One year ago, I announced that I’d invest every dime I earned in 2012. Will and I would live on his income while investing mine.
The naysayers claimed we couldn’t do it. They were wrong!
It’s now January 2013, and we can announce “Mission Accomplished.” Here are the lessons from a year of not spending a cent:
#1: It’s All in Your Head.
Money management is 90 percent mindset and only 10 percent logistics. When you’re in the mindset that you make gobs of money, it’s easy to spend.
This pledge hooked us into the mindset that we’re a one-income couple. We stopped thinking about my income. Shifting to that mindset was the bulk of the battle.
#2: This is Great for Lazy People
I’m lazy. I hate budgeting. I’d rather sit on the couch eating Cheetos while staring into space.
The best way to avoid bill-planning? Amass a big ‘ol cash cushion. It’s friggin’ great for lazy people who have zero desire to balance their checkbook or scrutinize their statements.
#3: “You’re Rich!”
The whiners crawled out of the woodwork after I announced this project. One of my favorite comments came from a guy calling himself Tom, who claimed ordinary people aren’t “rich enough” to do this.
Oh Tom, you have so much to learn. Let’s look at the lifestyles of the rich and fabulous, shall we?
This year, Will and I:
- Wore the same clothes again and again … and again.
- Lived with two roommates.
“Isn’t Will, like, 33 years old? And aren’t you 29?”
“Isn’t that kinda old to still have roommates?”
“Depends on what you want from life.”
- Drove beater cars.
- Lived without a bathroom or kitchen, in the middle of a massive construction project.
“Wait a sec, you’re still living there?”
“With no shower?”
“There’s a shower at the YMCA. “
“Yep! The YMCA even offers free towel service. Score!”
“And no kitchen?”
“I can go to my parents house when I’m feeling desperate.”
“Why don’t you just rent a place temporarily, while your house is under construction?”
“Because we’re investing roughly half of our income.“
“Only rich people can invest that much money!”
The whiners can go home. In another 10 years, when we’re actually rich, they’ll pretend that we were born that way. (Cue Lady Gaga song). Then they’ll sit in front of their flat-screen TV, sulking about the fact that they’ve made so little progress.
#4: But It’s No Sacrifice
None of these things I’ve named are a real sacrifice.
So my car has some cosmetic damage. So what?
So my clothes are old. Who cares?
Is that a sacrifice? Really? More than a billion people on the planet don’t have enough food. I’m not going to whine about a dinged car.
Where Did The Money Go?
“So, Paula, you mentioned investing. Where did the money go?”
$10,000 went into our respective Roth IRA accounts. Taxes gobbled a larger-than-I-like sum. A few thousand went into this website. The rest went to real estate.
Dude, real estate drinks your money. It’s scary how small of a dent a full year’s income makes.
We paid in cash for many repairs and renovations – like the $17,021 that we spent upgrading one of our rental units. It now rents for an extra $3,600 each year, which means it’ll pay for itself in less than 5 years.
We also paid cash for a $10,000 upgrade to the house that’s giving us a 17 percent return-on-investment. Woohoo! (You’ve gotta read that story, if you haven’t yet).
We’re using a combination of cash and loans to pay for the renovations to our crowning rental unit, a 3-bed, 2-bath within our triplex. It’s pretty ugly right now. Let’s see how it changes …