independence

Going Off the Grid Is a Lot Harder Than You Think

Philip Brewer — Thu, 15 Dec 2016 11:30:12 +0000

The term "off the grid" has taken on an expanded meaning of late. It used to be used in a literal fashion, to refer to disconnection from the grids supplying power, gas, water, and telephone services. Lately it's come to mean something broader: disconnecting from what whatever parts of "the system" seem objectionable to you.

Some people want to disconnect from the financial system. Some people want to disconnect from the surveillance state. Some people want to disconnect from the globalized economy or industrial agriculture or consumerism. Any of these choices have both costs and benefits.

Take a look at some of your options.

Off the Grid on the Low-Tech Path

To go fully off the grid is to become self-sufficient — to produce all the things you need for daily living. This is only sort-of possible. That is, the technology to produce everything you need to live is very low-tech indeed — pretty much everybody lived that way for the past 100,000 years — but there are two problems, one of which is insurmountable.

The Surmountable Problem: It's a Hard Way to Live

There are two historical routes along the low-tech path. The more recent is subsistence farmer.

You can't just decide "I'm going to be a subsistence farmer" and expect to succeed at it. It takes capital (in the form of land and tools). It takes skills (that your grandfather may have had, but that you probably don't). And if you can acquire both of those things, it then takes long hours of year-round backbreaking work to eke out a meager existence.

You can live at a much higher standard of living if you work for money (whether at a job or at your own small business) and then use that money to buy the things you need. Even if you don't make much money at all — part-time work at minimum wage, or whatever you can make as a freelancer at this or that — you're still going to be able to live as well as a subsistence farmer.

Oh, the subsistence farmer will get better food. It doesn't get any fresher, more local, free-range, or organic than the stuff you grow yourself. The subsistence farmer also gets the huge satisfaction that comes from supplying your own needs with your own two hands. But if you really want to produce everything yourself, you're going to have to do without a lot.

You have to make a lot of choices about how pure you want to be. Each thing you want to learn how to make yourself — nails, let's say — means another big investment in tools (forge, anvil) and skills, and another huge amount of work that you have to do to produce enough nails for a project. And each thing you decide not to make for yourself — cellphones, let's say — draws you into the money economy, meaning that you need to produce a surplus, so you have something to sell beyond what you need to live on.

Although it would have been a lot easier in your grandfather's time (his parents had and could teach many of the skills that you're going to have to learn from YouTube videos), it's probably easier now than it was in the 1960s, when a lot of hippie types gave subsistence farming a serious try. At least you've got the YouTube videos.

There is a lot of stuff out there to help, if you're serious about giving something like this a try. You might start with my review of The Self-Sufficient Life and How to Live It here on Wise Bread from a few years ago.

Just for completeness, I should mention the even older low-tech path: The lifestyle of the hunter-gatherer.

As a practical option, this one probably doesn't even exist. Virtually all the land that is suitable to support hunter-gatherers is more valuable for some other use, and so it has been taken for that use. (Hunter-gatherers couldn't win fights with farmers even before firearms were invented.)

I suppose a wealthy person could buy a hunting preserve on a tract of land big enough to provide enough fish, game, and plants to support himself. If he did his hunting with primitive weapons and processed the carcasses with primitive tools (and kept to himself), he could probably get away with violating the rules on hunting seasons, fishing licenses, and the like. But it would just be a fantasy of living as a hunter-gatherer. As a landowner, he'd still be on the grid. (As a rich person, he'd no doubt be on the grid in all sorts of ways.)

Having said all that, hunting and gathering are both useful as ways to improve whatever lifestyle choice you end up with. Anything you can take from the wild is something that you neither need to grow nor buy. I talk about that in my post Foraging: Not Insane, Useless, or Impossible and Andrea Karim has posts looking at hunting and fishing for food and at gathering edible weeds. (Of course those barely scratch the surface of what hunting and gathering can do to supplement your diet in modern times.)

The Insurmountable Problem: You're Still on the Grid

A farmer needs to own land, and all kinds of grid attachments come along with that. You have to pay your property taxes, so you have to earn some money, so you're probably going to have to file an income tax return as well. If you need to earn money you're probably going to have to be able to market your products, so you need a truck, which means even more money, and even more grid attachments (license, plates, safety inspections, dependence on foreign oil).

