BiggerPockets Money Podcast - 10: Designing a Frugal But Luxurious FI Life by Age 32 with Liz Thames

Episode Date: March 5, 2018

In March, 2014, Liz and her husband made the conscious decision to stop their big city, big spending lifestyle, and adopt a frugal mindset in order to realize their new goal of moving out of the hustle and bustle and into the woods. Their 180 turn took them from dinners out every night to 66 acres in the woods of Vermont, where they happily raise their daughters and live the life they want - with no stress, no financial strains and ultimate financial freedom in just over two years, by May 2016. This is a must-listen episode for anyone curious about what it takes to make this lifestyle  change. Links from the Show BiggerPockets Forums Americorps How To: Cheap Homemade Seltzer with a Modified Sodastream (Article) Frugality Is A Compounding Game (Article) Your Last Chance To Join The Uber Frugal Month Challenge And Revolutionize Your Finances Mad Fientist Check the full show notes here. Learn more about your ad choices. Visit megaphone.fm/adchoices

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Kickstart your well-being journey with your first audiobook free when you sign up for a free 30-day trial at audible.com slash BP money. Welcome to the Bigger Pockets Money Show, show number 10. It's important to recognize that the money in itself is not the happiness. The money is just the vehicle that enables you to explore the lifestyle that's going to make you happy. It's time for a new American dream, one that doesn't involve working in a cubicle for 40 years, barely scraping by.

Whether you're looking to get your financial house in order, invest the money you already have, or discover new paths for wealth creation. you're in the right place. This show is for anyone who has money or wants more. This is the Bigger Pockets Money Podcast. How's it going, everybody? I'm Scott Trench, and I'm here with my co-host. This Mindy Jensen, how you doing, Mindy?

Scott, I am doing fantastic today. How are you doing? I'm doing great. We just interviewed a fantastic guest who has done some remarkable things in her life and has done it while living in a way she describes as luxuriously frugal. I love that term. That's so funny.

So I'm actually friends with Liz or you may know her as Mrs. Frugal Woods. I'm actually friends with her in real life. And we went and visited her this summer at her Vermont estate. And it is amazing how well they live on how little they live on. And, you know, it's a conscious choice. She has a job. He has a job. And they choose to make these changes.

I don't even want to call them sacrifices. They choose to make these changes in their life so they can live the life. that they want. They live on a, like I said before, it's a beautiful Vermont farm, and they have everything they could possibly want. Yeah, I think it's, I think it's fantastic. By the way, in addition to the interview today, they also are coming out with a book. I think it's tomorrow when this pairs, right? Yes. So you want to talk about the book real quick? Well, so the book comes out tomorrow. It is called Meet the Frugal Woods, achieving financial independence through simple living. And it's not a preachy book.

It's not a book where they make you feel bad about how you are currently living. It's here's how we did it. And these are ways that you can do it too. You can change the way that you live so you can live the life that you truly want, which is kind of what we're doing on this show. Yeah. That's what it's all about. She is not about the money.

It's about the happiness. And she was able to redesign kind of expensive lifestyle in an expensive city and realize, hey, that's not making me happy. What does make me happy is hiking, being around nature, doing these things and optimizing my lifestyle in such a way that I'm going to enjoy things. And that includes for her, seltzer water. By the way, there's a very cool tip later on in the show about how to get as much bubbly water as you want. I drink a lot of Laquois, McCroy, I don't know how to that's it, whatever it is, which is kind of a waste. So I'm definitely going to be thinking about giving up a Saturday to this project, which would be a very fun way to have unlimited seltzer water.

I, this post, I don't even drink seltzer water, but this post really resonated with me because it's, here's how I gamed the system. Here's how I saw something that I wanted. I didn't want to give it up, but I figured out a cheaper way to achieve this same thing. And she did this. She does this in multiple areas of her life. And she tells us all about how she got yoga classes for free, how she hacked her system to her soda stream system to make pretty much free salsa water. And they drink a lot of seltzer water. It's actually funny how frequently they're running that machine. But it costs them almost nothing.

And they just, how can I make this cheaper? So their version of frugality isn't how much can I give up? It's how cheap can I get everything that I want? I think, yeah, I think it's fantastic. And should we bring her in and let her tell us all these things? Yeah, we should let her tell her story. We don't need to tell her story. I just told half her story.

No, that's not true. She has a lot of great things that we talk about today and we just barely scratched the surface with this intro. Yeah. So let's bring her in. Hi, Liz. Welcome to the show. Hi. Thank you so much for having me. Thank you so much for taking time out of your day to chat with us. I know it's difficult to have a 66 acre beautiful farmstead and then pull yourself back inside. What's the weather like out there in Vermont today?

Well, it's not too hard to be inside today. we have freezing rain. So Mindy has been here, but when she was here, it was beautiful, idyllic summer. So slightly different. It was really nice. Freezing rain is, yeah, that's a lot easier to stay inside. Yeah. No, I go up to Vermont every year or so for Christmas.

So we have an house up there and a bunch of family comes together. And it's a beautiful place to be in the winter. But yes, you don't spend much time outside. It's nice for the fire by inside. So let's talk about how did you? come to be in Vermont? How did this situation arise? Can you tell us a little bit, can you tell the listeners a little bit about your backstory and why you are living on a farm right now and talking to us about personal finance? So my husband and I lived in cities for about a decade. We lived in New York City,

Washington, D.C., Cambridge, Massachusetts, actually two different times. And what we came to realize over the course of living in all these cities is that we did not enjoy urban life. And finally, in March 2014, we asked each other, when are you happiest? And we both said when we're hiking. And so we were leaving the city almost every weekend to go hiking in the woods. And we came to this realization that we had misaligned our lifestyles. Here we were in the middle of the city, working very standard, nine to five, very good jobs. And we were not feeling fulfilled. We were feeling frustrated by this routine and feeling like we needed to escape the city. And so we started talking about this idea of where we wanted to go when we retired. And that conversation started out with retiring at

