Author: David

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How to Save Money on Cell Phones

Posted on by David

The average cell phone costs $471 and the average premium phone costs over $1000! According to a Time Magazine poll, 84% of people surveyed said they couldn’t go a single day without their mobile device in hand. Given how important cell phones are, and how expensive they’ve become, how does one save money on cell phones?

Hardware as a Service

While a cell phone may seem like a one-time purchase, it’s getting harder and harder to treat it as one. Instead of being something you make last until it finally dies, the prevalent attitude about smartphones is to upgrade sooner rather than later. With the advent of the smartphone, the cell phone has grown to become a “hardware as a service model”.

What do I mean by that? Two things: 1) Each new model of smartphone comes with new features you may or may not want (Which you have to upgrade to get), and 2) manufacturers only support a certain model for so many years. It seems like every phone these days is advertised not by processing power or battery life, but by its better camera, new ID technology, and storage. These new features may be useful to you, but whether or not they are is irrelevant. The problem of “hardware as a service model” comes from the second point. Let’s look at an example.

In 2018 Google released a shiny new Google Pixel 3. With it came Android 9 Pie. The next year when Google released Android 10, the Pixel 3 was able to update and install it. Android 10 came with new software features like Dark Mode. It also came with new security patches. Google has promised support for the Pixel 3 until October of 2021. That means the Pixel 3 will be able to update to Android 11 and 12 and get security updates until October of this year.

But what happens after October 2021? Well if you have a Pixel 3, it means you won’t get any new software features that come with new versions of Android. For better or for worse you may want those new features or you may not. But more important than the new features, you will also miss out on the security patches that that come with Android updates.

Technical Security

I’ve personally never needed the newest smartphone features. I really just want my phone to be able to call people and surf the internet, but I’m very concerned with having the latest security updates. With more and more of our lives being online, technical security is a very real concern. In the US in the past 5 years there have been 6,469 data breaches totaling over a billion (1,026,000,000) records exposed. That’s three per person just in the last 5 years. And as I am morally against bad statistics, I am duty bound to remind you that since that includes children that are too young to have any online presence, that number is likely higher per person.

Source: Statista

These stolen records are usually credit card numbers, usernames, and passwords. The kicker in these data breaches is that nearly all of them could have been easily avoided by installing security updates. In these cases hackers exploited vulnerabilities in software that was either not updated or no longer supported by the manufacturer. This is why it is imperative that you update software on your electronic devices and that includes smartphones.

If your smartphone manufacturer no longer supports your smartphone, you are not getting security updates. Because of this, your phone will become increasingly vulnerable to the malicious intentions of bad actors.

To Upgrade or Not

All this to say that though in theory people don’t have to buy new cell phones regularly, in practice upgrading periodically is a necessity. In 2020 the average phone sold in North America cost $471 and increased by 7% annually. And as of 2018 the average smartphone user waited 24.7 months before upgrading. This comes out to an annual expenditure of $228.83/year on cell phones.

North America spends the most on cell phones. Apparently you can save money on cell phones by moving to Africa.
Source: Gizchina

So the average American spends $228.83/year on cell phones. $229 a year doesn’t seem like a lot of money but if you put that money into the stock market making 7% interesting, assuming a 7% increase in price, after 20 years that’s $16,536.93. In 2017 the iPhone X was released at a starting price of $1000. And as of 2020 the average premium smartphone is now over $1000. If you bought the flagship iPhone model every year for 20 years, it would set you back $72,330.55! This number, of course, is assuming a 7% increase in price.

That is the cost of buying new smartphones. Obviously very few people buy a new iPhone every year, but the average American is spending hundreds of dollars a year, and losing out on thousands in potential savings. How can they possibly save money on cell phones?

iPhone or Android?

I know this seems counterintuitive, but buying an iPhone is the better financial decision. I say this because, while Android phones are cheaper, Google only supports them for a couple years. They’ve promised to support their own phones, the Pixel line, for three years. Other high end Android phones, like the Samsung Galaxy line, usually get 2 years, and some of the cheaper android phones don’t get any updates. Google is working to change that because of security risks, but they won’t ever get more than 2 years of updates.

Apple on the other hand doesn’t promise any specific support window, but they’ve consistently supported phone models for 5-6 years. That means that if you pay $800 for a new iPhone that lasts you 5 years you’re spending $160/year on a smartphone. On the other hand if you buy a budget $400 Android phone that is supported for 2 years, you’re spending $200/year on a smartphone. As you can see in this case the iPhone is a cheaper option even though it initially costs twice as much.

