Part 17 in the series on how to be successfully self-employed
You’re on a mission to get to the place where you can quit your job and generate your own income. One of the strategies that will get you there is to live on less.
By “living on less,” I’m not suggesting a Thoreau-like austerity, in which you scrimp to the point where you’ve sucked all the joy out of your life. What I’m suggesting is an “attitude adjustment.” Kind of scary, isn’t it, to think that your whole life can be affected by a simple shift in attitude?
The road to living on less has been well paved by people who have become part of the “voluntary simplicity movement that has grown in the past couple of decades. Generally speaking, the concept reflects a desire to get rid of the clutter – figuratively and literally. Living simply will help you get your financial house in order and also help you establish habits that will enable you to be successful after you quit your job.
When you think of living on less, think that you’re creating a lifestyle that doesn’t depend on spending to make you happy. You know what your personal needs are, what it will take to nurture yourself and those you love. You don’t buy things that will further clutter your life and plunge you needlessly into debt. You’ll find you can live a lot better on a whole lot less!
To start attacking the “stuff” that may be cluttering your life, don’t bring any material thing into your home unless you absolutely love it and want to keep it for the rest of your life or until it wears out. The purchasing, maintaining, insuring, storing and eventually disposing of “stuff” can take up energy you’d be better off applying elsewhere.
The amount of money you spend on something does not necessarily equal the amount of fun and pleasure you get out of it. Try writing down 25 things you like to do that cost little or no money and refer to your list often.
Automobile
Buy a used car instead of a new one.
The average person can save $80 today on auto insurance, another big-ticket item for most of us, with a simple phone call. Just raise your deductible to $500 or $1,000. Chances are very good that the money you save in premiums will more than make up for the higher deductible by the time there is a claim. Consider dropping collision and comprehensive coverage on a car that’s more than five years old or worth less than $1,500, and save 30% to 50% on your premium. Examine your policy closely for other items that will chop your costs, such as discounts for safety features (e.g., air bags, anti-lock brakes), and medical coverage that duplicates coverage in your health insurance.
Shopping
If you buy something “on sale” that you don’t really need, you don’t save money, but spend money you didn’t have to. If you didn’t need it, it wasn’t a bargain.
When you’re catalog shopping, beware of purchasing from the glossy catalogs as they have to charge a lot to make up for the cost of printing the catalogs. Check “cheapskate” lists on the Internet for the best mail-order sources.
Share the cost of tools and equipment you seldom use (fruit picker, canning equipment, ladders) with a neighbor, friend or relative. Or look for tools at garage sales.
Shop after the holidays when you can save 50 to 75 percent off many seasonal foods, gifts and decorations.
And, by all means, stay out of the malls! You will get better prices at the big warehouse clubs such as Costco or Sam’s Club.
Food
Buying food takes one of the biggest bites out of our budgets, but opens some of the biggest opportunities for economizing. Some ideas:
A healthier diet is often a cheaper diet. Potatoes, grains, fresh local fruits and vegetables cost less than expensive meats and snack foods that add to your waistline and drive up your cholesterol count.
Shop for food no more than once a week. Check store ads and coupons for the week’s best deal before you go.
Buy food in bulk, but transfer it to smaller containers when you get it home so you are not tempted to consume larger quantities than you normally would.
When you find a good deal, stock up and store the food in a freezer. Chop and freeze bags of celery, onions and carrots when on sale or after you harvest them from your garden, and you’ll save money as well as meal preparation time.
Serve stir-fry meals, casseroles and soups and avoid serving large meat portions.
Grow your own food. If you do not have gardening space, check for a community gardening program in your area.
Clothing
The average American family of four spends an estimated 10% of its annual income on clothing. Using principles already discussed (buy what you need, buy secondhand, stock up on deals, for example), you can cut your clothing expenditures in half.
Don’t spend your money on designer clothing labels.
Men, when you buy a suit, purchase two pairs of pants since the pants wear out years before the jackets.
Furniture
Buy repossessed furniture. How do you find repossessed furniture? Check out scratch and dent rooms or clearance centers of traditional furniture stores. Also, check with jobbers who sell damaged furniture they buy from trucking companies.
Utilities
Electricity and water. Installing compact florescent bulbs in place of traditional bulbs can reduce your lighting costs significantly. Install computerized thermostats to control temperature by time of day. Recaulk all windows and doors.
