4 Best Ways I Have Ever Spent My Money

4 Best Ways I Have Ever Spent My Money

We have all made numerous purchases throughout our lives. Some were necessary—food, for one—but others were inessential purchases that we cannot even remember enjoying. Working part-time has made me more attentive to each dollar is spent. Even with this mindset, however, sometimes my money truly was well-spent:

Hunter Buddy Forest

247994_1795689091164_5992406_n When I was little, my parents said that I could not have a pet unless I bought one myself. So I took them at their word. After saving $200, I rescued Hunter through Operation Greyhound. My life is undeniably better for having had him as my first roommate.



Spanish Steps

I ended up staying longer in Venice by myself after traipsing through Rome with some friends. There’s something about traveling alone that deeply ingrains independence and I would love do it again soon.


Escape Room


My roommate extolled the virtues of escape rooms to me for a while before I finally went with a group of friends. It was so much fun that I dragged my little cousin and aunt to go with me a second time. An hour of bonding through constant action and lots of puzzles was well worth the $28. In fact, since then, I have been looking into starting an escape room side hustle. If anyone has any tips, please let me know!


Nancy Drew Games


These games bring me so much nostalgia. My cousin and I always buy them whenever they are on sale and play them together. It is probably because of these games that I enjoy escape rooms so much.


Of course, there were many things that I bought over the years. Clothes, food, etc. But over time, those purchases fade away. Rather than accumulating forgotten items, I would much rather embark on unforgettable experiences.

What’s Your Savings Rate?

What’s Your Savings Rate?

The current household savings rate in the United States is around 5%. Certainly, households have to pay for food, bills, and the roof over their heads—to name a few. Even considering these pressing needs, however, 5% still is a very dismal number.

To further understand why 5% is a depressingly low savings rate, let’s look at how many years it would take to retire.* Using the MadFIentist’s Savings Rate Calculator inspired by Mr. Money Mustache’s post on “The Shockingly Simple Math Behind Early Retirement,” it would take you around 52 years to retire. Assuming you start working right out of college, you will be in your mid-70s when you finally retire. Who in the world wants to still be working to pay the bills in their 70s?

Five percent is extremely low even by the usual rule of thumb savings rate of 15%. It would take you 35 years to become financially independent and you’ll retire as you near your sixties if you work after graduating college.

But what if you don’t want to travel the world with grey hair? What if you want the freedom to work if you so choose, to travel if you so choose? What if you want financial independence?

Then even 15% is terribly low.

Your savings rate is crucial for financial independence. To put it another way, how much do you value the years of your life? The 10% difference between a 5% savings rate and a 15% savings rate is around 17 years (which is currently 89% of my short life). Seventeen more years that you have to work to survive. Thus, to reach FI as fast as possible, you have to save as much as possible.


How to Determine Your Savings Rate


The math is quite simple:

(Amount you save for retirement/amount you earn)*100%

Instead of looking at how much you save overall, it is more important to look at the amount you save for future you. Money saved for future purchases skews your FI savings rate. If you save a lot of money for a car or a down payment on a house, then you aren’t actually any closer to financial independence since you plan to spend the money.**

I determined my savings rate by looking at the amount I contributed to my Roth IRA over the amount made from work-study and side hustles. My savings rate for the last academic year was 52%. If I continue to save 52% after graduation, it will take me 14 years to be FI.

As a college student, however, the difference between saving 10% and 20% can be very small. Some of us are already living close to the edge (the ramen life is real) and a lot of our money (or all of it) goes toward tuition. Thus, having a low or non-existent savings rate in college is understandable. If possible though, it’s a great idea to get started now to establish the habit of saving every penny.


This Doesn’t Mean You Don’t Live


My apologies for the double negative, but I do want to point out that striving for FI doesn’t suck out all the fun in life. You can still spend the money you earn.

My discretionary expenses rate for the last academic year was 16% (the rest was spent on textbooks, laundry, and other necessary expenses).*** I determined my discretionary expense rate by dividing the amount of money spent on things I could live without (read: entertainment) over the money I earned in the semester. This includes eating out a couple times, a Disneyland ticket, two trips to escape rooms, and Christmas gifts for my family.

As you can tell, I’m still willing to pay money for experiences, but not so willing to buy stuff (unless it’s for others). My closet is full so there is no point in buying more clothes. My dorm has all the stuff I need (plus some).

