Early Retirement - Financial Freedom (Investing, Tax Planning, Retirement Strategy, Personal Finance)

5 Expenses To Cut to Reach Financial Independence (and 3 NOT to)

• Ari Taublieb, CFP®, MBA • Episode 256

Share episode

Retiring early doesn’t mean cutting out everything you love, it means being intentional about what truly adds value to your life. In this episode of Root Talks, we take a closer look at the spending choices that can either delay or accelerate your path to early retirement. 

We explore which tradeoffs are worth making, where small changes can have a big impact on your timeline, and why some expenses are still worth every penny. This isn’t just about saving money—it’s about aligning your spending with your values, your future goals, and the life you actually want to live.

- 

Advisory services are offered through Root Financial Partners, LLC, an SEC registered investment adviser. This content is intended for informational and educational purposes only and should not be considered personalized investment, tax, or legal advice. We do not provide tax preparation or legal services. Always consult with your CPA or attorney regarding your specific situation.

Viewing this video does not create an advisory relationship with Root Financial. We only provide advisory services to clients under a written agreement. Investment strategies discussed may not be suitable for everyone. All investments involve risk, and past performance is not indicative of future results. Any opinions expressed are as of the date of recording and are subject to change.

Comments left on this video reflect the views and opinions of the individual commenters and do not necessarily represent the views of Root Financial Partners, LLC. Comments should not be considered a testimonial or endorsement of our services and have not been solicited or compensated. Root does not verify the accuracy of comments and is not responsible for their content.

Create Your Custom Early Retirement Strategy Here

Get access to the same software I use for my clients and join the Early Retirement Academy here

Ari Taublieb, CFP ®, MBA is the Chief Growth Officer of Root Financial Partners and a Fiduciary Financial Planner specializing in helping clients retire early with confidence.


Speaker 1:

I was talking to someone who said that they wanted to retire early and they asked if I should stop going out to eat, and I said no, don't avoid going out to eat just because you want to retire early, but at the same time, don't go out to eat for every meal because if you do, that really will change how much longer you need to work. So in today's video if you're watching on YouTube or podcast, if you're listening on any of the podcast apps I'm going to tell you five things that really do make a difference if you want to retire early, that I would consider either cutting back or scaling back on, and three things that I personally love. Paying for that I would not turn off. And yes, it will shift my quote unquote early retirement. But the point in life is not to retire just for the sake of it, it's to go. Hey, if I do retire now, I can actually do what I want to do and I'm not just retiring going. Well, I can't really spend on what I want because I have a pet peeve. Many of you know this by now.

Speaker 1:

For those who don't, my pet peeve is when people say the following I think I can get by in retirement spending $4,000 a month. I mean I think I can do it. I think I can go back to like the college days where I really just lived off of eggs and peanut butter sandwiches and I'll say, I'm sure you could do it. The point in life is not to get by. How much would you love to spend Now? Yes, sometimes I'll have someone say, well, you know, I could get by on $4,000 a month, but I'd love to spend $10,000 a month. And I'll say great, is that after taxes? Meaning you walk away with $10,000, a blank check, not a blank check, a check filled with $10,000. Not that anyone uses checks anymore, really and they go yeah, that's what I'm looking for. I said, great, that might mean that you need to work five more years. And someone might reply saying, well, I'd actually rather only work two more years. If that means I can only spend $8,000 a month, that would still be of interest, because I really don't want to work five more years. I have other people and I'd say the majority of people go look, I'm going to work as long as I need to so that I can really spend that $10,000 a month because that's what I want to spend. So today you might take an idea away that you go. You know what that's really going to shift what I'm doing and that's what I try to do. I try to keep these fun, I try to keep them educational, but I also want you to take action. I hope that you leave and go. Wow, this is one thing that really is different. And if you do find there's one thing that really helps, please drop a comment below on YouTube sending me an email. I love getting to hear from you guys, so we're going to start hopping right in.

