Living on Less for a Better 2013 and Beyond
And another year is coming to a close. Aw…. I had some pretty crazy ups and downs this year as you may have also. It’s been a difficult year for me personally and professionally as well as a successful year personally and professionally. In terms of personal finance, it was another stellar year. I saved right at 50% of my take home pay this year. Coincidentally, I saved 50% of last year’s take home pay as well. Not bad, but I’m not satisfied yet. I’m going for more in 2013.
Yeah, But it Must Have Been Painful
Living on half of my income this year (and last year for that matter) was not painful at all. In fact, I feel guilty for spending too much this year. My spending was up $4,000 from last year, almost exactly the amount that my net income increased. This is a perfect example of lifestyle inflation as one’s income rises. Although I thought I was different, I’m just like everyone else in that I fell into the lifestyle inflation trap. So yes, I feel like I spent too much, splurged too much on “stuff”, and didn’t practice enough self discipline. But hey, next year I’m going to step it up. All in all, it was not painful.
How The Heck is it Possible?
It’s funny how I feel I a sense of contentment when living on only half of my net income. How is that possible? You just learn to be okay with it. I remember how miserable I felt back in early 2010 when I cut my lifestyle big because I was sick and tired of being broke. Boy, did it suck to not have my 220 channels to watch anymore. It was painful eating mac and cheese for dinner (which I just finished eating tonight by the way). I cried a little inside every time I had to turn down an invitation to go out and spend money.
But then…. I got used to it. It became my life. Watching my spending and not being an idiot anymore with my money started to become the way I lived. And the crazy thing was….. I was just as happy as I was before. So, it turned out alright. In fact, I became quite a bit more happy when I saw my bank account rising, my debt decreasing and eventually disappearing. Living like a crazy man saving everything I could lead to a debt free me in just a few months (although I had been making progress for a couple of years). I went nuts and boy did it pay off.
The point is, you get used to a modest lifestyle and you actually get excited about what it’s meaning for your life.
My Old Self vs. My New Self
Let’s take a look at the old me (me in my early 20′s) and compare it to the new me (me today).
| Old Me | Me Today | |
| Anxiety | A lot | A little |
| Debt | $25,000 | None |
| Cash/Investments | 1 month of living expenses | 3.25 years of living expenses |
| Spending Needs | $28-29,000/year (everything I made) | $21-25,000/year (50% of my take-home) |
| Self Confidence | Not much | A lot. I’m on a mission. |
| Happiness | Normal level | Normal level |
So today’s me is a better me. I have less anxiety, more confidence in myself, the same level of happiness and less need to spend money. It’s a good change.
And How Long Am I Going to Do This?
It’s who I am now. It’s not a phase I’m going through anymore. It’s the real me. I’m a person who lives on less than I make for a reason. I plan to live on way less than I make as long as I’m making more than I need to live. I only need $21-24,000 per year to live. No, I don’t need a new car. No, I don’t need to buy a house. No, I don’t need to go shopping to feel better. And no, I don’t need to show off to others. I’m over that.
It’s the feeling I get when I look at my bank account and notice that I have another $5,000 to transfer over to my Vanguard index fund. It’s the peace of mind I have knowing that I have cushion to weather any storm that shall come to me. Fiscal cliff? Aw, whatever. The government can’t pass anything (or fail to pass anything) that will put me in financial trouble. I just have a sense of peace and it feels lovely.
Looking to the Future
I have a sense of excitement when looking to the future that I’ve never had before. What if I could make my future bright? What if I could make the world a better place? What if I actually had the time to do it? What if I loved what I did? What if this all was possible? Well, I found out that it is. If I keep at the pace I’ve been at for the past 2-3 years, saving at least 50% of my income, I can reach financial independence in less than 10 years. That’s exciting.
Have you calculated your financial independence date? If not, what are you waiting for? Do you plan to work for the man until you’re in your 60′s? If that’s what you want to do, great. But not me. Don’t get me wrong though, I’ll be working, but I’ll be doing things that excite me and that I’m passionate about. I’ll be living the life I was meant to live. And that’s not being unproductive and consuming like crazy. It’s being productive, adding value to the world and making it a better place.
Category: Living Cheap
Congratulations! Savings is the key to success. Next step is investing it so it grows to meet your financial goals. Good luck.
Why thank you. And I have started investing. I’m very new to it all and trying to figure it out. It’s exciting!
Awesome job year over year Kraig. You are setting yourself up for a great 2013.
Thanks Sean. Hope you’re year was stellar as well and good luck in 2013 my friend.
That is awesome and I am glad you love the new year. I also live on much less than I earn and it is so nice to not have to worry about money!
You bet. Here’s to reaching new heights in 2013!
What an amazing accomplishment! I’m not nearly at the point of saving 50% of my income, but I applaud the ambition! There is so much more I can learn and things I can do so much better than I’m doing now. It’s all part of the growth process. Good luck to you in 2013!
Thanks for the good luck wishes and for the kind words. Like I mentioned in the post, I don’t feel that accomplished. It wasn’t really a struggle this year to live on the 50% and actually feel like I splurged a little more than I wanted to. Next year is going to be different. I’m going to do more with all this. Happy New Year to you! I hope you succeed in 2013 at whatever you set out to do as well!
Brilliant. Just wanted to stop by to say you’re doing a great job and to keep it up! We are so similar it’s crazy. Subscribed!
Thanks, James. It sure helps when smart people (who are like me) come by to give me a pat on the back. I look forward to following your blog in 2013 and having a friend on a similar path to me. I honestly don’t know too many people who are thinking like we are so it’s really great to have you stopping by.