Perfection of the Life

The intellect of man is forced to choose
Perfection of the life, or of the work...

So said Yeats. It's "man" rather than "person" not only because of the scansion. Perfecting the work may always end a tragic failure, says the poem: but at least you haven't been a sissy and done something so easy and trivial as perfecting your life.

Well. I suppose it's always the job you haven't taken on that looks like the easier one. It's perfection of the life that I'm aiming at here, or at least improvement of the life. The shadow world of my personal finances and domestic habits: all those things that we all supposedly have under control before we step out of the door and greet the world and present ourselves, but which are actually a shame and a shambles. 

So I hit my both my weight loss goals this month. The next two things I'm undertaking involve habits as stubbornly inwoven as overeating: the restaurant habit and the driving everywhere habit. I have eaten breakfast out every morning since I was seventeen years old; and apart from the glory days of bicycling, when I lived closer to downtown, I've been driving to work for most of my working life. Burgerville every night was a godsend to my weight loss effort, but it wasn't cheap. Not the way I reckon cheap, anyway. 

The arithmetic is simple. Daily, I save at least $10.00 by making breakfast at home; $8.50, reckoning gas and parking, by taking transit; and $6.00 by making dinner at home. In total, $154.50 per week, which comes to a shade over $8,000 per year. These habits are expensive. (And every one of those savings estimates was lowballed.)

By the standards of some people, we were already living cheap. We make well under the Oregon median income, and we've been planing along, just meeting our expenses. This has been fine, because our retirement (at this same modest level) is funded. But I'm a gloomy, conservative person in my financial posture and I've always meant to pad the margins a bit in these last few working years. The padding wasn't happening. 

So now -- flushed with victory as I am -- I mean to force the issue. Cutting $8,000 from my expenses will not only allow us to pad the margin: it changes the retirement calculus drastically. If my investments & social security have to generate $8,000 less, the capital required to fund my retirement is $200,000 less, too. (My rule of thumb is: 25 x annual expenses = required retirement capital. There are a zillion other ways to reckon this, of course.) Suddenly my financial future looks downright rosy.

Okay, but. These habits are deeply part of me. The habit of getting out into the public-but-anonymous world of the cafe to write has been essence of Dale for forty-some years. This is going to take some doing. And eating at home requires planning and tracking. It takes a lot of brainspace, especially at first: how many eggs do I have? How long do I have before the burger in the fridge goes bad? These things are not second-nature to me. They take effort. I have to make up new habits: and I already have the weight loss habits to protect.

So it's a stretch. If I end up not being able to swing it, well, I fall back to the old habits and hope I really do have enough savings already: I'm not going to let the weight loss slip away. But I'm ten days in and going strong. Here goes.

Three Ways to Think about Saving Forty Cents

View from the Exercise Carpet in the Wreck Room: Massage Sheets Drying

I saved forty cents this morning. Something like that. Instead of running my load of massage linens through the dryer, I hung them up to dry. Google tells me that running a dryer once adds about forty cents to my electricity bill.

And forty cents, you know, buys... well... nothing. I don't think there's a single thing I buy for that little money, any more. Throw in another few cents savings, maybe, for the incremental wear and tear saved on the dryer, but it still doesn't add up to much.

And then there's the set-up cost. I bought a hundred feet of line -- we needed line anyway, and we have a good bit left, but still, I spent a dollar at least. So I don't even make back expenses until the third time I do it.

This is the first way, and probably the most common way, to think about saving money. You do all this work (actually this was not a lot of work, but there's five minutes of browsing the internet, lost to me forever!) and you get nothing out of it. What earthly good is forty cents?

Ah, but let's annualize it! A massage therapist does a lot of laundry: I was typically running the dryer four or five times a week, every week of the year: some 250 loads at forty cents apiece. That comes out to $100.

This is the second way of thinking about it, and I confess that it's still not very exciting. $100 is in fact money, but it's not a whole lot of it. And it's earned at the distinctly uninspiring wage of $4.80 per hour. Wouldn't I be better off to sink that time and energy into drumming up more business? $100 is what I charge for a single in-home massage, after all.

There's actually a lot of ways to pursue this line of thought. Do chore time and creative-marketing time actually come out of the same bucket? What about the overhead of doing that $100 massage, the driving, the marketing, the oils, the linens? (And, yes, the sheet-washing?) What about the fact that Uncle Sam is deeply interested in my massage earnings, and expects a cut of them, but turns up his nose at my line-drying earnings? You can bat it around a lot of ways. But it's still true that $100 a year doesn't seem like a lot.

But there is yet a third way to think about it, and this is the one that had me pinning my sheets to clothes-line in the wreck room this morning. To grasp this, you need to understand The Four Percent Rule. This rule says that you can rely on taking out 4% of your savings (intelligently invested) for the rest of your life, without exhausting them. Which means that to be financially independent -- to live on your savings -- your annual expenses must be no more than 4% of your savings; or to turn it around, once you've saved up 25 times what you spend in a year, you never need to work again. (This is hugely controversial, by the way, and can be argued six ways from Sunday, but I find Mr Money Mustache totally convincing, on this one.)

Due to the outrageous good fortune of my life, and a certain innate miserliness, this savings is within hailing distance, for me. (And a good thing, too, because at 58 I don't necessarily have a whole lot of working years left in me.) But I'm not there yet. Despite the fact that Martha and I earn well below the Oregon median income, we are saving money, to the tune of some $3,500 a year. So we are inching towards that financial independence number.

