It was roughly ten years ago that I launched The Simple Dollar. It wasn’t a smooth rollout, so pointing to a single day as “launch day” is tough, but late October to mid November 2006 is a pretty good timeframe for the launch of the site.
Let’s roll back the clock a little to see where my life was at that time.
In April 2006, Sarah and I had our big financial meltdown where we realized that we were going to be unable to pay our bills that month. This left me with a deep sense that I was somehow messing up my whole life. Sarah and I were four years out from college, each of us with burgeoning careers in our field, and we were collectively making a pretty good income. We lived in a tiny apartment together with our infant son. We were unable to pay our bills because Sarah and I had awful spending habits and the additional financial burden of child care simply pushed us over the top.
I decided, right then and there, that some serious changes needed to happen in our life. I checked out a dozen or so personal finance books from the local library and buried myself in them, learning about what we needed to do to improve our financial state. The big initial answer, at least for me, was that we needed to cut back drastically on our spending.
That’s what we did. We basically went on a “spending fast,” where we cut almost every non-essential dollar from our spending habits. We sold some of our accumulated possessions quickly in order to pay the bills that were at hand and we started rapidly paying off our credit cards.
We expected the lifestyle changes to be painful – and some of them were – but we actually found that a lot of the changes weren’t bad and that some of them were actually quite enjoyable. We started experimenting a lot with frugality during that summer and by late summer I’d started sharing those thoughts in written form and those writings eventually became this site.
What’s happened since? That infant we had back then is now an eleven year old. That eleven year old now has two younger siblings. We no longer live in that tiny apartment; instead, we now live in a four bedroom house. That four bedroom house is fully paid for. We still have two cars, just as we did then, but the ones we have now are fully paid for. We had tens of thousands of dollars in credit cards; now we have no credit card debt. We had tens of thousands of dollars in student loans; now we have now student loans. We are completely debt free.
Furthermore, we’re actually well on our way down the path to financial independence. Our goal is for both of us to effectively “retire” as soon as our youngest child leaves the nest and then spend a lot of years together doing things we both enjoy, things like visiting all of the national parks, building up a local charity, and writing a novel (well, that’s a personal goal of mine).
These changes weren’t easy ones. Along the way, we’ve had to re-evaluate and think deeply about pretty much every single aspect of our lives. We’ve made career shifts. We’ve talked about having more children, chose to have two more, and stopped there. We’ve almost completely changed how we spend our time on a daily basis.
Throughout all of these enormous financial, personal, professional, and social changes – most of them self-inflicted – a few questions come to mind.
What have I learned from all of this?
What has actually made my life better/happier?
What do you know now that you wish you had known at the start of your journey?
These are questions that I’ve been puzzling over for weeks now. I’ve written down tons of ideas and quickly deleted most of them. What remains are ten lessons for ten years, the things that have really mattered the most in terms of shaping a better financial, professional, personal, spiritual, and social life over the past decade.
Most of these ideas originated from books and then simply resonated out throughout my life as I took that idea and re-evaluated my life through that new lens. If the life that came out through the other side was somehow better, then I incorporated that change as permanently as possible into my life.
I hope you’ll find these as valuable as I have.
1. Spend less than you earn, always.
This is the first principle of these ten that I learned and it’s one that has stuck with me through thick and thin, proving the power of its simple truth time and time again. Spend less than you earn. Every week. Every month. Every year.
If you follow that simple principle, you’re going to move into a life where you’ll always have the resources you need when things take an unplanned turn. No matter what life throws at you, you’ll have the ability to handle it with ease, whether it’s an unfortunate event like a job loss or a broken-down car or an opportunity like a cross-country career move or a love that sweeps you off your feet.
Many people tend to look at the downsides of this change with pain. If you’re spending less than you earn, that means that you’re “cutting back” in some fashion, and their mind flashes immediately to their favorite “treats.” They think of the visits to the coffee shop or to the weekly date night. The thing is, that’s not what you should be cutting when you’re spending less.
