Living In This Expensive World — Part Four — Tips and Tricks
It’s expensive out there! I want to be able to pay for my coffee! Whether it be something like that daily ‘treat’ that brings you joy, or something more serious like ensuring you can pay your rent, we all want to be able to feel comfortable in life. In today’s article, I will be talking about some of the tips and tricks I’ve seen that people use to help break that Paycheck to Paycheck cycle and live comfortably. Let’s peel this onion and start saving money!
It should be noted that these tips and tricks focus exclusively on what you can do. They do not have any bearing on external forces like “Corporate Greed”, which I will talk about in Part Five.
I’m going against the grain a bit here as I discuss money instead of my passions in software engineering and tech. This article is something I think we need to discuss in light of the recent changes in the economy and inflation.
0.1 — Keep Your Pride in Check
If you come away with nothing else from this article, I hope you at least retain this single tip. In my opinion, it is the single most important factor in getting ahead money-wise.
Simply put, always check your pride first. It will always be your greatest enemy. Even greater than “Corporate Greed”. While there are a lot of factors to breaking the Paycheck to Paycheck cycle, I have never seen more failures than I have when talking to someone whose pride is greater than their wage. In contrast, I’ve never seen more success than when someone has completely abandoned their pride.
To be clear, I’m not encouraging you to abandon your pride, just keep it in check. I’ve seen people so full of pride, that they can be making twice as much as everyone else in the room, and still act like they have no money, despite having the best car in the parking lot. This is pride short and simple. Keeping your pride in check is as simple as understanding that you “earned” that daily coffee instead of saying you are “owed” that coffee and being able to say no to that coffee if there are more important things.
0.2 — Teach Yourself Basic “Money” Principles
Spend some time learning more about basic money principles and how money “works”. I’m going to talk about this in more detail in Part Five when we talk about issues like Corporate Greed.
1 — Expense Tracking and Budgeting
We talked about Expense Tracking and Budgeting in Part Three. One of the greatest tips I can give is to start both as best as possible.
1.1 — YNAB 4 Rules
You don’t have to use YNAB to track your budget if you don’t want to. It doesn’t matter to me what you use. I do however want you to learn the 4 Rules and how they apply to your daily life.
- Give Every Dollar a Job
- Embrace Your True Expenses
- Roll With the Punches
- Age Your Money
2 — Can You Do Without That […]?
This goes back in part to pride. Ask yourself if you actually need something and what you can do without.
Scenario 1: I don’t need Hulu since I only watch it a few times a year. I get Hulu because of a deal with Spotify. I want Spotify so I can listen to specific music and not have to deal with ads. I choose to pay for Spotify, therefore I get Hulu.
Scenario 2: I want a new Jeep. A new Jeep is $60,000. Jeeps don’t keep their value. I want the Jeep to play with offroad. I can get a used Jeep for under $30,000 to play with offroad. I don’t need a new Jeep and can cut my payments in half by getting a used Jeep.
3 — Separate “Bills” Accounts
I have caused my mortgage payment to bounce multiple times before. This happened in the same way each time because I checked the account and thought I had more money available than I needed, so I overspent. This was many years before I started using YNAB. At the time, I decided to do something I still consider rather ingenious to this day. I created a second checking account. I then calculated the total monthly cost of all my bills. Utilities, Subscriptions, Annual Expenses, etc. Let’s imagine this total came out to be $500 and I was paid $700 per month. Once I had the total cost per month, I divided that number by the number of paychecks I got per month. I was paid twice a month, so I divided that number by 2 to get $250. Finally, I multiplied that by 10%, or 1.1. This gave me with $275.
Next, I then set up my direct deposit so I had two deposits. The first deposit was for an exact amount for the calculated amount above, so $275. For the second deposit, I set it to “all remaining funds” and had it go into the original checking account. Since I was making $700 per month, I was making $350 per paycheck. This meant that $275 went into my Bills account, and the remaining $75 went to the main account.
By setting it up this way, I was able to do several things. First, I always know that my bills are paid for, because I only pay them out of the bills account. Second, it means that if I look at my main account, I know that the money in that account isn’t accounted for already, outside of say gas and food. Finally, I was slowly aging my money, without having to change anything. Eventually, it got to the point that my bills account had enough money in it that I was no longer living “check to check” and had a buffer in case something came up.
If you are neurodivergent and have something like ADHD, I highly advise this technique if you are not going to do anything else. It works well with your working memory since you no longer have to think about it.
4 — Automation
This is a companion to #3. Essentially, any time you can automate a bill through automatic deductions, I would do it. Some people don’t like to do this for various reasons, but it goes hand in hand with my neurodivergent nature. I am notorious for getting bills in the mail and forgetting to pay them. “Out of sight, Out of Mind” is the major culprit for this. What makes it worse is that if someone stacks all these bills in a pile and throws them in my office chair, they will get set aside and not looked at again for weeks, because when I go into my office, I’m focusing on whatever task is at hand, so I move the bills to sit down, without even being conscious of moving them.
This is why I try to always do paperless billing and automatic drafts. It plays well with my brain, doesn’t clutter the house, and in some cases, you can get a discount for doing it.
