Part Nine: Cost Of Living And Personal Financial Runway
I introduced luxury of choice in the last installment.
To kick off today’s installment on cost living, let’s go deeper into luxury of choice.
Because it underlies every thought, idea and concrete method we’ll cover through the rest of this series.
I first wrote about luxury of choice on Medium in November 2021—
The rich live this every minute of every day, though I’m not sure they think much about it, if at all. If they do, they might not maximize its value if — for whatever reason — they continue to work excessively hard.
The luxury of choice
Attaining the luxury of choice might be the most realistic money goal you can chase. At least from the current crop the standard financial media spews at you on the daily.
Luxury of choice works best because it captures something we’re all capable of doing if we make decent or better money and maintain a low cost of living.
Tracing my thinking on this term.
Traditional retirement—not going to happen for many of us.
Financial freedom—pretty much the same thing. You have enough money to never have to work again. Also, not going to happen for most of us.
Financial flexibility—works better for most of us. I define what I mean by financial flexibility in this Medium article. Consider reading it after you read this.
Semi-retirement—that’s the lifestyle goal. To work less now, so you can work less longer. Maybe forever.
In the above-excerpted Medium article, I continued—
Thinking more than I probably should about this stuff, I decided we need something less conceptual and fluid and more utilitarian and clearly defined.
That’s when I went back to something I’ve mentioned before — the luxury of choice.
This isn’t a broad vision of a lifestyle you’d like (e.g., semi-retirement, traditional retirement, financial freedom). Rather, it’s something that works for you in the day-to-day…
As examples —
You see clients. You’re able to block off a day or days for one reason or another or weeks for, maybe, travel. You can do this without considerable stress over the income you lose. You either work at a pace where taking these breaks comes naturally or you can make up for the time off before and/or after you take it.
You have the luxury of choice.
You freelance as a creator. You don’t want to work today. So you don’t. And you don’t fret about it. Simple as that.
You have the luxury of choice.
For some of us, it even comes down to something so basic.
You know you need to get some work done, but you don’t really feel like it right now. You’d rather go for a hike or participate in some other leisure activity. Maybe a lazy leisure activity. You’re able to prioritize living, putting work second.
You have the luxury of choice.
Much of this requires a mindset shift that removes guilt around work (or not working) and puts your work in its proper place.
If you think about bringing your cost of living lower—maybe finding the floor—there’s a good chance you have luxury of choice.
So this discussion is not geared towards people in desperate or even precarious financial situations. It’s meant for people who certainly are not perfect with money, but have quite possibly already been through two of the worst money situations you can be in.
If you’re unable to pay your bills and do some discretionary spending each month, one of two things is probably happening—
You’re on one of the bottom rungs of the economic latter. You have no choice in the matter. You scoff at—and maybe even get angry about—discussions over cost of living. Because you’re too occupied with merely getting by each month on a bare bones budget.
You spend too much money. Probably on housing. Maybe on everyday spending. Maybe both. You have bigger, likely psychological financial problems to deal with. It’s bigger than messing with your cost of living as part of, say, a comprehensive Never Retire plan.
I have been in both situations. The first more than the second.
And there’s a good chance you have too.
Therefore, our discussion on cost of living is for the person who—
Has already struggled horribly with not having enough money to make ends meet.
Has already struggled with some form of overspending. Maybe lifestyle inflation.
Has righted those ships, but isn’t perfect. You have some debt, an unfavorable housing situation or difficulty with cash flow as you transition your job/career.
Has money to play with at the end of most months. Even if a modest amount.
Has money replenishing and accumulating in pots of money. Even if a modest amount.
Has goals around Never Retiring that require strategies so desperate and precarious financial situations, such as the aforementioned two, don’t reenter the picture at the worst time possible—into and beyond relative old age.