Speaker 1: Welcome to How to Money. I'm Joel, and too, I
Speaker 1: am Matt, and today we're discussing why you need a
Speaker 1: bare bones budget.
Speaker 2: You know, a bare bones budget. It's got that BBB
Speaker 2: action going on, some nice alliteration for our listeners today,
Speaker 2: like a better business bureaud. Okay, So here is what
Speaker 2: this episode makes me think of. You know, when you
Speaker 2: start acquiring items for your closet, like your wardrobe, and
Speaker 2: you kind of just add another hanger in there, and
Speaker 2: you're like, oh, you know, I ran out of hangers.
Speaker 2: Let's buy another pack of hangers, and you start filling
Speaker 2: your closet, it starts bulging. It's about the bus at
Speaker 2: that seems. I feel like our budgets can act that way, right, Like,
Speaker 2: over time, as we add line items to our budget,
Speaker 2: it can start to swell. Maybe now that we're you know,
Speaker 2: we've got a legit job. Maybe you go on like
Speaker 2: acation every year with your friends or something like that,
Speaker 2: or maybe you like clothing, like that's something that you
Speaker 2: really value, or maybe you really like electronics. It's okay
Speaker 2: to spend money on the things that you enjoy, the
Speaker 2: things that bring you value, but the effect that that
Speaker 2: has on our budget is it. It starts getting kind
Speaker 2: of thick, it gets a little bit plump. And so
Speaker 2: with this episode, we want to introduce this idea of
Speaker 2: essentially like a thought experiment for folks, Right, we want
Speaker 2: folks to think through what would happen if you were
Speaker 2: to pare down your budget to the bear essentials.
Speaker 1: Yeah, we're not going to force you to create and
Speaker 1: then adhere to this bear bones budget, but we do
Speaker 1: think there's a whole lot that could be gained by
Speaker 1: by just trying it out and seeing what happens by
Speaker 1: at least creating one. And so we're going to talk
Speaker 1: about how you do that and what you're going to
Speaker 1: gain by doing that in today's.
Speaker 2: Yeah, there's a lot of benefits from partaking in this exercise.
Speaker 1: No doubt. Before we get to that, mat, I want
Speaker 1: to quickly mention listener Holly send us an email and
Speaker 1: she had mentioned this app that I hadn't heard about,
Speaker 1: and I feel like we had to look into it
Speaker 1: called Giveling, and it's this like student loan app or
Speaker 1: people come together they play trivia games and sometimes say
Speaker 1: pay money to play more trivia games and see if
Speaker 1: they can move up the standings in order to win
Speaker 1: a big prize to help pay off their student loans.
Speaker 1: And yeah, I mean I know you took a look
Speaker 1: at this too. Yeah, what would you think about it?
Speaker 2: Dude? Yeah, it seemed a little too good to be
Speaker 2: true because one of the things they say is that
Speaker 2: once you get to the number one spot, you're eligible
Speaker 2: for the grand prize, which is a fifty thousand dollars
Speaker 2: student loan payoff.
Speaker 1: Which you know, to anybody who has a bunch of
Speaker 1: student loans is like, that's that's music to my ears exactly.
Speaker 2: And here's the thing, dude, I was almost even hesitant
Speaker 2: for us to even talk about it because I don't
Speaker 2: want people to get the idea that this is something
Speaker 2: that they need to do, because there are some serious
Speaker 2: red flags, right because you're able to move up that
Speaker 2: queue by acquiring I think what they call Q points,
Speaker 2: and you do that by you can answer trivia, you
Speaker 2: can watch ads within the app. You can also make
Speaker 2: purchases like from their just different companies that they've partnered with,
Speaker 2: and also by referring people from reading up on it.
Speaker 2: Those are all ways that you can get closer to
Speaker 2: that kind of prize, but specifically that last way of
Speaker 2: getting points, referrals, pulling your friends in, dude. That's the
Speaker 2: part of this that makes me feel like that this
Speaker 2: is more of a pyramid scheme than anything else, right,
Speaker 2: because essentially they are counting on the additional people that
Speaker 2: are coming in in order to pay off the prizes
Speaker 2: for the folks at the top, right, And anytime you
Speaker 2: have any sort of model like that that's dependent on
Speaker 2: the acquisition of more customers in order to be successful,
Speaker 2: because there isn't truly an actual product. It makes me
Speaker 2: feel that at some point if there are not enough
Speaker 2: folks kind of at that base of the pyramid, you
Speaker 2: know what happens that the pyramid essentially gets inverted, and
Speaker 2: so you've got a fewer number of people at the
Speaker 2: bottom paying into it. You've got a lot of people
Speaker 2: invested who are waiting for that big payout at the
Speaker 2: top exactly, and it's going to fail. And so something
Speaker 2: like this, you can have so many people who are invested,
Speaker 2: like literally invested. The We can link to an article
Speaker 2: that we came across, but there's folks who have paid
Speaker 2: in thousands of dollars and there's nothing really keeping a
Speaker 2: company like this from going bankrupt. Now, next year or
Speaker 2: like tomorrow.
Speaker 1: Right, Yeah, I think it is. It's one of those
Speaker 1: things where people get excited to think that they could
Speaker 1: win a big sum of money that would help them
Speaker 1: in a massive way, maybe pay off all their student
Speaker 1: loans or at least pay off a huge chunk of it.
Speaker 1: But it's kind of like the lottery in my opinion.
Speaker 1: It might be a perment scheme. I'm not sure, but
Speaker 1: it definitely has some lottery feel to it. And they
Speaker 1: get you in there and you start to pay money
Speaker 1: so you can continue to move up this leader board,
Speaker 1: making you think you have a greater chance of winning
Speaker 1: a big chunk of money that's going to help you
Speaker 1: in a big way. And I think, yeah, there are
Speaker 1: certain free ways that you can participate in this app
Speaker 1: where you don't have to spend a time, and I
Speaker 1: would say, like, even be careful doing that, because I
Speaker 1: think it might get you in the mental state where
Speaker 1: you're more willing to part with some of your money
Speaker 1: to try to move up and to try to win
Speaker 1: some cash. And I think the likelihood that's going to
Speaker 1: happen for you is skim, just like winning the lottery.
Speaker 1: So I would say, yeah, avoid givling I think it's
Speaker 1: an app that doesn't make sense for almost anybody.
Speaker 2: Yeah, the free aspects of it we don't have any
Speaker 2: problems with. But like you said, it's like the prime
Speaker 2: the pump a little bit and then gets you ready
Speaker 2: to pay a little bit more money into it. And
Speaker 2: specifically because it's the leader board, Like, I think that's the.
Speaker 1: Part of it that the gamification of this.
Speaker 2: Yeah, and I get it, Like I understand how it's
Speaker 2: kind of fun, but essentially there's the expectation that at
Speaker 2: some point you're going to reach the top. Right with
Speaker 2: a lottery, When folks you know, play the lottery, they
Speaker 2: know that there's a slim chance of them getting any money. Right,
Speaker 2: there's not a leader board where it's like, Okay, eventually,
Speaker 2: if I work hard enough, I will I will achieve it. Yeah,
Speaker 2: it's chance. And so there's in my mind, there's a
Speaker 2: huge difference between working towards something where you're expected to
Speaker 2: pay out versus you know, one and I don't know,
Speaker 2: ten million chance of winning the lottery or something like that,
Speaker 2: where there's a huge payout.
Speaker 1: Yeah, and gamification, we think can be a really healthy
Speaker 1: and good part of personal finance. Right that we've talked
Speaker 1: about that before on the episode. There are ways that
Speaker 1: you can gamify your own personal finances that are gonna
Speaker 1: help you in your pursuit of saving more and building wealth.
