Reader Case Study: Salud, Dinero, Amor!

Caroline and her husband Rodrigo are living a rent-free life as house-sitters in the Southwestern United States. However, Rodrigo is from Argentina and the couple would love to live closer to his family–and perhaps run a hostel or bed and breakfast. Come offer your advice to help them along their journey!

Case Studies are financial (and life) dilemmas that a reader of Frugalwoods sends to me requesting that Frugalwoods nation weigh in. Then, Frugalwoods nation (that’s you!), reads through their situation and provides advice, encouragement, insight, and feedback in the comments section. For an example, check out last month’s case study.

Case Studies are updated by participants (at the end of the post) several months after the Case is featured. You all requested an easier way to track Case Study updates and I have heard your pleas :)! I’ve created this page, which lists and links to all of the updated Case Studies.

I probably don’t need to say the following because you all are the kindest, most polite commenters on the internet, but, please note that Frugalwoods is a judgement-free zone where we endeavor to help one another, not to condemn.

And a disclaimer that I am not a trained financial professional and I encourage people not to make serious financial decisions based solely on what one person on the internet advises. I encourage everyone to do their own research to determine the best course of action for their finances.

Come Hang Out With Me In NYC!

Ok this is not at all related, but I am SO EXCITED to share that I’ll be speaking at The Financial Gym (134 W. 25th St., New York, NY) on Thursday, May 2nd from 6-8pm. The event is FREE and, naturally, boxed wine + snacks will be served. Space is limited and so you need to RSVP here in order to reserve your spot.

Shannon McLay (Founder and CEO of The Financial Gym, friend of mine, all-around excellent person) and I will discuss financial independence, other money-related topics, and likely quite a few topics that aren’t related to money at all… Then I’ll do a Q&A! Did I mention there’ll be wine?! I hope to see you there!!

If you can’t make the event, you can watch via The Financial Gym’s Facebook LIVE starting at 6:30pm on May 2nd. The Financial Gym is a personal financial services company that takes a fitness-inspired approach to their clients’ finances. By working one-on-one with a Certified Financial Trainer, each client learns to make smarter money decisions.

April is financial literacy month and The Financial Gym is hosting FREE educational events every single night this month. If you’re interested in working with a trainer at the Gym, Frugalwoods readers can sign-up for a free introductory phone call here and save 20% on a Gym membership.

With that I’ll let Caroline, this month’s Case Study subject, take it from here!

Caroline’s Story

Hi Frugalwoods! I’m Caroline, I’m 28 years old, and in December I married my 27-year-old husband Rodrigo, who is from Argentina. We have a long and romantic history of meeting in Mexico and him crossing four borders to be with me… but that’s a different story. Right now, we need to work on our finances!

Caroline & Rodrigo

I titled this “Salud, dinero, amor” because in many Spanish speaking countries, when you sneeze you are “blessed” with salud for the first sneeze, dinero for the second, and amor if you sneeze three times. The idea is you get “health,” “money,” and “love.” Well, I feel blessed that I have my health and my love, but my wealth is an area I need to work on! Let me fill you in…

For many years, I had the mentality of working extremely hard for a short period of time, and then spending ALL of my money on traveling. I’ve worked as a waitress in countless restaurants, taught skiing, been a raft guide, a wilderness therapy guide, worked on organic farms, in bike shops, at crepe stands, hostels in the middle of the jungle… you name it, there’s a good chance I did it.

It was SUPER fun to have all of these experiences, but right now I feel a bit panicked because I have very little money saved up. Two and a half years ago I bought a one-way ticket to Central America with the goal of learning Spanish. That I did, and along the way I met Rodrigo. We moved to the US in the summer of 2017, and got married last year.

Caroline & Rodrigo’s Rent-Free Lifestyle

We currently live in a small town in the Southwest, where we have a huge tourist influx in the spring and the fall. Property values have shot up because many people buy second homes here, and most of the jobs here are low-paying and seasonal. However, we don’t pay rent–we’re house-sitters! We miraculously managed to find house-sitting gigs when we lived in Nicaragua and here in the US, and so we haven’t paid rent in two years! We’ve also lived out of our van for some chunks of time, but that was pretty challenging. I am very grateful for our house-sitting situation, but I don’t want it to be our forever situation. For now this gig is indefinite, assuming the owner doesn’t experience a huge lifestyle change. The owner doesn’t live in our town and for the foreseeable future we have the security of living here rent-free.

