Money is life energy. This is a concept articulated in great detail in the fabulous, must-read book, Your Money or Your Life. We earn money by going to work and doing things. Most of us don't particularly enjoy our jobs, our commute, our bosses, our coworkers, our customers, the interior design of our workplace, or, well, anything else about working. We do it because we don't have a choice. Work is the price of the ticket. If we want to live here on this earth, we have to eat, and if we want to eat, we have to figure out some way to get the food. Food, clothing, transportation, shelter, wifi, and all the rest. What we spend our money on is a direct tradeoff for whatever we had to do to get that money.
Calculate how much you have to show after working for an hour. This formula also comes from the YMOYL book. Look at your take-home pay after taxes and anything else that is withheld from your paycheck. This is not your true net pay. You next subtract anything you spent in that pay period that you would not have spent if you didn't have to work for a living. Commute, bridge toll, parking, any snacks or adult beverages (including coffee) that you only buy as compensation for how much you hate your job. THEN divide that sorry amount by how many hours you actually spend on your job, including work hours, overtime, commute, lunch, breaks, and any "free time" you spend thinking about or complaining about your job.
The first time I did this, my true hourly wage was about $3.75.
Now that you've calculated what you actually earn for an hour of your precious life spent at your cruddy job, what does it cost you to buy stuff?
Frugal people do this kind of calculation routinely. If I buy this on a regular basis, it's $X per week, roughly $4x per month, $52x per year. Variation: That would cost me a day's pay, a week's pay, a month's pay. Variation: If I invested that much and it earned a 4% rate of return compounded annually, it would be worth this much when I retire, or, conversely, spending this amount regularly would require this much capital investment. If your eyes just glazed over, that's totally okay! These mental calculations don't snap into place automatically unless you're already quite good with numbers and comfortable with math. For most of us, it's much simpler:
When I buy this, it means I paid for it with time in the saddle at my wretched job.
If we're in debt, it means more:
When I buy this, and I didn't save for it, and I'm already in debt, it means I expect Future Me to pay for it. Also, I want Future Me to have to pay interest on the debt.
When we buy stuff, we're buying it with after-tax money. Most of us are also paying sales tax on most items. When we buy stuff on credit, we're then adding interest and fees on top of everything else. It's variable depending on what you earn and where you live, but you can estimate. To buy a $100 item on credit, you would have to earn $169. (Assuming 25% withholding, a 10% sales tax and a 15% interest rate on a credit card that you didn't pay off for a year. Oh, and not including tip).
Okay, enough with the math already, it's making my head spin. My husband is helping me with this and he just pointed out that due to our tax bracket, we effectively have to earn $2 for every $1 we spend. Me: "We can never go to Starbucks again"
Another calculation that frugal people use is to compare the price of one thing to the price of another version of it, and ask whether this makes sense. For instance, I can pay $8 for a bucket of movie theater popcorn, or I can pay $5 for a 12-pack of microwave popcorn. Is the experience of eating stale popcorn during the movie really 20x better than the hot, fresh 42-cent bag I can make at home? If I'm buying jeans, is the $100 pair twice as good as the $50 pair?
This calculation can be used in a similar way to compare distinct objects and experiences. Is $1.99 for chips equally as good as $1.99 for kale? (Yeah, yeah, yeah, but consider the difference between both choices compounded over ten years).
Another calculation is any monthly expense, or what we refer to as a "dinger." Like a cash register going DING! A dent in a car is also referred to as a ding. Most people are not in the habit of doing this, but the results of this exercise can be impressive. Multiply any regular monthly cost times twelve months of a year. Would the monthly cost of a storage unit really and truly add up to the cost of a round-trip plane ticket anywhere in the world? (Answer: if it's $100 a month, then yes. Cable TV, same answer).
A dollar is worth exactly one dollar, no matter who is spending it or what it's buying, just like everyone gets the same 24 hours in a day. Intentional living means we are spending our hard-earned dollars in the ways that we intend. We are getting the most value for our effort. We are avoiding expenditures that don't mean all that much to us, and instead using the money to buy our heart's desire. We're making sure the pittance we earned during our worst hour on the job was really worth the trouble it took to earn it.
I've been working with chronic disorganization, squalor, and hoarding for over 20 years. I'm also a marathon runner who was diagnosed with fibromyalgia and thyroid disease 17 years ago.
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