Speaker 1: This is a way that's like praying on that behavioral tendency,
Speaker 1: that a llure of gamification that's actually gonna part you
Speaker 1: from your money. So, yeah, don't participate.
Speaker 2: Games with friends that could cost you thousands of times right.
Speaker 1: Well, so, all right, Matt, let's mention the beer that
Speaker 1: we're having on the show today. This one's called Ethereal
Speaker 1: Vibrations by Monday Night Brewing, one of our favorite local breweries,
Speaker 1: and they collabed with Burial out of Ashville to make
Speaker 1: this really good looking IPA. Looking forward to having this
Speaker 1: one on the show today with you.
Speaker 2: Yeah, it's hard to go wrong when you've got one
Speaker 2: of your favorite local breweries teaming up with one of
Speaker 2: your favorite national breweries to make a delicious beer. Looking
Speaker 2: forward to enjoying this one on the show.
Speaker 1: Dude, me too. All right, But for now, onto the
Speaker 1: subject of the hand. Why you need a bear bones budget.
Speaker 1: That's what we're talking about today, And Matt, I don't
Speaker 1: know if you've seen this show there's a History Channel
Speaker 1: show called Alone. Have you seen it?
Speaker 2: I have not? Okay, so basically sounds like your worst nightmare,
Speaker 2: though it does.
Speaker 1: I like people, I would be sad.
Speaker 2: I would probably deal okay with it.
Speaker 1: You probably would. But basically what happens is that folks
Speaker 1: are allowed to bring ten items with them as they're
Speaker 1: dropped off in this remote section of the wilderness to
Speaker 1: survive amongst like okay, bears, bobcats, other various treachery. But yeah,
Speaker 1: so like ten people, they're competing against each other to
Speaker 1: see who can stay out there the longest, whether it's
Speaker 1: like thirty days, forty days, Like how long can you
Speaker 1: be out there? And you don't know how everyone else
Speaker 1: is doing. You're just trying to survive, And like the
Speaker 1: idea of doing that with only ten items, with like
Speaker 1: bare bones resources makes a show so much more interesting
Speaker 1: than if those folks were able to bring any or
Speaker 1: all of their possessions with them, right, Like, like I'm
Speaker 1: thinking of dropping them in the woods with a tiny
Speaker 1: house and a wood burning stove, and like it's like
Speaker 1: not as interesting as a show.
Speaker 2: I'd pay to go there, Yes, Like that's what's on
Speaker 2: the first page of Airbnb right now, it's just like,
Speaker 2: you know, these secluded cabins in the woods with a
Speaker 2: wood burning stove, right.
Speaker 1: And maybe an Xbox or something.
Speaker 2: Yeah. Yeah, so with panels, it's all set ready to go.
Speaker 1: Yeah, and I'm just thinking, like, not a very fun
Speaker 1: TV show to watch a dude play Xbox in the woods, right,
Speaker 1: But like seeing what people can do with limited resources
Speaker 1: is actually kind of fascinating and for some of the
Speaker 1: individuals who've gone on the show, even if they don't win,
Speaker 1: it seems like it can be like this meaningful and
Speaker 1: empowering experience. Well, we think that having a bare bones budget,
Speaker 1: it's not going to make you the next Bear Grills.
Speaker 1: You know, you're not gonna be able to survive in
Speaker 1: the wilderness for months on end, like sleeping inside dead animals.
Speaker 1: I think I saw him do that once. Dude, he
Speaker 1: does a weird stuff that's a Star Wars reference. Yeah,
Speaker 1: I guess that's true too. But he's an impressive man.
Speaker 1: But we do believe that having you know, one of
Speaker 1: these bare bones budgets in your back pocket is necessary,
Speaker 1: is helpful, and it can be powerful in the case
Speaker 1: of an emergency popping up.
Speaker 2: Yeah, essentially, we think that having a bare bones budget
Speaker 2: is about prioritizing your needs, not your once right, so
Speaker 2: it reflects only those most essential monthly expenses, and having
Speaker 2: one comes in handy in a lot of ways. So,
Speaker 2: for instance, you may feel trapped working in a high
Speaker 2: paying job that you hate, but because the pay or
Speaker 2: the benefits are so good and you need that income,
Speaker 2: you're stuck, or at least you feel like you're stuck.
Speaker 2: Maybe you don't get treated as well as you should,
Speaker 2: or the hours or the demands of that job are overwhelming.
Speaker 2: You're not going to be left with many options if
Speaker 2: you don't think you can seriously downsize your b and
Speaker 2: so creating that barbones budget can help you to see
Speaker 2: the path to exit that job, even if you don't
Speaker 2: have a new one lined up yet. Or maybe it
Speaker 2: can even help you to realize that you can take
Speaker 2: a job or a position that pays less because your
Speaker 2: finances are still going to be okay. It's essentially about
Speaker 2: giving you options, flexibility, and the freedom to act in
Speaker 2: ways that you want to act.
Speaker 1: That's right, Yeah, And so I guess, like, who is
Speaker 1: a bare bones budget for? We would say that it's
Speaker 1: for everyone, that everyone should really attempt this experiment. Right,
Speaker 1: even if you love your job, there's no guarantee that
Speaker 1: your employer keeps you around as long as you'd like
Speaker 1: to stick around. So some people might be like, but
Speaker 1: I really like what I'm doing. I probably don't need
Speaker 1: a bearbones budget because I plan on working, you know,
Speaker 1: here for a long time. But you know what if
Speaker 1: your employer goes to a rough patch, or the economy
Speaker 1: in the general goes to a rough patch, and you
Speaker 1: don't have that job anymore, Right, So we think it's
Speaker 1: important for everyone. You know, I personally have seen the
Speaker 1: difficulties that unexpected employment can create firsthand, and it's not pretty.
Speaker 1: I would say two, Having that bear bones budget on
Speaker 1: hand before an awful event like that happens to you
Speaker 1: can help you whether the storm much better than you'd
Speaker 1: otherwise be able to. It's so much harder to try
Speaker 1: and slash expenses when you're in the midst of the
Speaker 1: emotional and financial turmoil that you're going through in the
Speaker 1: aftermath of something like a furlough, a job loss, or
Speaker 1: a reduction in hours. Trying to get your budget in
Speaker 1: order and pair it down in the middle of the
Speaker 1: emergency is overwhelming. So that's why we would suggest getting
Speaker 1: this bear bones budget done now, and it can be
Speaker 1: a helpful resource for you in the future if you
Speaker 1: need it.
Speaker 2: Yeah, dude, rarely do we think that the worst things
Speaker 2: are going to happen to us. But it's good to
Speaker 2: start thinking about these things ahead of time. It actually
Speaker 2: makes me think of have you ever changed a tire
Speaker 2: like on your car?
Speaker 1: I have, It's been a while.
Speaker 2: Most people haven't done it, but if they were to
Speaker 2: get a flat tire, they've never done it, and so
Speaker 2: it's like they're stuck in the position of being like, Okay, wait,
Speaker 2: do I have a spare tire like on this vehicle?
Speaker 2: Where is it? How do I go about it? You know?
Speaker 2: Should I put the parking brake on? Yes, it's going
Speaker 2: to be really important that you do that.
Speaker 1: I even have a jack in my car.
Speaker 2: Yeah, And so there's all these things, and I mean, honestly,
Speaker 2: it sounds a little bit like prepping, but it's just
Speaker 2: thinking through the worst case scenario a little bit and
Speaker 2: making sure that you're familiar with what you're gonna need
Speaker 2: to do if that situation ever arises. I feel like
Speaker 2: that's a part of the reason why we're recommending for
Speaker 2: folks to start thinking about this ahead of time. The
Speaker 2: bare bones budget. It's almost like a fire escape plan
Speaker 2: that you had to come up with in elementary school,
Speaker 2: you know. I remember my folks, like you remember back
Speaker 2: in the nineties, there's those ladders, like if you had
Speaker 2: a bedroom in the second floor, you're supposed to get
Speaker 2: one of those ladders that you can like you know,
Speaker 2: roll out the window. Yes, so you could escape.
Speaker 1: I tried to, you know, tell my parents that we
Speaker 1: needed one of these things, because like I think every
Speaker 1: elementary school kid did, and I feel like they didn't
Speaker 1: love because we never got that.
Speaker 2: Okay, so my bedroom was there was actually this column
Speaker 2: outside my bedroom window, and we never got one of
Speaker 2: those things. But I remember thinking, okay, well you can
Speaker 2: slide down that. Yes, I remember thinking, well, at least
Speaker 2: I bet I could jump out my window, grab onto
Speaker 2: that and just kind of slide down like fireman polls FID.
Speaker 2: But I mean, in the same thing, just even as adults,
Speaker 2: if you work in an office building or an office park,
Speaker 2: you know, like once a year you have a fire
Speaker 2: drill and everybody goes out to the parking deck or
Speaker 2: the parking lot. Hopefully they have the ice cream truck
Speaker 2: there where everyone gets the free ice cream, that kind
Speaker 2: of thing, And it always kind of seems silly for
Speaker 2: adults to be doing that, but it was an important
Speaker 2: thing to do to make sure that we knew where
Speaker 2: to go, knew how to get out of the building
Speaker 2: in case there was a fire. It's not likely to happen,
Speaker 2: but planning for the worst is still a good idea.
Speaker 2: And in regards to your budget, knowing that you will
Speaker 2: you know that you have this bare bones budget made,
Speaker 2: and then just being able to just easily flip the
Speaker 2: switch in an instant to spending a good bit less
Speaker 2: than you currently are. This just offers some peace of mind,
Speaker 2: you know, And it's truly helpful if you find yourself
Speaker 2: in a precarious financial spot just down the road. Yeah.
Speaker 1: So I'm man, I'm an optimist. You know this about me.
Speaker 1: That's true, maybe to a fault, some might say, and
Speaker 1: I might even say that I don't know.
Speaker 2: And I'm a realist. I'm more the prepper type. Yeah,
Speaker 2: I know exactly where the jack is on my van,
Speaker 2: you know where yours is? Yes?
Speaker 1: See, yeah, okay, I do so. Yeah, it's I gotta say,
Speaker 1: like I think it's good to be an optimist. I
Speaker 1: think hoping for the best is a really good thing.
Speaker 1: But we would say, and I would say, yeah, even
Speaker 1: as an optimist, budgeting like a pessimist and planning for
Speaker 1: the worst is just a smart thing to do, right.
Speaker 1: And that doesn't mean that you can't have a normal,
Speaker 1: healthy budget where you use up all of your money
Speaker 1: every month, with hopefully a healthy amount headed towards savings
Speaker 1: and investing goals. But it does mean that you should
Speaker 1: at least have this bare bones budget in case you
Speaker 1: need it. Right. It's the budget equivalent, I would say,
Speaker 1: of an emergency fund. You're hoping to never have to
Speaker 1: use it, but having it is clutch, right if the
Speaker 1: worst were to happen, if job loss does occur. I
Speaker 1: think both of those things actually work really well in tandem,
Speaker 1: right if something hard does come along.
Speaker 2: Yeah, Plus, having that bear bones budget can also be
Speaker 2: a confidence builder, right, if you've got a solid emergency
Speaker 2: fund and a bear bones budget that's far less than
Speaker 2: your normal monthly budget, it can really boost the assurance,
Speaker 2: right that your finances are going to be okay no
Speaker 2: matter what. But it can be an eye opening experience
Speaker 2: to realize that you actually can live on far less
Speaker 2: than you might have previously thought, because you know, like
Speaker 2: fear of the unknown that is such a real thing,
Speaker 2: especially when it comes to your money. But the bear
Speaker 2: Bones Budget can just bring some concrete reality to quell
Speaker 2: some of those fears. You don't have to stay awake
Speaker 2: at night wondering like, well, what happens if I lose
Speaker 2: my job? Like what if I'm ridding my bike and
Speaker 2: I fall off and I break my arm and I
Speaker 2: can't go to work, or you know, I guess I
Speaker 2: could still talk you and I can continue to podcast.
Speaker 2: Like then you start thinking, oh, do I need accident
Speaker 2: you know, income replacement insurance? You know, do I need affleck?
Speaker 2: Like no, Like, we wouldn't point you in that direction,
Speaker 2: but we do think that this is a really valuable
Speaker 2: step to making sure that you've got that peace of mind.
Speaker 2: We want you to know that you would have options.
Speaker 1: Yeah, that you're going to be okay in the event
Speaker 1: of an emergency, and the E Fund and the bar
Speaker 1: Bones Budget simultaneously is really going to provide I think
Speaker 1: a lot of that peace of mind.
Speaker 2: It's like a nice one to two punch.
Speaker 1: Yeah, for sure, I think too Matt. This exercise of
Speaker 1: creating a bar bones budget. We're going to talk about
Speaker 1: how to get there in just a second. It might
Speaker 1: present some helpful questions about the expenses that are in
Speaker 1: your current budget too. I think this is a healthy
Speaker 1: exercise to realize that the expenses in your life they're
Speaker 1: not fixed. I mean, some of them are, we're gonna
Speaker 1: talk about that, but many of them are actually just
Speaker 1: spending choices that we've made, and we all make them.
Speaker 2: Yeah, this lifestyle.
Speaker 1: Yeah, and there are some things obviously, like we think
Speaker 1: it's okay, and it's actually good to prioritize certain expenses
Speaker 1: in your life that others might think are crazy, purely
Speaker 1: because you love them and you enjoy them. Use your
Speaker 1: fancy socks, like my fancy socks. Yeah, I don't know,
Speaker 1: I like my socks.
Speaker 2: I mean that's a lifestyle thing, you think. You know,
Speaker 2: I'm an adult now, I'm not gonna wear socks that
Speaker 2: have holes in them, Whereas I am cheap in that way,
Speaker 2: like I don't care man like, so in my mind,
Speaker 2: I don't call it cheap. It's frugal. Like I am
Speaker 2: willing to have socks with holes in them because I
Speaker 2: don't care. But then of course I spend money on
Speaker 2: other things that you would you know, you might think
Speaker 2: is our foolish, Like I got this new bike bag
Speaker 2: that I can wear around town or you know, while
Speaker 2: I'm riding my bike. It's fancy like my old one.
Speaker 2: It totally still carries it contained things. It's just that
Speaker 2: I kind of wanted one that was updated, that looked
Speaker 2: a little more sleek.
Speaker 1: Yeah, but I think that's what my priorities like. I
Speaker 1: know we have different priorities, and that's okay, But I
Speaker 1: think as we go through this exercise, it's good to
Speaker 1: point some of those things out, and it's good to
Speaker 1: realize that some of the things that are currently in
Speaker 1: your budget they are there because of choice and not
Speaker 1: because of necessity. And creating a bare bones budget figuring
Speaker 1: out the minimum amount that you could live on, can
Speaker 1: be a helpful mindset shift in how you think about
Speaker 1: the money that's going out of your account every single month.
Speaker 1: So we're gonna talk more about what's included in a
Speaker 1: bare bones budget and how to create one, and we'll
Speaker 1: get to that right after this.
