May 26, 2021 • 44 mins
If you were faced with a financial emergency, how would you respond? Imagine you just found out that today was your last day at work and you had no other income- do you know how you would cut back in order to get by? That might be a terrible scenario to envision, but we believe that having a bare bones budget in your back pocket is necessary as it can be powerful in case of a financial emergency. It’s all about keeping your needs and cutting your wants in order to prevent you from relying on debt or making other ill-advised financial moves. During this episode we discuss what you should include in your own bare bones budget, as well as the additional benefits that accompany thinking through some of the worst case money scenarios that you might encounter.
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:00):
Welcome to How to Money. I'm Joel, and too, I
am Matt, and today we're discussing why you need a
bare bones budget.
Speaker 2 (00:25):
You know, a bare bones budget. It's got that BBB
action going on, some nice alliteration for our listeners today,
like a better business bureaud. Okay, So here is what
this episode makes me think of. You know, when you
start acquiring items for your closet, like your wardrobe, and
you kind of just add another hanger in there, and
you're like, oh, you know, I ran out of hangers.
Let's buy another pack of hangers, and you start filling
your closet, it starts bulging. It's about the bus at
(00:48):
that seems. I feel like our budgets can act that way, right, Like,
over time, as we add line items to our budget,
it can start to swell. Maybe now that we're you know,
we've got a legit job. Maybe you go on like
acation every year with your friends or something like that,
or maybe you like clothing, like that's something that you
really value, or maybe you really like electronics. It's okay
to spend money on the things that you enjoy, the
(01:10):
things that bring you value, but the effect that that
has on our budget is it. It starts getting kind
of thick, it gets a little bit plump. And so
with this episode, we want to introduce this idea of
essentially like a thought experiment for folks, Right, we want
folks to think through what would happen if you were
to pare down your budget to the bear essentials.
Speaker 1 (01:28):
Yeah, we're not going to force you to create and
then adhere to this bear bones budget, but we do
think there's a whole lot that could be gained by
by just trying it out and seeing what happens by
at least creating one. And so we're going to talk
about how you do that and what you're going to
gain by doing that in today's.
Speaker 2 (01:43):
Yeah, there's a lot of benefits from partaking in this exercise.
Speaker 1 (01:46):
No doubt. Before we get to that, mat, I want
to quickly mention listener Holly send us an email and
she had mentioned this app that I hadn't heard about,
and I feel like we had to look into it
called Giveling, and it's this like student loan app or
people come together they play trivia games and sometimes say
pay money to play more trivia games and see if
(02:06):
they can move up the standings in order to win
a big prize to help pay off their student loans.
And yeah, I mean I know you took a look
at this too. Yeah, what would you think about it?
Speaker 2 (02:15):
Dude? Yeah, it seemed a little too good to be
true because one of the things they say is that
once you get to the number one spot, you're eligible
for the grand prize, which is a fifty thousand dollars
student loan payoff.
Speaker 1 (02:24):
Which you know, to anybody who has a bunch of
student loans is like, that's that's music to my ears exactly.
Speaker 2 (02:30):
And here's the thing, dude, I was almost even hesitant
for us to even talk about it because I don't
want people to get the idea that this is something
that they need to do, because there are some serious
red flags, right because you're able to move up that
queue by acquiring I think what they call Q points,
and you do that by you can answer trivia, you
can watch ads within the app. You can also make
(02:50):
purchases like from their just different companies that they've partnered with,
and also by referring people from reading up on it.
Those are all ways that you can get closer to
that kind of prize, but specifically that last way of
getting points, referrals, pulling your friends in, dude. That's the
part of this that makes me feel like that this
is more of a pyramid scheme than anything else, right,
because essentially they are counting on the additional people that
(03:14):
are coming in in order to pay off the prizes
for the folks at the top, right, And anytime you
have any sort of model like that that's dependent on
the acquisition of more customers in order to be successful,
because there isn't truly an actual product. It makes me
feel that at some point if there are not enough
folks kind of at that base of the pyramid, you
know what happens that the pyramid essentially gets inverted, and
(03:36):
so you've got a fewer number of people at the
bottom paying into it. You've got a lot of people
invested who are waiting for that big payout at the
top exactly, and it's going to fail. And so something
like this, you can have so many people who are invested,
like literally invested. The We can link to an article
that we came across, but there's folks who have paid
in thousands of dollars and there's nothing really keeping a
(03:58):
company like this from going bankrupt. Now, next year or
like tomorrow.
Speaker 1 (04:01):
Right, Yeah, I think it is. It's one of those
things where people get excited to think that they could
win a big sum of money that would help them
in a massive way, maybe pay off all their student
loans or at least pay off a huge chunk of it.
But it's kind of like the lottery in my opinion.
It might be a perment scheme. I'm not sure, but
it definitely has some lottery feel to it. And they
get you in there and you start to pay money
(04:22):
so you can continue to move up this leader board,
making you think you have a greater chance of winning
a big chunk of money that's going to help you
in a big way. And I think, yeah, there are
certain free ways that you can participate in this app
where you don't have to spend a time, and I
would say, like, even be careful doing that, because I
think it might get you in the mental state where
you're more willing to part with some of your money
(04:42):
to try to move up and to try to win
some cash. And I think the likelihood that's going to
happen for you is skim, just like winning the lottery.
So I would say, yeah, avoid givling I think it's
an app that doesn't make sense for almost anybody.
Speaker 2 (04:56):
Yeah, the free aspects of it we don't have any
problems with. But like you said, it's like the prime
the pump a little bit and then gets you ready
to pay a little bit more money into it. And
specifically because it's the leader board, Like, I think that's the.
Speaker 1 (05:06):
Part of it that the gamification of this.
Speaker 2 (05:08):
Yeah, and I get it, Like I understand how it's
kind of fun, but essentially there's the expectation that at
some point you're going to reach the top. Right with
a lottery, When folks you know, play the lottery, they
know that there's a slim chance of them getting any money. Right,
there's not a leader board where it's like, Okay, eventually,
if I work hard enough, I will I will achieve it. Yeah,
it's chance. And so there's in my mind, there's a
(05:29):
huge difference between working towards something where you're expected to
pay out versus you know, one and I don't know,
ten million chance of winning the lottery or something like that,
where there's a huge payout.
Speaker 1 (05:38):
Yeah, and gamification, we think can be a really healthy
and good part of personal finance. Right that we've talked
about that before on the episode. There are ways that
you can gamify your own personal finances that are gonna
help you in your pursuit of saving more and building wealth.
This is a way that's like praying on that behavioral tendency,
that a llure of gamification that's actually gonna part you
from your money. So, yeah, don't participate.
Speaker 2 (06:00):
Games with friends that could cost you thousands of times right.
Speaker 1 (06:04):
Well, so, all right, Matt, let's mention the beer that
we're having on the show today. This one's called Ethereal
Vibrations by Monday Night Brewing, one of our favorite local breweries,
and they collabed with Burial out of Ashville to make
this really good looking IPA. Looking forward to having this
one on the show today with you.
Speaker 2 (06:18):
Yeah, it's hard to go wrong when you've got one
of your favorite local breweries teaming up with one of
your favorite national breweries to make a delicious beer. Looking
forward to enjoying this one on the show.
Speaker 1 (06:26):
Dude, me too. All right, But for now, onto the
subject of the hand. Why you need a bear bones budget.
That's what we're talking about today, And Matt, I don't
know if you've seen this show there's a History Channel
show called Alone. Have you seen it?
Speaker 2 (06:36):
I have not? Okay, so basically sounds like your worst nightmare,
though it does.
Speaker 1 (06:41):
I like people, I would be sad.
Speaker 2 (06:43):
I would probably deal okay with it.
Speaker 1 (06:44):
You probably would. But basically what happens is that folks
are allowed to bring ten items with them as they're
dropped off in this remote section of the wilderness to
survive amongst like okay, bears, bobcats, other various treachery. But yeah,
so like ten people, they're competing against each other to
see who can stay out there the longest, whether it's
like thirty days, forty days, Like how long can you
(07:05):
be out there? And you don't know how everyone else
is doing. You're just trying to survive, And like the
idea of doing that with only ten items, with like
bare bones resources makes a show so much more interesting
than if those folks were able to bring any or
all of their possessions with them, right, Like, like I'm
thinking of dropping them in the woods with a tiny
house and a wood burning stove, and like it's like
(07:28):
not as interesting as a show.
Speaker 2 (07:30):
I'd pay to go there, Yes, Like that's what's on
the first page of Airbnb right now, it's just like,
you know, these secluded cabins in the woods with a
wood burning stove, right.
Speaker 1 (07:38):
And maybe an Xbox or something.
Speaker 2 (07:40):
Yeah. Yeah, so with panels, it's all set ready to go.
Speaker 1 (07:42):
Yeah, and I'm just thinking, like, not a very fun
TV show to watch a dude play Xbox in the woods, right,
But like seeing what people can do with limited resources
is actually kind of fascinating and for some of the
individuals who've gone on the show, even if they don't win,
it seems like it can be like this meaningful and
empowering experience. Well, we think that having a bare bones budget,
it's not going to make you the next Bear Grills.
(08:04):
You know, you're not gonna be able to survive in
the wilderness for months on end, like sleeping inside dead animals.
I think I saw him do that once. Dude, he
does a weird stuff that's a Star Wars reference. Yeah,
I guess that's true too. But he's an impressive man.
But we do believe that having you know, one of
these bare bones budgets in your back pocket is necessary,
is helpful, and it can be powerful in the case
of an emergency popping up.
Speaker 2 (08:25):
Yeah, essentially, we think that having a bare bones budget
is about prioritizing your needs, not your once right, so
it reflects only those most essential monthly expenses, and having
one comes in handy in a lot of ways. So,
for instance, you may feel trapped working in a high
paying job that you hate, but because the pay or
the benefits are so good and you need that income,
(08:47):
you're stuck, or at least you feel like you're stuck.
Maybe you don't get treated as well as you should,
or the hours or the demands of that job are overwhelming.
You're not going to be left with many options if
you don't think you can seriously downsize your b and
so creating that barbones budget can help you to see
the path to exit that job, even if you don't
have a new one lined up yet. Or maybe it
(09:09):
can even help you to realize that you can take
a job or a position that pays less because your
finances are still going to be okay. It's essentially about
giving you options, flexibility, and the freedom to act in
ways that you want to act.
Speaker 1 (09:21):
That's right, Yeah, And so I guess, like, who is
a bare bones budget for? We would say that it's
for everyone, that everyone should really attempt this experiment. Right,
even if you love your job, there's no guarantee that
your employer keeps you around as long as you'd like
to stick around. So some people might be like, but
I really like what I'm doing. I probably don't need
a bearbones budget because I plan on working, you know,
(09:43):
here for a long time. But you know what if
your employer goes to a rough patch, or the economy
in the general goes to a rough patch, and you
don't have that job anymore, Right, So we think it's
important for everyone. You know, I personally have seen the
difficulties that unexpected employment can create firsthand, and it's not pretty.
I would say two, Having that bear bones budget on
hand before an awful event like that happens to you
(10:06):
can help you whether the storm much better than you'd
otherwise be able to. It's so much harder to try
and slash expenses when you're in the midst of the
emotional and financial turmoil that you're going through in the
aftermath of something like a furlough, a job loss, or
a reduction in hours. Trying to get your budget in
order and pair it down in the middle of the
emergency is overwhelming. So that's why we would suggest getting
(10:29):
this bear bones budget done now, and it can be
a helpful resource for you in the future if you
need it.
Speaker 2 (10:35):
Yeah, dude, rarely do we think that the worst things
are going to happen to us. But it's good to
start thinking about these things ahead of time. It actually
makes me think of have you ever changed a tire
like on your car?
Speaker 1 (10:45):
I have, It's been a while.
Speaker 2 (10:46):
Most people haven't done it, but if they were to
get a flat tire, they've never done it, and so
it's like they're stuck in the position of being like, Okay, wait,
do I have a spare tire like on this vehicle?
Where is it? How do I go about it? You know?
