Today is my birthday, so I thought some personal boasting was in place. I know articles like this typically start with “it is not about me, but you, the reader,” but seriously, unless I am giving the money away (I’m not), saving helps… mostly me :).
A while back I read a very inspirational article by Kate McCulley (Adventurous Kate), on how she saved 13k in 7 months. At the time, I was in the middle of my own savings journey and thought, “When I’m done, I should tell my story too!” After all, there is more than one way to do it, and the more methods out there the better.
Whether or not this gives you ideas on how to save money to achieve your goals is not really my objective here. I know people are stubborn and don’t change easily, so I am not here to convince anyone of anything. I’m just going to tell you how and why I did it.
Why Did I Start Saving? (Everyone has a motive right?)
For those of you who have been following the blog for a while, you know that I have taught in South Korea for four years, so why did the savings only happen in three? My first year in Korea included four trips abroad (twice to China and once to Cambodia and Vietnam) that set be back a bit. After my first contract, I returned home and took yet another trip, a two month stay in Mexico. While I did leave Korea with around $6000 USD, after 4 months of unemployment, credit card payments, and my student loan payments, I returned for a second year as a teacher with almost the exact same debt as that which I started. Back to square one.
Saving takes planning, very detailed planning. I didn’t look at my bank account one day and notice I had a bunch of money. Three years ago, I realized that I was kind of stuck. While I wanted to work and live in another country, my financial responsibilities to my student loans ($250 a month), my credit cards ($100 a month), and what I owed my mom (about $4000) left me with little choice, but to take a higher paying job (Boo hoo, I know. But, I am aware of how lucky I was to have landed this job.) with much longer hours in the same country. If I was ever going to be debt free, I needed to have a long term plan. I started saving to give myself the freedom to roam the world and live in places that pay less without having to worry about the debt I had at home.
Step 1, Figure out my Financial Situation
While I have always had a general idea of my debts and incomes, I decided to become a financial Nazi about it. I made this spreadsheet to find out where I was and where to go from there:
From this, I found out that if I saved roughly 15,000 a year, I would be debt free in three years. I also solved how much I was paying in interest, how exchange rates affected me, how long it would take to pay off my loans, which credit card I should pay off first, etc. Given that my new job was paying me 40% more than my previous job, I thought it was doable with a few sacrifices.
My journey starts with $42,000 of debt.
Step 2, Make the “Ultimate Sacrifice”
I am not a big spender, and given the cost of living in Korea, I didn’t have to change much about my day to day life. One thing I did have to give up was international travel for 1 year. I know that this doesn’t sound like a big deal for most people, but I was hooked. The previous year resulted in moving to Korea and a total of 5 trips abroad! I decided that my first year of saving should be the a good one because who knows what the future holds.
Goal #1: Save $15,000 in 1 year
YEAR 1 March 2011-March 2012
[Note: I don’t count credit card nor loan payments as expenses since this is essentially what I am ‘saving.’ I do, however, count interest paid as an expense.]
Main expenses (monthly)
- Gas and Electricity: $70
- Internet: $25
- Building management fee: $120 (I don’t really know why we pay this)
- Insurance: $65
- Pension: $130 (Returned at the end of three years. Matched by my job and gains interest)
However, my job pays for all of the above and deducts it from my paycheck. My post-utility bills check was roughly $2300 a month the first year.
Other monthly expenses
- New Iphone 4: $60 (The first two years, the payment is higher because I need to pay for the phone.)
- Food: $450 monthly, including eating out from time to time
- Interest on credit cards and loans: $150 (average)
Balance: $1640 a month or $19,680 a year
Main expenses (yearly)
- Gym membership: $320 a year
- 9-day Trip to Jeju Island: $600 with flight
- Other Trips within Korea and weekend partying: ~$2200 a year
- Piano Lessons (3 months): $500
Total Spent : $3620
Other ways I saved:
- I opened a Citi account in the US, because there is a Citi Bank in Korea. You can transfer between Citi banks for free! I paid about $50 per month to wire money my first year in Korea. That is a savings of $600!
- I got into beer. All my life before now, I was a mixed drinks guy. This gets pricey as they cost twice as much as domestic beers.
- I never use coins. If I purchase something that is $1.50 for example, I write it down as if it was $2 and put the 50 cents in a piggy bank. I average about 300 dollars in coins per year.
- Towards the end of the year, I started using cash for everything. I am a firm believer that cash has value in your mind, credit or debit does not. It really helped me limit my expenses (but backfired a bit, more on this later).