What should you cut? You cut back hard on everything that isn’t important to you. You buy name brands instead of store brands (except in specific cases where you know, from personal experience, that the name brand is strictly better). You skip over silly forgettable treats like a bottle of Gatorade at the gas station (I might be speaking from experience on that one). You buy energy efficient light bulbs and install a weather strip or two and a programmable thermostat. Your goal is to minimize or eliminate the money that goes out for things that you really don’t care about so that you have money left over both for the future and for the things you really do care about.
The other part of this is the “earn” part. The more you earn, the easier it is to save a lot for the future quickly, to wipe out your debts quickly, to build up some money for retirement quickly. The more you earn, the faster your financial journey moves.
2. Think about your decisions in terms of time, not money.
Time is the one truly valuable resource in life. No matter how hard you work, you can never earn more of it. Money itself is just a way to measure time. You get a certain amount of dollars for an hour that you work, and then you trade those dollars for some item or experience, meaning that you think that a certain amount of time spent doing work is a fair trade for that particular item or experience. Money is just the go-between to help you translate the time you invest for the things that you want and need.
Because of this, I tend to think of most financial transactions in terms of time, not money. Every dollar I spend, according to the “back of the envelope” math, equates to somewhere around 4 minutes of work. Another way of looking at it is that every time I spend $120, I’m adding another work day to my life, a day where my hours are mostly filled with work tasks and not with things that I enjoy. $120 adds up surprisingly fast in an era of Starbucks and endless entertainment options.
On the other hand, moves I take to save money and spend less work in the opposite fashion. If I can do something that will save $120 over the next year, like adding weather stripping to a door, that means that this coming year (and every year after that), I’m essentially gaining a day of complete freedom.
That kind of thinking really motivates me to take action right now to spend less money. The reason is that right now, I have the sound mind and body to take on a bit of extra challenge. Right now, I can handle a task like installing weather stripping. Right now, I can make the decision to buy store brand dish soap. If I make those better decisions right now, then I’m essentially giving myself the gift of personal freedom at some point down the road. I’m earning a day without work.
I love visualizing those days without work, too. I think about an afternoon curled up in a comfortable chair with a great book on a cold day. I think about several hours spent hiking on an interesting trail in a nature preserve somewhere. I think about gathering several of my friends together to play board games all day while having great conversations. I think about packing a picnic lunch and sneaking off with my wife to some beautiful grassy hill, spreading out a blanket, and simply spending an hour or two together watching the world go by. I think about working on some big ambitious project that I never have time for but which seems so incredibly fulfilling in my head. And I earn those things through being smart with my money.
The idea that my little (and big) frugal steps directly translate into time spent completely free motivates me like nothing else.
3. Collect experiences, not things.
It is really easy to accumulate “stuff” in your life. It’s not at all unusual to find a home with closets stuffed full of possessions of all stripes. Overstuffed bookshelves and media centers, garages jam-packed with tools and other odds and ends, rafters and attics full of boxes of possessions of all kinds.
It’s so easy to want things and buy things and accumulate things that the vast majority of us finding ourselves doing it in some way or another. For me, that weak spot is board games. It’s something I recognize about myself.
Here’s the thing, though: all of that stuff is just representative of experiences that you want to have. Having that book on your bookshelf just means that you want to read it at some point in the future. Having that DVD on your shelf means that you want to watch it in the future. Having that board game on your shelf means that you want to play it in the future.
Those items represent potential experiences. Yet, if one were honest with themselves, if they were to pull out all of the stuff they have stowed away and thought about all of the experiences that those things represent, you most likely have enough stuff to fill up your spare time for the rest of your life, and probably several times over.
Lately, I’ve come to realize that I’m not as proud of my book collection as I am of the long list of books I’ve read. I’m not as proud of my board game collection as I am of the games I’ve played over the years. The things that really hold value for me? The list of state and national parks I’ve visited. The trails I’ve conquered. The longest streak of days in which I walked more the next day than the previous day.
In short, life is more fulfilling when you focus on experiences instead of stuff.
This has several advantages. For one, the less stuff you have, the less space you need to store it, thus saving on housing costs. For another, the less stuff you have, the less time you have to spend going through your stuff to find the particular item you want and the less time you spend maintaining your stuff, meaning the more time you actually spend experiencing things. For yet another, the less stuff you have, the easier it is to move and reorganize and rearrange your home.