Automation is something that I love. Anytime I can automate a process away, I will. Due to my neurodivergent nature, it can be extremely easy for me to lose sight of something. Automation gets it out of my head so I don’t have to think about it anymore. This is one of the reasons I love YNAB so much. Its automation, like target calculations, makes it much easier to handle the finances without overwhelming my brain.
5 — Aggressive Debt Awareness
You can’t talk about money tips without talking about debt at some point. Ultimately, it doesn’t matter how you got into debt. Be it Credit Cards, Student Loans, or just a Mortgage. The question becomes how do you get out of debt. This starts with simple, yet aggressive, awareness.
For example, do you have at least a rough idea of your APR? Are you aware of when your “0% Interest” deal runs out? What is the average interest charge a month? These are all examples of things you should be aware of at all times.
The more aware you are of these points, the more aggressive you can be with your debt.
5.1 — Aggressive Payoff
Most everyone I have ever talked to has at least heard of Dave Ramsey and his aggressive style of debt payoff. In his series Financial Peace University, he describes paying off debt “Like a Gazelle runs from a Cheetah.” He is paraphrasing the Bible verse Proverbs 6:4–5, which says:
Give no sleep to your eyes, nor slumber to your eyelids. Deliver yourself like a gazelle from the hand of the hunter, and like a bird from the hand of the fowler.
While I certainly understand where Dave is coming from (as I have FPU myself), I personally don’t agree with his mentality. For one, the Bible verse in context is actually talking about laziness, not debt. For another, Dave wants you to live as if you are making a Discomfort Wage even if you are making a Comfort Wage.
Don’t get me wrong, I have a lot of respect for the man and what he teaches. The problem is that in my mind, this just isn’t practical for everyone. Especially if you are neurodivergent like myself. Put another way, it takes a very special mentality for you to be able to eat nothing but ramen for 4 years just so you can pay off a credit card. It’s depressing, and not everyone can do it. If you have the strength to do this, then by all means you should. In my experience, this isn’t the case.
To be clear, a neurodivergent person tends to thrive on dopamine, the ‘happy’ hormone, Their body is unable to produce the same amount as neurotypical people. Spending money and eating are a major source of dopamine for the neurodivergent person. If you take all that dopamine away, they will crash very quickly because they use said dopamine several times faster than a neurotypical person. Once their “reserves” are depleted, they go downhill fast into what can only be described as a perpetual depressive state. This is one of the reasons a neurodivergent person will be excited about something like budgeting (that is to say the prospect of breaking the Paycheck to Paycheck cycle), only to quickly fail or fall short of doing it due to the lack of dopamine.
With all that said, I think you should pay your debt off as aggressively as you can, without causing distress to your mental health. If this means only paying $30 more a month on your credit card, so be it. Do what you can. I do encourage you to find clever ways to save money so you can put more money towards that debt. I’d also like to encourage you to pay AT LEAST as much as your interest over the payment while using the Snowball Effect below. If your lowest minimum payment is $100 per month, and $30 of that goes to interest, then I want you to pay at least $130 per month, if you can afford to do so.
Pay attention to your statements. Some of them will put a message on them that says something to the effect of “If you pay the minimum wage, it’ll take you 15 years to pay off. If you instead pay $xx, it’ll be paid off in 3 years and you’ll save $nnnn in interest. This can be a big help in deciding how much you want to put towards your debt.
5.2 — Don’t Go Into Debt Over a Hobby
We all know there are likely to be times when you have no choice but to pull out that credit card. If your car breaks down and you can’t afford to pay for it in cash, out comes the CC. I don’t have a problem with this. What I do have a problem with is when you use your credit card to pay for a hobby. I think a good example of what I mean is adding a lift kit to your vehicle. Lift kits are not cheap, and can cost you several thousand to purchase and install. Sure the lift is cool and all, but by the time you pay off that purchase on the credit card, you’ll end up paying 2–3 times more than the original cost.
The one exception I make to this rule is when the purchase is for risk prevention in the hobby. I once used my credit card to purchase a new set of skid plates for my truck. Off-roading is my hobby. This can damage the underside of my truck. If I had not gotten the skid plates, the amount it would have cost to fix my truck would have easily been four times the cost of purchasing the skid plates.
5.3 — The Snowball Effect
Going back to Dave Ramsey for a moment, I do enjoy his “Snowball Effect” of debt payoff. I’ve used it, and it truly does work well. The idea in simplest terms is to pay the minimum amount on all your statements except for the statement with the lowest amount. On the lowest amount, you pay as much as you can over the minimum until that item is paid off. Once paid off, you take whatever you were paying and apply it to the next lowest statement. In this way, as each debt is paid off, the amount of money going toward your overall debt will “increase” like a snowball rolling down a hill.
The alternative option is to target the amount with the highest interest rate. The nice thing about the Snowball method is that you get quick, visible, and tangible results. You don’t get this with the highest interest rate as easily. In my experience, the only way you can get good results using the highest interest rate method is when you are paying double the minimum amount at least. Using the highest interest rate method will supposedly result in you paying less in actual interest throughout the life of the debt. In my opinion, unless you have an astronomically high interest rate, then the amount you save by using this method will be minuscule in comparison to the emotional wins you get with the Snowball Effect.