Should I put the parking brake on? Yes, it's going
to be really important that you do that.
Speaker 1 (11:02):
I even have a jack in my car.
Speaker 2 (11:04):
Yeah, And so there's all these things, and I mean, honestly,
it sounds a little bit like prepping, but it's just
thinking through the worst case scenario a little bit and
making sure that you're familiar with what you're gonna need
to do if that situation ever arises. I feel like
that's a part of the reason why we're recommending for
folks to start thinking about this ahead of time. The
bare bones budget. It's almost like a fire escape plan
that you had to come up with in elementary school,
(11:24):
you know. I remember my folks, like you remember back
in the nineties, there's those ladders, like if you had
a bedroom in the second floor, you're supposed to get
one of those ladders that you can like you know,
roll out the window. Yes, so you could escape.
Speaker 1 (11:36):
I tried to, you know, tell my parents that we
needed one of these things, because like I think every
elementary school kid did, and I feel like they didn't
love because we never got that.
Speaker 2 (11:44):
Okay, so my bedroom was there was actually this column
outside my bedroom window, and we never got one of
those things. But I remember thinking, okay, well you can
slide down that. Yes, I remember thinking, well, at least
I bet I could jump out my window, grab onto
that and just kind of slide down like fireman polls FID.
But I mean, in the same thing, just even as adults,
if you work in an office building or an office park,
you know, like once a year you have a fire
(12:05):
drill and everybody goes out to the parking deck or
the parking lot. Hopefully they have the ice cream truck
there where everyone gets the free ice cream, that kind
of thing, And it always kind of seems silly for
adults to be doing that, but it was an important
thing to do to make sure that we knew where
to go, knew how to get out of the building
in case there was a fire. It's not likely to happen,
but planning for the worst is still a good idea.
And in regards to your budget, knowing that you will
(12:26):
you know that you have this bare bones budget made,
and then just being able to just easily flip the
switch in an instant to spending a good bit less
than you currently are. This just offers some peace of mind,
you know, And it's truly helpful if you find yourself
in a precarious financial spot just down the road. Yeah.
Speaker 1 (12:42):
So I'm man, I'm an optimist. You know this about me.
That's true, maybe to a fault, some might say, and
I might even say that I don't know.
Speaker 2 (12:49):
And I'm a realist. I'm more the prepper type. Yeah,
I know exactly where the jack is on my van,
you know where yours is? Yes?
Speaker 1 (12:56):
See, yeah, okay, I do so. Yeah, it's I gotta say,
like I think it's good to be an optimist. I
think hoping for the best is a really good thing.
But we would say, and I would say, yeah, even
as an optimist, budgeting like a pessimist and planning for
the worst is just a smart thing to do, right.
And that doesn't mean that you can't have a normal,
healthy budget where you use up all of your money
(13:19):
every month, with hopefully a healthy amount headed towards savings
and investing goals. But it does mean that you should
at least have this bare bones budget in case you
need it. Right. It's the budget equivalent, I would say,
of an emergency fund. You're hoping to never have to
use it, but having it is clutch, right if the
worst were to happen, if job loss does occur. I
(13:39):
think both of those things actually work really well in tandem,
right if something hard does come along.
Speaker 2 (13:45):
Yeah, Plus, having that bear bones budget can also be
a confidence builder, right, if you've got a solid emergency
fund and a bear bones budget that's far less than
your normal monthly budget, it can really boost the assurance,
right that your finances are going to be okay no
matter what. But it can be an eye opening experience
to realize that you actually can live on far less
(14:05):
than you might have previously thought, because you know, like
fear of the unknown that is such a real thing,
especially when it comes to your money. But the bear
Bones Budget can just bring some concrete reality to quell
some of those fears. You don't have to stay awake
at night wondering like, well, what happens if I lose
my job? Like what if I'm ridding my bike and
I fall off and I break my arm and I
can't go to work, or you know, I guess I
could still talk you and I can continue to podcast.
(14:27):
Like then you start thinking, oh, do I need accident
you know, income replacement insurance? You know, do I need affleck?
Like no, Like, we wouldn't point you in that direction,
but we do think that this is a really valuable
step to making sure that you've got that peace of mind.
We want you to know that you would have options.
Speaker 1 (14:41):
Yeah, that you're going to be okay in the event
of an emergency, and the E Fund and the bar
Bones Budget simultaneously is really going to provide I think
a lot of that peace of mind.
Speaker 2 (14:49):
It's like a nice one to two punch.
Speaker 1 (14:51):
Yeah, for sure, I think too Matt. This exercise of
creating a bar bones budget. We're going to talk about
how to get there in just a second. It might
present some helpful questions about the expenses that are in
your current budget too. I think this is a healthy
exercise to realize that the expenses in your life they're
not fixed. I mean, some of them are, we're gonna
talk about that, but many of them are actually just
(15:12):
spending choices that we've made, and we all make them.
Speaker 2 (15:15):
Yeah, this lifestyle.
Speaker 1 (15:16):
Yeah, and there are some things obviously, like we think
it's okay, and it's actually good to prioritize certain expenses
in your life that others might think are crazy, purely
because you love them and you enjoy them. Use your
fancy socks, like my fancy socks. Yeah, I don't know,
I like my socks.
Speaker 2 (15:34):
I mean that's a lifestyle thing, you think. You know,
I'm an adult now, I'm not gonna wear socks that
have holes in them, Whereas I am cheap in that way,
like I don't care man like, so in my mind,
I don't call it cheap. It's frugal. Like I am
willing to have socks with holes in them because I
don't care. But then of course I spend money on
other things that you would you know, you might think
is our foolish, Like I got this new bike bag
that I can wear around town or you know, while
(15:56):
I'm riding my bike. It's fancy like my old one.
It totally still carries it contained things. It's just that
I kind of wanted one that was updated, that looked
a little more sleek.
Speaker 1 (16:04):
Yeah, but I think that's what my priorities like. I
know we have different priorities, and that's okay, But I
think as we go through this exercise, it's good to
point some of those things out, and it's good to
realize that some of the things that are currently in
your budget they are there because of choice and not
because of necessity. And creating a bare bones budget figuring
out the minimum amount that you could live on, can
(16:24):
be a helpful mindset shift in how you think about
the money that's going out of your account every single month.
So we're gonna talk more about what's included in a
bare bones budget and how to create one, and we'll
get to that right after this.
Speaker 2 (16:46):
All Right, dude, we are back, and we just covered
all the different reasons why it is that we should
all have a bare bones budgets in our lives. And
so now let's talk about what is actually in a
bare bones budget. And at the top of the list
we're gonna put beer because beer is the essential to life. No,
actually it's not right. I mean, water is virtually free,
and if it came to it, I would be willing
(17:08):
to pair back how much I'm spinning on beer if
I was in a tight spot, wouldn't you?
Speaker 1 (17:13):
Yeah, I totally would. And I also think that would
be one of the last things I cut, Like definitely
when I made my bear bones budget, beer was not
a part of that because it should not be a
part of your bearer bones. But that's not what it's for.
That this exercise is literally for, like how little amount
of money can you live on?
Speaker 2 (17:26):
That is true. Yeah, we're looking at the essentials. And again,
this isn't the budget that you're hoping to ever have
to use. And so we want you to slash to
the point to where it starts to hurt, you know.
And so let's talk about some of the different categories
that will make the cut. Let's talk about which ones
won't make the cut. And as we do this, I
think it can be helpful to think about Maslow's hierarchy
of needs here as we discuss the basic needs that
(17:49):
it actually takes for us to survive.
Speaker 1 (17:51):
And so, Jill, you want to kick it off food obviously, yeah,
a basic need that we all have, right, But what
we don't all have as a basic need to survive
Chipotle or like Chick fil a or whatever fast food
or whatever food in general that you enjoy, like in
all likelihood, you're going to need to and you should
in this bare bones budget exercise, pare down your food budget.
(18:15):
Your current budget might include eating out and fancy cheeses
at the grocery store. Yeah, maybe some fine craft beers,
but the bare bones budget shouldn't include any of those things.
You know, we're not expecting you to survive on bread
and water alone. That's not healthy. But I guess if
you're in that show alone on the History Channel, maybe
that's what you're doing. If you can't kill a critter
that night to roast over and open flame. Maybe, but yeah,
(18:37):
rice and beans are tons of protein and fiber. Basically,
strip down your food budget to what you can actually
get by on without all the extras, without all the
fluff without all the niceties. It's helpful knowledge to have
on hand to know how low you can actually get
your grocery budget if you needed to.
Speaker 2 (18:53):
Yeah, dude, seriously, Like, like you mentioned rice and beans
in like I don't know. It can kind of be
a rallying cry of certain folks who are like trying
to get out of debt. But there's a good reason why,
and that's because, I mean, you can get a lot
of protein from rice and beans. I guess it's specifically
the beans, but like the combination of those two foods together,
Like you don't have to buy some fancy protein, you know,
you don't have to get the fresh Alaskan salmon that's
(19:14):
never been frozen. There are other ways to make sure
that you're getting the nutrients you need. And so we're
going to go from food to shelter because this is
one that everyone needs. This is one that's usually not
going to change, honestly from your regular budget.
Speaker 1 (19:26):
So are you going to suggest that people should pitch
a tent in the woods near where they live. Is
that all that can make the cut in the bar bot?
Speaker 2 (19:32):
I mean they could, but most people aren't gonna do that, right,
Like that's not the position that most of us are in.
But you know, if you are nearing the end of
your lease, maybe moving to a smaller place, smaller home
or a smaller apartment, that might make sense if your
financial situation has changed, But you can't, you know, really
change the reality of your current monthly you know, housing
expenses in most cases, and so as you're putting together
(19:53):
your bear bones budget, you're probably going to transfer this
lime atom pretty much directly from your regular budget. Although
it is importan and to point out though, that we
do have control to a certain extent of how much
are housing costs, right, because your mortgage payment isn't going
to change, but the amount that you're paying towards that
mortgage payment can change. Maybe you've got an extra bedroom,
and you've got that room set aside for friends who
might come to visit a place for them to crash.
Speaker 1 (20:15):
Now it's set aside for strangers.
Speaker 2 (20:17):
Well now as yeah, it's a set aside for a roommate.
And so if you're able to all of a sudden
realize that, like wait a minute, like I've got this
extra room, maybe I've got two extra rooms. I can
get two additional roommates who would gladly pay four hundred
dollars a month, you know, just for their own small room.
You get two of those room set up, you're bringing
in eight hundred bucks a month. That could offset a
fifteen hundred dollars mortgage in a significant way. And so
(20:38):
it's worth pointing out that you're probably not going to
sell your house just because you're having maybe a tough
time with your finances. But there are other smaller moves
that you can make without putting your house on the market. Right,
I get some roommates. That's definitely a way that you
can bring down your housing costs.
Speaker 1 (20:51):
And you don't have to go live in a van
down by the river either.
Speaker 2 (20:54):
Like that. That is true.
Speaker 1 (20:54):
It's an option, I guess, but I'm not sure the
legalities of that. Probably depends on your local municipality. I
shouldn't do that. Rest in peace, Chris Farley, Oh love
that guy, Kay, see a good one. I think another
thing that obviously needs to enter into your bare bones
budget is utilities associated with your shelter. Utilities aren't a
fixed cost, but they are largely fixed right. But at
(21:17):
the same time, we do think that you can trim
this back slightly from your normal budget, maybe five to
ten percent.
Speaker 2 (21:24):
Just depends on how much you're willing to sweat in
the summer. You know, if you just keep crinking that
thermostat up, man, utilize those fans, drink eyes water.
Speaker 1 (21:31):
That's what I used to do. I gotta say, seventy
eight degrees in summer is what I feel like should be. Okay,
and my wife might disagree, but then I think you
can pull it down a seventy six at times that
you need it if you're going below seventy six. Though
I don't even know who you are, man, you just
lived in luxury. How fancy are you?
Speaker 2 (21:48):
Dude? Okay, here's the thing. I would much rather keep
it at seventy six seventy seven in the summer and
keep it cool and then keep it really cold in
the winter. I would be much more willing to take
it to the extreme in the winter and drop it
down to like fifty nine or six, which I've done before.