Speaker 1:

This is a list that I put together and, if you don't know already, my name is Ari Taublieb. I'm a certified financial planner, I'm the host of this podcast, the Early Retirement Podcast, and I am the chief growth officer here at Root Financial. So the first one is cooking at home Now when people go out. So I'm going to walk you through right now. These are the five things to consider either cutting back entirely or scaling back on. It does make a big difference. So I'm curious. I'm a curious person, so I looked up online. I go hey, what would it mean to my early retirement if I were to only eat at home? And ChatGPT said cooking at home can cut your food costs by 50% to 75% of the time, and so what I'll see too many people do is go, well, that's a big deal. 50 to 75% of the time I'm absolutely going to make everything at home. And then what they find is they go to the grocery store and they buy things they otherwise would not have bought because they're hungry at the grocery store. So the way I'll explain it to clients is everything about retiring and optimizing is about momentum.

Speaker 1:

So, for example, let's pretend that you have a mortgage payment and it actually really lights you up. You're incentivized to go work harder, have that second job, or you're actually just putting in extra hours at your current role because you love getting to see that mortgage balance go down, hours at your current role because you love getting to see that mortgage balance go down. Well, it might, on paper, actually make sense for you to not pay down the mortgage and invest the rest of the money in a brokerage account, because if your mortgage rate is 5% but you could invest and get, on average, 10% just using a historical average of the S&P 500, that might make more sense on paper, but it doesn't feel as good. It just doesn't feel as real. When you add a thousand bucks to your brokerage account, yes, it helps, but when you pay down that mortgage, you see that balance go down. It just feels better. So sometimes the actual financial answer is not the answer I'll recommend to clients.

Speaker 1:

So in this case, what I'll tell clients is what do you love doing? Do you go out to eat because truly and this is where we get to know our clients really well do you go out to eat truly because you don't want to cook, because you had a long day? Do you go out to eat truly because you like the taste of food? Why do you do it? Now, most of the time it's a balance, but most people and I'll use myself here I go out to eat with my fiance. We're getting married in just a few months now and I'm very excited, if you can't tell, and we personally love the restaurants that are new. It just is exciting. Maybe there's one thing we learn. Maybe it's the ambiance. I'm the weird guy that likes finding out what the soap is in the bathroom. I know it's weird, but I just think it's cool. Is it the foam soap or is it a different kind of soap? I just I'm into it, and so we go for the experience.

Speaker 1:

So we don't love going out to eat because I eat a lot and it costs a lot of money, and even if we could afford it, it doesn't feel as good. So this is a choice that we go. We love spending on new restaurants, so it might not be great, but when a new one comes to town, we go to it. That's our thing. We also love breakfast burritos. So once a month no brainer we are going to get breakfast burritos. There's a place called Wake and Late in Los Angeles and if you live in LA or you travel to LA, you have to get this and tell me if you think it's amazing, because it is, and if you don't think so, that's a problem, but that is the first thing. So if you are like, hey, we love going out to eat, that's what we do for date night every week, or it's just my thing, I'm not saying cut it out. I'm saying, hey, the reality is it does cost more. But if it's one of those things that allows you meaning, if you get to celebrate by going out to a nice meal and you're willing to work longer that day, well, if it's going to cost you 100 bucks for that meal, but you worked way harder and brought in $1,000, well then, it would make sense to do so. So, first thing is just awareness around eating out. Are you doing it because you're like, hey, I'm really just too lazy to cook, or are you doing it because you're like, hey, it's for the experience, not right or wrong?

Speaker 1:

Number two, this is a common one subscription services. So I have a client that came to me and they were paying for Paramount Plus four times four different accounts. This maybe should have been number one, because it's just so easy. Now, I say easy, that's probably the wrong word. It's actually simple. It's simple to understand all of your subscription services because you can put it on a Google Sheet and see what you're paying. Or you can use mintcom. Or a lot of people use Rocket Money. I know a lot of people that are using oh, it's a Monarch Money, that's a. If there's one you really like, put it in the comments below to help other people find what they use for budgeting. But this is something that's very simple to find out, but it's not always easy to cancel those subscriptions. So that's something that if you're like, hey, I'm really not paying for ESPN, for example. Myself, I watch a lot of soccer and I once signed up for this one service and I needed it for that one game. Well, I'm going to put a reminder on my calendar to cancel it, but there have been times where I have not. Go check your subscriptions. That's just simple, easy stuff.

