Sacrificing for FIRE

I recently listened to a podcast where the host talked about their own sacrifices through their FIRE journey, so I thought it might be a good chance to talk about my own experiences.

Firstly, I think it needs to be pointed out that there are two different people in this world when it comes to finances, spenders and savers. I am a saver, and I believe this is more common among people within the FIRE community, but probably less common in the greater community.

What does being a saver mean? Well I mean it is basically in the name itself, and that I naturally would save my excess money instead of spending it in unnecessary things. It means I am comfortable seeing a dollar figure in my bank account and realise that I want that money for the future, and that just because I see money in my account it does not mean I need to spend it.

Being this way inclined, already creates a lot less sacrifice than it would if I was a spender. If I was a spender I would have to fight back that urge to constantly spend, and instead save the money against my will, to invest it. I see a lot of finance books talk about the importance of saving money, how important and helpful budgeting can actually be. I have talked about it myself many times as well in this blog. This advice is definitely more important for the spenders compared to the savers, while the advice is always going to be helpful, it would make a bigger impact on the spenders who feel the need to spend their money as soon as it hits their bank account. So, I feel if this exercise was asked of a spender, then their list of sacrifices might seem a lot longer.

Anyway, went off on a bit of a tangent there, so now back to what I have actually sacrificed. I really cannot think of any specific examples of a time when I chose not to spend money and instead thought I would be better off saving/investing it. Although it may have been a subconscious action, I know every time I do go shopping I do try hard to look for cheaper options.

Most of the time though you do get what you pay for and if you buy items that are cheap, it is because their quality is poor. I have learnt from this though and realise that it is actually more cost efficient to spend more money on certain items because they will last longer. It is worth mentioning that more money does not always mean better quality, I have bought some expensive items before that deteriorated quickly due to poor quality, but were only more expensive due to the brand. Fortunately, with the internet so easily accessible these days it is possible to find reviews of just about anything and everything to determine if it will be good quality or not.

One quick story is when I bought a TV at the start of 2020 after my old TV broke while I was moving, I went for basically the cheapest one available that looked decent (at least to me). But after about 18 months it started to deteriorate, the processor was not powerful and it would start freezing when using Apps like Netflix or YouTube. It still worked, but it was become a frustrating experience (although I am old enough to remember CRT TVs and only having 5 channels to watch so I realise it is still a long way ahead of there, but still, there is better out there).

It was time to buy a new TV, and my first instinct was to start at the cheaper end, but then I knew that in around 12 months I would end up buying a new TV anyway. Although the technologies are improving quickly, I would still like to have a TV I could get at least 3 years out of it. Instead I decided to do a bit more research and find a TV that was not outrageously expensive, but still had decent quality. In the end after looking at online reviews for a week or so, I was able to find a TV that looked to be pretty decent quality, should have good longevity in terms of keeping up with new technology and overall is a better product. I was able to find a TV that cost around $1,200, which is about 2-3x the price of the cheapest TV for that size, but I would expect it to last 2-3x longer, and for that time I will have a better quality TV as well. So, although it will be more of an outlay, in the end it will end up costing roughly the same amount.

While I still do not end up with a top of the line TV, I still do not necessarily feel like I am sacrificing, because I am more than comfortable with what I have, so not feel like I am missing out on something after not getting the more expensive variants. Similar things can be said for accommodation, transport and food.

As I have talked about before, typically the three biggest expenses for anyone are accommodation, transport and food. I will break down these three and talk about how I have reduced my spending in these categories but still do not feel like I am necessarily sacrificing.

Accommodation

I mean, I guess it would be nice to live in a mansion to be able to experience having a massive walk in wardrobe, a nice big ensuite bathroom and all that, but it really is not realistic. But there is also the option of share housing or living alone. When I first moved out I lived in a share house with some friends from university, it was close to work and a nice enough place and rent was pretty cheap (considering it was split 4 ways). It may not have been as comfortable as living alone and having more personal space definitely would have had it’s own benefits.

Since then, I bought a place out in Western Sydney with my brother, it was further from work but I did not want to maximise the loan to the extreme so I was more than comfortable getting the place we did have. Again I was not living alone but I was comfortable with the arrangement.

From here, I moved to Central Coast, NSW where I was able to live alone. Where I lived was not top of the line, but again it was more than comfortable and I really enjoyed my time up there.

After being up there for a few years I moved back down to Sydney but this time I was living alone, I was alone up at the Central Coast and I did prefer my independence at this stage of my life. My days of share-housing were over. I wanted to live somewhere with convenience to get to the city, so it was not too cheap but I was prepared to spend the extra money for the added convenience. At the time I needed to get to the city regularly so it was worth it to me.

Finally, after not needing to go to the city anymore, I have moved away from the city and am now on the outskirts of Sydney. Rent is a lot cheaper where I am now and I am a lot closer to my work. While I could potentially afford a nicer place, I am more than comfortable in the place I am in and do not feel any desire to upgrade in the near future, at least not while my life situation is as it is.

