According to You Need a Budget (YNAB), my total net worth is currently $108,940.66.
That’s $6,193.91 higher than it was at the beginning of last month.
$11,657.14 higher than it was two months ago.
It’s $27,213.44 higher than it was six months ago, when I switched my budgeting app from Mint to YNAB and began focusing on growing my net worth as quickly as possible.
I wasn’t expecting the numbers to grow quite this fast, honestly.
So let’s look at how they did.
Moving to a lower cost-of-living area
In November 2017, I moved from Seattle to Cedar Rapids, Iowa. This move, which I wrote about in detail for Vox, cost me $5,929.10. (This includes travel, shipping my belongings, buying new furniture, etc.)
It also cut my expenses by close to $1,000 a month, much of that in rent costs.
This means it took about half a year for the move to “pay for itself.” After that, any money I saved by living in a lower cost-of-living area became, for lack of a better term, pure profit.
The move also improved my quality of life considerably—I’m closer to family, I’ve joined community and arts organizations, and I can finally afford to live in an apartment that isn’t held together by mold and grime.
It was a win-win, on all counts.
Working towards financial independence
Moving to a lower cost-of-living area decreased my expenses, which enabled me to think differently about my future. With more money comes more options—not just today, but years down the road.
It took me a little over a year to think about what I might do with these new options—or to even realize I had them. My expenses were lower than my income, I was regularly putting money into my retirement and brokerage accounts, and I wasn’t really thinking about long-term growth; I figured that would take care of itself.
Then I received an advance reader’s copy of Grant Sabatier’s book Financial Freedom: A Proven Path to All the Money You Will Ever Need.
This book blew my mind. More importantly, it made financial independence seem achievable, even for someone like me who earns around $70K annually (pretax).
I read Financial Freedom three times, cover-to-cover. I did all the exercises and plugged my numbers into Sabatier’s online calculators. I realized that with my current expenses, I could “retire” and live off my investments as soon as those investments hit $750,000—which, at the time, the calculators predicted would take twelve years to achieve.
Of course, I’m not really planning to retire in my late 40s. I’m both a writer and a novelist; we tend to keep working until our final hours. But I’m also realistic. I’ve been a freelancer for seven years, but I can’t guarantee my web writing career will last another seven; even if there’s still the same demand for articles and content, I may start getting passed over for fresher faces with a better grasp of pop/youth culture.
Plus, I might have different demands on my time in the future, which might make it harder to devote as much time to freelancing (or other jobs).
So I’m looking at this financial independence plan as a type of insurance, really. The freedom, to borrow Grant Sabatier’s term, to cut back on my freelancing if I have to. To spend more time writing novels, or caregiving, or taking care of my own health, or whatever might come next.
Investing as much as possible
Once I knew that “all I had to do” to achieve financial independence was get myself a $750K investment portfolio, I began asking myself how I could get there as quickly as possible.
This meant investing as much as possible. Pouring every extra dollar into my IRA or my SEP IRA or my brokerage account. (Freelancing has this interesting quirk where every dollar you put into either a traditional IRA or a SEP IRA is counted as an “above-the-line” tax deduction, which means that the more I’m able to put in those accounts, the less I have to pay in taxes and the larger ACA health insurance subsidy I’m entitled to take. This provides a huge incentive to max out both accounts, which I did in 2018.)
According to Vanguard, $4,729.49 of my $27K net worth increase came from investment returns. That’s 18% of the total growth.
Increasing my income
The other way to reach that $750K portfolio as quickly as possible was by increasing my income. As a freelancer, this is easier for me to do than it might be for someone with a traditional job; I’m the upper limit on how much I can earn, after all. (At least until I get to the age where clients might start wanting to replace me with someone younger.)
So I picked up some new clients, including some higher-paying clients. My income is currently higher than it’s ever been, and it looks like it’ll stay that way for the next few months at least—and yes, I’m already thinking about how I’ll cover the income gap if/when one of my freelance gigs ends.
This is the part where I have to mention that my income jump coincided with my decision to stop running The Billfold (and that a portion of my 2018 SEP IRA contributions came from money I had originally set aside for Billfold operations, after closing everything out and paying the freelancers, the vendors, the accountants, and the lawyers). If you’re not familiar with my entire career arc—and there’s no reason why you should be—I spent five years writing and editing for The Billfold, a personal finance site that was part of the Awl Network. When the Awl Network stopped publishing in early 2018, they asked me if I would be interested in running The Billfold as its own project, which I did for a year.
It would be very, very easy for me to write this post as a story of consistent growth and triumph, but realizing that I could no longer keep The Billfold going—and then deciding to accept that realization, after going through every single stage of grief—did not feel particularly triumphant. It was both a personal and a career failure; worse than that, it meant telling a community of readers and commenters that the site they’d been visiting every day for years was going to stop publishing.
And then, once it was over, everything got better—for me, anyway. (I know many Billfold readers still miss the site.) In many ways it was like leaving Seattle for Cedar Rapids; the decision was not easy, people were sad to see me go, and I still miss many aspects of living in the city. But once I was settled into my new life, I knew I’d made the right choice.
Living the frugal life
There are a lot of reasons why I am able to save as much money as I currently save—I’m single, I’m healthy, I have no children, I live in a low cost-of-living area, and I’ve been growing my freelance career for nearly a decade.
I also don’t own a car.
I cut my own hair.
I spend, on average, $55 a month on dining out.
I find one shirt I like and buy nine of it, so I never have to think about what to wear. Plus, I rarely look in the mirror and think “I need a new outfit because I don’t like the way I look today.” (If all my clothing looks the same, I always look the same—which means I always feel the same way about how I look.)
I do a lot of really frugal, kinda weird things in the name of keeping my expenses as low as possible. I eat the same things every day: breakfast is Huel plus a banana; lunch is Huel plus an apple; dinner is quinoa, which I buy in bulk, cooked with frozen vegetables and spices and served with a side of cottage cheese plus frozen blueberries for dessert. I visit the library probably three times a week (okay, that one isn’t that weird). I got rid of Netflix, and I only subscribed to HBO long enough to catch the last season of Game of Thrones.
I try to save money wherever I can, so I have the freedom to spend money on things like self-publishing my novels and spending a week in Walt Disney World.
Now I’m living the frugal life so I can work towards financial freedom as well.
In case you haven’t done the backwards math: in order for me to hit financial independence with a $750K portfolio, I need to keep my monthly expenses around $2,500. That’s not difficult for me, in part because I’ve been living very frugally for a very long time. Whether it becomes more difficult in the future—well, we’ll have to see. That’s why I’m looking at this financial freedom project as insurance, rather than the point at which I’ll never have to work another day in my life.
The calculators have already updated my target goal date from 12 years to 10 years.
We’ll see how my net worth changes over the next six months.