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Before we entered into the 1 percent territory, we would closely watch our spending. We would be careful on how much we spent on groceries, we would sacrifice our comfort to reduce utility bills, we would eat in as much as we could, and would not travel much. I even got to the point where I would think twice before I ordered a drink at dinner or I would order chicken when I really wanted steak. Over time, this level of scrutiny took away from our enjoyment of life. Now, I’m not chastising anyone who currently does this. Everyone is in a different situation and it may make sense for someone (particularly someone in debt) to track their spending.
When we first got married, we had decent incomes, with growth prospects. Nowadays, we find it far more prudent to enjoy life and to focus a lot of that money-saving energy to growing our incomes by performing better at work. Don’t get me wrong, we still track our spending, but we don’t splurge. We own 2 smartphones that cost a penny each, we don’t own an iPad or any tablet, we own 1 flat screen television, and we haven’t flown on a plane as a family in years. We don’t live extravagant lives by any stretch of the imagination, but we stopped tracking our utility bills, grocery bills, gas bills, etc because they’re necessities and because we don’t splurge on these items.
The Small Stuff List
- Groceries – we buy what we need and consume what we buy with minimal waste (at least we try to). I don’t bother with worrying about the grocery bill
- Utilities – we installed a programmable thermostat, but won’t sacrifice our family’s comfort to save a few bucks. We manage energy as best as we can.
- Gas – we have to travel to work with no reasonable public transportation option. I haven’t look at gas prices in years since there is absolutely nothing I can do about it.
- Dining out – we don’t dine out often, but like to enjoy taking the family out to each every now and then. We probably dine out 2 times a month and order-in 5-6 times a month
- Entertainment – we haven’t seen a movie in years so the most we do for entertainment is pay for our cable bill plus a few $1.00 movies from Redbox. We also go on small trips to Sesame Place and other kid friendly areas, but since we don’t do it very often, it’s not worth tracking
- Grooming – we need stuff to look presentable. Haircuts mostly, but also make-up (for the wife of course).
- Medical – our children need to see their pediatrician as well as specialists. There is no way we would sacrifice medical care for ourselves or our children so we don’t track this spend.
- Taxes – what can I say? It is what it is. We take appropriate steps to reduce our tax liability, but when bill time comes, we pay it and forget it.
Everything else including cell phone bills, cable TV, insurance, mortgage, etc. are all fixed costs so they’re budgeted with no surprises. Everyone’s situation is different, but if you’re making a decent income and you’re not splurging on the small stuff, then pay the bills and forget it about it.
How do you track your spending?
I have an acquaintance who is my age (almost 35) and has just recently finished medical school. He is currently in his residency program and will not finish until 2013 when he will be close to 36 years old. Because he didn’t identify his talents early, he spent 8 years attaining an undergraduate college degree because he switched majors several times. After college he worked odd jobs, but then decided to go to medical school. He didn’t score high enough on the MCAT test to go to a medical school in the states, so he went to a medical school in the Caribbean. He came back to the states, but lost a few years taking the step 2 exam. I applaud him for ultimately choosing a good career, but the opportunity cost is something that he will never recoup.
What I’m trying to illustrate with the story above is what happens when you are not focused and not future-looking at an early age. I often hear many stories of parents who tell their children that they can be anything that they want to be. While I agree with this philosophy to a degree, many people end up unhappy because they cannot make ends meet while pursuing their dream of becoming a rock star. We then often wonder why people who are not good at math become accountants, people who are not exceptional at basketball pursue the NBA, and people who can’t sing audition for American Idol. These children are the ones who spend more than 4 years to obtain a 4-year degree, supported by parents for years after college, jump from job to job, and seem to go through life aimlessly.
As humans, we are not good at assessing ourselves. If we were, then we would fail at nothing, but we fail…we all fail from time to time. The key is to not underestimate or overestimate our abilities and talents. I fail constantly and am not perfect, but I try not to think of myself more highly than I really am. I am an optimist, but realistic in my optimism.
So, how do we get better at assessing our talents?
- The first step is to get an objective view your yourself by seeking council from a family member, friend, or mentor. Ask them to be brutally honest about your key talents and your areas of improvement.
- Write down what your good at and what you need to improve. For the items that you’re good at, try to match them up with careers that will maximize your strengths. Share this list with a family member or friend for an objective review.
- Assess your personal situation. Are you willing to move to another city away from family? Are you willing to move to another country? Do you want to or plan to get married in the near future? Do you want to have kids? Yes, nothing in life is certain, but knowing what you want out of life will help you plan better for it.
- Create a mission statement. What do you want to accomplish in life personally, professionally, spiritually, etc? Create a road map on how you plan on getting there.
Life is too short to waste. I try to live each day like its my last and ask if the world is a better place at the end of the day because of my contribution. Of course its hard to say “yes” everyday, but it is a good barometer on how I’m achieving my long-term goals and helps me stay focused on this journey.
Many envision the 1 percent of income earners in America as someone who either inherited the money or is on the top floor at an investment bank on Wall Street, but there are several ways to become a 1 percenter. Some ways are quick, and some take decades. Some are based on luck, and some take hard-work and dedication. Add to the list in the comments!
- Start a business
- Sell your business (think Instagram or OMGPop)
- Work several jobs
- Go to medical school and specialize
- Climb the corporate ladder
- Win the lottery
- Work at Wall Street
- Invest in real estate
- Go to Hollywood and become a famous actor/actress
- Be a famous musician
- Play on a professional sports team
- Work for the government
- Join the c-suite (CEO, CFO, CIO, COO)
- Inherit a fortune
- Invest in the next Apple Inc.
- Find a treasure at a garage sale
- Marry a rich spouse
- Divorce a rich spouse
- Sue someone rich or a corporation
- Catch a valuable baseball then sell it
- Register a domain name in high demand and sell it
- Live on an oil field
- Discover lots of gold
Feel free to add to the list!