Whenever you bring up a large or extreme financial/frugal goal (particularly if you bring it up at a party populated by spendy people, as I once did and will never do again), the first response is often a dismissive snort and, “That’s impossible.” And if you dare to say that you’ve already achieved said, “Impossible” goal, the response is likely to be, “Well, you’re exaggerating or outright lying because no one can really do that.”
Okay. I understand that many large or extreme goals seem out of reach. Mostly, though, what’s limiting the naysayers is their own belief that such a thing is impossible. (And their behavior, but I’ll get to that in a minute.) The first step in achieving the impossible is to want this impossible thing more than anything else. The second step is to believe that you can achieve the impossible. The third step is to behave in such a way that you make the impossible possible.
Sure, it’ll take work and sacrifice. Anything worthwhile usually does. It won’t be easy. If it were easy, no one would think of it as impossible, right? You have to match your actions to the goal. (This is where the behavior I mentioned above comes into play.) If you say you want to retire early, you have to behave in ways that make that possible. That means spending very little money today so you can sock every extra cent away. Either that or you have to earn so much that you can still spend freely while saving a ton of money. Either way, your behavior has to match the goal.
Here are some money-related things that people commonly dismiss as impossible but which are more than possible if you work at them. No, you might not be able to do everything on this list, and you probably can’t achieve all of them at once, but you can probably manage one or two with careful planning and work.
I essentially “retired” from work several years ago in my late thirties. I still work, but I only take the jobs I want to do because I’ve saved enough that I don’t “have” to work. People all told me that retiring so early was impossible, but it wasn’t. I saved aggressively, beginning with my first job. And I’ve always kept my expenses low. I don’t buy stuff I don’t need and I get the best possible price on the items I do need. Contrary to popular belief, I don’t live a deprived life. I have plenty of entertainment, clothes, and food and I’m not so extreme that I’m not using toilet paper. I simply realized early on that the forced treadmill of working until I died was not something I wanted and I did everything I could to make certain I wouldn’t have to.
Even if you don’t retire early, many people think that retiring at all and being able to eat anything but dog food are pipe dreams. Again, retiring comfortably is possible, but you have to prioritize it over other things. You have to start saving early in your working years (to take advantage of compounding) and keep saving the whole way to retirement. Too many people put it off until the kids are gone, the house is paid off, or some other excuse and then there is no way to catch up. It’s too late.
Fully Funded Emergency Fund
While there is a difference of opinion about what constitutes a “fully funded” emergency fund (some advisors say three months of expenses while others push it up to a year), many people feel like putting that much away is impossible. It’s particularly “impossible” if you’re saving for retirement and other goals, as well. But an emergency fund isn’t built in one day. You build it slowly, putting in the $20 you saved by not eating out one day, or the $5 rebate check you received from your cereal purchase. And if you can bank a big amount, like a tax refund, you’re well on your way. Ideally you want to save more, but the big goal is achieved by consistently putting money in the bank (and then not raiding the fund for anything other than a true emergency).
Change Someone Else’s Life
Wouldn’t it be great if you could give someone enough money to change their life? Whether you give to a family member, through a charity, or set up a scholarship at your alma matter, it is possible to save enough to make an impact on someone else’s life. Ideally you’d like to do it while you’re alive to see the joy, but that may not happen. Instead, you can strive to save enough that you make a bequest in your will. And you might be surprised by the amount of money that people consider “life changing.” While $10,000 might not seem like much in terms of what the truly wealthy can give, you’d be surprised at the difference it can make in an impoverished country, or even to a student who can’t even dream of college without scholarships.
Some people dream of being able to kick their insurers to the curb. To do this, you have to have enough money saved to cover any damage or loss to your property, or any illnesses that you may have. (And you should still carry liability insurance to cover you against lawsuits. Your state will likely require it on your car.) And you must also own those items free and clear since lenders will require insurance to protect their investments. Even if you can’t fully self-insure, it’s possible to save enough that you need only carry catastrophic insurance. You’ll pay for the minor stuff and only rely on the insurer for significant losses. (Self- insurance isn’t a dream I’ve ever had, but I have a neighbor who has achieved it on his home. He paid it off and then dropped all but liability insurance. He has enough saved to pay for a new home and contents and cannot see paying the insurer any longer. He continues to save what he would be paying in insurance premiums, further growing his savings.)
Live a Minimalist Existence
While this one doesn’t require saving or earning huge chunks of money, many people still feel that it’s impossible. Whether it’s a tiny house or simply owning a finite number of things, many people swear that it’s impossible to even downsize, let alone live a minimalist existence. The trick is to separate your value as a person from the stuff that you own or the square footage of your home. Too many people confuse “success” and “worth” with big houses and lots of stuff. If you can be comfortable in your own skin, lose your attachment to stuff, and stop caring what others think of you, you can easily live a minimalist existence. All you have to do is donate your stuff to a worthy charity, toss the trash, and then refuse to bring anything else unnecessary into your home.
