38-year-old retiree: 'America, stop wasting your money on these 7 things—if you want to retire early'

In 2016, I quit my six-figure job in software development and retired early at 35. My wife Courtney, who was 31 at the time, joined me in early retirement a year later.

Getting there wasn't easy. We always contributed the annual limit for our retirement savings plans and invested tons of money in the stock market. In fact, Courtney's entire salary went straight into our investment portfolio.

But much of our success had to do with cutting back on spending. It was hard at first because, like the masses, I was never the thrifty type. Once I dropped my bad spending habits, however, our retirement savings began to skyrocket. 

Why Americans struggle to save for retirement

A 2019 report from Ladder, a life insurance company, found that the average adult spends $1,497 per month on non-essentials. That's roughly $18,000 a year on things we can do without — which is baffling considering how 78% of full-time American workers are living paycheck to paycheck.

While cutting back on spending is just one part of the solution to saving for early retirement, it's a very effective start. Here are seven pointless things this 38-year-old retiree thinks Americans should stop wasting their hard-earned cash on:

1. Eating out

According to a 2019 survey of more than 2,000 Americans, 69% said they wasted money dining out. And I get it: It's nice to get out of the house and have someone else cook for you.

But the experience isn't cheap. On average, Courtney and I used to spend a combined $750 per month on eating out (yes, delivery and drinks count):

• Restaurant meals: $210
• Drinks: $189
• Takeout or delivery: $178
• Buying lunch: $173

That adds up to $9,000 per year, so you can imagine how much money we're saving now by preparing our own food. Of course, we still treat ourselves to a night out from time to time, but to help control costs, we don't order beverages or drinks. Water with lemon is just as satisfying — and it's free. This reduces the bill anywhere from $6 to $15.

We also don't buy appetizers or desserts, which can easily save us another $15 or more. (I always keep a pint of ice cream in the freezer in case one of us has a sweet tooth.)

Lastly, leftovers never go wasted. Even if it's just a few pieces of vegetables, we always find a way to reuse them the next day.

2. Phone upgrades

It's hard to ignore the hype every time there's a new smartphone from Apple, Google or Samsung. But today's devices are so advanced that they can function for years without a problem. And while the updated features are nice, they aren't life-changing.

In most cases, it only makes sense to get an upgrade if your current phone has major technical issues or stops working completely. But even then, taking it to a repair shop first can save you hundreds of dollars. Depending on your carrier, buying the newest model can cost you an extra $25 per month (for financing or leasing) or $600 or more to buy it outright.

Courtney and I kept our previous phones for over four years before finally getting new ones last year. For each year that we decide not to upgrade, we save up to $1,500. Rather than owning a piece of technology that depreciates each year, we figured we're better off putting that money into appreciating assets in the stock market.

3. Clothing and apparel

The average American spends about $1,866 per year on clothing and apparel, according to a 2019 GOBankingRates report, which rounded up 25 common expenses and used data from the US Census Bureau and the National Retail Federation.

Fast fashion doesn't make shopping any less tempting, but keep in mind that it only takes a few months for whatever clothes, shoes or accessories that are in style today to be replaced by some other contemporary trend. So before you make a purchase, ask yourself if you really need or have the room for it.

My clothes-buying rule is simple (and slightly Marie Kondo-inspired): Vow to buy less. I just buy the essentials, and once I do, I'll wear them until they're stained, ripped or no longer fit. On average, I only step foot into a shopping mall two or three times each year and spend between $50 to $100 per trip.

4. Lottery tickets

They say you can't win if you don't play. But we all know that the chances of winning are microscopic — and when compared to basic investment strategies, such as consistently contributing to retirement accounts, spending a few bucks on lottery tickets just doesn't make sense.

Those few bucks add up, too. From scratch-off cards to Powerball and Mega Millions entries, nearly half of Americans play state lotteries. According to a 2019 report from Bankrate, consumers each spend an average of $86 a month on lottery tickets.

What's crazier is that a staggering 59% of millennials believe winning the lottery is a reasonable way to retire, according to a 2019 poll from investing app Stash. Ditching this highly addictive habit could save you about $1,032 a year. If that's not reasonable, I'm not sure what is.

5. Extended warranties

Extended warranties have become a big business: Roughly $40 billion, according to the newsletter Warranty Week. A 2018 study from Stanford University found that consumers often overpay for extended warranties because they overestimate the likelihood that a product will need a repair.

But these service plans function like insurance, and for every dollar you spend, you'll likely only get pennies back. Courtney and I never fork over extra money on major appliances, and it has saved us thousands.

Before making a big-ticket purchase, we always do research to make sure we get a high-quality item, because we know it's less likely to break. Additionally, to stay on the safe side, we put a portion of the money that we otherwise would have spent on warranty fees into a designated repair or replacement fund.

If you really think you need an extended warranty, always read the fine print. In some cases, coverage isn't eligible for accidental damages, or a claim can be denied if you didn't follow routine maintenance instructions. Also, you might already have extended coverage benefits through your credit card, so check with your card issuer first.

6. Cable TV

Cable TV prices have skyrocketed over the years. But times have changed, and with the number of streaming services available, ditching cable television was an easy change for us. 

Instead of paying more than $100 per month for cable TV, we now pay $49.99 per month for YouTube TV, which includes local television networks, as well as a variety of others that you might find on a cable or satellite service.

There are plenty of other TV streaming options for cord-cutters. At $30 per month, Sling TV is much cheaper than premium services like Hulu with Live TV, which costs $55 per month, but has very few local stations.

A word of caution: Too many Americans end up wasting hundreds of dollars per year on subscriptions they don't use. So be mindful when deciding what to sign up for (and try to stick with just one service, if possible).

After testing out a few services, Courtney and I chose YouTube TV because it includes more top channels for the base price than any competitor. It also comes with unlimited cloud DVR storage and a generous nine months to watch recordings (most are 30 days).

7. Impulse purchases

This is a broad category, but it basically includes anything you don't need, but are tempted to purchase "in the moment" — like that pack of gum in front of you at the grocery checkout line.

Trust me, the immediately satisfaction will wear off before you know it. There were so many times when I had to stop myself picking up a 24-pack of toilet paper because it "seemed like a good deal" at the time, even though we were fully stocked at home.

Big purchases are the most dangerous. That Peloton bike, for example, might sound like a smart investment right now, especially when you're trying to convince yourself that you'll use it every day.

But if you're going to pay $1,995 for an exercise bike (and that's not including the $250 delivery fee or the $39-per-month subscription to stream the live classes), you'd better give it some serious thought and be willing to put in the physical work. Otherwise, it'll probably just end up collecting dust in your basement. 

Steve Adcock is a financial expert who blogs about how to achieve financial independence. A former software developer, Steve retired early at the age of 35. He occasionally writes about money for MarketWatch, Forbes and Business Insider. Follow him on Twitter @SteveOnSpeed.

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