I learned about financial independence. I was working 50-hour weeks, seeking the next promotion, and mindlessly spending money to make my life feel more bearable. 

I wasn’t happy, and I didn’t see a path forward that involved my happiness. 

In reflecting on our first year of the journey to financial independence, there are four main takeaways that I would like to share with you.

1. We Determined our “Why” for Financial Independence

Before I learned about financial independence, I didn’t realize there were other options in life besides working full-time at a job you hopefully didn’t hate (too much) until you were at least 55. The money from this job then pays for your basic needs and all of the stuff we reward ourselves with because we work so hard. 

When I learned about financial independence and started diving into other blogs from people in the FIRE community, I began to see that the options were much broader than I thought. 

There are people choosing to find a job they love even if it paid less or to work fewer hours in a job they enjoyed

Others were traveling the world, working for only a portion of each year, or becoming entrepreneurs.

My eyes were opened to so many different options. I spent time reflecting on what I actually wanted out of life. 

When we embarked on our financial independence journey, we did not have a clear vision for the destination. We did have a commitment to figuring it out.

europe map routes

We spent time learning about the interesting lives of others in the financial independence community, and we began to envision our ideal lives and rediscover our passions.  

Through this reflection, we realized that we are motivated to become location independent, and if we continued to work, we wanted it to be something we enjoyed.  

Doing important enjoyable work while we’re free to travel anywhere in the world is why we are pursuing financial independence.  

2. Learning to be Intentional with our Spending

Because we had previously bought into the mindset that buying things and convenience was our reward for hard work, we did a lot of mindless spending. 

I bought lunch at work almost every day, in the name of “self-care.” We would get home late, too tired to cook, and we’d order food at least once/week. We ate out anytime we wanted to, and our groceries went to waste. We’d buy new clothes, shoes, gadgets, books, and other random stuff when we were bored.  

We were saving a higher percentage of our income than most people we knew, so we spent our money with little regard for where it was going.  

My first exposure to financial independence was through Vicki Robin’s Your Money or Your Life. One of the most impactful things I learned from the book was the correlation between money and time. I’d often heard that time is money, so you don’t want to waste your time. I hadn’t heard it the other way around – that money is time.  

I learned that money is something that we trade our “life energy” for (i.e. we buy money with our time). 

Therefore, every time we spend money, we can ask ourselves, “Did I receive fulfillment, satisfaction, and value in proportion to the life energy spent?”  I realized that for many things, I was not. 

I was spending money mindlessly that could be invested to help me buy myself out of this consumerist system altogether.  

To combat this, we did not set a strict budget. Instead, we reviewed our spending and discussed the areas where we weren’t receiving proportional value. 

Because we became much more intentional about what added value to our lives, we were able to cut our expenses by an average of ~$1,400/month. That’s almost $17,000 for the year. 

3. Spending Intentionally on the Small Things can Make a Huge Difference

Hearing that we spent $17,000 less in the past 12 months than we did in the year prior can be somewhat shocking. This approach reduced our timeline to reach full financial independence by over 5 years.  

What’s even more surprising is that we didn’t change anything big. As we said, we didn’t downsize or move to a lower cost of living area. We didn’t deprive ourselves of things we enjoyed like traveling, eating out, or doing fun things with our friends. 

We just became a little bit more intentional about a lot of small things. It added up.

Here are the top 4 categories where we realized savings.  

Travel – $4,357 or ~$363/month less than last year

Travel is one of our true passions in life. I love to see new sites, learn new languages, and understand different cultures. I didn’t want to travel less. 

I learned that many people were traveling for free or cheap through credit card rewards. In the past, we had dabbled a bit in these rewards but never with any coherent strategy or much planning.  

This past year, we opened 3 new credit cards to help offset the costs of our trip to Panama. The points from these credit cards covered the full cost of our round trip flights, all lodging, a rental car, other local transportation, and all activities that accepted a credit card.  

beach blue sky sand water

We used other points to cover part of our trip to Vermont, a flight home for a family emergency, and flights to FinCon, a financial media conference in September.  

We spent significantly less on travel in the past year without reducing the amount that we travel. 

Restaurants – $2,200 or ~$183/month less than last year

When we were sick of all of the take-out options, we realized that we were not getting “value in proportion to our life energy” for this money spent. When I went back to work this winter, I had a similar realization about buying lunch each day. 

While we still go out to eat occasionally, it now feels like a treat that we look forward to. 

Groceries- $2,000 or ~$166/month less than last year

We had a food spending problem, and it was only partially because of our restaurant spending.  We didn’t always meal plan, and we had a lot of food go to waste. Therefore, we set out to decrease our food spending.  

We did a 6-week challenge where we reduced our food spending from $6.30 to $3.25/meal. We found that the things that made the biggest difference were meal planning, basing meals on things we already had on hand, and buying certain ingredients in bulk.  

General Merchandise – $2,200 or ~$183/month less than last year

General merchandise is all of the random things that we would buy from Amazon, Target, REI, etc. 

