Like many small business owners, I had to make changes when I started my business. Downsizing my personal spending was the hardest part, as my take home pay dropped by two-thirds. You learn a lot about the value of money when you're forced to cut to the bare essentials and there's no other source of income to tap. The biggest change is how I valued my time.
Nobody is going to pay you an hourly wage based on your efforts, so there's none of the usual mental comparisons. You can no longer say, "Well, a $20 car wash is worth it, because I make $50/hour and it will take me at least an hour to wash my car." There's nobody willing to pay you $50/hour to do anything, or even a dollar an hour. Wash your car yourself or you're out twenty bucks. When you realize you need to sell $250 in games to cover that car wash, you'll start looking for the bucket.
As you start cutting your expenses down to the bone, you place a much higher value on your money and especially your discretionary income, such as entertainment dollars. I mention this because cutting my expenses by two-thirds allowed me to see what I truly valued and what was fluff in my life. The result was promising.
Trading down on cars, was a big one, followed by entertainment expenses that seemed a bad value, like going to the movies or dining out. Gym memberships that didn't get used, subscriptions to magazines I didn't read; that stuff was easy money. Eventually I dropped my Tivo and satellite TV, changed my broadband service to something reasonable, and relied on fixed cost entertainment services like Netflix. I mention all this because one thing I didn't cut: spending on games.
It's true that I was more wary about my spending on games, more concerned with value for my dollar, but the amount I spend didn't change much. In the last few years I've bought armies for Flames of War, Warhammer Fantasy and 40K, and have kept up with my D&D habit. Granted, I get things at cost, but it just meant I got more for my dollar, not that I spent less. Games are a tremendous value, even when incomes are low. I believe this based on my own experience, and I believe we'll continue to see that with hobbyists that visit us. I'm confident that hobby games can stand up to any entertainment medium as a strong value. The only thing that has changed is the value proposition, the desire for better value for the money that will put a fork in many less useful products.
The idea that your time is worth what you get paid when working is a myth anyway, even if you aren't working for yourself. It's not as if when you pay someone $20 to wash your car that you are spending that time making $50. You're usually either sitting on your ass, or going shopping (and spending even more money).ReplyDelete
The only time this comparison is valid is if you'd actually have to take off time from your work to go do something, and you'd earn less as a result if you did so.
It does help in value comparisons, which I think is Gary's premise, sort of.ReplyDelete
However, I still dont' think it's worth Bill Gates' time to pick up a $100 bill he finds on the ground. Even if he's not doing anything else. *Unless* he gets something out of it beyond the actual value of the currency - the satisfaction of discovery, the thrill of finding money on the ground etc etc.
On another note Gary, I was hoping to see how it all relates to your Buddhist studies...
As for Buddhist Studies, I'm fully aware that I was a conspicuous consumer because I was unhappy with what I was doing. I knew it *as* I was consuming. Self awareness doesn't equal a change in behavior.ReplyDelete
Downsizing my life has broken that negative pattern of behavior. Even if I went back to a "real" job, I don't think I would change my lifestyle, upgrade my car, etc. Now my concerns for wealth are about others, such as having enough money to send my son to college or moving to a better school district.
Being on the lower end of the income spectrum has shocked me as to how unfair our society is, especially regarding education. California is especially bad. Income equal educational quality. If you're poor, it's probably because you didn't get a good education, which means you can't afford an expensive house in a school district that's properly funded, so you live in a poorer neighborhood, with a smaller tax base, and thus bad schools. The cycle perpetuates. There are ways around it, but you have to be clever.
Oh yeah, that guy's out of office now...