At 25, I saved $100,000 while earning below the median income through extreme frugality. This post outlines 20 habits that contributed to my savings, from cutting dining out to DIY renovations, and the importance of having a clear financial goal.
When I was 25, I achieved a significant financial milestone by saving my first $100,000 while earning below the median income. My job involved cleaning office buildings at night, and through a series of frugal habits, I managed to reach this goal. In this post, I will share 20 specific habits that contributed to my savings, some of which I now view as extreme, and others that were more manageable.
Before diving into the habits, it's crucial to highlight the importance of having a clear financial goal. I was fortunate to read about the concept of a 75% savings rate, which could allow someone to retire in just seven years. This knowledge motivated me to adopt extreme frugality as a means to take control of my life. Without a strong motivation—like wanting to be present for my future children—it's challenging to maintain such a high savings rate.
One of the most significant changes we made was drastically reducing our dining out. We only ate out two to three times a year. While this may seem extreme, it saved us thousands compared to friends who spent $50 to $100 weekly on meals.
For several years, our diet consisted mainly of chicken, rice, and beans. This choice was driven by cost, as chicken was the cheapest protein available. However, I now find myself disliking chicken due to the monotony of that diet.
We spent only $2,000 on our wedding, prioritizing financial stability over traditional celebrations. My wife sourced her dress from a thrift store, and we opted for a potluck reception. While this approach saved money, I now regret missing out on some experiences and memories that come with a more traditional wedding.
Our honeymoon was a gift from my dad, costing around $300-$400. While we had a great time, I wish we had invested more in travel experiences during that period.
When renovating our first apartment, we sourced materials from thrift stores. This approach was not only cost-effective but also enjoyable, as it allowed us to be creative with our living space.
I developed a habit of purchasing dented or dinged appliances, which saved us significant amounts of money. This practice also turned into a side hustle, as I would buy these items and resell them for a profit.
Instead of letting cash sit idle in a checking account, I began investing. I utilized platforms like Mumu, which offered commission-free trading and high-interest cash management options. This allowed my money to grow rather than stagnate.
I learned to do everything myself, from tiling showers to basic plumbing. This skill set saved us tens of thousands of dollars over the years and provided lifelong benefits.
For years, I only purchased refurbished Google Pixel phones, which cost around $100. This decision saved us from spending on the latest models, which often offer minimal improvements.
We adopted a no-gifts policy for adults, opting instead for shared experiences. This decision was both financially motivated and aligned with our minimalist values.
We avoided pre-cut fruits and vegetables, which often cost significantly more than whole produce. This small change helped us save money on groceries.
For several years, we managed with just one car. This decision was based on the high costs associated with owning multiple vehicles, including insurance and maintenance.
We purchased a multifamily property with a first-time homebuyer loan, living in one unit and renting out the others. This strategy allowed us to live for free and significantly reduced our housing expenses.
In our multifamily property, we converted one apartment into an Airbnb, generating about $2,000 in profit each month. This income was instrumental in allowing me to leave my job.
I engaged in multiple side hustles, including cleaning offices and starting a YouTube channel. By sacrificing leisure activities, I focused on building income streams outside my main job.
Despite earning more money over time, we maintained our expenses. This practice prevented us from falling into the trap of lifestyle inflation, where increased income leads to increased spending.
Frugal living should not be viewed as an end goal but rather as a tool to achieve financial independence. Once you reach a certain level of savings, it's okay to enjoy life a bit more.
I encourage everyone to learn about personal finance and investing. Understanding how to manage money effectively can lead to greater financial freedom.
I created a free calculator to help others assess their financial situation and determine how close they are to financial independence.
Finally, while frugality has its place, it's essential to enjoy life. Once you achieve financial stability, allow yourself to indulge in experiences and pleasures that enrich your life.
In conclusion, saving $100,000 by age 25 was a result of extreme frugality and a clear financial goal. While some habits may have been too extreme, they were effective in helping me gain control over my finances. By adopting a few of these strategies, anyone can work towards financial independence and enjoy a more fulfilling life. Remember, frugality is a tool, not a lifestyle, and it's okay to enjoy the fruits of your labor once you've established a solid financial foundation.
