How I Saved $10,000 in 10 Months (at an Entry Level Job)
Over the course of 10 months, I was able to save $10,000, working an entry level job, in one of the most expensive cities in the U.S. – Los Angeles. I saved over half of my measly $2,400 monthly income despite the inflated costs of living. Now I’m traveling the world, starting my own businesses, and generally loving life.
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I don’t say this to brag (entirely), but to remind everyone that anything is possible if you focus enough energy towards your goals. Here’s I how I did it.
#1: I Tracked Every Expense
I saved my receipts and entered them into a spreadsheet at the end of every day. You’d be amazed how quickly the little untracked expenses add up – coffee, gum, etc. If you record your spending you’ll naturally be a little smarter with it.
Here are what my expenses from January ”˜08 looked like (rounded up to the nearest $):
Utilities (gas/electric/water): $35
Eating Out: $41
House Items/Toiletries: $11
*Note: I didn’t have a cellphone bill because I was still on my parent’s plan.
#2: I Opened a High Yield Savings Account & Paid Myself First
I had a set amount of money deposited directly from my paycheck into a high yield savings account. This way I didn’t have the chance to spend it. A high yield savings account is better than a regular savings account because I accrued interest.
#3: I Saved on Rent & Utilities
The more people you live with, the cheaper the rent and utilities are going to be. My bill was split between five guys. Consider sharing a room instead of keeping the single. There’s no shame in having a roommate these days, especially with the ridiculous costs of housing.
Privacy was hardly ever an issue for me and my roomies. Whenever my girlfriend and I ”˜needed the room’, I just asked and it was ours for a bit.
I don’t, however, recommend sharing a room with a complete stranger. You could get a psycho – I know from experience. Screen potential roommates carefully.
#4: I Saved on Food
I was eating 5-6 times a day and a lot of healthy foods at each meal. I also bought an expensive protein supplement from Biotest. Yet, I still spent less money on my grocery bills than most people I know. These strategies worked for me:
I bagged my lunch to work.
People hear this all the time but hardly anyone actually does it. My co-workers would routinely eat out and spend $7-8 for their lunch-time meal. I spent just over that for an entire day’s worth of food.
I had a meal plan.
I made a meal plan for the whole week and bought all my food at once. My roommates would often end up at the grocery store every other day because they didn’t want to buy a week’s worth of food at a time. What they failed to see is that they were actually spending more because when they didn’t have food in the house, they’d end up at a fast food joint spending about 1/7 of my weekly bill for one, awful, greasy meal.
I followed the deals.
For healthy, cheap food I went to Trader Joe’s. It kicks the competition’s butt on a lot of products. A dozen cage free eggs is only $2.50!
Go to farmer’s markets on the weekend and stock up. Buy in bulk from Costco. There are cheap places for high quality food in every city. You just have to know where to look.
I ate out sparingly.
Eating out is great. It’s fun and delicious. But it’s also expensive. I usually end up ordering a drink or two so it gets out of control very easily. Instead of going out, I tried cooking nicer meals for my girlfriend at the house. I’m not a good cook (yet) but I tried and I think she appreciated the effort.
Try public transportation – it’s not as bad as you think. I rode the bus in LA for ten months with no real incidents to speak of. Unless you count getting made fun of for wearing a tie.
I had no car so I saved on all types of expenses – oil, insurance, and the other hidden costs. When I needed to borrow a car, I did, and I paid my roommates for my share of the gas. But, because I didn’t have my own car, I felt the need to drive places less. Obviously, if I didn’t live with friends, it might have been a problem, but that’s where good roommate decision making comes in to play.
#6: I Saved On Entertainment
Everyone’s idea of entertainment differs so you might have to get creative. Rent movies and split the $5 rental fee with a friend, or go to discount theaters. They often have movies that are just out of theaters. Avoid the hype and necessity to see a movie as soon as it’s released.
Some of my best nights in LA were spent with a cheap bottle of wine watching classic movies with my friends in a discount theater near my house.
There are times when you need to cut loose. Because I was spending so frugally on other things, I decided to splurge and spend a lot of cash on my friend’s birthday in January. The extra cash for sushi and drinks was well worth the fun.
#7: I Read Personal Finance & Travel Blogs Daily
Saving was difficult so I had to keep myself motivated. I made sure I read at least one personal finance article (usually something at GetRichSlowly.org) and one travel blog a day (Vagabondish.com anyone?). It helped me stay on track and stay focused on my travel goal.
The bottom line is: I didn’t spend my money on stupid things! As long as you follow that rule you’ll be fine. If it does you no good in the future, don’t buy it. Everything is an investment.
Yes, I may have forgone some immediate pleasures and comforts, but now I’m in a position that few people ever will be. I was able take an entire year off to make my dreams come true.