Category Archives: Cutting Costs

The Secret Recipe to an Extremely Early Retirement


Working in government, I have the benefit of a pension which makes it possible for many employees to retire at around age 55. The mainstream media always talks about how it’s impossible to retire so I counted my lucky stars that I would not only be able to retire, but retire at an early age. However, when I discovered the blogs, Early Retirement Extreme and then Mr. Money Mustache, where the bloggers wrote about retiring in their 30s, that sounded even better than retiring at age 55. (For purposes of this post, I’m going to say retire but I really prefer financial independence. Retiring doesn’t mean you stop working, just that you no longer NEED to work for money.)

Early Retirement is Simple

One of the most important blog posts I’ve read since learning about the possibility of early retirement is “The Shockingly Simple Math Behind Early Retirement.” Basically, it says that how long it takes you to retire depends on how much you can save. According to the math here, which assumes a rate of return after inflation of 5% and that you live off 4% of the nest egg in retirement, it will take 45 years to retire if you save 15%. However, if you save 50% of your income, you can retire in just 16 years! You can play around with the calculator here, but I think the early retirement/fi spreadsheet on Budgets Are Sexy is more detailed and a better predictor of when you can retire because it takes into account projected expenses in the future. Your expenses today may be greatly different from your expenses in the future, especially when some early retirees do so before they even have children.

Being obsessed with the Financial Independence and Retire Early movement (FIRE), I’ve read countless blog posts from various bloggers who have reached early FIRE or on the way there. While everyone’s journey is unique, you start to see some commonalities between those who are able to accomplish this awesome feat. Early retirement is simple…but it’s not easy! It takes discipline and dedication. Here are the factors that I’ve noticed in the journey of extremely early retirees:


Now that the FIRE movement is getting more mainstream, the media has featured a good amount of stories focused on early retirees. Most people assume that you have to make an extremely high salary to retire so young. It cannot be disputed that earning a high income makes saving a larger percentage of your income easier. The gap between your income and your expenses are the two determining factors in how much you can save, and ultimately, how early you can retire. If you earn $100,000, it is much easier to live on half, compared to someone making $30,000 trying to save half and living on $15,000.

A couple of the early retirement bloggers are pretty transparent with their income in their explanation about how they reached early retirement so you can get an idea of how much they earned and how much they saved. Justin who blogs at Root of Good retired at age 33 and during his career, he made between $48,000 and $69,000 while his wife made between $40,000 to $74,000. Mr. Money Mustache started off making $41,000 and reached $125,000 while his wife’s income ranged from $44,000 to $70,000. Yes, they earned good incomes but many people earn this level of income or higher, yet live paycheck to paycheck and are no where near ready for retirement.


If you make a healthy income then you need to assess whether you are spending money on things that really bring you happiness, otherwise you probably have a lot of excess spending you can cut out to increase your savings rate. If you are not making much, then you need to work to increase your income or work on a side hustle. Here’s a list created by Mr. Money Mustache of jobs where you can earn over $50,000 which do not require a degree. Read it part 1 here and part 2 here.

Great Reads

Steve from Think Save Retire wrote a blog post titled Financial Independence is not Just for the Rich or Wealthy which really encapsulates the idea that high income isn’t the only way to reach FIRE.

The bloggers at Millennial Revolution have a couple posts breaking down how they reached FIRE which is very informative.

Also, listen to this Mad Fientist Podcast about Joe (aka Arebelspy a Mr. Money Mustache forum moderator) and his wife, who are both teachers and were able to reach FIRE.


Having a good income is very helpful, however, if you don’t “mind the gap”, and constantly upgrade your lifestyle, you’ll never retire no matter how high your income is. Being frugal with your money is also an essential part of the equation. Some of the tips to save money that many early retirement blogs suggest are to live close to where you work to cut your commuting costs, bike to work, cook food at home rather than going out to eat, cut out cable and other excesses that don’t really add value to your life. The bloggers at Millennial Revolution argue that renting versus buying in overpriced housing markets is the key to retiring early.

Another assumption that many outsiders make about the FIRE movement is that these early retirees are living like paupers so they can save up enough money to continue living like paupers. They argue that they would rather continue working and “living” their life, buying nice cars and a big house, and filling that house with big screen TVs, and going on vacation once a year when their employer allows them to do so. What they don’t understand is that frugality has nothing to do with depravation and sacrifice, and everything to do with finding what is important to you, and living a rich life. A rich life doesn’t have to be life filled with consumption and spending. Clearly they need to change their mindset.