Speaker 2: All Right, dude, we are back, and we just covered
Speaker 2: all the different reasons why it is that we should
Speaker 2: all have a bare bones budgets in our lives. And
Speaker 2: so now let's talk about what is actually in a
Speaker 2: bare bones budget. And at the top of the list
Speaker 2: we're gonna put beer because beer is the essential to life. No,
Speaker 2: actually it's not right. I mean, water is virtually free,
Speaker 2: and if it came to it, I would be willing
Speaker 2: to pair back how much I'm spinning on beer if
Speaker 2: I was in a tight spot, wouldn't you?
Speaker 1: Yeah, I totally would. And I also think that would
Speaker 1: be one of the last things I cut, Like definitely
Speaker 1: when I made my bear bones budget, beer was not
Speaker 1: a part of that because it should not be a
Speaker 1: part of your bearer bones. But that's not what it's for.
Speaker 1: That this exercise is literally for, like how little amount
Speaker 1: of money can you live on?
Speaker 2: That is true. Yeah, we're looking at the essentials. And again,
Speaker 2: this isn't the budget that you're hoping to ever have
Speaker 2: to use. And so we want you to slash to
Speaker 2: the point to where it starts to hurt, you know.
Speaker 2: And so let's talk about some of the different categories
Speaker 2: that will make the cut. Let's talk about which ones
Speaker 2: won't make the cut. And as we do this, I
Speaker 2: think it can be helpful to think about Maslow's hierarchy
Speaker 2: of needs here as we discuss the basic needs that
Speaker 2: it actually takes for us to survive.
Speaker 1: And so, Jill, you want to kick it off food obviously, yeah,
Speaker 1: a basic need that we all have, right, But what
Speaker 1: we don't all have as a basic need to survive
Speaker 1: Chipotle or like Chick fil a or whatever fast food
Speaker 1: or whatever food in general that you enjoy, like in
Speaker 1: all likelihood, you're going to need to and you should
Speaker 1: in this bare bones budget exercise, pare down your food budget.
Speaker 1: Your current budget might include eating out and fancy cheeses
Speaker 1: at the grocery store. Yeah, maybe some fine craft beers,
Speaker 1: but the bare bones budget shouldn't include any of those things.
Speaker 1: You know, we're not expecting you to survive on bread
Speaker 1: and water alone. That's not healthy. But I guess if
Speaker 1: you're in that show alone on the History Channel, maybe
Speaker 1: that's what you're doing. If you can't kill a critter
Speaker 1: that night to roast over and open flame. Maybe, but yeah,
Speaker 1: rice and beans are tons of protein and fiber. Basically,
Speaker 1: strip down your food budget to what you can actually
Speaker 1: get by on without all the extras, without all the
Speaker 1: fluff without all the niceties. It's helpful knowledge to have
Speaker 1: on hand to know how low you can actually get
Speaker 1: your grocery budget if you needed to.
Speaker 2: Yeah, dude, seriously, Like, like you mentioned rice and beans
Speaker 2: in like I don't know. It can kind of be
Speaker 2: a rallying cry of certain folks who are like trying
Speaker 2: to get out of debt. But there's a good reason why,
Speaker 2: and that's because, I mean, you can get a lot
Speaker 2: of protein from rice and beans. I guess it's specifically
Speaker 2: the beans, but like the combination of those two foods together,
Speaker 2: Like you don't have to buy some fancy protein, you know,
Speaker 2: you don't have to get the fresh Alaskan salmon that's
Speaker 2: never been frozen. There are other ways to make sure
Speaker 2: that you're getting the nutrients you need. And so we're
Speaker 2: going to go from food to shelter because this is
Speaker 2: one that everyone needs. This is one that's usually not
Speaker 2: going to change, honestly from your regular budget.
Speaker 1: So are you going to suggest that people should pitch
Speaker 1: a tent in the woods near where they live. Is
Speaker 1: that all that can make the cut in the bar bot?
Speaker 2: I mean they could, but most people aren't gonna do that, right,
Speaker 2: Like that's not the position that most of us are in.
Speaker 2: But you know, if you are nearing the end of
Speaker 2: your lease, maybe moving to a smaller place, smaller home
Speaker 2: or a smaller apartment, that might make sense if your
Speaker 2: financial situation has changed, But you can't, you know, really
Speaker 2: change the reality of your current monthly you know, housing
Speaker 2: expenses in most cases, and so as you're putting together
Speaker 2: your bear bones budget, you're probably going to transfer this
Speaker 2: lime atom pretty much directly from your regular budget. Although
Speaker 2: it is importan and to point out though, that we
Speaker 2: do have control to a certain extent of how much
Speaker 2: are housing costs, right, because your mortgage payment isn't going
Speaker 2: to change, but the amount that you're paying towards that
Speaker 2: mortgage payment can change. Maybe you've got an extra bedroom,
Speaker 2: and you've got that room set aside for friends who
Speaker 2: might come to visit a place for them to crash.
Speaker 1: Now it's set aside for strangers.
Speaker 2: Well now as yeah, it's a set aside for a roommate.
Speaker 2: And so if you're able to all of a sudden
Speaker 2: realize that, like wait a minute, like I've got this
Speaker 2: extra room, maybe I've got two extra rooms. I can
Speaker 2: get two additional roommates who would gladly pay four hundred
Speaker 2: dollars a month, you know, just for their own small room.
Speaker 2: You get two of those room set up, you're bringing
Speaker 2: in eight hundred bucks a month. That could offset a
Speaker 2: fifteen hundred dollars mortgage in a significant way. And so
Speaker 2: it's worth pointing out that you're probably not going to
Speaker 2: sell your house just because you're having maybe a tough
Speaker 2: time with your finances. But there are other smaller moves
Speaker 2: that you can make without putting your house on the market. Right,
Speaker 2: I get some roommates. That's definitely a way that you
Speaker 2: can bring down your housing costs.
Speaker 1: And you don't have to go live in a van
Speaker 1: down by the river either.
Speaker 2: Like that. That is true.
Speaker 1: It's an option, I guess, but I'm not sure the
Speaker 1: legalities of that. Probably depends on your local municipality. I
Speaker 1: shouldn't do that. Rest in peace, Chris Farley, Oh love
Speaker 1: that guy, Kay, see a good one. I think another
Speaker 1: thing that obviously needs to enter into your bare bones
Speaker 1: budget is utilities associated with your shelter. Utilities aren't a
Speaker 1: fixed cost, but they are largely fixed right. But at
Speaker 1: the same time, we do think that you can trim
Speaker 1: this back slightly from your normal budget, maybe five to
Speaker 1: ten percent.
Speaker 2: Just depends on how much you're willing to sweat in
Speaker 2: the summer. You know, if you just keep crinking that
Speaker 2: thermostat up, man, utilize those fans, drink eyes water.
Speaker 1: That's what I used to do. I gotta say, seventy
Speaker 1: eight degrees in summer is what I feel like should be. Okay,
Speaker 1: and my wife might disagree, but then I think you
Speaker 1: can pull it down a seventy six at times that
Speaker 1: you need it if you're going below seventy six. Though
Speaker 1: I don't even know who you are, man, you just
Speaker 1: lived in luxury. How fancy are you?
Speaker 2: Dude? Okay, here's the thing. I would much rather keep
Speaker 2: it at seventy six seventy seven in the summer and
Speaker 2: keep it cool and then keep it really cold in
Speaker 2: the winter. I would be much more willing to take
Speaker 2: it to the extreme in the winter and drop it
Speaker 2: down to like fifty nine or six, which I've done before.