In short, the goal is to save and spend your money in line with your values. When there is nothing truly valuable to spend your money on (aside from basic necessities), then my advice is to save it for the FI dream.


* Of course, if you love your job, then there is no need to leave it. Part of financial independence is having the freedom and flexibility to pursue other options should things change.

**Just to qualify this a bit more, you save for things that will boost your income, like an income property, but then calculating your savings rate becomes a bit more complicated.

***I want to bring this down to 10% or less for the next academic year.

Your Financial Independence Number

Your Financial Independence Number

As I discussed in this article, financial independence (FI) is achieved when you have enough money to retire indefinitely. But how much do you actually need for that?

If only it were that easy

If only it were that easy

Basic Math


To calculate the minimum you need for financial independence, use this formula:

The amount you spend each year/0.04

[or, similarly, the amount you spend each year*25]

For example, if you spend $45,000 a year, then you’ll need a portfolio worth $1,125,000 to become FI.


Isn’t that too simple?


(The math, that is, since $1,125,000 sounds like a lot of money to me too.)

Admittedly, this is a rule of thumb. The formulas above will have to be tailored to your individual needs, but even that isn’t too difficult to do.


“Amount you spend each year”


Everything from rent, transportation, food, to entertainment gets lumped into this category.

You can get a rough calculation of your FI number even as a college student. Just use how much you pay for room and board as well as any miscellaneous expenses as the amount you spend each year. Don’t subtract student loans, scholarships, or grants from your calculations, since this type of aid won’t be available your entire adult life.

I wouldn’t include the cost of tuition in this calculation, since we’re trying to figure out the bare minimum needed to be considered FI. You won’t, after all, still be paying for more years of tuition after graduating. I, for example, estimate that with my current expenses for room, board, and miscellaneous expenses that the minimum needed for financial independence is around $420,000.

Here are some formulas to calculate your FI number based on whether you live on- or off-campus:

On-Campus (semester system):

(Meal Plan for one semester*3+Cost of dorm room for one semester*3+ miscellaneous expenses throughout year)/0.04

On-Campus (quarter system):

(Meal plan for one quarter*4+Cost of dorm room for one quarter*4+ miscellaneous expenses throughout year)/0.04


(Monthly Rent*12+Food Expenses+ miscellaneous expenses throughout year)/0.04

Miscellaneous expenses should capture the cost of transportation, any bills you pay from living off-campus, and entertainment (e.g. that Netflix subscription).


That’s Not A Lot to Live On


If you don’t want to live like a college student the rest of your life, then you are going to need more money for true FI. If, for example, you live in the Oregon and plan to live the rest of your days in Singapore, then you will definitely need more than your annual expenses to be FI.

photo-1413839283606-909dd35681caBoth are cool places, but one requires *a lot* more money.

Both are cool places, but one requires *a lot* more money.

Another way to calculate your FI number with some added cushion is to substitute the amount you spend each year with the amount you make each year. This doesn’t exactly work for college students, but you can estimate how much you’ll make after taxes in the future and divide by 0.04.


The Mysterious 0.04


While using your expenses or income to estimate how much you’ll need to retire is understandable, why you divide by 0.04 is more mysterious.

Four percent (0.04) is widely considered to be the safe withdrawal rate for retirees, no matter how early you retire.

Safe Withdrawal Rate: the amount of your portfolio (usually considered as the investments in a retirement savings plan), represented as a percentage, that a retiree uses for expenses

Of course, you don’t have to withdraw 4% from your nest egg. Withdrawing more lowers the probability that your portfolio will last you through retirement while withdrawing less raises the probability.

There is a lot to say in defense of using the Four Percent Rule as a rule of thumb, but fortunately, others have already written extensively on this topic. I highly recommend you read the MadFIentist’s thorough examination of the Four Percent Rule’s validity here. The Trinity Study is the original study that brought the Four Percent Rule to light, which you can access here (this is the second take of the Trinity Study, like Trinity 2.0).

What about inflation?


The Four Percent Rule extracted from the Trinity study is inflation adjusted, so if inflation is particularly high in one year, you would be living on less of your portfolio than normal years. This just means that while your withdrawal rate of 4% remains the same, the amount of money being withdrawn from your portfolio varies.

