expenses – Annienygma

How Minimalism Can Help You Achieve Financial Freedom

In 2011 I broke free of wage slavery for my very first time. My book royalties had reached the point where I could live on them without the need for a job, so I quit it to achieve my goal of being a stay-at-home single mother.

I enjoyed that life for several years but I found myself too close to the problem when my royalties dipped. After struggling for a bit I went back to work to regroup for another attempt.

What I don’t discuss much on this blog is the fact that I would have never been able to make that first leap if it hadn’t been for minimalism. If I had not actively pared down my possessions and my spending, I would have never been able to quit my job to stay home with my daughter at all.

In hindsight, I realize now that my pursuit of minimalism was behind my ability to take summers off to stay with my daughter for several years previous to achieving that goal. By limiting my purchases and my household expenses, I was easily able to conserve enough money to support us for several months each year.

In light of that fact, I must confess that I haven’t given minimalism the credit it deserves in my success. Even now I apply minimalist practices to my life as I prepare for my next, hopefully permanent attempt to achieve financial freedom.

Anyone can do what I’m doing. While your individual circumstances may be different, the act of reducing what you own and spend can make a massive change in your life. If you add a passive income source into the formula, you have the secret to attaining complete financial freedom.

How to Attain Financial Freedom

Look at your life right now. Chances are you have stuff you rarely (if ever) use, rooms that stay empty the majority of the day, and a vehicle or two you rarely (if ever) drive. Eliminate them. If you can sell the items for extra cash, use that money to pay down any debt you may have and build up an emergency savings account. Don’t worry about investing at the moment; right now we’re just trying to reduce the amount of space you need and how much money you need to survive.
If your home isn’t paid for (or the payments extremely low), consider moving to a smaller home as close to your job and basic shopping (such as a grocery; Wal-Mart delivers these days) as possible. If you own your home, consider renting it out to develop a passive income stream. Use caution if you owe a mortgage on the property. Unless you can rent the property for more than the mortgage payment (and have enough set aside to cover any down-time between tenants as well as some basic repairs), you may end up struggling financially whenever your tenants move out. If you can manage it however, that passive income will take you closer to freedom.

I need to note here that this was the primary way that my daughter and I managed to minimize our expenses. By ruthlessly minimizing our possessions, we transitioned from needing a two-bedroom home down to a one-bedroom, slashing our housing expense immensely. I shopped around until I located a rental in town that was extremely cheap to maximize the savings. It wasn’t in the prettiest area of town but since we don’t own the things that thieves like to steal (and we keep to ourselves), no one ever bothers us. We managed to cut our housing expense in half (more, considering that local rents have went up a bit since we moved here) as a result.

By eliminating our excess possessions we also eliminated the need of having to rent a self-storage unit as well, which saved us a few dollars more each month. We also benefit from lower utility bills year-round since it costs significantly less to heat and cool a smaller home than a larger one.

As a result of selecting a smaller home that was close enough to stores that offered the essentials like food, we were able to eventually eliminate our next largest expense: our vehicle. We both walk to work, hitching rides with coworkers and friends occasionally when the need arises but for the most part we can easily walk wherever we need to go. At first, however, we simply settled upon a nice older van that we purchased for cash, since financing a vehicle can almost double the price you pay for it if you aren’t careful. This allowed us to gradually transition to a life that didn’t require a vehicle for our daily needs.
Limit your exposure to advertising. Advertising is designed to make you feel insecure if you don’t spend your money buying the stuff they want you to buy. Traditional television programming is filled with advertising so the fastest (and easiest) way to drastically cut down on the advertising you are exposed to on a daily basis is to eliminate it. If you enjoy watching shows and movies, consider investing in a Netflix or Amazon Prime subscription. Since many modern televisions allow you internet access, you can continue using it while limiting your exposure to ads that are designed to make you feel insufficient. I noticed an immediate change years ago when I cancelled our cable television subscription. My children asked for things less frequently and I personally noted a desire to purchase less within days of cutting the cord.

