Tammy Strobel was featured recently in a NY Times article about how stuff doesn’t make us happy. The article went on to explain that Tammy and her husband live very well (and are even able to contribute to family members’ college savings accounts) on $24,000/year. I find that particularly inspiring. There are lots of websites out there that talk about how the key to success and happiness is to increase your income in order to have more money available. While that works for some people (and I can attest to the fact that we do enjoy our increased income now that we’re more than seven years into our self-employed journey), I believe that it’s a lot easier to cut your expenses than it is to grow your income. And the end result is the same: you have more money available for what really matters to you if you’re spending less on the stuff that doesn’t really matter. For people who are interested in starting their own business, I would say that the absolute most important first step is to minimize your expenses (in both your life and your future business) as much as possible, so that your business has the best possible chance of being able to support you.
There are people who are perfectly content with their 9 – 5 jobs and find great fulfillment in them. If that’s you – keep on doing what you’re doing! But for people who long for more independence and flexibility, and would like to start working for themselves but don’t know where to begin, today Tammy released a new e-book called Smalltopia: A Practical Guide to Working for Yourself. I just finished reading the book, and it’s an excellent resource for anyone trying to launch their own little business. It includes lots of practical tips, ideas, and resources, along with personal stories and advice from numerous successful small business owners (I’m a big fan of real life stories, so I really appreciated that part of the book). One of the overwhelmingly consistent ideas from just about all of them was that reducing your expenses is one of the keys to success. Of course that really resonates with me, and it makes perfect sense: if you set our to start your own little business and your lifestyle eats up $5000/month, your business is going to have to be pretty darn successful right out of the gate. But if you only need to earn $1500/month to cover your expenses, you’re giving yourself a much greater chance of success, and reducing the chances that you’ll end up working 80 hours a week to make ends meet.
I’m a big fan of small business and self employment. My husband and I started our little insurance agency in 2003, and it has supported us ever since. We have used technology to our advantage, slowly making our business entirely an on-line entity by about 2007. We do not ever have to leave the house for work anymore, and that means that we can work from anywhere we choose. We would not have been able to pursue our dream of growing our own food if we had been tied to our former location by our jobs. The fact that we can work from anywhere meant that we were able to find a home that met our needs without worrying about where that home was located.
Of course, not everyone is interested in growing their own food. Some people have a dream of traveling the world, or volunteering full time, or starting a family, or living on a boat. Your dream doesn’t have to be the same as anyone else’s, but it’s still worth pursuing. And if you can lower your expenses, diversify your income, create flexibility in your schedule, avoid becoming a workaholic, and earn enough money to support yourself, you’ll be a lot closer to shaping your future around what you really want.
I could tell from reading Tammy’s blog, Rowdy Kittens, that she and I see a lot of things the same way. I thought that my readers would be especially interested in knowing some of the details about Tammy’s happy, frugal life, and she agreed to an interview.
Tammy, thanks for being here with us today, and congratulations on the release of your new book, Smalltopia.
FB: When you quit your job to become self employed, how much of a savings cushion did you have?
Tammy: Before I left my job, we saved a year’s worth of our expenses (about $25,000). For anyone who is thinking of leaving a “traditional” day job, make sure you evaluate what your expenses are and what you really need. I also recommend reading, Your Money or Your Life and Unautomate Your Finances.
FB: How long did it take for your own little business to be able to support you?
Tammy: It took about a month for my little business to start making money. During the first month, I didn’t make a profit. But after I launched my first ebook, Simply Car-free, I was able to pay my bills. And slowly but surely I acquired more freelance writing and web design work.
FB: People who are considering leaving their jobs to seek out something new are often very concerned about health insurance. Was that an issue for you, and what did you do about it?
Tammy: Prior to leaving my day job, we thought a lot about health insurance. I knew it would be risky to leave an organization that had such good benefits, but it was a risk I was willing to take. In my opinion, it’s just as risky to stay at a job you dislike.
Health insurance is a very complex topic and the type of plan you chose will depend upon your health and the risk you want to carry. I’m not an expert on this topic and strongly encourage folks to talk to a health care broker and examine a variety of health care plans before making any big decisions.
FB: You’ve made a lot of downsizing steps over the last few years. What changes would you say had the most impact on your ability to live so well on a reduced income?
Tammy: By selling both my cars, I save about $12,000 per year. By going car-free we were able to pay off our debt and save a lot of extra money. And that gave me the freedom to leave my day job and pursue an unconventional career path. If I still owned a car, I would be saddled with debt, and stress.
FB: If your income were to double overnight, would you make any major changes to the way you live now?
Tammy: First, I would donate more of my income to charity. Second, I’d build a tiny house. Other than that, nothing would change.
FB: What’s your favorite form of low-cost entertainment?
Tammy: Having fun doesn’t require spending a lot of money or heading to the mall. Instead, I focus on doing things that make me incredibly happy. For instance, I love taking long walks in the park, going for bike rides, and doing yoga at home.
A few years ago I would have spent the day at the mall shopping, searching for happiness. Buying extra stuff didn’t make me happy and consuming more hasn’t done much for the planet or overall state of “happiness” in the U.S. Thanks to the ideas promoted by simple living movement I’m able to take advantage of beauty in everyday life. I’m satisfied with my possessions and I feel like I have enough.
FB: What does an average day’s menu look like at your house?
Tammy: Most of the time, we eat a lot of fruit, vegetables, grains, and bread. Lately, we’ve been making a lot of quinoa. It’s my new obsession. :)
FB: Do you have any expenses that you consider splurges or luxuries, or do you focus entirely on the basics?
Tammy: Sure. I think everyone loves to splurge once in a while. I love drinking coffee and eating out occasionally. We don’t eat out often, but I do spend a lot of time in coffee shops. So my monthly coffee budget is fairly large and I’m okay with that. :)
Thanks Tammy! We definitely see eye to eye on a lot of things. I’ve found that simple pleasures make me happier than any material possession ever has, and I can’t remember the last time I went to a mall. You’re an inspiration, and I wish you all the best with your little business!