Speaker 2: My in laws actually accused me one time. They were like, no,
Speaker 2: I swear, you know, like after Kate and I got
Speaker 2: married and back when we were super cheap. They're like,
Speaker 2: one time, like when we were visiting, you had your
Speaker 2: heat set of fifty seven. I was like, I don't
Speaker 2: think so. That seems kind of crazy, and.
Speaker 1: They swear by it, so it sounds pretty close.
Speaker 2: To what you do. Though. Well, luckily things have changed
Speaker 2: a little bit. I'm not nearly as cheap and imposing
Speaker 2: as I used to be. Dude, Let's talk about transportation,
Speaker 2: because this is another area that can be hard to change,
Speaker 2: especially if you hop over to that barbones budget because
Speaker 2: an emergency hits. It's hard to think about selling a
Speaker 2: car in the middle of a difficult situation. It's hard
Speaker 2: to hop out of a car payment or a lease
Speaker 2: if you're in one, although there are ways of doing so.
Speaker 1: Yeah, swap a lease, lease trainer. Those are websites.
Speaker 2: Look and so this is a line item that probably
Speaker 2: needs to be a part of your barbones budget, but
Speaker 2: see if there are ways for you to pare it down.
Speaker 2: And another piece of advice here is just to not
Speaker 2: necessarily buy a car at the top end of your budget,
Speaker 2: right because you're buying that car and hopefully you're not
Speaker 2: financing it. But if you are, you've got payments, and
Speaker 2: you've got payments that go along with your budgets. When
Speaker 2: everything is going exactly as it should, you know, sort
Speaker 2: of the best case scenario. And so I feel that
Speaker 2: this is a good reason to have the vehicle that
Speaker 2: will obviously work for you when things are going well,
Speaker 2: but one that you can afford or one that you
Speaker 2: can support when things are not going so well as well.
Speaker 1: Yeah, that's right. So buying that car in cash is
Speaker 1: definitely something we would recommend absolutely everyone. And that comes
Speaker 1: in handy to when you're creating your bear bones budget.
Speaker 1: You're like, I get to keep my car and I
Speaker 1: don't have a.
Speaker 2: No matter what. That exactly like, at least the car
Speaker 2: is mine. You can go sleep in that, like you said,
Speaker 2: I by the river.
Speaker 1: That's right. One other thing that definitely needs to make
Speaker 1: your bear bones budget is your recurring monthly debt obligations. Right,
Speaker 1: you can't stop paying your creditors if you lose your job,
Speaker 1: So this definitely needs to be factored into. Let's say
Speaker 1: you do have credit card debt that you're working on
Speaker 1: getting down student loan debt. Obviously, federal student loans have
Speaker 1: been put on pause for the time being. Eventually those
Speaker 1: are going to resume. You can't factor those out of
Speaker 1: your bare bones budget that has to be there because
Speaker 1: you're gonna need to continue to pay those payments every
Speaker 1: single month, even if you've been put in difficult financial circumstances.
Speaker 2: Yeah, but I mean you bring up a good point though, too, right,
Speaker 2: which is it's worth noting that we do have some
Speaker 2: control over those payments to a certain extent, just like
Speaker 2: with housing, you know, there might be ways that you
Speaker 2: can modify the terms a little bit so that you're
Speaker 2: paying less, right. I mean, there's a national forbearance, you know,
Speaker 2: on federal student loans, but you can go to a
Speaker 2: specific lender and see if you can get a four barance,
Speaker 2: so you can see if you can get the loan
Speaker 2: extended or even a lower interest rate. If you're looking
Speaker 2: at a credit card, right, there are ways to potentially
Speaker 2: modify the terms of that debt. And so while you
Speaker 2: don't want to necessarily count on that, know that if
Speaker 2: you ever do find yourself in an in dire straits,
Speaker 2: you're looking to all the different types of ways that
Speaker 2: you can reduce your expenses. And so, Joel, maybe we
Speaker 2: left some stuff out, but we feel that those are
Speaker 2: the basic requirements that we need in order to survive
Speaker 2: in a modern world. Right, And so let's talk about
Speaker 2: what doesn't make the cut. Right. There are probably quite
Speaker 2: a few things that might be in your normal budget
Speaker 2: that you don't want to give up up in an
Speaker 2: ideal world, and that makes sense. But the bare bones budget, dude,
Speaker 2: is not for ideal worlds. It's for the world that
Speaker 2: you hope never comes into being. So let's cover a
Speaker 2: number of different expenses that I think maybe some folks
Speaker 2: might feel are necessary to life. But we're going to
Speaker 2: cover several of these to point out that, in fact,
Speaker 2: they are not necessary.
Speaker 1: Yeah, man, I feel like, you know, one of the
Speaker 1: things that needs to go quickly, and it's pretty easy actually,
Speaker 1: to cut up from your life is no cable or
Speaker 1: streaming services in your barebones budget.
Speaker 2: Even though over the past year and a half it
Speaker 2: feels like that has been kind of like a non negotiable.
Speaker 2: You know, people are like, no, gotta have gotta have
Speaker 2: a Netflix.
Speaker 1: Yeah, maybe you're only saving grace having a couple of
Speaker 1: good shows to watch, right, But we would say that,
Speaker 1: you know, when worse comes to worse, living on that
Speaker 1: barebones budget, you can't be spending a dime towards those things. Instead,
Speaker 1: you should be watching free stuff on the Roku channel
Speaker 1: or a YouTube even, you know, when when you're in
Speaker 1: barebones budget territory. You know most of us have like
Speaker 1: a digital antenna. There's a bunch of stuff you can watch.
Speaker 2: Free over the air, that free HD content.
Speaker 1: AG. Yeah, exactly. It looks it looks good.
Speaker 2: It looks better HD over the you know, over air,
Speaker 2: looks better than the stuff they stream, right because it
Speaker 2: gets downgraded.
Speaker 1: Right.
Speaker 2: I don't know how the technology works, but I've been
Speaker 2: told that.
Speaker 1: And maybe on the bear bones budget too, you go
Speaker 1: from you know, watching stuff more frequently to reading more. Yeah,
Speaker 1: because yeah, reading is essentially free too, and you can
Speaker 1: read free stuff on the libby app. I use that
Speaker 1: all the time. They're little free libraries and tons of
Speaker 1: neighborhoods near where you live. In all likelihood, man, we've
Speaker 1: got so many just in our neighborhood alone.
Speaker 2: Like people love the little free libraries in our part
Speaker 2: of town at least. It's like, I feel like the
Speaker 2: number of little free libraries doubled during the pandemic because
Speaker 2: it was just like a little I don't know, I
Speaker 2: felt like it was a fun project that maybe some
Speaker 2: households were like, oh, let's make one of those and
Speaker 2: stick it, you know, at the sidewalk in front of
Speaker 2: our house. There's one actually a couple of blocks away.
Speaker 2: Have you seen the little free puzzle library?
Speaker 1: Oh I have seen that one.
Speaker 2: Yeah. Yeah, Like they used a like the old school newspaper. Uh.
Speaker 2: Like you stick a quarter and push the button and
Speaker 2: it allows you to open the door and you grab
Speaker 2: you know, you're supposed to grab one newspaper. Whatever kept
Speaker 2: you from grabbing like all the newspapers back Just general civility,
Speaker 2: just honesty.
Speaker 1: I mean, what would you do with more newspapers? I know,
Speaker 1: exactly right, I guess to trying to start selling them again.
