Do You Really “Need” to Consume That Much?
8:22 am in articles by Jane Chin, Ph.D.
A common fear of prospective entrepreneurs and candidates for “extreme transition” (for example, going from career professional to stay at home parent) is the fear of survival.
Survival is useful and important. I can’t be writing this article and sharing with you if I’m too busy fending for my life or for my loved ones’ lives.
BUT… We can all look carefully and see whether the “amount” that we believe we need, is actually as much as we think we need. Many of us have grown used to a lifestyle that we have chosen or have been conditioned to choose, and we forget that in reality, we actually can survive with the bare essentials.
Recently, for example, I have decided to commit myself for the next few years to be responsible for the conscious evolution of a new human being (translation: stay at home mom for my son). Up until recently, we thought that we must be a 2 income household, because we have a huge (jumbo!) mortgage.
We can’t possibly survive on only my husband’s income, when the economy is so bad, when we now have a big monthly mortgage, and when we have a baby to feed… right?
I wanted to see whether this is really true. I spent about a week going through 2 years of our spending habits, and found a lot of waste and what I consider “expenses of convenience”. We ate out frequently, for example. We bought more perishable food than we could consume during grocery trips and sometimes the food spoils and needs to be thrown away.
Some people’s vices include shoes or bling. I’m a domain junkie. I can’t seem to resist grabbing a domain name when a .com is available, except I’m not in the domaining business, and I don’t buy them to sell them the way a domain flipper develops then sells virtual real estate. At least I’m a bit better now, with just under 200 domain names. Still, these can get expensive with around $10 per year per domain. Just the renewal fees alone exceeded a thousand dollars per year.
I created a household budget that is both realistic and achievable on just my husband’s salary, plus the passive income that I’ve created with my blogs and websites. I let expire some of the domains I know I’d never develop. We are now living on 1/3 of what we used to make annually. Essentially, we looked carefully at what we actually spend, and now we have given ourselves an option that months ago I thought was impossible.
You will be surprised how empowering knowing exactly how much you need to survive as a human being can be. Yes, getting to that point – gathering all the information, sitting down for a few hours, taking an honest hard look at how you’ve spent your money – that can get scary. You can find all sorts of excuses to procrastinate.
But that little edge of freedom you feel when you know these details is worth it!
Image by svilen mushkatov
It’s true! My family is living on a fraction of what we used to. Our biggest expenditure each month was restaurants. We’ve cut it to a fraction of what it was, plus we’re eating healthier. I’ve been in the hospital a lot, and my wife has lost her job, so “living small” is very important and doable. Thanks for a great post Jane.
All absolutely true, Jane.
I think I lot of people are afraid to look too closely at their household finances. They fear that with the data in front of them, cutbacks would be unavoidable. This is a shame, because so much is wasted, in terms of money and resources.
The courage to look unflinchingly at one’s financial situation, be it personal or within one’s microbusiness, is a key skill and one we should all be trying to develop.
Thanks for your post, Jane. I look forward to reading more!
Neil Moodley
Lloyd,
Restaurants were a huge part of our expenses and when you consider the 9.25% sales tax rate now in California, plus the 15% tips, plus having to feed the parking meter, not to mention the gas we need to put in the car for getting to the restaurant… it all adds up to a $20-$35 meal EACH TIME! The good thing about this economy is that I may just learn how to cook.
Neil,
That’s it – people don’t want to face the possibility of making a choice and admitting that they have the power to decide to live at a different expense level. Instead of saying, “but this is how much we need to live on every month,” now they get to say “for some reason we chose to spend $250 eating out” or “I spent $300 on 2 pairs of shoes that I never wore.”
Most of the time, it is a fear of confronting the use of purchasing as a way to fill up some form of internal emptiness that cannot be filled up with material things. That can be a painful admission for people, as well as fearful, because once admitted, they get to choose if they want to do something about it.
Jane Chin
Ha, Ha….gr8 article Jane,
I went through a cash crunch in my business a year back, 16 months to be precise….
For 4 days, I shut out the world, and re-looked at my expenses, which were HUGE..!!!
I shut my big office (1000 sq ft) in an upmarket area and moved to a much smaller and cheaper office closer to home – saved on rent and commute cost and time as well.
Pruned staff, only non essentials, staff which I had kept to fill the office and got down the working team from 8 to 5.
Net result – my 5 months’ expenses now last me for a year !!!