Although it’s a principle that’s really obvious to me, it’s something that I still struggle with in my life. I find that when I clear out my possessions and focus less on acquiring stuff and more on doing stuff, I’m genuinely happier and I generally have more money to boot. The reverse is true when acquiring stuff – I get this little boost of initial happiness from the new thing, but that fades and then I just have more stuff to deal with.
Try this for a challenge: cut your collections down to the ten things you’re most likely to use or revisit in the future. It’s something I’m trying to do with my board game collection and something that I have done with my other collections. What you’ll find is that you have more time and a greater sense of freedom, plus you’ll be flush with money from the possessions you sold off on Craigslist.
What if you need something for a particular thing you want to do? See if you have a sensible substitute. If you don’t, see if you can borrow it. If you can’t, see if you can rent it. If you still can’t come up with something that works, then go ahead and buy it. Every once in a while, go through the possessions you have and critically ask yourself whether you’re ever going to realistically revisit this stuff in the next year or two. If not, get rid of it – sell it off on Craigslist.
It really is a recipe for a better life, as it leaves you with both more money and more time to actually do the things you enjoy doing.
4. Treat the unexciting elements of your work as fuel for the things you want to do in life.
Every single person on Earth has things that they have to do that they don’t enjoy. For many, those tasks are professionally oriented. Someone has to file the paperwork. Someone has to clean the bathroom. Someone has to do the drudgery. There are also tasks in one’s personal life that aren’t particularly fun, either. Someone has to clean the bathroom, again. Someone has to pay the bills. You get the idea.
It’s easy to fall into the perspective of hating those tasks. They’re miserable. You dread them and put them off and loathe every second you’re doing them. You let them put a damper on your whole life.
That’s the wrong perspective entirely. Instead, look at those tasks as the fuel for every good thing you have in your life.
You earn your money from the most miserable things that you have to do. That’s where you earn the cash. You are paid very well for that time. You aren’t paid for your breaks. You aren’t paid for the watercooler talk. Those things are fun. You make bank from handling the hard tasks, the drudgery.
Relish them. Know that you’re earning serious money every second you spend on those unenjoyable tasks. Know that every second you spend handling that task is earning the free time and free money for everything that you enjoy in your life.
Keep that in mind, then focus. Get lost in the task. Lose everything else in the world except for that task that you’ve dreaded and get it done. The more distractions you allow yourself, the longer you’re going to spend on this miserable task. Close the door. Turn off the cell phone. Bear down on that thing you don’t want to do.
Before you know it, you’re done with it. It’s done faster than you’d ever expect. You’ve earned your pay. You’ve earned your free time. And it feels good.
Every task in your life that you don’t like rewards you with many things that you do like. Keep that in mind before you tackle those tasks; you never get the goods without tackling the challenge.
5. Build blocks of freedom into your busy life; start with them, don’t stick them in later.
Every single weekday, I block off the hours of 3:30 PM to 6:30 PM to spend with my family in a meaningful way. We usually read together in the same room for thirty minutes. I help them with their homework. We usually try to do something fun together, too. I’ll make supper and we’ll have a family dinner together.
Every Sunday, I block off about six hours for a community game night. It’s my main hobby/social activity of the week. I go there, meet up with friends, play some games with them. It’s wonderful.
Every Monday, I block off about three hours to go visit a friend who doesn’t get out much at all. I usually end up playing a game with this friend.
I also reserve a block of about an hour each day for a morning routine that includes meditation, writing down things I’m grateful for, and a brisk walk or exercise session where I review the day ahead in my mind.
If at all possible, I take a longer walk in the afternoon to mentally unwind.
I wrap everything in my life around those things. These things are the first things on my schedule each week. All of my other professional and personal tasks and responsibilities flex around these things.
Many days, I wake up very early to start in on my tasks for the day. I’ll often work in the evenings as well, if necessary. You might find me doing laundry at 6 AM or writing an article at 9 AM or doing dishes at 3 in the afternoon or checking emails at 10 PM.
That’s because the things that are most important to me, the things I live for – my family, my mental and physical well-being, my core hobbies – need to be at the center of my life. If they’re not at the center of my life, what is? And if they are at the center of my life, then it makes absolute sense to plan for those things first and do everything I can to make everything else flex around it.
I don’t live to work. I work to live. My household and professional tasks are done so that I can have that time to do the things I care about the most, with those periods of time walled off from intrusion or interruption. My career is something I care about deeply, but if it takes away from the things I’m working for, then why am I really doing it?
Schedule the things you truly care about the most first. If you find that you can’t hold to those things, what does that reveal about your priorities? This practice not only ensures that you have time for the things that matter most to you, but it can uncover some really difficult matters of priority in your life.
6. Always question everything you spend your time or your money or your energy on. Is that the best use of your time, money, or energy?
Never, ever, ever stop questioning your use of your time, money, and energy. Whenever you find your mind idling or you’re engaged in a task that doesn’t take a whole lot of mental focus, use it to evaluate, evaluate, evaluate.
One approach is to think about recent choices you’ve made regarding how you use your time, money, or energy. Should you have made that purchase? Did you spend that hour very well? Was that really a good use of your energy?
Another approach is to take a recent situation where you made a mistake using your time, money, or energy. What went wrong? How can you do better in the future?
Yet another approach is to take a recent situation where you really did well using your time, money, or energy. Why did it go so well? How can you replicate those conditions again so you can enjoy that success again?
A final approach: visualize upcoming situations where you’re going to have to make some tough choices regarding your time, money, or energy. Think about the optimal way to handle that situation now, when you’re not stuck in the situation, then visualize yourself handling the situation in just that way. You’ll find that such visualization makes it far easier to make the right choice when the real situation arrives.
I intentionally turn my mind to such thoughts whenever I have mental downtime. I’ll think about such things when I’m loading the dishwasher or walking to the post office or driving home from dropping my kids off at an activity. These things cross my mind when I’m in the shower or when I’m brushing my teeth. These thoughts constantly pull me toward different life tweaks that, in the end, will help me build a better life.
7. Set big goals, but don’t set them in stone; take initial steps that work broadly toward lots of big goals.
Big, giant, life-changing goals are kind of a double-edged sword. They’re often a perfect match for the current aspirations you have in your life and build obviously upon your current life situation.
When I think of the most exciting times in my life, the times where I was most excited to jump out of bed and take on the challenges of life, it was when I was tackling a giant goal of some kind. They’re powerful and wonderful.
But life changes. The person you were five or ten years ago likely wouldn’t hold the same big goals that you might have right now. That’s normal.
So why set a big goal at all? Well, it’s simple: a big, giant, life-changing goal can give you a reason to get out of bed in the morning. It can add a focus and an excitement to your life that nothing else can really provide.
I have one big overriding goal in my life right now. It’s more of a health-oriented goal, but shooting for it gets me out of bed each morning. I know that I can work on that goal each and every day and take a step toward it each and every day.
Eventually, though, I might move on to another goal. That’s why I intentionally choose steps for that goal that I won’t regret later on. I won’t regret the health-oriented steps I’m taking right now regardless of what happens going forward.
Money goals can be much the same. No matter where you end up going in life, you won’t regret having taken steps right now toward your money goals. Paying off debt? You’ll never regret it. Saving for the future? You’ll never regret it. No matter what direction your life takes from there, you’ll never regret those fundamental steps.
Big life goals are incredibly powerful, but they are even better if the steps you’re taking are ones that are essentially transferable. Make sure that the early steps you take toward any goal are ones that you’ll be happy with no matter what happens in your life and then ride that wave of enthusiasm and motivation.
8. If you see a mistake you’re making, address it head on. Don’t run from it.
People make mistakes. I make them constantly. I spend money in ways that I shouldn’t. I don’t think through a purchase. I settle into a routine that isn’t as positive or healthy as it could be. I fall back on life crutches when I face challenges.
The key to overcoming those challenges isn’t to hide them or pretend they didn’t happen or run away from them or excuse them. Those tactics fail every time. They enable you to just keep repeating the mistake over and over again.