Speaker 2: But one of our neighbors somehow got their hands on
Speaker 2: one of those, and now this thing is packed full
Speaker 2: of different puzzles and so it's just a fun, free
Speaker 2: way to entertain yourself without paying for cable, without paying
Speaker 2: for streaming services. Uh and so. And obviously, dude, you
Speaker 2: know we're talking about like entertaining ourselves. How about vacations
Speaker 2: and travel? If things get tough financially, it is crucial
Speaker 2: to put spending on fun stuff like that summer trip
Speaker 2: on hold, even though you've been itching to go on
Speaker 2: a trip. Right, So we would recommend for you to
Speaker 2: remove leisure travel from your bare bones budget and make
Speaker 2: sure too that you don't fall into the sunk cost
Speaker 2: fallacy because you might think, well, shoot, I've already got
Speaker 2: a deposit down on this place. If I don't go,
Speaker 2: I'm going to lose that deposit. And here's the thing,
Speaker 2: it doesn't really matter, because if you don't have the
Speaker 2: money to actually go on that vacation, then it might
Speaker 2: be worth losing that deposit. Right. Hopefully you're able to
Speaker 2: get all of your money back, but even losing out
Speaker 2: on like fifty percent of the cost of a trip
Speaker 2: might be worth doing if that keeps you from spending
Speaker 2: additional money that you wouldn't spend where you just stay home.
Speaker 2: And so the sunk cost fallacy comes into play because
Speaker 2: you think, well, I've got money invested into that trip.
Speaker 2: I need to see it through. But that's not the
Speaker 2: case if you can't afford it.
Speaker 1: Yeah, those are hard words, but I think they're true words. Yeah,
Speaker 1: I think it's important to put stuff like that on
Speaker 1: hold if you're in a tough spot. And Matt another thing,
Speaker 1: I think that definitely does not make the bar bones
Speaker 1: budget is clothing. I'd say that, you know, maybe thrift
Speaker 1: store purchases only, and you know, because you can get
Speaker 1: stuff they're pretty cheap. But on a bare bones budget,
Speaker 1: you should be able to have this line on him
Speaker 1: at zero. Yeah, and just wear stuff you already own.
Speaker 2: Unless your socks are getting so holy that. I mean,
Speaker 2: like evidently yours were, like they're so bad that you
Speaker 2: couldn't wear them anymore.
Speaker 1: No, they weren't, But I also wasn't on a bar
Speaker 1: bones budget, and I could afford some new socks, right,
Speaker 1: But in the bar bones budget, I'm not buying the
Speaker 1: semi nice stocks that I like, we're not buying your
Speaker 1: mamas exactly. They're off the table, right. The one exception
Speaker 1: might be getting clothes for your but you know, still
Speaker 1: you should be able to go without that for a time,
Speaker 1: you know, keep clothes out of the bare bones budget altogether.
Speaker 1: If you got to pull the trigger and start using it,
Speaker 1: there's just no reason to be spending on clothes in
Speaker 1: that situation.
Speaker 2: And I think that's an instance where you can look
Speaker 2: to your community, right, dude. Recently, we had two families
Speaker 2: donate us some clothes, multiple large trash bags full of clothes,
Speaker 2: because their daughters are older than our oldest and what
Speaker 2: that meant for us was a ton of free clothes. Man.
Speaker 2: The girls loved it because they're just kind of sitting there, like,
Speaker 2: you know, flipping through all these clothes and like, I'm
Speaker 2: gonna keep this. I wanna keep this. Kate loved it
Speaker 2: because she didn't have to go to the store, she
Speaker 2: didn't have to like order stuff you know online, have
Speaker 2: a ship. If it doesn't fit, she has to ship
Speaker 2: it back. And then of course it was good for
Speaker 2: the budget because that joke was free.
Speaker 1: Yeah, hand me down clothes are the best, dude.
Speaker 2: Absolutely. And you know, we already kind of touched on entertainment,
Speaker 2: but you know, I'm thinking of like concerts and movies
Speaker 2: like that kind of thing as well. We've all seen
Speaker 2: how we can get by without those over the you know,
Speaker 2: the past year and a half. Again, it's not ideal.
Speaker 2: Maybe it's to have no entertainment funds in your normal budget,
Speaker 2: but this is again we're looking to how we can
Speaker 2: pare down our budget in the most extreme way. And
Speaker 2: let's also talk about like self care. You know, I
Speaker 2: think a gym membership is something that a lot of
Speaker 2: folks have also learned that they can do without over the.
Speaker 1: Past year, push ups at home. Baby Dude's that.
Speaker 2: In the kettlebell. Folks don't want to hear me talk
Speaker 2: about that. I'll talk about that enough, but a lot
Speaker 2: of folks are working out at home. If you are
Speaker 2: having a tough time with your money, but if you're
Speaker 2: not eliminating that, like thirty bucks up to two.
Speaker 1: Hundred dollars looking at you, crosswait, dude.
Speaker 2: CrossFit folks pay a lot of money for that accountability.
Speaker 2: I mean essentially, that's what it is. It's accountability, and
Speaker 2: I get it, But man, is there not a way
Speaker 2: that you can get more affordable accountability?
Speaker 1: Well, I will say, you know, if that's in your
Speaker 1: normal budget and you love it, I don't care. That's fine,
Speaker 1: Like I don't mind if you're spending. I think the
Speaker 1: first time I heard a friend was joining CrossFit and
Speaker 1: they told me how much it was, I almost puked,
Speaker 1: Like I was like, that's really I guess I'm going
Speaker 1: to open a CrossFit job, you know exactly, Like that's
Speaker 1: definitely the business I'm getting into. But I was like,
Speaker 1: that doesn't make any sense to me. But the more
Speaker 1: I've heard people talk about it does make sense to me,
Speaker 1: and it is kind of a community based thing.
Speaker 2: I get it.
Speaker 1: But in your bear bones budget, sorry, you're gonna have
Speaker 1: to hang out with those people like on your front
Speaker 1: porch right your house goes. You're not gonna work out
Speaker 1: with them at two hundred bucks a month.
Speaker 2: Yeah, dude, hanging out outside, going hiking with friends, like
Speaker 2: hanging out on the front porch, like playing games that
Speaker 2: you already have. These are all great alternatives, you know,
Speaker 2: to entertainment that's gonna cost you money, but you know
Speaker 2: with like gym memberships, like that's something you can do
Speaker 2: at home, and even other self care you know. Again,
Speaker 2: Like one of the other things I feel like folks
Speaker 2: to learn from the pandemic is that like, Okay, I
Speaker 2: can actually cut my hair at home. Maybe it's not pretty,
Speaker 2: it wasn't pretty the first time, but like, I bet
Speaker 2: you learned a lot after that first haircut. You learn
Speaker 2: how to make it look pretty good. I've been cut
Speaker 2: my own hair for I don't even know how long,
Speaker 2: but it's something you get used to in the and dude,
Speaker 2: the money that I've saved has compounded, let me tell you,
Speaker 2: over the years of not having to pay for haircuts.
Speaker 1: So that's where thousands in your roth Iran, there's tens
Speaker 1: of thousands. Maybe I don't know, it's gonna be a lot.
Speaker 1: All right, well, yeah, I think to one of the
Speaker 1: great things. Again, we're not telling people to create this
Speaker 1: bear bones budget and start living according to it now, right.
Speaker 1: It really is this exercise that can be a confidence builder,
Speaker 1: that can reveal some of the spending choices that are
Speaker 1: easily changeable in your life, that you feel like are immovable.
Speaker 1: But once you've created this barre bones budget, once you've
Speaker 1: got it alongside the budget that you're using right now
Speaker 1: every single month, you're gonna notice there are a lot
Speaker 1: of differences. There's going to be one big difference, right,
Speaker 1: the number that is coming out of your accounts every
Speaker 1: month to pay for your monthly expenses. We'll talk more
Speaker 1: about that and how a bare bones budget can be
Speaker 1: implemented into your life, not just in the case of
Speaker 1: an emergency. We'll hit that right after this break.
