I get asked quite often how I’m able to go through life just doing things my own way and seemingly not paying much attention to authority, or the normal “rules of the road”. I work for myself, I do not pay much attention to time or schedules, and to most people I don’t seem to be taking life all that seriously (which is true, I work very hard and I’m very competitive but I do not get worked up about things that most people do).
My answer to everyone is always very simple, and I fear very over-looked. I tell them to Lower your overhead. So what do I mean by that, I’ll explain. Everyone has expenses that you cant avoid (food, shelter, clothes, entertainment ect…). Where a lot of young 20 somethings fall short (and in turn make their life much harder) is that they don’t focus on lowering the “re-occurring fees”. Personally I try to limit my recurring fees, while getting other people to pay me as many re-curing fees as possible. I’ll give a few helpful examples below, but I want to make sure and stress this point. Not having enough money to live is the root of many of our life problems. The key is not to make more money, the key is to lower the bar you need to hit every month while still keeping your quality of life high and giving yourself enough money to enjoy your life (aka pay for entertainment).
-Housing: Using the FHA (first time home buyer) program I purchased a home with 3.5% down. I bought a fixer upper so this 3.5% payment equated to just under 5k. Now when you put so little money down you are forced to buy what is called PMI insurance until the value in equity that you have equals or exceeds 20% of the value on your home. This is not a problem at all if you buy a home that needs updating. For the next 8 months I fixed up the house, and then got the home re-appraised. The house appraised for 40k higher than my purchase price, PMI insurance dropped, happy day. From there I rented the home out, and took what was a 900/month mortgage payment and turned that into a positive cash flow of 150/month through rental income. Net effect I make 150/month to live in my house.
-Transportation: I’m luckier than most in this category due to help from my father. Most young 20 somethings go out and purchase a somewhat fancy/not needed vehicle after graduation from college. This is such a silly idea for 2 reasons. 1 they get saddled with a car payment, and 2 they pay high insurance rates to ensure the car until they turn 26. I drive an 1995 dodge Dakota. Insurance cost 500/year and there is no vehicle loan payment. Net effect: I pay 100/moth for gas and 38/month for insurance.
-Food: One of the best things you can do is make your own food. Its often healthier and way cheaper. A few keys that I have found help me are that I find 3-4 meals that I really “love” and would be happy to eat all the time. Those are reserved for dinners, and I always have the ingredients to make these meals on hand. Examples:
-Frozen turky burger, mixed greens salad, home made salsa, tofu ice cream bar.
-chicken breast with brown rice, sweet potato, mixed greens salad
-solid white albacore tuna mixed with yogert ranch and white vinegar sauce, steamed broccoli
-Clothing: A lot of people my age spend all kinds of money on fancy clothes. Now I’m all for having a couple nice outfits that you can wear if you are going out, or going to a business meeting and need to look presentable. But beyond that, I do absolutely zero clothes shopping. I wear hand me downs from roommates, I wear old clothes from growing up, and that’s about it. It helps that generally I’m working from home so the dress code is pretty lax, but most people spend so much time/energy/money worrying about the clothes they wear… a much better strategy is to spend that time on exercise/eating right.
Overall takeaway: If you just take some time and focus on lowing your cost for housing, transportation and food you will be amazed what kind of positive impact it will have on your life. When its all said and done I only “need” about 600 dollars per month to live on. Now I spend more than that, especially when you factor in services that I purchase to save the most valuable asset we have, our time. But when push comes to shove it is so liberating to know that you don’t need to come up with a ton of money to live. It gives you the freedom to really pursue the life that you want.