FI Journal: How I cut spending during the three months of COVID lock-down

I discovered FIRE (Financial Independent; Retire Early) movement a couple of years ago, but for some reasons, I never took any actionable steps to work toward achieving FI. I set a goal of saving 50% of my take-home income, but that was it – it was nothing more than a goal.

I never tracked my spending, let alone lowered my spending. Whatever saving I put asides, I would still spend it once opportunities comes up, let it be traveling, theater, restaurants, or hanging out. Cutting down spending is something I knew I needed to work on when I was setting my journey to FI.

When the lock-down began in March of 2020, that’s when I did a comprehensive assessment of all my spending, line by line. It’s sad that it took a pandemic for me to do it. But I think it also has to do with the fact that as I stuck at home all days, I have more time to listen to various FIRE-related podcasts on daily basis (Thanks ChooseFI) and sit down and really digest the materials on FI (Thanks Millennial Revolution).

The lock-down provided an opportunity for me to reexamine what truly my necessary spending and discretionary spending are. It’s really amazing to see how much spending I can cut down.

The significant drop of spending after COVID lock-down

Spending that I cut

  1. Commute – Without the daily commute, I was able to save ~$150 per month.
  2. Cell Phone Plan – Since I have been home all day anyway, I decided to remove my unlimited data plan and switched to 2GB data plan, which has saved about $40 a month. In addition, Amex provides its Platinum card member for $20 cell phone credit until the end of the year. Which means I am able to save in total of $60 a month.

    This is still not the most optimal as I am currently using Verizon and still paying >$80 a month. Ideally, after I finish paying off my device installment, it would be better to switch to Republic Wireless or Mint Mobile as advocated in the FI community.
  3. Gym membership – Like many New Yorkers, I over-spent on gym membership. I had three gym membership and honestly don’t even know why I signed up for these many membership. I was able to call and suspended all of them, which saved about $250 a month. I am planning to resume the membership of only one gym when things are back to normal, hopefully to cap it at $100 a month by then.
  4. Food – Based on Mint, my usual average of food spending were pretty crazy back then. On average I spent about $1,400 – $1,700 a month, largely due to the fact that I often eat breakfast, lunch, and dinner in the office/after gym. Since March, I was able to cut down to $500-$600 each month for food. Things I have done include making my own cold brew coffee, eating less meals (two meals a day instead of three, since I have been less physically active than before) and 95% of the time I prep my own meal.

    This level of food spending is what I am targeting to maintain when things are back to normal. It will be difficult as the nature of my job is hectic and I often couldn’t find time to meal prep when I need to commute back to office. For now, I am happy that I have been able to save ~$950 a month.
  5. Dry Cleaning – Since it is not a social norm to dry clean your sweatpants, I saved ~$90 a month from this. As the office is likely to continue with folks working remotely, I am hoping to continue saving this expense in the short term.
  6. Streaming Services – One mistake I realized I have made was that I never check how much I have been paying for the month subscription service. During the lock-down, I realized I have been paying for the DVD plan for almost a year without using it. I actually suspended the DVD plan 2 years ago as I was traveling, but never realized the service was resumed. It was honestly quite infuriating when I found out.

    I canceled the DVD plan and downgraded the services. In addition, Amex Platinum card member has allowed user to get $20 streaming credit. So basically I have been able to cover the monthly Netflix. Saved $20/month.
  7. Financial Times / NYT – I discontinued my subscription to newspapers. Our lives have been overflown with news already anyway. Saved about ~$50 per month. Not planning to resume the service.
  8. Contact Lens – Even though this is an FSA spending, I stopped the auto-refill of contact lens as I do not go to gym as often as before. I am okay with wearing glasses while working out at home. This probably saved ~$20 a month.

Based on the fixed expenses that I identified – I have been able to save roughly $1,500 on necessity spending. The other savings probably coming from late night Uber from work/gym, traveling/excursion, shopping, concerts, etc.

Other Saving To-Do list

  1. Fios – I need to cancel my Verizon Fios. Currently it is costing me $142 a month. I do not really watch any show. I have not cancelled it mainly because I thought there’d be value in following the latest cable news during the pandemic. As it turns out, it probably caused more anxiety
  2. Auto insurance – I need to show for a cheaper car insurance. Even after the COVID discount, I am currently spending $140 a month on car insurance. I am planning to look for a cheaper auto insurance
  3. Cell Phone – Once I pay off my device, I am planning to switch to Republic Wireless/ Mint mobiles

2020 Financial Goals

  1. Max my 401(k) -DONE
    The decrease in spending as discussed above gives me to comfort to max out my 401(k) contribution. Again, another thing I should have done long time ago, but glad I am able to update my contribution during the lock-down.
  2. Opened and maxed my IRA ($6,000)- DONE
    Again – something that I always thought I should do but never took any action. Thanks to the delayed IRS deadline, I was able to max the 2019 contribution. (Thanks ChooseFI for the tips!)
  3. Opened taxable investment and invest in index funds (VTI, VEU, VUG, BND)- DONE
    This year is the first year I finally took the action to open brokerage account to invest in ETFs. I am not sure why I did not do it sooner. I guess I was intimated by the investment process. But it is actually simpler than I expected.

2020 Life Goals

  1. Continue to blog at least once a week on my FI journey – ONGOING
    I started this blog during the lock-down. I received a lot of great tips and advice from other FIRE bloggers, and I hope through this blog, I am able to keep myself accountable while also able to share some new perspectives. Meanwhile, I can gain some new skills in blogging/writing.

Thanks for reading! See you soon! – Kaya Road

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