There are other ways you can't get off the grid. The state is going to check and make sure your kids are getting a proper education. You can teach them yourself, but you need to be on-the-grid enough to do the paperwork. You need to have health insurance even if you don't want to avail yourself of modern medical care. Zoning regulations will affect how you can use your land. Federal marketing orders and agreements affect what crops you can grow, and the EPA regulates what you can do with wetlands on your property.

Because of these issues (and a hundred more like them), I've become enamored of late by the possibility of a different sort of path to off-the-grid living.

Off the Grid on the High-Tech Path

If you accept the fact that there simply is no way to live completely off the grid — if you abandon the purity aspect of the notion — another option opens up: You can go off the grid a la carte, picking and choosing where connecting to the grid is worth the cost, and where disconnecting is the bigger win.

The question you need to ask is "Why do you want to live off the grid?" If you understand the answer to that question, you can decide where to put your effort.

The Satisfaction of Providing for Your Own Needs

If this is what moves you, you can start right away. Think about what you need and start producing it.

Food? An intensively worked suburban plot can provide a large fraction of all the food a family needs, but you can start with just a garden. If you can have chickens where you live, you can easily be self-sufficient in eggs. You can certainly raise a few rabbits and substantially augment your household meat supply.

Clothing? Learn to sew. Learn to knit. Learn to weave. Learn to spin.

Shelter? Look into the "tiny house" movement. (There are several tiny house articles on Wise Bread.)

Producing your own stuff is only sometimes cheaper than buying it, but stuff you produce yourself can also be better than what you can buy (once you get good at producing it).

The Safety and Security of Providing for Your Own Needs

One downside of "the grid" is that you're so terribly dependent on it. If the power goes out, you're sitting in the dark. If a backhoe takes out the wrong cable, you've got no landline (or no Internet, or no cable). If the water company starts piping in water that's contaminated with lead, you're drinking from bottles until they clean the system.

You can replace most of these things in a grid-free fashion, although it often takes capital.

You can put solar panels on your roof and produce your own electricity. If you live out in the country, you can drill your own well and pump up your own water. You can even set up a biodigester and produce your own methane gas (although it might be simpler to harvest the occasional tree and burn wood rather than gas).

There's really no way to go grid-free for telephone and Internet, because the connection is the essence of the thing. But if you wanted to do it, the technical chops required to set up your own local network — one that covered your home or your neighborhood (or your walled compound) — is not beyond the capability of an ordinary person. Throw in some access points capable of establishing a meshing network and a server with ample disk space and you could offer folks very local networking that was completely independent of the larger grid, providing voice access to everyone within your local network and offering whatever you wanted to spin up on your server. (A local copy of Wikipedia wouldn't take up much room at all.)

The Morality of Providing for Your Own Needs

Things that you produce yourself can be produced in accordance with your own values.

You can be confident that no produce from your own garden was harvested by poorly treated migrant labor. You can be confident that no garment that you sew yourself was made by slaves or prisoners. Eggs from your chickens can be cruelty-free, cage-free, free-range, and organic to exactly the extent that you choose — and will certainly be extremely local.

Using power produced by your solar panels funds no overseas terrorist organization, drains no cash to money-center corporations, nor does it enrich the shareholders of the firms endangering our air and water with fracking, offshore drilling, or poorly maintained pipelines.

Where morality is not implicated, you can choose to stay on the grid. I don't live in a tiny house: I live in a town house — but it's a town house owned by a cooperative that I'm a member of. In essence, I rent it from myself. It's on the grid, but it's very much in accordance with my values.

Living large on a small budget makes it easy to live light on the planet, and that often goes hand-in-hand with high-tech, off-grid living.

The Flexibility of Providing for Your Own Needs

The technology of the digital nomad makes it possible to go off the grid in a very different way.

On the one hand, the digital nomad needs regular (although not necessarily constant) access to the Internet. That's as grid-connected as can be.

On the other hand, once you've arranged your life to allow you to be location-independent, you can be pretty indifferent to exactly which bits of the grid you choose to depend on, and you can shift around based on the circumstances of the moment.

You can live out of a suitcase and laptop bag, using the power and Internet available wherever you happen to be.

You can outfit an RV (or a van) with some solar panels and some batteries, add a few gigabytes of data to your cellular plan, and live and work anywhere you choose.

