[Read Step 5 of the Simple Living Guide. Go to Step 1]

The previous step asked us to create a wall chart showing our monthly income, expenses, and savings. Now in Step 6 we’ll consider some ways to minimize our spending while still enjoying the peak of fulfillment.

We all know there are a zillion publications already available to give us a great many tips on cost cutting. Rather than address this topic from that same perspective, I’d like to talk about a few very general ways that I and others around me have successfully made the shift from an expensive lifestyle to a frugal one.

What do I really need

When I was in my early 20s and quickly growing dissatisfied with my life of full-time office work, I sat down one evening to calculate how much I would need to save to pay my most basic monthly expenses from investment income (this was before I read Your Money Or Your Life.) I was so dissatisfied with my life that I decided it would be fine to only be able to pay my bare-bones minimum expenses this way, and have to work sometimes to cover any additional costs such as entertainment, toys, etc.

I decided my basic expenses would only include minimalist housing, groceries, thrift-store clothing, and health insurance. I could rent a room for about $300/month, buy my groceries for $200, and pay $50 for a major medical policy. Clothing in thrift stores is nearly free ($2 shirts, $5 pants, etc.), so I figured that about $600/month would include some miscellaneous expenses such as utilities and even a cheap used bike.

A person I knew a few years ago spent some time in the Peace Corps. He told me of a saying they have: “If you find your needs aren’t being met, perhaps it’s time to adjust your needs.” That’s the way I did that calculation back in my early 20s. Even though I often spent much, much more than that, I always remembered that in reality, I simply don’t need much.

Getting down to the core

When Ann moved to San Francisco, she was shocked and dismayed at the cost of housing. With rents starting at $600+ for only a small room, and the median price to buy housing at over $700,000, she was determined to find a way to cut that expense. Ann says she worked to identify the core need, and then solve the problem of meeting that need. She needed a place to sleep inside, out of the rain. She needed a place to cook her food. She needed a safe place to keep her cat. She needed a place to feel reasonably comfortable.

Having determined what her housing needs were, Ann spent some time thinking about a variety of unconventional ways to meet those needs. She rented a very small studio apartment in a not-so-beautiful area of town. That too was expensive and left her unfulfilled. As she began considering other ways to go about this, she tried finding someone who would rent her a long driveway where she could park a used RV to live in. That didn’t pan out. She discovered that it would be possible to legally live aboard a boat not far from the city, so she researched and found a used houseboat. In the end, she found a way to cut her housing expense in half while still meeting her core needs. The problem was solved.

Thinking outside the box

Another person I know has done a lot of international travel. Her husband’s family hails from Croatia. She currently lives in California, growing her own vegetables as best she can in a small backyard. To reduce her expenses and increase her quality of life, she plans to move to Croatia in the next few years. There, she’ll enjoy more land in which to grow her own food. She also loves the tight-knit community of village life there. As she ages, Croatian medical care will cost a small fraction of the same care in the United States. As a result, she can spend more of her prime healthy years enjoying life, rather than working to save for expensive health care later in life.

Letting go of fear

I recently overheard someone humorously term the USA the “Excited States of America.” In retrospect, I think they had a good point. We can be held captive by our fear of the unknown. One example is a friend of mine who always drives a new car. She won’t take the risk of driving a car that’s a few years old, because it might break down somewhere, leaving her stranded. It’s an unlikely scenario, since she has the security of a cell phone and a good network of friends who would immediately come to her rescue. But that’s not the point—the breakdown itself is a frightening enough possibility that she’ll pay tens of thousands of dollars to assure herself that it won’t happen.

We have come to think of money as security against anything that might go wrong. In reality, true security comes from personal relationships. Money only buys goods and services. In contrast, friendships bring safety and security. A strong network of friendships gives us all the ability to lower our expenses, knowing that help is there if we need it. We share tools, skills and mutual support.

Another type of fear that we all experience from time to time is the fear of trusting ourselves to do things right. Instead of trying something new, we’ll often pay a professional to do it for us. We pay the plumber to fix the leaky faucet, pay the investment advisor to steward our savings, and pay the barber for a haircut. Each of these people wears a special uniform and speaks a particular language to gain our trust. Why else would we trust these people’s skills any more than we’d trust ourselves to learn how to do these things on our own? If they can learn these skills, so can we. I learned how to cut my hair, and haven’t paid for a haircut in 15 years. That’s a lot of money in the bank, and a little bit of money I don’t need to spend each month. Yes, we will make mistakes as we learn new skills. That’s a small price to pay for the long-term advantage of not needing these “professional services!”

But why?

What’s so wonderful about minimizing our expenses? Sure, there’s the obvious result that we can save more money. In the long term, we’re spending less of our precious life energy at work, freeing ourselves to live the life of our dreams.

All that’s great, but what does it mean to the practical application of the Your Money Or Your Life program? As our monthly expenses drop, the amount of capital required to achieve Financial Independence drops accordingly. In short, it’s not about how much we have, it’s about how little we need! If we are comfortable and happy with a lifestyle where we spend only $500/month, our nest egg doesn’t need to be as huge as others may imagine. Financial Independence becomes realistically attainable.


In this article, I’ve only touched on a few general ways of thinking which helped some of us change our lifestyles from spending to saving. Chapter 6 of Your Money Or Your Life offers many more ideas. Another excellent resource for practical tips is The Tightwad Gazette by Amy Dacyczyn. We all lead different lives, so each of us can use different tools to help us align our financial lives with our values. The important thing is to find the tools that work for you.

Next time we’ll discuss Step 7, which examines how we can maximize our income. As identified in Step 2, money is something we choose to trade our life energy for. Given the fact that we each only have a finite amount of life energy remaining, we strive to value it highly. That’s what Step 7 is all about! In alignment with our values, we’ll consider ways to receive the optimal amount of money for the life energy we spend at work.

Fred Ecks was the volunteer Newsletter Editor for The Simple Living Network. He’s a dedicated follower of the 9-step program detailed in Your Money Or Your Life. He uses the time freed up in his life for writing, volunteering, sailing, and trail running. He maintains a Web Log www.crazyguyonabike.com.