Run the dishwasher half as often as you do now, and save 50% in water, energy and time. Wash only full loads of clothing, and since 90% of the cost of washing clothes is to heat the water, avoid using hot water. Modern detergents clean well in cold water for all but the dirtiest loads.
Check how “hard” or “soft” your water is to determine if you are using the optimum amount dishwashing detergent. Check your appliance manuals to find out how much you need for your water type.
Phone. Think about getting rid of your high priced phone service by replacing it with a cable modem or DSL line and use cell phones for all your calling, including long distance. You will save by having the Internet service/home phone combination and you’ll have high speed Internet access to boot.
Long distance phone. Buy prepaid long distance phone cards where you pay as little as 3.45 cents per minute.
Housing
If you’re living in “too much” house that’s designed – let’s face it – to impress your friends, consider living in a home that has only enough rooms that you or someone in your family uses every day. By creating a home environment that fits your family’s needs, you will find it much more satisfying than spending time and money to maintain a home that is larger than you truly need and that diverts resources from more fulfilling endeavors.
Handle your own home repairs instead of hiring someone to do it for you. Now, no matter what you want to do, you will find a site on the web that will show you how to do it.
A poorly insulated house can easily waste 30% to 50% of the energy poured into it. Most utility companies perform energy audits for low or even no cost, and sometimes offer discounts and rebates to help you pay for energy-saving steps you take.
Reduce heating and cooling costs by 15% by keeping the thermostat set at 65°F in the daytime, and 55 or 60 degrees at night. Keep sweaters and blankets in living areas, or try a cozy hot water bottle under your shirt and in your bed.
Plant a large tree to shade your home and save an estimated $73 a year in air-conditioning bills. The tree will also help prevent heat loss from the house in cold weather.
Holidays
Holidays are the most emotionally loaded times of the year. Many people expect each Holiday to outdo last year’s. Many people go into debt that may take a year or more to recoup.
Wanda Urbanska listed the following “12 Tips For Creating A Simpler Christmas,” as reprinted in The Simple Living Newsletter (Issue #31 • October-December, 2000):
1.Make Conscious Choices. You decide what constitutes a meaningful holiday for you and your family rather than shifting into autopilot and following our consumer culture’s prescripted plan for what you should do, be, and buy.
2.Try Not to Compare Yourself — your celebration, your gifts, and activities — against some "ideal," real or imaginary.
3.Plan Ahead for the Holiday — whenever possible involving your immediate and extended family and anyone with whom you plan to share the holidays.
4.Feel Free to Change. Just because you always "did it that way" doesn’t require you to do it that same way again and always. Remember that the most constant part of life is change and you will feel more active and alive when you’re creating something new.
5.Change Over Time. If you have a vision of where you want your Christmas celebration to be in the future, don’t hesitate to incorporate small step changes for each of several years. For instance, one year you may decide to cut down each family member’s gifts from five to three, or your spending level from $200 to $150.
6.Avoid Spending Beyond Your Means. Do not be pressured by the culture around you — or even your closest friends — to compete dollar for dollar, bow for bow. When you’re selecting a gift, or throwing a party, arrive at a dollar amount where you feel comfortable.
7.Next year, Consider Buying Gifts Year-round. That extends the holiday fun and takes the pressure off during the holiday season. This way you can snap up something on sale and buy the perfect gift when you see it, rather than having to hunt for something.
8.Shop Inside Your Own House. Face it, most of us have more than we need (or even know we have). So find something meaningful and give it to someone you care for, with a history attached.
9.Give Gifts of Time and Talent. Give gift certificates for your services: a homecooked meal for four, delivered to the person’s home; a massage; house cleaning; babysitting; a loaf of bread, a jar of apricot preserves.
10.Give Experiential Gifts — things that won’t add clutter. Tickets to the Nutcracker, to an art show, the theater or a movie. Or give food.
11. Wrap Your Gifts in Comic Strips, like Billy Romp does in Christmas on Jane Street. Or recycle paper and ribbons, or try making your own. It’s fun!
12.Give to the Poor or a Worthy Cause. Make your donation in someone’s name and write him and tell him what inspired you to make this selection.
Clutter
Get off junk mail lists by sending the pre-paid envelopes back to the sender requesting that you be removed from the sender’s mailing list. To prevent the sale of your name, contact the Direct Marketing Association, www.dmachoice.org.
Become a packaging activist, by becoming aware of packaging excess, and when all else is equal, choose the least-packaged.
Part 18, “Think Before Your Shop,” continues the series on becoming successfully self-employed.