And I Thought I Was Living a Low Cost Lifestyle…
February 07, 2014One of the things that gives me a little bit of a smile is knowing that I can make a dollar stretch pretty far. I’m pretty good at either saying NO to myself and not spending money or finding great bargains and saving a lot of money. That translates into me being able to live on not a whole lot of money. At least I thought so…
And then, I read about this couple who is living “off the grid” and they make me sound like I throw dollar bills out of my sunroof on warm summer days. They are living in an adobe house they built over the course of time after starting out living in a bus. They have solar power that they self-installed. They grow their own fresh fruits and vegetables, raise their own livestock and wash clothes the old fashioned way, with a washboard and drying line. They are clearly not driven by the same consumer-driven lifestyle that is prevalent in America today.
The lifestyle that they live requires only about $800/month in cash flow to support, and $500 of that is to feed their animals! This is definitely not the lifestyle for everyone. I can’t imagine my kids buying into this right now…at all.
I am always looking for ways to pare my budget back a little bit. Netflix and HuluPlus vs. cable vs. satellite dish? Landline vs. cell only? I try to keep the thermostat at a level that doesn’t create huge utility bills. I do a quick web search for the lowest gas prices in the area before heading out for gas. I use coupons and buy Safeway special deals when grocery shopping. It’s a little bit of fun trying to get great deals on your day-to-day expenses, and we can all do a little bit better…well, almost all of us. I’m sure this couple couldn’t look at their budget and think “we are REALLY being frivolous in our purchases of x.”
What am I going to take away from what they’re doing, other than that I’m feeling a little bit spoiled with my lifestyle right now? We can all do a little bit more than we are doing today to save money. The more we can reduce our “structural costs,” the costs that recur each month, the better chance we have at saving more aggressively and being able to handle an illness or job loss and the more easily we can transition into a retirement lifestyle.
It’s easy to talk about reducing our structural costs, but how do we do that? The first step is to figure out what they are! I’m a big fan of using a spreadsheet like this Expense Tracker, matched up with my bank statements, so that I know where each dollar is going. I also use mint.com, which automatically categorizes almost all of my expenses. I compare Mint and the Expense Tracker and while there are some minor discrepancies, they show the same big picture.
From there, the second step is to target areas for reduction of expenses. I do that both on the spreadsheet and in mint.com’s “Budgets” area. The last step, the third step, is the hardest and it’s what this couple who is living “off the grid” does so exceptionally well.
That step is having discipline and taking ownership/control of your cash flow. It’s easy to want to maintain a low cost lifestyle and to set goals, but it’s very difficult to follow through and make it happen. But, once you do, it becomes easier with each passing iteration.
I’m not asking you to sell all of your possessions and move to the desert so that you can live off the grid. But what I will ask you to do is to take a good hard look at your budget. Do you know where your money goes today? Do you want to remain exactly where you are or do you want to cut costs and increase savings?
Do the three step approach.First, figure out where the money goes today.Second, pick targeted areas to reduce spending.Third, hit or exceed those targets. If you do that each month for a 3-6 month time frame, you will have developed a new habit and “reset” your lifestyle’s structural costs. That should propel you to be able to reach just about any goal you set for your financial life.