Your Money or Your Life, Step 4: The Three Questions

[This is part 4 of a 9 part series on the book Your Money or Your Life. See my original post about the book.]

In the last step, we started a Monthly Tabulation, where you figure out how much you spend in various categories.

Now we’re going to add three more columns to the tabulation. Each column represents the answer to one of the following three questions you’ll ask yourself about money/time spent in that category:

1. Did I receive fulfillment, satisfaction and value in proportion to life energy spent?
2. Is this expenditure of life energy in alignment with my values and life purpose?
3. How might this expenditure change if I didn’t have to work for a living?

For shorthand you can use a +/- system. The + sign means spending more in this category would increase fulfillment, would demonstrate greater personal alignment, or would increase after Financial Independence, respectively. Conversely, use the – sign if you didn’t receive fulfillment proportional to the hours of life energy you spent in that category, or if that expenditure was not in alignment with your values and purpose, or if you could see expenses in that category decreasing after Financial Independence, respectively. Leave the box blank if that category is just fine where it is.

For example, every month when I see how much we’re spending on car-related expenses (fuel, parking, insurance, maintenance), I put a – sign in “alignment with my values” since I value exercise and public transit over driving, and another – sign in “change if I didn’t have to work” since if I didn’t have to work I’d have more free time to get places slower. It took a while, but these costs have started to go down, like magic. I’m choosing to walk and/or ride the bus more often when we go on family outings. We’re saving money and also enjoying the ride.

Finally, this is the core of the 9 steps (and not only because we’re half way through). Taking a look at whether or not you’re spending what you want on the items/services you want to spend it on is the single best way to change your spending. Budgets don’t work, they’re like diets. Being honest with yourself about your values and the sense of fulfillment that your dollar buys is the only way to make changes.

This step takes about an hour a month. It also helps you figure out what is enough for you, which we’ll talk more about in a later step.

Bank Transfer Day: politics aside, it just makes sense

November 5th is Bank Transfer Day, when everyone who keeps their money in big, for-profit banks is supposed to close their accounts and move them to a not-for-profit credit union (CU). This is different than the run on banks that preceded the Great Depression, since nobody is recommending you put your cash under a mattress. Instead, you’re moving it from one type financial institution to another.

I’m not a huge fan of the Guy Fawkes stuff (the guy was sort of a terrorist), but this event simply makes financial sense, politics aside. Since executives at Credit Unions aren’t making big bucks like their colleagues in the for-profit banks, they’re able to offer lower rates on loans, higher rates on savings accounts, and other perks, such as reimbursing you for other banks’ ATM fees. In short, their business model isn’t built around squeezing every last penny out of you, because credit unions don’t answer to Wall Street.

My biggest gripe with CU’s used to be lack of ATMs, but if you bank with a CU that belongs to the co-op network, you have almost 30,000 ATMs to choose from.

I recommend a slow approach to changing banks. It takes a month, but if you forget about any auto-pay stuff being deducted from your old account, it won’t bounce.

Here’s how to make the switch:

1. Find a credit union near you and open an account there. Deposit a good part of your money at the CU, but not all. The amounts are up to you.
2. Cancel all automatic withdrawals & deposits from your old bank and move them to the new bank. (This is the most time-consuming step)
3. Wait a month, and check your old bank account to see if any auto-pay deductions occurred.
4. Transfer the rest of your money out of your old account and close it.

Anyone planning to (or recently did) a bank transfer? I was lucky enough to start out at a credit union, though I did have the experience of switching from one credit union to another (FirstTech to BECU). It was mostly painless.

An amazing new service that will change your life!

I just found out about this amazing new service. It’s like Netflix but it also has books and music. It also compels you to get exercise and to meet your neighbors. And best of all, it’s totally free!

Ok, I lied about it being new and about just discovering it. The service is called the Seattle Public Library and it’s one of the most amazing parts of living in this city. Even if our neighborhood branch looks a little silly:

Like a colonialist with a robotic arm

Making the switch from being a media buyer/renter, to a patron of the library isn’t going to save you huge bucks (when we canceled our netflix subscription, it was like $7 a month). The biggest change is accepting the idea that one need not own something to get full enjoyment out of it. Borrowing it for a few weeks is good enough.

In other words, you no longer need to stockpile media in your home. Our CD collection fits in a few CD booklets. Our movie collection fits in a drawer, with room to spare:

And it’s mostly Lord of the Rings

Our bookshelf is tucked in the corner of the bedroom, and mostly contains books that fall under the category of “stuff I’d like the kids to read when they’re a little older,” starting with The Hobbit, and working up to Cryptonomicon.

The exercise part comes from the fact that the library has no parking so I usually walk or ride my bike there. And getting to know your neighbors is just an effortless side-effect of being in a public place every so often.

You’re already paying for your local public library through taxes, so you might as well enjoy the benefits!

DIY Halloween Crafts

Americans plan to spend an estimated $6.9 billion this year on Halloween decorations, costumes, and candy. To put that into perspective, the Titanic was built for about the same price (in 1910 dollars).

DIY candy is out of my league, but here’s a cute DIY decorations craft project: egg carton bats.

Just take an egg carton, cut it into 3-egg sections, and trim it into the approximate shape of a bat. Paint it black, then add eyes with white paint or stickers. Spooky!

DIY costumes are left as an exercise for the reader…

My secret about jackets

Speaking of jackets, I have a little secret that I’ll let you in on:

My ski jacket is as waterproof and as clean as the day I bought it. That’s a pretty bold statement considering I live in rainy, outdoorsy Seattle, and the jacket is 10 years old.

The secret is a product called Nikwax. It’s really two products purchased together. The first preps the jacket by cleaning it. The second is the actual waterproofing agent.

A kit costs $20 and is good for about 5 jackets. I figure for that price (plus the negligible cost of running the washing machine twice and the dryer once) I’ve extended the life of our family’s jackets by at least 10 years. (The kids get cheapo thrift store ski jackets that they lose or grow out of in a year anyway.)

Frugality doesn’t mean not buying nice things. But it does mean taking care of the things you have so you can get the most use out of them.

Not caring what other people think. It’s hard.

The hardest part about being frugal is not caring what other people think.

I bought a coat at Value Village for $5. I assume it was priced low because it had a rip in the back, since it’s an otherwise amazing jacket that packs down small.  I’m not good with sewing but I’m really good at duct taping things.  So I taped the hole closed with waterproof duct tape.  That was 2 years ago and it’s still going strong.

Since the hole is in the back, I usually forget about it anyway.  I probably saved myself $50 – $75 compared to buying a comprable coat new.