Save and Invest

A two-step process to save more money, from a couple that paid off $200,000 in debt and plans to retire early

Rich & Regular co-founders Kiersten and Julien Saunders
Source: Kiersten and Julien Saunders

Entrepreneurs Julien and Kiersten Saunders are working toward a specific net worth goal: $1.5 million. That's their "FIRE number," roughly equal to 25 times their annual spending, and the amount they would feel comfortable living off of for the rest of their lives without having to work.

They're part of the FIRE (financial independence, retire early) movement, which embraces the concept of saving the majority of your income in your 20s or 30s so you can retire and have the freedom to do what you want to in your 30s and 40s. They share their FIRE journey on their blog Rich & Regular, which they launched in 2017.

The Atlanta-based couple, who got married in 2015, are on track to hit their savings goal within a couple of years, but "once we eclipse that number, we're not going to stop," Julien tells CNBC Make It. "Our goal is to continue to build wealth and to inspire Black people to explore the financial independence movement as a way to achieve economic freedom."

Julien, 39, and Kiersten, 35, believe that the key to building wealth is to focus more on earning than cutting back expenses: "We're actually less focused on budgeting and saving a few dollars here and there, and more concerned with driving income," says Julien. As entrepreneurs, they earn six figures each from a variety of sources: They generate revenue from their blog, work with brands to tell creative stories about money and recently signed a book deal. 

Still, they've saved a lot of money: Between 2013 and 2018, when they were still working 9-to-5 jobs in marketing, they paid off $200,000 in debt, including auto loans, student loans, credit card debt, tax debt and a mortgage, by saving more than half of their combined income.

Rich & Regular co-founders Kiersten and Julien Saunders
Source: Julien and Kiersten

While the couple is debt-free today, they still save and invest 30% to 40% of their disposable income in low-cost index funds, where it can grow over time.

"We've shied away from savings rates because it's more of a relevant metric for people with fixed incomes," says Kiersten. "As business owners, our income is unpredictable."

If you're looking to spend less and save more, here's their best advice.

1. Start with your 'big three' expenses

Americans spend the majority of their money on three expenses: housing, transportation and food, according to the Bureau of Labor Statistics. Start by figuring out ways to cut down your spending on those major categories to free up extra cash.

That's what Kiersten did to gain control over her finances. She wasn't always good with money and used to spend everything she earned, she says. But when she began her debt repayment journey and committed to turning around her finances, one of the first things she did was downsize: "I broke the lease of my very expensive apartment and moved into one that was half the size and half the cost."

Right away, that freed up hundreds of dollars a month. "With the burden of a big bill being sliced in half, it gave me the freedom to think: OK, now you can't say that you don't have enough money," she says. "That was never true to begin with, but now, it's really not true."

Downsizing is an obvious way to cut housing costs, but there are other options as well. Look into getting roommates to split rent with, or, if you have the option to buy, try "house hacking" by buying a two-bedroom apartment or duplex and renting out the other half to help cover the mortgage.

When it comes to transportation, hold off on upgrading your car. One way Julien and Kiersten kept their costs low while paying down debt was by continuing to drive their old cars. 

If you don't get much use out of your car, or if you have a spare vehicle that you don't use often, "revisit whether it needs to be insured," suggests Kiersten. "You can call your insurance company and get a reduction on the premium." You can also revisit whether you need the car at all. If you can get by on public transportation and/or a commuter bike, consider selling it.

The last big expense, food, can be easy to cut back on if you have a soft spot for dining out. As a general rule, the more you cook at home, the more you'll save, say Julien and Kiersten. They even wrote a guide to cooking at home, "Eat Better on a Budget," to help others learn how to eat well without breaking the bank.

2. Understand where the rest of your money is going — and what's driving your spending

If you want to save more after cutting back on food, transportation and housing, "it's about looking at every single transaction and figuring out the root cause of why you purchased it," says Kiersten.

In many ways, this can be more challenging than downsizing or eliminating takeout because it's "soft work," says Kiersten. "It's not something as simple as: Do this. Call these people. Say this script. But it's so important because the fringes are where people lose track of their budget. Fixed expenses are really easy — you know your rent is $1,200 per month, for example — but where is the rest of your money going?"

To figure out what's driving your spending, you first have to take a hard look at exactly what you're buying and why. Are you buying things that you truly enjoy and add value to your life? If not, can you eliminate some of those expenses?

Years back, when Kiersten was overspending, her money went to restaurants and beauty, she recalls: "Everything I spent my money on was meant to elicit a certain type of feedback from somebody, whether it was I wanted to hear that somebody liked my pants or liked my hair or enjoyed the restaurant that we went to. I could convince myself to spend money for any reason because I had attached it to something external versus something internal."

This realization made it easier to stop overspending on things like clothes, shoes and beauty products. "I adopted a capsule wardrobe, I stopped getting my hair done every week and started embracing my natural curls and everything started changing," she says.

Everything I spent my money on was meant to elicit a certain type of feedback from somebody, whether it was I wanted to hear that somebody liked my pants or liked my hair ... I could convince myself to spend money for any reason because I had attached it to something external versus something internal.
Kiersten Saunders
co-founder of Rich & Regular

Balance is important, the couple emphasizes. While they consider themselves frugal, they're "far from cheap," they write on their blog. About 20% of their budget has always gone toward entertainment, which includes the "fun stuff that we love to do," like drinking good wine, traveling and seeing live music. (Though, it's not as high now during the pandemic, they note.)

"To 'trade-down' on the things that we really enjoy would make this early retirement grind less comfortable and introduce a degree of misery into our lives," they write. 

Of course, if they ever need to cut back on their spending, they can easily do so by starting with the entertainment portion of their budget. But, "so long as we're making progress on our investments and bills are paid, we really don't stress about the rest."

Don't miss: Couple who paid off $200,000 in debt and are on track to 'retire early' focus on earning instead of saving—here's why

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