JIM AND I GOT married 16 years ago in our modest home. We spent just $500 and only invited immediate family members. Back then, we didn’t have any clue where life would take us. Neither of us planned to retire early, let alone retire abroad.
Still, how we got married was a sign of how we wanted to live—in a financially prudent manner. We set out to keep our living costs under control, and that set us on a path to financial independence, culminating with our retirement last year. In particular, we focused on four key expenses:
1. Debt. I’ve always disliked being in debt. When we merged our finances, Jim came with credit card debt, while I had an auto loan. We realized it would take many years to pay off the mortgage on the home we just bought together. We could, however, reduce our other debts.
Since credit cards were the most expensive debt, we aggressively tackled those first. We both had excellent credit scores, so we opened credit card accounts that offered an introductory 0% promo rate, using either my name or Jim’s. We’d transfer old, interest-accruing balances to the new cards and then—before the 0% promo rate ended—transfer the balances again to new cards that offered 0% promo rates. During this time, we lived frugally and managed to pay off the credit cards within a few years. We were also able to pay off my auto loan in two years.
After that, our only debt was the mortgage. We sent in at least one extra payment per year. Based on my calculation, we were on track to pay off the mortgage in 22 years.
2. Transportation. For most people, their biggest expense—after housing—is their car or cars. Living in Dallas, a city with poor public transportation, we both needed good, reliable cars. We realized early on, however, that we didn’t need the latest model with the flashy gadgets.
For Jim to drive to work and for a general family car, we bought a used Toyota Scion, a small hatchback car with 131,000 miles on it, paying cash. It was big enough to carry most everything, from groceries to camping gear to all the boys’ sports equipment.
Sure, there were occasions we wished we had a big SUV, like many people do in Dallas, especially when we had to strap a 10-foot pole vault to the side of the car to get to competitions. But such occasions were few, and the rare inconveniences were worth it, because we had extra money for other adventures.
3. Cell phones. These have become a necessity for most of us, me included. But why did I need the cell phone? I didn’t use it heavily to do business. I just needed a good reliable phone to keep in touch with family and friends on three continents. With that in mind, I always bought older models, spending less than $300 on each.
When a new model came out, I would ask if I really needed the new features it offered. When the iPhone 6 rolled out, just as I needed to get a new phone because my iPhone 3 was dead, I decided to buy a used iPhone 5s. Today, Jim and I still use the iPhone 5s we each bought many years ago.
A costly phone is a one-time overpayment. But the plan you subscribe to can be an ongoing waste of money. By buying unlocked cell phones for cash, we had the flexibility to change cell plans as often as we liked, because we weren’t locked into a contract.
One of my friends told me she spends over $200 a month on an unlimited cell phone plan for a family of four, which is not uncommon in the U.S. This begs the question: Why do you need an unlimited plan? I treat the cell phone like any other utility, such as water, gas or electricity. I would not pay two-to-three times my actual usage per month for “unlimited” use of electricity. I pay only for what I consume. Unlimited usage can cost a lot in the long term, so it’s important to know what you truly need. How many minutes do you actually use for phone calls a month? How many texts do you send and how much data do you need each month?
Another key to saving on cell phones is to use mobile virtual network operators, or MVNOs. The big networks, like AT&T, Verizon, T-Mobile and Sprint, own their own towers. But the smaller ones—the MVNOs—buy service from these big guys in bulk, reselling to consumers at low prices.
Depending on rates and promotions, I would switch our cell phone service among MVNOs, signing up with companies like Mint Mobile, Consumer Cellular, Red Pocket, Ting and Pure TalkUSA. Our last year living in Dallas, we paid $15 a month per line with one of the MVNOs.
4. Utilities. These can add up, especially if you live in an older home, like we did. I would shop for the best monthly electricity rate—something that’s easy to do in Texas. Using sites like Compare Power or Power to Choose, I could enter my actual usage and then compare rates.
Last year, at age 53, Jiab Wasserman left her job as a financial analyst at a large bank. She’s now semi-retired. Her previous articles include Courting Success, Buen Camino and Takes Skill. Jiab and her husband Jim, who also writes for HumbleDollar, currently live in Granada, Spain. They blog about downshifting, personal finance and other aspects of retirement—as well as about their experience relocating to another country—at YourThirdLife.com.