![]() ![]() Since then, we’ve gone into a slack period in the “thinking about money” department. (Of course, we’ve started little businesses and done smaller side work since then, but that was for reasons other than earning an income to live on). So the years passed and the lines on the spreadsheet went up, and when they were high enough to pay for expenses with passive income, we quit our jobs and declared ourselves retired. In reality it does not happen, of course, but the mindset of relentlessly thinking over every single purchase and trying to optimize it away is the thing that lets you develop your Frugality Muscle over time. With tracking, your goal is NO waste, so you challenge yourself to cut every category, except eating, to zero. With a budget, you allow yourself certain quantities of waste and try to stay within them. When you’re shooting for financial independence, I really like the “track your spending” method better than the “budgeting” method. maybe I don’t really NEED to throw this extra bottle of wine into the grocery cart – I’ll save a few bucks and go on an alcohol-free health kick this week, and go for a new record in low spending this month”. My feeling on the matter was, “Well, since I am spending much less than I earn, what’s the point of using a budget – I already know there will be no shortage!” The thing I was missing is that you should still know how much you are spending, because that tells you how much income your investments will need to start providing once you start your early retirement.Īnd as soon as you start tracking your spending, even the most hardcore frugalist will suddenly gain extra motivation to optimize it. ![]() We felt pretty frugal overall and thus had never used a budget of any sort. We also started to have a look at our spending. Dividends and appreciation on stocks and real estate are usually small percentages, but when multiplied across large numbers, they start to surprise you. It became quite exciting when we noticed that the ‘stash itself would often produce more income than we did with our work. The spreadsheet grew fancier over time, adding graphs, goals, and historical snapshots. So every weekend, we’d log into our separate Vanguard accounts and compare notes.Īs this simple thrill wore off, we started a spreadsheet called “Net Worth” that automatically tracked the stock holdings in Vanguard and other accounts, as well as any cash in the bank and the value of our primary and rental houses. and I started to become more interested in watching the progress of our early retirement savings project. Way back in our working and saving days (which peaked between 2000-2005), the Mrs.
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