We realized that we got no more value from buying a book than borrowing it from the library. Games we bought new were no more fun than borrowed games. We were able to spend significantly less on the random “wants.” 

There were also other categories in our budget that went up or down a bit last year, but many of those were things that we have less control over (i.e. housing, insurance, health care/medical expenses, etc.).  

4. Incremental Financial Freedom Along the Journey

When we first began our pursuit of financial independence, it felt like an all or nothing concept. Either you have enough passive income to cover your expenses or you don’t. The initial message that we believed was that you needed to reach full financial independence before dramatically changing your lifestyle.  

These initial assumptions were misguided.  

While the last year was one of the hardest years of my life, I can finally look back and appreciate everything I learned.  

Last summer, the stress I was experiencing at work became too much for me, and I began to have regular panic attacks. This anxiety kept me from being able to work for several months.  

During the first week of this “episode,” part of the anxiety was money-related. I felt like I should get back to work as quickly as possible so I could continue earning a high income. Didn’t I need to work for us to cover our expenses and meet our financial goals?  

It wasn’t until I took the time to understand our current savings and investment balances that I realized that Mr. F’s salary could more than fully cover our living expenses.  

This gave me the freedom to take the time off that I needed to get mentally healthy again.  

This was the first time that I experienced the freedom of F-You Money

I also realized that I didn’t need to continue to make a high income in a stressful job. This was not needed nor worth it if it would continue to damage my mental health. 

For the latter half of 2018, I received disability, which covered 60% of my salary. I feel very fortunate to have received this benefit through my employer.  

Though our income decreased significantly, we were amazed that we were still able to achieve a 60% savings rate. Working less helped us to cut our mindless spending to the tune of $17,000/year.

Because of the reduction in spending, there was no need for me to continue working full-time in a stressful job.  

When I was looking for new jobs, we did the calculations to determine the impact of working part-time on our financial goals. Through this process, we realized that our financial independence timeline would only be a couple of years longer. By working part-time, I would also be buying back 1,000 hours of my time each year.  

This allows us to reduce the stress in our life, take care of my mental health, and focus on passion projects, like this blog. 

What is even better is that my understanding of the incremental financial freedom has tipped the balance of power between my employer and me. 

Because I don’t need this job (or any job) in the short-term, I am able to set very firm boundaries at work. I have been able to skillfully negotiate my priorities when there has been too much on my plate. My supervisor has been receptive to pushing deadlines, hiring external consulting support, and taking on certain kinds of work herself.  

Earlier this year when my employer asked if I wanted to increase my hours, I was able to successfully keep my 3 days/week schedule. They have even begun to talk about hiring dedicated HR support at some point in the next couple of years. 

I am happy to know that the answer to capacity constraints won’t be to ask me to work more hours. 

What Will Year 2 on the Journey to Financial Independence Bring?

So many things have changed for us in year 1, so I can’t say with certainty what I believe year 2 will bring. There are a few things we do know:

Slow FI will Continue to be our Core Philosophy

The financial independence community is slowly shifting away from the narrative that says it’s desirable to save money as quickly as possible so that you can retire as early as you can.  

We believe that you can pursue both financial freedom and a great life aligned with your values along the journey. 

This message has also resonated with our community and readers. We will continue to identify and amplify the stories of people putting this philosophy into practice in our “Slow FI” interview series

We will also continue to write weekly to share what we are learning.

Explore Additional Ways to Cut Costs without Sacrificing Value

We’ve realized that our grocery spending is still quite high compared to many people in the FI community. Therefore, we’ve been experimenting with “ugly” produce from Misfits Market and Imperfect Produce. (Clicking these links will give you a discount on your first box!)

Vegetables

From the orders, we get great produce (that I actually wish was a little uglier). Since we started this, we’ve both been eating healthier and saving more money on our groceries.

We’re planning a trip to Jamaica for early 2020, and we’ve already planned our travel hacking strategy. Since we’ll be staying in an all-inclusive resort (covered by points), the only thing we’ll pay for is ground transportation to and from the airport, any off-site food, and activities.

These are only two of the focus areas we could choose for the coming year. We’ll likely determine others as well.  

Delve into Ways we can Increase our Income in Ways we Find Enjoyable

I could easily increase my income by increasing my work hours, but this is not in the plan. 

Within the next year, we are going to explore investing in real estate to help us increase our monthly cash flow. We also plan to continue working hard to expand the reach of our blog, so we might be able to one day monetize the work we do online.  

We’ve also begun to purge our house of things we don’t need anymore, and we’ve been trying to sell the things that we can.  

Corey has considered starting a business to collect and sell used books, which we may decide to focus on in the next year. 

Overall, we’re looking forward to year 2 of our financial independence journey. We’ve learned so much already and met many incredible people along the way. I’m sure that next year we’ll again be surprised by how much we’ve learned.  

We’d love to hear from you! What have you been learning? 

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