- I got a girlfriend. Having a girlfriend increases dates, but decreases on those nights going out with the guys. For me, it has been a money saver, but if you have a high maintenance girl, this could definitely have the opposite effect. Sidney is one of those girls that insists on paying for her own stuff and is completely independent. It is one of the things I (and my wallet) respect most about her.
Total paid off: $16,000 in year 1 [Still owe $26,000]
(My favorite moments of Year 1)
YEAR 2 April 2012-March 2013
This year started with getting paid my severance payment ($3000), and my income tax ($300) together with my first paycheck. I also got a small raise, and there were more opportunities to do extra work at home from grading papers to doing quizzes for books. I took every opportunity I could and averaged an increase of about 200 USD a month. The USD to KRW exchange rate took a hit (from around 1120 a dollar to 1137), but it was not a big deal.
My automatically deducted monthly payments remained the same, so I now had about $2500 spending cash after bills and taxes.
Main expenses (monthly)
- Iphone 4: $60 (Two year contract)
- Citi Bank USA: $10 (They started charging!)
- Food: $450 monthly (I eat out, a lot)
- Interest on credit cards and loans: $125 (average, I owed less now so paid less interest)
Balance: $1855 a month or $22,260 + $3300 of severance and income tax -1500 (2 weeks unpaid extra vacation)= $24,060 a year
Main expenses (yearly)
- Piano Lessons (another 2 months): $360 (increased fees)
- Digital Piano: $250
- Netbook Computer: $400
- 3-week Trip to Italy: $2670 with flight* [July-August 2012]
- 5-day Trip to Osaka, Japan: $1030 with flight [September 2012]
- 8-day Trip to Taiwan/Macao/Hong Kong: $1680 with flight [New Year’s Dec-Jan 2013]
- 5-day Trip to Okinawa, Japan: $590 with flight (got a good deal) [February 2013]
- 4-Ski Trips: $400 (bought ski clothes to save in the long run)
- Scuba License: $700
- Yeosu World Expo: $300
- Going out with visiting Friends from the US: $200
- Clothes Shopping spree: $520
- Taxes Paid: $200 (This year, taxes came in a month early and I had to pay. In Korea, you are expected to spend a certain amount in the country. While I certainly did, because I used cash, there was no record of it. This is how spending cash ‘bit me in the ass.’ I still think the savings are worth it, so continued to use cash. There is a way to record your cash spending with the government, but I (stupidly) never bothered to figure it out.)
- Other Trips around Korea: $2500
- Weddings, birthdays, Gas and other Misc stuff: $1200
Total spent: $13,000
Other ways I saved:
- I ended my gym membership and started bodybuilding at home! Fine, I just got lazy.
- I bought ski clothes so I wouldn’t rent all the time. I knew it was a hobby I liked, and it had resale value, so it was a wise investment.
- As part of my re-signing, my boss generously credited me a flight of equal value to a flight back home. As a result, I took a flight to Italy and had to simply pay the difference, which was about $130. This saved me about $1500.
Total paid off: $11,000 in year 2 [Still owe $15,000]
As a side note: On Feb 13, 2013, I launched Travel World Heritage. This becomes a big part of my life in the upcoming year.
(My favorite moments of Year 2)
YEAR 3 April 2013-March 2014
I am feeling pretty damn good that I am on task to pay off my debt, but at the same time, mad that I spent so much the previous year. By now, I am starting to think that it may be possible to end this year debt free AND with some cash on the side. I thought about extending this ‘saving project’ to 4 years to have more cash on hand, but if it could be done in three, it would be much better.
Although I had already paid my taxes, a new Korean law meant that I couldn’t get my severance until after I quit working for the same school. While I was initially bummed, I later came to think of it as a savings account. By the end of this year, I would get $6,000 in severance (2 years worth), and my pension would be about $9,000 (three years worth). As far as my salary goes, I got another small raise. The USD vs KRW exchange also took a huge swing for the better, averaging about 1090 won per USD this year.
My automatically deducted monthly payments remained the same, so I now had about $2650 spending cash after bills and taxes.
Main expenses (monthly)
- Iphone/Nexus: $40 (Since I am not longer on contract and I don’t owe the phone anymore, this is the regular fee)
- Citi Bank USA: $10
- Food: ~$400 monthly, (I started cooking more, which doesn’t save much in Korea)
- Interest on credit cards and loans: ~$100 (average, continues to go down because I owe much less)
Balance: ~$2100 a month or $25,200 -1500 (2 weeks unpaid extra vacation) -$200 income tax (again!)+$800 (sold my piano, motorcycle, and a few more things when I left Korea) = $24,300 a year.
