How to Cut Expenses Drastically and Live More

Since we started saving over half our income, our budget has slightly changed. We now shop less, eat out less, buy less, but that’s all good things!

Honestly, we buy a lot less stuff, but we value experiences a lot more anyways. Even if we spend way less, we still travel a lot, eat out in amazing restaurants, and do fun activities… We just spend way less time at the mall.

A huge thing that helped us a lot with this is cutting out advertising. Since we cut the cable and now exclusively use Netflix, enabled adblocker on our browsers, and listen to podcasts or Spotify instead of radio, there is just no more room for ads in our lives.

Those small changes can actually change your purchasing habits. Marketers have been at this for decades, they know how to get you to buy stuff.


Consuming happiness

Consumerism is through the roof in America and there are no signs of slowing down. Even for exorbitantly expensive products like the new thousand dollars iPhone, people are lining up and cannot get enough of it. According to analyst Ming-Chi Kuo, Apple will be shipping 40 million iPhones X this year and between 80 million and 90 million in 2018.


apple store customers linePeople stuck in a consumerist lifestyle.


Now, this is a huge number! Over 120 million phones at a thousand dollars a pop! No wonder credit card company stocks are all up over 30% this year.  When you think about it, there is no way so many people can justify throwing over a thousand dollars on a gadget that will be out of fashion next year.

Most of these purchases will, unfortunately, end up as outstanding credit card balances.

Over one hundreds of millions of Americans carry credit card debt and the national average per household (as of 2016) stands at $8,377. Now, this is another huge number!

Using that amount and the average credit card interest rate that ranges anywhere between 15% and 20%,  we can estimate that the average household pays anywhere between $1256 and $1675 in interest per year. That’s an iPhone and a half just in interest! Every year.


Average credit card debtSource: WalletHub


If you were to buy that iPhone on a credit card an choose to just pay the minimum payment (2% of the balance) it would take you over 6 years to pay it off and you would end up paying over $1500 for it instead of the regular price tag.

If you can afford this phone and it works out in your budget, go ahead, but please don’t put yourself in a bad financial situation just to keep up with the Jones. Instead, we prefer keeping up our savings rate!


Spend less, live more

Buying less stuff and saving over half our income is not a huge sacrifice for us, it is simply our new way of life. We decluttered our house and constantly try to keep our shopping activities to the minimum.

Focusing on cutting down those expenses where we used to spend the most; Housing, Transportation, and Food. With little tweaks here and there, we were slowly able to save a bit more by the end of the month.


How to save more


Here is the secret; no one starts an extreme diet like the Strawberry Diet and keeps up with it. Going cold turkey and jumping into something drastic like eating only strawberries as a meal rarely works over the long-term and the same goes for your finances.

Don’t go from a paycheck to paycheck lifestyle, where you spend every penny you earn, to a high-saver diet, where you try to save over half your income. It just will not last. You are best to take small steps and slowly change your lifestyle to increase your savings rate.


7 ways to save money today!

  1. Start with clear goals. Know what you are saving for and then aim even a little higher. No goals are too far to reach.
  2. Make a budget in line with those goals and follow it. We suggest free tools such as Mint or Personal Capital to track your finances.
  3. Take a deep look at your monthly expenses. The latte here and there or the avocado toasts will not make or break your budget but a $600+ a month car payment might. Cars and Housing expenses are the hardest to change but anything can be done. Never think that you are stuck somewhere or that you ought to keep your car. In the end, it’s just stuff.
  4. Cut down a bit, one expense at the time. If you go out to eat every week, try to go every second week… If you have a huge house, try renting out some rooms like we did…
  5. Make it a habit to save and invest. Try to set up most of your savings on autopilot. We set aside an amount at every paycheck and it just invests itself automatically. This takes the emotions out of investing.
  6. Also, make it a habit to live with less. The less stuff you need, the more you can save. Cut the ads out of your life and acknowledge how marketers are affecting you.
  7. Finally, stay on top of things! Actively look through your statements every month (or through Personal Capital) and know where you are standing.