My in laws actually accused me one time. They were like, no,
I swear, you know, like after Kate and I got
married and back when we were super cheap. They're like,
(22:09):
one time, like when we were visiting, you had your
heat set of fifty seven. I was like, I don't
think so. That seems kind of crazy, and.
Speaker 1 (22:15):
They swear by it, so it sounds pretty close.
Speaker 2 (22:17):
To what you do. Though. Well, luckily things have changed
a little bit. I'm not nearly as cheap and imposing
as I used to be. Dude, Let's talk about transportation,
because this is another area that can be hard to change,
especially if you hop over to that barbones budget because
an emergency hits. It's hard to think about selling a
car in the middle of a difficult situation. It's hard
to hop out of a car payment or a lease
(22:38):
if you're in one, although there are ways of doing so.
Speaker 1 (22:41):
Yeah, swap a lease, lease trainer. Those are websites.
Speaker 2 (22:43):
Look and so this is a line item that probably
needs to be a part of your barbones budget, but
see if there are ways for you to pare it down.
And another piece of advice here is just to not
necessarily buy a car at the top end of your budget,
right because you're buying that car and hopefully you're not
financing it. But if you are, you've got payments, and
you've got payments that go along with your budgets. When
(23:04):
everything is going exactly as it should, you know, sort
of the best case scenario. And so I feel that
this is a good reason to have the vehicle that
will obviously work for you when things are going well,
but one that you can afford or one that you
can support when things are not going so well as well.
Speaker 1 (23:20):
Yeah, that's right. So buying that car in cash is
definitely something we would recommend absolutely everyone. And that comes
in handy to when you're creating your bear bones budget.
You're like, I get to keep my car and I
don't have a.
Speaker 2 (23:31):
No matter what. That exactly like, at least the car
is mine. You can go sleep in that, like you said,
I by the river.
Speaker 1 (23:36):
That's right. One other thing that definitely needs to make
your bear bones budget is your recurring monthly debt obligations. Right,
you can't stop paying your creditors if you lose your job,
So this definitely needs to be factored into. Let's say
you do have credit card debt that you're working on
getting down student loan debt. Obviously, federal student loans have
been put on pause for the time being. Eventually those
(23:56):
are going to resume. You can't factor those out of
your bare bones budget that has to be there because
you're gonna need to continue to pay those payments every
single month, even if you've been put in difficult financial circumstances.
Speaker 2 (24:07):
Yeah, but I mean you bring up a good point though, too, right,
which is it's worth noting that we do have some
control over those payments to a certain extent, just like
with housing, you know, there might be ways that you
can modify the terms a little bit so that you're
paying less, right. I mean, there's a national forbearance, you know,
on federal student loans, but you can go to a
specific lender and see if you can get a four barance,
so you can see if you can get the loan
(24:28):
extended or even a lower interest rate. If you're looking
at a credit card, right, there are ways to potentially
modify the terms of that debt. And so while you
don't want to necessarily count on that, know that if
you ever do find yourself in an in dire straits,
you're looking to all the different types of ways that
you can reduce your expenses. And so, Joel, maybe we
left some stuff out, but we feel that those are
the basic requirements that we need in order to survive
(24:50):
in a modern world. Right, And so let's talk about
what doesn't make the cut. Right. There are probably quite
a few things that might be in your normal budget
that you don't want to give up up in an
ideal world, and that makes sense. But the bare bones budget, dude,
is not for ideal worlds. It's for the world that
you hope never comes into being. So let's cover a
number of different expenses that I think maybe some folks
(25:12):
might feel are necessary to life. But we're going to
cover several of these to point out that, in fact,
they are not necessary.
Speaker 1 (25:18):
Yeah, man, I feel like, you know, one of the
things that needs to go quickly, and it's pretty easy actually,
to cut up from your life is no cable or
streaming services in your barebones budget.
Speaker 2 (25:28):
Even though over the past year and a half it
feels like that has been kind of like a non negotiable.
You know, people are like, no, gotta have gotta have
a Netflix.
Speaker 1 (25:35):
Yeah, maybe you're only saving grace having a couple of
good shows to watch, right, But we would say that,
you know, when worse comes to worse, living on that
barebones budget, you can't be spending a dime towards those things. Instead,
you should be watching free stuff on the Roku channel
or a YouTube even, you know, when when you're in
barebones budget territory. You know most of us have like
a digital antenna. There's a bunch of stuff you can watch.
Speaker 2 (25:57):
Free over the air, that free HD content.
Speaker 1 (25:59):
AG. Yeah, exactly. It looks it looks good.
Speaker 2 (26:01):
It looks better HD over the you know, over air,
looks better than the stuff they stream, right because it
gets downgraded.
Speaker 1 (26:08):
Right.
Speaker 2 (26:08):
I don't know how the technology works, but I've been
told that.
Speaker 1 (26:11):
And maybe on the bear bones budget too, you go
from you know, watching stuff more frequently to reading more. Yeah,
because yeah, reading is essentially free too, and you can
read free stuff on the libby app. I use that
all the time. They're little free libraries and tons of
neighborhoods near where you live. In all likelihood, man, we've
got so many just in our neighborhood alone.
Speaker 2 (26:30):
Like people love the little free libraries in our part
of town at least. It's like, I feel like the
number of little free libraries doubled during the pandemic because
it was just like a little I don't know, I
felt like it was a fun project that maybe some
households were like, oh, let's make one of those and
stick it, you know, at the sidewalk in front of
our house. There's one actually a couple of blocks away.
Have you seen the little free puzzle library?
Speaker 1 (26:49):
Oh I have seen that one.
Speaker 2 (26:50):
Yeah. Yeah, Like they used a like the old school newspaper. Uh.
Like you stick a quarter and push the button and
it allows you to open the door and you grab
you know, you're supposed to grab one newspaper. Whatever kept
you from grabbing like all the newspapers back Just general civility,
just honesty.
Speaker 1 (27:05):
I mean, what would you do with more newspapers? I know,
exactly right, I guess to trying to start selling them again.
Speaker 2 (27:10):
But one of our neighbors somehow got their hands on
one of those, and now this thing is packed full
of different puzzles and so it's just a fun, free
way to entertain yourself without paying for cable, without paying
for streaming services. Uh and so. And obviously, dude, you
know we're talking about like entertaining ourselves. How about vacations
and travel? If things get tough financially, it is crucial
to put spending on fun stuff like that summer trip
(27:32):
on hold, even though you've been itching to go on
a trip. Right, So we would recommend for you to
remove leisure travel from your bare bones budget and make
sure too that you don't fall into the sunk cost
fallacy because you might think, well, shoot, I've already got
a deposit down on this place. If I don't go,
I'm going to lose that deposit. And here's the thing,
it doesn't really matter, because if you don't have the
money to actually go on that vacation, then it might
(27:55):
be worth losing that deposit. Right. Hopefully you're able to
get all of your money back, but even losing out
on like fifty percent of the cost of a trip
might be worth doing if that keeps you from spending
additional money that you wouldn't spend where you just stay home.
And so the sunk cost fallacy comes into play because
you think, well, I've got money invested into that trip.
I need to see it through. But that's not the
case if you can't afford it.
Speaker 1 (28:15):
Yeah, those are hard words, but I think they're true words. Yeah,
I think it's important to put stuff like that on
hold if you're in a tough spot. And Matt another thing,
I think that definitely does not make the bar bones
budget is clothing. I'd say that, you know, maybe thrift
store purchases only, and you know, because you can get
stuff they're pretty cheap. But on a bare bones budget,
you should be able to have this line on him
(28:37):
at zero. Yeah, and just wear stuff you already own.
Speaker 2 (28:39):
Unless your socks are getting so holy that. I mean,
like evidently yours were, like they're so bad that you
couldn't wear them anymore.
Speaker 1 (28:46):
No, they weren't, But I also wasn't on a bar
bones budget, and I could afford some new socks, right,
But in the bar bones budget, I'm not buying the
semi nice stocks that I like, we're not buying your
mamas exactly. They're off the table, right. The one exception
might be getting clothes for your but you know, still
you should be able to go without that for a time,
you know, keep clothes out of the bare bones budget altogether.
(29:06):
If you got to pull the trigger and start using it,
there's just no reason to be spending on clothes in
that situation.
Speaker 2 (29:11):
And I think that's an instance where you can look
to your community, right, dude. Recently, we had two families
donate us some clothes, multiple large trash bags full of clothes,
because their daughters are older than our oldest and what
that meant for us was a ton of free clothes. Man.
The girls loved it because they're just kind of sitting there, like,
you know, flipping through all these clothes and like, I'm
gonna keep this. I wanna keep this. Kate loved it
(29:32):
because she didn't have to go to the store, she
didn't have to like order stuff you know online, have
a ship. If it doesn't fit, she has to ship
it back. And then of course it was good for
the budget because that joke was free.
Speaker 1 (29:41):
Yeah, hand me down clothes are the best, dude.
Speaker 2 (29:43):
Absolutely. And you know, we already kind of touched on entertainment,
but you know, I'm thinking of like concerts and movies
like that kind of thing as well. We've all seen
how we can get by without those over the you know,
the past year and a half. Again, it's not ideal.
Maybe it's to have no entertainment funds in your normal budget,
but this is again we're looking to how we can
pare down our budget in the most extreme way. And
(30:05):
let's also talk about like self care. You know, I
think a gym membership is something that a lot of
folks have also learned that they can do without over the.
Speaker 1 (30:12):
Past year, push ups at home. Baby Dude's that.
Speaker 2 (30:14):
In the kettlebell. Folks don't want to hear me talk
about that. I'll talk about that enough, but a lot
of folks are working out at home. If you are
having a tough time with your money, but if you're
not eliminating that, like thirty bucks up to two.
Speaker 1 (30:26):
Hundred dollars looking at you, crosswait, dude.
Speaker 2 (30:28):
CrossFit folks pay a lot of money for that accountability.
I mean essentially, that's what it is. It's accountability, and
I get it, But man, is there not a way
that you can get more affordable accountability?
Speaker 1 (30:39):
Well, I will say, you know, if that's in your
normal budget and you love it, I don't care. That's fine,
Like I don't mind if you're spending. I think the
first time I heard a friend was joining CrossFit and
they told me how much it was, I almost puked,
Like I was like, that's really I guess I'm going
to open a CrossFit job, you know exactly, Like that's
definitely the business I'm getting into. But I was like,
that doesn't make any sense to me. But the more
I've heard people talk about it does make sense to me,
(31:00):
and it is kind of a community based thing.
Speaker 2 (31:03):
I get it.
Speaker 1 (31:04):
But in your bear bones budget, sorry, you're gonna have
to hang out with those people like on your front
porch right your house goes. You're not gonna work out
with them at two hundred bucks a month.
Speaker 2 (31:12):
Yeah, dude, hanging out outside, going hiking with friends, like
hanging out on the front porch, like playing games that
you already have. These are all great alternatives, you know,
to entertainment that's gonna cost you money, but you know
with like gym memberships, like that's something you can do
at home, and even other self care you know. Again,
Like one of the other things I feel like folks
to learn from the pandemic is that like, Okay, I
can actually cut my hair at home. Maybe it's not pretty,
it wasn't pretty the first time, but like, I bet
(31:34):
you learned a lot after that first haircut. You learn
how to make it look pretty good. I've been cut
my own hair for I don't even know how long,
but it's something you get used to in the and dude,
the money that I've saved has compounded, let me tell you,
over the years of not having to pay for haircuts.
Speaker 1 (31:48):
So that's where thousands in your roth Iran, there's tens
of thousands. Maybe I don't know, it's gonna be a lot.
All right, well, yeah, I think to one of the
great things. Again, we're not telling people to create this
bear bones budget and start living according to it now, right.
It really is this exercise that can be a confidence builder,
that can reveal some of the spending choices that are
(32:09):
easily changeable in your life, that you feel like are immovable.