Main expenses (yearly)
- 2-week Trip to Peru: $1450 with flight from Korea* [June-July, 2013]
- 9-day Trip to Indonesia: $1910 with flight [July-August, 2013]
- 2-day Trip to Jeju: $600 (birthday present for Sidney) with flight [July, 2013]
- 6-day Trip to Tokyo, Japan: $800 with flight [January-February, 2014]
- Lenovo Ultrabook: $1,700 shipped from the US (my netbook broke)
- 5-day trip to Jeollanam-do: $200 [September, 2013]
- 4-day trip to Andong and Gyeongju: $250 [October, 2013]
- HD Portable Projector: $550
- Nexus 4 Phone: $400 (My iPhone was stolen in Peru)
- More weddings, Birthdays, Gas, and Misc: ~$1500 (this includes blog expenses)
- Other Trips in Korea: $2000
Total spent: $11,360
Other ways I saved:
- I stopped drinking coffee every day. I used to get 3 double shots every morning which was about $4. Instead, I bought an apple or apple juice.
- Like last year, my boss paid the bulk of my flight to Peru. I had to pay the difference, which was $80. Furthermore, the route was a new one for American Airlines and they offered triple the miles. In that trip, I have acquired 20,000 miles with AA!
- Went on $0 days. When I noticed that I didn’t spend money one day, I would try to see how long I can go without spending money. It became a game for me.
- Sporadically put $10-$50 in my coin piggy bank. It was a pleasant surprise at the end of the year.
- I sold most of my big things at the end of the year since I was leaving Korea for the foreseeable future. I made $800 from my motorcycle, an external hard drive, my ski clothes, and the piano.
- I stopped showering and saved tons on body wash. Just kidding, just making sure you are still listening.
- My job offers a traditional Korean lunch for about $3 a meal. I decided to take this offer on my last year. Saved on lunch.
Total paid off: $13,000 in year 3 [Still owe $2,000]
But wait, remember what I said about severance and pension, that came out to be $15,000.
$2,000 – $15,000 = A surplus of $13,000 USD.
(My favorite moments of Year 3)
This is pretty awesome, but what does it take? What does one have to do day by day to accomplish this goal? A typical week for me is quite routine in the weekdays, but anything goes on the weekends. Here is what it looks like:
- 8am – Wake up, snooze
- 8:10am – snooze
- 8:20am – snooze
- 8:30am-9:00am – snooze snooze snooze! (Snoozing makes me feel more awake when I finally do wake up
- 10am-2:30pm – Teach pre kinder (years 1-2) or pre-school (year 3). While there are things I wish I knew before becoming a teacher in Korea, I got the hang of it by the end. I loved my job and the morning was my favorite part of it. Teaching is something I want to be involved with long-term and being in Korea has helped me find my calling. Where was I?
- 2:30pm-3:50pm – Prep period. Time to prepare for the afternoon, go to the bathroom, and regain a little bit of the energy lost in the morning.
- 3:50pm-8:15pm – Teach elementary school students. While this part is enjoyable (especially te first graders), working 10 hours a day is draining. Some days, I am just beat by the end of the day.
- 8:15pm-10pm – Have dinner, either by myself while watching some show, or with a friend/coworker. Given our work schedule, your co-workers become some of your closest friends.
- 10pm-10:30pm – Household chores
- 10:30pm – 2am – Work on the blog
- Same as Monday, except that we get out at 7:30pm instead.
- Identical to Monday
- Everything is the same up to the end of work. On Fridays, I usually meet up Sidney, have dinner, and go out. I don’t work on nor think about the blog at all Friday and Saturday, although I do obsess a bit about how many views I got every day.
- Sidney and I go out of town every other weekend. This can be to see a new historical site, or to do an activity like skiing. Typically, we stay in cheap accommodations and split everything right down the middle. We rarely do fine dining, but do like eating out. The weekends are the oasis to an otherwise difficult (but rewarding) week.
- Sunday nights – I usually work on the blog another 3-4 hours.
There you have it. In three years, I managed to pocket $55,000 to pay off my 42K in debt and save $13,000. But more importantly, it has given me the freedom to chose where to live next without having to worry about my next credit card due date. All I had to do, was travel the world (oh yeah, and work pretty damn hard).