65. Where do we want to go? We really want to go to the woods. And then we started to think, maybe we could do it a little bit earlier. Maybe we could do it at 50 or at 40. And then we said, maybe we could do it at 32. And we came to that realization by carefully examining our finances, seeing where we were and then projecting out how much we would need in order to reach financial independence and in order to leave the city and move out into the woods. And so that happened for us in May 2016. So we've lived out here for about a year and a half at this point. And we absolutely love it. It is truly our dream come true. And we love the ability to walk outside our door and hike and be in nature and raise our children in this way. And so it's been a wonderful

move. And I think it's a kind of an unconventional move to make because it's not actually less expensive to live in the country versus in the middle of the city, which is a really common misconception. But it is where we want to be. Well, so I think this is awesome, just like the concept, oh, I'm going to start with what makes me happy, where I'm most, you know, where I want to actually spend my day a day. And then I'm going to figure out, okay, what I need to change over some time in order to make that a reality. So can we talk about that? When did you decide, like, what was the time? I know you moved in May of 2016. When did you kind of begin coming to this realization? And what was your position like? And how did you move towards this goal? So it was March 29th,

2014. I can tell you exactly the day because it was a very pivotal conversation. It was one of those conversations that you remember. And it was the culmination of, I think, several years of hiking. realizing that we didn't necessarily want to live in the city, but not really seeing another route for ourselves, not really understanding financial independence as a concept, not understanding location independence for work. And so this was kind of the culmination of all of those thoughts that we'd been having over the years. And at that point, we were 29, and we were very fortunate that we'd had pretty good jobs throughout our 20s. So my first job paid $10,000 for the year, and I lived in New York City. I saved $2,000.

Wait, wait, wait, whoa, whoa, whoa, whoa, whoa, whoa, whoa, stop. You save $2,000 while living in New York City making $10,000 total dollars. That is correct. Okay. So you could say frugality comes to me pretty naturally. So that was through AmeriCorps, which is sort of like the domestic peace corps. So I was working in an underserved community for a nonprofit, gaining valuable work experience being paid very little. I also had access to food stamps and a metro card.

So it's important to know that, you know, food and transportation were covered, which are major expenses. So I was paying my rent and any other incidental expenses. And after that year, I was able to get increasingly well-paying jobs, which after $10,000 a year, you know, just about anything is a better paying job. I always worked for nonprofit organizations. And my husband has always worked for mission-based organizations. So we were not making investment banker salaries. we were making very good white collar salaries, and we were saving at a pretty high rate. So we didn't have debt. We did not have student loan debt, which I think is transformational for the beginning of our journey,

and I think is a real element of privilege that we had coming into our 20s. We went to an inexpensive state school, and we had scholarships. We both worked during school, and our parents helped us to pay the rest of our tuition, and it just was not that expensive at the time. So coming out of school with no debt, we didn't have any consumer debt and we never took on any consumer debt. We got married very young at 24. It feels, that feels really young now. Looking back at the time, we were like, of course, we're ready to get married. So fortunately it worked out. And we lived well below our means. So we rented this basement apartment in Boston that was just not great, very below ground. When did you move from New York to Boston? That was 2007. And then we got married in 2008. And, and, and

And we set a goal of buying a home in Cambridge, which as your listeners probably know is one of the most expensive real estate markets in the country. We at 24 with, I think we had about $5,000. We're like, oh, yeah, we're totally going to do this. Now, a studio, you know, a studio is half a million dollars. So I don't know what we were thinking. But having that really aspirational goal was very important. I would say that was transformational for us because it helped us to focus in on what we could do. So on the salaries that we made, we saved around 40 to 50.

which eventually led us up to a down payment. And we bought a home in Cambridge in 2012. And that was really kind of the culmination of our first financial goal. That was our first way of proving to ourselves, okay, we can save a lot of money. We can be focused and concerted with a financial goal. And I think it was having that end point that got us there. So at this point, fast forwarding back to 2014, when we're talking about wanting to leave the city, we had been saving at a pretty high rate. And I think it's important to acknowledge that and understand that, that we weren't starting from zero and we didn't have any debt other than the mortgage on our Cambridge property. So starting from a pretty good place of saving around 40 to 50 percent, we bumped ourselves up to over 70, sometimes over 80 percent.

And we were able to reach this goal in a pretty short time frame with that really concerted push of saving at a much higher rate. So I think it's, you're going to. you know, financial independence. And I think this trajectory can be possible for a lot of people. But I like to acknowledge kind of the good fortune and the luck that I had going into it. And really the privilege of not having student loan debt of having a dual income household with at that point, no kids. And with having really pretty good paying careers. Well, you know, I think some of this, it sounds like you're not giving yourself quite enough credit because you say dual income household.

Yet you start him with a $10,000 a year salary. And that's an income. So yeah, I guess I guess that could be, you know, part of a job. income, but no, this, I mean, this is an awesome story here. And it just speaks to consistent, you know, application of sound principles over time. And then that turning point, you know, you had a goal to buy this home in 2012, which you did. And then you had the turning point, you know, after you, I'm assuming it by 2014, you've accumulated a few hundred thousand dollars in assets. And you're like, okay, now what's the finish line look for us? What's this happiness piece?

And how do we kind of bring that home and finish it? Absolutely. And I think there's a, it's important to recognize that the money in itself is not the happiness. The money is just the vehicle that enables you to explore the lifestyle that's going to make you happy. And so I don't think it's enough to retire from something. Sure, you can want to leave your job. You can want to run away, but you have to be going to something. You've got to have that destination of what do I really want to do with my time. And that's the ultimate question for us. How do we want to use our time? So if time and money are your most precious resources, the way in which you use your money can really enable you to explore that use of time in ways that are fulfilling to you. And when I talk about

happiness, a lot of what I'm talking about is fulfillment and finding a position in life, a job, a role that's really personally gratifying for you, whether or not you're being paid, whether or not you need the money. And that's very much where I am now. I've chosen to be a writer that is not necessarily a stress-free occupation, but I love it. It brings me so much delight. enjoy to do it and being able to choose that career is transformational to me in creating days that I enjoy. I just enjoy how I spend my time. Okay, you hit on like a hundred things that I want to circle back and talk about. I want to talk about first the high savings rate because you mentioned that and I really want to focus on that. You're saving 70 or 80% of your salary. What does that

look like. Is that rice and beans for dinner every night? Is that peanut butter sandwiches for lunch? Or is that, you know, a more doable thing? You know, all these people that we talk to say, oh, I had a really high savings rate. Well, are you sacrificing your life because of that? Or is it just, you know, something easy to do? I love that question because our approach is all about luxurious frugality. And I know people say luxurious for gal, lady, you are crazy. But listen, I really, I really believe in this because I don't think that for is sustainable or enjoyable or even makes any sense if you just don't spend any money. Sure, you could spend pennies and you could eat beans out of a can and you could live in a tent.