Speaker 2: All right, Joel, we are back to the break, and
Speaker 2: you know we've been talking about what's include in your
Speaker 2: bare bones budget, what you definitely should not include, like
Speaker 2: basically anything that we didn't mention in that first little section,
Speaker 2: as far as like the you know, the bear essentials,
Speaker 2: everything else you can kind of, you know, cut from
Speaker 2: your budget.
Speaker 1: What about my Gulf string, Matt, like my my private airplane?
Speaker 2: Your helicopter membership? Yeah, that also has to God, have
Speaker 2: you ever heard of those? There's these things where you
Speaker 2: can pay to be a member and you can kind
Speaker 2: of get airlifted from. I don't know if this is
Speaker 2: something that died out like years ago, but I remember
Speaker 2: seeing that one time and thinking, holy crap. There are
Speaker 2: people who you know, are essentially have like a gym membership,
Speaker 2: but it's like Uber for helicopters.
Speaker 1: Who's got that kind of money?
Speaker 2: Elon Musk, I'm sure, you know, call up a helicopter
Speaker 2: whatever he wants. But you know, before we're gonna talk
Speaker 2: through some additional benefits of creating one of these bare
Speaker 2: bones budgets. But I wanted to mention some of the
Speaker 2: different tools that you can use if you're not already budgeting,
Speaker 2: if you're gonna go more analog, you can be like
Speaker 2: me and kind of copy and paste your expenses over
Speaker 2: into an Excel sheet. I've got over a decade's worth
Speaker 2: of budgets that I you know, I could go back
Speaker 2: and look at my expenses, but I don't. It's not
Speaker 2: like I reminisce, oh, you know what I spent in
Speaker 2: June of two thousand and seven, But I could. But
Speaker 2: for most normal folks, you can check out Mints wine
Speaker 2: ab or you need a budget, that's a totally great
Speaker 2: app that you can use. And so once you've kind
Speaker 2: of paired that thing back, once you know how little
Speaker 2: it actually takes for you to survive, and you've got
Speaker 2: you know, this small, hopefully smaller number than what you
Speaker 2: normally have flowing out of your account, you might be
Speaker 2: wondering when should I actually implement this, And we think
Speaker 2: that there are a couple instances.
Speaker 1: Where you might put this to use.
Speaker 2: You could switch over to a bare bones budget, maybe
Speaker 2: because of an unexpected job loss. We kind of touch
Speaker 2: on this earlier, but that's absolutely a case when you're
Speaker 2: gonna want to, like, you know, like we said, flip
Speaker 2: the switch. It's almost like you're operating on like safe
Speaker 2: mode when you're booting up your computer because there's a
Speaker 2: virus or something that's attacking it. You know, you want
Speaker 2: to make sure that you can do the bear essentials.
Speaker 2: But everything else kind of falls by the wayside. That's
Speaker 2: kind of the primary reason that you'd want to switch
Speaker 2: to a bear bones budget. But you could also go
Speaker 2: bear bones if you're looking to accelerate your ability to
Speaker 2: achieve a financial goal, like maybe you're paying off a
Speaker 2: massive amount of credit card debt. If that's the case,
Speaker 2: then you're going to stick with that bearbones budget for
Speaker 2: however long it takes to crush that goal.
Speaker 1: Yeah, men, I think either you do it, like you said,
Speaker 1: out of necessity, right, you need this. You need to
Speaker 1: live on the bare bones budget in order to be
Speaker 1: able to make your money stretch further until you can
Speaker 1: get through whatever, you know, difficult circumstances have presented themselves,
Speaker 1: or also to you kind of impose it on yourself
Speaker 1: on purpose in order to achieve something in the short term.
Speaker 1: I think, you know, one other way maybe people might
Speaker 1: use it. Some people in the financial independence community might
Speaker 1: essentially be living on a barbones budget because they're trying
Speaker 1: to retire in five or ten years or something like that, And.
Speaker 2: Yeah, that's their higher goal that they're trying to achieve. Right,
Speaker 2: it's not necessarily credit card debt, but it's a certain
Speaker 2: lifestyle in their case, to maybe step away from a job.
Speaker 1: True, I think you know, it might be demoralizing though
Speaker 1: to try to do a barbones budget for five or
Speaker 1: ten years, Like that's a really really long time to
Speaker 1: try to adhere to that and to cut back your
Speaker 1: spending to that extreme, although it is possible if that
Speaker 1: is your greater goal and if you feel like you
Speaker 1: can actually handle it.
Speaker 2: Yeah, man. And you know the additional benefit of having
Speaker 2: a bar bone budget is that you get to see
Speaker 2: that you truly have power and control over the amount
Speaker 2: of spending in your life. You know, like, like we
Speaker 2: might think that it takes a certain amount of income
Speaker 2: for us to survive, but really we're just making ourselves
Speaker 2: subservient to that assumption.
Speaker 1: Right.
Speaker 2: It's important to know that we have control over our
Speaker 2: lives and we definitely have control over the things that
Speaker 2: we spend our hard earned money on. It makes me
Speaker 2: think of like, like, you know, if you're subscribed to Netflix.
Speaker 2: You know, this isn't the second time as it's come
Speaker 2: up as an example, and you're not really watching anything
Speaker 2: on Netflix, and maybe you say to yourself, oh, well,
Speaker 2: like I'm still subscribed. I'm just gonna kind of let
Speaker 2: that keep billing me like no, Like, why would you
Speaker 2: do that? You wouldn't do that, you would make changes.
Speaker 2: You have control over your spending. We have control over
Speaker 2: the direction of our lives. And I think it's easier
Speaker 2: to kind of keep doing what we've been doing rather
Speaker 2: than making those changes and rather pivot towards something either
Speaker 2: unknown or something different, or something that might be just
Speaker 2: a little more difficult. It's easier for us to not
Speaker 2: ask any questions and continue plotting on.
Speaker 1: Yeah, I think too, Matt. When you see the difference
Speaker 1: in your normal budget versus the bare bones budget, when
Speaker 1: you see how big of a chunk you can cut,
Speaker 1: just like that, you're able to visualize the changes that
Speaker 1: you can implement in your personal finances just by doing
Speaker 1: this exercise. And I feel like that sense of independence
Speaker 1: that you get by doing this can weave its ways
Speaker 1: into other parts of your life. Right now, you might
Speaker 1: be empowered to ask for a bigger raise at work
Speaker 1: than you might otherwise do because you need the job.
Speaker 1: If you're like, you know what, I can cut fourteen
Speaker 1: hundred dollars out of my month tomorrow if I need to,
Speaker 1: I feel like I can ask my boss for a
Speaker 1: raise and not feel bad about it. That's definitely one
Speaker 1: of the side effects that is possible. I think when
Speaker 1: you create a barbones budget right also too, like you
Speaker 1: might realize that you can invest more of your income
Speaker 1: than you previously thought. You thought maxing out a roth
Speaker 1: ira that's just for other people. Well, you know what,
Speaker 1: maybe it's not. Maybe it's for you. Maybe creating a
Speaker 1: bare bones budget helps you realize how much waste there
Speaker 1: actually was in the budget you've been using, and you
Speaker 1: can come back a few of those things you have
Speaker 1: to cut everything. You don't have to go all the
Speaker 1: way down to using that bear bones budget, but it
Speaker 1: does help you realize that there are things that you
Speaker 1: can cut pretty easily that don't make that big of
Speaker 1: a difference, and you can start investing more for your future.