As a rule of thumb I like to keep my cell phone budget to less than $100/year. If I spend $200 on a smartphone I hope to keep it at least 2 years. But I won’t keep a smartphone past its support window. This is the same reason I don’t use Windows XP: using software that’s no longer supported is a security disaster waiting to happen. For example I spent $190 on an iPhone 7 in fall of 2019. It should continue to get security updates for at least another year. If Apple stops supporting it in fall of 2022 then it would have cost me $63/year to use this phone.

Both iPhone and Android suffer from a short support window. Microsoft supports their operating systems for like 10 years. Shame Microsoft is awful at making phones.
The people that fight about which mobile operating system is better are much more entertaining than either phone could ever be.

Buy Used

The easiest way to save money on cell phones is the same as saving money on cars: Don’t buy a new phone. There are many ways to purchase used smartphones. Aside from general sites like Craigslist or eBay, there are several sites specifically for buying and selling used cell phones.

Swappa

Swappa is a site where sellers can list their old phones and buyers can buy from them directly. In that way it’s like eBay, but Swappa has specific rules such as the phone has to be working, clean, and not blacklisted from any carrier. I originally used them because they had a deal with Ting that would guarantee with phones worked with Ting and would come with a free SIM card. They are also usually the best deal I can find.

Swappa is mostly for phones, but they also have computers, tablets, and video games. They currently have the iPhone SE 2nd Gen starting around $215. And since the SE will probably be supported for another 3-4 years, that comes out to only spending $70/year on an iPhone!

Gazelle

Gazelle is a site that buys old smartphones, refurbishes them and then sells them at a discount. I bought my wife an iPhone SE 2nd Gen for $265 last fall. The SE 2 was new that year at $400 so $265 was a great deal. If Apple supports it for 5 years, that comes out to $53/year. Nearly half of my phone budget! I didn’t actually have a good experience with Gazelle or their customer service team, but I did get a great deal.

Back Market

Back Market is another site that buys old smartphones and refurbishes them for sale. I’ve never used it, but I’ve heard good things.

Conclusion

In conclusion, smartphones are hardware as a service. Because they shouldn’t be used outside of their support window, customers need to regularly upgrade to stay safe. Because of this you can’t just buy a cheap phone and use it forever like you can most things. This is why I propose the $100/year cell phone budget. I aim to spend no more than $100/year on cell phones.

This means I buy my phones used and then keep them until their manufacturer no longer supports them. Furthermore I pretty much exclusively buy iPhones because Apple supports their phones much longer than Google does. That said I don’t really have brand loyalty. I would by an Android if it were a better financial decision but for now I believe iPhones are the better deal on a per year basis. I recommend, as always, that you do your research.

What do you think? Which phones do you use? How much do you spend per year on cell phones? Let us know in the comments below!

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Save Money on Your Phone Bill with Ting

Posted on by David

The average cell phone bill is $70/month or $840/year for a single line according to JD Power. And a family of 4 can expect to pay anywhere from $120 to $220 a month for 4 lines from a major wireless carrier according to Tom’s Guide. Allconnect estimates the average cost of a single cell phone plan at $113 and $170 a month for a family of 4. My cell phone bill was just $11/person per month last year. How did I accomplish that? Here’s how to save money on my your phone bill with Ting.

Full disclosure, this post is not sponsored. I’m just a happy customer.

Ting has been around since 2012 and got their start by buying airwaves from Sprint. There was a flat rate for the number of lines you had and the rest was billed in buckets of minutes, text messages, and data across those lines. If you didn’t use your cellphone as your primary phone (ie, you had a landline) and didn’t use much data, it was a great alternative to an expensive phone plan with the Big Four carriers.

Using Ting it's very easy to save money on your phone bill

It worked for my family because we had a landline and we didn’t use much data because we had wifi at home (like nearly everyone in America).  The four of us usually kept ourselves under 500 minutes of talking, 1000 text messages, and 100 MB of Data. So it rarely costs us more than $41/month.

After moving out my sister and I started using our cell phones as our primary communication devices so minutes and texts went up. We combated this by getting google voice and using that for our longer conversations. It helped for the most part, but even if we went over on minutes or texts, Ting was still wildly cheaper.

