In today’s podcast we discuss the High Cost of Living Path to FI with ChooseFI community members Paige and Sam who live in Los Angeles and have been pursuing FI in a HCOL with sub-$50,000 per year jobs.
Podcast Episode Summary
- Episode 41: A conversation with Paige and Sam about pursuing Financial Independence in a high cost of living area on a lower income
- Paige pushed back on our limiting belief that you “can’t” achieve financial independence on a low income in a high cost of living area
- Sam introduced Paige to MMM but Paige ran with it from there
- Paige’s back story
- Paige had a negative net worth in her mid-40s
- Since Paige has earned and lived in the $30,000 range she is used to that and now that she’s making more she can save that difference
- Paige intends to hit early retirement in 2025 and has a 50% savings rate
- She uses her Roth IRA as an “emergency fund” since she can withdraw the contributions at any time tax and penalty free
- Sam’s story behind retiring “early and often”
- He did not have student loans and also his parents modeled investing for him well before he was earning income himself
- Sam’s parents always put gifts and other money into his investing account instead of giving it to him to spend
- Sam is technically at his FI number, but he does still continue to work
- Sam’s history of his apartment renting in Los Angeles and sharing apartments with roommates to lower the costs (over a 20+ year period)
- Sam has never made more than $50,000 in a year
- Having to be slightly more intense to reach FI in a low cost of living area. The best way being to live with roommates and not having a car payment
- They don’t buy new items – the “alley provides” and they can find free stuff on the street or at Goodwill, etc.
- They are very deliberate and intentional about saving money on food and groceries
- Limiting beliefs on why people like Paige and Sam couldn’t retire early and pursue financial independence and why they rejected them
- The big three items they can control: Housing, Transportation and Food
- There are so many free activities in a big city, so it is easy to keep a nearly $0 entertainment budget in a city
- They are not minimalists at all, but they just don’t buy new things.
- Sam is an extreme DIY-er and picks
- How did Sam become a DIY-er?
- You don’t have to agonize over decisions when you aren’t trying to maximize or perfect each buying decision
- How they approached their home buying decision differently with the mindset of people who can fix essentially anything
- Buy a house that is just bad enough that the flippers don’t want it – per Paige
- What is the long-term play for their new house? Do they intend to buy other homes to fix and sell?
- Extreme ownership of your decisions and knowing what you want
- Paige’s plan for early retirement and how to make it to 65 and social security where she’ll get a ‘big raise’
- Hot Seat questions
Listen to Brad and Jonathan’s thoughts about this episode here.
Links from the show:
- Playing With FIRE documentary
- Radical Personal Finance
- Jocko Willink podcast
- Mad Fientist
- Early Retirement Now
- Mr. Money Mustache
- Shockingly Simple Math Behind Early Retirement
Books Mentioned in the Show: