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Photo courtesy of Jim White
- Jim White retired with a net worth of over $1 million at age 43.
- But, he found that he overspent in several areas, including on his house.
- He also realized that buying new cars and spending too much on food hurt his saving plan.
Jim White retired at age 43 in 2018 with a net worth of over $1 million. But, he didn't get there without making a few mistakes.
The voice behind Route to Retire says that he overspent on three major expenses before reaching FIRE (financial independence/retire early): his family's home, cars, and groceries. Now, he's trying to reduce these costs as much as possible as he lives off his savings.
Here are the areas where he felt he could have cut back, and what he's doing differently in retirement.
1. He bought too much house
White and his wife, Lisa, bought a home in the Cleveland area, but soon realized that it was more than they needed for their small family.
"We first lived in a beautiful house in a wonderful neighborhood, but it was 2,400 square feet plus a finished basement," he said. "There were rooms we rarely used at all, but you're stuck paying for them in a mortgage payment, plus maintenance, repairs, and cleaning."
Buying a house is one of the most expensive purchases many people make, and it's also an area where overspending is all too common. Buying more house than you can afford can make it hard to save, invest, and meet other financial goals.
After retiring, White and his family moved to Panama, where they rent their home. "We don't currently own a house, but when we decide to buy again, we'd be happy with a ranch-style home that's maybe 1,500 square feet," he said. "Big enough for us, but much, much less expensive than where we were living."
Although he was able to make his FIRE goal work despite this, it's a mistake he won't make again.
2. He bought new cars
White says that one of his big mistakes was buying brand-new cars when he was saving for FIRE.
Oftentimes, buying brand new cars can mean spending a lot of money that's quickly lost to depreciation. When buying a new car, it's not worth as much as soon as it drives off the lot. Automotive information brand Carfax reports that new cars lose about 20% of their value in their first year alone.
For White, that was a figure that didn't work well with his goal of reaching financial independence, nor did it make sense living on his early-retirement budget. "Those were pretty much going to be our last new vehicles ever," he told Insider.
When White and his family return to the US from Panama, they plan to buy a pre-owned car that they can pay cash for instead of buying another new vehicle.
3. He overspent on groceries
Food costs are unavoidable, but White says it was one area where he and his family were overspending.
To spend less, they switched their grocery shopping from Giant Eagle to the discount grocery store chain Aldi, along with Walmart. "Our grocery bill went down to about half of what we were spending before," he said.
While groceries are essential, it's possible to save each time you go. And, for recurring purchases, you'll see in any budgeting app that savings can add up over time.
While every family is different, it's important to find places to cut back that won't affect your life drastically. "It's a matter of finding what's right for you — you need to make some concessions somewhere if you want to be able to save more," he said.
This article was originally published in July 2021.