The Money

After my post on leaving tech, I received a lot of queries on how we achieved financial independence and early retirement (FIRE) before age 40. I’ve tried to keep it short and to highlight pitfalls and lessons.

Evie’s 20 Year Salary Summary

I’ve included only mine since I don’t have details for my husband’s, but our earnings over time have been comparable and sometimes identical.

1995-1997: $16,000/year ($8k to live on after tuition. Possible but not fun.)

1998-2000: $20,700/year (I began 401(k) contributions at age 19 and never stopped. Saving for retirement early has been key to our success.)

2000-2001: $30,000/year (I got rid of my car and commuting, as did my future husband, unbeknownst to me. Not owning cars created serious savings.)

2001-2004: $37,000/year + $3,000 tuition credit (This helped me pay for part-time grad school in cash and avoid additional loans.)

2005-2007: $65,000-$80,000/year (I began aggressive cash savings of $30k/year and carried on with simple, frugal living.)

2007-2009: $110,000-$125,000/year

2009-2011: $145,000/year (We married and had a small wedding that cost less than $10k and that we paid for in cash. Marriage brought the second income of a high earning and equally frugal, aggressive saver. Dear Husband has made FIRE possible sooner than I would have been able to do it on my own. We bought an 850-square-foot house in a then so-so area of San Francisco with 20% down while interest rates were low (3.14%). We barely beat the insane Bay Area housing bubble currently underway and yes, we do realize how lucky we are. Don’t worry, future home buyers: it will probably pop. That’s what bubbles do.

2011-2013: $125,000/year plus $10-$20,000/year in bonuses. (All bonus income went to paying off our house. We bought one car in cash for first time since 2001, after 12 years without one for both of us. The end of a car-free era!)

2015: Paid off house and became FIRE with a net worth of $2.5m+. About $1.5m of that was the combined effort of 20 years worth of simple living and aggressive saving by two people. Approximately $700k was a business acquisition and the sale of some stock. The latter two helped in that they significantly added to our total nest egg and make FIRE more comfortable, but we would have been FIRE without them anyway and at about the same time, too.

In addition, all of the following were critical to my success:

Sheer. F**king. Luck. I have hard-ass Polish parents (thank God) who never went to college but for whom education was paramount. I had parents who wanted me, stayed together, didn’t abuse substances or me, were staunchly anti-consumerist, creative makers, and let me know I was on my own from age 18 until forever (a good thing). They killed themselves working to send us to Catholic schools. They said “No!” firmly when we asked for things and explained why they couldn’t afford them. I had grandparents who kept us from homelessness in hard times. I am white and I’m sure I got many of the jobs I did because of that. I was never unemployed. Though I was without health care in pre-ACA times on a few occasions, I did not meet with disaster and thus bankruptcy during those times. One accident would have changed all of this. The list goes on.

Decent wages when I was less skilled and less educated. In 2015, people in my home state are paid as much as I made in 1998 and that’s if they have “a good job.” And that, my friends, is bullshit.

Software industry salaries. When I (completely accidentally) started out in tech this was not the case, but it has become so over time. I don’t like the larger changes that high wages have brought to the tech industry (there are a lot of useless MBAs I’d like to see back on Wall St., and better yet in jail), but I’d be lying if I didn’t say they’ve helped our nest egg. Other careers, however, do pay commensurately. I do not exaggerate when I say I have a dear friend who is a dog walker in San Francisco and makes exactly what I have at my past two tech jobs, and for far fewer hours.

Living simply, which some folks call extreme frugality. Even now, we spend $32,000-$36,000/year living in San Francisco, for everything: taxes, insurance, food, the whole deal. It’s not hard because it’s a habit. I chose a $495/month one-room studio apartment in Chicago (heat included) when I could have gotten a bigger place. I’ve lived in Goodwill attire for decades. I got my hair cut at beauty schools, threw away catalogs unopened, and didn’t look at fashion magazines. It all adds up. Don’t get caught up in consumer culture — in fact, actively revolt against it. Cook simple food. Buy fewer, better things. Before you buy anything, ask yourself questions like: Do I need it? Do I already have something like it? Where will I put it? and What will happen if I don’t buy it? (Answer: nothing.) If you’re anything like me, it would probably take you decades to actually wear through all of your shoes and all of your clothes.

A willingness to go where the jobs are. If you live in an area that’s consistently economically depressed or hopeless, consider moving for work. I didn’t want to leave my family but I had to. Don’t worry: You can move back to this low cost of living (LCOL) area after you’re FIRE.

Two people not owning cars for 12 years and saving all of the associated costs adds up. The availability of public transit, the existence of Amtrak to be able to visit family cheaply, and the ability to walk and bike to work (even in the Midwest in winter) contributed hugely to my savings.

Employer tuition assistance. I don’t know how many places do this anymore, but having $3,000-$10,000/year to put toward my graduate education saved me a lot of money.

A graduate school that offered evening and summer (year-round) classes and enabled me to attend part-time while working. This meant not taking years off from earning money for school, something I was unwilling to do anyway. To this I would add schools that offer online classes that were not as available or common then.

Jobs with free food, i.e. restaurant kitchen “mistakes”, table scraps (yep, you bet I ate what you left on your plate when I had $8k/year to live on), conference room leftovers, and Free Lunch Wednesdays (take leftovers for dinner and prepare yourself a lunch for the next day, too).

Not having a baby when I could not afford it. I grew up in Detroit and it did not take a whole lot of smarts to look around and notice that the poorest women around me were mothers. Yes, the fact that this is true indicates that we are a sad, pathetic society, but it’s a fact I understood. Thank you, Planned Parenthood. Guess what? No STDs, no babies. It worked! I’d like to be able to tell you that it has worked out equally well for friends who had babies in high school and in their early 20s, but it hasn’t. They’ve struggled and, 20 years on, are still struggling, have no cushion, and have no retirement savings. Yes, there are exceptions, but those are rare by definition.