This is the monthly post for January. You can watch in you youtube or listen to it on your podcast app: Spotify | Apple | Spreaker | Podcast Addict
Frugality: Achievement Unlocked
I’ve been very focused on reducing my cost of living (CoL) since January 2020. I’m about done.
I mean, I’m about done focusing on low spending. I finally feel like I’ve got radical frugality pretty well internalized and it just doesn’t take that much effort any more. So I’m going to stop thinking about it.
My CoL is trending down below $10,000 / year, which in my opinion is the threshold that unlocks some really interesting options for how to live my life. From here on out, my attention is shifting to exploring those interesting options.
Like what?
I got a permit to hike the Pacific Crest Trail this year. Not the whole thing. I’ll probably just do all of the Sierras and maybe up into Oregon. So June, July, and some of August I’ll be walking.
I plan on spending a lot of time this year wandering around the desert on my new bike. I traded my old Capra with a friend for a Surly Long Haul Trucker. I rode it in to town (three hours) and back (six hours) already, and am in love with it. I want to ride around all of the Mojave, up the eastern sierras, all of it.
I’m psyched to get the Studio a bit more complete. I’m going to put the South windows in (which should make it warmer in the winter), build a patio off the north side of it (which should be a nice cool place in the summer), and build a raised platform on the inside (which will obviate the need for furniture and solve my storage problems in one move).
This is a stretch goal for 2023, but I’d like to build a small earth-sheltered greenhouse, which will serve double duty as a bathhouse. I have a longer term vision of building out a greater capacity to host larger groups of people for longer periods of time here on the land, that these projects are initial steps towards.
I’m also working on a writing project. A book maybe? I haven’t decided for sure what it should be yet. But I’m going to finish whatever it is this year and move on to other writing projects.
Deep Dive: My New FU Stash Rules
Well, see, what happened, is that upon my return from Europe I was a little concerned about how I was going to earn money. I hadn't really earned any of the stuff since I got laid off from my big important engineering job in 2021, and I had no experience piecing together income from this-and-that style work.
So I said "yes" to every single opportunity that cropped up. Surprisingly, several remunerative projects that sounded fun popped up in the first month. I dove in.
Unfortunately, I quickly overloaded myself. I became too busy, and I started dropping other activities in order to meet my new obligations. I was stressed. Not good!
I took a closer look at my finances, and a harder think at what I want to do with my life. I realized that
I didn't actually need to be earning so much money, and
In fact it'd be all right if I didn't earn any more for another couple years, if I could come up with a good reason not to, and
There are some activities I'd like to take a crack at, that would require a fair amount of my time and attention, that might possibly generate some income, but wouldn't do so after at least several months to a year.
I decided to pull back on my obligations in order to maintain a comfortable margin of free time and space in my life. Which is sort of the whole reason I worked so hard to get my CoL down: so that I have greater autonomy over how I spend my life energy.
This process of inquiry made me realize that I needed a better system for thinking about my money. Standard personal finance advice doesn’t apply well to an aspiring solarpunk polymath with a target cost of living of $5,000 a year, and in fact, neither does standard FIRE rules of thumb. I realized, with the help of some friends, that I’d sorta-kinda adopted a FIRE mindset towards money and remuneration, and it wasn’t serving me very well. I didn’t have a solid set of heuristics that fit my actual situation.
So I came up with some. I’ll skip the boring details, but the gist is I have a tiered system like:
Tier 4 is my tax-deferred retirement accounts. I just leave this alone and mostly pretend it doesn’t exist.
Tiers 1-3 are my FU Stash, the buckets of money I live off of. They range from cash sitting in a checking account, to iBonds. I won’t break down the differences between the three tiers, but it’s basically a scale from “money I can get at today” to “money I should leave alone for another couple years, but I could get at it if I needed to.” The intent is to minimize or eliminate losses to inflation. I don’t have an expectation of growth here.
Each tier has a rule attached to it that tells me if there’s anything I need to do, such as move surplus up a tier or pull some extra down from the tier above.
Long story short, my FU Stash Rules are designed to tell me one of two things:
“Ooo, bud, hey um, we’re getting a little low, you need to go actually, like, earn some money, or something.” At the moment, this happens if I get below three years of living expenses.
“You have enough money, it’s fine, don’t worry about it. Only say yes to remunerative activities if you really want to do them for reasons other than money.”
This is the key: it's IF and ONLY IF my FU stash starts to run low that triggers me to go out and seek some efficient means of earning income regardless of whether it's really what I want to do.
Otherwise, it's do watchuwanna and let serendipity do its thing. As long as I keep an eye on my Tiers and follow my rules, I'll never get surprised by a low bank account, and I'll avoid undesirable unnecessary work, or too much otherwise desirable work. Which is just as bad as undesirable work.
There are two reasons why I think this “meh” strategy is not wildly irresponsible:
My CoL is very low, around $5k.
Several of the things I wanna do will likely generate some income. It's possible that within a year or two, they'll generate more money than I spend (because of (1)).
If (2) turns out to be true, then overloading myself now to earn money that I don't actually need at the moment (because FU) and would have generated regardless in the future doing stuff I'd rather have been doing anyway, is totally nuts.
So. There it is. My sophisticated personal finance system is to say no to paid work if I'm not psyched on it. I'll let you know how it goes.
Um. It probably goes without saying, but this is oh so very much not financial advice. I spent the last three years obsessed with radical frugality and applying holistic systems thinking to my skill-activity web-of-effects, and I've got backup plans and social safety nets up the wazoo. I will be fine. Even if this turns out to be a dumb idea.
To be clear: I think this approach is highly irresponsible and risky UNLESS you have a multiyear financial buffer, super low expenses, an existing web of skills including at least one that is highly efficient and doesn't require physical labor, several fallback plan B's, and ideally a robust social safety net.
I happen to have all of those things, so I think it'd be highly irresponsible of me to not go for it. Yes, irresponsible not to try, that's right. I have one little eyeblink of a shot at existence, and so NOT taking full advantage of the privilege and blessings that the universe in its capricious wisdom has seen fit to shower upon me would be like spitting in the eye of god.
Which sounds pretty stupid to me. So here goes. Hold my beer.
Ps: “Don’t throw money at it. Throw competence at it.” —Vicki Robin.
Vicki’s conversation with Nate Hagens on his podcast The Great Simplification is tremendous. Listen to it. (Also, subscribe to Hagen’s podcast if you aren’t already).