A few months ago, a startup videography team from Florida came knocking on my door.
Mike and Lauren are a young married couple living in Sarasota, and in their spare time, they’ve started hustling:
They’re under contract for their first rental property, devised a plan to retire by 2018, and they’ve launched an awesome YouTube channel about money, travel and financial independence.
They threw their friend and cameraman Ryan Parker into their backseat and cruised seven-ish hours to Atlanta, unwittingly instigating a road trip worthy of a Will Ferrell sitcom. Along the way, they encountered a language barrier, a surprising chemistry lesson, and a $22 parking spot. (Eek!)
Check out the hilarious video of their road trip — it’s classic.
They arrived in Atlanta relatively unscathed, and I spent a day filming and interviewing with the trio. Their final product is pretty awesome — it’s a five-minute snapshot of my path to ditching the cubicle, creating a nomadic lifestyle business, and investing my profits into creating a stream of rental-property-income. You can check it out here:
(If you can’t see the embedded video, this link will take you to YouTube directly.)
While you’re there, check out the rest of MikeandLaurenTV — where they’ve created some fun videos on backpacking Europe, and (if you’re nosy) they’ve also exposed their Net Worth.
“What Do You Mean, You’re Not Frugal?”
During the interview, Mike asked a darn good question, which I’ll paraphrase here:
You don’t focus on the “frugality” side — you focus on the “earn more” side — but you save a huge percentage of your income. Whaaa??
Yep, that’s true. I’ve described Afford Anything as an anti-frugality blog, and yet I saved 77 percent of my income last year, and about 50 percent the year prior. Although the phrase “anti-frugality” is obviously tongue-in-cheek, I should probably clarify that position. Let’s roll:
#1: Frugality is a consumer-based mindset. Yes, you’re paying less than otherwise — you’re harnessing sales and deals and discounts — but you’re still thinking about consumerism, about purchasing and buying and shopping.
I’d like to spread a message around creating something awesome, rather than consuming for less.
#2: You can’t penny-pinch your way to wealth. If you earn $21,000 per year, as I used to, you simply can’t save enough to maximize your 401k and IRA contributions. It’s mathematically impossible. The only way to max out those retirement accounts — plus have enough money leftover to buy investment properties — is by upping the “earning” side of the spectrum.
Frugality is necessary but not sufficient.
#3: Abundance trumps scarcity. There are two ways you can choose to view the world. You can choose to think: “Money is limited; I need to clutch onto every cent.” Or you can think, “There’s more money flowing around the planet than I could ever possibly need; I only have to invest a small sliver of this in order to create a sustainable stream of passive income that can support me for the rest of my life.”
(Wow, that’s a run-on sentence. But you get the idea.)
#4: Your time is your most precious asset. And the best use of your money is to spend it buying time.
And the most sustainable way to purchase time is by setting up passive income streams (rental properties, index funds). Which — again — leads to a mental focus on investing, rather than on clipping coupons.
Lifestyle Inflation is Fine (Really!)
I’m certainly not a cheapskate:
- I don’t clip coupons.
- I don’t make my own laundry soap.
- I don’t rip dryer sheets in half.
- I don’t send away for “free samples” so I can avoid paying for shampoo.
These tiny expenses are not going to “move the needle” — not even over the accumulated span of, say, the next 45 years.
Likewise, I spend lavishly on lifestyle inflation:
– I used to drive a 23-year-old Corolla. It cost $400, and I paid cash.
– Now I drive a 6-year-old Civic. It cost $11,000, and I paid cash.
– I used to wear glasses. Cost: $200/year.
– Later I upgraded to contact lenses. Cost: $500/year — more than double.
– Finally I upgraded to LASIK. Cost: $4,000 (lifetime).
– I used to sleep in hostels, sharing a bunk-bed in a room stuffed with 4 to 10 strangers.
– Now I usually rent a space on AirBnb — although sometimes I’ll couchsurf, or stay in hostels, or treat myself to a nice place.
You know what? I’m totally satisfied with my lifestyle inflation. I don’t want to wear eyeglasses, drive a 23-year-old car, and sleep in a cockroach-infested dormitory bunk-bed next to 9 strangers.
And that’s totally okay — as long as I’m (first and foremost) debt-free, saving for retirement, and investing.
My “anti-budget” is shockingly simple: First, pick your desired savings rate. Choose 20 percent as a minimum, or 50+ percent if you want to ditch the cubicle.
Skim your savings from the top. Spend lavishly and without apology on the rest. Lifestyle inflation is fine, as long as you’re taking care of the essentials first.