Great Read

Check out this great post by Mrs. Frugalwood explaining that frugal living DOES NOT mean deprivation: Frugality is not Deferred Spending.

Low Cost of Living Area

Living in a high cost of living area is probably my biggest obstacle in reaching early retirement. It is harder to have a high savings rate if you live in a location where everything is more expensive…especially housing. Of course, the reason most people live in high cost of living areas is because the income is often higher. The reason I live here is because it’s where I grew up and where our family and friends live. Because of the higher income in high cost areas, there are many early retirees or prospective early retirees who there, but most of them move or plan to move to lower cost of living areas after they retire.

The bloggers Mr. and Mrs. Frugalwoods lived in Boston, but moved to a homestead in Vermont. Jeremy and Winnie from Go Curry Cracker used to live in Seattle, but now travel the world, and often live in low cost areas in Southeast Asia and in Mexico. Kristy and Bryce from Millennial Revolution lived in Toronto and also now travel the world. The bloggers at Freedom is Groovy credit their move from Long Island, New York to Charlotte, North Carolina as one of the main reasons they were able to reach FIRE.

There are also bloggers who live in low cost areas and continue living there. Mr. Money Mustache lives in Longmont, Colorado and Justin from Root of Good lives in Raleigh, North Carolina. There is a common misconception from many people who live in high cost of living areas that moving to a low cost area means taking a significant pay cut and having to worry about the availability of jobs. They also picture low cost of living cities as some rural town in the middle of no where with nothing to do except going to watch high school football and the local bar. That’s just not true. There are many cities in the U.S with vibrant economies, a plethora of entertainment activities yet a much lower cost of living. According to Investopedia, a couple of cities with high paying jobs with a low cost of living are Houston, Dallas, Charlotte, Denver, and Austin. For instance, a good unit in an apartment complex in Austin, Texas will typically cost between $850-$1,000 per month to rent.


The blogger at The Frugal Vagabond created the website The Earth Awaits which is a great tool to find great cities you can live in based on your budget and you can filter based on other preferences like crime rate, pollution, and lifestyle.

For those living in high cost areas, check out my post Is NYC Really That Expensive? and the Frugalwoods’ post The Ultimate Guide to Frugal Boston Living.


Deciding whether to have kids and how many kids you want to have are very personal questions. While the cost of children may not be as expensive as some may have you believe ($241,080 or $446,100 in the Northeast), having children will no doubt add to your expenses. Having kids will also affect the amount of time you have to work on side hustles or to work overtime. However, having kids may also motivate you to reach FIRE at an early age. Mr. Money Mustache states that he and his wife wanted to retire early so they could be there to raise their child.

Great Reads

My wife and I love kids and always knew we wanted to have them. The delay in reaching FIRE because of those little ones is fine with me, but if you are not sure about having kids, you shouldn’t let societal pressures make that decision for you. Also, some parents feel like they should have a second child so the first child has a friend. Read the following posts if you’re struggling with those decisions.
Great News: You’re allowed to have only one kid! from Mr. Money Mustache
Why My Wife and I are Choosing to Remain DINKS from Think Save Retire

And if you think children are expensive, check out this post from Mr. Tako Escapes:
The Myth of the Expensive Child

Smart Investing


Having a high savings rate is very important in determining whether you can retire early, but no matter how high the savings rate is, you’re not retiring if you stuff your savings under a mattress. You’ve got to let your money work for you. The early retirees who got there through investing in the stock market are mostly proponents of index investing. A lot of people probably assume that trading high flying stocks or that trading options or other complex investing strategies is the way to riches, but more often then not, you’ll likely lose more money than you’ll make.


To learn more about index investing, go to the Bogleheads wikipage which is investing advice inspired by Jack Bogle, creator of index funds. You can also get the book The Bogleheads’ Guide to Investing

I also recommend reading the Stock Series on Jim Collins’ personal finance blog or get his book The Simple Path to Wealth: Your road map to financial independence and a rich, free life

Real Estate

Investing in rental properties and living off the income produced by them is a great way to reach financial independence. Admittedly, I am a lot less familiar with this avenue but I am learning more about it and bought my first rental property a year ago. At first, I thought investing in real estate would be intimidating but the more I learned and the more I saw the benefits in the use of leverage and tax advantages, it became clear that investing in real estate is a viable path for many to reach FIRE.


Paula Pant who blogs at Afford Anything has a lot of posts relating to real estate investing. She has a fantastic post answering the most frequently asked questions about real estate investing, she has monthly income reports, and recently launched a course about this topic.

