I haven’t counted but the number of times people have said they envy my RV life. But it has been a lot. At least 80% of those I give my one-sentence life story—sold everything, bought an RV to travel the county sightseeing, adventure-seeking and writing—tell me I’m living the dream. So today’s post is about saving for a Supersize dream.
My very first Finances post titled Funding a Supersize LIFE was more about how much my dream was going to cost. I had most of the funds in the bank at that point, or knew I would when I sold some investments and sold my house. I projected my startup costs and how much I’d have left over to live on while I figured out a way to make money on the road. In that post and other posts I shared my finances on a macro level.
Today, I thought I’d get more into the nitty-gritty of what worked for me. And what might work for you for saving money.
I love thinking about money. I may be part of the reason I ended up in career in finance even though it wasn’t my educational background. It’s interesting to me to hear other’s philosophies about money. And I enjoy sharing my own.
A Bad Deal
Once I got out of credit card and student loan debt, I didn’t release myself from my self-imposed restricted buying that I had created in order to get out of debt. I lessened the reigns a little, but only a little. Instead the money I had applied toward debt, I socked away in savings. As well as investments and retirement plans. There was a rhythm to what I was doing. I was on track to my financial goal. At the time, my goal was to retire as a millionaire.
The nonprofit where I worked was having financial problems. I don’t want to get into the dirty details, but rather than addressing some of the real problems, it was decided that the solution was to cut my hours to 30 per week.
I was suddenly faced with a paycheck 25% less than what I was used to. And, this happened within a year of my second house purchase where I went from paying $850 for living expenses (mortgage, condo dues and utilities) to $2,000 per month.
It weighed heavy on my mind and I spent a lot of time debating whether or not to sell the house. I decided to not be rash. If I could figure out a way to pay my bills, I would give it a little time. I knew cutting my position was a short-term solution to a bigger problem. In the end, I was right and the bigger issues had to be addressed.
But that didn’t change the fact that I was a three-quarter time employee for 18 months. Think about your own income and losing 25% of it for 18 months. The number will not be a small one.
Immediately after my paycheck was cut, I ceased adding money to savings, investments and retirement. But it wasn’t enough to make ends meet. I came up about 10% short.
When you have a budget shortfall, there are only three possible options: increase income, reduce expenses or a combination of the two. I wanted to see if I could make ends meet by reducing expenses. It meant cinching up an already-lean budget.
I did it in a lot of little ways. But there are a couple of budget categories that stand out to me. First, I cancelled cable television. I love movies and wasn’t prepared to go completely without so I got a subscription to Netflix. Net savings: $50 per month. Second, I went from having my hair professionally cut and colored every 10 weeks to coloring it myself and having it cut at Great Clips (and I never went unless I had a coupon). Savings: more than $50 per month. Reducing my travel allotment resulted in a $100 per month savings.
The littler things I reduced or stopped also added up. I declined meals out and I stopped buying coffee at coffee stands. My thermostat came down a couple of degrees. I didn’t renew any magazine subscriptions.
In the end, I was able to manage. In fact, I made so many cuts I was able to put 1% of my smaller income into savings.
The reason I write this whole saga is because it taught me that even when I felt like I was on a tight budget, making a few different choices allowed me to tighten it up further. The lesson was so profound that when I went back to full-time, I continued life without cable television and visits to a professional hair dresser. Meals out with friends, however, went right back in. As did coffee. The thermostat went back to a more comfortable temperature. Magazine subscriptions stayed non-renewed.
For me, it was all about understanding the power of choice. And the power of my personal priorities.
Another small way to save, I only learned about recently. Some companies may offer a discount or rebate on prepaid bills. In the last year in my sticks-and-bricks, I learned that one of my utilities offered a $25 rebate if you paid your estimated annual bill all at once at the beginning of the year. The bonus was not worrying about paying one bill for 12 months. The extra bonus? Another $5 savings in stamps.
Have you ever gotten a raise at work and then felt like nothing changed for you? You didn’t really see an improvement or change in your life but you knew the paycheck was a bit more?
It’s an interesting phenomenon. We often think of our budget as spending the money we make. So if I make $1,000 per month, then my expenses are $1,000 per month. And when I get that raise to $1,050 per month, my expenses become $1,050 per month.
I certainly know that’s how things were for me before I became obsessed with savings. When a paycheck only goes up a few dollars, it’s so easy to absorb it. Buy that extra pair of pants. Upgrade to a higher membership at the gym. It takes conscious effort to make sure those few dollars go into savings. Or debt reducing, if that’s your financial focus.
Making Extra Income
I didn’t choose to bring in extra income in response to my pay cut. If the same thing were to have happened to me in my last years of working, I likely would have. So what are the options?
As part of my downsizing process, I sold a lot of stuff. I became aware of how much of the stuff I was downsizing that I hadn’t used in years. So selling off unused items via yard sales, internet, etc. can be a way to make a bit of extra cash.
A more common way to make additional income is to have a side business. Side business options are far ranging. Some people take a passion for a particular craft (such as knitting) and make things to sell on Etsy. Other people do direct selling through home-based parties such as Pampered Chef. Having a specific talent might be marketable as a business such as web design or dog training.
And, of course, one can get a second job. I had a friend who worked at Home Depot for a year. He worked one evening a week (after his traditional job) and every Saturday. That was 12 hours of extra income each week to help as he strove to reach his financial goals.
I fully recognize that this post won’t speak to everyone. And that there situations where the suggestions I have made sound like pie-in-the-sky to some because they struggle just to pay rent each month. I heard someone once say that to pull oneself up by the bootstraps only works for those with boots. And a lot of people don’t have boots.
This post assumes that if you are interested in RV life, you are not in that category.
I wrote this post to share the fact that I was able to make this big life change by saving a dollar at a time. It was never easy. Nor was it fast. I was actively saving for 15 years (minus the 18 months mentioned above). Plus I used the proceeds from the sale of my house to help fund the dream pot.
Whether you are saving for a once-in-a-lifetime vacation, a big event like a wedding or a baby, retirement or debt reduction, it is possible. I want the take away from this post to be one of hope. Whatever your current financial situation, saving for a dream is possible. It takes determination and time. It’s hard but the payoff is worth it.
More than you ever imagined.