You can connect to the grid, work for as long as seems appropriate, and then disconnect whenever you want.

Being able to make these choices — and then make different choices when the circumstance (or your thinking) changes — is what I mean by the high-tech path to off-grid living.

High-tech or Low-tech, Capital Makes a Difference

There's a big trade off between self-sufficiency and self-reliance, and the more of what you need you can produce for yourself, the more options you have.

The grid is part of this. Replacing it requires a lot of capital. Doing without means taking a hit to your standard of living. This means a lot of hard choices, but each additional chunk of capital can turn one more hard choice into an easy choice.

I mentioned at the beginning that a subsistence farmer needs capital for land or tools. Many of the other strategies I've mentioned — such as getting your power from a solar array — involve substituting capital up front for monthly bills (and a reliance on the grid).

There is the option of going big on capital. If you've got enough money, you can be as local and off-grid as you want in sourcing your food, power, water, and so on.

If you lack capital, you're going to have to pick and choose which aspects of grid you chose to unhook from. Or else, you're going to have to accept a very low standard of living indeed.

In the end, it comes down to your values. Why do you want to live off the grid? What lifestyle choices support those reasons?

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This article is from Philip Brewer of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

8 Frugal Living Skills I Wish My Parents Would Have Taught Me

Mikey Rox — Fri, 09 Dec 2016 11:30:08 +0000

We had it great when we were kids. Zero responsibility, zero bills, zero debt — and then we grew up. Our parents tried to teach us everything they knew, but nobody's perfect, and some things we had to learn the hard way. Like how credit cards will ruin your financial life for years if you start whipping them out at 18 years old like you actually have money to pay the bill. My mistake! Take a look at these other frugal living skills I wish my parents had taught me and see if you can relate.

1. How to Live the "Vacation" Life

I know what this sounds like, but it's not what you think. Living the vacation life isn't about lying around on the beach every day (at least not in this sense), but rather living like you're on vacation by getting by with only the essentials.

Rebecca Gitana, author of the minimalist blog Lifestyle Remix, explains.

"When we travel, we only pack the things we love," she says. "The result is the feeling of lightness and endless possibility. Take that same concept into how you 'pack your home' — only keeping things suitable for your next great adventure."

While I'm fairly good at purging my belongings when I no longer have use for them, I do still retain some of my hoarding roots (especially when it comes to clothing), a trait likely inherited from my parents who really enjoy their "stuff." It's a habit that can be broken, however, if you can see the value all around — literally and figuratively.

2. It's Okay to Buy Generic

We never, ever bought anything generic in my house growing up, and I shop similarly today. I justify my brand-name-only purchases with the philosophy that these brands are popular and famous because their products are superior. In some cases that's true, but not always. Which is why I use my judgment when deciding what to buy generic and what to splurge on. I buy store-brand pantry staples, for instance, like flour, sugar, and spices, as well as meat and other proteins. As much as I can, I try to use coupons on brand names to hopefully bring the cost down to where the generic brand would be. Makes me feel better, at least.

3. Why Multi-Purpose Purchases Are Important

We had plenty of space in my home growing up, with an attic and a basement, so there wasn't a real need for furniture and other items that pulled double duty. I had to learn how to make the most of very small amounts of space when I moved out on my own, especially when I moved to New York City. After living in urban areas for nearly a decade, I've conditioned myself to shop for those two- or three-pronged products, like pullout sofas, storage benches, and appliances that can perform several functions.

4. There's No Shame in Using Coupons

Until very recently, my parents didn't use coupons when shopping for groceries, and I tried to get away with coupon-free shopping when I first struck out on my own. Admittedly, I didn't get very far. Like my parents, lots of folks don't use coupons for many reasons — they don't feel like hunting them down and clipping them, for instance, or they think that somehow using them makes you look like a cheapskate. Nonsense. Take it from me — the coupon king — that saving your hard-earned money on necessities like food so you have enough to pay for necessities like shelter and heat isn't being a cheapskate; it's being smart. So to hell with what other people think about how you spend your money.

