Live On Half Your Income And Change Your Finances Forever

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Live On Half Your Income And Change Your Finances Forever

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ChooseFI Favorite: top rewards card for beginners

Chase Sapphire Preferred Card​

Looking for the best credit card to start earning travel rewards points? The Chase Sapphire Preferred is our pick. With a 50,000 point signup bonus (after spending $4,000 in the first 3 months), the $95 annual fee waived the first year, and ultra-flexible points (transfers to 13 airlines & hotels!), this is our top choice!

If you’re looking to live on half your income, you will need to make some adjustments to how you live, work, and stay entertained. I won't sugar coat it, living on half of your income will challenge everything about your life, but it will be so worth it in the end. Because living on half your income also means saving half your income!

And you don't have to make all these drastic changes overnight. You can work up to them over time. With some testing and research on the fly, living on half of your income can be done!

Calculate half of your after-tax income

To make the math work, you’ll be living off of one of your biweekly paychecks per month, essentially, two weeks’ worth of pay. While many people start by listing their expenses and work their way back, it will be immediately disappointing to see that your current lifestyle, even a super frugal one, likely won’t fit into half of your income.

Instead of tallying up your expenses and finding it doesn’t work, start with half your income and see what you can fit within it. This process will require a bit of work and strategic cutting.

Question everything; from the expenses that you consider essential down to the most frivolous splurges. It is important to keep in mind and plan ahead for some of the less regular, but essential spends–like travel to see family, or self-care when needed. After those are tallied up, it's likely you'll have nothing left over to consider as discretionary income, but with some of the tricks mentioned below, you’ll be able to create some wiggle room in your budget.

Housing Hacks

The biggest gains you can make are in cutting your housing expenses. If you’re married with a family, the idea of house hacking or renting out a room for Airbnb as extra income may feel out of the picture; but as discussed, if you want to live on half your income, you’ll need to get creative to make it work. Simply saying you “can’t” do something makes living on half your income an impossible challenge. Creativity and flexibility in this category means you’ll see the biggest gains to make room for some of the “nice to have” expenses later.

The average mortgage is around $1,030. You can house hack your way towards a lower housing expense easily with a roommate or renting out a spare room on Airbnb. Having a roommate could also help lower utilities, food expenses, and even the cost of childcare and pet sitting. Another option for lowering housing expenses is downsizing your stuff and moving to a smaller home.

Related: What Is House Hacking

Cutting Car Costs

A tenet of FI is to never buy new, but if you’re already driving a used car, you can save more money by carpooling, co-sharing a car with a roommate or friend, biking to work, and/or learning how to do basic maintenance yourself.

Keeping up to date with basic car maintenance tasks and empowering yourself to do them, can save you hundreds. Also, each year when your insurance renews, take at least an hour to investigate if you could be getting a better deal and evaluate if your coverage still fits your needs. Whenever possible, lower your transportation costs–especially if you need more room in your budget.

Related: How To Get The Most Mileage Our Of Your Car

Address Your Triggers & Reroute Your Behavior

Every FIRE walker has their own triggers. Even the most frugal among us have certain things we know will eat through our budgets. It’s unique to each person. For some of us, we know that going out to the bars would be our undoing, or tech gadgets easily tempt our willpower, making it hard to stay on track.

When you recognize your triggers, you can plan for them. There are ways to optimize your triggers, by either rerouting the behavior (like inviting friends to do other activities that don’t involve $12 martinis at the bar) or finding ways put your expensive hobbies to good use.

You can start your own side hustle to learn photography, website editing, dog sitting, or selling consignments on Ebay. Starting a side hustle around an existing hobby can be a great way to indulge while getting some tax write-offs and even earn some extra income.

Podcast Episode: The Hobby Checklist

Learn New Skills & Take A DIY Approach

Most of us pay a high price for convenience and time-saving tools, so if you’re looking to save half of your income you’ll need to take a DIY approach and skill hack your way to savings.

Learning how to cook your own meals, entertain at home, borrow instead of buy, and spend some time researching a purchase before pulling the trigger, means you’ll need to invest some additional time, but you’ll save money.

While it can be overwhelming to cut back on expenses you used to outsource, you’ll be empowering yourself and your family to learn new skills and talent stack. While you may end up cooking a few flops for dinner, spending time instead of spending money can be a lifestyle change that yields more than just cash, but memories in the process.

By keeping with the spirit of self-sufficiency, and not sacrifice–you’ll see your budget change and your daily schedule transform to boot. These changes might be challenging, but you’ll be better for it.

Related Articles:

Live On Half Your Income And Change Your Finances Forever

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2 thoughts on “Live On Half Your Income And Change Your Finances Forever

  1. A few years ago, I moved to San Francisco with a car. After a few months of the car sitting around, I sold it. BEST DECISION OF THAT YEAR. I did the math after a full year of taking Uber, Lyft, public transportation and walking and it was amazing to see the savings. Not to mention, the mental health benefits of not stressing about traffic or parking meters or the DMV. Here’s the whole story if you’re interested: https://thesterlingreport.com/sell-car-take-uber-lyft-everywhere/

  2. When calculating after-tax income, do you factor in the fact that I have already saved in my 401k and HSA acct? So my after tax income is total income – (401k contributions+hsa contributions+income taxes+other pre-tax costs such as medical insurance?)

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