{"id":1541,"date":"2016-05-06T07:21:59","date_gmt":"2016-05-06T12:21:59","guid":{"rendered":"http:\/\/www.investmentzen.com\/blog\/?p=1541"},"modified":"2022-06-07T14:37:14","modified_gmt":"2022-06-07T18:37:14","slug":"how-frugality-allows-financial-independence","status":"publish","type":"post","link":"https:\/\/www.investmentzen.com\/blog\/how-frugality-allows-financial-independence","title":{"rendered":"This Couple Shows You How Extreme Frugality Allowed Them To Become Financially Independent"},"content":{"rendered":"

N<\/span>o matter who you are or where you live, it\u2019s easy to come up with reasons not to save<\/em>. Maybe you live in an expensive city and struggle to pay rent, let alone set something aside. Or perhaps you have pricey hobbies, kids in daycare, or a penchant for dining out.<\/p>\n

Maybe your commute is killing your finances \u2013 with an hour drive each way to work, you\u2019re stuck paying thousands of dollars in car payments, gas, and upkeep every year.<\/p>\n

Whatever your excuse is, almost everyone has one. Of course, some people buck the trend and save more money than most \u2013 against all odds.<\/p>\n

Meet the Frugalwoods<\/h2>\n

\"Family_Easter\"<\/p>\n

The bloggers known as Frugalwoods fall squarely into that camp, even though they have every reason to be spendthrifts. Not only does the couple and their baby live in one of the priciest regions of the United States (Cambridge, Massachusetts), but they both had regular 9-5 jobs and faced the same temptations as the rest of us until recently.<\/p>\n

Crazy enough, they have also had a $2,741 mortgage to contend with. Yet, they have still managed to save at least 50 percent of their income for years. Better yet, they have invested those savings into low-cost index funds all along \u2013 growing their wealth and paving the way towards their early retirement dreams.<\/p>\n

Fortunately, all the hard work and sacrifice has paid off. In just a few short weeks, the Frugalwoods are moving to a 66-acre homestead in Vermont. Once they are settled, they\u2019ll continue working remotely<\/a> as they make the final push towards financial independence. And the property with a $2,741 mortgage? Their old home has now become their first income-producing rental property.<\/p>\n

Yes, their intricate plan is now coming together better than anyone could expect. But, how did they do it? To learn more, I sat down with Mrs. Frugalwoods and picked her brain.<\/p>\n

Extreme Frugality for the Win<\/h2>\n

\"Homestead_MrMrsFW_house\"<\/p>\n

True to their name, the Frugalwoods do everything they can to avoid spending money. And while some might view their lifestyle as \u201cextreme,\u201d the pair has become extremely comfortable with their way of living, so much so that they expound the virtues of extreme frugality almost every day on their blog, Frugalwoods.<\/p>\n

But the couple doesn\u2019t really feel like they are going without, she says. Instead of sacrificing everything,<\/em> they have focused most of their efforts on cutting out \u201cextras\u201d that don’t add value to their lives.<\/p>\n

\u201cWhen we really began examining our budget, it turns out that the vast majority of expenditures were for wants, not needs,\u201d she said. \u201cOur philosophy is to try anything for a one month time frame. If by the end of the month we\u2019re happy with our savings, then we continue on.\u201d<\/p>\n

But, what does that mean? So far, that has meant giving up things like dining out, new clothes, and household help. Oh, and Mr. Frugalwoods has been a bike commuter for years – as in, he doesn’t drive a gas-guzzling car to work. The Frugalwoods barely hit the mall and avoid sales in favor of just not buying anything.<\/p>\n

Another way the Frugalwoods save money: they in-source almost everything imaginable. Where most people hire someone to clean their house or change their oil, the Frugalwoods take care of it themselves. Heck, they even cut each other\u2019s hair to save on the bi-weekly expense.<\/p>\n

And instead of buying stuff, they find it. The Frugalwoods have been known to dig through the trash to find snazzy pieces of furniture, clothes, and perfectly functional household goods.<\/p>\n

\u201cWe consider our lifestyle to be \u201cfrugally luxurious\u201d<\/a> in that we spend on the things that matter to us most and save everywhere else,\u201d she says.<\/p>\n

How the Frugalwoods Save for Early Retirement<\/h2>\n

With a simple lifestyle and a longing for more free time, the Frugalwoods set their sights on early retirement long ago. Still in their early 30\u2019s, the pair is already on the path towards financial independence \u2013 or maybe there already depending on how you crunch the numbers.<\/p>\n

Saving for early retirement was the next common step move for them, she says, simply because they want more time to learn, try, do, and explore. While they enjoyed their regular 9-5 jobs in the public sector, they felt suffocated by all the time they had to spend at work.<\/p>\n

\u201cIt seemed a shame to build a life that required us to put so much time into a single venture, rather than spread our efforts out over the myriad things we want to accomplish,\u201d she says.<\/p>\n

If you’re looking for dynamic investing advice though, look elsewhere. The Frugalwoods\u2019 investing style is admittedly snooze-worthy. Instead of trying to time the markets or pull off any fancy financial moves, the couple invests in index funds regularly \u2013 never selling when the market is high or low<\/a>.<\/p>\n

In addition to maxing out their work-sponsored retirement plans when they had them, they also invest in a taxable brokerage account with Fidelity \u2013 again, with a similar low-key strategy. (If you’re uncomfortable doing this yourself, you can always use a robo advisor service<\/a> to help you manage your portfolio balancing and asset allocation.) Plus, they have other income streams to count on in early retirement and semi-retirement.<\/p>\n

And despite their young age, the Frugalwoods never worry they\u2019ll run out of money. Why? Because they have money coming in all over the place!<\/p>\n

\"Franconia-2\"<\/p>\n

\u201cWe\u2019ve addressed our financial needs from many different angles<\/a> and so aren\u2019t reliant on a single income source,” notes Mrs. Frugalwoods. “We have a rental property, the ability to both work remotely while living on our Vermont homestead, substantial investments, and the possibility of one day generating revenue from our land.\u201d<\/p>\n

Mrs. Frugalwoods now works as a freelancer \u2013 a job she can perform easily at home with her new baby in tow, thus avoiding the high costs of daycare. In the meantime, Mr. Frugalwoods plans to work remotely from their new-to-them Vermont estate for the time being. The longer they can both earn an income<\/a>, the easier early retirement will become when – and if – they walk away from their work altogether.<\/p>\n

How to Retire Early (the Frugalwoods Way)<\/h2>\n

Whether it\u2019s simply spending too much, not saving or earning enough, valuing short-term pleasures over long-term goals, or giving up before we really try, there are myriad reasons why most of us never get ahead.<\/p>\n

Still, nearly anyone could adopt their family’s take on extreme frugality, notes Mrs. Frugalwoods. All it takes is a dose of pure and unadulterated honesty with yourself. You have to ask yourself what you really value, then build your lifestyle around it. Everything that doesn’t matter, she says, should be cut without a second thought.<\/p>\n

While there is more than one way to get ahead, Mrs. Frugalwoods suggests the following steps to get started.<\/p>\n