But once you've created this barre bones budget, once you've
got it alongside the budget that you're using right now
every single month, you're gonna notice there are a lot
of differences. There's going to be one big difference, right,
the number that is coming out of your accounts every
month to pay for your monthly expenses. We'll talk more
(32:30):
about that and how a bare bones budget can be
implemented into your life, not just in the case of
an emergency. We'll hit that right after this break.
Speaker 2 (32:47):
All right, Joel, we are back to the break, and
you know we've been talking about what's include in your
bare bones budget, what you definitely should not include, like
basically anything that we didn't mention in that first little section,
as far as like the you know, the bear essentials,
everything else you can kind of, you know, cut from
your budget.
Speaker 1 (33:02):
What about my Gulf string, Matt, like my my private airplane?
Speaker 2 (33:05):
Your helicopter membership? Yeah, that also has to God, have
you ever heard of those? There's these things where you
can pay to be a member and you can kind
of get airlifted from. I don't know if this is
something that died out like years ago, but I remember
seeing that one time and thinking, holy crap. There are
people who you know, are essentially have like a gym membership,
but it's like Uber for helicopters.
Speaker 1 (33:24):
Who's got that kind of money?
Speaker 2 (33:25):
Elon Musk, I'm sure, you know, call up a helicopter
whatever he wants. But you know, before we're gonna talk
through some additional benefits of creating one of these bare
bones budgets. But I wanted to mention some of the
different tools that you can use if you're not already budgeting,
if you're gonna go more analog, you can be like
me and kind of copy and paste your expenses over
into an Excel sheet. I've got over a decade's worth
(33:47):
of budgets that I you know, I could go back
and look at my expenses, but I don't. It's not
like I reminisce, oh, you know what I spent in
June of two thousand and seven, But I could. But
for most normal folks, you can check out Mints wine
ab or you need a budget, that's a totally great
app that you can use. And so once you've kind
(34:07):
of paired that thing back, once you know how little
it actually takes for you to survive, and you've got
you know, this small, hopefully smaller number than what you
normally have flowing out of your account, you might be
wondering when should I actually implement this, And we think
that there are a couple instances.
Speaker 1 (34:22):
Where you might put this to use.
Speaker 2 (34:24):
You could switch over to a bare bones budget, maybe
because of an unexpected job loss. We kind of touch
on this earlier, but that's absolutely a case when you're
gonna want to, like, you know, like we said, flip
the switch. It's almost like you're operating on like safe
mode when you're booting up your computer because there's a
virus or something that's attacking it. You know, you want
to make sure that you can do the bear essentials.
But everything else kind of falls by the wayside. That's
kind of the primary reason that you'd want to switch
(34:45):
to a bear bones budget. But you could also go
bear bones if you're looking to accelerate your ability to
achieve a financial goal, like maybe you're paying off a
massive amount of credit card debt. If that's the case,
then you're going to stick with that bearbones budget for
however long it takes to crush that goal.
Speaker 1 (35:01):
Yeah, men, I think either you do it, like you said,
out of necessity, right, you need this. You need to
live on the bare bones budget in order to be
able to make your money stretch further until you can
get through whatever, you know, difficult circumstances have presented themselves,
or also to you kind of impose it on yourself
on purpose in order to achieve something in the short term.
I think, you know, one other way maybe people might
(35:22):
use it. Some people in the financial independence community might
essentially be living on a barbones budget because they're trying
to retire in five or ten years or something like that, And.
Speaker 2 (35:31):
Yeah, that's their higher goal that they're trying to achieve. Right,
it's not necessarily credit card debt, but it's a certain
lifestyle in their case, to maybe step away from a job.
Speaker 1 (35:39):
True, I think you know, it might be demoralizing though
to try to do a barbones budget for five or
ten years, Like that's a really really long time to
try to adhere to that and to cut back your
spending to that extreme, although it is possible if that
is your greater goal and if you feel like you
can actually handle it.
Speaker 2 (35:56):
Yeah, man. And you know the additional benefit of having
a bar bone budget is that you get to see
that you truly have power and control over the amount
of spending in your life. You know, like, like we
might think that it takes a certain amount of income
for us to survive, but really we're just making ourselves
subservient to that assumption.
Speaker 1 (36:14):
Right.
Speaker 2 (36:15):
It's important to know that we have control over our
lives and we definitely have control over the things that
we spend our hard earned money on. It makes me
think of like, like, you know, if you're subscribed to Netflix.
You know, this isn't the second time as it's come
up as an example, and you're not really watching anything
on Netflix, and maybe you say to yourself, oh, well,
like I'm still subscribed. I'm just gonna kind of let
that keep billing me like no, Like, why would you
(36:36):
do that? You wouldn't do that, you would make changes.
You have control over your spending. We have control over
the direction of our lives. And I think it's easier
to kind of keep doing what we've been doing rather
than making those changes and rather pivot towards something either
unknown or something different, or something that might be just
a little more difficult. It's easier for us to not
ask any questions and continue plotting on.
Speaker 1 (36:57):
Yeah, I think too, Matt. When you see the difference
in your normal budget versus the bare bones budget, when
you see how big of a chunk you can cut,
just like that, you're able to visualize the changes that
you can implement in your personal finances just by doing
this exercise. And I feel like that sense of independence
that you get by doing this can weave its ways
(37:17):
into other parts of your life. Right now, you might
be empowered to ask for a bigger raise at work
than you might otherwise do because you need the job.
If you're like, you know what, I can cut fourteen
hundred dollars out of my month tomorrow if I need to,
I feel like I can ask my boss for a
raise and not feel bad about it. That's definitely one
of the side effects that is possible. I think when
you create a barbones budget right also too, like you
(37:38):
might realize that you can invest more of your income
than you previously thought. You thought maxing out a roth
ira that's just for other people. Well, you know what,
maybe it's not. Maybe it's for you. Maybe creating a
bare bones budget helps you realize how much waste there
actually was in the budget you've been using, and you
can come back a few of those things you have
to cut everything. You don't have to go all the
(37:59):
way down to using that bear bones budget, but it
does help you realize that there are things that you
can cut pretty easily that don't make that big of
a difference, and you can start investing more for your future.
So yeah, I think the barebones budget exercise goes way
beyond just creating this piece of paper that you're hoping
you never have to use or implement. Putting together the
(38:20):
barebones budget goes beyond just having this backup in case
the worst possible thing were to happen. Although though it
is good for that reason, it can be empowering in
all these other ways of your personal finances.
Speaker 2 (38:32):
Yeah, yeah, and you're saving and what you invest And dude, like,
I feel like the discipline that we gain by taking
control of our spending like that can apply that like
that can bleed into other areas of our life, right Like,
it makes me think of just like getting fits and
like controlling how much you eat, how much you exercise,
Like these are all things that we have control over,
even like our relationships, Like within our social circles, we
(38:54):
can initiate hanging out with a friend that we haven't
seen in a while. You know, these are all areas
in life that could benefit from this crossover of discipline
that could result from cutting back on your expenses. It
seems crazy to say that, right like that, just simply
by seeing that, Oh, I truly could live on a
third of what my current monthly budget is, which, by
(39:17):
the way, dude, so I crunch the numbers and I
won't give specifics, but our bare bones budget is about
a third of what we currently live on. Right It's incredible,
isn't that crazy? Yeah? Which means that two thirds of
it is basically lifestyle fluff's seriously, and that's okay, But
it's just good to see that. Wow, if it came
to it, we really could cut back a lot. And
(39:37):
so regardless of which area in your life you're looking at,
And obviously we're focusing here primarily on finances, but it
can affect a lot of the different areas in your life.
Speaker 1 (39:45):
Yeah, for sure. And I think to a lot of
people in all likelihood might decide to use the barebones
budget to inform their current budget to come up with
something like in in between budget, right, Like maybe maybe Matt,
after that you say, wow, you cut that much, Well,
you know, but maybe I can have a monthly budget
somewhere in between if you have other goals that you're
looking to accomplish.
Speaker 2 (40:05):
Day, if you're thinking you have to subscribe to like
one or the other, like, that's a false dichotomy. R. Yeah,
Like there's plenty of spots in the middle that you
could go with exactly.
Speaker 1 (40:14):
I feel like, Yeah, seeing the difference in what you're
currently spending versus what you could get by on could
help you realize, like how big this gap is. Seeing
the difference in what you're currently spending versus what you
could get by on could help you realize how big
of a gap you can actually have between what's coming
in and what's going out. You know, you might be
able to even achieve financial independence earlier than you thought
(40:35):
by letting that bear bones budget, not not by living
on that bar bones budget for a decade, but by
letting it at least inform your normal budget to a
larger extent in the here and now.
Speaker 2 (40:44):
I mean it also like when you're looking at it
from an emergency fund standpoints, when you know that you
can pare down your budget to maybe a third of
what it currently is, that's empowering. I get a lot
of confidence knowing that our emergency fund, we could actually
stretch that out for much much further. And so you know,
a fully funded emergency fund that normally would be around
three to six months worth of expenses might in fact
(41:07):
translate more into maybe six to twelve months worth of expenses.
And so I don't think I'm alone and gaining some
peace of mind from that, especially dude, you know, being
self employed, when our income varies significantly, it's nice to
know that we, you know, can have enough set aside
to allow us to even out those annual expenses, those
(41:28):
ups and downs.
Speaker 1 (41:28):
No doubt. So it's a helpful exercise for everyone out there.
Even if in the end you decide I'm sticking to
my normal budget as is not changing a thing. Having
that bear bones budget is going to provide peace of
mind and some empowerment, I think in your corner. All right, Matt,
let's get back to you. The beer that we had
on this episode, we have not yet cut it out
of our budget. We're still enjoying good graph here that
(41:49):
is true. But yeah, this one was called Ethereal Vibrations.
It's an IPA from two of our favorite breweries, Monday
Night Brewing and Burial Brewing. What were your thoughts on
this delicious beer?
Speaker 2 (41:58):
Man, Yeah, this is a double New England IPA and Dude,
this has all the different flavors I'm looking for in
a New England hazy ipa. It poured a super hazy
orange color. It's got all the kind of floral notes
as well as all the hoppy dankness that you would
come to expect from some IPAs from.
Speaker 1 (42:17):
Both of these breweries.
Speaker 2 (42:18):
Like, I don't feel like there's anything stand out about
it except that it was just flat out delicious and amazing. Like,
there wasn't anything like super unique about it. But when
I think about a double New England IPA. This is
one hundred percent what I'm picturing or what I'm imagining
myself tasting.
Speaker 1 (42:35):
Yeah, I feel like to make an NBA comparison, I
feel like Monday Night and Burial, you know, combining forces
would be like Lebron calling stuff curry up and being
like come over and play playing the Lakers with me? Like,
can you imagine what that team would be like? Like
how they would demolish people. The beer was delicious. It
was just like blend, I think perfect blend of like
bitter and sweet. It was juicy and delicious. I don't
(42:57):
know how descriptive I can get beyond that. It was
just it was just a really really good example of
the style. They crushed it on this one.
Speaker 2 (43:03):
Yeah, it's not one of these IPAs where there's like
a bunch of adjuncts which means like they're adding different
ingredients or just kind of doing a random fruits yeah,
or like a weird process that they're participating in. This
was just a really good all star of a New
England IPA. Glad that you and I got to share
this one on the show.
Speaker 1 (43:19):
Bud me too. Man, all right, well that's going to
do it for this episode. For folks that want the
show notes for this episode links to anything and everything
we mentioned, we'll put those up on our website at
howtomoney dot com.
Speaker 2 (43:29):
That's right, And if you've been listening to the show,
and if you have not yet left us a review
over at Apple Podcasts, we would love it if you
did that. So that helps us to get the word out.
It helps others to find the show who haven't yet
found it, and so we would appreciate that over at
Apple Podcasts or wherever it is that you listen to
your shows. And so Joel, that's going to be it,
buddy for this episode. Until next time, Best Friends Out,
(43:52):
Best Friends Out. The Only wo
Welcome to How to Money. I'm Joel, and too, I
am Matt, and today we're discussing why you need a
bare bones budget.
