How much can you lower your cost of living? How much money does it cost you to live? Sounds like a simple question doesn’t it? Ask somebody who makes $2,000/month and they will tell you that it takes $2,100/month to live, and if they only made just a little more money all of their financial problems would be solved. If you asked the same question to somebody who earns $5,000/month they will tell you that it takes $5,500/month to live. Ask somebody who makes $100,000/year and they will tell you that it takes $150,000/year to live. In fact you can ask just about anybody and they will tell you that if they made just a little more income than they are currently earning that would allow them to live comfortably. Interesting isn’t it?
What is the real answer? How much does it actually cost to live? I am assuming here that you are at least 18 years old and thus an adult, which means that you are responsible for supporting yourself. So what is the real answer? Are you ready? The real correct answer is zero. ZERO! You can live with absolutely no cost if you choose. Anything you spend above zero is voluntary, it is totally discretionary. Do you think that I am wrong? Off my rocker? Delusional? Do you want proof that I am right?
How many people do know of who don’t spend any money on food, clothing or shelter? Let’s take the obvious example to start with, homeless people. Before you get the idea that I am going to tell you to become homeless, read on for a few paragraphs. I only use being homeless as the first example. There are countless people who are homeless in this country and they are wearing clothes, eating, and have somewhere to sleep, though it might be under an overpass. Let’s move on. Who else do you know of, who are at least 18 and adult, who doesn’t have to pay for food, clothing or shelter? In other words, who do you know who has a ZERO cost of living? How about people in the military? Anybody who joins the military has food, clothing and shelter provided don’t they? I’m not saying that there are not people in the military who choose to pay for private housing, and eat off base at times, and buy their own clothes which they wear when they are not on duty. But you can join the military and never have to spend any of your paycheck for living expenses if you choose.
What about college students? Most students do not work, yet they have clothes to wear, food to eat, and somewhere to sleep. Either they are being supported by parents or they are living off of student loans, but they are not currently having to provide their own food, clothing or shelter. What about people who work overseas for American companies? Many of them are provided with food and housing in addition to their salary. Ready for more people who have a ZERO cost of living? How about all the ladies who live with their boyfriends, and the guy pays all the rent and food costs, and sometimes gives his girlfriend spending money too? There are even some guys who are supported by their girlfriends. What about live in housekeepers? There are literally millions of people in this country who have a zero cost of living if they want it.
Then there are the people who have a cost of living, paying their own rent or house payment, car payments, utilities, food, etc., and they something happens to them and they lose everything and have to start over. Some people are victims of a natural disaster like tornados and hurricanes, or earthquakes and even fires. Their home is destroyed along with all of their possessions. Many even lose their jobs too when the same disaster destroys the company that they work for. What do people do when they are the victims of a disaster such as these? Many move in with family or friends, who give them a place to stay and food to eat until they can get back on their feet. What about people who get divorced and lose everything? Many move in with their friends or parents until they can get back on solid financial ground. What about college students who graduate with their degree and cannot find any job at all for many months? How many move back in with their parents temporarily? What about the millions who lose their jobs in the recession?
I am not telling you that you should cut your cost of living to zero. How you live is your decision alone. But what I am telling you is that how much money it costs you to live is 100% totally discretionary. 99% of people believe that they would be doing so great in preparing for retirement if only they could set aside 5%, or maybe in their wildest dreams 10%, of their income into investments. Let me tell you the other side of the story. What if you invested 100% of your income, after you pay your taxes that is. How much money would you have in one year? Two years? Five years? Ten years? Millions of Americans have a zero cost of living if they choose to. If they took advantage of that situation to work hard and invest all of their money they would all become wealthy in only a few years.
I am not saying that you should do this, unless of course you want to become financially free in just a few years. I know that it means that you would have to make sacrifices. But what is worse, making sacrifices for a few years so you will never have to work again, or working for forty years just to earn enough money to feed yourself? I didn’t cut my cost of living to zero during the four years that it took me to go from broke to retired, but I did cut my cost of living to under 20% of my income. If you do for a few years what other people won’t do, you will be able to live for the rest of your live like other people will never be able to. What’s worse, doing without for a few years, or wasting your entire life in financial servitude, spending 40 years working just to survive?
You don’t have to cut your cost of living as low as I did, unless you want to retire in only a few years. But the idea that how much you spend to live is a decision that you make, it’s totally voluntary. You can live on any amount of money that you choose, no matter how much you earn, you can live on less than that amount. So you can find money to invest if you want to. Then it is just a matter of how fast you want to become financially free, and how much you want to start investing. Maybe you will decide to not buy a new car this year, and instead keep the current car and invest all that money that you were going to spend. Maybe you will decide to keep your current house and not buy that shiny new McMansion, and invest all the money that you were going to spend. It is your life and your choice alone to make, how much of your money do you spend on things that go up in value (really go up, real investments and not housing bubbles, etc) and things that go down in value.
How much money did you make in the last ten years? What you have happened if, ten years ago, you cut your cost of living to zero and lived like a college student, and invested every dollar you could? And you only did that for four or five years. Where would you be today. If you have completed at least sixth grade math, and have a $2 calculator from Walmart (I bought one for 0.99 on sale) you can start playing around with the numbers and see for yourself that you, YES YOU!!!, can become financially free in just a few years, if only you want it bad enough. There is nothing standing in your way. You do not need a college degree, you do not need credit. All you need is a source of income, any source of income, because every dollar is the same. The dollar that a doctor makes is exactly the same as as dollar that a burger flipper at McDonalds earns. You don’t need anything but a source of money, from whatever career that you choose, and the desire to do it. Prove me wrong if you can. But you won’t be able to, I am living proof, and you can too if you do what I did.