Another excellent resource is the Biggerpockets website and they also have a free beginner’s guide to investing, podcasts, blog, calculators and a plethora of other useful tools at your disposal.

Others who have used the power of real estate to reach FIRE are Chad Carson, Eric Bowlin, and Joe (aka Arebelspy).

Smart Tax Planning

Saving a large percentage of your money is great and so is investing it wisely, but if you can keep Uncle Sam from taking a big chuck of your money away, that is another big win. Taxes are definitely not an exciting topic and many people avoid it like the plague but not strategically planning your taxes is ignoring big savings. Make sure you do your best to keep your hard earned money!

Great Reads

Definitely read $150,000 Income, $150 Income Tax and Never Pay Taxes Again.

Also check out the Mad Fientist’s blog posts: HSA-The Ultimate Retirement Account and How to Access Retirement Accounts Early.

Work in Retirement

What? Isn’t the point of reaching FIRE to NOT work? No, it means that you don’t need to work but you certainly are welcome to work on things that you are passionate about and that are fulfilling. Since most early retirees are still young, capable, and intelligent (you’d have to be to reach FIRE early right?), it is likely that they may continue to do some type of work, and sometimes they will earn income from it. Mr. Money Mustache likes building things so in his retirement, he has earned some income building/renovating houses…he’s also earned a good amount of money from his very popular blog.

If you are as excited about the FIRE community as I am, check out the following lists of bloggers who have reached or on their way to FIRE:

Early Retirement Blogs for Everyone created by Joe from Retire By 40 and The Secret Fire Cult- And Why You’ll Want to Join It created by Julie from Millennial Boss.

Are you on the path to early FIRE? What other factors do you think are common among those who reach early FIRE?

“It’s Supposed to be That Expensive!”

Photo Credit, David Niblack,

Photo Credit, David Niblack,

A higher priced product does not necessarily mean a better quality product. While it is true sometimes, often times, we pay a higher price only because we perceive something to be a higher quality. Other times we pay for higher priced items because we like that brand and are conscious of image. Here are a few things that people assume you have to pay a lot for because marketers have brainwashed us into thinking that the price point is the norm. The companies in these industries also have monopoly/oligopoly over the industry.


Glasses are expensive. Recently, I received a coupon for “$200 off” glasses at an optical store and I thought I would get a great deal, but in the end, the salesperson still told me the glasses would cost over $500. I always assumed glasses are just expensive and there was just no way around it. Then I read about a company, Warby Parker, that was turning the eye-wear industry on its head. The founders explained that the reason why eyeglasses are so expensive is because most frames are manufactured by a single company, Luxottica, which controls 80% of the major brands. Not only do they own most of the major brands, they also own a majority of the eyewear stores, including, Lenscrafters, Pearle Vision, Sears Optical, and Target Optical, among others. But wait there’s more! If that wasn’t enough, Luxoticca also owns EyeMed, the second-largest vision care insurance plan in the U.S, which, if you have coverage from Aetna or Anthem Blue Cross Blue Shield, is your carrier. Now it makes sense, the glasses are expensive not because it costs a lot to make, it’s expensive because one company has a monopoly and can control the price. According to an article on the DailyMail, Oakley had a dispute with Luxoticca about pricing so it dropped Oakley from Sunglass Hut, which is surprise surprise, owned by Luxoticca. Luxoticca would later buy out Oakley. So because Luxoticca controls the market, they can price glasses at over $200 when they cost only about $30 to make.

So if you want to find an affordable pair of eyeglasses, you can check out Warby Parker which sells glasses online but they have physical stores in some cities. I haven’t bought glasses in awhile and haven’t gone there so I don’t have personal experience but you can read about Kristin’s experience, who blogs at the Wild Wong. There are also other online eyeglass stores like Zenni Optical, 39 Dollar Glasses, and Kristin wrote about some of those online stores as well. I know many people may not feel comfortable going to an online store but Warby Parker allows you to try 5 frames for 5 days and has a 30-day no questions asked return policy. Also, I read that Costco has good prices. Bob Niedt, who writes for Kiplinger, wrote about his experience buying glasses at Costco . I’m not sure whether Luxoticca controls them, but the DailyMail article mentioned Costco as its competitor.