For example, if you have a portfolio of $1,000,000, then you could withdraw $40,000 at the 4% withdrawal rate. Should your portfolio only be worth $1,100,000 the next year, then you could withdraw $44,000 at the 4% withdrawal rate.

Inflation can also change the amount you need for FI. If your expenses go up significantly (due to inflation or lifestyle changes [e.g. kids]), then you should recalculate your FI number based on your new expenses.


And Taxes?


When you retire, then your tax bracket should go down, which decreases the amount of taxes you pay (sometimes to $0).

However, if you love your job and don’t want to retire, then you would just leave your nest egg alone and live off your salary, devoting any excess to fueling your portfolio’s growth. Since you wouldn’t be touching your portfolio, there wouldn’t be anything to worry about.




There are tricks for handling healthcare expenses in retirement, but require a lot more explanation than can be done in one post. Those interested should check out:

GoCurryCracker’s “Obamacare Optimization in Early Retirement

This is an interesting analysis on optimizing your Obamacare plan as an early retiree.

MadFIentist’s “How to Hack Your HSA

This is an amazing post on how to use your HSA as a retirement savings plan, with an infographic as an added bonus.




There are several retirement calculators out there, but the two I use the most often are the MadFIentist’s and Vanguard’s. You have to sign up to use the MadFIentist’s calculator, but it’s free to use. Vanguard’s calculator calculates the probability of how long your retirement nest egg will last given a variety of variables.

I also made an Excel sheet (a very simple one, that is). You can download it and play around with the numbers by clicking the “Savings” link: Savings. This post on BudgetsareSexy, however, has a much better Excel sheet and a list at the end of other awesome Excel sheets for FI.

Last, but definitely not least, I highly recommend everyone read Mr. Jim Collins’ Stock Series. He discusses how to achieve FI through passive investing as well as the Four Percent Rule.


Whether you want to retire early, at 65, or go at it on your own from the start, your FI number is a good estimate to guide you on how much to save for the future.

Crab Futures

Crab Futures

Warning: A crab is caught and eaten in the making of this story. Viewer discretion is advised.


Since her arrival in Oregon, my mother has been extremely excited about going crabbing. She would recount the tales of her childhood crabbing expeditions fondly, recalling a time of warm, fuzzy family memories.

To be honest, I was not as thrilled as she was with the prospect of crabbing. It seemed like a useful skill to know for the zombie apocalypse, but the prospect of a crab pinching my fingers was very discouraging. In fact, my mom’s Facebook post captures the extent of my crabbing inclination:


My parents came home yesterday with a shellfish license though so there was no room to negotiate.

But since this is a personal finance blog, this isn’t just about crabbing. The title of this post is “Crab Futures,” after all. What do futures have to do with crabs?

Google’s beautifully concise definition of futures (a.k.a. futures contract) as “an agreement traded on an organized exchange to buy or sell assets, especially commodities or shares, at a fixed price but to be delivered and paid for later.”

Actually, our escapade with crabbing has nothing to do with futures per se since we didn’t agree to sell our crab for a fixed price. Futures is just a cool bit of financial knowledge to know. Fishermen, at least, could use this technique to sell their crab. We, on the other hand, all just agreed to eat it.

Futures aside, our trip crabbing was a lot of fun. The Crabmaster (my lovely uncle) caught one Dungeness crab that was legal to take home. He discovered his secret calling to be a crabber while at it (and made a cool video of our trip).

He was quite fearless. MVP all around.

He was quite fearless. MVP all around.

Now for the important question (I still haven’t forgotten this is a personal finance blog), how much did that one crab cost us? (Hint: A lot)

Cost of Good(s) Sold (well, eaten in this case):                                         

Trap: $30

Chicken legs: $5.66

Bucket: $3.99

Crab License: $9/per person ($36 for the four of us)

Crab lessons: $0 (free event put on by Lincoln City)

Our adventure didn’t take us terribly far away and if crabbing becomes a pastime in my family, then we can do it closer to home. Therefore, I’ll put transportation at $0.

Total COGS/Eaten: $75.65

That crab is already looking super expensive.

We also have to factor in the opportunity cost of the crabbing trip, namely our time and the amount of money we would have made by investing that $75.65 elsewhere.