These are all things that you could do. We did not do any of those things. We really continued living at what I would consider to be a very high level of luxury, convenience, but we stopped spending on all the things that did not bring us deep and lasting fulfillment. And so we cut out a lot of things that were just ultimately, unnecessary. And then the other piece is that we found frugal substitutions for things that we love to do. So a great example are yoga classes. I love going to yoga. In the city, I was going to yoga three nights a week for like $20 a class. I mean, just thousands of dollars every month. And what I realized is that

I could volunteer at the front desk of the yoga studio, check people in, mop the studio afterwards, take out the trash, and get free classes. And so that was a very small expenditure of time for me it was about 30 minutes in order to get free classes. And a tradeoff like that where then you're then saving many thousands of dollars a year is fantastic. And the other piece of that is that I made a bunch of friends. I was part of the community of the yoga studio. I loved working at the front desk. It was a lot of fun for me in addition to being this financially fantastic idea. So I really encourage people to isolate the variables of what makes them the happiest. And if it's yoga class or it's CrossFit, whatever it is, there is a frugal analog for that.

there is something that you can do in order to reduce the cost of that. We also love to drink seltzer, which is sparkling water. This is the most ridiculous example because, no, no, this is my favorite example. Wendy has had it. I will say that Liz's husband is exceptionally handy. That is yours. And he, yeah, but this isn't about me. He's, okay, tell the story.

I'm sorry, I interrupted you. But I love this story. Like, this is such a great idea. I would never have thought of this, but you're saving a lot of money. I mean, when she says that they drink a lot of seltzer, I don't think that you really understand. I think that's all she drinks is seltzer. She keeps herself very hydrated with her seltzer water. It's just water.

It's just sparkling water. I don't put any sugar in it, I swear. No, but you can't just like go and blow bubbles in there. You have to do it with a machine. You do. You need the intervention of a machine. So this is an example where, you know, someone who is going to extreme frugality would say, oh, well, obviously you're going to give up the seltzer and just drink tap water because that's free.

No, we did not give up the seltzer. My husband, who is very handy. And we detail this process on our blog. So if anybody wants to do this, you really can follow the steps. It's actually quite straightforward. We hacked our Soda stream machine to hook up to a 20-pound canister of CO2. And so this now costs us, you know, pennies. And I do the cost breakdown on frugal woods, and you can read through that.

But the key with a soda stream machine where you're spending the money is on the inserts, you know, the CO2 inserts that you have to swap out. And we were spending, I think it was maybe $40 a month on those. We now spend, I think it's $60 per year on this CO2 tank. And I have to tell you the evolution of the seltzer because originally, let me tell you, we were buying two-liter bottles at the grocery store. All right. So that's the most expensive way to get bubbly water to your home. It's also very heavy when you don't have a car and you're walking back from the grocery store. So my devotion to this stuff is very profound. So then from there we bought a soda stream. That is less expensive. And then from there we hacked it to use this CO2 tank, but it gets better. We originally bought the CO2 tank from a beer home brew shop because it's the same CO2. I looked at the CO2 tank and it had a sticker of a welding. supply company on the side and it was like this home brew shop is getting it from the welding supply

and then marking it way up at the hipster home brew shop so i called the welding supply sure enough it's half off at welding supply so we now it's the same thing they were just like hipsterizing it like putting a bow on it you know at the home brew shop so there's always a cheaper option and you know what kind of underlies this story is how much fun it is to make these discoveries this was truly enjoyable for my husband and I. I mean, I cannot tell you how excited we were and then excited to share with other people. And so I think it's when you see it as an enjoyable aspect of life and you see it as a competition and you see it as really a way that you can innovate and be creative, becomes a lot of fun because we live in the society of just use an app for anything that

you need. And, you know, what I'm advocating is use your brain. Be creative. Be innovative. Find ways to get what you want without spending money. Okay. See, Now, we do that at our house, too. You make it into a game. And now I'm in this, like, decluttering my kitchen mode because I can be kind of a hoarder. When it comes to food, that's my last bastion of hoarderism. So I'm trying to get rid of things. So now it's like a game.

What can I do with this random assortment of stuff in my refrigerator and my cabinet so I don't have to go out and buy something? And there's websites you can use to do this. And it's just, it's a lot of fun. When you gamify it, it's not such a, like, don't. wanting task, it's not like, ugh, I can't spend any money. No, how little can you spend? Like, what can I get my monthly spend down to? And this article is fabulous. The detail and the, oh, I could, I could cut money there. I could cut expenses here. I love this article. I'll link to it in the show notes so everybody else can read it and love it too. Awesome. I think it's great.

I think that the mentality you speak to is how do I do, you said it yourself, how do I do this, the things I love as cheaply as possible and find ways to make that economical. And, And applying that mentality to all of your favorite things, I think is absolutely a key to not only just saving money, but loving your life while you're doing it. Luxurious regality. You don't even have, you're so luxurious. You probably don't even drink tap water anymore. It's all this, this salsa water, right? It's fancier to me.

And it's also a question, too, of once you eliminate or reduce these expenses, it's not for one month. It's not for one year. It is for the rest of your life. And then if you invest, which is something that I espouse doing, you are then reaping the benefits of compounding interest on all of those dollar amounts. So people might say, oh, you're saving $60 a month, a thousand. What does that even mean? Well, put it into a compounding interest calculator and you will see what that means over time. And so my husband and I cut each other's hair at home. That's thousands of dollars saved over the course of our entire lives. You know,

It's not like I'm going to suddenly start getting my haircut in a salon for $120 again, which is what I was doing before. It's a lifelong question of eliminating that expense. And it's also a question of skill building. So I now know how to give pretty good haircuts, as does my husband. I've even had friends say, could he cut my hair too? I'm like, well, he could. I mean, if you want him to.

So it's, you know, you're building out this set of skills that really is fun. It's an enjoyable thing to do. And it saves time. That's another misconception about frugality. It takes so much less time to cut your hair at home. It's like 15 minutes and you're done versus commuting to the salon, sitting there waiting, doing it, commuting back home, never again. Yeah. It's like a three-hour process for me.