There are other ways to cut expenses but those are the ones that will save you the most money. If you wish to learn how to lower your expenses even more, I urge you to read my book The Shoestring Girl. It goes into detail about how I manage to live on $500 or less a month.

Once you have pared down your finances to the point where you know how much money you need to live on each month, proceed to the next section.

Develop a passive income stream. The Internet has created an immense opportunity for those who decide they want to escape the rat race of wage slavery. You can share affiliate links (like I do on this blog occasionally) to promote products and services that you believe in. You can develop your own products to market and sell on a website. There is a huge demand for steamy romance novels currently, so if you enjoy fantasizing about that, you could turn those fantasies into a passive income stream by publishing them online. I have a number of friends who have become quite wealthy doing just that. In fact, I have explored that option personally. While I am much more comfortable sharing my personal experiences to help others, you may find that writing romance novels both enjoyable and lucrative. If so, I highly recommend it. My friends report that they receive thousands of dollars a month in book royalties from their romance novels, and E. L. James became very wealthy simply by converting a piece of Twilight fanfiction into a book series.

For those who have no interest in writing books or internet marketing, don’t worry. There are things you can do to develop passive income streams as well. The most lucrative of those is in real estate. You can purchase inexpensive homes (mobile homes, even) to start out. Clean them up and rent them out. You’ll have to go around once a month to inspect your properties and collect the rent but that is a lot less work than having to show up each day at a 9-5. There are many books available that will help guide you through the process.

You can also invest in dividend-paying stocks as well as bonds. Both of these provide a somewhat stable income stream (no form of passive income is perfect). I am currently investing in dividend stocks as an additional passive income source for when I decide that I am ready to reduce or eliminate working at a public job again.

I highly advise you to create at least two passive income streams before you decide to quit your day job. Things can happen that will cause your passive income to drop, if not disappear. Everett Bogue discovered this the hard way and ended up stranded in Japan. He was forced to sell his laptop for air fare back to the states. I would link to that story but it is old news and has faded from the internet. He is currently working two jobs to survive. I experienced this personally when my book royalties dropped to the point where I felt the need to return to a public job. If I had been smart back then, I would have heeded the warning his experience provided and adjusted my life accordingly. I could have easily invested enough money back then to have eliminated the need to go back to working at a public job. I didn’t, so I am paying the price of that mistake now.

Eliminate your debt. Every debt you eliminate will take the amount you need to live on even lower. While a credit card can benefit you if used wisely (pay off the balance each month), credit as a general rule is verboten. You want to spend your money enjoying your life, not funding the excess of the bankers. The only possible exceptions to this rule would be to finance rental property or to invest in a class that will teach you how to grow your passive income further. Use extreme caution before making these decisions.
Build up an emergency fund. You need to have several months’ worth of expenses saved away in an easily accessible interest-bearing account in the event your passive income takes a slight dip or another emergency arises. In hindsight, this was one thing I did right. I stashed away my excess money each month when my book royalties were high. That enabled me to survive for quite a while as my royalties began to drop.
Develop your passive income stream to the point where it will more than cover your normal expenses before you decide to stop working. This way you can invest the excess into dividend-paying stocks, bonds, or another form of passive income source such as real estate. This way, even if your current passive income remains stable (or drops a bit), your passive income will continue to increase over time.
Once you have created an emergency fund, paid down or eliminated your debt, reduced your expenses as low as you comfortably can, and developed a passive income stream that more than covers them you can safely make the leap. You can reduce the amount of hours you work gradually or eliminate working entirely.

Even now, by following these precepts, I am able to work only part-time instead of getting a full-time job. My monthly expenses are lower than ever now that my daughter has become my room-mate, so we have taken advantage of the situation by investing our excess money and using the time gained to our advantage. Katie enjoys eating out and spending money a bit more than I do, so she has opted to work full-time since she likes to keep busy. She still manages to set money aside each month into her savings as well as attend college full-time by paying as she goes. Like her mother, she has an aversion to debt.

