My first year out of college I lived out of my car. Then I moved to Baltimore, MD making a little over $35K my first year. I lived in a basement of a small row house I rented with two other guys. I parked my car and made a deal with myself: if I can get by without a car for 30 days I will sell my car. I figured making the leap from 30 days to 365 wouldn’t be that difficult. All that to say, the budget was tight.

I decided to treat my budget like a business and looked for ways to cut my operating expenses down. So I bought a bike from the local bike shop, sold my car, and began cycling everywhere: work, jiu-jitsu practice, grocery store, etc. along with some other money saving tactics.

As I biked to get my groceries today, 5 years later, I wondered to myself how much this bike purchase saved me, so I ran some numbers:

Yes, there were days I got rained on. Yes, every day when I would go into the office I would have a ton of stuff to carry since I needed a change of clothes with me, plus lunch, plus a water bottle, etc. but the reward is for a short term “sacrifice” (which I don’t think biking actually is) is tremendous. That type of savings can cover loan payments for a recent graduate, a down payment on a home, or grow to $40K in 10 years by just investing it in low-cost index funds.

Most importantly, monitoring your operating expenses and making intentional cuts (that don’t need to necessarily be as dramatic as selling your car) helps to maintain your freedom and prevent lifestyle creep, all of which compound over time.