Caroline & Rodrigo’s Wedding

Caroline & Rodrigo’s wedding

I am really proud that we spent just $1,300 on our wedding in December. This included my dress, all the food, the marriage license, the officiant, decorations, etc…

We scaled it back from the original plan of over 100 guests and a giant Argentinian asado to an intimate affair, with only eight people in attendance.

It was the best decision and I am so happy we didn’t financially overextend ourselves. We had a fantastic time and it was a beautiful outdoor wedding!

Caroline’s Job

I spent several years working seasonal jobs in our tourist town, but have finally found a year-round position as a social worker at a small non-profit. We primarily serve Spanish-speaking clients and I love being able to speak Spanish every day. Unfortunately, this job doesn’t pay a lot and there isn’t much room for growth or a higher salary.

However, for now I’m stoked to be here and am learning new skills every day! I also have the opportunity to become a certified medical interpreter, for free, while I work here. I’m a few days away from completing a year at this job, which is the longest I’ve stayed at a job since… ever? It feels great to reach this milestone and to realize that I do have the ability to buckle down and work a more traditional job. However, I don’t see myself staying in this job forever.

The Green Elephant in the Room

We recently filed the paperwork to adjust Rodrigo’s status, but he currently doesn’t have permission to work in the US. The application for his green card cost over $2,000, so we have our fingers and toes crossed that everything goes quickly and he gets his work permission in the next few months! However, there’s no guaranteed timeline for this process. So, for now, we’re living on my income.

Rodrigo keeps himself busy by volunteering as a Spanish teacher, serving as a mentor, keeping the house in order, and working on projects. He is very talented in both woodworking and mechanics, and is thinking he’d like to work in one of those fields once he is legally able to. In his home country, Rodrigo studied and worked in real estate. He isn’t interested in pursuing this in the US, however. He has worked as a manager at hostels and restaurants, a guide for adventure tourism, and as a tennis coach. He is athletic, great with people, a wonderful teacher, and a quick thinker. I’m excited to see what direction he ends up going in career-wise!

Differing Financial Viewpoints

Caroline biking

While I adore my husband, we have some very big differences in how we view finances. Argentina has been in an economic crisis for most of Rodrigo’s life, and as a result, he doesn’t have much faith in financial institutions. For him, cash is king.

Although I understand where he’s coming from, I feel like time is passing quickly and we need to start saving more. I need help from you all however, because I don’t feel like I know what to do! I read Mrs. Frugalwoods’ book, which led me to the blog, and both have helped me begin looking critically at our finances.

The Importance Of Healthy Living

I’ve suffered from migraines for about 15 years, and recently started seeing a naturopath. Since I’ve been taking her tinctures and avoiding gluten, my migraines have almost entirely disappeared! This is an expense I am NOT willing to cut, because it has improved my quality of life dramatically. Because I am not a high earner and my husband is not working, my health insurance is only $6.54 per month, and my prescriptions are about $20 every 3 months. I am infinitely grateful for this!

Last year I asked my employer to sponsor a wellness program for my co-workers and me, and our board approved it, giving us $40 a month to spend at the gym/on fitness classes. I also do a work-trade at my Crossfit gym, thereby saving $85 a month, or $1,020 per year.

What Caroline and Rodrigo Spend Money On

  1. Outdoor activities. We’re both outdoor junkies and love to go snowboarding, mountain biking, hot-springing, and hiking. A lot of these activities are free, but some of them (snowboarding, for example) can be quite expensive.
  2. Travel. Rodrigo’s family lives in South America and we try to visit them when possible. We also love to explore and have been to eight different countries together. Our last visit was to Argentina and we want to get back there again as soon as possible.
  3. Food. We go dumpster diving and I can sometimes score food donations from my work, but we still end up spending a lot of money on food. We cook from scratch at home–homemade hummus, crockpot dried beans, baked goods, etc–but we still spend A LOT on food. I am gluten-free, so I occasionally splurge on GF options for myself. We also may have a bit of a late night burrito problem…