When I bought my first mattress, I remember my mom telling me not to scrimp when buying a mattress. She told me that mattresses are worth it since we use it so often and that mattresses are supposed to be expensive. This was somewhat odd to me because I grew up with frugality ingrained in my head by my parents so expecting to pay a lot was rarely something that was said to me. My mom is not the only one though and I’ve heard many people, including those who blog about frugality, say that their mattress costs thousands of dollars, but is worth it. I’m not saying that a comfortable mattress is not worth it, it certainly is. But does it really have to cost that much?

If you’ve been paying attention, there seems to be a lot of internet ads for online mattress companies. Much like Warby Parker, these online mattress companies are trying to turn an old industry on their heads. One such company, named Tuft & Needle, says that “mattresses are typically marked up 6-12 times and consumers are mostly paying for “gimmicks, unfair retail markups, sales commissions, and wholesaler’s profits.” Another online mattress company, named Helix which makes customized beds, argues the same thing. According to their website, their team conducted substantial research and “found that there is typically a fairly direct increase in quality as price increases, but only up to roughly the $1,000 price point for a queen. Beyond that point, typically brands are just charging you more for the same materials. Adding on extra features sounds nice, but in practice these extras aren’t adding much to your sleep quality.” The CEO of another online mattress company, named Casper, said that “statistically, lying on a bed for four minutes has no correlation to whether it’s the right bed for you.” He explains that hotels don’t ask people what beds they want, and yet, we often find those beds very comfortable. He said that the salesmen at mattress stores like to play games with customers to get them to buy the what they say is the “most comfortable” mattresses which are always the most expensive ones.

The mattress industry has striking similarities to the eyeglass industry. An article on Priceonomics said that the “whole mattress industry seems to be a giant, make money hand-over fist, anticompetitive racket.” They are controlled by a small amount of companies. Sealy, Serta, Simmons, and Tempur-Pedic make up 59% of the industry revenue. Mattress wholesalers have gross margins of 41 to 64% and retailers mark that up another 96% on average.

If you have the time, listen to this Freakenomics podcast entitled Are we in a Mattress Store Bubble?, which explains why a lot of these start ups are selling mattresses and why there are so many mattress stores to begin with. Mattresses have high markups. Retail profits are steep because manufacturing costs are low. A mattress with a retail price of $1000 costs about $250 to make. While new mattresses have special gels and foams, most people buy a mattress that is similar to the basic innerspring mattresses that have been around for ages.

I still have a mattress that I bought about seven years ago so I haven’t had the chance to try out these new startups. However, a few personal finance bloggers whom I trust gave Tuft and Needle excellent reviews. Amazon reviews also seem excellent. Their return policy is pretty generous. If you are someone who just can’t fathom buying a mattress on the internet, you should at least make sure to try to haggle when you buy at the mattress store. There is a high markup and they are definitely open for negotiation. I wasn’t even thinking to negotiate when my wife and I bought a mattress from Sleepy’s years ago. We were just looking around and not ready to buy so we left the store, but the salesman immediately told us he would knock off $100 and we took the deal. I’m sure we could have gotten an even bigger discount!


They say two months salary for engagement rings right? Is that net salary or gross?? And who made up this rule? Demand for diamonds is a marketing invention, argues Rohin Dhar in a Priceonomics article. Before the 1940’s, the diamond industry was dying so De Beers went to Madison Avenue for help. They marketed diamonds as a symbol of status and love by enlisting the help of Hollywood stars and the fashion industry. The marketing campaign was so successful that in 20 years, a diamond engagement ring was practically a requirement to marriage. Today, 80% of women in the U.S receive diamond engagement rings. This custom has also spread to other countries. And as to the rule about two months salary, the De Beers marketing machine made that one up. Actually, it was only ONE MONTH’S SALARY, but since that rule worked so well, they figure they should increase it to TWO MONTHS!

Like the first two industry, De Beers is pretty infamous for having a monopoly over diamonds, in addition to creating the market for it, in the 1980s, De Beers controlled almost 90 percent of rough diamonds and they would manipulate the markets by buying up mines and intimidating competitors.

Diamonds are marked up 100% to 200%, and if you want to sell your diamond back, good luck getting the wholesale price. According to an Atlantic article, Jack Brod, president of Empire Diamonds, which is a company that buys diamonds estimates that a half-carat diamond ring, which might cost $2,000 at a retail jewelry store, could be sold for only $600 at Empire. Jewelry retail stores don’t buy back diamonds because their offer of lower than wholesale price for something that they just claimed was so valuable would be a bad optic. The whole house of cards may just fall down. Diamonds are not an investment, they are merely a status symbol. Unfortunately, there is no internet company to disrupt this industry, because unlike eyeglasses and mattresses, diamonds have no intrinsic value. Instead, maybe people can buy a different type of gemstone, however I know there is societal pressure to get a diamond. I did read a very interesting alternative on a post from Millennial Boss blog where the blogger sets out her grievances against the diamond industry and said that she went with an alternative: moissanite, which looks strikingly similar to a diamond. And one final reason to consider an alternative to diamonds, Blood Diamonds!

