How to Achieve Financial Independence Through Frugal Living, Chat With Frugal Expat

Yasi: So, welcome to Fast Track podcast, Steve.

Steve: Thank you for having me.

Yasi: As in my intro, I talk about, you know, your world travel and choosing Taiwan as your home base. I wonder why you made that decision Taiwan as a home base.

Steve: That’s a great question. I was looking for a place so I could travel and I needed also to be able to make some money in the process.

Taiwan was a great place because on the top five list of countries where you can save the most while also being able to travel was Taiwan, Taiwan was like number four or five. And so I decided to move there and what also convinced me to move there was I had a friend living there and she said, you know, Taiwan is great, great weather, great people.

You should just come here and you can live with me for a little bit until you can get your bearings. And I said, oh, that’s perfect. I mean, it gives me a place to start off. It gives me a place to earn some extra money and I can travel all around Asia from Taiwan.

Yasi: Well, it sounds amazing. And what are the other countries in the top of list?

Steve: The other countries, the number one country was South Korea. I think they were saying in South Korea, you could save closest to $15,000 a year. And I was like, wow, that’s pretty good. China was on there, Vietnam and Thailand.

Yasi: And what do you do in Taiwain now?

Steve: Right now I’m an English teacher.

And so I work at a school for new Taipei city. And the way the school works is a camp style English program. So I work about three days a week making English fun and the rest of the time I hang out with my wife and venture around. And if it wasn’t COVID time, we’d be traveling more.

Yasi: So it’s all about traveling and then living your life.

I like it. And where did you get this idea that you want to travel around the world? Since most of the people, you know, would be still in the office working and just having this idea that, oh, it would be nice to travel around the world. What makes you to take the action?

Steve: I was sitting in an office just like most people and I spent most of my time just sitting on the computer. And when I got done with my work, I would have like four or five or even six hours just to read. And so, I would go online and I would see pictures of people traveling. I was like, Ooh, I wonder what this is about. So I read, research and research and dive into many, many travel blogs.

And it kind of got me hooked. I just wanted to just leave everything and then go and travel. And so I made that my plan, I decided to at the end of my work here, I was going to quit, find a job, teaching English somewhere, and then travel.

Yasi: Wow, okay, nice. But were you English teacher before, or just because you are an American abroad, then you found this new profession?

Steve: I was not an English teacher before. I tried to become a history teacher. I passed all my tests to become a history teacher, but I was not teaching history. I was on the side. I was doing some after-school programs. As you said, as an American, I thought, oh, I could teach them English, but first I needed to learn how to teach English.

So, I left and went to Chicago. I was living in South Carolina at the time. So I left, went to Chicago and took ateaching English as a foreign language course for about four weeks straight. That way I could get a good grasp on how to teach English, how to teach students that were learning English for the first time.

I mean, they could be from any different language background, but I needed to learn how to teach them without knowing their language. And so I did that and then I was able to, I had the confidence in myself to go and teach English.

Yasi: Hmm. And how long have you been living in Taiwan now?

Steve: I’ve been here almost fully four years.

I moved to Taiwan at the very beginning of August of 2017. And so I’ve been here ever since.

Yasi: Well. And what are the other countries you have explored since you were in Taiwan?

Steve: That’s a great question. Well, I’ve explored a little bit of Australia, I have been to Hong Kong, I’ve explored Guatemala, Belize, Honduras, El Salvador, Peru Bolivia, Chile, Argentina.

I’ve been to Morocco, oh yeah, sri Lanka, the Maldives. I’ve been to a lot of countries.

Yasi: Yeah. Sounds like it. I was expecting some names around the region, but I didn’t expect like a Honduras, so far away. Sounds a very adventurous. And what are the travel hacks you like to share with us? How do you save money from that?

Steve: Yeah. That’s a great question. A lot of the travel hacks I like to use is I like to sign up for credit cards. I’m very good at paying off my credit card on time, which is you need to do that if you use a credit card. And so what I do is I find a good credit card that has a good bonus and also has some good bonuses when you spend money as well.

And so what I’ll do is every year I’ll look through and find a good credit card offer. And then if there’s a good bonus that I know I can hit it, I’m going to sign up for it, hit the bonus, use that bonus to pay for future travels. And I’ve done this several times. When I was living in the States and I got into travel hacking, I worked for a man on a horse farm and he always told me, he said, Steve, put everything under credit card and it just pay you back, that’s so you can earn cash back.

