My 15-year Journey from $0 in Net Worth to Achieving Financial Independence

Growing up in Dubai, my parents were surprisingly frugal. Dubai is known to be the world's capital of exorbitance (even more than the United States), so it was kind of interesting living a norm-core, frugal life when the rest of the city was living in such grandeur and extravagance. Perhaps because my parents had gone through some rough times growing up in post-colonial India, they understandably never wanted to put themselves in a similarly precarious position without sufficient money ever again.

Regardless of their reasons, their frugality-by-choice had rubbed off on me big time. But not right away. Until I was 8 or 9, I wanted to buy everything I saw. It didn't quite make sense to me why I couldn't just buy whatever I saw and wanted. I didn't understand that money was a finite quantity and that you had to work hard to earn it. I didn't understand that money wasn't a simple matter of just "going to the office" everyday. But when I turned 10 or 11, I suddenly and magically lost all my interest in stuff. Perhaps the years of constant rejection after rejection by my parents to buy me everything I laid my eyes on eventually made me give up wanting to acquire new stuff, and instead focus on making the best out of the things that I already had (of which I had plenty).

From that point on, I don't ever recall not being frugal. When I graduated high school, my net worth was an abysmal $0. 18 years had flown by and I hadn't worked a single job, and I hadn't received any allowances from my parents (i.e. pocket money). All I had to my credit was decent mental and physical health and a few decent clothes from Walmart. But what I didn't realize then is that I also had was a solid grounding in the maths and sciences, and more importantly, a phenomenal interest in computers, software, programming, and web development. These alone would take me to fantastic heights in the years to come.

I used my self-taught skills in web development and programming to apply for a 2-month internship at a software consulting company in Vancouver. I got paid $2500 for that, my first income ever.

Living alone in college, mostly out of my own paltry internship earnings, forced me to be more frugal than ever. I had a strict budget, and I couldn't run out of it. I would work at an internship for 4 months, and use the savings from that to fund my college tuition and living expenses for the following 4 months. Throughout those 8 months, I had to remain as frugal and budget-oriented as possible. Then the cycle repeats.

My very first off-campus rental back in May 2006 for a mere $360 CAD per month. It was a shit hole. These days, a mere 10 years later, I pay almost $2,100 USD per month for my living expenses, a 7-fold increase.

As soon as I graduated, I landed a job as a full-time software engineer in San Francisco that paid $85k in salary with a $10k signing bonus. That was more money than I had ever seen in my entire life. Even still, the frugal side of me didn't leave me. I found myself a room in San Francisco paying only $900/mo in rent, which was reasonably cheap by San Francisco standards, even back in 2010. But it required sharing a house and a single bathroom with 3 other roommates. Once, I even had to pee inside a plastic bottle since the single bathroom was busy for longer than I could hold my pee in. Even this episode didn't make me want to find better housing because I knew I wouldn't be able to beat the $900/mo rent that I was currently paying without enduring a significantly worse commute.

Our unit in San Francisco. Everyone in our house had a bike, so it would've been a bit weird for me to go out and get a car.

Our unit in San Francisco. Everyone in our house had a bike, so it would've been a bit weird for me to go out and get a car.

When my salary rapidly increased to $100k over the next year and a half with promotions and bonuses, I had plenty of chances to introduce lifestyle creep into my life. I could've gotten myself a brand new car. I could've switched apartments and gotten myself something significantly swankier. I could've upgraded my aluminum hybrid bicycle to carbon fiber. But I didn't. Instead, I lived in the same apartment and just continued cycling to work everyday with the same used bicycle. The benefits of biking to work everyday were not lost on me. In fact, everyone in our house had a bike, so it would've been a bit weird for me to go out and get a car. Our apartment looked like the picture on the right.

So it wasn't like I needed to be frugal, I just enjoyed it. If money was going to be a limited and finite quantity, doesn't it make sense to maximize its utility? It's the engineer's way of looking at things. Financial efficiency is the concept of making every dollar count, and making every dollar stretch to its maximum capacity. Can you squeeze the juice out of every dollar you spend?

