We’re Cody and Georgi, two 25-year-old financial independence aspirants living in Central Washington with our daughter, Eloise and our dog, Pilot. We stumbled across the FIRE (financial independence, retired early) concept 4 years ago and completely flipped our finances from a dismal cycle of paycheck to paycheck to an impressive investment in our future.
Two years before this, we were seniors in college and were both taking out student loans, not only to pay for tuition but also to subsidize our housing costs, food costs, and more. Of course, we knew we had to pay the loans back, but we were more concerned with sustaining our current wants over our future needs.
By the time we graduated college, we were expecting to find $40,000/year Monday-Friday 9-5 jobs waiting for us. After applying to hundreds of jobs that required both a degree and experience, Cody ended up at Taco Bell and Georgi ended up at Office Depot. We both fumed at our situations. How could college graduates only find work at near-minimum-wage levels? We had amassed over $56,000 in student loan debt and were working at $11.50/hour and $9.50/hour.
Soon after that, our older car started having some issues. We took it in for repairs and when the bill was projected to be $900, said “we can’t afford that.” So we traded it in and financed a fully loaded 2012 Honda Civic for $27,000, raising our debt to $83,000.
Living Paycheck to Paycheck
Fast-forward a couple of years. Our debt was still hovering around $80,000 after some minimum payments that went straight to interest, and we found ourselves living paycheck to paycheck. We were two college graduates who had been working for two years and still found ourselves at pay rates of $14 and $10.50. We genuinely believed we were victims.
We had standard student loan debt and a car payment, but who else didn’t in our situation? We were working hard, and by the time our paychecks came in every other week, they went straight back out to loan payments and living expenses. We just figured it would be this way for a year or two until we got raises, at which point we could start setting money aside.
Just a few days later, I got a raise of $1 per hour. Naturally, we went out to celebrate. We finally had enough income to set some money aside in savings (after taxes, this ended up being around $30 per week). Our first fattened paycheck came in, and we had every intention of setting that money aside. But we didn’t. We went out again that week, then again the following week.
Before we knew it, our standard of living had increased proportionately to our income. Sound familiar? According to Parkinson’s Law, many Americans do the exact same thing. We crave instant gratification and rarely put the future in focus. As such, our spending rises proportionately to our income.
From Victim to Victory
Then we started discussing having a baby. We wanted to be in a good financial position first, though, so we set out to pay off our car debt, which still hovered around $25,000. Paying the whole loan off would remove a whopper of a monthly payment: $465. We started researching ways to save, when we stumbled across the early retirement blog of Mr. Money Mustache. Without knowing exactly how far we’d end up taking MMM’s radical advice, we fully revamped our spending habits to go above and beyond our goal of just paying off the car.
We upped our savings rate from 0% to more than 65% of our take-home pay while living in one of the most expensive neighborhoods in Seattle. Our salaries at this point had risen to a combined $65,000, meaning we started to live comfortably on $21,000/year.
Within 20 months of this decision, we paid off all of our $80,000 in remaining debt, purchased a house, and traded in our shiny new car for a cheaper, older, but perfectly operating model. Over the last two years, we have renovated our home, started a family, wrote a book on FIRE and have grown our net worth into the six figures. From starting with minimum wage jobs and $83,000 in debt at the age of 20 to being a few years away from financial independence with (hopefully) multiple children in our early thirties, we want to show you everything we’ve learned so you, too, can clock out early and become financially independent.
For a consolidated, detailed guide on how to cut expenses, pay off debt, minimize your tax burden, invest, retire early and sustain early retirement, check out our book!