Where Caroline and Rodrigo Want To Be In 10 Years

  • Careers: Perhaps owning and working at a hostel in a Central or South American country.
    • That’s the one dream we generally come back to, probably because we’re such nomads at heart and love interacting with people. We’re both bilingual and gregarious, so this feels like a great fit for us.
    • I also would like to be teaching Pilates and maybe Crossfit to Spanish speakers.
  • Finances: Although I’m not focused on being super rich, I’ve spent enough years depleting my savings and then feeling panicked that I’m no longer interested in living that way.
    • I would like to convince Rodrigo that putting our money into wise investments could pay off in the future.
    • I’d like to be able to travel without being stressed about money, and not feel entirely terrified thinking about someday retiring.
    • I would love to be able to own a house, most likely in a different country, where the pace of life is slower and the cost of buying is cheaper!
  • Lifestyle: We’re both very active and love moving our bodies.
    • Living near nature is a requirement and I hope we’re still surfing, snowboarding, and mountain biking!
    • I would love to live closer to Rodrigo’s family; they’re extremely close-knit and I know he misses them a lot.
    • For now, I don’t see us moving to live near my family in Indiana–they are healthy and it’s much easier for them to travel than Rodrigo’s family.
    • The economic crisis in Argentina makes it pretty much impossible for Rodrigo’s family to travel for leisure. Rodrigo has three siblings and a HUGE family in Argentina, so I don’t envision us needing to care for his parents in the future, but it’s impossible to say that with certainty.
    • Regarding having kids: for now, we’re not interested. We like our independence and freedom!

Caroline and Rodrigo’s Finances

Net Income

Item Amount Notes
Caroline’s monthly take-home pay $1,430 After taxes and monthly $400 pre-tax SIMPLE IRA contribution
Annual total: $17,160


Item Amount Notes
Groceries $400 Even with dumpster diving and getting donated food we’re spending a lot here.
Gasoline for car $200 I usually bike to work. We only really spend money on gas when we travel
Traveling $200 We usually couchsurf, camp, or stay with friends/family when we travel. However, this is still a huge chunk of change.
Eating out $150 Fluctuates a bit, but we generally eat out for special occasions (birthdays, anniversaries) and when we’re traveling
Snowboarding/outdoor activities $150 Again, an average. I know we need to cut down on this.
Miscellaneous Trainings/Classes $50 I went to Mexico for intensive Spanish classes, and have signed up for a Pilates training. More trainings and classes are likely to come in the future.
Gifts $40 Christmas and birthday presents for immediate family.
Rodrigo’s cell phone $40 Through Verizon
Car Insurance $30 We pay for 6 months at a time
Alternative Medicine $20 Vitamins, tinctures, consultations. Not willing to eliminate this.
Health insurance and prescriptions $15 We have really low cost insurance right now
Household supplies $15 Toothpaste, toilet paper, etc.
Spotify $10 We split this cost and enjoy it
Clothes $10 We only buy clothes when we REALLY need them, and usually shop second hand.
Caroline’s cell phone $9 I’m still on the family plan and I pay my dad $100 per year.
Haircuts $5 I go twice a year and it is affordable. I really enjoy this “pampering.” Rodrigo cuts his hair at home.
Rent (including all utilities) $0 House-sitting for the win!
Total monthly spending: $1,344
Total annual spending: $16,128 No wonder we can’t save anything!


Item Amount Notes
Caroline’s Saving Account $7,213 This is our emergency fund. In the past, I would deplete my savings in order to travel. I’m now trying to think long-term about this money.
Rodrigo’s Cash $5,000 Locked away; also an emergency fund of sorts.
Caroline’s SIMPLE IRA (through employer) $2,180 I’m putting $400/month (pre-tax) into this account because it helps keep my health insurance low and my employer matches up to 3%. I just started it last year.
Savings Bonds $1,600 My grandparents bought these for me. I am not sure what to do with them. They have all matured.
Total: $15,993


Vehicle Valued At Notes
2004 Nissan Quest Minivan $2,000 A hand-me-down from my mom, this van has been my trusty companion for many years. I’m not sure how much life is left in it though…

Debt: $0

Life Insurance

I have whole life-adjustable life insurance. I honestly don’t understand it very well, and my dad is paying the $500 yearly premium as a Christmas present. He says it has a good return rate and I can borrow from it without penalty in the future. Thoughts?