Speaker 2 (00:25):
You know, a bare bones budget. It's got that BBB
action going on, some nice alliteration for our listeners today,
like a better business bureaud. Okay, So here is what
this episode makes me think of. You know, when you
start acquiring items for your closet, like your wardrobe, and
you kind of just add another hanger in there, and
you're like, oh, you know, I ran out of hangers.
Let's buy another pack of hangers, and you start filling
your closet, it starts bulging. It's about the bus at
(00:48):
that seems. I feel like our budgets can act that way, right, Like,
over time, as we add line items to our budget,
it can start to swell. Maybe now that we're you know,
we've got a legit job. Maybe you go on like
acation every year with your friends or something like that,
or maybe you like clothing, like that's something that you
really value, or maybe you really like electronics. It's okay
to spend money on the things that you enjoy, the
(01:10):
things that bring you value, but the effect that that
has on our budget is it. It starts getting kind
of thick, it gets a little bit plump. And so
with this episode, we want to introduce this idea of
essentially like a thought experiment for folks, Right, we want
folks to think through what would happen if you were
to pare down your budget to the bear essentials.
Speaker 1 (01:28):
Yeah, we're not going to force you to create and
then adhere to this bear bones budget, but we do
think there's a whole lot that could be gained by
by just trying it out and seeing what happens by
at least creating one. And so we're going to talk
about how you do that and what you're going to
gain by doing that in today's.
Speaker 2 (01:43):
Yeah, there's a lot of benefits from partaking in this exercise.
Speaker 1 (01:46):
No doubt. Before we get to that, mat, I want
to quickly mention listener Holly send us an email and
she had mentioned this app that I hadn't heard about,
and I feel like we had to look into it
called Giveling, and it's this like student loan app or
people come together they play trivia games and sometimes say
pay money to play more trivia games and see if
(02:06):
they can move up the standings in order to win
a big prize to help pay off their student loans.
And yeah, I mean I know you took a look
at this too. Yeah, what would you think about it?
Speaker 2 (02:15):
Dude? Yeah, it seemed a little too good to be
true because one of the things they say is that
once you get to the number one spot, you're eligible
for the grand prize, which is a fifty thousand dollars
student loan payoff.
Speaker 1 (02:24):
Which you know, to anybody who has a bunch of
student loans is like, that's that's music to my ears exactly.
Speaker 2 (02:30):
And here's the thing, dude, I was almost even hesitant
for us to even talk about it because I don't
want people to get the idea that this is something
that they need to do, because there are some serious
red flags, right because you're able to move up that
queue by acquiring I think what they call Q points,
and you do that by you can answer trivia, you
can watch ads within the app. You can also make
(02:50):
purchases like from their just different companies that they've partnered with,
and also by referring people from reading up on it.
Those are all ways that you can get closer to
that kind of prize, but specifically that last way of
getting points, referrals, pulling your friends in, dude. That's the
part of this that makes me feel like that this
is more of a pyramid scheme than anything else, right,
because essentially they are counting on the additional people that
(03:14):
are coming in in order to pay off the prizes
for the folks at the top, right, And anytime you
have any sort of model like that that's dependent on
the acquisition of more customers in order to be successful,
because there isn't truly an actual product. It makes me
feel that at some point if there are not enough
folks kind of at that base of the pyramid, you
know what happens that the pyramid essentially gets inverted, and
(03:36):
so you've got a fewer number of people at the
bottom paying into it. You've got a lot of people
invested who are waiting for that big payout at the
top exactly, and it's going to fail. And so something
like this, you can have so many people who are invested,
like literally invested. The We can link to an article
that we came across, but there's folks who have paid
in thousands of dollars and there's nothing really keeping a
(03:58):
company like this from going bankrupt. Now, next year or
like tomorrow.
Speaker 1 (04:01):
Right, Yeah, I think it is. It's one of those
things where people get excited to think that they could
win a big sum of money that would help them
in a massive way, maybe pay off all their student
loans or at least pay off a huge chunk of it.
But it's kind of like the lottery in my opinion.
It might be a perment scheme. I'm not sure, but
it definitely has some lottery feel to it. And they
get you in there and you start to pay money
(04:22):
so you can continue to move up this leader board,
making you think you have a greater chance of winning
a big chunk of money that's going to help you
in a big way. And I think, yeah, there are
certain free ways that you can participate in this app
where you don't have to spend a time, and I
would say, like, even be careful doing that, because I
think it might get you in the mental state where
you're more willing to part with some of your money
(04:42):
to try to move up and to try to win
some cash. And I think the likelihood that's going to
happen for you is skim, just like winning the lottery.
So I would say, yeah, avoid givling I think it's
an app that doesn't make sense for almost anybody.
Speaker 2 (04:56):
Yeah, the free aspects of it we don't have any
problems with. But like you said, it's like the prime
the pump a little bit and then gets you ready
to pay a little bit more money into it. And
specifically because it's the leader board, Like, I think that's the.
Speaker 1 (05:06):
Part of it that the gamification of this.
Speaker 2 (05:08):
Yeah, and I get it, Like I understand how it's
kind of fun, but essentially there's the expectation that at
some point you're going to reach the top. Right with
a lottery, When folks you know, play the lottery, they
know that there's a slim chance of them getting any money. Right,
there's not a leader board where it's like, Okay, eventually,
if I work hard enough, I will I will achieve it. Yeah,
it's chance. And so there's in my mind, there's a
(05:29):
huge difference between working towards something where you're expected to
pay out versus you know, one and I don't know,
ten million chance of winning the lottery or something like that,
where there's a huge payout.
Speaker 1 (05:38):
Yeah, and gamification, we think can be a really healthy
and good part of personal finance. Right that we've talked
about that before on the episode. There are ways that
you can gamify your own personal finances that are gonna
help you in your pursuit of saving more and building wealth.
This is a way that's like praying on that behavioral tendency,
that a llure of gamification that's actually gonna part you
from your money. So, yeah, don't participate.
Speaker 2 (06:00):
Games with friends that could cost you thousands of times right.
Speaker 1 (06:04):
Well, so, all right, Matt, let's mention the beer that
we're having on the show today. This one's called Ethereal
Vibrations by Monday Night Brewing, one of our favorite local breweries,
and they collabed with Burial out of Ashville to make
this really good looking IPA. Looking forward to having this
one on the show today with you.
Speaker 2 (06:18):
Yeah, it's hard to go wrong when you've got one
of your favorite local breweries teaming up with one of
your favorite national breweries to make a delicious beer. Looking
forward to enjoying this one on the show.
Speaker 1 (06:26):
Dude, me too. All right, But for now, onto the
subject of the hand. Why you need a bear bones budget.
That's what we're talking about today, And Matt, I don't
know if you've seen this show there's a History Channel
show called Alone. Have you seen it?
Speaker 2 (06:36):
I have not? Okay, so basically sounds like your worst nightmare,
though it does.
Speaker 1 (06:41):
I like people, I would be sad.
Speaker 2 (06:43):
I would probably deal okay with it.
Speaker 1 (06:44):
You probably would. But basically what happens is that folks
are allowed to bring ten items with them as they're
dropped off in this remote section of the wilderness to
survive amongst like okay, bears, bobcats, other various treachery. But yeah,
so like ten people, they're competing against each other to
see who can stay out there the longest, whether it's
like thirty days, forty days, Like how long can you
(07:05):
be out there? And you don't know how everyone else
is doing. You're just trying to survive, And like the
idea of doing that with only ten items, with like
bare bones resources makes a show so much more interesting
than if those folks were able to bring any or
all of their possessions with them, right, Like, like I'm
thinking of dropping them in the woods with a tiny
house and a wood burning stove, and like it's like
(07:28):
not as interesting as a show.
Speaker 2 (07:30):
I'd pay to go there, Yes, Like that's what's on
the first page of Airbnb right now, it's just like,
you know, these secluded cabins in the woods with a
wood burning stove, right.
Speaker 1 (07:38):
And maybe an Xbox or something.
Speaker 2 (07:40):
Yeah. Yeah, so with panels, it's all set ready to go.
Speaker 1 (07:42):
Yeah, and I'm just thinking, like, not a very fun
TV show to watch a dude play Xbox in the woods, right,
But like seeing what people can do with limited resources
is actually kind of fascinating and for some of the
individuals who've gone on the show, even if they don't win,
it seems like it can be like this meaningful and
empowering experience. Well, we think that having a bare bones budget,
it's not going to make you the next Bear Grills.
(08:04):
You know, you're not gonna be able to survive in
the wilderness for months on end, like sleeping inside dead animals.
I think I saw him do that once. Dude, he
does a weird stuff that's a Star Wars reference. Yeah,
I guess that's true too. But he's an impressive man.
But we do believe that having you know, one of
these bare bones budgets in your back pocket is necessary,
is helpful, and it can be powerful in the case
of an emergency popping up.
Speaker 2 (08:25):
Yeah, essentially, we think that having a bare bones budget
is about prioritizing your needs, not your once right, so
it reflects only those most essential monthly expenses, and having
one comes in handy in a lot of ways. So,
for instance, you may feel trapped working in a high
paying job that you hate, but because the pay or
the benefits are so good and you need that income,
(08:47):
you're stuck, or at least you feel like you're stuck.
Maybe you don't get treated as well as you should,
or the hours or the demands of that job are overwhelming.
You're not going to be left with many options if
you don't think you can seriously downsize your b and
so creating that barbones budget can help you to see
the path to exit that job, even if you don't
have a new one lined up yet. Or maybe it
(09:09):
can even help you to realize that you can take
a job or a position that pays less because your
finances are still going to be okay. It's essentially about
giving you options, flexibility, and the freedom to act in
ways that you want to act.
Speaker 1 (09:21):
That's right, Yeah, And so I guess, like, who is
a bare bones budget for? We would say that it's
for everyone, that everyone should really attempt this experiment. Right,
even if you love your job, there's no guarantee that
your employer keeps you around as long as you'd like
to stick around. So some people might be like, but
I really like what I'm doing. I probably don't need
a bearbones budget because I plan on working, you know,
(09:43):
here for a long time. But you know what if
your employer goes to a rough patch, or the economy
in the general goes to a rough patch, and you
don't have that job anymore, Right, So we think it's
important for everyone. You know, I personally have seen the
difficulties that unexpected employment can create firsthand, and it's not pretty.
I would say two, Having that bear bones budget on
hand before an awful event like that happens to you
(10:06):
can help you whether the storm much better than you'd
otherwise be able to. It's so much harder to try
and slash expenses when you're in the midst of the
emotional and financial turmoil that you're going through in the
aftermath of something like a furlough, a job loss, or
a reduction in hours. Trying to get your budget in
order and pair it down in the middle of the
emergency is overwhelming. So that's why we would suggest getting
(10:29):
this bear bones budget done now, and it can be
a helpful resource for you in the future if you
need it.
Speaker 2 (10:35):
Yeah, dude, rarely do we think that the worst things
are going to happen to us. But it's good to
start thinking about these things ahead of time. It actually
makes me think of have you ever changed a tire
like on your car?
Speaker 1 (10:45):
I have, It's been a while.
Speaker 2 (10:46):
Most people haven't done it, but if they were to
get a flat tire, they've never done it, and so
it's like they're stuck in the position of being like, Okay, wait,
do I have a spare tire like on this vehicle?
Where is it? How do I go about it? You know?
Should I put the parking brake on? Yes, it's going
to be really important that you do that.
Speaker 1 (11:02):
I even have a jack in my car.
Speaker 2 (11:04):
Yeah, And so there's all these things, and I mean, honestly,
it sounds a little bit like prepping, but it's just
thinking through the worst case scenario a little bit and
making sure that you're familiar with what you're gonna need
to do if that situation ever arises. I feel like
that's a part of the reason why we're recommending for
folks to start thinking about this ahead of time. The
bare bones budget. It's almost like a fire escape plan
that you had to come up with in elementary school,
(11:24):
you know. I remember my folks, like you remember back
in the nineties, there's those ladders, like if you had
a bedroom in the second floor, you're supposed to get
one of those ladders that you can like you know,
roll out the window. Yes, so you could escape.