Thus I remained frugal for a very long time even as my income started to climb. My expenditure continued to be far less than what I was earning after taxes. As a result, my savings accounts started to grow. First I hit $50k, then another $50k, then another. The credit card offers started pouring in, often from banks I hadn't even heard of, but I ignored them all. I didn't know what to do with all this extra money so I just randomly put $16.5k of it (the max at the time) into a 401(k) account in 2011. Years later I realized that was the smartest thing I had ever done for myself.

After a point, it just became a game. I was getting a kick out of spending less and less. I was not only being a productive member of society, I was also doing it with a relatively small amount of financial resources to sustain my everyday life. Frugality was no longer a pain or a chore, it had started becoming fun! My ecological footprint and planetary impact was also fairly low to boot.

As is to be expected, some of my friends soon started referring to me as "cheap". They knew roughly how much I was making, but they couldn't understand why I would sometimes choose to walk rather than take public transit. Or take public transit when I could be taking an Uber. Perhaps they were trying to shame me into submission because they were jealous they couldn't be as frugal themselves? I would attempt to explain to them that public transit cost $2.25 while walking was free. Or that Uber was $20 while public transit was only $2.25. I tried to move the dialog away from being "cheap" to being fiscally prudent - a term I coined myself to try and explain my frugal actions.

So all this while, for almost a decade, I had lived a pretty frugal life, even without knowing it. What started out because of necessity in college then grew into something of a hobby once I started working and making money. It was truly a choice I had subconsciously made for myself, partly because of my frugal upbringing and partly because of my college training as an engineer. I was doing it because it felt fiscally efficient to live minimally. I had already tried to reduce my food intake over the years, and live the best life I could with the least amount of food input. So why wouldn't I try doing the same for money? Efficiency = output divided by input, so I strove to drive up output while minimizing input everyday, both with food as well as money. I was insatiable in my quest to optimize the efficiency of my own life and also my footprint on this planet.

At this point, I should mention that frugality came naturally to me. I didn't even have to try, and it didn't feel like I had to expend any extra effort to make it happen. It didn't feel all that hard or unnatural to be frugal, in fact it felt perfectly normal, more importantly logical, to question the price of everything before purchasing it. To question whether I truly needed something before buying it. Frugality had become my modus operandi.

A large part of this was because I was raised frugally to begin with. I knew exactly how to think about my expenses without needing to be taught explicitly, and I knew how to avoid financial creep from the get go. These aren't things I learnt from school or college (although I wish we all did) — I learnt them from my parents at home, and couldn't see any real downside to it. As I saw my savings account continue to grow, that only reinforced the idea and my behavior even further. I know not many people are fortunate to be in the same position as me. I've heard empirical accounts from people who struggle to introduce frugality into their own lives, even if they desperately want to. I can only imagine how hard it would be to ask someone to suddenly become frugal one day when they've never been frugal for the past 25 to 30 years of their life, or never even seen or interacted with someone frugal that they could at least mimic.

In 2013, I married another relatively frugal woman (now Mrs. Frugal Hacker), and in 2016, we bought our first condo in San Francisco. At that point I was making enough — but still keeping spending low enough — to save $50k every single year. Before I knew it, my individual net worth had blown up to a mind-boggling $300k. What was I to do with all this money?? How do I find something useful to do with this money without wasting a single penny? I didn't have any meaningful answers. I was lost. I just kept putting off the question since there was no real urgency to have it answered properly. Software bugs at work kept me busy.

Then one fine day we ran into a tweet which led us to a blog that changed our lives. We were promptly informed that frugality isn't just a random hobby a few suburban kids were into on the weekends, but in fact was one of the most powerful financial weapons a millennial like myself could ever ask for. Frugality was a nuke, when everybody else was fighting with toothpicks and branches. Frugality wasn't just cool anymore, it was instead this golden ticket to toppling your life and turning it upside down in a phenomenal way. It was the key ingredient to achieving a major milestone in one's life known as financial independence, a concept so foreign to me at the time.

Finally, it hit me. Frugality was no joke. It was the secret pill that would allow me to quit my job and retire early if I invested all my savings into the stock market and kept it there for the next 50 years. I was intrigued. It's not that I hated my job or anything, but it would be nice to quit software at some point and pursue my other interests. And I only needed 25x of my annual expenses saved up to get there? Hell yes, I was already at 16x by the time I even found out about the 4% rule (which is where the 25x comes from, 1/4% = 25). Somehow through some accidental good fortune and fate, I had inadvertently given myself a huge head-start, simply by practicing frugality as a part-time hobby, and thinking of money like an engineer. And how many more years before I get to 25x? Turns out only 3 more years of working full-time. Jackpot!