And my hairdresser actually lives literally across the street from me, but she doesn't cut hair in her house. So I go to her salon and that's my one splurge. But I cut Carl's hair. I was just saying I know that I know that because Carl we got Carl's hair at our house I mean I didn't indeed so I got a question here going back to this is and again this is prior to the transition where where you move to the city what would you're what you're doing for your big three expenses which for most people are going to be housing transportation food so how are you managing I mean in order to have an 80% savings rate

I'm assuming you have to you apply this mentality to your favorite things yes but you also have to strategy for the big ones, right? Absolutely. And I am a fan of thinking about the big three, but I also encourage people not to be myopic and only think about those three. You got to think about every single line item that, you know, you can't get to a high savings rate by just looking at those three. It's not possible. Guarantee it. So for those three, so we own this home in Cambridge, which is now a rental property, and that was another aspect of our plan all along was to turn that into a rental. And so that can be a really good option for financial independence. It's a great source of

passive income for us. Of course, this doesn't, goes without saying that Cambridge is a good rental market. And, you know, that's not guaranteed to be the case everywhere at all. So we have a pretty high mortgage on that home. And we, there was not really a whole lot we could do about that. We actually did consider renting it out and living in a smaller place because we were underutilizing the asset by living in it, totally under utilizing it. It's a single family home that was much too large for us, but we wanted a single family so that we didn't have any HLA restrictions when we turned it into a rental. And it also has a lot of bedrooms, which is ideal for the grad students who rent it because we live walking distance to Harvard and MIT. So that was, you know, kind of a

long-term vision with that house, not ideal to be living there. So we talked about renting it out and moving. We didn't end up doing that because ultimately we just, it would be so much disruption. and we were having a baby as well. And I was like, I'm not moving like twice with an infant. So we stayed in the house until we moved and started renting it. In terms of transportation, the city is the best place for cheap transportation. So my husband biked to work every single day, all winter long. Yes, in Boston winters.

And so that's a very cheap way of commuting. We used public transit. We walked most places. I actually drove to work in a 20-year-old minivan with over 200,000 miles. So that was a luxury to have a car, but it was also a super cheap car to ensure and maintain. And we had all of those backup transit options. So we didn't need a super reliable car and we didn't need a second car because that car would just not start some days.

But I could just like take the bus, you know? So it's nice when you're in the city because when you have those backup transit options, you can really get by either with no car, which we did for many years or with a really old crummy car that like if it doesn't start you can still get to work so it's not a huge deal and then in terms of food the city was a great place for frugal grocery shopping because you have so many options so we checked out every single grocery store in the area and we just found the cheapest it's market basket so if you're in new england you must shop at market basket it is the best um but we really questioned do we need to shop at Trader Joe's and Whole Foods, we do not. So we went from like, I don't know, $1,000 a month on groceries

to 300. And we did not sacrifice the quality of our food. You know, we eat mostly organic, high quality foods. We do cook everything from scratch at home. And from scratch, I mean like we make our own bread. We make our own hummus. We make pretty much everything from scratch. And by we, I 100% mean my husband. I do not cook. So I have to clarify. You know, but when you cook with the base raw ingredients. You can buy really high quality, great meat, great produce and, you know, really nice whole wheat flour and you just, you make it yourselves. So we transitioned away from packaged foods, prepared foods, that Whole Food salad bar that we were doing like three times a week. Yeah, no. This is after yoga. This is great. So we'd go to yoga and then walk to

the Whole Food Salad Bar. So that's $20, $80. Absurd. So finding an inexpensive grocery store is very important. And then looking at buying in bulk, cooking from scratch, and cooking at home. So stopping eating out, people will not be surprised

is transformational for your budget, especially in the city where there are so many good restaurants. So we ate breakfast, lunch, dinner, snacks, coffees, everything was at home. we totally stopped going out during that time frame. And what I will say now, we actually go out to dinner once a month. That's our date night and that's kind of our one chosen time to eat out. But it's a very conscious choice and it's a very special celebration. It's not like, oh, whoops, it's Tuesday and we forgot to make dinner. So I guess we have to go to McDonald's. It's not that at all. It's, you know, something that we plan for. And so I think just making that decision, okay, am I going to have restaurant meals? If I do, how do I make them special? and not just an accidental, oh, I forgot to cook type of situation. And that's really important because when you don't make it special, when you go out every single night, all of a sudden you have an $85 meal, $112 meal, a $200 meal. And you're like, oh, whatever.

We were just at Camp FI a couple of weeks ago, Scott and I, and there was a guy there, FI 180, 180, FI 180, FI 180. Yeah, he was telling about how he and his wife would go out to dinner every single night. They'd go to these like $600 a night restaurants and it was like no big deal. And they didn't like totally appreciate it. And that's that's really, really important to, you know, to make it special. So it is special. And also I would like to say that your husband is a phenomenal cook. Oh, holy cow.

Holy cow. I think I'm a good cook and I make garbage compared to him. So that's also very helpful. Well, and what I will say too is his cooking has gotten better because he does it all the time. So he just last night made this like Korean kimchi beef recipe that he's never made before. It is unbelievable. It's like better than a restaurant. And it's just because he cooks all the time. And so he has gotten better. He's, you know, he watches cooking shows. He reads books. And so when you start to do this stuff constantly, you will get better at it. And you will start,

it will start to become a hobby. You know, and for him, it's really a joyful hobby because he gets to create these amazing meals for this totally appreciative. audience, that's me. I eat everything he makes. That's the other thing. If you're the one that doesn't cook, you just eat everything they cook. You never come. I never complain. It's always good. And I think to what Mindy is saying, you know, when you make luxuries like eating out rare, your happiness that you derive from it will absolutely increase. You know, and it's a question of hedonic adaptation. And it's a question of if you repeatedly expose yourself to anything that's enjoyable, food, alcohol, whatever it is, you're going to deaden it.

the response that you have to it. And you're going to require higher and higher levels of that. And we see that with our spending too. If we spend more and more and more in pursuit of this elusive happiness, there is no end to that. Versus when you do what we do, which is you just completely step off of the consumer carousel, you completely stop spending money. You will then find that the times that you do spend money, it's very meaningful. The one or two lattes in a really fancy coffee shop that I have every year. They're like the best lattes I've ever had, versus when I was having a latte every afternoon, and it just didn't even matter to me. So I've got two quick questions here. The first is you made this transition to, you know,

working at the yoga shop, you know, cutting back on certain things, learning how to cook, changing up where you shop, all this good stuff. What was your timeline like for reducing your expenses? Did it happen overnight, or did it take you a year or two to get from point A to point B in terms of spending, how do that look like? So when we made the decision to retire early and reach financial independence, we made the decision in a really big way. And, you know, you don't have to be this sudden about it. But for us, I mean, it was absolutely an overnight decision.