As you go, slowly increase your savings rate until it is enough to attain your goals in a reasonable timeframe. No matter what stage you are at, all these steps can be applied. They work just as well if you are carrying a lot of debt and trying to pay it off or if you are saving for your first million.

Being in debt is not fun. Feeling trapped can sometimes be overwhelming and becoming debt-free is a huge milestone that you should appreciate and celebrate. One extra step we would add here if you are carrying debt is to look around and refinance your debt to a lower interest rate. We recommend SoFi to save thousands on your student loans, consumer debt, or mortgage.

Once you start saving, start growing your money. As our friend Slow Dad puts it, “There is a huge opportunity cost associated with squirreling money away in the bank or under the mattress, as that same money could be invested productively and put to work”.

He personally keeps enough cash on hand for day to day expenses and keeps an emergency fund for genuine emergencies like disaster or accidents. Everything else is invested. He also suggests viewing any savings you are putting aside for a future expense such as a wedding, a holiday, or a car purchase, as deferred spending rather than savings.

All these small steps should get you very far. Good luck, Xyz.




How to Grow your Wealth in your 20’s?

Every day we are bombarded with news. In the finance world, it goes from bad, to somewhat good, to plainly dreadful news. 🙂 You can be shown a hundred ways how to grow your wealth, save money or how to invest. Nevertheless, in most cases, sticking to the basics is usually best.

In my field, I see many financial planners or financial service providers that will have TVs playing CNBC all day! I guess it is to show their client that they are on top of things or just to use as a decoration. Personally, I think that the former use is much more appropriate. Following the daily blabber on financial news outlets is the wrong way to view financial planning when your focus should really be on long-term prosperity.

Those news outlets will not only show the daily movements of the markets but also dramatize any insignificant movements. Your focus, if you are aspiring financial freedom, should be on the long-term. Day-to-day movements are irrelevant and there is no need to follow financial news.

However, there is usually something to learn out of anything someone writes on the internet. 😛 Here is my takeaway from a few articles I read this week. Some are from financial news, others from personal finance blogs or fellow financial independence bloggers.


Keep it simple

Financial News


The typical play would be to rotate out of more cyclical stocks and overweight the consumer staples, Wald points out, given that the defensive sector has been the best-performing sector in the average August to October period. – Wald


I think that playing sectors is unnecessary and it is a bet that will not always beat the market. Why would you dedicate so much effort in selecting the right sectors, month-after-month, for a slight chance of beating the market when you can simply buy a Total Market Index ETF and forget about it?

I prefer spending my time on other things than looking into my investments. Not to mention that your chances are so low! You should not read the financial news every day. The same goes for your account balances. Try to look at your investments only quarterly, or even yearly, if you can.


Time in the market rather than timing the market


Don’t time the pullback — buy it,

You want to be invested in this market. – Wald


Agree, 100%. Do not try to time the market. There is statistically a better chance that it will go up than down so why wait? As a millennial, I have a lot of time ahead of me. The biggest help I can get for my future is the power of compounding.

I am not the only one increasing my savings, according to a survey that tracks Bankrate‘s monthly Financial Security Index, millennials are saving more than past generations and have a healthier view towards savings.


I saw my elders, people that were older that I looked up to, struggle during the financial crisis,

Keeping a good savings account is something I think would really help me survive something like that. – Markey


It makes sense that tougher times can teach you healthier saving habits. I am glad to see that people are saving, it is the first step to financial freedom.


Don’t be empty-handed

The Great Depression of 2007-08 has put large financial stress on the ones that were not prepared or reacted badly. High debts and low (or the absence of) savings puts people in a particular situation when the economy starts dropping or their job situation changes. Having a healthy emergency fund in a high-yield savings account will give you peace of mind. The flexibility to live your life on your own terms rather than paycheck to paycheck is priceless.


