You won’t find Kristy Shen, 36, trapped in a cubicle anymore.
In fact, these days, the former Toronto-based computer engineer — who once was so stressed by her job she’d throw up regularly — can be found traipsing the world with her husband, Bryce Leung, 37. They’re now “fully nomadic” with no home base, having hit up Thailand, where they got beachside massages; Greece, where they island hopped and dined on fresh fish drizzled in olive oil; and Amsterdam, where they glided along the cobblestone streets on bikes.
How did they make this happen? Shen and Leung, who was also a computer engineer, are part of the FIRE movement — which stands for Financial Independence, Retire Early — where the goal is to save a lot so you can retire early. The couple retired at 31 with roughly $1 million in the bank. They’re currently withdrawing 3.5% a year from that nest egg, and say they can easily travel the world on that money — as they’ve got lots of practice being frugal.
Indeed, they do: Even when they were earning just $66,500 a year (this was a partial year of work — their first year of work after graduating) in combined after-tax income in 2006, they managed to save more than half of it. And as their income climbed, so did their savings. Here’s a look at exactly how much they earned, spent and saved to get to retire at 31, as well as their investing philosophy and tips for others who want to do the same.
How did your earnings, spending and savings break down each year?
Shen and Leung broke down their estimated spending, earnings and savings for 2007 (their first full year of work after graduation), 2010 (the year they got married) and 2014 (their last year of work). Here’s what those numbers look like -- and we’ll explain their evolution below. (You can see their spending breakdown further, as well as how those savings were invested and growing, in their new book, out this week, Quit Like a Millionaire.)
| 2007 | 2010 | 2014 | |
| Monthly/annual rent | $1500 / $18,000 | $800 / $9600 | $850 / $10,200 |
| Monthly/annual food and entertainment | $2200 / $26,400 | $1700 / $20,400 | $850 / $10,200 |
| Monthly/annual utilities, bus pass, miscellaneous | $300 / $3600 | $300 / $3600 | $715 / $8580 |
| Annual travel costs | $3,000 | $11,850 (including wedding expenses; they eloped) | $2,020 |
| ANNUAL SAVINGS | $74,000 | $99,950 | $133,000 |
| ANNUAL SPENDING | $51,000 | $45,450 | $31,000 |
| ANNUAL INCOME (after tax) | $125,000 | $145,400 | $164,000 |
One big thing the couple did to slash expenses was move in together — spurred by one of Shen’s roommates constantly fighting with her boyfriend, she says — in 2008, which cut their monthly rent from $1,500 to about $800. They also stopped eating out and going out so much (in 2006, they were both very familiar with $12 martinis and clubbing; a few years later they were going out to eat a max of once a week), and instead cooked at home and had friends over for game nights. They also never bought a car, and they went to a school with a work/study program so they graduated without student debt.
“We’ve gone against the grain,” says Shen. “Other friends were buying cars, buying houses. We did the opposite.” Indeed, in addition to not owning a car, Shen and Leung never bought a house — a move they say they’ve never regretted. “People have mortgages up to their eyeballs,” says Shen, who adds that always renting also meant less of a hassle for the couple. “We hear it from our friends -- the basement is flooding and they are complaining. We don’t have to deal with any of that.”
What’s your spending and saving philosophy?
Though Shen and Leung are big savers, Leung stresses that “it’s not about deprivation.” Instead, he says, “there are ways to make cuts to improve the quality of life.” For example, Leung is something of a beer connoisseur and used to spend $400 a month on bar tabs. Now he still gets the craft beers he loves, but buys them from the store for a fraction of the price, he says. They also scrimp on going out to eat so that they can spend on travel, which they love.
What’s your investing philosophy?
The couple love index funds, says Leung. ‘Most people think that investing in the stock market is all about individual stocks,” he says. “But the average person doesn’t have the time or skill to do this. You don’t need to do this. Buy the entire stock market [with an index fund],” he says -- adding that they choose different funds that get both U.S. and worldwide exposure.
He has a point: Numerous studies — including this study from S&P Dow Jones Indices — have found evidence for index funds, though of course they have their naysayers and are far from perfect.
Still, as Warren Buffett has famously said: “When trillions of dollars are managed by Wall Streeters charging high fees, it will usually be the managers who reap outsized profits, not the clients. Both large and small investors should stick with low-cost index funds.”
What motivated you two to aggressively save?
Shen says it was primarily her background — she grew up in poverty in China — that motivated her to value money and savings so much. “My mom taught me that money is really valuable and not to be wasted,” she says. “That money is precious.” As for Leung, Shen says with a laugh: “I dragged Bryce along with me. He was a normal person, didn’t pay attention to spending,” jokes Shen.
Shen also, at points, hated her job because of the stress it put on her and others. “I saw my coworker collapse at his desk,” she says of one of the more stressful gigs she held. “My dad didn’t go through all this effort to get me to the West so I could collapse at my desk.”