And I was like, oh, so cool. But then when I got into travel hacking, I realized this is amazing. I can literally purchasings with my cards and hit that bonus and he pays me back. Then I also thought, oh, I lived in an apartment with a flatmates and he would share the utility. So he would pay me back as well.

So I just started putting everything in my credit card and all of a sudden I had all these points, for United airlines, points through late chase credit cards. And then I could travel and not really have to spend much money on buying flights.

Yasi: Also heard this travel like credit card hacks.

You probably know from Matthias in the second episode, he applied for this woman’s credit card and there’s no rule in the application form that you cannot apply for it if you are a man. So few of his guy friends also apply for this credit card due to some other bonuses. Interesting.

Steve: Yeah. That’s brilliant. I mean, if you can find something like that, then take advantage.

Yasi: And now I want to talk about this frugal living. Cause you mentioned that it’s your name, your Twitter name is Frugal Expat. Where did you learn about this frugal lifestyle and what inspires you to live this kind of lifestyle?

Steve: I gained the experience and the lifestyle from my parents. Actually my family didn’t have the most money. We were probably, I would say lower middle class. And so my father was all about gaining value from having purchases. I mean, that is coming from where we lived where, what house we moved into, what vehicles we’d buy and just even with the utilities and the US. Well, I lived in Florida and it would get quite hot. So one of the things we would do is we would not turn on the AC until maybe it was maybe 28, 29, 30 degrees Celsius, which is the high 80s in Fahrenheit. And then we would shut all the windows and doors and turn on the AC.

But we’d only keep it around 28 degrees Celsius or 86, 87 degrees Fahrenheit, just so then we can save on electricity. And so through kind of his frugality, I kind of picked up a lot of that and I kind of live the life of like a poor college student when I was in college. I was not wealthy. I was working and trying to save money.

And so that was something that kinda kept me going. And even after I left university, I was able to continue to live that lifestyle. Being frugal and just saving money wherever I can.

Yasi: And why do want to save money?

Steve: I save money for two reasons. First reason is I want to hit financial independence which basically means I don’t really have to work. I am financially free, I own my own time and I’m able to do what I want. And that comes up to number two. Number two is I would like to travel more and it is hard to travel if you don’t have money. And I figured if I’m financial independence, then I don’t have to work as much because I don’t need to work for money.

And then I can travel as much as I want.

Yasi: That’s a very, very legitimate reason. I love being financially independent as well. I love traveling as well. I guess I need to learn more from you. What kind of like a frugal tips would you give it to people that you don’t sacrifice your quality of life, but also you can save more money?

Steve: Yeah. I would say a couple of things. You need to figure out how to live below your means. That is like don’t buy the biggest place you can live in, buy a small, modest place that you can grow and live in. My wife and I do that. We searched and searched for a great price on a good apartments.

And that is part of frugality. You need to find something that brings value into your life for good price. And that’s what we were looking for when we were searching for home in Taipei Taiwan is we were looking for a good place fits all of our needs for a good price. And that is one way you can live a frugal life is trying to find things that bring value into your life.

One thing that doesn’t necessarily bring value into my life, but maybe someone else’s is I don’t really like eating out. I like going out to eat because maybe I’m a little lazy sometimes and don’t want to cook at home, but I prefer to cook at home because the food is healthier. I get to enjoy the process.

I get to be at home and kinda make and learn how to make food. In that way, I saved more money. And so then I can put the extra savings towards financial independence where towards traveling. Those are two of my tips. A third tip of mine is to either walk or ride a bike more. Oftentimes in the US or other places people like to drive, they don’t use public transportation as much.

And one thing I like to do is i like to to ride my bike, I like to walk to places. And if I have to, like, if it’s pouring down rain i’ll use a public transportation, but being able to ride my bike gives me freedom. It gives me good exercise and it’s free. That’s the greatest part is like, it’s free.

I can go anywhere and I don’t need to pay for it.

Yasi: And on top of that is environmental friendly.

Steve: Yeah. Since there’s no exhaust coming out my bike, it’s just a, I pump up the tires and I can just go.

Yasi: You don’t have to pay parking for it, right?

Steve: Nope. Well, at least in Taipei, I don’t know whether it is in other countries, but in Taipei, all you need is basically a chain lock.

