I started 2015 on an entirely different career path to the one I’m on now, and with a fairly small savings account. I had a lot of expenses when I first moved to LA — gas to get me to and from work, a higher rent payment, buying lunch at the office (before I knew better), and just general unexpected moving costs (security deposits, etc.). The first year I was here was spent building up my savings, only to use it to pay off an unexpected bill. I’d build a measly savings account, and then use it to pay a dental bill (which was hefty, because it turns out, if you don’t go to the dentist for a few years, you can end up with a lot of cavities), fix a car issue, put down a security deposit, or buy a bed. My balance fluctuated constantly, and my stress level followed.
Finally, I got serious about saving when I decided I wanted to quit my job, without the guarantee of another one. I knew I was going to need a safety net, but saving money on an entry-level paycheck (from my full-time advertising job), in an expensive apartment, is a challenge. That’s when I started my first emergency fund. I started at the end of 2014, and was aggressively putting significant chunks of my paycheck into my savings account. By mid-February, I managed to save about three month’s rent (plus three month’s worth of additional expenses). TFD recommends an emergency fund that includes about six months rent, and other expenses, which I agree is ideal, but this story is not without its mistakes, and I didn’t make it to six months of saving.
While I now have a full-time workload — I’m with TFD part-time, and take on other freelance writing jobs — that wasn’t always the case. For the first two months after I quit my job, I wasn’t working full-time. I wanted to be, but I hadn’t gotten enough freelance contracts yet to pull together a full-time schedule. I had one contract to go off, and my emergency fund. And yet, 10 months later, I’ve saved about $8K this year, even though I quit my job, and didn’t land another full-time gig. Here are seven ways I was able to save $8K this year:
1. I airbnbed my apartment. This is honestly the only reason I never had to dip into that emergency fund, I hastily pulled together before I quit my job. For the first couple months I was out of my salaried job, I got my entire rent covered by airbnb tenants. It wasn’t the most glamorous way to live. I was very lucky to have good friends who were willing to host me, while I paid them in a nice dinner that I would fund from my airbnb money. Airbnb is always a risk, so I honestly didn’t love doing it, especially in a lease that I wanted to get out of. But it enabled me to not touch my emergency fund, and pocket all the freelance money I was earning, because my rent was covered.
2. I then moved out of my apartment. This is a luxury that very few cities have to offer, but thankfully, in LA, you can find relatively well-priced rent. I moved in with a roommate, and I took $250/month off my rent price by doing so. I was working remotely at this point, so I no longer had to be in an expensive area of town to ease my commute. The $250/month I freed up went directly into savings every month, and paying well under $1,000/month is a huge #blessing in my life.
3. I lived like I wasn’t fully employed, even when I was. During the months when I didn’t have a full-time workload as a writer, I lived very frugally. It was obviously a stressful time — teetering on the edge of ~making your dream job happen~ is enough to give anyone a tension headache. However, when I did start working full-time, as a freelancer, I was still in the Save Like There’s No Tomorrow mindset. Even when I was working 40 hours/week, or more, I was concerned that one of my freelance contracts would go away, or that I’d need a fall back, so I kept saving as much as possible.
4. I side hustled. I started frantically asking around for things I could do for extra money. My friend was moving out of LA, so I asked if she could introduce me to her babysitting clients. I work on the weekends (doing different freelance projects), and babysitting doesn’t fit neatly into my schedule, but I make time for it, because I love the kids, and also, because I will always make time for cold hard CASH.
5. I cut out a lot of the fun I used to have. I didn’t shop for any clothes until October of this year (when I finally broke down and bought a new pair of jeans, and a new purse). For the first few months after I quit my job, my boyfriend and I cut out eating out, and if we treated ourselves, the rule was that our meals had to be under $10 each. My alcohol tolerance (which was already pretty low) came down to nonexistent levels, because I stopped buying drinks out, or buying a six-pack or a bottle of wine “just to have around.”
6. I saved an excessive amount for taxes. The rule of thumb is that you’re supposed to put about 1/3 of your paycheck into your account for your taxes. I was very paranoid that I wasn’t going to have enough to cover what I owe in taxes (this is my first year paying taxes as a freelancer), so whenever I didn’t need a paycheck coming in to live off for the month (to pay rent, buy groceries, or pay other bills), I would put any excess I could (AFTER taking out taxes) into my savings as well. I was always concerned that I would somehow get wallopped with a tax I didn’t know about, and would then have to pay exorbitantly, so I wanted to save extra. I finally talked to an accountant, and learned I’d been grossly oversaving for taxes. (So, my savings that I’m discussing here does not include the amount I’ve saved for taxes.)
7. I put any unexpected money into savings. My family makes fun of me for putting money I get for my birthday, or holidays, into savings. Any money that came in out of the blue, this year, would go into savings. When I left my job, I got paid out for vacation days I never knew I had. In March, I got a rebate on a bill I apparently overpaid. It all went directly into savings, where I couldn’t see it.
At the end of this year, I probably won’t leave this money sitting in savings, but I need to pay my taxes before I do anything with it. I learned that, for me, the out-of-sight principle really does work the best. I keep a cushion in my checking account (because I used to be a chronic overdrafter), but I’ve adopted cost-cutting practices, and made savings a priority. I got so used to reducing my expenses while I didn’t have full-time work, that the habits I developed made me a better saver in the long-term.
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