5. How to Determine What You Need Versus What You Want

Yes, I'm a personal finance expert, but I'm also an avid consumer and major supporter of capitalism, which means that I can sometimes succumb to impulse buys because I think I have to have something. But when I started spending my own money on all the things I thought I'd just die without (that my parents previously bought for me), I had to step back and re-evaluate the situation. As such, I've gotten pretty good over the past 17 years that I've been financially independent, like choosing gas for my vehicle over a new pair of Nikes.

6. To Proceed With Extreme Caution With Credit Cards

Like many families, mine didn't talk about finances. My parents went to work, made the money, and we magically had everything we needed. I honestly have no idea how many credit cards they had, how much debt they were in, if they had any money in their savings accounts — so on and so forth. And I'm probably correct in assuming that you grew up similarly. Which is in part why as I became an adult, I had no idea how to manage my own money — especially when it came to credit cards. Long story short, I maxed mine out within six months of receiving them, and it took me yeeeeears to pay them off. Now I use credit the proper way — as an extension of the money I already have, not a put-it-off-until-you-have-it loan from the Money Gods. (See also: 5 Habits of Responsible Credit Card Users)

7. How Vocational Skills Will Save You a Ton of Money

In all fairness, my dad tried to teach me how to fix various issues on my car as a teenager, but I just wasn't interested. As a result, now I have to pay the friendly mechanics at my neighborhood auto shop more often than I'd like. But it's not just auto skills I wish I had learned. I could've benefitted from a wealth of vocational skills, from home improvement projects to yard maintenance to electronics repair, that would have saved me a ton of money thus far and perhaps made me some if I were enterprising enough to monetize my skills.

8. How to Comparison Shop

I'll give my parents a break on this one, because when I was a kid, it wasn't an easy task to comparison shop. In fact, I think we've all learned how to do this together over the past decade or so since the Internet has made it easier. Either way, I'm a pro at it now. My new goal is to teach myself how to do it more efficiently instead of spending hours investigating the best price. How about you?

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This article is from Mikey Rox of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

4 Reasons 'Frugal' Shouldn't be a Dirty Word

Claire Millard — Fri, 01 Apr 2016 10:30:05 +0000

What does living frugally mean to you? Do you think of deprivation and doing without, people merely scraping through in a life barely lived? Or maybe you think of fanatics, evangelizing for their way of life while extreme couponing and haggling in Walmart?

Frugal living has had quite the PR problem. But modern frugality really isn't about hair shirts and gruel. Today many people come to frugal living through conscious choice, rather than necessity. They often find it's a lifestyle choice that can actually enrich. Here's why.

1. Frugal Choices Are Value Driven

It's a common misconception that frugal living is all about saving money — but sometimes the frugal choice is not the cheapest one. To take a simple example, the frugal choice when buying a key item you need to be long lasting, like a winter coat, might not be visiting the thrift store. You might actually be better off buying new, and buying the best quality you can afford. Apart from the wider range available, this is a good way to avoid the high price of cheap clothes.

That might not sound so different from the choice anyone else might make, but the crucial point is that it's an examined decision. Frugal choices are mindful, where wall-to-wall commercials and our consumer society tend to promote mindless, reactionary buying.

A frugal mindset means that you're aware of your spending, thinking about the real purpose of a purchase before you make it. At its core, modern frugality is not about penny pinching. It's about attaching value to the right stuff. Which, of course, might not be stuff at all.

2. Living Frugally Offers Independence

There's little we Millennials prize more than independence. At first glance, frugality might seem to remove independence, forcing you to forgo opportunities and limiting your choices. And it's true that on a day to day basis, a frugal approach will see you dropping your skinny Starbucks latte habit, and put the kibosh on the designer handbag collection. But in the long run, a frugal life offers great independence.

People who choose to live frugally deliberately reduce their material needs. If you need less, you can save more — but many choose frugality not for the option of filling up the coffers, but for the opportunity to rebalance work and life.

Free from the need to keep up with your neighbors, you can critically examine how much money you need to earn for a lifestyle you will enjoy. As your financial needs diminish, you can choose to cut your working hours, take time for your hobbies, visit family, or study. Maybe you could even retire early.

3. Being Frugal Fosters Creativity

Necessity, as they say, is the mother of invention. Being frugal is a surefire way to foster self discipline and creativity.

Take birthdays or celebrations, for example. When you start from a frugal mindset, gifts and parties are not about how much you spend, but about how much you think. No last minute, guilt-driven smash and grab at the shopping mall here. The same goes for eating. Frugal living is about cooking from scratch, planning a menu and shopping list, understanding and working with seasonality. Put down the take-out menu.