Opportunity Cost:

Time: $160

Assuming four college students—instead of one family—wanted to go crabbing, then I estimated the value of their time to be minimum wage at my university (since minimum wage is different everywhere in the United States). We crabbed for around four hours, and with the $10/hour I make, then the opportunity cost of time for a group of four college buddies would be $160.

Fun is, of course, priceless—as is time in good company. However, whenever calculating the cost of what you are buying, it is extremely important to consider the amount of time you spend.

Interest: 18 cents

Instead of investing in our crabbing knowledge, we could have invested that $75.65 elsewhere. I assumed that we would have put the money in a three month treasury bond, which currently has an extremely low interest rate of 0.24%.*

Total Cost (including opportunity costs): $235.83

How much our crab would have cost in the supermarket: $18.29 ($10.45/lb.)

Price of our crab: $217.46 ($20.81/lb.) Certainly the most expensive crab I have ever eaten.

If we keep up the rate of only catching one, 1.75 lb. crab every trip, then it will take us 12 crabbing trips (or just 12 crabs) to make up our costs (not including labor and the additional chicken we would have to buy). However, I fully trust that the Crabmaster will catch quite a few in future trips, especially in September when crabbing season actually starts.**

These were interesting calculations on our family adventure. However, even as a personal finance blogger, I think the price of our extremely expensive crab isn’t all that matters. In the end, having great warm, fuzzy family memories that I can recount online and to future generations is very valuable to me. We learned a new skill that would be useful should zombies attack, had a lot of fun, and can potentially make back our money.

In the end (to keep with the warm, fuzzy theme):

Experience: Priceless

Memories: Fun

Bragging Rights: 0 (My uncle really did all the work.)

Good Food: 1 Crab


*I really questioned whether I should include this or not. It doesn’t actually change the number of trips needed to make back our initial crabbing investment, but it is an interesting opportunity cost to consider. Plus, 18 cents is almost 1/5 of a really good cup of coffee here, so it definitely matters.

**Classes, unfortunately, start on August 30, so I’m just going to cry on the way back to college.


PSA: You Should Be Worried About Retirement

PSA: You Should Be Worried About Retirement

My fellow collegiate peers,

We are young and, most of us, healthy. We have no or few grey hairs, unless you dyed it that way. We have the future ahead of us. The world is our oyster. Etc.

Most of us haven’t started our career. Or really figured it out, for that matter. Our concerns are focused on finals, getting our first job, making life-long friends, enjoying youth, and fretting about an indeterminate future. I would know, since I’m right there with you.

Thus, the word “retirement” does not sound annoyingly loud warning bells in our minds. It is something far off and doesn’t involve our current college selves.

But we couldn’t be more wrong.

I see this story in the news over and over again. Most recently, this article appeared on my feed, reporting that around 30% of 55 year olds surveyed had no retirement savings. Zero. Zilch. Nothing.

No elderly person needs that sort of stress in their lives.

And trust me, social security is not going to be enough to enjoy those “golden years.” In fact, many of us are worried that social security won’t even be around when we retire. What then, are we waiting for when it comes to planning for old age? According to this article, 40% of Millennials do not have a plan for funding their retired years but more than 30% are optimistic about retirement. Sure, we have time on our side, but what benefit is time if we don’t take advantage of starting early?

Furthermore, who said you can only retire when you are old, feeble, and unable to work? Society’s preconceived notion of retirement? In reality, you can retire so much earlier like GoCurryCracker, Mr. Money Mustache, and the many other financial independence early retirees in the world. The path to early retirement isn’t easy, but it isn’t impossible either.

The notion of retirement consisting of perfecting the coach potato portion of resumes is outdated. Think of the possibilities: you can start your own business, advocate full-time for the causes you are passionate about, travel the world, and spend more time with your family. You don’t have to request vacation time or worry about what “business casual attire” actually means.

Even if you love your career choice and don’t want to retire early, the peace of mind that comes with knowing you’re covered if fired, ill, or too old is absolutely priceless. We might be young, but we all know that life is unpredictable.

Despite papers and reading and resumes, we should at least consider those terrifying after-career questions. It can be as simple as educating yourself on how much you will need for retirement (I personally use MadFIentist’s amazing FI Laboratory), making a game plan, and starting to take advantage of compound interest. Retirement can be decades away, but planning for it needs to start ASAP.