I have money left over from my part-time paycheck every month. I combine that with my (once again) growing book royalties to invest in dividend stocks. I use the extra time I have available to go to college as well, take care of my home, and to write posts like this one that will hopefully help others achieve their own financial freedom.

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If you found this post informative, please take a moment to share it with a friend. You may help them realize that they don’t have to be trapped in the chains of wage slavery forever. They too can achieve financial freedom if they want.

If you have already achieved financial freedom (or are working towards that goal), please share your story in the comments below. We all benefit when we share our knowledge.

If you have a blog of your own, consider writing a piece about this post. Do you agree with these steps, or do you feel that something is missing? Be honest in your comments. This will help others learn from our beliefs and experiences. If you feel that my experiences will help your readers, let me know so that we can arrange an interview. If you feel that your personal experiences may benefit my readers, email me as well because I would love to interview you. You can reach me at annie at annienygma dot com.

Have a great day,
Annie

Winter Worries

The kid will be moving out this winter. She plans to get married once her fiancée graduates BASIC training and move on base with him once he gets things sorted. Here’s a picture of him in training:

The demon Fear has raised its ugly head since I’ve received this notice. She will probably move out mid-winter when the bills are at their highest. Should this come to pass I might have to suspend my investment plan until spring returns just to survive.

Sometimes working for minimum wage sucks.

I’ve gotten rather spoiled with her sharing our household expenses. As a result I’ll have to limit my spending just to make the bills. Since I only bring home about $600 a month from my public job I’ll have less than $100 a month to buy food and supplies while I wait for spring to come back around. I might have to use my book royalties to make things easier, at the cost of my future.

I don’t like that thought. Every penny that I invest takes me that much closer to achieving financial freedom. I miss my freedom. I also don’t like the thought of having to tighten my belt once more. The memory of those two lean years still haunts me.

But that’s okay. I know I can make ends meet regardless. It might be tight but it’s not impossible. Some way, somehow I’ll not only scrape through, I’ll figure out how to continue investing at least a little bit towards my future.

One bright spot: I’ll be able to sleep in a bedroom for the first time in over seven years once the kid moves out. I’ll even be able to rearrange a bit to make this place more usable.

Look on the bright side Annie.

Maybe I’ll stumble across a way to increase my income so things won’t be so tight. Who knows? Anything can happen. In the meantime I am thankful that my daughter is on the verge of a brand-new adventure. I am also thankful that I know how to live extremely cheap. It allows me to survive in situations that would make the average person choke, so despite my fears I know that I will be just fine. I just have to ride the emotional wave.

How do you encourage yourself when fear raises its head? Please share your stories in the comments below.

Extreme Water Conservation

Water is the source of life. It is also rather expensive!

Do you enjoy paying that water bill every month? Why not reduce it? True, you can invest in low-flow shower heads, put bricks in the back of your commode—but did you know that there are other ways you can trim some serious numbers off of your water bill?

The Commode

A commode is designed to take fresh water and use it to flush wastes down the drain. Like paper towels or bathroom tissue, you are spending money just to throw it away.

Save the water when you wash your hands—I use a large bowl for this purpose—and place that used water in the back of your commode. Turn off the water feed to the device and begin filling it with previously used water from hand washing or bathing. This way your water is getting double use!

When you bathe or take a shower, save this water for flushing the commode as well. An average family should have plenty of water from bathing alone to keep that commode properly flushed without having to spend a dime!

If you are single or otherwise don’t have enough water reserved from bathing, save your dishwater in a bucket and pour it down the commode. Don’t put this water in the reservoir because of the possible food debris, but this water is safe to pour in the bowl for flushing.

Bathing

Even with a low-flow shower head using 2.5 gallons of water a minute, you are using a whopping 25 gallons of water every single time you take a short 10-minute shower! Why not reduce that water usage to 2 gallons?