I find like a pole or a tree, or even my wife’s bike and we just connect our change to it. So no one steals it.

Yasi: Yeah. I like what you said, something brings value to you or something does not bring value to you. You don’t need to spend money on it. Maybe that brings value to other people. It’s all about being aware of what really is important to you, like make you life feel, you feel better. You enjoy it more. If something does not bring value to you, why spend our money on it, right? Just purely be aware.

Steve: It’s all about your mindset.

And I know people that they’ll just spend, spend, spend, and then at the end of the month, they have nothing left. And so they complain about like, oh, I’m not making enough, everything’s so expensive. But once they get paid again,spend, spend, spend. And I think you have to shift your mind, even becoming frugal.

You have to shift the way you think in order to change the way you do things.

Yasi: And now you talk about your first goal is to become financially independent. I want to ask you how would living a frugal lifestyle and doing what you’re doing right now helps you to be financially independent? Cause to a lot of people, this is kind of like a dream, you know, very far away from the reality.

So can you explain to the audience, how would you do that?

Steve: Yeah, of course. One thing when you’re trying to become financial independent, you need to have some good financial goals. And what you need to do is you got to figure out, okay, how much do I need? To retire. How much do I need to become financially independent or financial free?

One way I like to do is I he’s a 4% rule, which is, comes from the Trinity study. So I just basically take the amount of money I spent or want to spend in the future. And times that by 25, they’ll come out to my FI number, financial independence number. Second thing. What I need to do is figure out what type of savings rates I need in order to hit that goal.

Now, if you’re not saving any money, well, it’s going to be hard to hit that goal. So what you need to do is start thinking about your frugal mindset is take the things that are not bringing value into your life and cut them out. All of a sudden, once you start cutting out things that you just don’t need and you start using your money for things you want or bring value into your life, you are now saving even more money and it can start as small as 5% and then it can grow to 10%.

And if you are as frugal as I am, I mean, I’m doing about 60% every month. Sometimes it’s a little bit less, sometimes it’s a little bit more, but on average, it’s about 60%. Not everybody can do that. That is just my wife and I. So everybody’s goals are different, but you have to be able to raise a savings rate.

Now I just talked about financial goals and the 4% rule and saving. One big thing that I haven’t talked about is investing that money. If you’re not investing your savings, that money is never going to grow. And the greatest thing about investing your savings is compounding interest and your money will start to grow and grow.

And you’re not doing anything. It’s just kind of passive growing, which is one of the most amazing things is you can take some of your money and it can double within seven, ten, and then it can just grow even more. I always think about Warren Buffet. I think at age 60, he made his first billion. He’s now at age 90 and he’s worth a hundred billion.

The amazing thing is that money just kept growing and growing and growing. And so, if you want to hit financial independence, you need to make some good financial goals. You need to save money and you also need to invest your money in order for it to grow.

Yasi: Yeah. And also another important factor, I think, as you mentioned before, is to live below your means.

If people think, when I’ve become financially independent, I’m going to have this kind of lifestyle, this kind of less, I’m going to buy this and this and this. There’s never going to happen. If you inflate your lifestyle like living below your means can actually help people to accelerate and achieve financial independence.

Steve: Well, of course I think, living below your means is something that’s so huge. I mean, if we let lifestyle creep come into our life and it’s like, we have all this money and all of a sudden we decide to spend more, you will need more in order to keep spending more. And it’s a cycle that will keep growing and growing, which pushes your goal is far beyond your reach.

And so you need to be able to live below your means and save more money.

Yasi: Yeah. And the consequence of that, if you need more, which means you need to earn more. You earn more means you need to work harder and longer. And then basically you need to tie yourself to a job for longer period of time.

But your life it’s, you know, the time is passing by, the time will not come back. So basically you are not living your life. You are living your office life.

Steve: Yeah. Yeah. Your life is like tied to work instead of tied to what you want to do.

Yasi: Yeah, correct. And I want to, because in the US there are lots of, everything is big, right?

If you go to the supermarket, a peanut butter jar has bigger. The chip is bigger, the house is bigger, the car is bigger. How are you not being influenced by this bigger, everything is bigger mentality?

Steve: I feel like when I moved to Asia, everything was smaller. And so I had to make my mindset smaller because partments are smaller.

There are no cars. I mean, there are cars, but people would drive on scooters, people, ride bikes, people walk to places. They get on buses, they get on the metros you have to fit smaller. If the American mindset is all about big, big, big, but at some point I think I changed my mindset moving to Asia because I started thinking smaller.