We had planned to go out to dinner that night and we did not go out to dinner that night because we thought there's no point in waiting. We're not going to change our minds. This is what we want to do. We're going to start now and we're not going to look back. So it was a very strategic and decisive thing. and we truly started the next day. And what we did in the first month of what I call extreme frugality is we cut out everything,

everything that was not necessary. And I actually run a challenge, a free month-long challenge on Frugal Woods called the Uber Frugal Month Challenge, and that tracks the steps that we took. So if you want to truly save as much as you can possibly save, take that challenge, do what we did. And then at the end of that challenge, what my husband and I did at the end of that month, as we said, okay, how did this feel? What do we want to add back in? And that was where the questions of things like seltzer and yoga came to light where, you know what,

I'm not happy not going to yoga. Like, I need to figure this out. You know, I'm not happy not drinking seltzer. We need to figure that out versus, you know, it wasn't that bad not to eat out. We had some great meals at home. We really had nice date nights with our boxed wine and our candles. And, you know, that's fine. And we can keep doing that. And so I think it's a question of bring yourself down to truly the lowest that you can spend and identify how that feels. Keep very close track of how much you save, calculated that out over the course of the year, over the course of a few years. And we were so overwhelmed and impressed by how much we could save that that really prompted us to realize, okay, we can do this. We can do this in a short period of time and we're motivated to save that much.

Okay, so you said you cut out everything. You obviously can't cut out like food and water and your mortgage payment and all of that. What exactly did you cut out? So the restaurants is huge. I got to tell you, restaurants, lunch is out at work, coffees, haircuts, dry cleaning, really anything that was not mandatory. So clothing, I have actually not bought any clothing in four years, four years now. And I have been pregnant twice during that time. I am right now wearing my hand-me-down maternity clothes. So I used to shop at thrift stores, like just constantly. I bought things at thrift stores all the time. I thought, oh, that's frugal. I'm at a thrift store. No, it's not if you do not need it. So really coming to terms with clothing is usually not a need and recognizing that across all of our spending. Household wares, you know, throw pillows, decor, candles. Those are not needs. And that is how you go to Target and come Now, you know, with a $300 bill is by not just buying toilet paper. And so truly isolating the variables of what we needed for survival and being very careful

in price comparisons, you know, comparing costs of toilet paper per square foot or inch however they do it. You really can save a lot when you do that and focus on buying the least expensive option that you have. So it's a really holistic view of what you actually need. And I have to say for us, you know, we were never huge spenders, but we were certainly spending a lot more than we needed to. And I think for a lot of people, you know, when you do this practice, there's a lot of low-hanging fruit that first month. There are subscriptions that you've forgotten about.

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clearly honing in on saving money. And it's fun because it's a game and it's a competition. But I have to say, over time, it becomes so easy because it's just second nature. Now, I mean, we really don't think about it all that. We don't budget. We don't project out how much we're going to spend in a month. It just shakes out to be really frugal because that's the philosophy that we've ingrained in our lives. So over time, it really becomes very easy. So you do it the first month. It's hard. Anything that you try new, a diet and exercise program is very hard the first month. And then if you just keep doing it, it just becomes what you do. And so the things that we added back in are things that we felt that we needed in order to sort of increase our happiness. So things like the yoga, the seltzer,

which actually the yoga, though, that's not, we didn't spend money on that. So that was, you know, finding a substitution. And then now eating out once a month at a restaurant is a great example of an expense that we've added back at. We could certainly stop doing that if we needed to save more. But it's something we choose to do. And I think we also added back in more high-quality groceries. So at the very beginning, we sort of didn't eat any meat. And we still don't eat a lot of meat, but we eat more meat now. Just kind of cycles through our diet a little bit more regularly. And it's also, you have to also question when it makes sense to spend money, because finding things used or secondhand is primarily what we do, but it's not actually always the cheapest route to go. And so being strategic,

about what you do spend money on. I think a good example of that is our chest freezer. Living in the country, you've got to have a chest freezer to store your food in. And we looked at getting a used chest freezer on Craigslist because we get everything used. But then we realized that the chest freezers on Craigslist would use so much more electricity and energy than the brand new energy star certified appliances, which were only, you know, $80 more new. So we bought new. So, you know, doing that analysis and kind of bringing that presence of mind to the, the decisions that you make. We also have a Prius, a Toyota Prius, which is a hybrid vehicle. We bought it used in 2016. It's a 2010. But that was another conscious choice to buy a car that will save

us money over time because we spend so little on gas over time. So bringing that kind of wholesale understanding into how you live, that it's not always about just finding the dirt cheapest option, but what's going to enable frugality over the long term? I love it. I think it's a fantastic approach, and this is the baseline for achieving financial freedom. I mean, it's really hard, I think, to make the progress that you made that almost pretty much everyone that we've talked to is made without having this frugality layer in place first.

