Well this didn't take long. We've now received a few emails from readers, the majority of which were incredibly supportive and we truly appreciate the good vibes - you all are awesome. But as expected we've had someone wanting all the details of how two 24 year olds afforded a Hallberg-Rassy without taking out a loan or without their parents throwing funds toward the boat. Let's debunk that now - No we do not have any liens on the boat, and our parents haven't helped us with the purchase of the boat, they have however helped both of us with paying for a portion of our undergraduate degrees. Obviously the question that was paired with the original one was the almighty, all-telling, how much do you make? Herein lies the problem with this question, it makes the assumption if you earn a lot then you should have a higher liquid net worth (cash available). However, this is typically not the case.
I used to play the "whose client had the most credit card debt" game with a co-worker of mine every day at work. Majority of the time the client who won each day was a doctor. One of the highest paying professions carried the highest amounts of debt, not just a mortgage or student loans but credit card debt - the worst of them all.
Clearly the question we should be asking is how much do you spend? Let's try an example, you have the doctor who makes 120k a year then spends 100k of it on his monthly expenses, mortgage for the 5bd home, car payments for his Mercedes and wife's BMW then his entertainment budget including restaurants, bars and much more. In the end his take home is 20k per year, and honestly I'd say this is much higher than most doctors I spoke with. Then let's use me as an example, this past year I made roughly 58k annualized (only working May-Dec due to Graduation in May) and my average monthly spending including rent, car payment/insurance, groceries and our small entertainment budget was $1500, annualize it and we get 18k a year for all my expenses. Me the 24-year-old kid straight out of college had a take home of 40k, thats double the above average doctor (derived from my anecdotal on-the-job data). If I can achieve this number, anyone can.
So where do we begin? How did we get from taking home and saving 16% of our pay to 68%. Well it truly doesn't have to involve boring excel spreadsheets where you dissect your spending with a scalpel, if you don't want it to. We had no desire to put that much constraint on our life, nor did we want to do anymore spreadsheets than needed outside of the office. All we had to do was start playing the don't spend any money on weekends game, start selling things we didn't use anymore on OfferUp and add an addition source of income to our daily grind salaries. Then in less than a year we bought a blue-water sailboat, paid off all of my debt and paid off 50% of Kelsey's student loans. So here's how we did it, we abandoned comfort through a variety of ways which ultimately lead us to where we are now.
- Airbnb'd our guest bedroom (Refer to first blog post for details)
- How you can do it? = Easy! Rent a two bedroom apartment not managed by a property manager and just a regular old landlord who is just looking for tenants who pay their dues each month. Or you can buy a 3-4 bedroom house with a decent down payment in an up and coming area then rent out each room individually. We will be doing a video on this soon so stay tuned to our YouTube channel.
- Packed our lunches at work, along with our snacks every single day
- Kelsey fronted this operation and was a huge reason of why we saved so much. She would find vegetarian dishes (Kelsey's vegetarian and the only time I eat meat is when we eat out which is virtually never) on Pinterest and from the Whole Foods app to make for us to eat on a weekly basis. As for where we purchase our food, we shop at Trader Joes once a week and Whole Foods once a month - so much for us being frugal eh? And the reasoning behind Whole Foods is we are huge proponents of eating organic and love their selection - queue the "Overheard Hipsters at Whole Foods quotes".
- Sold a car that carried a huge insurance payment along with high gas costs
- This is a very important piece if you commute to work. I (Ryan) had a 20-mile drive to work and had to feed my 370z premium gas each time it was hungry. A simple equation can give you an idea of how much you spend on driving. My 370z was $50 to fill up the tank and it got around 350 miles on a full tank. So $50/350miles = .14 per mile. Compare this with my sexy Prius which costs $15 to fill up and has a range of 450miles - $15/450 = .03 per mile. Now I am saving more than 4x as much as I used to on gas and commuting to work. If you're paying for the expensive or gas guzzling car seriously look at selling the car private party or through a fair consignment dealership, then if you can't after a few months sell it to Carmax or Vroom. Another option is to bike to work (this what Kelsey does and has for 2 years now) if possible and if not buy a small, eco-friendly hybrid.
- Became an Uber & Lyft driver or if you can't part with the expensive car rent it on Turo!
- We used all three peer sharing sites listed above. Turo was great when I owned the 370z because I couldn't Uber or Lyft with no back seat. Since owning the Prius I've driven a handful of times only on the times when there is a high surge in pricing, or a promotion going on. This is because I make roughly $25 an hour at work so if anything pays me more an hour I'm going to make time to do it. One week I was engulfed with my regular work schedule plus doing my grad school homework and Lyft sent out a promotion that if you drive 10 times in a week they'll give you a $250 bonus. Awful timing Lyft but this was a promotion I could not afford to miss. I calculated that I would make roughly $300 during about 5 hours of work = $60 an hour. Way more than I make at work! I made it happen, and if I hadn't I might have had to delay the dream further.
If you truly want something, you'll make reasons not excuses.