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Why Iím Doing the Challenge

April 23rd, 2006 at 01:26 pm

Yesterday I posted the details of how my challenge is going, and then I realized some folks may not know why Iím doing the challenge. I decided to do the (modified) minimum wage challenge 02/25/06, after reading the ďChallenge::Live on $5.15 an hour::ď thread under General Discussion; mine is modified because I am using the California minimum wage of $6.75. My original reasons are far outnumbered by the rewards Iím seeing. I decided to do this for a couple reasons, but I find am getting more than I expected.

I am getting:

a clear sense of the value of a dollar.

a sense of freedom in not spending everything I make.

additions to my frugal toolkit.

more creative, to cook better meals and put together better gifts.

excellent clarification on where I am getting good value in my spending.

an ability to savor my treats instead of taking them for granted.

the satisfying feeling one gets from taking on a challenge.

the security of knowing that I am prepared if I hit a financial rough spot.

more money to use for long term plans; retirement, house down payment.

a clear idea that healthcare is broken; I am exceeding lucky to have an insurance plan that costs me $44 in premiums; Iíd like to see all people have the ďluxuryĒ of affordable healthcare.

more exercise, in trying to decrease gas use, hanging clothes, etc.

a better diet, in going out less and eating beans, grains, and vegetables.

an enjoyable, if slightly odd, hobby.

a sense of gratitude.

The idea that a good life could be lived on a low income if needs were taken care of before wants is an idea has been percolating for me since I was in my early twenties. It took me a while to act on that idea.

When I grew up, my parents spent what they made. Payday was treat day, the day before payday the fridge was bare. I think that with the double income of white collar professionals, we could have been in a lot better shape than we were, but we had a paycheck to paycheck instability. I didnít learn to save. I got my first real job at 15-1/2 to the day, and I spent a lot of that money on frivolous items-an obscene amount on meals out.

In my late teens and early twenties I made poor money decisions, but I did subscribe to Amy Dacyczynís ďTightwad GazetteĒ newsletter for a bit, so that planted a seed. I donít believe that being exposed to information is ever a waste; when I needed to change financially I had a direction to turn to.

It was in my late twenties that I starting cleaning up my life, including my finances. At this time I had been pretty low income. I had been $6.75 and hour part time (30 hours a week or less), and then became lucky enough to go to $7 an hour full-time, 37.5 hours a week with benefits. During that time, I was able to pay off old debt. I had also always managed to find money for alcohol and cigarettes-it was a priority to me at the time. I had somewhere between $3000 and $6000 in debts, medical bills, and fines, and though that might seem low, it felt crushingly large.

Living within and below my means became a tool for me to not feel afraid financially. I didnít mind eating oatmeal if it meant not owing any more money. I was much more scared of debt than I was any deprivation I might have felt. We never went hungry, we always paid rent, but things were tight. I balanced my checkbook daily because sometimes I had as little as $5 in my account.

I got a job as a civil servant, eligibility worker in welfare, interviewing clients who needed Medi-Cal or food stamp benefits. My starting wage in 2000 was $8.43 an hour. I later moved to cash aid, where my clients received cash aid welfare. A lot of these people seemed to not have the frugality skills to live within a small income. I have a lot of compassion for people on aid, regardless of whether life choices or unforeseen circumstances placed them there. I donít want to get in the welfare debate. I also do not want to get into the Minimum wage debate; I am not arguing that minimum wage is a fair wage. (I will say I think that affordable health care for all would go a long way to helping families make it on lower incomes.)

What I am saying is that our overall culture does not teach frugality. Some of my clients had a series of brutal knocks in life, and being frugal would not have prevented domestic violence, abusive parents, job loss, drug or alcohol abuse, low education, injury and illness. However, during those times of stress, I was seeing that if money was spent differently, at least some of the stress could be lessened. When I started as a worker the food stamp level was $130-something maximum for one person, and people were telling me that they could not eat on that. I was spending much less than that. These folks did not want to buy foie gras, steak, or caviar; but they were buying a lot of name brand items, a lot of convenience foods, a lot of snack foods. One client told me, when granted food stamp benefits, that she was glad that she didnít have to get the 4 loaves for $5 deal anymore. This was at the time that I was buying 50 cent loaves at the bread thrift store, at the same time that I could have spent $2.50 a loaf if I wanted too. I realized that I had a different head space than other people.

Now 6 years later, Iíve been promoted a couple times and make what I consider pretty decent money, especially for my area. I still buy bread at the thrift store. I had been spending more as my income went up, but I had still spent below my means. As Iíve spelled out in prior posts, my per month average spent last year was $1592, and that included a week long trip to Oaxaca and a weeklong trip to Belgium and Poland, and many meals out.

What some people still fail to see is why I would line dry and wash Ziplocs and buy bulk bulghur. Co-workers and friends see frugality as something to be used when broke, but something that a better income can free you from. I donít have full cable (I have the $9.95 twelve channel deal), and folks wonder why I donít have full cable since I can "affordĒ it. A friend gave me a bunch of paper grocery sacks, and I found a receipt in one. This person spends regularly, but I was shocked at what a ďnormalĒ household buys on a grocery trip.

Iíve been through three phases: low income with debt, low income without debt, and higher income living below means.

For the people in debt:
Getting out of debt was one of the most satisfying moments ever. It was definitely incentive to not ever go into debt again. I bought a used car and paid cash, because I couldnít deal with the idea of car payments. Living low, regardless of oneís income, is a great way to free up money to pay off debt more quickly and avoid new debt.

For the people on a low income:
I want to show that living on a low income does not have to mean hunger and deprivation and boredom and insecurity. Other people on this site, in the forums and blogs, speak eloquently about making do with little. Iím giving the detailed numbers based on my real life to show that under certain circumstances it can be done. Admittedly, the minimum wage in California is higher than most of the country, but the cost of living is higher too. Iíve already acknowledged that if I were actually minimum wage Iíd cancel my cable, my Netflix, drive less and walk more, spend less on dining out and clothing, have a cheaper apartment, etc. The money I saved on those would be going to an emergency fund. I admit I am childless, am not disabled, and no longer have any debt. I am living pretty high on my $1073, though-with bulk foods and thrift stores and ingenuity, a person could do a little with a lot. If I had started this challenge with nothing-no home, no furniture, and the clothes on my back-I could use Freecycle and thrift stores to get the minimum basics while I put all my money into an apartment.

For those of us who are making decent money:
Doing this exercise has been invaluable for me to see where I get good value from my spending. I have overspent on clothes, because I donít like clothes shopping, so I go twice a year and get what I need at one or two stores. If I shopped smarter, by checking thrift stores occasionally, I could get better clothes for less. I splurge on silver and semi-precious stone jewelry, $10 to $50 per item, and I donít regret a single purchase. Jewelry is my favorite souvenir from traveling, and I wear my pieces all the time. So I know that Iíve been getting not-so-good value from clothing purchases, but great value from jewelry purchases. A lot of spending on items where I get low value comes from having more money. It is rare that if people get a raise, they still spend exactly what they used to make. I used my extra money to pay for the convenience of one-stop clothes shopping, not for higher quality or more flattering clothes. Iím trying to see if I can choose not to spend money on convenience. I can put a lot of my money into retirement, or investing, if I donít pay for unnecessary convenience.

Now, I donít say that any particular purchase is bad. Take the oft-quoted lattť factor. I myself donít appreciate lattťs and I brew coffee at home and bring it to work in a travel mug. However, I know people for whom the lattť is a truly enjoyed daily treat. They get good value out of the purchase. Where we get value is an individual decision; for some spending less in some areas lets them have a stay at home parent, for others (me!) spending less in other areas lets me travel a couple of times a year.

And with that lengthy post, Iím hoping my reasons for this challenge are clearer. Whew.

7 Responses to “Why Iím Doing the Challenge”

  1. LuckyRobin Says:

    I've enjoyed reading about it. It is amazing what you can do when you don't have debt.

  2. DivaJen Says:

    Thank you for writing this - I've enjoyed reading your updates.

  3. 2Ę Worth Says:

    I liked your post - you're right about "frugality as something to be used when broke". Most people don't understand that keeping up with the Jones and conspicuous consumption aren't going to pay off - all they can see is that being frugal leads to being labelled a tightwad / cheapskate.

  4. Bellen Says:

    Your post was very interesting reading. I'm almost 60, and majored in Home Economics in college. This was during Johnson's War on Poverty. We were taught everything from child care to home design but the majority of courses were how to use money to get the most out of it. At the time, banks, utility companies, etc were hiring Home Economists to work with their clients. It lasted until Johnson went out of office . It was then totally ignored until the 70's and now in the present. If available, there were some really good books written that I still refer to. "The Little Green Book" covered everything - including how to wash a wool suit because you couldn't afford the dry cleaning. I worked for the State of Florida in the early 70's teaching people how to use donated food (that was before food stamps). I was using some of the same recipes because my mother did. It's unforunate that the younger generation does not understand the meaning of living below your means. I applaud you for your experiment and hope that you reach at least a couple of people - the ripple effect at work.

  5. PF Spreadsheets Guy Says:

    Pretty darn cool - most people are too sheeplike to even think of doing something like this. Way to go against the flow to change your life.

  6. annab Says:

    I really appreciate your posts. I'm trying the challenge (as closely as I can) and it is changing my perspective as to the difference between necessity, desires, convenience and luxuries. It's interesting, because frugality isn't considered to be a good thing from the people that I know. But I know a lot of people in debt, and it's scary, because we have the idea that the lifestyle that we have is the basics, and going beneath that in anyway is a kind of bad deprivation. But I'm finding that my life has a lot more luxuries than I ever imagined, really. It's changing my outlook by helping me associate thrift with making conscious choices about spending instead of thrift=what you do only when broke.

  7. LuxLiving Says:

    Wonderful, informative post!!

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