Speaker 1: So yeah, I think the barebones budget exercise goes way
Speaker 1: beyond just creating this piece of paper that you're hoping
Speaker 1: you never have to use or implement. Putting together the
Speaker 1: barebones budget goes beyond just having this backup in case
Speaker 1: the worst possible thing were to happen. Although though it
Speaker 1: is good for that reason, it can be empowering in
Speaker 1: all these other ways of your personal finances.
Speaker 2: Yeah, yeah, and you're saving and what you invest And dude, like,
Speaker 2: I feel like the discipline that we gain by taking
Speaker 2: control of our spending like that can apply that like
Speaker 2: that can bleed into other areas of our life, right Like,
Speaker 2: it makes me think of just like getting fits and
Speaker 2: like controlling how much you eat, how much you exercise,
Speaker 2: Like these are all things that we have control over,
Speaker 2: even like our relationships, Like within our social circles, we
Speaker 2: can initiate hanging out with a friend that we haven't
Speaker 2: seen in a while. You know, these are all areas
Speaker 2: in life that could benefit from this crossover of discipline
Speaker 2: that could result from cutting back on your expenses. It
Speaker 2: seems crazy to say that, right like that, just simply
Speaker 2: by seeing that, Oh, I truly could live on a
Speaker 2: third of what my current monthly budget is, which, by
Speaker 2: the way, dude, so I crunch the numbers and I
Speaker 2: won't give specifics, but our bare bones budget is about
Speaker 2: a third of what we currently live on. Right It's incredible,
Speaker 2: isn't that crazy? Yeah? Which means that two thirds of
Speaker 2: it is basically lifestyle fluff's seriously, and that's okay, But
Speaker 2: it's just good to see that. Wow, if it came
Speaker 2: to it, we really could cut back a lot. And
Speaker 2: so regardless of which area in your life you're looking at,
Speaker 2: And obviously we're focusing here primarily on finances, but it
Speaker 2: can affect a lot of the different areas in your life.
Speaker 1: Yeah, for sure. And I think to a lot of
Speaker 1: people in all likelihood might decide to use the barebones
Speaker 1: budget to inform their current budget to come up with
Speaker 1: something like in in between budget, right, Like maybe maybe Matt,
Speaker 1: after that you say, wow, you cut that much, Well,
Speaker 1: you know, but maybe I can have a monthly budget
Speaker 1: somewhere in between if you have other goals that you're
Speaker 1: looking to accomplish.
Speaker 2: Day, if you're thinking you have to subscribe to like
Speaker 2: one or the other, like, that's a false dichotomy. R. Yeah,
Speaker 2: Like there's plenty of spots in the middle that you
Speaker 2: could go with exactly.
Speaker 1: I feel like, Yeah, seeing the difference in what you're
Speaker 1: currently spending versus what you could get by on could
Speaker 1: help you realize, like how big this gap is. Seeing
Speaker 1: the difference in what you're currently spending versus what you
Speaker 1: could get by on could help you realize how big
Speaker 1: of a gap you can actually have between what's coming
Speaker 1: in and what's going out. You know, you might be
Speaker 1: able to even achieve financial independence earlier than you thought
Speaker 1: by letting that bear bones budget, not not by living
Speaker 1: on that bar bones budget for a decade, but by
Speaker 1: letting it at least inform your normal budget to a
Speaker 1: larger extent in the here and now.
Speaker 2: I mean it also like when you're looking at it
Speaker 2: from an emergency fund standpoints, when you know that you
Speaker 2: can pare down your budget to maybe a third of
Speaker 2: what it currently is, that's empowering. I get a lot
Speaker 2: of confidence knowing that our emergency fund, we could actually
Speaker 2: stretch that out for much much further. And so you know,
Speaker 2: a fully funded emergency fund that normally would be around
Speaker 2: three to six months worth of expenses might in fact
Speaker 2: translate more into maybe six to twelve months worth of expenses.
Speaker 2: And so I don't think I'm alone and gaining some
Speaker 2: peace of mind from that, especially dude, you know, being
Speaker 2: self employed, when our income varies significantly, it's nice to
Speaker 2: know that we, you know, can have enough set aside
Speaker 2: to allow us to even out those annual expenses, those
Speaker 2: ups and downs.
Speaker 1: No doubt. So it's a helpful exercise for everyone out there.
Speaker 1: Even if in the end you decide I'm sticking to
Speaker 1: my normal budget as is not changing a thing. Having
Speaker 1: that bear bones budget is going to provide peace of
Speaker 1: mind and some empowerment, I think in your corner. All right, Matt,
Speaker 1: let's get back to you. The beer that we had
Speaker 1: on this episode, we have not yet cut it out
Speaker 1: of our budget. We're still enjoying good graph here that
Speaker 1: is true. But yeah, this one was called Ethereal Vibrations.
Speaker 1: It's an IPA from two of our favorite breweries, Monday
Speaker 1: Night Brewing and Burial Brewing. What were your thoughts on
Speaker 1: this delicious beer?
Speaker 2: Man, Yeah, this is a double New England IPA and Dude,
Speaker 2: this has all the different flavors I'm looking for in
Speaker 2: a New England hazy ipa. It poured a super hazy
Speaker 2: orange color. It's got all the kind of floral notes
Speaker 2: as well as all the hoppy dankness that you would
Speaker 2: come to expect from some IPAs from.
Speaker 1: Both of these breweries.
Speaker 2: Like, I don't feel like there's anything stand out about
Speaker 2: it except that it was just flat out delicious and amazing. Like,
Speaker 2: there wasn't anything like super unique about it. But when
Speaker 2: I think about a double New England IPA. This is
Speaker 2: one hundred percent what I'm picturing or what I'm imagining
Speaker 2: myself tasting.
Speaker 1: Yeah, I feel like to make an NBA comparison, I
Speaker 1: feel like Monday Night and Burial, you know, combining forces
Speaker 1: would be like Lebron calling stuff curry up and being
Speaker 1: like come over and play playing the Lakers with me? Like,
Speaker 1: can you imagine what that team would be like? Like
Speaker 1: how they would demolish people. The beer was delicious. It
Speaker 1: was just like blend, I think perfect blend of like
Speaker 1: bitter and sweet. It was juicy and delicious. I don't
Speaker 1: know how descriptive I can get beyond that. It was
Speaker 1: just it was just a really really good example of
Speaker 1: the style. They crushed it on this one.
Speaker 2: Yeah, it's not one of these IPAs where there's like
Speaker 2: a bunch of adjuncts which means like they're adding different
Speaker 2: ingredients or just kind of doing a random fruits yeah,
Speaker 2: or like a weird process that they're participating in. This
Speaker 2: was just a really good all star of a New
Speaker 2: England IPA. Glad that you and I got to share
Speaker 2: this one on the show.
Speaker 1: Bud me too. Man, all right, well that's going to
Speaker 1: do it for this episode. For folks that want the
Speaker 1: show notes for this episode links to anything and everything
Speaker 1: we mentioned, we'll put those up on our website at
Speaker 1: howtomoney dot com.
Speaker 2: That's right, And if you've been listening to the show,
Speaker 2: and if you have not yet left us a review
Speaker 2: over at Apple Podcasts, we would love it if you
Speaker 2: did that. So that helps us to get the word out.
Speaker 2: It helps others to find the show who haven't yet
Speaker 2: found it, and so we would appreciate that over at
Speaker 2: Apple Podcasts or wherever it is that you listen to
Speaker 2: your shows. And so Joel, that's going to be it,
Speaker 2: buddy for this episode. Until next time, Best Friends Out,
Speaker 2: Best Friends Out. The Only wo