Start a Business
Starting a business doesn’t always require tons of money. There are lots of businesses that can be started for very little money. What is required is discipline, a salable product or service, and commitment to making the business work. You have to be willing to put in the hours, listen to feedback, and learn what you don’t know about taxes, accounting, insurance, etc. Very few people start a business knowing everything and having everything in place, but they are willing to go out and try.
Like starting a business, travel does not always require lots of money. Luxury travel requires money, but there are plenty of other types of travel that you can engage in that cost much less. We travel many weeks out of the year, but much of it is camping in our RV or visiting destinations out of season. While luxury travel is nice, I’d much rather take more trips for less money than one big expensive trip.
Move to the Country (or the city, the mountains, or another country)
Many people dream of moving somewhere else. They want to make their dreams of a certain lifestyle come true. But many feel stuck where they are because moving can require a lot of money. Besides saving like mad to make the dream come true, you should also ask whether your dreams need readjusting. Can you downsize significantly so that you require a smaller space, which would be more affordable? Can you be happy in your second choice location if it is significantly less expensive? Sure, it would be great to be able to afford the big dream, but maybe you can be happy with a bit less if the location is what’s most important.
Pay Cash for a Car (or house, boat, or RV)
As with many others on this list, these are goals that you must prioritize and save for. But as with the others, there are compromises you can make. If you buy good used cars, they will cost much less than new. Same with “toys” like RV’s, boats, and ATV’s. If you start saving for the replacement immediately after buying the current car, and you drive it for years, paying cash is more than possible. As for houses, you’ll probably have to mortgage your first, but if you pay it off quickly and then use your equity to buy the next house (with maybe a smaller amount in cash added on), you’l have accomplished the impossible. This won’t work if you buy houses that are significantly more expensive each time, but it can work for comparably priced homes and, if you downsize, you may even pocket some money.
Pay Cash for College
Whether you’re a student seeking to avoid college debt, or a parent seeking to pay for your kid’s college in cash, it is possible to pay cash for college. If you’re a parent, college has to be a savings goal and you have to start as soon as (if not before) you have kids. And you have to set limits. If you’re willing to save and pay $60,000 for college, for example, but your kid wants to go to a school where that won’t cover it, you have to tell them to cover the difference. If you’re a student, you have to be willing to work hard, attend state schools, and chase every available scholarship, all while cutting expenses. However, people do manage to pay cash for college every day. It’s not as impossible as it seems. It simply requires a readjustment of expectations and a solid work and savings ethic.
Live Well on Less than $20,000 (or even less) Per Year
Many people swear that it’s impossible to live well on a tiny income. What makes this “impossible” is usually the definition of the word “well.” When most people think of living well, they think of large houses, nice cars, and other creature comforts. But living well can also mean simply having a decent roof over your head in a safe neighborhood, adequate food to eat, a little entertainment, and decent clothes. That is more than possible on a small income if you are creative and willing to work a bit. Buying things secondhand, growing some of your own food, choosing free entertainment, and relying on mass transit are great ways to reduce expenses. You may also have to move to a lower cost of living area, take in some roommates, or otherwise get creative to reduce your expenses. It’s not impossible to live well on a small income, but it requires that you adjust your lifestyle and expectations. You’ll have to learn to do without things like cable TV or cell phones that other people consider “essential.”
Live without a Car
Americans love their cars and most consider life without one to be impossible. In some areas of the country this is true. Mass transit is sadly lacking in many areas. But if you live in an area with mass transit, or within walking/biking distance to most of the places you need to go, you can live without a car. You may be able to carpool or participate in car sharing programs. You can rent a car if you need to travel long distance, and some metropolitan areas have cars that you can rent by the hour if you just need to run a couple of errands. If you don’t live in an area that’s friendly to the carless and going without a car is important to you, you may need to look at moving.
Have One Spouse Stay Home
Having one spouse stay home requires, like so many other things on this list, a disciplined savings and budgeting strategy. If you want to go from one income to two, you have to plan for it. Try living on one income before you give up the second one. Save aggressively even before you have children. If you think you will require more money than one income can provide, have the stay at home spouse look for work that can be done from home. You’ll likely have to cut expenses, as well, but not paying for commuting expenses, lunches out, and employment taxes will help with this. It’s not impossible for many people to live on one income, but it may require that you learn to live with less and let go of some things like cable TV, newer cars, and meals out.
If you want to accomplish the impossible, you need to plan and prioritize in order to make it a reality. You can’t go at it half-assed, or simply hope that things will fall into place. You have to know how much you need, how much you can save, and constantly evaluate your finances to make certain you’re on track to meet your goal.