Then I got Married

After getting married we added Courtney onto our mobile plan for a total of 5 lines. That extra line tipped us over to the next bucket for several of these. (That year Pokémon Go also came out but I’m sure that didn’t affect my data usage at all *cough* *cough*). At 5 lines, 1000 minutes, 2000 text messages, and 500 MB of data, our monthly bill was looking more like $66-$83 per month. That is still so much cheaper than just about any other option. Especially for 5 people.

We did this for a while, then Ting was bought out by Dish. We’re still not sure what that means for customer service or reliability, but after this they changed the billing system. Their new plan is much simpler: Unlimited Talk and Text for $10/line plus $5/GB shared across all lines. They have other plans if you need more data, but this has worked great for us.

New Ting plan has unlimited talk and text
New Ting plan has unlimited talk and text

So with 5 lines and never going over 1GB of data our bill comes out to $55/month or $11/person!

But what if I need Data?

I’m going to say something a little controversial: you don’t need that much data. It’s been my experience that no one needs data, or at least no one needs as much data as they think they do. No one needed it ten years ago and now that nearly every home, business, and restaurant has wifi, there’s no need to use cell data. The most data we use is for Pokémon Go and even that only ends up being like 200 MB/month.

Everywhere I am has wifi. The only places that don’t are when I’m actively driving and at the park. And you don’t need to use your phone when driving or enjoying the outdoors. You can stream music or watch YouTube videos on data, but you don’t need to stream music or videos when you’re out. But what if my work doesn’t have wifi I can access? You’re working, you don’t need to be on your phone. If you want to watch something while on your lunch break, download it before you leave home. Netflix allows a variety of episodes and movies to be temporarily downloaded.

Some people stream music when they’re driving or running, but that’s just a modern luxury. Just pretend it’s the distant past circa A.D. 2010 and put some music onto your phone. Modern phones have a crazy amount of storage now. You can put so much music on them! With the money you save by not paying for data, you could buy several albums a week.

What carriers do they have?

Originally it was just Sprint, but now they have deals with all the major carriers. We’re currently using them on Verizon’s airwaves, or the “Red Network” as they call it. Never had a problem with coverage.

Do I have to buy a new phone?

No. Ting works with nearly any phone. They have a phone checker that will make sure your phone is compatible with their networks, but pretty much any modern phone will work now that the government has forced the Big Three to play nicely. If your phone doesn’t work on Ting or you just want a new phone they have a shop where they sell compatible phones at or below new prices. That being said I only buy used phones from Swappa.

What if I *actually* need data?

They have other plans that are more data-friendly, like unlimited talk and text and 5 GB of data for $25, but for the most part we don’t *need* as much data as we think we do. The less data you use the more you can save money on your phone bill.

What about Google Maps?

Google maps uses surprisingly little data. An hour trip might use like 30 MB. If you use Google maps a lot, you can download an offline map while at home then you won’t need data to use the GPS.

Captain Picard saved money on his phone bill by switching to Android
Captain Picard saved money on his phone bill by switching to Android

Conclusion

I like Ting a lot. Our family spends roughly ¼ of what the average American does on cell service. And now that they have unlimited talk and text for $10/line it’s pretty hard to complain. I don’t use much data and frankly have never felt that I needed more than the 1 GB we use. Even for a family of 5, we only ever use a few hundred megabytes. Remember mobile data is a luxury, and while it’s ok to indulge in the occasional luxury, they aren’t needs.

What do you think? How much do you spend on cell service? How do you save money on your phone bill? Have you been looking for a new cell plan? Let us know in the comments below.

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100 Million Americans Have no Retirement Savings!

Posted on by David
Millions of Americans retirement savings are dangerously low

Recently, while complaining about rich people using IRA’s, Senator Ron Wyden said that 100 million Americans have no retirement savings. You mean 1/3 of Americans have no money saved for retirement? Oh Noes!

This is a startling statement meant to be an eye-catching headline. It may even be true, but let’s look further into this statement before we make our minds up. Like I said in my post on whether 40% of Americans Don’t have $400 in the Bank, “There are three kinds of lies: lies, d***** lies, and statistics.” I’m sure you’ve seen studies that show that the average American only has several thousand dollars saved for retirement. While it’s true that most people aren’t pursuing FIRE, I don’t believe we have an impending retirement crisis on our hands.

First off let’s look at the 100 million Americans figure. 100 million people represents almost 1/3 of America. But if you look at the population of America by age and sex, you’ll see that the number of Americans under 25 equal 103.26 million.