Speaker 1 (11:36):
I tried to, you know, tell my parents that we
needed one of these things, because like I think every
elementary school kid did, and I feel like they didn't
love because we never got that.
Speaker 2 (11:44):
Okay, so my bedroom was there was actually this column
outside my bedroom window, and we never got one of
those things. But I remember thinking, okay, well you can
slide down that. Yes, I remember thinking, well, at least
I bet I could jump out my window, grab onto
that and just kind of slide down like fireman polls FID.
But I mean, in the same thing, just even as adults,
if you work in an office building or an office park,
you know, like once a year you have a fire
(12:05):
drill and everybody goes out to the parking deck or
the parking lot. Hopefully they have the ice cream truck
there where everyone gets the free ice cream, that kind
of thing, And it always kind of seems silly for
adults to be doing that, but it was an important
thing to do to make sure that we knew where
to go, knew how to get out of the building
in case there was a fire. It's not likely to happen,
but planning for the worst is still a good idea.
And in regards to your budget, knowing that you will
(12:26):
you know that you have this bare bones budget made,
and then just being able to just easily flip the
switch in an instant to spending a good bit less
than you currently are. This just offers some peace of mind,
you know, And it's truly helpful if you find yourself
in a precarious financial spot just down the road. Yeah.
Speaker 1 (12:42):
So I'm man, I'm an optimist. You know this about me.
That's true, maybe to a fault, some might say, and
I might even say that I don't know.
Speaker 2 (12:49):
And I'm a realist. I'm more the prepper type. Yeah,
I know exactly where the jack is on my van,
you know where yours is? Yes?
Speaker 1 (12:56):
See, yeah, okay, I do so. Yeah, it's I gotta say,
like I think it's good to be an optimist. I
think hoping for the best is a really good thing.
But we would say, and I would say, yeah, even
as an optimist, budgeting like a pessimist and planning for
the worst is just a smart thing to do, right.
And that doesn't mean that you can't have a normal,
healthy budget where you use up all of your money
(13:19):
every month, with hopefully a healthy amount headed towards savings
and investing goals. But it does mean that you should
at least have this bare bones budget in case you
need it. Right. It's the budget equivalent, I would say,
of an emergency fund. You're hoping to never have to
use it, but having it is clutch, right if the
worst were to happen, if job loss does occur. I
(13:39):
think both of those things actually work really well in tandem,
right if something hard does come along.
Speaker 2 (13:45):
Yeah, Plus, having that bear bones budget can also be
a confidence builder, right, if you've got a solid emergency
fund and a bear bones budget that's far less than
your normal monthly budget, it can really boost the assurance,
right that your finances are going to be okay no
matter what. But it can be an eye opening experience
to realize that you actually can live on far less
(14:05):
than you might have previously thought, because you know, like
fear of the unknown that is such a real thing,
especially when it comes to your money. But the bear
Bones Budget can just bring some concrete reality to quell
some of those fears. You don't have to stay awake
at night wondering like, well, what happens if I lose
my job? Like what if I'm ridding my bike and
I fall off and I break my arm and I
can't go to work, or you know, I guess I
could still talk you and I can continue to podcast.
(14:27):
Like then you start thinking, oh, do I need accident
you know, income replacement insurance? You know, do I need affleck?
Like no, Like, we wouldn't point you in that direction,
but we do think that this is a really valuable
step to making sure that you've got that peace of mind.
We want you to know that you would have options.
Speaker 1 (14:41):
Yeah, that you're going to be okay in the event
of an emergency, and the E Fund and the bar
Bones Budget simultaneously is really going to provide I think
a lot of that peace of mind.
Speaker 2 (14:49):
It's like a nice one to two punch.
Speaker 1 (14:51):
Yeah, for sure, I think too Matt. This exercise of
creating a bar bones budget. We're going to talk about
how to get there in just a second. It might
present some helpful questions about the expenses that are in
your current budget too. I think this is a healthy
exercise to realize that the expenses in your life they're
not fixed. I mean, some of them are, we're gonna
talk about that, but many of them are actually just
(15:12):
spending choices that we've made, and we all make them.
Speaker 2 (15:15):
Yeah, this lifestyle.
Speaker 1 (15:16):
Yeah, and there are some things obviously, like we think
it's okay, and it's actually good to prioritize certain expenses
in your life that others might think are crazy, purely
because you love them and you enjoy them. Use your
fancy socks, like my fancy socks. Yeah, I don't know,
I like my socks.
Speaker 2 (15:34):
I mean that's a lifestyle thing, you think. You know,
I'm an adult now, I'm not gonna wear socks that
have holes in them, Whereas I am cheap in that way,
like I don't care man like, so in my mind,
I don't call it cheap. It's frugal. Like I am
willing to have socks with holes in them because I
don't care. But then of course I spend money on
other things that you would you know, you might think
is our foolish, Like I got this new bike bag
that I can wear around town or you know, while
(15:56):
I'm riding my bike. It's fancy like my old one.
It totally still carries it contained things. It's just that
I kind of wanted one that was updated, that looked
a little more sleek.
Speaker 1 (16:04):
Yeah, but I think that's what my priorities like. I
know we have different priorities, and that's okay, But I
think as we go through this exercise, it's good to
point some of those things out, and it's good to
realize that some of the things that are currently in
your budget they are there because of choice and not
because of necessity. And creating a bare bones budget figuring
out the minimum amount that you could live on, can
(16:24):
be a helpful mindset shift in how you think about
the money that's going out of your account every single month.
So we're gonna talk more about what's included in a
bare bones budget and how to create one, and we'll
get to that right after this.
Speaker 2 (16:46):
All Right, dude, we are back, and we just covered
all the different reasons why it is that we should
all have a bare bones budgets in our lives. And
so now let's talk about what is actually in a
bare bones budget. And at the top of the list
we're gonna put beer because beer is the essential to life. No,
actually it's not right. I mean, water is virtually free,
and if it came to it, I would be willing
(17:08):
to pair back how much I'm spinning on beer if
I was in a tight spot, wouldn't you?
Speaker 1 (17:13):
Yeah, I totally would. And I also think that would
be one of the last things I cut, Like definitely
when I made my bear bones budget, beer was not
a part of that because it should not be a
part of your bearer bones. But that's not what it's for.
That this exercise is literally for, like how little amount
of money can you live on?
Speaker 2 (17:26):
That is true. Yeah, we're looking at the essentials. And again,
this isn't the budget that you're hoping to ever have
to use. And so we want you to slash to
the point to where it starts to hurt, you know.
And so let's talk about some of the different categories
that will make the cut. Let's talk about which ones
won't make the cut. And as we do this, I
think it can be helpful to think about Maslow's hierarchy
of needs here as we discuss the basic needs that
(17:49):
it actually takes for us to survive.
Speaker 1 (17:51):
And so, Jill, you want to kick it off food obviously, yeah,
a basic need that we all have, right, But what
we don't all have as a basic need to survive
Chipotle or like Chick fil a or whatever fast food
or whatever food in general that you enjoy, like in
all likelihood, you're going to need to and you should
in this bare bones budget exercise, pare down your food budget.
(18:15):
Your current budget might include eating out and fancy cheeses
at the grocery store. Yeah, maybe some fine craft beers,
but the bare bones budget shouldn't include any of those things.
You know, we're not expecting you to survive on bread
and water alone. That's not healthy. But I guess if
you're in that show alone on the History Channel, maybe
that's what you're doing. If you can't kill a critter
that night to roast over and open flame. Maybe, but yeah,
(18:37):
rice and beans are tons of protein and fiber. Basically,
strip down your food budget to what you can actually
get by on without all the extras, without all the
fluff without all the niceties. It's helpful knowledge to have
on hand to know how low you can actually get
your grocery budget if you needed to.
Speaker 2 (18:53):
Yeah, dude, seriously, Like, like you mentioned rice and beans
in like I don't know. It can kind of be
a rallying cry of certain folks who are like trying
to get out of debt. But there's a good reason why,
and that's because, I mean, you can get a lot
of protein from rice and beans. I guess it's specifically
the beans, but like the combination of those two foods together,
Like you don't have to buy some fancy protein, you know,
you don't have to get the fresh Alaskan salmon that's
(19:14):
never been frozen. There are other ways to make sure
that you're getting the nutrients you need. And so we're
going to go from food to shelter because this is
one that everyone needs. This is one that's usually not
going to change, honestly from your regular budget.
Speaker 1 (19:26):
So are you going to suggest that people should pitch
a tent in the woods near where they live. Is
that all that can make the cut in the bar bot?
Speaker 2 (19:32):
I mean they could, but most people aren't gonna do that, right,
Like that's not the position that most of us are in.
But you know, if you are nearing the end of
your lease, maybe moving to a smaller place, smaller home
or a smaller apartment, that might make sense if your
financial situation has changed, But you can't, you know, really
change the reality of your current monthly you know, housing
expenses in most cases, and so as you're putting together
(19:53):
your bear bones budget, you're probably going to transfer this
lime atom pretty much directly from your regular budget. Although
it is importan and to point out though, that we
do have control to a certain extent of how much
are housing costs, right, because your mortgage payment isn't going
to change, but the amount that you're paying towards that
mortgage payment can change. Maybe you've got an extra bedroom,
and you've got that room set aside for friends who
might come to visit a place for them to crash.
Speaker 1 (20:15):
Now it's set aside for strangers.
Speaker 2 (20:17):
Well now as yeah, it's a set aside for a roommate.
And so if you're able to all of a sudden
realize that, like wait a minute, like I've got this
extra room, maybe I've got two extra rooms. I can
get two additional roommates who would gladly pay four hundred
dollars a month, you know, just for their own small room.
You get two of those room set up, you're bringing
in eight hundred bucks a month. That could offset a
fifteen hundred dollars mortgage in a significant way. And so
(20:38):
it's worth pointing out that you're probably not going to
sell your house just because you're having maybe a tough
time with your finances. But there are other smaller moves
that you can make without putting your house on the market. Right,
I get some roommates. That's definitely a way that you
can bring down your housing costs.
Speaker 1 (20:51):
And you don't have to go live in a van
down by the river either.
Speaker 2 (20:54):
Like that. That is true.
Speaker 1 (20:54):
It's an option, I guess, but I'm not sure the
legalities of that. Probably depends on your local municipality. I
shouldn't do that. Rest in peace, Chris Farley, Oh love
that guy, Kay, see a good one. I think another
thing that obviously needs to enter into your bare bones
budget is utilities associated with your shelter. Utilities aren't a
fixed cost, but they are largely fixed right. But at
(21:17):
the same time, we do think that you can trim
this back slightly from your normal budget, maybe five to
ten percent.
Speaker 2 (21:24):
Just depends on how much you're willing to sweat in
the summer. You know, if you just keep crinking that
thermostat up, man, utilize those fans, drink eyes water.
Speaker 1 (21:31):
That's what I used to do. I gotta say, seventy
eight degrees in summer is what I feel like should be. Okay,
and my wife might disagree, but then I think you
can pull it down a seventy six at times that
you need it if you're going below seventy six. Though
I don't even know who you are, man, you just
lived in luxury. How fancy are you?
Speaker 2 (21:48):
Dude? Okay, here's the thing. I would much rather keep
it at seventy six seventy seven in the summer and
keep it cool and then keep it really cold in
the winter. I would be much more willing to take
it to the extreme in the winter and drop it
down to like fifty nine or six, which I've done before.
My in laws actually accused me one time. They were like, no,
I swear, you know, like after Kate and I got
married and back when we were super cheap. They're like,
(22:09):
one time, like when we were visiting, you had your
heat set of fifty seven. I was like, I don't
think so. That seems kind of crazy, and.
Speaker 1 (22:15):
They swear by it, so it sounds pretty close.
Speaker 2 (22:17):
To what you do. Though. Well, luckily things have changed
a little bit. I'm not nearly as cheap and imposing
as I used to be. Dude, Let's talk about transportation,
because this is another area that can be hard to change,
especially if you hop over to that barbones budget because
an emergency hits. It's hard to think about selling a
car in the middle of a difficult situation. It's hard
to hop out of a car payment or a lease
(22:38):
if you're in one, although there are ways of doing so.
