On his blog, ThinkSaveRetire, Steve Adcock admits that he wasn’t always frugal. Like most people his age, he wanted to live “the American dream – own a big house in a suburb, drive fast cars and buy expensive things.

While he earned a decent income as an IT expert, Steve only stashed away the bare minimum in a savings account and spent the rest.

2016 marked a new chapter for Steve and Courtney (his wife). They both decided to quit their corporate jobs to join the FIRE movement.

Steve told CNBC Make It that they embarked on early retirement a year after getting married. They realized that they could pool their incomes into their savings instead of financing their lavish lifestyle and continue working for the rest of their lives.

In 2017, they sold their homes in Tucson, Arizona and started following a new kind of American Dream: early retirement. The couple started travelling around the country in an Airstream trailer with their two dogs.

By 2018, Adcocks had achieved financial independence. They became full-time travellers and self-made millionaires running a YouTube channel chronicling their adventures.

They have since relocated to a solar-powered home off-the-grid in Arizona.

Steve shared the 5 money moves they followed to pay down debt, save and invest.


1. Calculating their projected retirement expenses

Figuring out how much they thought they needed in retirement was the first step Steve and Courtney took.

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To estimate how large their portfolio needed to be to last them through their retirement, Steve and Courtney used the 4 percent rule. Fundamentally, this rule states that you can securely withdraw 4 percent from your retirement savings account every year.

The Adcocks chose to spend 3 percent of their net worth every year for an extra financial safety net.


2. Creating a budget that works for them

The Adcocks got serious about tracking their expenses and cutting their spending once they had a number to work with.

They closely inspected their bank and credit card statements and did a lot of personal inventory to fully understand every expense.

Since they already knew what they made and exactly what they spent, this helped them pinpoint where they could cut back.


3. Downsizing

After cutting on unnecessary expenses, the Adcocks started focusing on big-ticket items.

By reading the book “The Millionaire Next Door,” Steve started to understand why real millionaires live below their means and tuck away more money rather than spending it.

The couple sold their massive house with a pool, cars and most of their possessions and bought an Airstream.

They paid for the trailer in cash, which meant no mortgage or property taxes.

They opted for smaller cuts, too.

They cut back on stuff they didn’t think was essential, like ditching cable TV and dining out regularly, which was Steve’s biggest vice.

They discussed every purchase. The Adcocks now spend in the neighbourhood of 37,200-43,400CAD a year, with the biggest expenses being fuel and healthcare, which costs 310 CAD per person every month.


4. Saving 70 percent of their take-home income

The Adcocks were able to put away 70 percent of their $200,000+ annual income thanks to downsizing.

The couple entirely banked on Courtney’s income and lived off approximately 50 percent of Steve’s salary.

According to Steve, their success was a result of learning to spend less instead of making more.

When it comes to money, Steve always likes to take the hands-off approach whenever possible.

Steve and Courtney automated their savings through payroll. For nearly 14 years on the job, the couple never had to lift a finger.


5. Putting their cash to work

According to Steve, while saving is a good start, it does not get you rich. Investing that money is what makes you wealthy.

Wealth grows when you put your money to work for you, buy assets ( like a piece of property or a share of stock) or even a business investment that appreciates over time.

They started with just over 1 million CAD and years later, thanks in part to the power of investing, they grew their savings.

Because they were young, they took a conservative approach to their investments. Nearly a quarter of their investments are in a shorter-term Vanguard brokerage account that they set up and funded when they both worked.

They kept the rest of their money in a high yield savings account, which also acts as their emergency fund.


How They Dealt With COVID-19

Steve and Courtney have survived on their investment dividends and capital gains in the market for the past few years. That is until March 2020, when COVID-19 sent the markets into a tailspin.

Their net worth dropped 248,000 CAD. They dipped into their emergency fund, which has enough money to last them 3 years.

In response to the coronavirus pandemic, the Adcocks tweaked their budget and investment strategy.

They are now spending a lot less cash by getting rid of their discretionary spending and plan on sticking to this lower budget until things change for the better.

Investment-wise, the couple is now automatically reinvesting all of their dividends into buying more stocks through their online broker.

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