5.4 — Debt Forgiveness
To be honest, I don’t know much about what forgiveness options exist. I somehow managed to get through my education without having to get student loans. I know there are some forms of debt forgiveness, but I don’t know the details. I recall one discussion where a co-worker used the temporary debt hold on student loans during COVID to push it into a high-interest return account, so he could still set the money aside and gain additional interest in the process.
I know there are a lot of people out there who disagree with the idea of debt forgiveness. To be honest, I don’t understand why this is such a negative thing, especially if we only focus on the raw interest as I understand most debt forgiveness does. I think it would be amazing if we established laws around debt forgiveness of student loans, or at least made them 0% interest after a certain number of years.
6 — Passive Income
If possible, find a way to generate passive income. That is to say, income that you get without having to do anything specific. The most common form of this is the Stock Market, but that tends to be unstable and isn’t for everyone. For example, if you love going to yard sells, consider buying items and then selling them on Facebook Marketplace or eBay.
6.1 — Turn Your Hobbies Into Income
If you have the opportunity to make some cash on the side with your hobby, go ahead and do it. If you enjoy something like knitting, then consider selling your wares on Etsy. If you’re good at drawing, sell them on 99Designs. Whatever your hobby may be, try to find a way to monetize it. That way, not only are you making money, but you’re enjoying doing it too.
6.2 — Spend More Money Now To Save Money Later
This may seem a bit controversial, but I think it still applies, depending on the return. You’ll have to do the research yourself to see what works best, but home improvements are some of the best ways to “save” money. If your house is drafty in the winter, then installing new windows, albeit expensive, can save you money over the lifetime of your house. What’s more, it increases the value of the house. If you get Solar Panels installed on your roof, then when you are using less electricity than the panels generate, the excess energy can feed back to the power grid. It makes your panel go backward! This of course means the power company may have to start paying you!
7 — New Job
I didn’t put this higher on the list because it is only as good as you are good with your money. I talked about Life Creep in Part Two. If you are susceptible to Life Creep, then chances are getting a new job that pays you more will feel more stressful.
8 — Stuff that Should Not Work but Does
This section is a list of stuff that at first glance shouldn’t work. However, the more you dig into this, the more you can save.
8.1 — Eating Healthy
So, hear me out on this one. While it’s true that “healthy” food is more expensive, usually this comes in such a bulk format that it can save you more per serving. For example, Collard Greens are one of the more healthy dark green leaves you can get. A big bundle of them costs less than $10, and if you chop them, you can get enough to make several meals out of. What costs you $10 in ingredients can supply you with $40 in servings.
To be clear, it’s true that ‘healthy’ foods like produce tend to have a higher cost. The point I’m trying to make here is that I’ve noticed that while the cost is higher, once I combine all the ingredients into a salad or similar, the cost per serving is less. For example, if I buy a frozen pizza for $8 with 4 servings, that’s $2 per serving. If I instead buy a bag of lettuce, small tomatoes, an onion, and a bag of broccoli for $14, and make myself a bigger salad at home, I can get 8 servings or more out of the tomatoes, onion, and broccoli, and my only replenishable is the bag of lettuce, so my cost per serving ends up being less than $2 per serving.
8.2 — Buying Bulk
Using places like Costco or Sam’s Club is a good way to save some cash. By buying bulk, it’ll be cheaper, and of course, it can last longer as a result.
8.3 — Couponing
Couponing isn’t as big as it was in the 2000s, but I still see people doing it. If you have someone who is an “at-home mom” or “at-home dad”, couponing can be a fairly lucrative process. It plays right into 8.2 because you can spend less than $1 for several tubes of toothpaste that will last you several years.
I’m personally not a fan of Couponing. It’s too tedious for me. Furthermore, some items can expire before you even use them. However, if you play your cards right, you could do couponing, and then sell the excess for more than you paid.
8.4 — Renting Rooms
A lot of people are not going to like this one, but it’s still a possibility. I had a former co-worker do this. They were single and had a big house with 3 extra rooms in it that they weren’t using. So he started renting out the individual rooms. Of course, as the “landlord” he had to deal with all the nuances of management, but this would easily generate $300 a month per person just by renting out those rooms. This is not only cheaper for the person renting the room, but it is also possible to fully pay your monthly mortgage through this method, depending on how you set it up.
8.5 — T-Shirt Designs
I’ve seen a few people do this. I just don’t have the creativity to do it. Simply put, the second you come up with a funny quote or phrase, slap it on a T-shirt and sell the T-shirt online through something like 99Designs. People will suck that stuff up if it’s good enough. This is especially true if it goes viral.
Conclusion
In today's article, we focused on tips and tricks we can use to help make ourselves a bit more financially stable. Do you have any tips or tricks you use that aren’t listed? I’d love to hear from you what those are!
Join me in the final article, Living in this Expensive World — Part 5 — Changing the Status Quo where we will explore the concepts typically outside our control and what we can do to make the world a better place overall.
Have an idea or a subject you’d like me to discuss? Feel free to mention it and I’ll see if I can.