Speaker 1 (22:41):
Yeah, swap a lease, lease trainer. Those are websites.
Speaker 2 (22:43):
Look and so this is a line item that probably
needs to be a part of your barbones budget, but
see if there are ways for you to pare it down.
And another piece of advice here is just to not
necessarily buy a car at the top end of your budget,
right because you're buying that car and hopefully you're not
financing it. But if you are, you've got payments, and
you've got payments that go along with your budgets. When
(23:04):
everything is going exactly as it should, you know, sort
of the best case scenario. And so I feel that
this is a good reason to have the vehicle that
will obviously work for you when things are going well,
but one that you can afford or one that you
can support when things are not going so well as well.
Speaker 1 (23:20):
Yeah, that's right. So buying that car in cash is
definitely something we would recommend absolutely everyone. And that comes
in handy to when you're creating your bear bones budget.
You're like, I get to keep my car and I
don't have a.
Speaker 2 (23:31):
No matter what. That exactly like, at least the car
is mine. You can go sleep in that, like you said,
I by the river.
Speaker 1 (23:36):
That's right. One other thing that definitely needs to make
your bear bones budget is your recurring monthly debt obligations. Right,
you can't stop paying your creditors if you lose your job,
So this definitely needs to be factored into. Let's say
you do have credit card debt that you're working on
getting down student loan debt. Obviously, federal student loans have
been put on pause for the time being. Eventually those
(23:56):
are going to resume. You can't factor those out of
your bare bones budget that has to be there because
you're gonna need to continue to pay those payments every
single month, even if you've been put in difficult financial circumstances.
Speaker 2 (24:07):
Yeah, but I mean you bring up a good point though, too, right,
which is it's worth noting that we do have some
control over those payments to a certain extent, just like
with housing, you know, there might be ways that you
can modify the terms a little bit so that you're
paying less, right. I mean, there's a national forbearance, you know,
on federal student loans, but you can go to a
specific lender and see if you can get a four barance,
so you can see if you can get the loan
(24:28):
extended or even a lower interest rate. If you're looking
at a credit card, right, there are ways to potentially
modify the terms of that debt. And so while you
don't want to necessarily count on that, know that if
you ever do find yourself in an in dire straits,
you're looking to all the different types of ways that
you can reduce your expenses. And so, Joel, maybe we
left some stuff out, but we feel that those are
the basic requirements that we need in order to survive
(24:50):
in a modern world. Right, And so let's talk about
what doesn't make the cut. Right. There are probably quite
a few things that might be in your normal budget
that you don't want to give up up in an
ideal world, and that makes sense. But the bare bones budget, dude,
is not for ideal worlds. It's for the world that
you hope never comes into being. So let's cover a
number of different expenses that I think maybe some folks
(25:12):
might feel are necessary to life. But we're going to
cover several of these to point out that, in fact,
they are not necessary.
Speaker 1 (25:18):
Yeah, man, I feel like, you know, one of the
things that needs to go quickly, and it's pretty easy actually,
to cut up from your life is no cable or
streaming services in your barebones budget.
Speaker 2 (25:28):
Even though over the past year and a half it
feels like that has been kind of like a non negotiable.
You know, people are like, no, gotta have gotta have
a Netflix.
Speaker 1 (25:35):
Yeah, maybe you're only saving grace having a couple of
good shows to watch, right, But we would say that,
you know, when worse comes to worse, living on that
barebones budget, you can't be spending a dime towards those things. Instead,
you should be watching free stuff on the Roku channel
or a YouTube even, you know, when when you're in
barebones budget territory. You know most of us have like
a digital antenna. There's a bunch of stuff you can watch.
Speaker 2 (25:57):
Free over the air, that free HD content.
Speaker 1 (25:59):
AG. Yeah, exactly. It looks it looks good.
Speaker 2 (26:01):
It looks better HD over the you know, over air,
looks better than the stuff they stream, right because it
gets downgraded.
Speaker 1 (26:08):
Right.
Speaker 2 (26:08):
I don't know how the technology works, but I've been
told that.
Speaker 1 (26:11):
And maybe on the bear bones budget too, you go
from you know, watching stuff more frequently to reading more. Yeah,
because yeah, reading is essentially free too, and you can
read free stuff on the libby app. I use that
all the time. They're little free libraries and tons of
neighborhoods near where you live. In all likelihood, man, we've
got so many just in our neighborhood alone.
Speaker 2 (26:30):
Like people love the little free libraries in our part
of town at least. It's like, I feel like the
number of little free libraries doubled during the pandemic because
it was just like a little I don't know, I
felt like it was a fun project that maybe some
households were like, oh, let's make one of those and
stick it, you know, at the sidewalk in front of
our house. There's one actually a couple of blocks away.
Have you seen the little free puzzle library?
Speaker 1 (26:49):
Oh I have seen that one.
Speaker 2 (26:50):
Yeah. Yeah, Like they used a like the old school newspaper. Uh.
Like you stick a quarter and push the button and
it allows you to open the door and you grab
you know, you're supposed to grab one newspaper. Whatever kept
you from grabbing like all the newspapers back Just general civility,
just honesty.
Speaker 1 (27:05):
I mean, what would you do with more newspapers? I know,
exactly right, I guess to trying to start selling them again.
Speaker 2 (27:10):
But one of our neighbors somehow got their hands on
one of those, and now this thing is packed full
of different puzzles and so it's just a fun, free
way to entertain yourself without paying for cable, without paying
for streaming services. Uh and so. And obviously, dude, you
know we're talking about like entertaining ourselves. How about vacations
and travel? If things get tough financially, it is crucial
to put spending on fun stuff like that summer trip
(27:32):
on hold, even though you've been itching to go on
a trip. Right, So we would recommend for you to
remove leisure travel from your bare bones budget and make
sure too that you don't fall into the sunk cost
fallacy because you might think, well, shoot, I've already got
a deposit down on this place. If I don't go,
I'm going to lose that deposit. And here's the thing,
it doesn't really matter, because if you don't have the
money to actually go on that vacation, then it might
(27:55):
be worth losing that deposit. Right. Hopefully you're able to
get all of your money back, but even losing out
on like fifty percent of the cost of a trip
might be worth doing if that keeps you from spending
additional money that you wouldn't spend where you just stay home.
And so the sunk cost fallacy comes into play because
you think, well, I've got money invested into that trip.
I need to see it through. But that's not the
case if you can't afford it.
Speaker 1 (28:15):
Yeah, those are hard words, but I think they're true words. Yeah,
I think it's important to put stuff like that on
hold if you're in a tough spot. And Matt another thing,
I think that definitely does not make the bar bones
budget is clothing. I'd say that, you know, maybe thrift
store purchases only, and you know, because you can get
stuff they're pretty cheap. But on a bare bones budget,
you should be able to have this line on him
(28:37):
at zero. Yeah, and just wear stuff you already own.
Speaker 2 (28:39):
Unless your socks are getting so holy that. I mean,
like evidently yours were, like they're so bad that you
couldn't wear them anymore.
Speaker 1 (28:46):
No, they weren't, But I also wasn't on a bar
bones budget, and I could afford some new socks, right,
But in the bar bones budget, I'm not buying the
semi nice stocks that I like, we're not buying your
mamas exactly. They're off the table, right. The one exception
might be getting clothes for your but you know, still
you should be able to go without that for a time,
you know, keep clothes out of the bare bones budget altogether.
(29:06):
If you got to pull the trigger and start using it,
there's just no reason to be spending on clothes in
that situation.
Speaker 2 (29:11):
And I think that's an instance where you can look
to your community, right, dude. Recently, we had two families
donate us some clothes, multiple large trash bags full of clothes,
because their daughters are older than our oldest and what
that meant for us was a ton of free clothes. Man.
The girls loved it because they're just kind of sitting there, like,
you know, flipping through all these clothes and like, I'm
gonna keep this. I wanna keep this. Kate loved it
(29:32):
because she didn't have to go to the store, she
didn't have to like order stuff you know online, have
a ship. If it doesn't fit, she has to ship
it back. And then of course it was good for
the budget because that joke was free.
Speaker 1 (29:41):
Yeah, hand me down clothes are the best, dude.
Speaker 2 (29:43):
Absolutely. And you know, we already kind of touched on entertainment,
but you know, I'm thinking of like concerts and movies
like that kind of thing as well. We've all seen
how we can get by without those over the you know,
the past year and a half. Again, it's not ideal.
Maybe it's to have no entertainment funds in your normal budget,
but this is again we're looking to how we can
pare down our budget in the most extreme way. And
(30:05):
let's also talk about like self care. You know, I
think a gym membership is something that a lot of
folks have also learned that they can do without over the.
Speaker 1 (30:12):
Past year, push ups at home. Baby Dude's that.
Speaker 2 (30:14):
In the kettlebell. Folks don't want to hear me talk
about that. I'll talk about that enough, but a lot
of folks are working out at home. If you are
having a tough time with your money, but if you're
not eliminating that, like thirty bucks up to two.
Speaker 1 (30:26):
Hundred dollars looking at you, crosswait, dude.
Speaker 2 (30:28):
CrossFit folks pay a lot of money for that accountability.
I mean essentially, that's what it is. It's accountability, and
I get it, But man, is there not a way
that you can get more affordable accountability?
Speaker 1 (30:39):
Well, I will say, you know, if that's in your
normal budget and you love it, I don't care. That's fine,
Like I don't mind if you're spending. I think the
first time I heard a friend was joining CrossFit and
they told me how much it was, I almost puked,
Like I was like, that's really I guess I'm going
to open a CrossFit job, you know exactly, Like that's
definitely the business I'm getting into. But I was like,
that doesn't make any sense to me. But the more
I've heard people talk about it does make sense to me,
(31:00):
and it is kind of a community based thing.
Speaker 2 (31:03):
I get it.
Speaker 1 (31:04):
But in your bear bones budget, sorry, you're gonna have
to hang out with those people like on your front
porch right your house goes. You're not gonna work out
with them at two hundred bucks a month.
Speaker 2 (31:12):
Yeah, dude, hanging out outside, going hiking with friends, like
hanging out on the front porch, like playing games that
you already have. These are all great alternatives, you know,
to entertainment that's gonna cost you money, but you know
with like gym memberships, like that's something you can do
at home, and even other self care you know. Again,
Like one of the other things I feel like folks
to learn from the pandemic is that like, Okay, I
can actually cut my hair at home. Maybe it's not pretty,
it wasn't pretty the first time, but like, I bet
(31:34):
you learned a lot after that first haircut. You learn
how to make it look pretty good. I've been cut
my own hair for I don't even know how long,
but it's something you get used to in the and dude,
the money that I've saved has compounded, let me tell you,
over the years of not having to pay for haircuts.
Speaker 1 (31:48):
So that's where thousands in your roth Iran, there's tens
of thousands. Maybe I don't know, it's gonna be a lot.
All right, well, yeah, I think to one of the
great things. Again, we're not telling people to create this
bear bones budget and start living according to it now, right.
It really is this exercise that can be a confidence builder,
that can reveal some of the spending choices that are
(32:09):
easily changeable in your life, that you feel like are immovable.
But once you've created this barre bones budget, once you've
got it alongside the budget that you're using right now
every single month, you're gonna notice there are a lot
of differences. There's going to be one big difference, right,
the number that is coming out of your accounts every
month to pay for your monthly expenses. We'll talk more
(32:30):
about that and how a bare bones budget can be
implemented into your life, not just in the case of
an emergency. We'll hit that right after this break.
Speaker 2 (32:47):
All right, Joel, we are back to the break, and
you know we've been talking about what's include in your
bare bones budget, what you definitely should not include, like
basically anything that we didn't mention in that first little section,
as far as like the you know, the bear essentials,
everything else you can kind of, you know, cut from
your budget.
Speaker 1 (33:02):
What about my Gulf string, Matt, like my my private airplane?