Caroline’s Questions for You:

  1. How do I convince my husband to believe in financial institutions? I don’t want to have to save all on my own, but at this point, I am because he simply will not. Once he’s earning money, I want to make sure we’re putting some of it away.
  2. How do we plan our finances when there’s a good chance we’ll be living in another country for a good chunk of the year once Rodrigo gets his green card? Ultimately I’d like to get my citizenship in Argentina as well. I want to make sure we don’t get slammed or penalized if we ever have to quickly switch over our savings for a quick move.
  3. How do I trim our spending? It seems OUTRAGEOUS how much we spend every month, and we’re not even paying rent! I can’t fathom getting by without that benefit, and it makes me terrified about ever moving because I don’t see how we could survive if we were paying that too!
  4. What are the most important things I/we need to do NOW in order to feel more stable in our finances?
  5. Can anyone offer advice about affordable, effective birth control options? We currently use condoms as they seem to be the least expensive, but I’m curious to hear what other couples find cost effective.

Mrs. Frugalwoods’ Recommendations

Caroline & Rodrigo

Wow. Caroline and Rodrigo are doing an AMAZING job. I’m shocked that Caroline doesn’t think so!!! Their income is just barely above the government established poverty line for a household of two people and they are making it work quite well! Their free rent and utilities are major contributing factors to their success and I commend them for finding such an excellent house-sitting gig.

The fact that they don’t have debt, do have an emergency fund AND have retirement savings is phenomenal. I’ve seen many, many folks with much higher incomes in much more precarious financial positions. Congrats, Caroline and Rodrigo! Stop berating yourselves and celebrate how very well you’re doing!!!

The Obvious: Income Needs To Increase

While there are some things Caroline and Rodrigo can do to save more, the real issue for them is their low income. In the absence of earning more money, there’s not a whole lot they can do to change their financial situation. I’ll address all of this in greater detail, but I want to start off with a recognition that without more money coming in, there’s not much to work with terms of saving and investing. That being said, they’re doing an incredible job of saving and investing with what they do have!

Now let’s tackle Caroline’s questions.

Question #1: How do I convince my husband to believe in financial institutions?

Caroline finds herself in a challenging and unique situation with Rodrigo’s experience of the Argentinian economy. I can understand where Rodrigo’s fears stem from since Argentina has been on a roller coaster of inflation and currency depreciation. His concerns about the Argentinian economy are well-founded and I wouldn’t advise Caroline and Rodrigo to invest in Argentinian securities. That being said, since Caroline is a US citizen, the couple has access to arguably the best (or some of the best) investment vehicles in the world.

Inflation: Argentina’s Main Problem

I am (obviously) not an economics expert or an Argentinian politics expert, but it’s my understand that what has caused the most harm to average Argentinians boils down primarily to inflation. Hence, if Rodrigo is concerned about the possibility of inflation reducing his buying power, then the worst thing to do is keep money in cash because inflation decreases the value of cash.

According to the US Department of Labor:

Inflation can be defined as the overall general upward price movement of goods and services in an economy.

If inflation goes up 10%, for example, then the value of your cash goes down by 10%. Some people would argue that if you fear inflation you should invest in hard goods, such as gold. But in most cases, this isn’t a good idea. The way I like to think about inflation is that by investing in the stock market or real estate, you’re investing in a hard good. When you invest in the US stock market, you’re buying a piece of a company’s future profits. When you buy real estate, you’re buying future rental profits.

Caroline & Rodrigo

When inflation happens, then in theory, the earnings from those companies and/or those rental properties will also increase, which means you’re hedging against inflation. As inflation goes up, your investments rise commensurately (unlike cash, which decreases in value).

The trick is that you need to be sufficiently diversified so that a downturn doesn’t also cause all of your hard goods to deflate in value. This means you want to invest in a broad range of things, which you can–in my opinion–achieve through a total market index fund in the US. A total market index fund (aka a low-fee index fund) is a well diversified asset that should keep up with inflation in most, though not all, circumstances.

