This story is part of CNBC Make It's Millennial Money series, which details how people around the world earn, spend and save their money.
It took Carly DeFelice until 2007 — her junior year of college — to break all her rules about money.
Frugality and diligent saving had been the name of the game since Day 1 — literally. DeFelice says that her mother was balancing the family checkbook when she went into labor.
The child of parents who owned a struggling business, DeFelice saw her parents clip coupons and follow a strict monthly budget. Following their lead, she pocketed nearly every dollar she made babysitting and refereeing kids' soccer games.
By the time she was an upperclassman at the University of Texas, she had spent years working in direct sales, first in high school pushing books door-to-door, then in college selling home security systems. In 2007, she earned $63,000, plus her company offered her a $500-per-month bonus to put toward a car.
DeFelice bought a brand-new, white Mercedes-Benz, signing on for 60 monthly payments of $560.
"I was on top of the world. I had to put the car in my name, but they were going to pay me $500, and the payments were $560," she says. "This company had all these accolades and all this revenue — it was like, 'What could possibly go wrong?'"
Given that 2007 marked the start of the global financial crisis, quite a lot could go wrong, and it did, rather quickly. Shortly after DeFelice bought the new car, her employer went bankrupt. DeFelice lost her job, and between her $29,000 in remaining car payments and a modest student loan, she had racked up about $35,000 in debt.
"I had this whirlwind where I was this supersaver living below my means, to thinking I had to have the appearance of success," she said. "I quickly learned that I didn't want to look wealthy and have nice things. I wanted to actually truly build wealth."
DeFelice graduated from school in December 2008, and with a re-commitment to frugality and investing in herself, she was able to pay down her debt and build a portfolio worth $100,000 by age 26.
Now 38 and a community manager at a co-working space, DeFelice has boosted that number to about $400,000 in cash and investments, without ever making much more in a year than her current salary of $58,000.
She also continues to live below her means. In place of a luxury car with a monthly payment, DeFelice owns an SUV outright, along with a 20-foot by 8-foot camper she calls home outside of Austin, Texas.
Budgeting with cash and finding 'Coast FIRE'
Graduating in 2008 meant that jobs were scarce, so DeFelice, a finance major, went to one of her professors for help.
"She knew that I had this crazy summer internship selling home security systems. She said, 'Why don't you go out there and start your own company doing that?'" DeFelice recalls. "At the time, I never imagined I would be an entrepreneur. But I really couldn't think of a good reason why not."
One potential snag was that DeFelice only knew how to sell the systems — not install them. "So at the start of the recession, I literally rolled my sleeves up and trained myself how to install security systems. I was a one-woman show."
DeFelice paid herself a salary of $50,000 while continuing to live in Austin, but survived on far less. By moving in with the roommate, she was able to keep her monthly rent to about $500. To keep day-to-day expenses low, she relied on an old-school method: cash budgeting.
"I would take out $120 in cash and make that last for the week," she says. "This is what I consider operating expenses. So I buy my necessities first — groceries, gas, my car — and then whatever was left would be happy hours and hanging out with friends, maybe a new shirt or small gifts."
By keeping her expenses low, DeFelice was able to pay more than the minimum on her car payments and contribute to her emergency savings and investing account.
During this period, she came to two realizations about money. First: she was pretty good at this personal finance thing, maybe good enough to help others. Thinking she might switch to a career in financial advising, DeFelice began taking job interviews, telling potential employers that she wanted to help educate young adults about money.
It turned out, through, that major advisories tend to want their employees to court high net worth clients. "The rejections letters just rolled in," she says.
So in 2012, DeFelice started Best Money Class Ever, a four-week financial crash course that she taught in person, charging $150 per customer for classes of five to 20 people every few months. She's since increased the price of the class.
Her second major realization: Her own financial life didn't have to follow the traditional script.
DeFelice became interested in the world of FIRE, short for "financial independence, retire early," a movement whose adherents aim to save and invest large portions of their income early in their careers in order to have enough money to retire early.
FIRE adherents often aim to accumulate a certain amount of money — known as their FIRE number — from which they can withdraw in perpetuity to replace their income. Using a common calculation, which assumes they'll withdraw 4% of their account per year in retirement, a potential early retiree takes the income they hope to live on and multiplies it by 25.
At age 26, with $100,000 invested and no debt to speak of, DeFelice had reached a version of financial independence known as "Coast FIRE." She hadn't yet reached her FIRE number, but assuming normal stock market returns, she calculated it could grow to where she needs it to be by age 65 without her ever having to invest another dollar.
'Wherever you go, there you are'
For DeFelice, covering those living expenses became a grind. By 2019, she says she felt massive burnout in addition to going through a personal rough patch.
So she sold everything she owned — from her Mercedes to half-used nail polish — and embarked on a six-month sabbatical.
