I had a very productive conversation with a friend last night, and thought I would post today on a part of what we were talking about. Specifically, on how to get by in our world financially. While I recognize that the sorts of advice and tools I am about to share are not necessarily going to work for everyone, these are the strategies I have used in my life that allow me to maintain financial stability and even some degree of financial freedom. This is what has worked for me, so maybe you might find it helpful for yourself too.
When I was much younger, and still in high school, I believed that in order to do as I wanted at any time that I wanted, I would need to make over $500,000 per year for every year in my life. I came to this number by suggesting that for $1000 per day, I could freely do anything I wished. For example, perhaps I might like to fly to Paris, France to have lunch on a particular day. With the income I described, I could have lunch in Paris every day without worrying that I would run out of money.
That is a lot of money to be making by any individual, even in today’s standards. I would suggest it might even be an unreasonable goal, considering what one might have to do in their lives to earn such an amount of money. It was in part due to this belief that I attended university the first time trying to become a Mechanical Engineer. Such a profession would have put me on a path that could, at least potentially, lead to the achieving of such a goal. As I believe I have mentioned in other posts, this didn’t work out for me. Attending university with my aim being to gain employment that produced such large sums of money was ultimately a disaster for me.
What I’ve learned since then is that in order to actually do the things I want in this world, when I want to do them, actually only requires me to make about $30,000 per year, which amounts to making approximately $15 per hour at a full time job. And as many of you likely already know, $15 per hour is just above minimum wage in the area of the world I currently live. This is far more reasonable and attainable than the original goal of $500,000 per year.
Admittedly, such a discovery has a number of conditions attached. Firstly, this is how much I would need to make if I lived alone, with no dependents nor a companion. Also, it would assume I have no other debts (for example, my mortgages would all need to be paid off completely). While my current situation does not meet these requirements, the additional funding I require to fulfill my goals in my current circumstances is not drastically more than this. I have not actually worked out the numbers for my present circumstances, but if I suggested I needed about $60,000 per year now, I’m sure that would be enough. It may be double my previous estimate, but it is certainly far less than my original estimate of $500,000.
With this groundwork laid out, I will now reveal some of my strategies that allow for the achieving of this goal. While discussing these strategies, it is important to keep in mind these findings I have established. The goals above are intimately tied to the strategies below, and if you adjust your life to the strategies below, you will likely find that the goals above need to be adjusted as a result. This will become clearer as I proceed, so please bear with me.
The first, and possibly most important, observation that I learned to make is with regard to how I spend my time. Literally. How much does it cost for me to take part in various activities over time. This was not my discovery, but actually was advice offered to me by my father at a rather young age. To understand this idea better, I will present a few examples:
If I decide to go to the theater to watch a movie, how much does that cost me (these numbers are from about 2010 or so)? The movie tickets, in addition to the popcorn and drink that I often purchase, typically end up costing me about $20. The time I spend watching this movie will often take up about 2 hours of my life. As a result, doing the math, watching a movie in the theater costs me about $10 per hour to do.
If I decide to play Pokemon on my Gameboy, how much does that cost me (these numbers are from about 2000 or so)? The Gameboy cost me about $100 to purchase, and the Pokemon game cost me about $50. The playing of the game itself does not cost me any money, just time. So the question is how much time do I (or did I) spend playing that game? In this particular case, the Pokemon cartridge happened to track the time I played it, so I could see precisely how much time I had been playing the game by the time I decided to work out this math. It turned out I had played well over 100 hours in the game, and I was still continuing to play the game (I was far from completing the game). If I suggest that I spend 150 hours playing that game (a conservative estimate), then I find that it costs me about $1 per hour to play Pokemon on my Gameboy. Of further interest in this particular situation, the more I play the game, the less it costs. For example, if I continue playing this game and eventually accumulate 300 hours of play, the math will reveal that at that point it cost me $0.50 per hour to play. In other words, the more I play, the less money I seem to be spending per hour.
If I decide to write programs in Python on my computer, an activity I actually rather enjoy, how much does that cost me (these numbers are from this current time, as this is one of my present hobbies). The computer I use to program on was salvage, and so literally cost me no money. Furthermore, the computer I use is utilized for many, many other purposes than simply programming, so any number I suggest is already technically much more than it ought to be for this example. Having said all of this, I will pretend for a moment I purchased the computer ($1500), and that I spend approximately one sixth (about 17%) of my time writing Python programs on it. The operating system (linux) and the Python interpreter did not cost me any money as they are freely available online. Thus, very approximately, I might suggest that I have spent about $250 in order to program in Python. The act of programming itself does not cost me any money, just time. I have likely spent over 100 hours programming so far, and I continue to do so, as it is a current hobby of mine. Thus, programming in Python costs me (presently) about $2.50 per hour, but like the video game, continues to become cheaper and cheaper as I keep doing it. Knowing that I actually did not spend money on the computer, and the actual number is $0 per hour. This is (so far) the least expensive activity for me to engage in.