What other products are highly marked up and not worth the cost? Do you think these internet companies can disrupt the monopolies in those industries? Have you tried any of the above-mentioned companies?

This post does not include affiliate links.

Mind-blowing Ideas Found Reading Blogs



Even before I started my own blog, I was a blog reading addict (mostly personal finance blogs). I’ve learned so many great things and gotten so many ideas from reading blogs, which include ideas that the main stream media often don’t talk about. I was tired of reading the recycled articles about making a budget and contributing to your 401K up to the employer match. I didn’t want to read any more stories about how early retirement was almost impossible (and by early they meant 50’s) and that even retiring at 65 might be a pipe dream. Here are some of the amazing things that I’ve learned thus far:

Retire in your 30’s

I always thought that, like most people, you get a job, work for 40 some odd years and retire in your 60s. I thought I was doing an awesome job saving for retirement when I opened an IRA account and increased my 401K contribution over the amount that my employer matched. Since I was working in government where I had a pension, I started thinking that retirement at 55 would be possible and thought that was incredibly awesome. Now when I stumbled upon the Early Retirement Extreme blog where the blogger, Jacob, said that he retired after working 5 years and was not yet 30, my mind was blown. He was a little extreme with his frugality, but then through Jacob’s blog, I found Mr. Money Mustache and his story really made me think that early retirement was possible. He went into detail about how he and his wife retired early, and argued that early retirement didn’t mean a life of deprivation, explaining often that he lives a very fulfilling life. I’m not going to be able to retire in my 30’s, but it’s possible I get there in my 40’s.

Simple, Stress-free Investing with Superior Results

I have talked about index investing many times on my blog. I believe in it and I am glad that I found this strategy. It wasn’t always this way though. Like many others, I used to chase returns by trying to a hit run by investing in the next hot stock and by investing in mutual funds which had the best returns. Now I realize that it is difficult if not impossible to consistently beat the market, so I just stick with low-cost index funds. Warren Buffet has encouraged most investors to just invest in low-cost index funds and I’m going to take his advice. This investment approach has also reduced my stress. The market drops a few hundred points! There’s a recession coming! Britain is exiting the EU! I’m investing for the long haul and I don’t really care about the stock market fluctuations. I continue to invest and stay the course. I’m not exactly sure when I first learned about index investing but it was likely on the Bogleheads’ forum.

Don’t Pay Taxes

You know how the saying goes that “there are only two guarantees in life: Death and Taxes.” Well, what if you could pay very little or no taxes? Wait wait wait, I’m not saying you should be like Wesley Snipes and get convicted of tax evasion. There are legitimate ways for regular working Joes to shelter our money from taxes. When I read the blog post title $150,000 Income, $150 Income Tax and Never Pay Taxes Again, I was very interested. We often hear about maximizing our returns when investing, but most times we ignored tax savings. Taxes are boring and complicated. Nobody really wants to deal with them. Heck, most people I know have no idea about their own taxes! They send their tax documents to the accountant who files the taxes for them. The tax policy in the US targets people with earned income so if you reduce your taxable income by “making your take home pay as small as possible,” you can avoid paying a good amount of taxes. Justin who blogs at Root of Good and wrote the post about paying only $150 in income tax with a $150,000 income, suggests that “you do everything you can to make your take home pay as small as possible” by maxing out tax advantaged plans like Retirement plan contributions (401k, 457 or 403b plans), flexible spending accounts, health savings accounts, and others. I’m pretty sure that after I read this post, I immediately logged onto my 457 plan online and maxed out my contributions.

The post about never paying taxes again was found on the Go Curry Cracker blog and it gave four simple rules to eliminate taxes:

◾Choose leisure over labor
◾Live well for less
◾Leverage ROTH IRA Conversions
◾Harvest Capital Losses AND Capital Gains

I’m especially a fan of choosing leisure over labor to eliminate taxes. That’s a win win! This advice is geared more towards those seeking or near early retirement, which is what I often dream about.