If you fear inflation, then it’s actually better to keep your money invested in a well-diversified portfolio of assets that stands to keep up with inflation.

In addition to a diversified asset pool (such as a total market index fund), holding fixed-rate debt, such as a mortgage, is another way to hedge against inflation. Inflation is when money becomes less valuable and a mortgage is denominated in the dollars you originally paid for the house and so, over time, as inflation increases (which generally happens), the money you’re using to pay off your mortgage is “cheaper.” I’m not saying that Caroline and Rodrigo should rush out and buy a house, but this is something for them to keep in mind for the future.

Why I Trust US Financial Institutions: FDIC Insurance

Most banks in the US are backed by FDIC insurance. According to the FDIC’s helpful website FAQs section:

The FDIC (Federal Deposit Insurance Corporation) is an independent agency of the United States government that protects you against the loss of your insured deposits if an FDIC-insured bank or savings association fails. FDIC insurance is backed by the full faith and credit of the United States government.

Hooray! What this means is that if an FDIC-insured bank fails, the government will pay you your money (up to $250K per institution). Hence, even if an individual financial institution collapses, within the US you’re protected by the backstop of the US government. And if the US government collapses, it’s likely nowhere in the world will be safe from the ensuing apocalyptic doom since financial markets are all interdependent and interwoven.

At that point, cash will be worthless, investments will be worthless, savings accounts will be worthless, and it won’t matter anyway because there won’t be anything left to buy. Not to sound overly apocalyptic, but if you take this to its logical conclusion, it’s unlikely most of us would survive this sort of cataclysm anyway. Except perhaps for those folks with basements full of guns, ammunition, and antibiotics (which is not me, for the record). I’m sort of joking, but I’m also not really joking. The point is that FDIC-insured banks in the US aren’t going to experience a run on the banks that prevent people from getting their money.

The Problem With Cash

In my opinion, there are several problems with keeping your assets in actual, physical cash.

1) Cash can be stolen or catch on fire.

Since cash is a tangible, material object, it’s a lot easier for it to be stolen, lost, or otherwise meet an untimely demise, such as in a house fire. I imagine Rodrigo has his cash in a locked, fire-proof box, but I’m just pointing out the obvious danger of relying on a physical possession. Statistically, it’s more likely that your house will be robbed and your money stolen than the FDIC not honoring their obligations.

2) Opportunity costs.

Caroline & Rodrigo

There are opportunity costs to keeping money in cash form. Namely, you’re missing out on the potential investment returns you’d enjoy if your money was instead invested in the stock market or even just an interest-generating savings account. This is where understanding the value of compound interest is key.

Caroline already knows this, which is why she’s asking the question. I encourage her to talk with Rodrigo about compounding interest and her concerns for their future if they don’t invest their money. This post might offer some helpful talking points.

3) Cash is not a good hedge against inflation.

As discussed above, inflation decreases the value of your cash.

Compromise On A Middle Ground: Set A Limit For Rodrigo’s Cash

While Caroline and I are against keeping money in cash, I intuit it’ll be difficult–if not impossible–to fully convince someone who has lived through repeated economic instability that financial institutions will protect his wealth. If Rodrigo is set on keeping money in cash form, then perhaps he and Caroline can carve out a compromise. They could identify the dollar amount that Rodrigo feels he needs to keep in cash and agree that everything above that dollar amount needs to be either invested or, at the very least, put into an interest-bearing savings account at a bank.

Rodrigo already has a healthy amount in cash ($5,000) and I encourage Caroline to discuss with him what dollar amount he feels is sufficient for their cash reserves. This could be the best way to address his concerns about financial institutions and Caroline’s concerns about the losses they’re experiencing by not investing their money. While Rodrigo has a legitimate fear at stake here, so does Caroline.

Question #2: How do we plan our finances when there’s a good chance we’ll be living in another country for a good chunk of the year once Rodrigo gets his green card? Ultimately I’d like to get my citizenship in Argentina as well.

As we all know, I am not an ex-pat expert, but fortunately, a lot of Frugalwoods readers are, so please chime in! Additionally, last month’s Case Study from a French/American couple offered quite a bit of universally applicable advice for multi-nationality families and couples.