Some elements of a frugal life are more demanding than others. That's where the self discipline comes in. But we humans are meant to be able to look after ourselves, and modern conveniences have stripped away some of that. Getting frugal is a great way to get creative, and experience the rewarding feeling of making something yourself, whether it's a gift or a gazpacho.

4. Frugality Promotes Personal Connections

Living frugally naturally leads to valuing experiences more than things. By being open and mindful to experiences, frugality can deepen personal connections.

Traditional research into the science of happiness agrees. The Easterlin Paradox suggests that people could ultimately be happier if they devoted more time to non financial goals like spending time with family, or improving our health. More money, once your basic financial needs are met, does not make us happier — the idea that it does has been described as the "money illusion."

One reason for this is that a more consumerist outlook can inadvertently foster a sense of competitiveness. Even with those closest to you, you might get a jealous twinge looking at the latest flash purchase. Instead of comparing designer high heels, frugal people might share an experience with those around them. Get into the countryside for a walk or cook a meal together — just stay away from the mall!

So, far from merely enduring a miserable existence, perhaps those embracing a frugal life are actually demonstrating that you can have more, with less. Maybe collecting a life full of experience is more rewarding than a closet full of clothes.

What do you value about frugality?

This article is from Claire Millard of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

Independent People Have These 7 Things in Their Homes — Do You?

Nick Wharton — Mon, 01 Sep 2014 15:00:06 +0000

Independence can be hard-earned, and even more difficult to keep. But part of that battle is providing yourself the right tools — not just in terms of "skills," but actual, physical things. (See also: People Who Love Their Bodies Do These 12 Things — Do You?)

Whether it's about mastering your domain, maintaining health, or just not having to call a plumber, here are seven things you'll often find in the homes of truly independent people.

1. Home Office

A true mark of independence is being able to get a task done on your own. Working from home, or having the ability to do so, takes discipline — a huge tenet of the independent lifestyle. Set-up an office desk (bonus points for a standing desk) with a computer. Furnish it with functional items like a wall clock, calendar, note pad, and organizational trays.

2. Running Shoes

Running is an endurance sport of the mind and body done in solitude. The kind of person who can regularly practice running for long distances is more likely to have less decision anxiety and have more confidence in accomplishing tasks independently. Not a runner? Start jogging using an app for structure, such as Couch to 5k.

3. Tool Box

Independent people are prepared with the basic handyman skills needed to fix minor household problems. Even the least handy should have a full tool kit, with a hammer, screwdrivers (every head), wrenches, nails, bolts, the whole bit. The kitchen water faucet will inevitably get loose and start leaking. Why call for help when minor issues arise?

4. Art on Display

Independent thinkers enjoy sharing their interests and surround themselves in what they enjoy. Art, posters, sculptures, and decor that are proudly displayed around the home are true signs of a well-defined individual. Fan of Cézanne? Buy a large print for inspiration. Not sure what kind of art you like? Peruse Etsy or Society6 for attractive pieces that fit you. Feeling self-conscious about that X-Men poster? Don't. It's your home.

5. Home Garden

Making your own meals from your own bounty is not only a great sign of independence, but a great set of skills that promotes a healthy lifestyle. It's also a good way to relieve stress and get exercise, which are scientifically proven to help one's self-esteem and health. Don't have a yard for a garden? A windowsill is all you need to grow tomatoes, herbs, and sprouts. (See also: 10 Unique Garden Containers and Techniques)

6. A Well-Updated Calendar

The truly independent have a firm grasp on their schedule. If you have a partner or an assistant, it can be easy to lean on them to remember events and obligations, but remember that no one will value your time as much as you do. Try a new calendar app, or re-organize your iCal. Staying on top of your own calendar every day might result in being more satisfied with your work week.

7. Valid Passport

Don't wait until planning a trip to get a passport — always have one! The freedom to travel at a moment's notice is a key part of being independent. Haven't used your two weeks' vacation yet and fares to Australia are low right now? Got invited to Mexico with five days' notice? Having a valid passport means you can go where you want, when you want.

Are you an independent-minded person? How many of these things do you have at home?