If you see yourself making a mistake, address it head on. Ask yourself why you’re making this mistake. Look for things you can to so that you’re not going to repeat that mistake again.
If you see yourself making a spending mistake, ask yourself why you’re doing this. What good is this purchase really going to bring to your life? Aren’t there other uses for your money that might make more sense, particularly in the long term? Are there things you can do to help you avoid making that mistake again?
The same thought process is true is true for every kind of mistake. Address it head on. Ask yourself about that mistake.
Another important part: own up to your mistakes. If you made a bad choice, don’t blame others for it. Don’t excuse it by pointing to someone else. If you made a bad choice, the reason for that choice is you. At the same time, no one else but you can reap the rewards of successfully overcoming that mistake.
Don’t beat yourself up over a mistake, though. Humans make mistakes. That’s part of being human. The path to being a better person isn’t to eliminate mistakes from your life, but to figure out how to make fewer of them and how to correct the ones that you do make. You’re always going to make mistakes, so your goal should be to reduce the count and the intensity.
9. “Expect anything worthwhile to take a long time.”
The above principle is a quote from Debbie Millman, who stated the principle far more succinctly than I ever could have.
Every single thing worth achieving in life is going to take a while. It’s not going to happen today or tomorrow or next week. That’s why it’s worth achieving.
If you could achieve financial stability in a day or two, no one in America would be living paycheck to paycheck, yet more than three quarters of Americans do in fact live paycheck to paycheck.
If you could achieve major weight loss in a day or two, no one in America would be overweight, yet we’re facing an obesity epidemic.
If you could build an incredibly successful startup in a day or two, literally everyone would have a stunningly successful business, but we don’t.
The truth is that the things in life that are worthwhile – great relationships, a good stable financial life, a strong career, a healthy body, a healthy mind – take time. They take repetition of good practices over a long period in order to achieve the exceptional results that you want. Otherwise, the exceptional results you want wouldn’t be out of the ordinary.
It’s going to be hard. Every long journey always is, particularly in the middle of the journey when you feel so far from the security of old habits but also so incredibly far from your destination. Many, many people give up. Don’t be one of those people.
10. Treat life as a journey of growth and discovery.
I could write a long section here, but I think that the idea I want to share was best described by Jim Valvano during his speech at the 1993 ESPY Awards. Valvano was dying of cancer and had to be helped up on the stage to give this speech, but when he got going, you could see the fire in his eyes and his heart. Here’s the key excerpt:
“When people say to me how do you get through life or each day, it’s the same thing. To me, there are three things we all should do every day. We should do this every day of our lives. Number one is laugh. You should laugh every day. Number two is think. You should spend some time in thought. Number three is you should have your emotions moved to tears, could be happiness or joy. But think about it. If you laugh, you think and you cry, that’s a full day. That’s a heck of a day. You do that seven days a week, you’re going to have something special.”
Laugh. Think. Cry. Do that every day. Laugh until it hurts. Learn something new about the world and really incorporate it into your thinking. Be moved so strongly by something that it brings tears to your eyes.
Life is a journey of growth and discovery. You can never grow unless you push yourself. You need to push your heart. You need to push your mind. You need to push your body. You need to push out against your weak points.
Every day in which you do those things, even if they perhaps didn’t go as perfectly as you might have wanted, is an exceptional day. If you have a life with those elements in it, what else do you really need?
Where will my life be ten years from now? Our youngest child will be preparing to leave the nest, likely filling out college applications and taking other career-oriented steps that people take in their late high school years. Our two older children will already be gone. Sarah and I, if things go well, will be figuring out what comes next. Are we ready to retire? I hope so.
Whatever my future holds, two things remain true. One is that the principles above will guide me from where I am now to where I hope to be in ten years. The choices I make today are heavily guided by those principles and they’ve helped to build a wonderful life over the past ten years.
The second is that I hope to be able to share the things I learn about frugality, money management, career planning, personal growth, investing, and many other things along the way with you, right here on The Simple Dollar.
Here’s to ten more great years.
For more financial tips and a great blog visit The Bill Coach Blog