Tenet 4. Spend less than you make
ssmythe1968
Posts: 2 Member
I'm intrigued on this one. This is essentially linked to the whole "duhhh" factor in healthy living and "put down the fork" food equivalent with money.
For over 5 years now (since the divorce), I've been working diligently on predictably improving cash flow, minimizing regular expenses, and living on significantly less than my take home pay.
I have a spreadsheet that essentially calculates every paycheck in, and every regular expense out for a 3 year period (I update the tail and graphing at the end of every year). The critical part of the design of the spreadsheet is that I forecast out 3 years, and see the impact of the decisions I'm making today on what I spend (or more often than not, don't spend) and what it does for the future. Forecasting positive cash flow (savings and checking accounts increasing rather than going negative) is a powerful motivator to finding those behaviors that borrow from the future.
Just like eating more than your body needs, spending more than you make has severe negative consequences.
I make it a game with myself to see just how little I can get my expenses too. Here's where I'm at now. I...
- pay cash (more correctly, debit card) for everything (so I can track stuff)
- don't have any credit cards
- don't have any debt
- don't have any storage units
- live in a much smaller place (with an attached garage)
- pay my car insurance 6 months at a time
- live within walking distance of work, grocery, and other key services
In order to get there during the 5 years, I...
- gave up cable TV (I watch Netflix streaming on my Apple TV, and a Roku for Amazon Prime Instant Videos)
- gave up my storage unit
- replaced all the 50/100/150-Watt 3-way incandescent bulbs with GE 47448 12/23/29-Watt CFL bulbs (this saves me over $100/month in electricity)
- turn off lights and electronics I'm not using (seems stupid, but really adds up)
- wash clothes after hours (when electricity is cheapest)
- have energy efficient refrigerator, washer, and dryer (gas)
- walk to work / ride bike to work instead of driving truck
- cook more at home instead of eating out
So now, my annual expenses (not including rent), are around $17,500. This leaves plenty of savings for buying a home, putting my son through college, and retirement.
This took quite a lot to get to over the years, but it really is amazing how little it really takes to live on. I know I could live on even less, but I'm super comfy where I'm at. :-D
How 'bout you?
For over 5 years now (since the divorce), I've been working diligently on predictably improving cash flow, minimizing regular expenses, and living on significantly less than my take home pay.
I have a spreadsheet that essentially calculates every paycheck in, and every regular expense out for a 3 year period (I update the tail and graphing at the end of every year). The critical part of the design of the spreadsheet is that I forecast out 3 years, and see the impact of the decisions I'm making today on what I spend (or more often than not, don't spend) and what it does for the future. Forecasting positive cash flow (savings and checking accounts increasing rather than going negative) is a powerful motivator to finding those behaviors that borrow from the future.
Just like eating more than your body needs, spending more than you make has severe negative consequences.
I make it a game with myself to see just how little I can get my expenses too. Here's where I'm at now. I...
- pay cash (more correctly, debit card) for everything (so I can track stuff)
- don't have any credit cards
- don't have any debt
- don't have any storage units
- live in a much smaller place (with an attached garage)
- pay my car insurance 6 months at a time
- live within walking distance of work, grocery, and other key services
In order to get there during the 5 years, I...
- gave up cable TV (I watch Netflix streaming on my Apple TV, and a Roku for Amazon Prime Instant Videos)
- gave up my storage unit
- replaced all the 50/100/150-Watt 3-way incandescent bulbs with GE 47448 12/23/29-Watt CFL bulbs (this saves me over $100/month in electricity)
- turn off lights and electronics I'm not using (seems stupid, but really adds up)
- wash clothes after hours (when electricity is cheapest)
- have energy efficient refrigerator, washer, and dryer (gas)
- walk to work / ride bike to work instead of driving truck
- cook more at home instead of eating out
So now, my annual expenses (not including rent), are around $17,500. This leaves plenty of savings for buying a home, putting my son through college, and retirement.
This took quite a lot to get to over the years, but it really is amazing how little it really takes to live on. I know I could live on even less, but I'm super comfy where I'm at. :-D
How 'bout you?
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Replies
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Well, this one I'm doing much better at compared to a few years ago. I had a nice little business for 10 years that went belly up in 2009 when the economy crashed. A number of key customers with large receivables went belly up. Had to close that business.
Now, I am doing something similar to what I was doing before but on a much smaller scale. We are living within our means and saving every month and I have monthly goals set for that. There is no steady paycheck, income changes month to month with a business. Our overhead is very low so it is very hard for us not to be in the positive every month and every month the business has been profitable since October of 2011 (we started in August 2011). An important part of that is tracking expenses and knowing where you are at and where you need to be, as you know- it seems you really watch your expenses closely and you look for ways to trim them. We use Quickbooks to track everything, so we have very detailed information on month to month profitability.
But I've found that after establishing a good system that watches expenses, sales, etc that finding ways to aggressively increase sales is the fastest way to wealth, not looking for ways to trim expenses. The problem before is that we had a high concentration of receivables with a few customers which we are not doing anymore, but it is one of the most common ways a business can get in trouble.
With my previous business though I was always thinking about the business. I was hard driving toward it and it had a very negative impact on my overall quality of life. I was not exercising enough, was not eating well, not sleeping well, and gaining weight little by little. I did not spend enough time with my family and friends. And even when I did I was mostly preoccupied and was not relaxed. In a way, the failure of my last business was a blessing in disguise. I think I was headed toward a lot of serious health problems if I had continued the way I had been before.
Now I have a much better relationship with all my friends and family and it makes all the difference in the world. I'm not as busy as I was then either, but that is a choice I am making. I am so much happier than before it is hard to really make any comparisons. Sure the growth of the business is not what it could be now but it is growing and it is sustainable in the long term.
Now I am working on my weight loss. But with the changes mentioned above I've made in my life I am much better positioned for that weight loss to be a lasting one. I was very happy to find MFP also and it has been very helpful in several important ways that I’ve discussed before:
1. logging of food and exercise and having a daily goal.
2. getting to know people in the MFP community and the encouragement and challenge it brings.
3. lots of little things about MFP that add up to an experience that makes losing weight using MFP a very positive experience for me. For example, I don’t feel the pressure or anger with my myself that I did on other diet plans when I went off plan. In other words, I don’t really “feel” like I’m on a diet even now.
Those factors are big deals. I am making lasting changes. I still have things that I need to work on for sure.
Uh, seems like I got off topic… a lot. Sorry about that. Answering your question Smythe, “how about you?”. I do spend less than I make. And, I am hoping to slowly grow how much I make though my business while continuing to watch how much I spend.
This post actually has a lot to do with tenets 6 and 7- Caring, Connecting and Committing and how I have move toward doing those thing much more than ever before. I am really thankful now for where I am at and enjoying life like never before. I thank you and all my MFP pals for being a part of that growth.0 -
ssmythe1968:
How easy was it for you to watch the Netflix streaming? I'm not tech savvy and have wanted to do this for awhile but would have to know now myself PLUS (and here's the big hurdle) get The Hubs to buy in also and he's worse with computers than I am. LOL
- walk to work / ride bike to work instead of driving truck ---- this one has to really be helping you get or stay in shape! Good for you. My commute is 27 miles one way in four seasons. Not realistic to give up the car BUT I did get one that avg 35 mpg instead of 22!!!
- cook more at home instead of eating out ---- glad to say that I finally accomplished this during the summer. I'm now fully in the organized place to shop, clean, and prep my own food now. Not only is it cheaper, it tastes soooooo much better. I've become a food snob now!!! Company arrives on Saturday and we've already told them that we are only eating out two times while they are here. Rest of the time, home prepped and cooked. They feel the same way!
-Debra0