"I just pressed pause. Having that financial cushion really gave me the opportunity to go for a period of time without bringing in an income at all, just to do what I needed to do," DeFelice says.
She started in Hawaii, where she rented a micro-sized Airbnb. "I was always curious about tiny living," she says. She immediately took to the simplicity of it.
After a month on the island, she returned to the mainland to look for a new place to put down roots. Her first choice, Omaha, Nebraska, ("Warren Buffett is there and I love the mentality of how he really lives below his means") proved too cold in the winter.
She ventured to the Carolinas, where she realized maybe she didn't need to put down traditional roots at all. She paid $14,000 in cash for a travel trailer and another $14,000 for an SUV to hitch it to.
"I hit up all the cities that I was interested in that area, like Charlotte or Raleigh. And then I kind of found myself in a situation where I'm like, 'You know what? Wherever you go, there you are,'" she says. "Even though I had this big dream of trying out all these places and starting over in a new place, I realized that I really craved my community and went back to Austin, Texas."
How she spends her money
That isn't to say that DeFelice hasn't had some adventures. In 2021, she took her rig up and down the West Coast, hitting the usual suspects of iconic national parks on a loop that began in Texas and ran her up through the Pacific Northwest.
Austin, though, has become her home base. And by virtue of having no debt, she's able to continue to live on a modest budget.
Here's how she spent her money in September 2023.
- Investments: $1,000 toward her brokerage account
- Housing and utilities: $792 for lot rental, propane, water and electricity
- Unexpected expenses: $505 for car and bike repairs
- Insurance: $405 for health, RV and car coverage
- Travel: $251 for a round-trip flight to New Orleans for FinCon
- Entertainment and celebrations: $214 for nights out with friends and gifts for birthdays and weddings
- Food: $174 for groceries and dining out
- Gas: $152
- Health: $95 for copays and medication
- Household expenses: $88 on home improvement, laundry, clothes and beauty supplies
DeFelice likely could have written the section above herself, down to the last dollar. Every month, she sketches out a plan for her budget and diligently tracks her spending.
"Budgeting out what I think's gonna happen, and then filling in what actually happens in a month gives me the accountability that I crave and want," she says.
One way to keep the monthly budget low: Pay for things at a lower rate in cash up front. DeFelice has no monthly cell phone bill because she bought an iPhone in cash and prepaid for a one-year service plan from Mint Mobile.
Similarly, because she owns her vehicle outright, she doesn't have a monthly payment. Instead, she pays for a lot in an RV and tiny home park in East Austin (bike-able to her office) along with monthly charges for insurance and utilities. Wi-Fi is included in her rent.
As for living expenses, DeFelice still takes out $120 a week to cover her basic costs and finds ways to limbo under that number. By planning out large-batch meal preps for the week and going to the grocery store with a list, for instance, she avoids overspending on food. She spent just $123 on groceries in September.
Still, unexpected expenses pop up for even the most rigorous budgeter. In September, DeFelice discovered her bike needed new tires and that the battery failed in her SUV. This time, she used her weekly cash allowance to cover the bills, rather than dipping into her emergency fund, which contains more than a year's worth of living expenses.
"I'm pacing my spending on the little purchases. So when there's something that comes up, I already have a cushion in my budget to ... pay for those unexpected expenses."
'I'm here to say you can turn things around'
After her return to Austin, DeFelice had been coasting. She began teaching her money class virtually in 2020, eventually operating out of a co-working space. She found she enjoyed the camaraderie, and picked up a part-time position as a community manager.
The part-time work was enough to cover her living expenses, but she's recently bumped up her salary by going full-time. She's used the extra money to start investing again.
"Even though I took a few years of pausing on retirement contributions, I've decided to start that back up again, for multiple reasons," she says. "The biggest thing is, instead of waiting until I'm 65, why not aim to move the bar up to reach total financial independence before that?"
Indeed, by increasing her retirement savings — she socked away $1,000 in September, the largest line item in her budget — DeFelice can theoretically hit her FIRE number sooner. If she stays focused, she says, she hopes to reach $1 million by age 45. By the traditional FIRE number rules, that would allow her to withdraw and live on about $40,000 a year.
"If I do reach that million-dollar mark, I would feel confident in not having to bring in an income with a standard day job or with my business. For me, though, [retirement] is not the end goal."
She hopes to continue to help people follow her model to reach financial independence of their own. DeFelice is focused on growing Best Money Class Ever, investing any profit the classes generate back into the business.
"I don't see myself stopping working. I see myself doing what I'm doing but just doing it for a lifetime. There are so many people who feel like they're stuck in debt, living paycheck-to-paycheck, they have student loans, payments coming in, inflation, housing's expensive."
DeFelice wants her students to know that she's been there, and that there's a way out. "I'm here to say, you can turn things around."
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