Out-of-State Real Estate Investing

I always wanted to invest in real estate but it didn’t seem possible because real estate was so expensive in the area where I lived. When I read that the blogger FI Fighter, who also lived in a high-cost-of-living-area, invested in real estate in states where the prices made more sense and where the properties would cash flow, I was very intrigued. I was somewhat skeptical at first but after some due diligence and research, I jumped in and also purchased a rental property out-of-state.

Travel for Free

I used to focus on earning cash back on my credit cards. When I read bloggers write about earning travel points on credit cards and going to exotic locations for nearly free with points, I didn’t really pay much attention because I always figured it was just too good to be true. There was a catch, right? However, after I read more and more stories of people were doing it, I was of course, interested to see if I could get in on it too. After learning some of the “tricks of the trade” with travel hacking, I’ve been able to score some free flights and have stayed at hotels (some pretty luxurious ones) for pretty much free. If you are someone who overspends with a credit card, travel hacking is not a good idea. If you are disciplined with your spending and are an organized person, you can definitely take advantage of travel hacking. I think I first started reading about travel hacking on the Flyertalk forums, but the information can get pretty technical and it might be intimidating to newbies. I think from that forum, I found the Million Mile Secrets blog which is a great resource for those interested in pursuing this. If you want to learn more about this area, there is even a free online course about the topic on Travel Miles 101. If you want even more hand holding, you can contact Holly from Club Thrifty with your ideal itinerary and she will help you create a “credit card rewards-fueled plan that can make your travel dreams come true”

You Can Really Make Money Online!

I always thought that there was an opportunity to make money online but I didn’t know how, plus I am not the least bit technically inclined. Reading articles where bloggers reveal how much money they earn online really opened my eyes to the opportunities out there. Check out the income reports on Club Thrifty and Making Sense of Cents and tell me you don’t want to learn more about this possibility. I definitely am and will need to learn more about how to earn some money online! The best thing about making money online is that you can be often work from anywhere and your schedule is a lot more flexible. Also, if you do it right, a lot of the income can be passive.

Drastically Reduce the Cost of Your Cellphone Service

I was in a family plan with AT&T and had an employer discount. I thought that was the best that I could do. There was no other way to reduce this expense unless I went with some unknown network which was probably unreliable. Then I read Is Your Cellphone Plan Ripping You Off? on the Saving the Crumbs blog and I knew that I could saved a lot of money by switching. Being that Cricket Wireless uses AT&T’s network, I figured there was no downside to the switch. With Cricket Wireless’ family plan, you can have 5 smartphones with unlimited talk and text and 2.5 gigs of data (after which your data speeds are reduced) for $100. That is less than half of what you would pay if you had a similar plan on AT&T. So why wouldn’t I switch? I’ve also heard great things about other plans like Republic Wireless and Ting which are a lot more affordable that the traditional plans, but I haven’t tried them. If you’re interested, you can check out the review on Republic Wireless here, and the review on Ting here.

Consider an Adjustable Rate Mortgage
When I was purchasing a co-op, I went to the bank and the loan consultant just assumed that I was looking for a 30 year fixed mortgage. I didn’t know any better and after the housing crash in 2007, there was such a stigma with adjustable rate mortgages that I just assumed that a fixed mortgage was superior. I truly regret not doing more research about this because I would have saved a lot of money if I didn’t go with conventional advice. When I read Financial Samurai’s post, 30-Year Fixed Mortgage Loan or an Adjustable Rate Mortgage (ARM)?, I knew I made a costly mistake. Here is an excerpt of what he had to say:

“First of all, the average duration one lives in and owns a home is 7 years. If that’s the case, what on earth are you doing borrowing a 30-year fixed rate mortgage for? A 23 year + overestimation of ownership is a serious miscalculation based on the statistics at hand. With a 5/1 ARM, your underestimation is only 2 years, but you already have baked that in”

We bought a co-op which is a junior 4 (small dining alcove converted into a small bedroom). Being that our family was growing, it was very likely that we’d outgrow the apartment in 5 to 7 years. I did run the “rent vs buy” calculator and given other factors, I think it made sense to buy a co-op even given this timeline. But it made no sense to get a 30-year fixed mortgage. If I had gotten a 5/1 ARM, I’d reduce my interest rate by 1% saving over a thousand dollars a year. *Face Palm*

Do you see anything here you might implement in your life? Have you read anything tips or ideas on other blogs that was really mind-blowing? If so, please share in the comments!