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This article is from Nick Wharton of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

Wage slave, debt slave

Philip Brewer — Tue, 21 Jul 2009 20:00:07 +0000

This article has its roots in an article I wrote some time ago that used the terms wage slave and debt peonage--terms that some people objected to. Those making free choices aren't slaves, they said, even if their poor choices result in a hard life. There's some truth to that. But there's also some truth to the notion that our system makes it easy--almost automatic--for people to trap themselves.

I've thought about it a lot since then, and found that the terms still resonate with me. It's true that the system makes people complicit in the process that traps them, but that fact doesn't make it okay. It seems to me that the system is designed, whether consciously or not, specifically to get people locked into it.

(The article where I used the terms, by the way, was this one: Self-sufficiency, self-reliance, and freedom.)

Student loans

It starts with student loans--available to any student, pretty much without regard to whether their course of study will give them the skills and certifications that will produce an income to support the debt load.

Students with parents who are both generous and affluent can escape. (I largely did.) Students who are both unusually smart and unusually wise, or else are lucky enough to get very good, thoughtful advice, can escape. But most students come out of college with debts that lock them into the money economy. They have no choice but to earn enough money to pay off that debt--on top of the money they need to support themselves, of course. Even bankruptcy won't free them.

Which isn't to say that student loans are evil. For many poor students who couldn't otherwise afford to get an education, they're a marvelous tool--something that can break generational poverty and let people aspire to some of the great things that can follow on from education.

But for too many people, student loans are a default choice that they make--often before they've even graduated from high school--without even imagining that there are alternatives.

And that's just the beginning of it. The default path is to graduate from college and then get a job to pay off the student loan (and pay living expenses). The wise graduate might know that it'd be a good idea to get that loan paid off quickly, but that's still likely to take a decade. It's not practical to put your life on hold until then, so you proceed with all the ordinary aspects of living your life: getting married, having kids, buying a house--with the attendant mortgage.

Mortgages

Mortgages are no more evil than student loans. If you buy a house that's well within your means, a mortgage can be cheaper than renting.

But just like a student loan, a mortgage traps you in the money economy--you have to earn enough money to make that mortgage payment (and your student loan, and all the other costs of supporting your family), or else you lose your house.

I won't even talk about credit card debt.

The trap

This all works fine for most people, but it fails badly for some--for people who can't find work or lose their job or become disabled. It fails less badly for others--people whose degree prepared them for work that they enjoy, but that doesn't pay well enough to both support them and get them out of debt, or for people whose work pays well enough but that they don't enjoy. Overall, I'd say it fails to some extent for lots of people.

There are all kinds of ways to support yourself besides working at a regular job. You can be self-employed, you can do freelance work, you can be a writer or an artist, you can grow your own food and make the things you need. Most of those ways won't support you at a middle-class standard of living, but they're an option. Except that they aren't an option to most people, because most people are in debt. And most people in debt can't cover their cash expenses any other way than by working at a regular job--those other options, although they can provide enough to eke out a meager existence, don't generate enough cash to do that and make the monthly payments.

The way out

In the end, debt and wages work together to trap the overwhelming majority of people.

It's hardly an airtight trap. You can buy your way out if you earn good money: Keep your expenses low, pay off those debts, get enough savings that you don't need to borrow again, start making some investments.... That path to financial independence is well known to anyone who reads financial blogs.

But it's a path that most high school students don't learn about. Most people only begin to understand when it's too late--after some young kid (i.e. them at age 17), guided by well-meaning but under-thoughtful parents, guidance counselors, and college admission advisors, have set them on the path to being locked into employment by wages and debt. Once you're there, it's a long hard slog to switch back to the path to financial independence.

One thing I'm sad about is that so many people who have managed to find the path to freedom have so little sympathy for the people who went badly astray. Granted, those who have just begun to find their way will be in the midst of difficult striving, but it somehow seems to me that should give people more empathy with those who, following the default advice, headed down the path of debt. In fact, though, it seems to give them less.

There's nothing wrong with debt and there's nothing wrong with wages. But I think the system we have now is pernicious. It makes sure that everyone starts out with a load of debt to trap them into working for wages at exactly the moment that they might otherwise be exploring other possibilities, and keeps them there until family obligations and a promising career make it hard to escape.