100 million Americans have no retirement savings, but that is because they are children...
Source: Statista

So right there you can see that there is an issue with the “100 million Americans” figure. Very few people under 25 even have a job much less a job with a 401(k). And at 25 very few “adults” are worried about saving for the future (even if they ought to be). If they are looking towards the future at all, most of them are looking to pay off student loans or save to buy their first house than actually save for retirement.

According to Vanguard, the average 401(k) balance for people 25 and younger is $6,718. Knowing this it makes sense that 100 million Americans have no retirement savings, but that doesn’t necessarily mean it’s concerning.

Why don’t older people have more in their 401(k)?

The 401(k) started as part of the Tax Revenue Act of 1978. It was mostly an accident and it took tax lawyers a couple years to notice it as a tax loophole. It wasn’t until 1981 when the IRS issued new rules that allowed employees to fund their 401(k) through payroll deductions. After a couple years most big companies offered 401(k) plans. This means that someone who is currently 65 had been working for roughly 7 years before the 401(k) had become a thing that was available to them.

That easily explains why 401(k) balances of people over 65 aren’t proportionally higher than those of younger savers. They didn’t have them available when they started their careers. They had pensions. The 55-64 year-old crowd also likely had pensions. The 401(k) is a relatively newer retirement tool. And even now that 401(k) plans are more popular than pensions, many people still have pensions. Most teachers, contractors, and government workers still have access to pensions. So they have to be accounted for these kinds of surveys.

How many retirement accounts do you have?

Another issue with surveying the average balance in a retirement account is that it ignores the fact that most people have more than one retirement account. A family with two working parents can easily have several retirement accounts even though the family is saving for retirement together. If each parent has both an IRA and a 401(k), that’s 4 retirement accounts. And if each parents has both a traditional and a Roth IRA that can make 6 accounts. And that’s only if both parents only have one 401(k) each.

Over the 1994-2014 period, 25 million 401(k) holders separated from an employer and left at least one account behind and several millions of those holders left two or more 401(k)’s behind. According to the Social Security Administration (SSA), in 2013 over 33 million individuals could have potential benefits from past retirement accounts. Source: https://www.gao.gov/assets/gao-15-73.pdf

“The considerable mobility of U.S. workers increases the likelihood that many will participate in multiple 401(k) plans. Over the last 10 years, 25 million participants in workplace plans separated from an employer and left at least one account behind and millions left two or more behind. When individuals hold multiple jobs, they may participate in many 401(k) plans or other types of employer-sponsored plans and upon changing jobs face recurring decisions about what to do with their plan savings.”

Government Accountability Office

It’s not hard to have several accounts

If you leave your job, you can opt to either withdraw your 401(k), roll over the money into another retirement account, or leave the money in your old employer’s custodial care. Below is a graphic depicting how a worker could accumulate several retirement accounts. A couple years after starting his first job, he leaves for a new one. Instead of rolling his 401(k) into an IRA, he leaves it with his old employer to manage. His employer then places it into a forced-transfer IRA, An IRA for previously terminated employees. After leaving his second job he rolls over that 401(k) into an IRA. When he leaves his third job he leaves the 401(k) with his old employer to manage. And he starts his fourth job and opens up a 401(k) with them.

The average retirement account by definition is average rather than cumulative.
This worker’s average retirement account is only $4,250 rather than $17,000

So by the time he is onto his fourth job, this hypothetical worker has 4 retirement accounts totaling $17,000. Though his retirement savings total $17,000, the average amount in his retirement accounts only equal $4,250. Using this example you can see how someone saying “the average retirement account only has X amount of money in it.” That may be true, but the average American may have more than one retirement account.

According to indeed the average employee stays at their job for just over four years. If that’s true and they don’t get around to rolling over their 401(k) into their new employer’s 401(k) or an IRA, the average worker could have 10 to 12 different retirement account by the time they retire.

Conclusion

As you see these kinds of charts and statistics can be misleading. Who are they counting in their surveys? Are they counting all Americans, or only working Americans? What types of retirement accounts are they factoring in? Is it all kinds of retirements accounts, or just certain ones? Are they accounting for pension plans? Just like with everything you read or hear, a little critical thinking goes a long way. Is the average American not saving enough for retirement? Yes, I believe everyone could benefit from a little more discipline when it comes to delayed gratification. But is the future all doom and gloom? I don’t think so.

What do you think? Are we headed towards a retirement crisis, or is it all fake news? Let us know in the comments below!