How exactly does this fit in with the forty cents I saved this morning? Well, the "25 times" may sound awfully daunting, but actually what it shows is the extraordinary leverage of reducing your annual spending. $100 per year is not much money. But the savings needed to safely generate that $100? $2,500 dollars. There's no legerdemain here. Saving this forty cents has exactly the same financial impact as saving an extra $2,500 this year. Or to put it another way: it magically scoots me eight months closer to financial independence.

All of a sudden, saving that forty cents looks a whole lot different.

Five Tips: What To Do If You're A Person Who Can't Save Money

Well, you're not a person who can't save money. But leave that aside for now. For the moment let's think about the problem this way: there are two people wearing your body and living your life and making your decisions. One of them wants to save money and one of them doesn't.

Tip #1: Treat both of these people as fully rational and intelligent. Because they are. There are lots of excellent reasons for spending money. There are good reasons (though fewer) for spending money you don't have. Your spendy self is not a willful unteachable brat. She's a human being with deep and important reasons for doing everything she does. Find out what they are. Find out why she thinks these things are more important than saving money. Honor her intentions. She's not going anywhere. Your solution is going to involve either enlisting her, or tricking her. Enlist her if you possibly can, because it's not as easy to trick her as you might think.

Tip #2: Trick your spendy self if you can. If you have an employer with a savings plan, which lets you save your money before you ever see it, and makes it hard to take the money back out once it's in, then do that.

Tip #3: If you're self-employed, or in debt, that won't work. You're going to have to enlist your spendy self. Get her on your side. Find the moments when she spends too much, and interrogate her about them. Why does this expenditure seem so imperative? What's at stake? Don't treat her like a naughty child. Treat her like an adult. She might be right, after all. But it's likely that you can persuade her that whatever end she's trying to achieve by spending this money -- generally, making somebody happy -- can actually be better served by NOT spending it. Saving that money rather than buying a treat -- that is the treat. You're buying them, and not just yourself, financial room to maneuver. You're buying freedom. You're buying treats to enjoy later.

Tip #4: Realize that they're out to get you. I don't ordinarily encourage this frame of mind, but in this case it's totally appropriate. They are out to get you. The marketers and credit card companies and banks, the media, often even your friends, are all trying to manipulate you into spending money. If you feel like the target of a plot, its because you are. Cultivate paranoia and even a little hatred. This economy is, by design and with full intent, a machine to manipulate you into spending so hard that you have to work ever harder just to keep up, so that you never have time to pause, never have time to think it over, never have room in your life for art or God or love or contemplation. Push back. They'll nickle-and-dime you into submission, if they possibly can. Screw them. That's not what life is for.

Tip #5: Remember, when you're scrimping: you are already this poor. You are not pretending to be poor in order to be rich later. You really are this poor, and by saving twenty percent of what you make -- the bare minimum, for most people, to set up a comfortable retirement -- you are simply facing the facts of your poverty. Face them boldly and fiercely. Be proud of being a person who understands reality and is willing to be real. Do it for yourself, and do it for the people you love. They need your example.

Get Real: You Are Poor

I get worried about my American friends these days. I don't think they understand how poor they are.

We grew up with some truths about money and working that aren't true any more, and I don't think we've quite realized it yet.

Inflation. When I was at an impressionable age, inflation sometimes ran into the double digits. In that environment it made all kinds of sense to borrow money, lots of it, because the money you were going to pay the loan back with was going to be worth less than the money you borrowed. My grandparents' horror of debt vanished. Everybody was borrowing money. Everybody is still borrowing money, but now they're going to have to pay it off with real money. Borrowing money is stupid now.

Furthermore, when money was dwindling rapidly in value, employers had to keep giving raises to keep up. We came to expect raises of ten or fifteen percent as a matter of course, just the way things worked. Well, they don't work that way anymore. You make what you make, and if you don't like it, there's plenty of unemployed people who would be delighted to step into your shoes. Suck it up. There's no reason to think you'll ever make more money than you're making now. You might well make less. This is it.

The balance of power has shifted decisively to Capital. Pensions, unions, benefits, all those Western European style things, are vanishing from our landscape. Labor, with a few dwindling exceptions, is passive and powerless. We grew up with the vague expectation that we just had to earn a living – make our daily expenses – and everything else would be taken care of. That's how people in France and Germany live: if something awful happens, the State will take care of you.

Not here, not now. You're on your own, and if you don't have money saved for your incapacity or your old age, you're going to be out on the street. In the age of inflation, saving was for suckers, and making a few percent on your capital was a mug's game. Now it's working for a living, just meeting your expenses, that's for suckers. The overriding priority, in this economy, is to get yourself over to the Capital side of the equation, where people actually get ahead.

How do you do that? By saving like a motherfucker. 'Scuse my French. All that stupid crap about saving five percent of your income? Forget it. You want to save half your income. Half of it. Get that through your head. When you have paid off your debts, and what you have saved equals 20 or 25 times your annual expenses, then you can ease up. Then you can live off your capital, and you're not a slave any more. Till then, it's going to be hard.

But that means I'm poor, like really poor. Yes. It does. You are. You have to live in a shit place. You can't afford lattes every day. You can't afford a car. You can't afford vacations abroad. You can't afford to eat out. You are poor. You're not “middle class.” There's no such thing any more: there's rich and poor. I don't like it any better than you do, but not liking it doesn't make it go away.

Save radically, as much as you can. Stick it in an index fund and leave it there. Don't try to outsmart the wolves: just get in amongst the pack and try to blend in. This is survival we're talking about. Get real.