This is already quite telling. Between the above activities, I ought to preference Python programming, as I spend the least amount of money doing it. I don’t think it is an accident that this activity can also be quite productive, as the programs I write can be used for other purposes, such as increasing automation in other chores and activities I engage in. This raises a couple more examples I think it is worth presenting:
If I decide to work a job, how much does that cost me? The answer to this one should already be obvious. It costs me nothing to work a job. In fact, I actually make money when I work a job. If I used the example at the beginning of this post, I might earn $15 per hour while working a job. This activity is now even more desirable than Python programming, assuming I actually enjoy working. Thus, it is certainly of great benefit to me to work a job I enjoy, as it won’t feel like work, and I will be earning money from the activity.
If I decide to do absolutely nothing, how much does that cost me? Believe it or not, this ends up costing me something financially. For example, I am sitting in a rental property, sitting on a couch. The rental property costs me about $1500 per month to live in, and the couch cost me about $1000 to purchase. So even if I sit here doing nothing, there is some cost involved. Furthermore, I typically do many activities in this home and on this couch, which will affect the math. However, for the sake of argument, I will suggest I am purposely doing nothing just to see what kind of numbers I end up with. There are 720 hours in a month of 30 days. Thus, the rental costs me about $2 per hour, even when I do absolutely nothing else.
If I decide to stay in a hotel for a night, how much does that cost me? This gets a lot more complicated again, as I would be staying in the hotel often toward some other purpose. But again, just to see some numbers, I will again assume I do absolutely nothing except sit in the hotel, perhaps watching television. If the hotel room costs me $200 per night, and there are 24 hours in a day, then staying in the hotel costs me about $8 per hour to stay there. Clearly my rental is less expensive than the hotel.
This all may sound very pedantic, but it all has a point. If I am able to break down the cost of all my activities into a common time slice (in my case by the hour), then I can start to see how those activities compare to each other. In some cases I spend money, and in a few cases I make money. And in some cases, an activity becomes less expensive the more I engage in that activity. When I started to see all these things, I started to consciously decide to pursue more activities that cost me less money. Furthermore, I preferenced activities where the cost of the activity dropped as I engaged with the activity more. For those who know me, I do/did play a lot of video games, especially Pokemon. In all honesty, playing Pokemon might be the least expensive activity I perform at this point, putting aside using salvaged computers to program on.
By behaving as I have, despite having generated less income than most of my friends, I have also tended to save far more money than those same friends. Furthermore, I have been able to “splurge” more than those friends at times I may want to spend a bit more money as well, because of my having my savings. During this pandemic, when we are all expected to lockdown and remain at home, I have endured better than many of the people around me as a result of my life choices.
There is, of course, a drawback to much of what I’ve described, as my friend pointed out last night. If I really want to engage in the more costly activities, I will require a much higher income than I presently have. Activities like scuba diving, sky diving, or even playing golf or tennis generally cost a very substantial amount of money. I have heard from those people who do engage in those activities that they consider the rewards they receive from those activities to be quite spectacular. If it makes them happy, then who am I to criticize? However, in order to engage in those activities, those individuals will obviously need to sacrifice more in order to generate the larger incomes they require, possibly taking jobs they do not actually enjoy.
It can be hard to find enjoyment in certain mundane activities. Our society, constructed on structures of consumerism, can even seek to shame individuals who do take enjoyment in such activities. My friend last night told me he enjoys sweeping floors and cleaning, but seemed incredibly ashamed to admit such a thing. Personally, I am a bit envious that he has found such a productive and important activity enjoyable. I wish I found doing those activities more enjoyable myself. However, he indicated to me that among his circle of friends, doing such mundane activities is considered “beneath” them as well, suggesting that people around him are even discouraged from performing those activities, despite any enjoyment they may receive.
There is much more I could say about all of this, but I think I have rambled on long enough for the moment. And I believe my reader should by now see my point. I believe that living a life of financial stability, and possibly freedom, is not as far-fetched as we are often led to believe. I believe that structures such as consumerism seem to motivate people to desire the more expensive activities, leading people away from potential happiness. My friend likes to sweep floors, an activity that potentially earns him money while at the same time fulfilling a happiness for him, much as my hobby of writing Python programs does for me. By embracing these sorts of choices and activities, and by recognizing the significance of finding a job we enjoy rather than a job that pays well, I believe we have a much greater potential for happiness in our lives. And it won’t require making ridiculous sums of money in the process.