From a financial perspective, I encourage Caroline to utilize her US citizenship to keep her money in US financial institutions, which again, are backed by the FDIC. From my admittedly limited understanding, I believe it will be easier for Caroline to open up such accounts while they’re still living in the US.

Longterm Goal Of Owning A Bed-and-Breakfast?

I want to deviate from Caroline’s questions to address what she identifies as one of their longterm goals: moving to South America and starting a hostel/bed-and-breakfast. I agree with her that it sounds like she and Rodrigo would be wonderful at this. They both have experience in the hospitality field, they’re both bi-lingual, and they love people. Sounds ideal! I think that at this point, Caroline and Rodrigo should sit down and determine if this is really and truly their ultimate goal.

Soul Searching

Only Caroline and Rodrigo can determine whether or not this is their ultimate dream, but here are a few considerations to ponder:

  • Caroline & Rodrigo

    Caroline mentioned repeatedly that they are nomads and love to travel. I worry that owning a business could clip their wings and tie them down to one place. When starting a business, you can’t really leave it alone for very long and you also likely don’t have the funds to travel. In the future, when the business is humming along, I can imagine they’d have more time and money for travel, but being business owners entails a full-time allocation of your most precious resources: time and money.

  • They’d have to stick with it for a long time in order to break even and to eventually generate a profit. Similar to my first concern, Caroline noted that she’s been at her job for a year and that it’s the longest she’s ever worked somewhere. Starting a business is a lengthy affair and so it’ll be important for them to consider if they truly want to do the same work in the same place for many years.
  • Pursuant to the above discussion of Argentina’s economy, I don’t know if it’s a wise financial decision to invest so heavily in a property/business in Argentina. On the flip side, if the business primarily caters to foreign tourists, then it might be more durable than other Argentinian-based enterprises. This is really outside my scope of knowledge, but it’s something for Caroline and Rodrigo to research.
  • Would Caroline be allowed to work in Argentina? She mentioned getting her Argentinian citizenship, so this may be a moot point, but just figured I’d bring it up.

If Yes:

If Caroline and Rodrigo decide that owning a hostel/bed-and-breakfast in Argentina is their ultimate dream, then I think we can outline a fairly straightforward financial plan for them:

  • Figure out how to earn more money in order to save up enough to have the capital to start a business. While they can stand to trim around the edges of their spending a teeny tiny bit, it’s really about earning more.
  • I recommend they work in the US, save their money, and use the power of US currency to buy a property/business in Argentina.
  • Once they are earning more money, it likely won’t make sense to invest in the stock market because they’ll be utilizing that money to purchase a property in Argentina. Investing in the stock market is a longterm proposition and it usually doesn’t make sense to invest money you envision needing to use in the next, oh, five years or so.
  • Given that, Caroline should continue saving for retirement through her employer-sponsored account and the rest of their money can go into a high interest bearing (FDIC-insured) savings account.

If No:

If Caroline and Rodrigo decide that owning a hostel/bed-and-breakfast in Argentina is NOT their ultimate dream, then their financial plan is a bit more flexible and open to interpretation.

I think these three steps remain the same no matter what they decide:

  • Earn more money
  • Work in the US, save in the US, and use the power of US currency to buy a property in South America/travel/etc
  • Continue saving into Caroline’s employer-sponsored retirement account

After that, their options are quite open and quite dependent on what they want to do with their lives. Perhaps pursuing location-independent work, where they likely wouldn’t make all that much money, but would have the ability to travel as much as they wanted. Or perhaps they’d be able to find a house-sitting gig here in the states for half of the year and down in Argentina for the other half of the year. Since they are amazingly adept at finding these arrangements, that could be an ideal way to fund a dual-country lifestyle. Caroline and Rodrigo have the ability to live on very little per year and so they might find that through location independent work, coupled with rent-free house-sitting, they have the flexibility to travel and live near both families at different times each year.

To help them think through these options, let’s do a review of where they are in the scheme of managing their money.

Asset Allocation and Money Management 101

Below are the basic money management steps I advise just about everyone to follow. I’ve made notes of how Caroline and Rodrigo are performing on each step and, spoiler alert, they’re crushing it.