In Defense of the Latte Factor

Caffè latte as being served at Kaffebrenneriet Torshov, Oslo, Norway 2 600x600 100KB

The first personal finance book I read after graduating college was The Automatic Millionaire by David Bach. It was an eye-opening book and I loved the idea that you could “automatically” become a millionaire by paying yourself first and investing in a diverse portfolio of low-cost index funds. Another concept that was popularized by Bach and his book was the Latte Factor. He recounted a story of how he used to frivolously spend money on a latte everyday and that if he had saved that money instead and invested it, he would have a fortune. Check out the latte factor calculator and see how much money investing small savings can amount to.

Lately, I have seen a lot of criticism of the latte factor. Some argue about Bach’s math and how he calculates the amount you would amass by cutting out the daily latte. “Oh a latte doesn’t cost $5!” “The rate of return he used is too high!” And many argue that they don’t want to cut out their daily latte, that it wouldn’t make much difference, and that they’d be better off focusing on big expenses, not a $5 daily latte expense. One personal finance guru, who I respect, even said that he’d love to “catch” those who tout the latte factor at a Starbucks. I can just picture him seeing Bach or another latte factor supporter at the Starbucks holding a Venti Iced Vanilla Latte and yell, “I caught you red-handed! I knew you’d break down and buy a latte you HYPOCRITE!”

Critics of the Latte Factor seem to be taking the latte factor too literally. Nobody says that you can’t indulge in a latte once in a while. The latte factor is more of a metaphor to demonstrate that if we spend money on little expenses constantly, they add up. On the other hand, if we saved that money and invested it, the magic of compounding over years will give you a nice pile of cash. Many of the critics also argue that we should focus our energies on bigger expenses like housing and transportation, which are a much bigger proportion of our monthly expenses rather than waste time bothering with a $5 indulgence. While I agree that we should make sure that those expenses are reasonable, how often do you really have to spend energy on them. How often do you buy or rent a house? How often do you purchase a new car? Making sure you don’t buy more house than you need or a car that you can’t afford is important but it doesn’t mean you won’t have energy to focus on smaller expenses. You can do both!

The Latte Factor concept is more of a mindset where you are more conscious and intentional with your spending rather than buying latte, going out for lunch, getting a drink after work because, “hey it’s only a couple bucks, it’s okay” mindset. It’s not about deprivation and sacrifice. It’s about conscious and intentional spending. If you change your mindset and try brown bagging your lunch a few times or brewing your own coffee at home rather than buying it outside, you might find that this alternative option works just fine. It doesn’t mean that you are required to ONLY drink home-brewed coffee and that if you step into a Starbucks, you should be called a fraud by a personal finance blogger.

Small savings do really add up, but they won’t if you just leave it in your checking account. Most likely the money in your checking account will start to burn a hole in your pocket and there will be temptation to spend the money you saved by foregoing small expenses. Additionally, that money is not earning much if any interest. You need to invest it So start tracking your expenses and make a budget, which may include money for indulgences like lattes. Find what small indulgences that you can reduce or get rid of and make sure to have the excess money automatically sent to your investment accounts. I recommend using Personal Capital (affiliate link) to help with tracking your expenses and net worth.

Does cutting small expenses really make a difference? What small indulgence have you reduced or eliminated?

Trip to Buffalo/Toronto and Money-Saving Travel Tips

Niagara Falls

Last spring, I went with my wife and son to Florida on our first vacation after our son was born to take advantage of the free flight as he had not turned 2 yet. We thought about heading down to Florida again this year for the nicer weather, even though we would have to pay for our son’s flight. However, due to an over abundance of caution relating to the Zika virus, we wanted to avoid areas with mosquitos being that Mrs. LRC is pregnant. Mrs. LRC’s brother has been telling us to visit him up in Buffalo so we figured we’d take him up on the offer and go to Toronto as well. Driving to Buffalo is doable but I wasn’t sure I wanted to do that with a pregnant wife and a toddler in tow. Plus, flights to Buffalo from NYC can be pretty affordable and being that we only had a week, I didn’t want to spend that much time driving.

The Flight

I am not a travel hacking aficionado but I have accumulated a good amount of points which can be used for flights. However, many flights I found using points required layovers which would be a hassle for a flight that should only take an hour. And did I mention I was traveling with a toddler and pregnant wife? We opted to take JetBlue which had flights for $59 each way. We used an app called “Hopper” to determine if that would be the best price or if it might drop even more. At $59, I didn’t think it could get much lower but it was good to get confirmation. You can also go to the Kayak website which also has a fare predictor.


