Welcome, Future Early Retirees.

You may have noticed things have gotten a lot more expensive over the past few years. You would be correct. According to Bureau of Labor Statistics, prices have increased over 20% in the past 5 years. With these increased costs, finding reasonable ways to cut back on expenses can give you a huge relief. Let’s talk about some of the most impactful ways you can save thousands.

In today’s newsletter:

• Use the pickup service for groceries

• Avoid high interest debt

• Move to lower cost living area

• Things I found interesting

• Views of Financial Freedom

• Financial Tools

Use Grocery the Store Pick Up Service

Overview: When you go into a grocery store, you tend to spend more than you intended. Thankfully, this can be prevented by utilizing the pick-up service where the store brings it out to your car. It saves you both time and money, as there is no extra charge for orders over a certain threshold (usually $35).

The details: How many times have you gone to the grocery store with a list and you leave with more than you intended? This happens to me almost every time. I see a tasty beverage I want, or a snack that will fill me up because I made the mistake of going while hungry.

All of the major grocery chains offer pick up services at no extra charge, as long as the order is more than a certain threshold (it’s usually been $35 for me). It’s very convenient, as you just need a method of transportation and the store’s app on your phone. When you arrive, they bring it out to you and that’s it! Super easy.

The only 2 things I would caution you on:

1. Before you get there, see if there were any substitutions (this happens when the store runs out of whatever you ordered).

2. The quality of the produce has been inconsistent in my experience. I recommend going in to pick out the produce yourself in this case.

How much can this save me?

Lets assume you go to the grocery store on a weekly basis and avoid an additional $20 of purchases by using the pick-up service. That would result in $1,040 of savings per year. This is just an example, but it gives you an idea on how a seemingly small amount can add up over time!

$20 × 52 (number of weeks in a year) = $1,040

Avoid High Interest Debt

Overview: Nothing will slow down your path to financial freedom like taking on high interest debt (debt with an interest rate greater than 8%). If you find yourself in a position where you have this debt, stop all contributions to your investments. The return you earn will likely be less than what you are spending on the interest of the debt.

The details: High interest is anything with an interest rate greater than 8%. I use this number because this is where you get into the territory where your investments are starting to earn less than what you are paying in interest.

For example, compare $1,000 of investments vs $1,000 of debt. If that debt has a interest rate of 10%, your investments will have to have 10% annual return just for you to breakeven. While this is what the S&P 500 has returned historically, it is not guaranteed it will be that in the future. It could be 8-9% for the next 50 years, in which case you would pay more in interest compared to what your investments are earning.

I’m not saying you need to avoid all debt. Some debt can be good as long as:

1. It has a lower interest rate (less than 8%)

2. It is used to acquire an asset that can increase your net worth.

Being selective about the debt you take on will have a huge impact on you ability to achieve your financial goals. If you have any high interest debt, I recommend you pause contributing to your investments to put your money’s focus towards eliminating this debt as you will save thousands on the interest paid by doing so. Some typical high interest debts include:

• Credit cards

• Personal loans

• Payday loans

• Private student loans (Federal loans are much lower)

Move to a Lower Cost of Living Area

Overview: Your largest expense besides taxes is likely your housing. Despite what most people talk about, being able to keep this expense low compared to your income will make the biggest difference in achieving your financial goals as soon as possible! If your housing payment is greater than 33% of your gross income, it may be a good idea to consider moving to a cheaper location so you can make bigger contributions to your investments, or give yourself more flexibility on spending.

The details: I understand this is not a simple action for many, but it can truly be life changing for those who are not strongly attached to where they are living.

My wife and I did this ourselves a couple of years ago. We were living in Nashville where rent alone took up almost half of our monthly income. This put us at a huge disadvantage, as we also had to pay for gas, groceries, and other essentials.

By the time we got to the money we could use to spend or invest, we had very little. This caused a lot of financial stress between us, and the topic of money became a sore spot in our marriage. We were also trying to buy a house, which did not help. We reached our breaking point when we were checking out a mobile home in a town that was an hour and a half outside of Nashville. We walked in and found bullet holes on multiple windows. We took this as a sign that we needed to change our plans.

As a result, we made the decision to move to Dayton, OH, where my wife is from. Our plan was to live with her parents for 3 months and see if we could find a house there. If the house hunting didn’t work out, we were going to rent for another year. We were very fortunate to have an awesome realtor, and ended up moving into a house a few months after starting our search. Our monthly mortgage is now less than our rent in Nashville was, and we have saved thousands. I share this story not to say you should do the exact same thing, but to encourage you to not feel stuck where you are.

It is important to note that if you prefer to stay (or simply cannot leave) where you are currently living, that’s okay! Your situation is different than ours, and we were fortunate I had a remote job and my wife was enrolled in online school, so we could move anywhere in the US.

If you are in a situation where you want to stay in the same area but still have high housing costs, another solution could be to look at nearby areas that are more affordable. Even just a couple hundred dollars a month difference would save you thousands each year!

Things I Found Interesting

• Tesla shares soar on better-than-expected Q2 deliveries report

• US job openings rise to 8.1 million despite higher interest rates

• Record-High July 4th Cookout Costs: Inflation Hits the Backyard

• 5 Investing Truths to Live By

• When will housing prices drop?

Views of Financial Freedom

Have you ever been hammocking? I can’t recommend this enough as it is one of the most enjoyable things to do when you have some free time!

Reply with your own AI generated image of financial freedom and I’ll feature it in an upcoming issue.

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