Maybe I’m getting old, but it feels like many things just aren’t built to last anymore. Planned obsolesence, which is a business strategy to have things fail and encourage consumers to replace them, seems to be real phenomenon. In addition, we have endless items available to us as consumers that are virtually disposable – super low cost, easily accessible and so cheap that you’re happy to buy without thinking, even if only to use once or twice. Sometimes I think things are just too affordable.
Even if something doesn’t break, we feel compelled to replace it in time anyway. Marketers employ sophisticated techniques to convince us that new is good and old is less desirable. “Keeping up with the Joneses” mentality is unfortunately common place and, as consumers, we are conditioned to buy, buy, buy.
What is the true cost of our hyper consumerist, disposable society?
I posted recently about reframing my pursuit of financial independence to capture a more holistic ambition to also lead a sustainable, balanced lifestyle – Financial Independence Live Lightly and Simply (FILLS). With that bit of context, I wanted to write a quick blog post given events this week at the United Nations.
Work was tough last week – long hours, lots of pressure and an unsatisfactory discussion with my boss about the future of my role. It reaffirmed for me one of the key reasons that I’m pursuing financial indepence (FILLS) – to be free from the golden handcuffs of work (or at least this job) and have choices around how I spend my time. To live a life of purpose, meaning and joy without the burden and daily grind of paid work. To have the mental space to be present with my family at night, instead of responding to emails. The chance to pursue my dreams and ambitions rather than those of my corporate masters.
Regardless of whether you love, hate or are ambivalent about work, removing your reliance on a paycheck is both liberating and prudent.
Over the last 12 months I’ve been obsessed with the concept of financial independence (FI). Essentially FI allows you to design a life you want without taking money into consideration. For me, embedded in the goal of FI are concepts of freedom, self-reliance, optimism and the sense of endless future possibilities. At its essence, the path to FI is realtively simple – spend less, save more, and optimize the difference. I’ve realized though, it isn’t all about money.
It’s estimated that ~78% of workers are living paycheck-to-paycheck. Scary, but not surprising. People from all walks of life are scraping by and struggling through life – regardless of gender, education or income levels.
49% of all employees say they find it difficult to meet household expense on time each month
Only 31% would be able to meet their basic expenses if they were out of work for an extended period of time
59% consistently carry balances on their credit cards, with 37% finding it difficult to make their minimum payments each month
35% of Millennials and 30% of Gen X employees are using their credit cards to pay for monthly necessities which they could otherwise not afford
Most worryingly of all is that 45% of people surveyed have less than $1,000 saved for unexpected expense. Unfortunately this situation is worse for women, with 51% not having this relatively small amount of money put aside vs. 38% of men.
The situation is dire and getting worse. It’s time to do something about it, because living paycheck-to-paycheck is a disaster not only for your immediate finances but also your general wellbeing, happiness and future living standards.
I’m an aspiring frugal minimalist, working towards Financial Independence. Given that, saving should be second nature and easy for me, right? Well normally we are are pretty good and put money away like clockwork, but this week was a reality check as my monthly budget went up in flames. The budget collapse wasn’t due to any unforeseen disaster, medical emergency, or car problems. I simply overspent and purchased what could be classified as an unnecessary, luxury item.
So what went wrong and how do I avoid overspending in the future?
We have only just started on our journey towards financial independence (see my previous post for a quick overview of FIRE) so we haven’t yet built good and lasting habits or found a sustainable level when it comes to balancing saving and spending.
Reflecting on last month it feels like we often took one step forward and two steps back. It’s been a struggle at times. It’s also been exciting as we saw the impact of our decisions.
Overall though I think we made great progress in April and are off to a great start.
Moved to a smaller home, which will hopefully cost less to heat, cool and maintain
Changed banks and received a $500 signup bonus in the process
Cancelled our cable subscription and home phone line
Reviewed our auto insurance, changed insurers and saved ~50% in the process
As a result of lowering our expenses we’ve now set a new baseline for living costs and will be able to save more each month going forward. The pleasing thing is that we’ve stopped drifting through life and now are much more intentional about our finances.