Speaker 1:

Number three there's a big one I thought about putting this number one as well but new cars and upgrades to cars. Okay, so I have a client that had bought a car and I believe in buying cars in cash. However, that's not the most financially optimal thing to do. You could buy a car, you could put a down payment, you could get a 3% interest and invest the rest, but I just find life is simpler when you don't have another payment. It just makes it easier. Some people go. That's not optimal and they would be correct. But I believe there's optimization and there's simplicity and there's a balance to that. Believe there's optimization and there's simplicity and there's a balance to that.

Speaker 1:

So when I buy a new car, I buy it in full, and I bought a Mazda. My family has four Mazdas, so we are Mazda people and I bought it because I'm not a car guy. It's not my thing and I love that it doesn't break down often and it gets me from A to B and that's really all I need. But my car was having lots of issues. So I took it to the shop and they said it was going to cost. The car I bought was about $23,000. And they said that if I wanted to upgrade the car it wouldn't be very much money. I think it was like 3,500 bucks. And then I had an issue where and I'm going to butcher the name it wasn't the engine, but it was the alternator. I think the alternator was going to be like $5,000. So they're like you should really just upgrade your car, since you just bought this one.

Speaker 1:

And I personally am like look, the reason I'm an advisor is because my parents were screwed over by multiple advisors and they were taken advantage of. So it's hard for me to know hey, is this person giving me good advice at the dealership? Even if they're well intended, I don't really know. And so I'm very hesitant and I naturally have a skeptical bias where what I'm going to do is actually say hey, maybe that makes sense on paper, but I'm going to keep my current car and I'm going to pay the maintenance and then, if I want to buy a different car in the future because I want a different car. That's a different story, but the reason I bring it up is I'll see lots of clients that have a car that go yeah, I'm going to absolutely buy that new car when it comes out. And they keep upgrading their current car. But they'll upgrade it for, you know, alternator brakes $3,000. Oh, they need to update an engine. Oh, another $2,000. Oh, and then all of a sudden they're paying just small amounts over time when it really would have made sense for safety purposes to buy a new car.

Speaker 1:

So the last thing I want is for someone to over-optimize which I've had a client do this, and they might be listening if they know who they are, where they are really trying to get every inch out of that car, which I'm not against, I like the philosophy. But if you're trying to get every inch out and now you're not driving safely, that defeats the purpose of all the investing you've ever done. Driving is literally probably the thing that can kill you the fastest in your entire life. That's the thing that scares me about driving is I go look. Even if I'm trying to be as responsible as I can, there have been times where I am tired behind the wheel. I think I'm a responsible person. I try to pull over when I feel that way, but if there's other people who have felt that you don't want to be in a car where the brakes are not optimal. So the point here is, please, safety overall. That would defeat all the investing If you got in a car crash and now you can't travel in retirement. So not trying to get dark here, just real life stuff.

Speaker 1:

Number four impulse purchases. So that I try to limit. That is something I really tell my clients if you're going to buy something, you're using the 24 hour rule. Now, if you're at an airport and you're thirsty and you're like, why would I spend $8 for water, I will actually say this is what I do, recommend buying it. And they go what do you mean? That seems like something that's so frivolous. It's $8. Shouldn't I have just brought my water bottle? I go, you should have, but if you didn't, don't not drink water. And yes, it's.

Speaker 1:

But that's not going to dictate whether or not you retire early. So I certainly encourage you, don't, simply, which I have a lot of people who they're trying to retire early and if that means cutting every corner imaginable. They're trying to do it because they really don't like where they work or it's just they're fed up with it. I resonate, I can empathize with it, because I've been at a role that I didn't love. But what I don't want you to do is go honestly and not drink water Like a best case scenario.

Speaker 1:

If you really are itching to not buy an $8 water, go ask for a water cup and then fill it up with the water fountain. But then now you're gonna have to keep doing that. So just buy the $8 water bottle. It's not gonna feel good but over time you'll realize hey, this was actually something worth doing and I had a client actually send me an email recently saying that there was a Chick-fil-A at the airport he was in and traditionally he would have never been able to buy. I think it was like $11 for like eight Chick-fil-A nuggets and he said I would have never done it because that price does not resonate with me. But listening to the podcast and being a client at Root, I know I'm going to be more than okay. So that's something that I, old me, couldn't have done. And now I do it and I don't think twice.

Speaker 1:

So we're not about spending frivolously for the sake of it, but please be reasonable with yourself and the number five. So luxury vacations, I will say if you're still working today and it's a stressful job, it's really hard. I give you kudos if you can travel and truly be away from work, because I find most people, if they're in a high-paying job and there's a lot of stress involved even when they're traveling so luxury vacations if you are working a really stressful job, most of the time you're still going to be working. Hopefully you can truly turn off. That would be my goal. We are very strong about that. We're very passionate about making sure when people are out of the office, they truly are out of the office. There's no Slack, there's no email, but it's difficult and the reality is, if you're taking a luxury vacation to reset, I'm all for it, truly.

Speaker 1:

I personally have a budget. I spend $14,000 a year on travel that I can see do as I see fit. If I want one big fourteen thousand dollar trip, awesome. If I want three mini trips or whatever a mix, I can do that. But I like having that as my guardrails. And if I get a bigger bonus because performance or otherwise or whatever it is I want to make sure that I'm sticking to that fourteen thousand dollar amount because that's my annual target. I feel good about it. I actually like having that, but it's not saying I've ever gone over it. I have, and in those instances where I go over it I will cut back other things so that I'm still on track for my goals of I wanna one day buy a particular home I want, and this is my big kind of frivolous purchase that I will do in the future.

Speaker 1:

Some of you guys are going to think I'm nuts and I don't blame you with this, but this is something. Maybe I'll do it when I'm 70. I want I was at a Chicago hotel once. I don't know what the name of this is, but it spins your car so you can install it in your driveway. I have no idea how much it costs. I've never seen it in any residential home. It might look crazy. It might look like you have an Iron man house where I might actually see it and then not want it, but I thought it was so cool at the hotel where you go, park your car and it'll just spin it around for you and it does it pretty quick. So you have a remote control and you go and then all of a sudden the car is facing the right way to depart and I just thought I'd feel like Batman if I had that. So maybe in the future that'll be my frivolous purchase, but not for a while.

Speaker 1:

So those are five things to consider scaling back or cutting in terms of keeping. So these are my personal three things that I tell my clients. I love. Keeping these, please. I would imagine you should do the same. High speed Wi-Fi. Nothing is worse than slow Wi-Fi or having a computer that lags. So if your computer is going a little slower, please, I recommend, go to the Genius Bar. Go to have someone a friend, a neighbor, a coworker to speed up your computer, whether that's paying for high you know fast Wi-Fi, or whether that's having for high you know fast wifi, or whether that's having the latest computer. Don't just buy a computer every single year for the sake of it, but the faster you can operate if you get that little spinning wheel of death.

Speaker 1:

That thing causes me more anxiety than anything in the world. So I encourage you certainly pay for products that work well. If they don't work, don't just hold on to it until and hope that eventually it gets better. Basic insurance, okay. So this many of you know. But I say there's three types of insurance underinsured, overinsured and unnecessarily insured. I don't need you unnecessarily paying for something. I do not want you underinsured and you cannot be exactly insured, so I want you overinsured and that is something that is insurance I pay for and I hope I never get my money back. I am paying, hoping that I never die, but if I were to die, then Alice would be receiving the insurance proceeds from that. So that is my no-brainer. It's really cheap and I love it. I feel good about it. Every day I go to bed honestly thinking, hey, if something happened to me, for whatever reason, if I die on the soccer field which I hope I never do, die on the soccer field, but it wouldn't be the worst way to go. But anyways, here I go rambling again. If I were to die on the soccer field, alice would make sure that our future children would be able to go to college and I still want them to have some skin in the game. So I want to get that set up a certain way, because I had that and it really motivated myself. But I love knowing that there would be certain procedures and protocols in place.

Speaker 1:

And then number three this is an odd expense. Okay, some of you are going to be like, are you really paying for this? But I just love it. Okay, some of you are going to be like you don't really do this, do you? But I do. Okay, so the expense that I pay for it's not meal delivery service. Okay, because things like blue apron, which we've tested out, we'd find they don't really work well for us because we're somewhat picky eaters.

Speaker 1:

But what we do is we meal prep. I don't think it's odd, I think it's cool, but I will meal prep on a Sunday with my parents. This is the ultimate hack to connecting with your parents. It's hard, at least for us. We live about an hour away from our parents both myself and Alice and it's one of those things that I can call my mom and I can talk to her, and it's awesome. I can call my dad. Do the same.

Speaker 1:

But if we're meal prepping, it's an odd camaraderie that it brings, and when the chicken's in the oven, you're ending up talking a lot, but you're also still feeling purposeful. So it's probably just like a productivity issue of my household that we always feel like we have to be productive, but meal prepping gives us a ton of time with our family. So we're not using like a meal service like blue apron or cook unity or um, what are some of the other ones and there's a lot of them out there HelloFresh. We don't do that, we're not gonna do. We tested out a few different services and what we find is like we need to be really excited for lunch or we're not gonna eat it. I know that's bad, but I'm not gonna eat lunch unless I'm hyped, knowing hey, oh my gosh, it's gonna be this, it's gonna be great, I made it, I'm excited for it. So that's one thing that we will meal prep and sometimes I find that I'll buy more things than I need and then I'll end up making dinner with my parents, so I stayed there longer. What can I do to use money to get more time with my family? It sounds kind of bad that way, because you're like, can't you just hang out with them? Like, why do you need money to hang out with them? It's not really the money, it's the fact that we're meal prepping and that costs money. But I'm purchasing time.

Speaker 1:

Many of you know my sauna story, but I'll leave you all with this. So my dad loves Facebook. He is truly addicted to Facebook and he knows it. He loves getting to scroll. He's like a five-year-old who just found TikTok for the first time, and my dad's in his seventies, which I love. He has a youthful energy, one of the most fun people to ever be around. I love my dad, but my dad sometimes it's hard to be present with us. So my brothers said, hey, we want to connect with our dad more.

Speaker 1:

So one of the things that we've purchased which is one of my favorite purchases, if not my favorite of all time is I bought a sauna that would intentionally overheat my dad's phone, so when he's in the sauna he cannot scroll. He has to talk to us. Many people, including my clients, hey, ari, do you really need to buy a sauna just to talk to your dad? Can't you just tell him to sit down, put down the phone? I go, you try telling a five-year-old to put down the phone. They're just not going to listen every time. So this is something that we bought because we wanted a sauna anyways. Now we have one. Now we sleep better. We used it all the time. Now I don't live at home, my dad uses it. So here it is, something that I purchased that he probably never would have ever bought on his own, but now he loves it. Now he sleeps better. Can't exactly quantify that impact on your health. So these are just some new, different ideas.

Speaker 1:

Maybe you learn one thing, maybe you learn nothing, from today. Hopefully it was entertaining at the least. But if there was one thing you learned, please drop a comment, please do let me know. You can always submit a question if you want me to discuss any topic in the future at earlyretirementpodcastcom. And that is it Once again. You all should know that I have multiple ways of working with us. We have the Early Retirement Academy. That is just if you want to go play around. There's a budgeting tool. You can go find out when you can retire early. You get to build your own plan. And then, of course, there's the formal process, working with Root, where you can go to our website, rootfinancialcom, click, get started and you can follow those steps to begin working with us. That's it. See you next time.

Speaker 1:

Thank you all, as always, for listening to the Early Retirement Podcast. I love getting to host these shows and make different content for you guys every single week. I've not missed a single week in years, and that is because I love getting to do this. Now, please be smart about this. Before you actually execute any strategy that you see me talk about or hear me talk about, should I say Please talk to your financial advisor, your tax preparer, your estate attorney, please be smart about this. None of this should be construed as financial advice. This is for fun, educational, informational purposes only. Once again, just quick disclaimer here. Guys, please be smart about this. Appreciate you listening, as always. You can, of course, submit a question on my website, earlyretirementpodcastcom. If you, of course, want me to address a specific case study or topic. I will not promise I can get to it, but I respond to every single person and if I find it will be helpful for a lot of people, I will absolutely make an episode on it, at the very least give you some insight. That's it, thanks, guys.