I realize I can live with less. I mean, I moved across the world with a suitcase, just with, I mean, a few items and clothing. I really haven’t grown that many more items of clothing because I don’t need it. And I realized you know, living in a world with just so much excess printing, so much extra problems.

If you have a bigger house, it means more maintenance. If you have bigger car, more maintenance. You have a bigger closet of clothes, some of the clothes you may not even wear at some point, you’re going to have to get rid of them and you realize, oh, why did I spend that much money? I live in Asia, and I feel like the Asian mindset is all about, I guess, thinking more minimalistic and being a minimalist helps with kind of combating that You need big.

Yasi: Yeah. I think it’s quite interesting that you adapt yourself so well, because imagine if you were living in a bigger house or everything is bigger, more luxurious, you know, it’s kind of hard to downgrade. It’s always easier to inflate your lifestyle, right. It’s always harder to go back to the lower level.

I admire you for that part. Very adaptable. And earlier you mentioned about investment. What is your investment strategy?

Steve: I like to buy index funds, especially US total stock market index funds. I mean, they’re simple. And it works.

Yasi: What do you mean by it works?

Steve: You know, you buy a simple stock market index fund, you put money into it. The S&P 500 for instance, has increased on average 10% every year. I say average because some years it’s worse, some years is better. As the market goes up, your money goes up. If the market goes down, your money goes down. If you don’t want me to worry about it and don’t think about it, less stress, so I guess that’s why I made that it works.

Yasi: And how much time do you spend on investing every month?

Steve: I would say maybe 15 to 20 minutes. It’s not much time is when I have money. I’m ready, I go in and invest it. If not, I have it automated and I don’t worry about it.

Yasi: Nice. Nice. And do you invest in other kind of exotic stuff or only ETF?

Steve: Right now I have probably three or four ETFs. And then I have a few like a dividend stocks. Like I’ve got Apple, I’ve got some targets and some other, some other dividend stocks as well. And I don’t really get too exotic. Just mostly I stick with index funds.

Yasi: Yeah. The simple way, the reliable way.

Steve: It’s simple. And like I said, it works.

Yasi: Yeah.

Steve: It works to me. It works. to a lot of people too.

Yasi: Yeah, indeed, it does. It does for the audience, because I want to help the audience understand like a personal finance investing as well. So it’s glad to hear from your side, I have so many guests, they mentioned ETF .

As you mentioned, you spent 15 to 20 minutes per month on investing. So, really, average person doesn’t really need to spend hours analyzing the stock market. You basically just stick to a strategy and do it automatically.

Steve: Yeah. And the greatest thing about ETFs is you get low fees.

You don’t need a financial advisor to tell you what you need to be investing. It’s simple. You create your simple fund and you just go with it.

Yasi: Right. Yeah. And then how many years are you going to be financially independent based on your forecast?

Steve: I have forecasted about nine years from now.

If we go into a massive bull market, like we are experiencing right now, it could be shorter, but I I’m being conservative. And so I would say nine years.

Yasi: And then how old are you this year?

Steve: I am 34. So I’ll be about 43 when I hit financial independence.

Yasi: And what’s the retirement age in Taiwan?

Steve: I think it’s 60 years old. So I’m going to be a little bit sooner.

Yasi: 17 years, at least 17 years earlier than that. And imagine if you’re working in the US, I guess it’s 65 or 67

Steve: I think it’s 67 right now. Probably for my age group, it may be longer. I know my father, he is 67 going to be 68 very soon. And about 67 was his retirement age.

He’s not retired. He’s still working. He likes it.

Yasi: All right. Thank you so much for being here, Steve.

Steve: Oh, you’re welcome. Thank you for having me on the show. I’m glad he invited me on.

Yasi: And lastly, if the audience like where you’re talking about the lecture, follow your journey would you tell them where they can find your internet?

Steve: That’s great. They can find me at my website which is the frugalexpat.com or they can find me on Twitter. My Twitter handle is the frugal expat with the number one. And those are the two great places you can find me. And I’m welcome to chat with you via DM or on my contact page on my website.

Yasi: Great. So all the information will be in the show notes. Thank you so much, Steve. And nice to have you here.

Steve: All right. Thank you very much. Thank you for having me, Yasi.