It's not impossible to escape. Wise Bread is full of advice, both tactical and strategic, for finding the path out of the debt and wage trap. Better if you never get trapped in the first place, but who among us has such luck? Who among us was smart enough or lucky enough or well-advised enough as teenagers to find the path to financial independence early? Too few.

This article is from Philip Brewer of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

Book review: Your Money or Your Life

Philip Brewer — Sat, 28 Jul 2007 00:25:46 +0000

Your Money or Your Life by Joe Dominguez and Vicki Robin.

This book is one of the classics of modern frugality, and it's been a source of some controversy. At the bottom, though, its message is a simple one: Pay attention. Pay attention to how you spend your money. Pay attention to what you have to do to earn it. Having paid attention, think about whether whether your time and money are going where they ought to.

Pay attention

The book is structured a bit oddly, partly because its roots are in an audiobook and workbook, but also because the authors knew that a lot of people would resist the underlying message and need to be coaxed along the way.

As you follow the steps in the book, you identify where your money comes from and what you have to do to get it. The authors emphasize including all the incidental time and money that goes into your job--commuting, shopping for work clothing, hours spent unwinding after work, etc.

Having analyzed where your money comes from, you next analyze what your money goes to: track your spending down to the penny. Don't neglect to show the less visible expenditures like taxes, and be sure to identify the expenditures (such as for work clothing) that only exist because you have a job.

The next step is simply to make the previous information visible--put the income and expenditures on a big graph. Most people are going to find that the spending line tracks along very close to the earning line--they're spending all they earn. For too many people, it's worse than that--they're spending all they earn and then some.

The next steps are the obvious ones of maximizing your income and minimizing your spending, but the authors have a significant twist on it.

Since you've been paying attention, you know just what you've been doing to do to get the money that you're spending. So, they have you think about it just that way: Before you buy another whatever-it-is-you-want, think about just what you had to do to get that money: so many hours spent working, preparing to work, getting to work, recovering from work, so many dollars spent on gas for commuting and clothes for working in (and those dollars converted into the hours of work it took to earn them). Is the thing worth the hours of your life it took to earn the money? If so, buy it. If not, don't buy it.

Go through the same exercise on the earning side, trying to maximize the dollar return for each hour that you spend on money-making endeavors.

Investment program

The book has a very simple investment program that many people have taken issue with. The authors want you to invest your surplus money (a growing amount, once you make some progress on maximizing income and minimizing expenses) in long-term treasury bonds. More than a few people have criticized the program on the grounds that a diversified stock portfolio would produce higher returns. These people have missed the point: The goal of the investment portfolio is to produce a very secure stream of income. Long-term treasurys are a perfect choice.

Once your investment portfolio is in place, start graphing the interest received on the same big graph that has the lines for earnings and spending. The interest income will grow steadily (as you invest your surplus). Sooner or later--depending on how much you've managed to minimize your spending--your interest income line will cross the spending line. At this point you are financially independent.

The best thing about the book is its nonjudgemental tone. It never tells you how much money to spend or how frugal to be. It just gently urges you to pay attention to how much of your life you have to trade for each purchase, and to decide if whatever you're about to pay is worth the trade.

This article is from Philip Brewer of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

Is This Job Worth It?

Troy Hadley — Tue, 03 Apr 2007 18:15:34 +0000

This post technically isn't about me. It's about a friend, a lousy job situation, and soliciting feedback from our readers for a friend of mine.

Tiffany is an engineer who works for a small start-up. She makes a very good salary, has benefits, and doesn't have a particularly heavy workload at the moment (her company is building a product, so the work comes in fits and starts, so she's been chilling for a couple of months while the hardware is being built). Anyway, Tiff is kind of bored right now, but otherwise OK. She's the only female in her office, and works with about 12 men who are much older than she is (she's 27, they're all about 45-57).

She feels well-respected and knows that she has plenty to offer the company. The CEO seems to like her, she gets long well with everyone.

Tiff recently became close with a coworker named Mike. Not close-close in a here-comes-the-lawsuit kind of way, but so that they discussed their lives with each other. Mike could complain about his college-age daughters to Tiffany, and she would assure him that they would turn out fine. They both discussed their concerns over the direction of their company, which was erratic, to say the least.

