[Read Step 2 of the Simple Living Guide]
The most important point to remember from the previous step is that money is something we choose to trade our life energy for. After all, isn’t that why we’re paying any attention to this at all? This life isn’t a dress rehearsal—it’s the real thing! We want to spend it in the most enjoyable, fulfilling way possible. For some, that means spending a lot of time with family and friends. For others, political activism may be their thing. Others may want to build their own home and grow a vegetable garden. Others want to see the world. For me, I’m figuring it out as I go along. Right now I’m into outdoor activities, from trail running to sailing to extended backpacking journeys. Everybody’s got something they’ve always wanted to do. Let’s make it real!
In Step 2, we calculated our Real Hourly Wage and began keeping track every cent that comes into or goes out of our lives. After collecting this information about our daily activities for a little while, it’s time to total it up and see what we’ve been doing. That’s Step 3.
Let’s not go on a diet
The authors of Your Money Or Your Life repeatedly draw an analogy between budgeting and dieting. As they point out, neither budgets nor diets work. Both only make us feel guilty about our behaviour until we give up the budget or diet. This analogy hits pretty close to home for me. For most of my life from childhood until well into adulthood, I was overweight. I tried diets many times without success. I would lose 5 to 10 pounds, and then give up in frustration, returning to my usual 270 pounds. But later on I found myself living in downtown San Francisco. There was no parking nearby, and the bus service was pretty slow. I began walking to the office, about 20 minutes each way. I discovered that my weight was slowly dropping, naturally. When I put some effort into exercising more, I lost all that weight quickly and easily. I lost 100 pounds in about a year, and have kept it off for over five years now! The key wasn’t a diet. The key was a lifestyle change.
Likewise, in our financial lives the key is to change how we live. Self-deprivation won’t work! None of us want to spend our lives scrimping every penny to follow a strict budget. What a lousy way to live. That would be like counting calories and only allowing ourselves to eat a certain amount from each category. I think we can all agree that we like eating cookies and ice cream sometimes. We just want to eat enough to enjoy, but not more than we will enjoy.
Creating the monthly tabulation
In Step 2, we began tracking every cent that passed through our lives. After a little while, that ends up being a lot of information. Now we want to tally it all up, to see how much we spent in each category. But wait a minute—what are the categories?
I’ve heard the same questions over and over again: “Which category should I use for this particular expense? How should I set up my categories for this particular area of spending? Food, for example. Should that be one category? Or should groceries for home be separate from meals out, which would be separate from the snacks at the vending machine at work, which would be separate from the work cafeteria, which would be separate from the morning coffee from Starbucks?” I don’t think the problem here is the categorization. The problem is the question itself.
This program is self-directed. Each person’s categories will be his or her own. It’s a matter of what is important to us as individuals. Nobody can tell us what our categories should be, just as nobody can tell us how to spend our money. Pick some set of categories to start with. Keep it simple and easy. It’s no big deal to change them later and begin using a new set of categories. The important thing is to just choose some categories and create a monthly tabulation. Don’t get too fancy, nobody else ever needs to see any of this.
Totalling it up
Our whole world is computerized, but that doesn’t mean this process should be. Personally, I have a graduate degree in Computer Science and I was a software engineer in my professional career, yet I have never used a computer for anything in the Your Money Or Your Life program. I find a pen and paper to be far more flexible and much simpler. I can scribble down whatever I want, however I want. It usually ends up looking rather ugly. But who cares? This is only for me; nobody else will see it.
Lots of people really dig using their computer to put together gorgeous spreadsheets of their monthly cash flow, importing the daily tracking data from their personal finance software and online banking websites. That’s excellent. It doesn’t matter how it’s done, whether it’s a spreadsheet, pen and paper, or hieroglyphics on a cave wall. The only important thing is to make a monthly tabulation. It doesn’t take long, and the results are enlightening!
I spent forty hours of my life on my car?!
The last piece of Step 3 is to convert the total number of dollars spent in each category into hours of life spent working for pay. We do this by using our Real Hourly Wage we computed in Step 2. This way we’re keeping in mind that our jobs really consume more of our lives than we’re paid for (including commuting, preparation, decompression, etc.), and that they really pay less than the advertised wage (after taxes, commute expenses, work clothing, etc.).
The result is that we’ll find out how many hours of our lives were spent at our jobs to pay for whatever we bought in each category. For example, if my Real Hourly Wage is $10/hour, and my car payments are $200/month, plus $100 gas, plus $50 repairs, plus $50 insurance, I would discover that I spend 40 hours of my life on my car each month.
This is the point at which we should repeat our mantra: No Shame, No Blame. This isn’t a budget. We’re not doing this to make ourselves feel guilty. We’re not going on a diet. We’re only figuring out what our current behaviour is. That’s all. And again, nobody else will ever see this. This is just for our own personal knowledge.
OK, let’s stop here. We’re now collecting information about ourselves. We’re not doing anything about it (yet); we’re only seeing what we’re doing. That’s the first major chunk of the Your Money Or Your Life program in action.
In Step 4 we get into the core of the whole program, discussing personal values and fulfillment. You didn’t actually think this program is about cutting expenses and living frugally, did you? No, this program is about living consciously, in alignment with our own personal values. That’s why Step 4 is where it really gets fun! Hang in there, collect some information, and tally it up. It’s worth the effort!
[su_panel background=”#f2f2f2″ color=”#000000″ border=”0px none #ffffff” shadow=”0px 0px 0px #ffffff”]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.
