Minimalism has become such a buzzword these days so I want to really zero in on two examples of minimalism and show exactly how and why they will change your life and maybe even positively impact everyone else too.
My approach has been to practice good personal finance, embrace frugality, and explore minimalism in order to be able to retire in less than 10 years. To explore this, I will go through and illustrate this with two examples.
The first example I want to focus on is owning a car. Now I’ve covered this many times before, but I want to get more specific. Let’s take the average cost of owning a car here in Canada, more specifically Ontario where I live, and compare what you could do with that money instead to better your life. Also, by not having a car, you’d be helping the environment.
I’m using the statistics given by this site which is giving low estimates and assuming you own a fairly affordable used car: https://www.ratehub.ca/blog/what-is-the-total-cost-of-owning-a-car/.
Of course, these values may differ if you get a used car or do your own maintenance etc., that is why we are using the average.
With a car, generally, you have finance payments for the car, gas, maintenance, administrative fees, parking fees, and car insurance which on average totals $11,460 or $955 a month. If you were able to invest $955 into dividend stocks every month that paid an average of 5% yield, with compounding interest, you’d have earned $364.03 after the first year. That’s not substantial but by year 5, you’ve earned about $8,000 and you’re investment has grown to over $66,000. After 10 years, you would have earned $34,930 and have a portfolio value of $150,485. Going forward that will be paying about $7,500 every year or $625 a month.
Now, this is just with stocks, imagine what this could be if it were invested in Bitcoin instead. This scenario sounds a lot more appealing when you break down the math than to just tell someone to sell their car to get rich. I am living proof that this absolutely works and it all came down to minimalism and deciding that I didn’t need a car. I never said it was easy, but it’s a lot easier than people want to believe depending on where you live and what you do. However, in my case, I went out of my way to ensure that my career fit with my frugal lifestyle and so I’ve built my life around this vision. I don’t expect many to do this, but there are many easy solutions to cover what you may need a car for. Cut your own hair, order groceries, walk or bike where you need to go. Occasionally Uber if needed.
The second example pertains to my wardrobe. For the past 40-50 episodes you will have noticed that I have only worn branded crypto t-shirts that I’ve been gifted or a standard black v-neck t-shirt. This is on purpose as I’ve sold the rest of my shirts aside from a few suits to simplify my wardrobe. Not only does this make things simple and easy, but it’s also much cheaper to replace clothing when I can order in bulk and always get the same thing. More importantly, these shirts only cost me about $7 and in some cases less with sales and such. The idea is that if you only have one thing to wear every day, then you don’t even need to consider buying clothes or give any worry to fashion whatsoever. It provides you with just as much mental clarity as it does with more savings.
The example I used in the video was for the average person in the US who spends between $161-$211 on clothing every single month according to https://www.creditdonkey.com/average-cost-clothing-per-month.html. This could be up to $2,532 a year. In Canada, it’s closer to $285 on average according to https://www.chango.ca/household-expenses-canada/ though that includes washing clothes too. That is up to $3,420 a year. While this is a lot smaller than the car example, this is just another chunk of money that could go to investing to speed up the process to retirement.
Find several other things you can give up or save on and you’re well on your way to saving 65% of your income or more in order to retire in less than 10 years. Before you can become rich, you need to invest, before you can invest, you need to save. The only way to wealth is the right way. Don’t look for shortcuts and you too can build consistently and reliably.
How do you save money? Would you give up your car for $150,000 in 10 years? What would it take to get you to save more? How much do you spend on your car and or clothes? Let me know what you think about this in the comments below and don’t forget to subscribe!
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