  1. Track your expenses religiously. Know exactly what you’re spending every month. If you’re not tracking your spending, you can sign-up for the free service Personal Capital, which is what I use and recommend for expense tracking (affiliate link).
    • Caroline and Rodrigo are already doing this. Hooray!
  2. Caroline & Rodrigo’s wedding

    Pay off high interest debt. List all of your debts in a spreadsheet and sort by interest rate. Prioritize paying them off in order of highest interest rate first.

    • Caroline and Rodrigo don’t have any debt. Hooray!
  3. Build an emergency fund. An emergency fund should be kept in an easily-accessible bank account, such as a checking or savings account, NOT in investments, retirement funds, or cars/houses/expensive china. An emergency fund is money you can access immediately in an emergency. I recommend saving three to six months’ worth of expenses (meaning three to six months worth of what you spend every month, which is why it’s important to do #1: track your expenses).
    • Caroline and Rodrigo are actually overboard on savings in this area. They have a combined $12,213 in savings, which at their current rate of spending, would cover them for nine months.
  4. Contribute to retirement accounts. Especially if your employer matches your contributions, putting money into a 401k or 403b is a no-brainer. Here’s more on why: 401ks Are Your Friend: Demystifying Personal Finance Part 3.
    • Caroline is already doing this, but Rodrigo is not. Once Rodrigo is allowed to work in the US, he should begin saving for retirement as well.
  5. Start investing! Investing in the stock market is how you grow your wealth. Without this crucial step, you won’t reap the advantages of compounding interest and you’re unlikely to build your net worth in a meaningful way. I personally invest in low-fee total market index funds through the brokerage of Fidelity. Vanguard offers a similar product. You can do this yourself (it’s just like any other form of online banking) and there are more details here: For the Love of Frugal Hound, Manage Your Money Yourself! (by following The Simple Path to Wealth).
    • Caroline and Rodrigo aren’t doing this yet but, as I noted above, this is dependent on both Rodrigo’s comfort level with investing and whether or not they plan to purchase a property/business in the near term.
  6. Explore other options for investing in order to achieve diversification. After completing steps 1-5, you should continue investing in your low-fee index funds (and rebalancing them) on a regular basis (I recommend automating this process) and you can also start to look around for diversification options. This might include, for example, real estate. Mr. FW and I rent out our home in Cambridge, MA for a profit. Renting a property can be a fabulous financial decision and it can also be an absolutely abysmal one. It depends on many factors, including the rate of return you’d receive. For more on renting out properties, I recommend the site BiggerPockets, which discusses real estate investing.
    • Again, this’ll be dependent upon what Caroline and Rodrigo identify as their longterm goal and priority.
  7. Analyze your income. Concurrent with all of this should be an analysis of your net income (that means the dollar amount you bring home every month, minus taxes and any other withholdings). In some cases, the best route to financial stability will be to increase your income while also lowering your expenses. Income is the crucial second piece to this equation and, the more you make, the more you can save. That’s a solid math fact.
    • Caroline is keenly aware of this element.

Question #3: How do I trim our spending?

Caroline noted:

It seems OUTRAGEOUS how much we spend every month, and we’re not even paying rent! I can’t fathom getting by without that benefit, and it makes me terrified about ever moving because I don’t see how we could survive if we were paying that too!

First of all, I do not think their spending is outrageous. I think it’s pretty normal and pretty frugal at that. Caroline is correct that if they were paying rent and utilities, they’d be sunk. But, the good news is that they’re not! The other piece of good news is that Caroline and Rodrigo have proven their ability to live on one salary–and a small salary at that. Once Rodrigo is legally able to work and their income increases, they’ll be able to funnel his entire salary into savings. Woohoo!!!! That’ll accelerate their ability to move to Argentina and purchase a home/business/property IF that’s what they decide to do.

Caroline & Rodrigo

In every single Case Study, I like to point out that what you choose to save or not save is a very personal decision.

Cutting every last expense is NOT the right answer for everyone and I am NOT an advocate for making yourself miserable in the process of achieving financial stability. I AM an advocate for values-based, goal-oriented spending. I think it’s important to assess whether all of your expenses bring you fulfillment and a good return on your investment.