That said, there are two other areas of personal finance we haven't really covered in depth yet. What were you doing, if anything, on the income and the investment fronts while you were moving toward the school. And I am really glad you brought that up because I write a lot about frugality and simple living just because it's fun, but it's really important for people to understand that you, A, need to have an income that's high enough to enable you to save, and then you've got to invest because that's the only way to build and grow your wealth. You cannot just stuff it in your mattress or putting it in a savings or a checking account. You can't do that if you want to see it grow over time. So we invest in low fee index funds. We use Fidelity. We have FSTVX, which is very similar to Vanguard's option. The fees are actually slightly lower on Fidelity. And we ended up with Fidelity because our 401Ks through work are with Fidelity. So we've just concentrated all of our accounts there, but either VTSAX through Vanguard or FSTVX through Fidelity are what you want to have low fee index funds. So we're invested there. We then have this rental property that I mentioned in Cambridge, which is a great revenue generating asset for us. We did a serious analysis when we

moved sell versus rent. So that's important to understand what your rental market is, what your sales market is, what your tenant population is, and then of course taking into account things like vacancies maintenance fund. We have a property manager, which is, I think, the best decision we've made, being moderately long-distance landlords to a, I don't know, 160-year-old house. We are very happy with our property managers. And they've really done a great job for us. So identifying whether or not you're going to pay a property manager, lots to think about with whether or not you want to serve as a landlord. That has worked out well for us. So we're very happy with that. And then we also have 401 case that we had from our traditional W2 jobs when we had those. So those are also invested. And we have a donor

Advised Fund, which is a way of giving to charity in a way that's tax advantaged. So you're able to take the full deduction of your contribution in the year that you put it into your donor advised fund, and then you're able to met money out to nonprofits over the course of your lifetime, essentially. And so a donor advised fund is a great idea if you're experiencing a high tax year and then you anticipate having a lot of low tax years. So for example, if you're retiring early and you can kind of see, okay, this is going to be my really high tax year, probably followed by lower tax years, and you know that you want to give philanthropically. It's a great idea to consider putting money into a donor advice fund. And then we also own our property in Vermont, which is a 66-acre

homestead with a house and a barn, but I will tell you that we actually consider it $0 in our overall net worth because rural property is not guaranteed to appreciate or even remain static. It's a tough sales market, if we were able to recoup what we put in it, that'd be great. But honestly, we just consider it zero, which I think it's really important to know where your real estate shakes out and, you know, and whether or not it's actually an asset or just a great place to live. And we just think it's a great place to live. And then, of course, we have, you know, some cash, which is we would consider to be an emergency fund. We have 529s for our daughters, which is college savings accounts. And I think that might be about the full portfolio.

of our assets. But again, the key is being invested, whether you choose real estate or you choose Lothianx funds or how you choose to do that, is very important to be growing your wealth. It's not enough just to say that you've got to then turn it over into making more money. Okay, so because this is bigger pockets, I want to ask about your property manager. You said that you have a property manager that you love, which is ideal, but not easy to find. How did you find your property manager because real estate isn't your thing. Like you're not. It's not my thing. No, Mindy knows because I emailed her when we were like, Mindy, oh my goshel. Yeah, real estate is not our thing. And I think it's telling that we only own one rental property, even though we could choose to diversify and on more.

It's not, you know, we don't feel that we know enough about enough other markets. I think we would buy again in Cambridge as we were so comfortable with that market. But we, you know, we just have not expanded beyond that. We know the Cambridge market so well because we house hunted there for years. And we looked at absolutely everything that came on the market. And we made the decision to buy our house in like 20 minutes. I mean, we looked at it. We absolutely knew price per square foot. It was the lowest price per square foot. And it was single family home, great area. Anyway, so choosing the property manager, I think I just got lucky. I called around and researched online and asked friends for recommendations, and I spoke to every property manager that I could get on the phone with,

and just to get a sense for what pieces of the rental they managed, I wanted somebody who did everything from finding the tenants to preparing the lease, to handling the leaky toilet. You know, we wanted to be essentially as hands-off as possible, and that was what they offered, and they also offered it at a fixed rate every month, which was not the case. a lot of other managers I talked to were going to take a percentage of the rent, and that percentage was going to end up being a lot more than this other company that offered a fixed rate. And I think the reason that they do the fixed rate is that they are the ones who rent it out initially. And so they're being paid by the tenants. So in the Cambridge area, and this is not true everywhere,

but you essentially have to have a broker in order to find a rental property. And you have to pay a fee to the person who's renting it out to the person. the sum of first month's rent. And so that went to the property manager. So that's kind of how they took their cut on the front end, which was fine with us because they rented it out for higher than we would have priced it at. And they found us fantastic tenants. They did the photographs. They listed it online. So a lot of that burden was taken off of us. They did all of the vetting of the tenants. They prepared the leases. And we were very, very happy to outsource that because Massachusetts law is very much in favor of the tenants and not the landlords very much. And so we did not want to be

self-generating a lease and like hoping we were getting it right. We did not want to be, you know, running afoul of how you select tenants or how you vet them. And so having a professional do that was really worth also the peace of mind. So I think knowing what your state, you know, what the, how that law shakes down is important. So for us, it's a lot of peace of mind. And it's not It's a pretty insignificant portion overall of what we're bringing in from it each month. Okay. Great. Awesome. So, you know, we've talked about your investing here, your high level fragility.

Can we talk about the transition itself? When did you know you were ready? How much, you know, how much had you said you saved up? And then what happened before, during and after that? Like, what was your mind like? Were you still working? All that good stuff. I don't know if you ever are really ready in an emotional sense.

No, because it was such a big move for us. And we also had a tiny baby at the time, which just kind of added to sort of the, is this the right decision? Because we moved to a place that is extremely rural. We have about 400 people in our town. Turns out they're fabulous. It's a wonderful community. We love it. We didn't really know this coming in.

And so we're moving from, you know, this extremely urban area where you've got hearts and culture and thousands of people to like this little tiny ham one. So we were, it's nerve-wracking. So we wanted a house that was built relatively recently, and this one was built in the 1990s, not the 1790s, which most of Vermont is very old housing stock, which comes with all of its wonderful charms and unique challenges. So finding a house that had, you know, new plumbing and new electricity and floors that were level. My poor husband replomed our Cambridge house and it's like, I don't want to do that again. So this was the place for us. And so it was a little bit accelerated on our timelines as we just had a baby. We closed on it in January 2016 and we moved up here full time in May 2016 and then rented out the Cambridge House.

