Three years ago, a mild financial and personal disaster struck my life. I lost my job at pretty much the same time that my wife left me. I'll keep the personal part of that to myself; this article is about my finances. I had been working as a freelancer (illegally misclassified), so I couldn't draw unemployment, and without my wife paying half of the rent and utilities, my expenses ballooned at the same time that my income vanished.
Over the years, I have tried to obey the advice my father gave me: "Pay yourself first." He advocated putting 10% of my income away for retirement before considering any of my other expenses. But although I have been fairly good at putting that 10% into a savings account (the third worst place it could have gone), I haven't protected the account from the rest of my life, and it has wound up squandered with fair regularity. So there wasn't nearly enough available to sustain me until I got things put back together. I was about three weeks from having to live in my car* by the time I managed to reach a financial stasis. My expenses were finally lower than my new, much smaller income. By about $5 / month.
During that time of paring down my life, I learned a few things about myself and what I needed. I have usually considered myself as relatively non-materialistic, but a review of my spending and the need to drastically reduce the physical volume of my possessions suggested I had been wrong on that account. Three moves in two years, into smaller and smaller spaces, showed that I was apparently much more vulnerable to consumerism than I had thought. And oddly enough, as I continued to divest myself of belongings and resist the purchase of new ones, I did not become less happy. I cannot honestly claim to be more happy, either, but that is because my personal satisfaction really isn't tied to the things that I own.
Before leaving Wichita, Jessica & I lived in a 1400+ square-foot house. 7 years later, I am living alone in less than 300 square feet (and paying almost twice as much as I did for the house, I might add). I had a bit to learn about minimalism and small-space living, so I turned to the lifestyle blogs for help. There is a particular intersection between those writing about minimalist living, which I wanted, and personal finance, which I needed. In that crossroads is a handful of blogs focused on frugality.
I started reading half a dozen of them, mostly following the blogroll on Jim Collins' Simple Path to Wealth.
And then Mr Money Mustache (MMM) punched me in the face.
Most of the bloggers in the wealth through frugality camp all have something odd in common: In spite of preaching a message of reducing consumption, they're all still quite focused on the money; it's materialism with a different face. MMM's philosophy makes wealth a side effect of living a better life right now. Ramsey's motto is "Live like no one else, so later you can live like no one else."¹ Sacrifice your present for a future of consumptive luxury. MMM, on the other hand, proclaims "Learning to separate 'happiness' from 'spending money' is the quickest and most reliable way to a better life. The side-effect of this is that your life will become much less expensive and you will therefore become much wealthier very quickly. But it’s not about the money, and as long as you think it is about the money, you’re still fucked."² (Apologies if you are offended by the profanity; it's his way.)
The point is to reduce consumption, not as a means of accumulating money so you can consume more (or give more, being generous to Mr. Ramsey), but as a means of living a better life and being a better person immediately.
I have been waiting around, hoping to raise my income high enough to be able to do the things I want to do, putting off the life I want to live in the hope that the future will bring more freedom to pursue those things. That needs to stop. Mr Money Mustache has shown me a better way, and the only rational action now that I have seen it is to follow. So call me a convert to Mustachianism.
And as a side benefit, I'll see you on the other side of financial freedom:
*That bit about living in my car isn't an exaggeration. Here's my plan for that eventuality
Housing: $120 / month for fuel + car insurance.
I drive a '99 Honda Accord. I can lay down the back seat, and with a camping cushion, sleeping bag, and two pillows, be quite comfortable on a Southern California winter night. Based on previous camping experience and the qualities of my bag, I estimate I could sleep comfortably in temperatures down to about 40 degrees. Any lower and I would need a nicer bag. The trunk/back seat of an Accord is surprisingly roomy, although you do wind up sleeping on an incline. The fuel accounts for having to occasionally move the car for street sweeping and errands beyond walking distance.
Personal hygeine: $47 / month YMCA membership. + $10 / month laundromat.
Obviously, one of the biggest problems with being homeless is the lack of a bathroom. A membership at the Hollywood YMCA, within blocks of my workplace, provides a place to shower and shave, in addition to free wifi and recreation in the absence of computer games and television. Laundry would have to be done less frequently than many people would be comfortable with.
Mailing address: $20 / month Mail service store.
A mailing address is absolutely critical if you want to have any kind of a normal life. The post office won't deliver to a car, but you can conveniently rent a mailbox at any of those little UPS/Fed-Ex/Notary Public/Fax service/Passport photo places. That gives you a normal-looking street address, disguising the fact that you are, in fact, homeless.
Mobile phone: $15 / month Republic Wireless.
At the time I developed this plan, I was on a pay-as-you-go plan with an ancient flip phone for $15. Now I have an even better deal from Republic for less than $14 on a smart phone. As long as I use it mostly on wifi, data is all but free. It actually costs me less to operate a smartphone than it did my old flip phone! Charging can be taken care of at work and with a solar panel on the car's dashboard.
Storage: $115 / month
Ideally, my plan involves eventually moving back into a proper apartment. I therefore want to hang on to some furniture and personal belongings, but if I sleep in the trunk of the car, there's no place to put those things. Also, it would provide closet space.
Food: $300 / month
This is the real sticker. No refrigerator, no pantry, no oven, no microwave. I would be limited to eating in restaurants and foods with minimal preparation. Raw fruits, vegetables and nuts would be the largest part of my diet. I wouldn't be able to buy more than two or three days' worth of provisions at a time. A small ice chest might be able to keep cold cuts fresh.
No TV or computer, so there is no reason to have a Netflix subscription or pay for Internet. There is a library nearby, and free wifi can be had at the Y and numerous other places.
The overall budget, accounting for a little bit of slop spending, is about $650 / month. I am willing to bet that I could find some efficiencies in the food budget, though, and if I were willing to sacrifice my belongings, I could forego the storage unit, theoretically cutting the budget down to $450. What about clothes? Instead of laundering, I could recycle clothing through the nearby thrift stores. It's difficult to estimate the expense, but I think I could provide myself with a wardrobe in this fashion for less than $50 / month.
My current monthly expenses are about $1800 (pretty dang low considering I live in Hollywood), discounting student loan payments. So this budget would save me over $1000 monthly.