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FIRE Case Study – 29 Year Old Earns $158,000/Year

Posted on by David
Destiny Adams - FIRE Case Study

I’ve been wanting to do a FIRE case study to test a budget for potential FIRE-ability. So I looked for a likely candidate and stumbled across “make it”. CNBC’s “make it” is a series that features millennials who work hard and make a lot of money and breaks down how they spend it. In January’s video How a 29-year-old built a career and 2 side hustles that earn her $158,000 a year, they interviewed Destiny Adams. She is 29 years old, works three jobs and made $158,000/year. According to the article she spends her mornings making YouTube videos which brought in about $12,000 last year. She then works at her salon and online hair extensions shop which made $86,000. After that she goes to her day job with the state which pays about $60,000/year.

Adams revealed that she grew up in a low income household and watched her grandmother struggle in retirement and her mother struggle to save for retirement. She knew she didn’t want to struggle like that. So to overcome, she decided to work several different side gigs and make sure she could save for retirement. She said she wakes up early and works until 2:30 AM. Because of her strong work ethic I thought this would make a great FIRE case study.

So let’s look at her budget and see how it measures up. I want to make clear that I’m not here to be jealous of the money she makes nor am I looking to judge any of her spending. This is just an exercise in analyzing budgets for the purpose of determining if reaching financial independence is a reasonable goal.

Destiny Adams’s Monthly Spending

FIRE Case study - Destiny Adams's monthly budget
  • Discretionary: $1,715 (includes entertainment, beauty, shopping and other miscellaneous expenses)
  • Savings and investments: $1,500 (includes liquid savings and 401(k) contributions)
  • Rent: $1,340 (for a two-bedroom apartment)
  • Food: $900 (includes $150 for groceries and $750 for eating out)
  • Insurance: $295 (includes health, dental and car insurance)
  • Gas: $235
  • Utilities: $140 (includes heat, electricity and Wi-Fi)
  • Subscriptions: $83 (includes $20 for a car wash service, $30 for the gym, $19 for Hulu and $14 for grocery delivery)
  • Phone: $75

She also has $44,000 in student loans. The reason they don’t appear here as a monthly liability is because the payments were put on hold because of Covid-19, though the payments are probably back on as of now. She is hoping to qualify for the Public Service Loan Forgiveness program (though the odds of being selected are much lower than people think.

What’s Her FI Date?

Destiny’s self-reported spending is $6,283 which includes her $1,500/month into her 401(k). So if we exclude her retirement savings and multiply the rest by 25 (the 4% rule) we get a FI number of $1,434,900. She needs a little less than $1.5 million to retire and keep her desired lifestyle. Taking into account her $44,000 student loan debt and assuming the market returns a conservative 7%/year, if she makes 158,000/year and saves $18,000/ year it’ll take her…

nest egg
YearsincomespendingsavingAmount needed $     -44,000.00Amount to go
1 $ 158,000.00 $  57,396.00 $   18,000.00 $  1,434,900.00 $    -29,080.00 $ 1,463,980.00
2 $ 158,000.00 $  57,396.00 $   18,000.00 $  1,434,900.00 $     -13,115.60 $ 1,448,015.60
3 $ 158,000.00 $  57,396.00 $   18,000.00 $  1,434,900.00 $         3,966.31 $ 1,430,933.69
4 $ 158,000.00 $  57,396.00 $   18,000.00 $  1,434,900.00 $      22,243.95 $ 1,412,656.05
5 $ 158,000.00 $  57,396.00 $   18,000.00 $  1,434,900.00 $      41,801.03 $ 1,393,098.97
6 $ 158,000.00 $  57,396.00 $   18,000.00 $  1,434,900.00 $      62,727.10 $ 1,372,172.90
7 $ 158,000.00 $  57,396.00 $   18,000.00 $  1,434,900.00 $      85,117.99 $ 1,349,782.01
…… ……………
26 $ 158,000.00 $  57,396.00 $   18,000.00 $  1,434,900.00 $    980,652.94 $    454,247.06
27 $ 158,000.00 $  57,396.00 $   18,000.00 $  1,434,900.00 $ 1,067,298.64 $    367,601.36
28 $ 158,000.00 $  57,396.00 $   18,000.00 $  1,434,900.00 $ 1,160,009.55 $    274,890.45
29 $ 158,000.00 $  57,396.00 $   18,000.00 $  1,434,900.00 $ 1,259,210.22 $    175,689.78
30 $ 158,000.00 $  57,396.00 $   18,000.00 $  1,434,900.00 $ 1,365,354.93 $      69,545.07
31 $ 158,000.00 $  57,396.00 $   18,000.00 $  1,434,900.00 $ 1,478,929.78 $     -44,029.78

31 years to reach financial independence!