I think it was a June 1st lease. So it was a little bit faster than we'd anticipated, but financially it was a very comfortable spot for us. And we did consider ourselves financially independent at that point and still do. And the reason, one of the things that made the move very easy is that we have high speed fiber internet here. And so we have the ability and the option to connect with the broader world to work if we so choose and to really have access that is not very common in a lot of rural areas. So I think accelerating our timeline did make sense for us at that point. It was it was the right place to buy. And I think this is where frugality can really help push you.

over the edge because when you're able to save truly a lot and you know that you can get by on a very small amount, I think that you have more flexibility than if you have much higher spending and you sort of need to be earning at a certain rate. And so for us, you know, our assets and our passive income outstrips are spending and we, I don't share the exact numbers, but we are financially independent, which is a very privileged and gratifying thing to be, to not have to worry about where your income is going to come from. And that is so important. And you can now choose to be a writer. You say you really enjoy it. You get to do what you love. I know that Frugal Woods is a very successful website, but even if it wasn't, you could still devote all this time to it

because you want to, not because you have to or I can't do it because I've got other restrictions on my time or other requirements for my time because I have this need for all this money. Exactly. And it's the ultimate liberation to suddenly not need to make money. And what I find is that when you're in that position, you can do the work that matters the most to you. And for me, educating people about frugality and about financial independence and financial literacy, is my greatest passion. I love, like, I cannot stop talking about it. Obviously, I'm here talking to you all. So it's, you know, being able to do that on a daily basis is the most wonderful, fulfilling thing for me. I absolutely love doing it, being able to choose to do that.

And I think importantly, Mindy, what you touched on is I can do this even if I don't get paid, which is really important because it means I don't have to sacrifice the quality of my content. I don't have to take on sponsorships or products that I don't believe in. I get to do what I think is right at all times. And that is, I think, the greatest way to run a business or a website as it has sort of grown into a business. But being able to stay true to what you really believe in and finding that opportunity to kind of meet the world's greatest need with where you are most passionate and successful, I think is going to be the most fulfilling aspect of this whole adventure for me and for my husband. Yeah. I think it's awesome. If you're not having fun,

then why do it? Yeah. I mean, what is the point? You know, if you're not enjoying your life. I mean, what, why are you doing it? What are you doing this for? Exactly. Absolutely. Okay. Scott, shall we segue to our new famous four questions? Yeah, let's move. Let's do it. These are the same four questions that we ask every guest. And one of them is actually a really tough one that's going to attach your mental faculties to the, to their limits, I think. But we'll get to that one later on. The first one is what is your favorite finance book? So my favorite is your money or your life, which I think a lot of people probably say.

But the reason for that is that it combines a mathematical approach with a philosophical approach. Because I think in order to really be successful with your money, you've got to do both. It's so easy to say, oh, you know, finances are just math. Put them in a spreadsheet. But if that were the case, you know, we would not spend emotionally. we would not find ourselves in debt over emotional purchases that we don't need. And so I think it's really important to marry the two and understand it's a question of transforming your mindset in addition to understanding the math.

So I think that book, which was originally written in, I don't know, the 70s or the 80s is a great example of how you need to have that dual approach. I think it was actually written in the 60s. Oh, was it really? Yeah, I was listening to her. It was written by Vicki Robbins. I was listening to her interview with The Mad Phyatist, and it's a great interview. She's got so many good points.

Yes. So that's kind of the original financial independence writing, I think, is how I think of it. Yeah, it's a great book. We will link to that in the show notes as well. What was your biggest money mistake? We didn't really talk about money mistakes that you made. Well, really the biggest money mistake was not having a goal after we bought our first home. So we bought that house and then we just ramped our spending up because we didn't have anything

we were saving for. You know, we'd achieved this huge financial goal of buying this house and we didn't have any real plans. And so we just started spending more money on, you know, like craft beer and leather boots and manicures and just things that are just not. Okay, we do still buy a lot of craft beer. Mindy's laughing because we do file out of here. I'm laughing at the manicure because I met you post-F-I-life and you're not a manicure kind of girl. Not in my head. So, you know, that was the biggest mistake we made. You know, we really lost out on a lot of savings in those years because we just were spending

mindlessly and without a goal. So I think when you want to change how you spend your money, you need to first have a goal and you need to first know where you want to be in the long term before you ever get to a spreadsheet or a dollar sign or a dollar amount. I love it. None of the rest of this matters. No one's going to try to become frugal. No one's going to learn about investing. No one's going to want to deal with managing tenants or buying rental properties. If they don't have the goal, in this case of financial freedom and what that's going to bring into your life besides money, the happiness, completely. put in. That's the key to all of this. I love it. Liz, what is your best piece of advice for people who are just starting out on this journey? Oh, whoops, we kind of just gave it. So, all right, so it's a two-part piece of advice. So identify where you want to be in 10 years, in 20 years, and 40 years. What do you want to do with your life? Your money will follow that. Okay. So think about that first. Now you're looking at your money. Track your expenses. You have to know how much

you're spending every month. Also, figure out your income. I cannot tell you how many people come to me and they are not sure their net versus their gross. Know what you're actually bringing home every month. Be really clear on that and understand then what the gap is between your spending and your income, because there's three tenants really to financial independence. It's income, expenses, and time. And so once you know those variables, you can make really conscious decisions. Don't try to guess your spending. That's like your weight on your driver's license. It's a lot lower than reality. Just, you know, actually track how much you're spending. Oh, I love that. Yeah, I love that. That's a great way of stating the equation that I have. Yeah. In a lot of ways, I think it's no more

complicated than that. There's a lot of nuance in there, but really just thinking about those three pillars gets you off on the right foot, I think. Yes. Awesome. Now, this is the most mentally taxing question of the lot here. What is your favorite joke to tell at parties? This, do you assume I go to parties that aren't just toddler parties? I will not tell you the toddler joke party. So people ask us, you know, we moved to the woods.

Why didn't you move to a yurt in the woods? And we say, well, that's because we think camping is pretty intense. I love it. I love it. That's Scott's favorite. Scott tells these jokes like that all day, every day. I love that one. Intent.

My husband and I, like, do a version of that joke pretty much every day. That's going to be the title of this podcast, Intense for a guy. And we laugh every time. I know. You think I'm kidding. No, the number of puns we've done on intent. Because what I always said to him is he's a man who would live in a tent. like by himself and I saw I'm not going to live in a tent with you like in the middle of

I'm not doing that so that was how that started because he totally won't I can see that yeah well let's let's hear about the last question here is where can people find out more about you but can you also tell us a little bit about your most recent project you've been working on I've heard it's pretty cool I would be delighted to so you can find me online my blog is frugalwoods You can find me on Facebook, Instagram, and Twitter at Frugal Woods. I am very consistent online. So anywhere you see Frugal Woods, that's probably me. And I recently wrote a book, Meet the Frugal Woods, Achieving Financial Independence

Through Simple Living. It is published by Harper Collins, and it comes out on March 6th. You can pre-order the book, and if you order the book by March 13th, I will send you a free signed bookplate from me, from the homestead. And I have the details on my blog on how to do that. Okay. I will put a link in the show notes for the book and how to get the signed book plate. And I'm going to order my copy as soon as it is over.