Millennials have a greater inclination toward saving, for both emergencies and retirement, than we’ve seen from previous generations, – Chief Financial Analyst Greg McBride, CFA

Americans saving more than 10% of their income increased to 28%, compared with 24% a year ago, while the number of people saving 15% or more jumped to 1 in 6 Americans, compared with 1 in 7 last year. – Chief Financial Analyst Greg McBride, CFA


The good news is, people are saving. Slightly… but they are saving.

In this article, a 10% savings rate was used as a benchmark. In the United States, almost one-third of millennials are saving at least 10%, which is to me, the bare minimum to have some kind of safety. 10% might not pay for early retirement or even regular retirement, but it is enough to secure a good safety net in case of emergencies or unforeseen expenses.

Since I am saving over half my income, I cannot really relate but I am glad some are taking the initiative to start saving. I am sure that a 10% savings rate can easily be doubled with a little motivation and change of perception. Once you have a clear goal and motivation to achieve that goal, it is easy to find different ways to save.


Geo-arbitrage might be the answer

A great way to increase your savings rate is with location arbitrage. Living in a low cost of living area and making a big salary can greatly increase your savings potential and speed up your financial independence.


There are many different philosophies on why people live where they live when it relates to finances.

 – Live in an inexpensive place and save a ton of money in expenses.

 – Live in an expensive place because you can make more money here. – 


Live where it makes sense

The two main distinctions between these are that one might be more controllable than the other. Nowadays, wages are not even keeping up with inflation and so many sectors saw a drop in standard of living. In most fields, I think it is much harder to find a job that pays enough to justify the high cost of living areas like New York City or San Francisco.


For instance, let’s say you make $100,000 in Kansas City. If you move to San Francisco, you need to make $183,316. If you can’t do that (if you still make $100k in SF), that’s really going to eat into your ability to save, right?

Looked at the other way, if you make $100k in San Francisco, you can live the same lifestyle in Kansas City for $54,551. Imagine how your bank account would benefit from an extra $45,449 each year for 20 or 30 years! – 


This is a great perceptive to have; never look at the dollar amount alone but also, at where can that dollar take you.


Cut your biggest expense

The biggest impact on your savings rate, for most, is your housing expenses. Real estate can take up a huge portion of your budget. It can easily be the key between a 10% savings rate and a 50% savings rate.

With a cost of living almost twice as high in San Fran compared to Kansas, it is easy to see how you can save if you can find a good job in lower cost areas.


Key steps to live in a low cost city with a high salary:

  • You must be flexible on where you live.
  • You need to develop your career in an industry or field that’s in demand. 
  • You need to market and grow your career.
  • You need to manage your career.


I think that the key here is to be flexible. I understand that moving interstate is not for everyone. Most of us will not choose a city based on its cost of living but the basic concepts can be applied locally.


Every region has its market

Within a region, city, or suburb, you can find price discrepancies and use those to your advantage. When we were shopping for our house, we started looking in one neighborhood. However, we ended up in another on the other side of the city.

We then started looking on that side of town. Finally, we chose to live 10 minutes drive further than where we were shopping since the house prices were more attractive.

In Canada, or anywhere else, housing costs can greatly vary from city to city or suburbs to suburbs and shop around could save you thousands!


location arbitrageSource: Visual Capitalist


Ways to save money

In our case, houses 10 minutes further from the city were $40,000 to 50,000 cheaper!

Now that’s a bargain.

In terms of our mortgage, $50,000 meant $226 per month more in savings. (Assuming a 25 years amortization period at a 2.60% interest) This amount, if invested in the market at an average return of 7%, would add a whopping $216,642.82 to our savings over the next 25 years! 🙂


If you manage your career properly, you can eventually transition to more affordable locations. Especially these days, you can work from almost anywhere.

If you build your reputation and network properly, you can be a tech worker in Kansas City for a firm in San Francisco. – 


Always be on the lookout for opportunities. Remote work online or by phone is always an option. You can also change to related fields to increase earnings or location potentials.

Live Happy, Xyz.