I didn't know much about investing in the stock market at the time, so I promptly opened up a Wealthfront account and dumped all my remaining savings there, basically whatever was left after our condo downpayment. Maybe those smart PhD dudes will take care of it for me for a measly 0.25% in fees until I get my bearings right and figure out this whole investing thing from the ground up. I then setup monthly recurring transfers of $4k each month to be automatically moved from my checking account into Wealthfront's index funds. Before I knew it, I had $150k deposited into my Wealthfront account by May of this year (2017). As of August 2017, that number had grown to $177k. My target was $350k, or roughly double the amount of what I had.

Now all I had to do was show up to work everyday and make sure I didn't get fired for the next 3 years. I've already been doing that consistently for 6-7 years at various jobs, so doing it again for another 3 years at a job I actually somewhat liked can't be all that hard. And even if I do get fired or decide to quit, it's not a big deal. I just have to spend the remainder of the 3 years at another job earning just as much (or higher).

My Wealthfront account balance over time. It was super exciting to see my net worth grow faster than my raw savings thanks to stock market growth and compounding effects.

The journey to financial independence isn't over yet, but the destination is in sight. It will be the most extraordinary 15 years of my life, beginning in 2005 when I graduated high school with $0 in my pocket to 2020 when I will become truly financially independent in the fairly high-cost city of Vancouver, Canada. I started with a net worth of $0 and have worked my way up to a net worth of $330k today. All I had back then when I started out was a $10k loan from my parents to kickstart my first 2 semesters of college until I could start earning money through my internships.

And over the next 2-3 years, adding almost $70k/yr to my net worth each year, I'll work my way up again from $330k to the required $460k needed to retire. At $460k, I'll have $15.6k of passive income each year to spend after taxes (15% taxes on a 4% withdrawal rate). That amounts to roughly $1300/mo which translates to a simple 1 or 2-br shared apartment in a quiet suburb of Vancouver (shared with my wife), no air-based travel, groceries mostly from Costco and discount stores, probably no air conditioner and maybe even no dishwasher. This will be my version of a very basic UBI (universal basic income) until I can figure out how to make more money in Vancouver passively.


*-*-*-*


The main takeaway here is that following the textbook principles that were prescribed to me (and most other people as well) early on in life really did work out for me. Graduate high school, get into a good college, graduate with useful, practical skills and without too much debt, move to the best city in the world for your skills, earn as much as you can for 10-15 years while spending as little as possible as you embrace frugality to its maximum, save and invest the rest, then move again to a lower cost of living city to retire. There is nothing special about this trajectory, or no terrific luck involved beyond the usual baseline. I didn't have to win the lottery, or achieve any crazy windfalls.

The only part I got incredibly lucky with is that I was in college during the economic slump of 2008-2009, perhaps the best time to be in college. And as soon as I graduated in 2010, both the economy, and more importantly the software industry were on FIRE. This opportunity gave me a huge amount of tailwind to help me earn a lot of money during the 2010-2017 years. But generally speaking, the economy is in good shape more years than not, so most people should not have too much difficulty here.

The real bottleneck to this strategy is your own frugality. Can you muster the energy and discipline needed to spend much less than you earn, despite what everyone else is doing around you? Can you save and invest 50-70% of your annual paycheck that is required to retire early? Only you can answer that. Most people can't, which is why they end up working 40-50 years and still have a shaky retirement fund at best. But if you want to work for only 10 years, something's got to give, and that something is frugality. And of course the ability to intelligently hack the system by playing the life game right.

Ladies and gentlemen, students and new grads, welcome to frugalhackers.com, where we show you how frugality plus a deep knowledge of how to hack the system can work in your favor and allow you to retire in just ~10 years of working like we did. We hope you'll partake with us. Subscribe to our weekly posts and read each and every one of our hacks for free.

Mr. Frugal Hacker

San Francisco, CA

Born in India. Grew up in Dubai for 15 years. Studied and lived in Canada for 8 years. Backpacked in Europe for 2 months. Lived in Toronto for 1.5 years. Working in San Francisco for the past 4 years. Runner, cyclist, software engineer.