Speaker 2 (33:05):
Your helicopter membership? Yeah, that also has to God, have
you ever heard of those? There's these things where you
can pay to be a member and you can kind
of get airlifted from. I don't know if this is
something that died out like years ago, but I remember
seeing that one time and thinking, holy crap. There are
people who you know, are essentially have like a gym membership,
but it's like Uber for helicopters.
Speaker 1 (33:24):
Who's got that kind of money?
Speaker 2 (33:25):
Elon Musk, I'm sure, you know, call up a helicopter
whatever he wants. But you know, before we're gonna talk
through some additional benefits of creating one of these bare
bones budgets. But I wanted to mention some of the
different tools that you can use if you're not already budgeting,
if you're gonna go more analog, you can be like
me and kind of copy and paste your expenses over
into an Excel sheet. I've got over a decade's worth
(33:47):
of budgets that I you know, I could go back
and look at my expenses, but I don't. It's not
like I reminisce, oh, you know what I spent in
June of two thousand and seven, But I could. But
for most normal folks, you can check out Mints wine
ab or you need a budget, that's a totally great
app that you can use. And so once you've kind
(34:07):
of paired that thing back, once you know how little
it actually takes for you to survive, and you've got
you know, this small, hopefully smaller number than what you
normally have flowing out of your account, you might be
wondering when should I actually implement this, And we think
that there are a couple instances.
Speaker 1 (34:22):
Where you might put this to use.
Speaker 2 (34:24):
You could switch over to a bare bones budget, maybe
because of an unexpected job loss. We kind of touch
on this earlier, but that's absolutely a case when you're
gonna want to, like, you know, like we said, flip
the switch. It's almost like you're operating on like safe
mode when you're booting up your computer because there's a
virus or something that's attacking it. You know, you want
to make sure that you can do the bear essentials.
But everything else kind of falls by the wayside. That's
kind of the primary reason that you'd want to switch
(34:45):
to a bear bones budget. But you could also go
bear bones if you're looking to accelerate your ability to
achieve a financial goal, like maybe you're paying off a
massive amount of credit card debt. If that's the case,
then you're going to stick with that bearbones budget for
however long it takes to crush that goal.
Speaker 1 (35:01):
Yeah, men, I think either you do it, like you said,
out of necessity, right, you need this. You need to
live on the bare bones budget in order to be
able to make your money stretch further until you can
get through whatever, you know, difficult circumstances have presented themselves,
or also to you kind of impose it on yourself
on purpose in order to achieve something in the short term.
I think, you know, one other way maybe people might
(35:22):
use it. Some people in the financial independence community might
essentially be living on a barbones budget because they're trying
to retire in five or ten years or something like that, And.
Speaker 2 (35:31):
Yeah, that's their higher goal that they're trying to achieve. Right,
it's not necessarily credit card debt, but it's a certain
lifestyle in their case, to maybe step away from a job.
Speaker 1 (35:39):
True, I think you know, it might be demoralizing though
to try to do a barbones budget for five or
ten years, Like that's a really really long time to
try to adhere to that and to cut back your
spending to that extreme, although it is possible if that
is your greater goal and if you feel like you
can actually handle it.
Speaker 2 (35:56):
Yeah, man. And you know the additional benefit of having
a bar bone budget is that you get to see
that you truly have power and control over the amount
of spending in your life. You know, like, like we
might think that it takes a certain amount of income
for us to survive, but really we're just making ourselves
subservient to that assumption.
Speaker 1 (36:14):
Right.
Speaker 2 (36:15):
It's important to know that we have control over our
lives and we definitely have control over the things that
we spend our hard earned money on. It makes me
think of like, like, you know, if you're subscribed to Netflix.
You know, this isn't the second time as it's come
up as an example, and you're not really watching anything
on Netflix, and maybe you say to yourself, oh, well,
like I'm still subscribed. I'm just gonna kind of let
that keep billing me like no, Like, why would you
(36:36):
do that? You wouldn't do that, you would make changes.
You have control over your spending. We have control over
the direction of our lives. And I think it's easier
to kind of keep doing what we've been doing rather
than making those changes and rather pivot towards something either
unknown or something different, or something that might be just
a little more difficult. It's easier for us to not
ask any questions and continue plotting on.
Speaker 1 (36:57):
Yeah, I think too, Matt. When you see the difference
in your normal budget versus the bare bones budget, when
you see how big of a chunk you can cut,
just like that, you're able to visualize the changes that
you can implement in your personal finances just by doing
this exercise. And I feel like that sense of independence
that you get by doing this can weave its ways
(37:17):
into other parts of your life. Right now, you might
be empowered to ask for a bigger raise at work
than you might otherwise do because you need the job.
If you're like, you know what, I can cut fourteen
hundred dollars out of my month tomorrow if I need to,
I feel like I can ask my boss for a
raise and not feel bad about it. That's definitely one
of the side effects that is possible. I think when
you create a barbones budget right also too, like you
(37:38):
might realize that you can invest more of your income
than you previously thought. You thought maxing out a roth
ira that's just for other people. Well, you know what,
maybe it's not. Maybe it's for you. Maybe creating a
bare bones budget helps you realize how much waste there
actually was in the budget you've been using, and you
can come back a few of those things you have
to cut everything. You don't have to go all the
(37:59):
way down to using that bear bones budget, but it
does help you realize that there are things that you
can cut pretty easily that don't make that big of
a difference, and you can start investing more for your future.
So yeah, I think the barebones budget exercise goes way
beyond just creating this piece of paper that you're hoping
you never have to use or implement. Putting together the
(38:20):
barebones budget goes beyond just having this backup in case
the worst possible thing were to happen. Although though it
is good for that reason, it can be empowering in
all these other ways of your personal finances.
Speaker 2 (38:32):
Yeah, yeah, and you're saving and what you invest And dude, like,
I feel like the discipline that we gain by taking
control of our spending like that can apply that like
that can bleed into other areas of our life, right Like,
it makes me think of just like getting fits and
like controlling how much you eat, how much you exercise,
Like these are all things that we have control over,
even like our relationships, Like within our social circles, we
(38:54):
can initiate hanging out with a friend that we haven't
seen in a while. You know, these are all areas
in life that could benefit from this crossover of discipline
that could result from cutting back on your expenses. It
seems crazy to say that, right like that, just simply
by seeing that, Oh, I truly could live on a
third of what my current monthly budget is, which, by
(39:17):
the way, dude, so I crunch the numbers and I
won't give specifics, but our bare bones budget is about
a third of what we currently live on. Right It's incredible,
isn't that crazy? Yeah? Which means that two thirds of
it is basically lifestyle fluff's seriously, and that's okay, But
it's just good to see that. Wow, if it came
to it, we really could cut back a lot. And
(39:37):
so regardless of which area in your life you're looking at,
And obviously we're focusing here primarily on finances, but it
can affect a lot of the different areas in your life.
Speaker 1 (39:45):
Yeah, for sure. And I think to a lot of
people in all likelihood might decide to use the barebones
budget to inform their current budget to come up with
something like in in between budget, right, Like maybe maybe Matt,
after that you say, wow, you cut that much, Well,
you know, but maybe I can have a monthly budget
somewhere in between if you have other goals that you're
looking to accomplish.
Speaker 2 (40:05):
Day, if you're thinking you have to subscribe to like
one or the other, like, that's a false dichotomy. R. Yeah,
Like there's plenty of spots in the middle that you
could go with exactly.
Speaker 1 (40:14):
I feel like, Yeah, seeing the difference in what you're
currently spending versus what you could get by on could
help you realize, like how big this gap is. Seeing
the difference in what you're currently spending versus what you
could get by on could help you realize how big
of a gap you can actually have between what's coming
in and what's going out. You know, you might be
able to even achieve financial independence earlier than you thought
(40:35):
by letting that bear bones budget, not not by living
on that bar bones budget for a decade, but by
letting it at least inform your normal budget to a
larger extent in the here and now.
Speaker 2 (40:44):
I mean it also like when you're looking at it
from an emergency fund standpoints, when you know that you
can pare down your budget to maybe a third of
what it currently is, that's empowering. I get a lot
of confidence knowing that our emergency fund, we could actually
stretch that out for much much further. And so you know,
a fully funded emergency fund that normally would be around
three to six months worth of expenses might in fact
(41:07):
translate more into maybe six to twelve months worth of expenses.
And so I don't think I'm alone and gaining some
peace of mind from that, especially dude, you know, being
self employed, when our income varies significantly, it's nice to
know that we, you know, can have enough set aside
to allow us to even out those annual expenses, those
(41:28):
ups and downs.
Speaker 1 (41:28):
No doubt. So it's a helpful exercise for everyone out there.
Even if in the end you decide I'm sticking to
my normal budget as is not changing a thing. Having
that bear bones budget is going to provide peace of
mind and some empowerment, I think in your corner. All right, Matt,
let's get back to you. The beer that we had
on this episode, we have not yet cut it out
of our budget. We're still enjoying good graph here that
(41:49):
is true. But yeah, this one was called Ethereal Vibrations.
It's an IPA from two of our favorite breweries, Monday
Night Brewing and Burial Brewing. What were your thoughts on
this delicious beer?
Speaker 2 (41:58):
Man, Yeah, this is a double New England IPA and Dude,
this has all the different flavors I'm looking for in
a New England hazy ipa. It poured a super hazy
orange color. It's got all the kind of floral notes
as well as all the hoppy dankness that you would
come to expect from some IPAs from.
Speaker 1 (42:17):
Both of these breweries.
Speaker 2 (42:18):
Like, I don't feel like there's anything stand out about
it except that it was just flat out delicious and amazing. Like,
there wasn't anything like super unique about it. But when
I think about a double New England IPA. This is
one hundred percent what I'm picturing or what I'm imagining
myself tasting.
Speaker 1 (42:35):
Yeah, I feel like to make an NBA comparison, I
feel like Monday Night and Burial, you know, combining forces
would be like Lebron calling stuff curry up and being
like come over and play playing the Lakers with me? Like,
can you imagine what that team would be like? Like
how they would demolish people. The beer was delicious. It
was just like blend, I think perfect blend of like
bitter and sweet. It was juicy and delicious. I don't
(42:57):
know how descriptive I can get beyond that. It was
just it was just a really really good example of
the style. They crushed it on this one.
Speaker 2 (43:03):
Yeah, it's not one of these IPAs where there's like
a bunch of adjuncts which means like they're adding different
ingredients or just kind of doing a random fruits yeah,
or like a weird process that they're participating in. This
was just a really good all star of a New
England IPA. Glad that you and I got to share
this one on the show.
Speaker 1 (43:19):
Bud me too. Man, all right, well that's going to
do it for this episode. For folks that want the
show notes for this episode links to anything and everything
we mentioned, we'll put those up on our website at
howtomoney dot com.
Speaker 2 (43:29):
That's right, And if you've been listening to the show,
and if you have not yet left us a review
over at Apple Podcasts, we would love it if you
did that. So that helps us to get the word out.
It helps others to find the show who haven't yet
found it, and so we would appreciate that over at
Apple Podcasts or wherever it is that you listen to
your shows. And so Joel, that's going to be it,
buddy for this episode. Until next time, Best Friends Out,
(43:52):
Best Friends Out. The Only wo
Hosts And Creators
Joel Larsgaard
Matthew Altmix
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Betrayal: Weekly
Betrayal Weekly is back for a brand new season. Every Thursday, Betrayal Weekly shares first-hand accounts of broken trust, shocking deceptions, and the trail of destruction they leave behind. Hosted by Andrea Gunning, this weekly ongoing series digs into real-life stories of betrayal and the aftermath. From stories of double lives to dark discoveries, these are cautionary tales and accounts of resilience against all odds. From the producers of the critically acclaimed Betrayal series, Betrayal Weekly drops new episodes every Thursday. Please join our Substack for additional exclusive content, curated book recommendations and community discussions. Sign up FREE by clicking this link Beyond Betrayal Substack. Join our community dedicated to truth, resilience and healing. Your voice matters! Be a part of our Betrayal journey on Substack. And make sure to check out Seasons 1-4 of Betrayal, along with Betrayal Weekly Season 1.