Mike's job was to coordinate several engineering projects, although he wasn't technically a manager. Mike got along well with the CEO, and idea-man who is big on vision and short on business plans. He was one of the few people who could tell the CEO when he was getting off-track.

A few weeks back, the company almost went under. Funding wasn't coming in as expected, and paychecks were delayed. Tiffany and everyone else started sending their resumes out to old coworkers and recruiters, but kept working for the company with the CEO's reassurance that the checks were in the mail.

When Tiff and Mike were having lunch one day, and talking about where they were going, Tiff expressed some of her concerns about the proprietary nature of the job. Because everything that they are developing is very hush-hush, Tiff isn't able to say much on her resume beyond "I coded some things that I have to kill you over if you knew about them." She told Mike that she was worried about continuing to work for a company that wouldn't put a product out for two years, and she'd have nothing to show for it on her resume in the meantime, should she need to find a new job.

Mike started discussing the company's non-compete contract, something that all employees are required to sign. The non-compete had been written and rewritten, with several rounds being rejected by the employees because they were far too strict. The final had not yet been drafted, and thus, no one had signed it. Mike stressed that if Tiffany were to leave, she would need to sign it.

"Mike," said Tiffany, "I'm not signing that. I'd never get hired anywhere else if they knew I signed that thing. You know that. I know that. That's why no one signed it."

Mike shrugged and kept eating his hotdog. He later said something about wanting to ensure that Tiffany stayed onboard, which Tiff thought was nice. Then they discussed his job prospects at his old employer, and the positions that Tiffany was interviewing for, just in case the company went under.

A couple of days later, Tiffany was called into the CEO's office. The CEO, Jim, was red in the face. He told Tiffany not to take what he was about to say in the wrong way, and then launched into a rambling lecture about the importance of focusing on one's job. When Tiffany tried to assess what he was talking about, he said something like "I can't have you looking sideways, looking for other jobs, always looking around for a better position." Tiffany explained that she wasn't always looking around, but that she had sent out her resume like everyone else when the paychecks stopped coming.

Tiffany was understandably upset, realizing that Mike had ratted her out. Technically, she hadn't done anything wrong, and since everyone, including Mike, was putting out employment feelers, she didn't see the need for all the blustering. The CEO then said, "Now, going forward, this isn't going to affect your job here at all. We like you, and we want you here," which Tiffany immediately realized was code for "This is definitely something that we will hold against you for a long time." When she got up to leave, feeling like she would either cry or scream at any minute, Jim added, "We need to you to be 100% on-board. We need enthusiasm. We can't have anyone half-assing this."

Now, engineers are not an enthusiastic bunch. Tiffany felt like she was being given the "You need to wear more flair" speech. Half-ass? She worked as hard as anyone else at the company.

That's when Mike came to her desk and asked if he could talk to her. Slightly pissed at him, she followed him to the conference room, where Mike proceeded to explain that not only had he told the CEO that Tiff was looking for a new job, but that she was refusing to sign the non-compete. Basically, Mike had told her boss that she was leaving the company, and was taking the technology with her.

Tiffany didn't know what to say, so she got up and left.

An hour and a half later, a company meeting was called, and it was announced that Mike was now in charge of Tiff's projects. Basically, Tiffany was demoted, and Mike was put in charge of her.

Now, Tiffany is in a rough place. She hates Mike with all of her heart, and knows that what he did, he did for the purposes of climbing the corporate ladder, which is kind of odd in an office of less than 15 people. Although she has since clarified her position and intentions to the CEO, and signed the new non-compete along with the rest of her coworkers, she can't help but want to stab Mike through the eyeball with a sharpened #2 pencil.

I've listened to Tiff's woes over a beer or two, and I can't think of a single good bit of advice to give her. She could retaliate against Mike and casually mention the times that he commented on the CEO's wife's ass. She could quit and do some contracting, because permanent jobs are hard to come by. Or she could just suck it up and work with Mike, reporting to Mike, and simply never speak to him about anything personal again.

What would you do in this situation? Me, all I can think of is a good punch to the jaw, but Tiff isn't known for her skills left hook. Also, I'm not sure I'd even be in the same position, because I prefer to hold my cards close to my chest and discuss next to nothing with coworkers. So I'm stuck between telling her that it's her fault for being so trusting, and helping her let the air out of the guy's tires.

Any advice?

This article is from Troy Hadley of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread: