Be a Ruthless Spender

The best way to spend money is to be absolutely ruthless about each transaction. Living in a culture where people think money comes from trees, credit card debt doesn't need to be paid off, and luxuries are viewed as "necessities", you must be willing to stand up independently and make tough decisions about money.

That's where we Moose folk differ from the herd. We're independent, bad-ass, and don't get pressured to change by anyone without thorough evaluation.

You Can Control Every Expense

There are very few things in our financial lives which we truly cannot control and we have to just go with the flow. These are the real fixed expenses. There are so few in fact, I can just think of one: fixed connection fees on utilities. It might be the only area where no matter how efficient we might be in our choices, the price stays the same and is out of our control.

I think most would agree that going without power and gas is not an option. Unfortunately off-grid solar just isn't via in Canada from an economic perspective.

My issue with the conventional world view that nearly every major expense is a "fixed cost". Mortgages, rent, property tax, vehicle payments, gas, insurance, utility bills, student loan payments, and income tax for example. Apparently all out of your control according to many finance experts.

Well, I got news for you... after turning your back on these so-called fixed expenses, there is hardly anything left to change. This mindset keeps you financially trapped.

If you want to be rich and truly have control over your financial life, you need to change the way you think about expenses. 

The large, month-to-month expenses are exactly the kind you need to get under control. They are the keys to building wealth and gaining financial freedom.

Embrace the variability of these costs; they are only fixed by your psychological and emotional limitations!

Assessing Value by Income

Value is a relative concept. Something of high financial value to me would be clearly inconsequential to someone like David Thomson (the wealthiest Canadian resident).

I believe a good way to measure value by income is to make a rough conversion into hours worked. Here is my formula: divide your hourly wage by 2. This accounts for taxes, mandatory minimum savings, and other payroll deductions. This will give a close approximation of net hourly income for most middle-class Canadians.

If you make $30 an hour, you can actually only spend around $15 an hour on your life expenses.

How many hours then do your have to work for that $600 a month truck payment with it's $200 insurance bill, $300 gas bill, and $100 maintenance bill? 80 hours a month

What about the chipboard and granite palace your coworkers drool over? Well the $2,000 mortgage, $300 property tax, and $400 maintenance cost alone slurp up a whopping 180 hours each month. That's a whole month's work!

How about the two $10 microbrewery pints and pound of wings you bought at the bar last week when you went out with your friends? 2 hours

That well-deserved week long vacation to Mexico every winter for you and the squeeze? 260 hours

Using real hours worked to evaluate the cost of things in your life gives a good perspective on their true cost. You will probably start to think twice about your spending when put in these terms.

Assessing Value by Substitution

Another great way to assess value is by substitution. Basically it is comparing your first option to an alternate acceptable option with consideration to its meaningful betterment of your life.

For example: husband calls and wants to go out to the steak place for dinner and a few drinks. It's going to cost $100 all said and done for the two of you (appy, meal, wine, tip, gas, taxi?). Alternatively, you can hit the butcher place and buy a couple steaks, pick up a nice bottle of red, and get some veggies for about $40. Let's assume you tolerate each other's company and don't mind cooking together. Is the steak place experience really 2.5x better than making an equally nice meal together at home while improving your cooking skills and spending more productive time together?

What about your vehicle? The new truck you never actually haul anything with at $1,000 a month versus a used hatchback that you paid cash and costs you $200 a month to keep on the road. Does that new truck really bring you 5x the enjoyment and utility?

The $300 cable bill versus the $80 internet with Netflix and some library rentals? I have a hard time believing the cable bill gives you nearly 4x more entertainment value.

Owning a 2,000 sq.ft. house in suburbia that costs you $2,500 a month versus a size-appropriate condo close to work that rents at $1,600 a month. Is the big house with all the space you don't need, rarely use, but still maintain and heat really worth 1.5x the condo?

Spending Decisions

The key to ruthless spending is evaluating each expenditure critically. Think about the item, compare to alternatives, and determine its value to you right now. This stops you from making quick, thoughtless decisions—the kind of impulse purchasing marketers dream of.

Ruthless spending is a learned process. While it takes time and can be difficult at the start, over time you learn rules of thumb and can evaluate each purchase decision quickly and easily.

Getting the large expenses under control is a must: housing, transportation, utilities, consumer debt, food, and entertainment.

This means you might be better off moving, selling your vehicle, and saying "No" to your friends and family every now and then.

With these big issues out of the way, your budget will open up incredibly fast! Even an extra couple hundred bucks can speed up your financial freedom immensely.

Adding $500 a month to your existing saving will provide you with thousands of dollars in endless extra monthly income down the road.

Stop waiting and get ruthless!

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One Reply to “Be a Ruthless Spender”

  1. This is a great idea!
    We all fail at rethinking our fixed costs b/c they are fixed.

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