I don’t know about you, but I’m the kind of person who likes to go “big”; Not in the frantic, empty consumerism kind of way so prevalent today. It doesn’t matter to me whether I drive a Mercedes SLK, whether my address is in that zip code. It doesn’t matter to me if I have the coolest phone or the fastest computer. I have been focused on one thing financially, going back to my teens. That one thing is freedom. Freedom is really, really big. We’ll talk about what that means & how to get there in a short while. But first we need a bit of background.
At some point long, long ago the ruling class of society figured out a very clever trick. They decided that they owned the land. Now this is a very novel concept, actually. What can we really appeal to say that this land is yours? Or theirs? Can you think of anything? There are some justifications. Some of them sound nice. But under any scrutiny they fall apart. When we establish “the fact” that X person “owns” Y land, it’s really by convention. It’s completely arbitrary, and then decision is backed up ultimately by force. But this “fact” unlocked a tremendous amount of power for the ruling class, and it continues to this day. Once the land has an owner, there are obligations if you hope to spend any amount of time there. The ancient ruling classes obliged their subjects to pay rents on the land; Sometimes with currency, but more likely with commodities it produced. In any case, now we have a trap. Our long-past agrarian commoners needed the land to live, and to use the land they needed to pay rents to the ruling class, and from there the options are few & grim.
Unless you’re headed off for the monastery or the commune any time soon, you need currency to go on living. And barring a trust, or outrageous fortune, you will have to spend a great deal of your life chasing after dollars just to keep it going. The predicament that we face today isn’t too different from our agrarian commoners. We’re trapped in a cycle of servitude to the ruling class, with the choice made for us by the fact of our very birth.
Or maybe not. I have a philosophy that you cannot stop a sufficiently motivated, dedicated individual. And I have been working on this problem in one way or another since I was 16 years old or so. I looked at this huge problem, which I call the “The Babylonian Con”, and I went big. I thought that there has to be a way where I don’t spend all of my days trapped by my very birth. And I had an insight. I’ve refined it over the years, but I realized that the number one thing that keeps us down, that keeps us scrambling after dollars whether we want to or not, is recurring expenses. If you want to be free, if you want to have maximum choices in what you will do with your time and the very course of your life, I believe you’ve got to get ahead of recurring expenses. The largest, most important of which we now call “housing”, which we’ll explore in detail later. But think more generally about all of the bills that roll in a monthly basis. Think also of the purchases that aren’t bills proper that you make on a regular cycle (the grocery store, household goods at Target, parking if you work downtown). These need to be evaluated very, very carefully. They are the very hammer that keeps us down.
Some of them are genuine needs. I’m not going to stop visiting the grocery store any time soon. Some of them are things that we really want. I happen to belong to a gym that costs $115 per month. Fitness is something that I value highly and for me it’s worth every dollar, no regrets. Some of them we don’t want or need in any strict sense, but they are just part of the reality of participating in this society. I’m not about to go without car insurance, how about you? But the point here is to take a look at “where all the money goes”, and put it into categories.
1. Things that are absolutely essential, and cannot easily be changed/improved.
Example: Mortgage. Electric bill. Outstanding student loans.
2. Things that are absolutely essential, and could be changed with some effort.
Example: Maybe the lease on your car is up soon. Could you trade down to a less expensive vehicle? A more efficient one? A more reliable one?
3. Things that are not essential, but not negotiable.
Example: My gym membership. High-end wine. Lift tickets and skiing gear. You could look at these things as “Passions that make life worth living.”
4. Things that are not essential, and negotiable.
This is the type of item you read about all the time in financial advice columns. “If you can eliminate your $3 cup of coffee during the work week, you’d save $700-some dollars over the course of a year. Cha-ching!” And if you have things like this in your financial life, I think you know what to do.
With all of your expenses in front of you, and categorized, you now have some more understanding and choices, two of my favorite things. I’d like to explore the concept of “choice” just a bit further. First, looking at category one, and even category two can become discouraging. Most people spend a sizable majority of their income in these categories. So if that’s the situation where you find yourself, this is normal and you’re certainly not alone. Second, realize that you still choose to do all of this. Yes, there are consequences if you decide to stop paying your mortgage or your cell phone bill. Nasty consequences that you probably don’t even want to consider. But you still choose. You are in 100% control of your financial life. This is empowering!
So now that you have you have your financial life in front of you, I’m going to ask you to go big, go radical. How many of these things can you strike off the list? What if you didn’t have car payments? What if you didn’t have utilities? What if you had a stream of passive income? What if you were completely free of chasing after dollars? No question is too big, too brazen.
Continue reading about recurring expenses in Recurring Expenses Part 2, HERE!
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