I think it’s also important to question if your rate of savings will help you to achieve your long-term goals. But what you spend on? That’s a very personal choice and one you have to make for yourself. My job is to point out areas where you might be able to save, but only you can decide if that level of savings is right for you. If you’re struggling with where to save more and how to map out a longterm financial plan, I encourage you to take my free 31-day Uber Frugal Month Challenge.

Ok, with that said, let’s take a look at potential savings for Caroline and Rodrigo:

  • Groceries + Eating Out = $550. This is not outrageous, but it is an area where they could save more. $400/month on groceries isn’t bad at all, but the $150/month on eating out might be an area to focus on for savings.
  • Gasoline for car + Traveling = $400. This seems like a lot since they’re not using the car for a daily commute. I’m wondering if there might be efficiencies to realize here. Primarily, I’m wondering if Caroline has considered getting a credit card to utilize for travel rewards points. Since she and Rodrigo are so responsible with their money, it seems like using a travel rewards card could yield a lot of bonuses for them. Here’s my full post on responsible credit card usage and here’s a list of travel rewards cards to compare (affiliate link).
  • Snowboarding + Outdoor Activities = $150. Again, not at all outrageous, but it is a discretionary expense. However, the whole point of managing your money well is having the ability to spend money on the things you love doing. So from that perspective, this expense might stay put.
  • Rodrigo’s Cell Phone = $40. Ok this is an easy one! Rodrigo should switch to an MVNO provider where his monthly bill should be in the range of $14-$20 per month. Popular MVNOs to research include: BOOM, Ting, Mint, and Republic Wireless.

As I noted above, there’s not all that much room in their budget to cut spending. The real area of emphasis for them should be on increasing their income.

Question #4: What are the most important things I/we need to do NOW in order to feel more stable in our finances?

Honestly, I think Caroline and Rodrigo are in about as good a position as possible given their single, low income. Other than trimming a tad on their expenses, the real focus should be on Rodrigo finding a good job once his paperwork comes through. The second goal should be identifying what they want to do longterm so that they can begin to save/invest their money appropriately.

Question #5: Can anyone offer advice about affordable, effective birth control options?

I love this question! It’s a great one for us to analyze and something I’m sure many frugal couples grapple with. Since Caroline noted that they have decent health insurance right now, that’s where I’d start with researching options. I suggest she and Rodrigo comb through her benefits to determine if any of the following are covered, or covered in part, by her insurance:

  • IUD: I am pretty sure that all insurances are required by law to cover IUDs in full. Caroline should check with her insurance, but I think she should be able to get an IUD for free.
    • I have a Mirena IUD and it’s my third. I had one prior to having kids, in between my two kids, and now after having children. I absolutely love it and it works really well for me.
  • Vasectomy: I realize this might be too drastic, but Caroline noted that they don’t want children and so this could be the easiest, cheapest longterm solution.
  • Oral contraceptives.

Depending on what her insurance offers, it’s possible any of the above could be free or very inexpensive. Caroline said they’re currently using condoms, which I have to imagine are more expensive than a semi-permanent option (such as an IUD, which is good for five years) or a permanent option (such as a vasectomy).

Summary Advice

  1. Take a deep breath and realize that they are in excellent financial shape and that they’ve proven their ability to live frugally.
  2. Prioritize finding a well-paid position for Rodrigo the minute his paperwork comes through.
  3. Have conversations about FDIC insurance, compound interest, and the value of saving in a savings account and investing in the US stock market. Identify a way to balance Rodrigo’s suspicion of financial institutions with Caroline’s fear of not investing.
  4. Determine what their longterm goal is.
  5. Whether or not the longterm goal is to move to Argentina, I suggest they work hard and save while still in the US in order to deploy their capital as they wish in the future. This is the time for them to build up a reserve of funds.
  6. Look into leveraging Caroline’s US citizenship to take advantage of some of the excellent investment vehicles available in the US, such as low-fee total market index funds.

Ok Frugalwoods nation, what advice would you give to Caroline? She and I will both reply to comments, so please feel free to ask any clarifying questions!

Would you like your own case study to appear here on Frugalwoods? Email me ( your brief story and we’ll talk.

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