We stayed in hotels in both Buffalo and Toronto for free using Chase Ultimate rewards points. You can transfer these points to various airlines as well as hotels. When I signed up for the Chase Sapphire Preferred credit card, I received 50,000 points after spending $2,500 (it has been increased to $4,000 now). I also have the Chase Freedom card and the Chase Ink Plus which is why I have a decent stash of Chase Ultimate Rewards points. During our stay in Buffalo, we stayed at a Hyatt Place hotel, which only required 5000 points a night and I think that was an excellent value. I mean the sign up bonus alone would have given me 10 free nights and the hotel costs about $120 a night. In Toronto, we stayed at a Holiday Inn Express using points. Both hotels offered a nice and free breakfast where we filled up so we usually had a light lunch. Some travel hacking bloggers often write about fancy luxurious hotels you can stay at with points, but fancy hotels rarely offer a free breakfast. I want my hotel to be clean and to have the essentials but I don’t need to live in the lap of luxury. I want to spend most of the time doing stuff OUTSIDE of the hotel.


I hadn’t been to Niagara Falls since I was a child so I was looking forward to seeing breath taking views, as well as see my son’s face when he say it. He thought they were pretty awesome too, but then he got distracted by some small rocks on the ground. The Niagara Falls Observation Tower offered great panoramic views of the falls. Our visit was free with the exception of parking. There are activities like Maid of the Mist and Cave of the Winds, but since it was still on the chilly side being that it was only April, we passed on them. We also saw the falls from the Canadian side on our way back from Toronto and it definitely offers a different perspective. Unfortunately, it was cloudy and started to drizzle a little after we arrived. Nevertheless, it was still an amazing sight to behold. There did seem like a lot more “touristy” things to do on the Canadian side like a huge Ferris wheel, a tower which I’m sure offers a great view of the falls, a haunted house, wax museum…if you’re into that kind of stuff. Other things we did while in Buffalo were to check out the downtown area which has been revitalized. Canalside along Lake Erie would be a great place to do some boating or biking if the weather was warmer. There are free concerts, festivals and a variety of other events held there, but mostly in the warmer months. We also checked out the lighthouse, the naval and military park and visited my wife’s alma mater while in Buffalo. And of course, if you’re in Buffalo, you have to eat buffalo wings, so we went to the famed Anchor Bar.

Little LRC liked those buffalo wings!

Little LRC liked those buffalo wings!

Ripley's Aquarium of Canada

Ripley’s Aquarium of Canada

In Toronto, we went to the Ripley’s Aquarium which is located right next to the CN Tower. Surprisingly, it was open until 11:00 which was great because we needed to fill an evening with a family friendly activity. There is a discount for AAA members and also a discount if you buy the tickets online in advance. While driving to the Aquarium, which is also right next to Rogers Centre (where the Blue Jays play), I was stuck in a lot of traffic because the Blue Jays’ game was starting at that time. Good thing I wasn’t wearing my Yankees T-shirt though. I noticed plenty of signs at parking garages charging $30 but I found one charging $12 and it was only a block or two farther away. If you need to park in a metropolitan area, make sure to use the BestParking app to find the best price. Prices vary widely even on the same block! We were only in Toronto briefly, but we also walked around the Entertainment District, had dim sum in a suburb outside of Toronto, and went to St. Lawrence Market.

If we were in Toronto for longer, I think buying a CityPass would be well worth it. The CityPass in Toronto costs about $60 and includes attractions like the CN Tower, the Aquarium, Zoo or Science Center, Casa Loma and the Royal Ontario Museum. You’d be close to breaking even if you went to two of the attractions so if you are interested in a couple of them then you’d definitely save. CityPass also has deals in a couple of other cities as well. We originally wanted to go to Tampa and the CityPass there included all the activities we’d be interested in and we would have saved over $100 per adult in admission costs.

Summary of tips to save money while traveling:

-Sign up for credit cards that give you bonuses for travel. However, if you are doing this, make sure you pay off your balance in full and don’t spend more than you normally would spend, otherwise the bonus points aren’t worth it.

-Use the Hopper App or Kayak to determine if the price of the flight your booking is a good one

-Use the Best Parking app if you need to park in a garage so you get the best price

-If you are a AAA member, check to see if you can get a discount at an attraction or at a hotel

-Consider buying a CityPass if the attractions that are included in the city you’re traveling too are ones that you’d be interested in going to.

-Consider staying in a hotel that offers free breakfast

Also, check out this infographic from Personal Capital which has a couple of other great ways to save money when you travel:

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How do you save money when you travel?