In summary, I do not believe I have necessary sacrificed anything in any of the places I have lived. I have never felt uncomfortable or hated the places I lived. They were not perfect of course, but they were enough for me, and I do not regret any of the decisions. Being able to be content and satisfied with a little bit less, can really make things easier to boost your savings without sacrificing on your quality of life.

Travel

I have only owned 3 cars, and they have all been second hand. Again, it might be nice to own a top of the line, brand new car, but I really struggle to justify the additional expense. I am not a car person and simply want a car to get me from A to B, so if I can spend $5,000 on a car instead of $30,000 then I would choose that option.

It is also important to mention that buying a more expensive car does not always equate to a higher quality and more reliable car. For example, my car is only a small car, so I have found most of the parts needed are relatively cheap and readily accessible. My dad on the other hand has a larger car and all the replacement parts for his thing are considerably more expensive. This includes consumables which need to be replaced for all cars regardless of quality.

Not to mention my car is quite fuel efficient, only 5.5L/100km so not only is it cheap to own, it is also cheap to run as well. I do not feel uncomfortable when I drive it, I do not feel like there is anything significantly extra I would get out of driving a more expensive car so am more than happy with my choice in cars.

Again, it comes back to being easily satisfied and content with cheaper options. It also helps I don’t feel any pressure to look impressive on the outside, I do not care what people think of me, I do not feel judged for having an “inferior” car and do not feel pressure to spend the same amount of money on cars as my peers. It does help that most of my close friends are of similar mindset so we all drive cheap second hand cars.

Food

I always find this expense item particularly interesting when I see how much other people actually do spend on food. The range of spending seems to vary considerably, from less than $100 per week to over $400 per week for some people (even on an individual basis).

I find it quite incredible since at the end of the day we typically need the same amount of food to survive so how could some people spend 4x as much as others. But of course, it all comes down to how much you prepare yourself and how much you buy from cafes/restaurants. Of course, if you also add drinking to the equation then the number could go higher with alcohol or coffee spending.

I learnt to cook at a relatively young age, and I really enjoy it actually. To be honest, I have found I typically prefer the food I cook for myself rather than a lot of restaurants as well. I am in no way suggesting that I am a better cook than the chefs they have, but I cook exactly to suit what I want, and over years of refining my recipes I have come up with a few that work for me.

In the end, I rarely find myself eating out, maybe once every couple of weeks, but I do not feel like I am sacrificing. I guess I prefer the experience of not having to prepare the food, and not have to clean up afterwards, but I prefer the food I cook myself and the money saved is an added bonus.

I have been able to spend a considerably lower amount of money by cooking for myself without feeling like I am really sacrificing on anything. Again, I like the ability to be independent and not reliant on the outside world.

Travel and Experiences

I will finish this post talking about the one thing you should NOT sacrifice for the sake of financial independence. Travel and experiences are sometimes that no matter how much money you have in the future, you cannot get later in time.

Sure, you can travel later in life once you have FIRE, but it is not the same as travelling when you are younger and seeing the world early in life can give you such incredible life experience that really is priceless.

I have been fortunate enough to travel to several countries already, and have found each adventure unique and exciting. I am really looking forward to travelling around Australia more when the lockdowns do end. Still not sure about overseas travel, will wait and see what happens with that for the time being!

There are also certain experiences that can only be had at certain points in time, so even if you have the money later in life, you cannot go back and do them. These could be a once in a lifetime concert of an artist that you really want to see.

I have one such example, back in 2006 when I was a poor Uni student my friend and I heard our favourite band (Foo Fighters) were performing a show next month at the Sydney Opera House. We had seem them live a year before and knew we had to get tickets to this show. But they were $150 each, being a poor Uni student, this was a lot of money. But we knew we could not miss out on it, we knew we just had to be there.

We both dug into our savings and spent the money on tickets (there is a whole story about camping out overnight through a hurricane, but that is a story for another day). And to this day I will believe that is probably the best $150 I have ever spent. I regularly still think back to that night and remember how awesome that concert was, how much of an enjoyable experience I had. How happy I am that I have that experience as part of my life.

There are some things that money is just not worth sacrificing for, and travel and experiences are top of that list in my opinion.

Summary

I know I wanted to talk about sacrifices I have made on my FIRE journey, but to be honest I cannot think of too much I have consciously made the decision that I will not spend the money because I would prefer to save it. There could be subconscious decisions made, where I simply prefer to spend less money and inherently, I will end up saving/investing that additional money.

Overall, I believe I am easily satisfied and generally content with the more frugal things in life, which definitely makes it easier on the FIRE journey.

I do not think it is healthy to sacrifice too much for FIRE, as FIRE is not about impacting on your quality of life. It is about finding that balance where you are able to have your desired quality of life, but still be able to reach your financial goals. A lot of the time this might be about altering your mindset to give yourself a new perspective on your life and your spending habits in particular.

This is why I never tell people to stop spending money on things that give themselves pleasure or enjoyment in their life, or what they believe enhances their quality of life. I might suggest they look for a different alternative which might help the bank balance however, but I do not believe FIRE should be about substantial sacrifice to reach your financial goals.