Instead of showering, take a pan (large bowl, dishpan, etc.) and fill with warm water. Wash your hair first by dampening it and scrubbing it with a spoon of baking soda dissolved in a cup of water before rinsing. Once your hair is washed use that batch of water to wash the top half of your body by taking a wash cloth, lathering it up and scrubbing off before rinsing the cloth then rinsing your body. Refill the bowl with clean water then wash your bottom half the same way. At most you will use 2 gallons of water—though if you aren’t very dirty you may be able to wash on a single bowl of water and save an extra gallon!

This is the exact same bathing method we used in the mountains during the summer when the well or cistern was low. You get just as clean as showering—as fast or faster than the same time spent in a shower! Just don’t pour that water down the drain—use it to flush the commode to get more use out of it!

If you have pets to bathe make a bath do triple-duty by soaking in the tub, then bathing pets in the same water before using it to—you guessed it—flush the commode.

Dishwashing

I have heard so many people state that it takes more water to wash dishes by hand than it does to use a dishwasher. Frankly I don’t know where they came from but in our neck of the woods that is a complete falsehood!

A good load of dishes can be washed by hand in 2-3 gallons of water easily! Take two large bowls or dishpans and fill with water. Make sure the rinse water is extremely hot—this kills any germs. Wash well in one pan then place in the rinse water for a time before taking them out and placing them in a dish drainer to air-dry.

If your wash water gets too dirty flush it down the commode and pour the rinse water into the wash side. This way you are getting another use out of the rinse water, while getting fresh rinse water to boot.

Brushing Teeth

You do not need to use a gallon of water to brush your teeth. At most all you need is a half-cup of water. Put some water in a glass or cup. Swirl your toothbrush around in it to get it wet before putting a dab of toothpaste on it. Brush your teeth and use some of the water in the cup to rinse your mouth. Then swish your brush around in the remaining water until it is clean before putting it away. Not only will you use less water with this method, but your toothbrush will stay cleaner! If you want to have whiter teeth or are concerned with germs place a splash of hydrogen peroxide in the water—this gives you the equivalent of those mouthwashes that contain peroxide for a lot less money!

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There are other ways to save on your water bill—not watering your lawn, washing your car with a couple of buckets instead of a constantly-running hose, reusing wash water to water flowers….

Instead of letting that tap run stop and think. Can it be cleaned just as well in a pan of sudsy water instead of a running stream? Can this used water be used again? Can I use less water by doing something a little differently?

There are a lot of reasons to use less water, some even swear that it will help the environment. All I know is that the less water you run through your tap the less you will have to pay for and this is what is important for us in the here and now!

Information Costs More than Food?

I just stumbled upon an article saying that we pay more for information than food (dead link)!

You gotta click on the link and check it out — cause for a lot of people he is exactly right!

I know people who have almost all of those things–the internet, the cellphone, the internet on the cellphone, the satellite radio, the satellite television, the DVR (modern TiVo)–even the wireless card for Internet on the go besides the internet they were paying for at home! I read the article and the comments and wanted to laugh!

I pay for a mid-grade DSL connection. That connection is my television thanks to Hulu and other places. It is my phone thanks to MagicJack. It is my radio thanks to Shoutcast. If I want instant replay I just wind back the controller on the page, so I have TiVO as well!

My two cellphones are both prepay, and combined cost $50 every three months to keep active, but we rarely use all of the time we purchase for them. We mainly keep a texting package on them and use that.

I splurge with having two cellphones, but feel safer knowing that my daughter can contact me wherever she is and regardless of where I am. That is a blessing when she is at her father’s house or out playing–or we get separated in a store.

It is cheaper to have the two prepay phones than it is to have even the smallest family plan.

So, no cable, no satellite radio–not even a television or a game machine in this house to pay for XBox live or whatever game is hot these days…

Read the article please, and leave in the comments here how much YOU are paying for information–I would honestly love to know!