That is a viable path to retirement. It’s not super fast, but it is quicker than the typical American worker. Currently 29 years old, if she started now, she would be able to retire by the time she was 60. That’s 5 years earlier than the official retirement age of 65. It’s also older than 59 1/2 which is the age you need to be to withdraw from your 401 (k) or IRA. Obviously Destiny is on an acceptable path to retirement, but it’s not a great path. If she ran these numbers herself I can imagine she would probably modify her budget a bit.

This is also assuming that she contributes $1,500/month into her 401(k). The article said that she usually likes to spend $1000/month on travel and in 2020 (pandemic) she’s been putting some of that money into a savings account. Her budget says that the $1,500 includes liquid savings and 401(k) so depending on how much of that savings is her actually going into retirement accounts her financial independence date could actually be quite a bit further off than 30 years.

Something’s not Quite Right

But there’s an even bigger issue here. There is a huge disconnect between the amount she is making and the amount she budgets for spending. Even if you include what she contributes to her 401(k), her budget only covers 48% of what she made last year.

She said she likes to buy designer handbags. In 2020 she spent $4,300 on Louis Vuitton purses. She also bought a Mercedes in 2015 for $21,000. Though it violates one of my rules of car buying, I’m not here to judge. Different people find different things of value, and if she gets satisfaction and joy from her purchases then that’s great. I’m just interested in the FIRE analysis.

What If?

What if she put all that extra money into retirement savings instead of just $1,500/month?

Her FI number would still be the same: $1,434,900, but this time savings would be $100,604/year. I understand that this is nigh on impossible, but roll with me on this. Consider it a thought experiment. With those numbers her financial independence date would be…

nest egg
YearsincomespendingsavingAmount needed $     -44,000.00Amount to go
1 $ 158,000.00 $  57,396.00 $ 100,604.00 $  1,434,900.00 $      53,524.00 $ 1,381,376.00
2 $ 158,000.00 $  57,396.00 $ 100,604.00 $  1,434,900.00 $    157,874.68 $ 1,277,025.32
3 $ 158,000.00 $  57,396.00 $ 100,604.00 $  1,434,900.00 $    269,529.91 $ 1,165,370.09
4 $ 158,000.00 $  57,396.00 $ 100,604.00 $  1,434,900.00 $    389,001.00 $ 1,045,899.00
5 $ 158,000.00 $  57,396.00 $ 100,604.00 $  1,434,900.00 $    516,835.07 $    918,064.93
6 $ 158,000.00 $  57,396.00 $ 100,604.00 $  1,434,900.00 $    653,617.53 $    781,282.47
7 $ 158,000.00 $  57,396.00 $ 100,604.00 $  1,434,900.00 $    799,974.75 $    634,925.25
8 $ 158,000.00 $  57,396.00 $ 100,604.00 $  1,434,900.00 $    956,576.99 $    478,323.01
9 $ 158,000.00 $  57,396.00 $ 100,604.00 $  1,434,900.00 $ 1,124,141.37 $    310,758.63
10 $ 158,000.00 $  57,396.00 $ 100,604.00 $  1,434,900.00 $ 1,303,435.27 $    131,464.73
11 $ 158,000.00 $  57,396.00 $ 100,604.00 $  1,434,900.00 $ 1,495,279.74 $     -60,379.74

Just over 10 Years!

She could retire before she hits 40 years old. That’s the power of upping your savings. Destiny also mentioned that she wants to travel more and buy a house which will most-likely increase her monthly spending, but I think she makes more than enough money to be set. The only issue is that she’s not committing to savings.

Since she’s self-employed as well as working a regular job she can take advantage of a solo 401(k) and contribute up to the max of $58,000/ year. She’s also a state worker so she should have access to a 457 plan. It’s like a 401(k) but only for government workers. So that’s another $19,500/year on top of her IRA. If she committed to saving, she could save $83,500 in tax advantaged retirement accounts. That would almost completely cover her $100,604/year in savings. The rest could be put into a taxable brokerage account.

What do you think? Does this FIRE case study make sense? Can you think of more ways for Destiny to save money? Maybe a better plan to take advantage of her tax advantaged accounts? Let us know in the comments below!