Yeah. I'm looking forward to it. Awesome. I am so excited. I can't wait until that book comes out. I saw that. So I went and visited Liz up in Vermont. Was that August?

In August last year. Yeah. Yeah. Wonderful. Yeah, it was a great trip. And I saw her book there. Like, I was like, oh, I didn't know. The book was out already. She's like, oh, no, that's just a cover like mock up. It was a plain, empty book with just the cover on the outside. I'm like, oh, I can't even read that. I thought I was going to get some like sneak peek, but I did not. So I'm very much looking forward to getting this in real life. My bookplate too. Yes, you can get you can get your book plate as well. Liz, thank you so much for taking the time to chat. with us today. I really enjoyed this. I love your story. I love your, just everything about your story and how you started off not frugal. And then you had a period of, let's call it, forced frugality making $10,000 a year and saving $2,000 in New York City. You said you were

responsible for rent, but isn't rent like $10,000 a month? Like, how did you? Well, not if you live in the neighborhood that I left them. Actually, I have a whole chapter on this. in the book because that was a time of what I would say extreme personal growth and a real understanding of my privilege and I have never understood privilege or just how fortunate I am after living in in the neighborhood that I did live in where my rent was I think it was $555.5 a month which you can imagine what kind of apartment it was. Yeah, that's not good. That's not a common rent amount in New York.

It's not. So were you in Manhattan? Central Park West? Yes, exactly. We were in Crown Heights, Brooklyn, and I had two roommates, two wonderful roommates. And it was, I think it was technically a one bedroom. And we kind of made it work as a three bedroom, sort of. So that was how it was.

Imagine some curtains or something like that. Yeah, well, my poor roommate Joseph sort of slept in a closet. He was very, very kind to allow us. to take the larger rooms. And he was like, I'm a minimalist. It's great. And he totally made it work. So it worked out.

But, you know, ultimately, it was just, it was not a safe neighborhood at that time, which I, you know, talk about a lot, kind of the experience of living there in the book. Because it was very transformational for me and understanding the importance of money in somebody's life. Well, I just have a ton of respect for your foresight and planning you put into this, the discipline you had and executing it and the courage you had to make the job. change and, you know, get through all those obstacles in the way, including living in this $550 a month apartment in Brooklyn. It's just fantastic. I think it's just something that I think that so many people should think about, hey, is this something that's repeatable for me

and something that I can do for myself and go and achieve the happiness that I'm looking for. So thank you. Well, thank you so much for having me. All right. Well, thank you so much for coming on today, Liz. Good luck with the book. And we wish you the very best and look forward to watching your journey and your community continue to grow. Thank you so much. All right. That was Liz, Mrs. Frugalwoods. Thanks so much to having her on the show. That was a great podcast. What'd you think, maybe? I love talking to Liz. I could just talk to her every day, all day long, all week long. I really like how she shares her story and how easy it is to do what she did. It's, you know, like I said before, she's not looking for ways to give up everything and live this totally hard life.

for ways to make it cheaper to do exactly what she wants. And she is. I have not met anybody who's a happier person than she is. Yeah. I mean, she embodies this whole thing. I mentioned earlier in the show, but of planning, the discipline, the, you know, courage to take action. And the reward is lifestyle. It is exactly what you want.

That is meticulously chosen bit by bit to be exactly the way that she wants to spend her day. And that's a privilege that she has earned. through all the cool things that she's done, which just kudos to her. Yeah, you know, I think that's a really important distinction. She's earned this. This wasn't just handed to her. She didn't just decide, oh, I'm going to be frugal and everything I want has come true. You have to make some changes in your life and earn this life.

But look at the life she has. That's a life worth making changes for. Absolutely. And by the way, she's also very articulate and able to communicate these things in really kind of unique and creative ways that are really kind of easy to digest. So if you haven't got a chance, go check out the frugalwoods blog. I believe that's frugalwoods.com. Yes.

And then you can also check out her new book again, which is Meet the Frugal Woods, achieving financial independence through simple living on sale tomorrow. So, yeah, big thanks to her. And I wish you the best of luck with that book and spreading that message to everyone. Yes, I know she's going to sell a but trillion copies of this book. She's a great writer. You know, I like, I'm a big fan of her blog. She's, she writes from, I mean, she's a woman, so she writes from a female perspective.

And a lot of these personal finance blogs that I come across are either written by men, which isn't bad. I'm just not a man. They're either written by men or people without kids. And her ideas and her, you know, the things that she shares, I really relate to. And, you know, I just, I have a love of the English language and so does she. Yeah, I think it's great. I think we need many more female voices in the. personal finance community because it does tend to be a little bit male dominated sometimes.

And, you know, the why, the reason behind achieving financial independence should be just as strong for everyone. Right. And so we need to get as many folks out there as possible spreading this and kind of understanding the why behind why females might want financial dependence might be slightly different from the why of men. Exactly. She's able to create and, you know, generate an income.

while still pretty much staying home with her kids. Yep. So that's, she's one up on me. I was able to stay home with my kids, but I generated $0 when I did it. Yeah. And my future unborn, unconceived trenchlings, we'll see what happens for that. How many, how many do you want, Scott? Seven.

Seven. Seven. Seven. Seven. Seven. Good luck, Mrs. Scott. A lot of sporting events. Oh, my goodness.

Can you imagine taking seven kids to. seven different sports. Wow. Okay. None of them are going to play. None of them are going to play what? Mindy, by the way, does not allow her children to practice the recorder in the house, which I find very funny.

That's the worst thing ever. That's the most obnoxious sound. And every note sounds the same. You'll see when you have seven little trenchlings going through third grade blowing on this dumb recorder, you will be like, oh, I get it now. Okay. Should we get out of here and let everybody go home? We should get out of here.

you after listening to this podcast. Listen to the next one. We should get out of here. So from episode 10 of the Bigger Pockets Money show, this is Mindy Jensen over and out.