“Happiness has got to be paid for”
Aldous Huxley, Brave New World
Every dollar that we keep is two dollars (one for the taxman) that we don’t have to go back out and earn. We value money for what it is. Freedom now and in the future.
Our goal is to try to retain around 70+% of our total income. After an exercise reviewing our finances over the last three months we are falling short of our aspiration. The average that we saved or invested over the period was 37%.
For us that is quite poor, but if you put it in the context of the normal western family that saves around negative 20 % each pay cheque (i.e.. they spend 20% more than they earn) our saving rate is actually exceptionally good.
There are a range of reasons that our savings have fallen off, but basically it just boils down to avoidable, but unpredictable expenses that we incurred.
We call these unexpected hard hitting bills black swans.
It is possible to live simply in a city, but it is impossible to avoid all expenses unless you are prepared to scavenge waste and generally eek out a fairly miserable existence living under bridges.
While I’m inspired by people that can live by their own ethics like Charles Gray I don’t chose such a life for myself or my family. If you aren’t familiar with the story, about 20 years ago Charles calculated his share of the earth. He determined that to take anymore than his share was unfair. He actually felt that taking more than his share was a form of violence against others. His research has lead him to develop the World Equity Wage (WEW). According to Gray’s calculation (based on 1980’s population levels) he had rights to:
• Live on 4.2 acres of land
• Earn/spend about US$5000 per year (or $420 per month).
So for the last 17 years he has lived on his WEW in Portland, Oregon.
Living on $5000 in the US would be challenging to say the least.
Under our optimal spending profile we would have broadly US$20,000 or £12,500 (€15,000) per year for day to day living, but as I said earlier in the last 3 months we RAN aground. A flock of black swan bills nested in our mailbox. One thing I know for certain is that even Charles will have his share of black swans. Living his way he must also have remarkable capacity to cope with these events without spending a dime.
I used to get really annoyed when black swans flew in shat all over us and then disappeared into the mist. Now I go with the flow. Black swans are just part of life. Cars break down. Children break things. Bikes get stolen. Sometimes you get sick. There will be last minute flights. Sometimes you won’t get to the airport in time. You lose your purse. Your husband also loses his wallet. Your vegetarian salad includes shredded chicken and your kid falls out of a tree. Life happens. The only way to react to black swans is to smile at them and glide through the situation as gracefully as you can.