“You all laugh at me because I’m different, I laugh at you because you’re all the same.” — John Davis
Financial advice abounds everywhere we look. It is not difficult to discover. And yet, the statistics paint an ugly picture that it may not be working so well. The average American family still holds $6,700 in credit card debt and 76% live paycheck-to-paycheck (just to name a few).
Unfortunately, most people think more money is the answer. And while there may be some truth to this solution, most of us would readily admit that our most basic needs (food, shelter, and clothing) are financially covered. It appears then that most of our financial troubles are not based in need, but in cultural expectations—that because we live in a society based almost entirely on consumption and the promotion of it, we have too subtly bought into the lies and built our lives upon them far more than we realize.
Perhaps, then, the pathway to financial freedom requires a bolder, more countercultural approach. One that intentionally begins to question the messages we believe and looks elsewhere for answers. To that end, consider this list of 8 Bold, Countercultural Decisions to Find Financial Freedom.
Each of them questions culturally-accepted norms. Before you begin, know that we believe and practice each item on this list. We have found wonderful freedom in them. And whenever appropriate, I’ll share the story of how we arrived at each decision.
Eight Countercultural Decisions to Find Financial Freedom
1. Purchase based on necessity, not possibility.
Especially in large purchases, consider necessity over possibility. When we bought our first home, we went to the local bank for pre-approval. They approved us for a loan up to $135,000. And… we immediately started looking at houses up to $135,000. We based our search entirely on possibility. There was no consideration given to our actual needs.
When we found a new, higher-paying job, we were pre-approved for a $300,000 loan and… we immediately started looking for homes in that range. Our purchase became a heavy burden in payments, maintenance, and upkeep. During that season of life, we discovered minimalism. Our desire for physical possessions changed dramatically. As a result, when we moved into a new home two years ago, we determined our ideal house based on necessity, not opportunity.
Our payments are smaller. Our upkeep is easier. Our lives are more freed to pursue other passions. We have never regretted the decision. And I actively encourage others at every opportunity to purchase based on need, not possibility.
2. Never carry a car payment.
One financial decision that has had a profound impact on our financial well-being was our wise decision to always pay cash for our vehicles. Subsequently, we have never had a car payment—ever.
I bought my first car from my parents with money I had earned working at a local carwash. And all future car purchases were based on the most reliable car (or mini-van) we could afford with cash already in the bank.
We have never owned a brand-new car or one that turned heads in traffic, but we’ve also never felt stress or regret over a car purchase. And if you ask me, that’s a pretty fair trade.
3. In dual-income households, don’t spend the lesser income.
One of the most valuable pieces of financial advice we ever received came early in our marriage when both my wife and I were working. My boss encouraged us to live entirely on my income and save every penny my wife earned. We did just that. Her earnings became our first down payment on a home.
But more importantly, it prevented lifestyle creep from setting in. And when our first child was born, becoming a one-income family was an easy transition.
4. Avoid alcohol.
Countercultural? For sure. Financially-beneficial? Absolutely. Even-possible? Definitely.
I inherited the lifestyle from my grandparents. Both sets refused the consumption of alcohol for different reasons (some personal, some religious). But regardless of their reasoning, the pattern continued with my parents, myself, and my siblings.
While financial concerns were never a chief motivator, the decision has resulted in significant, personal financial benefits for us. Americans spend $50 billion each year on alcohol—despite the fact that 34% of Americans don’t drink. This is a significant expense for many families. Removing it completely returns a significant amount of discretionary income.
And adding other unhealthy behaviors to this decision results in even greater returns.
5. Never retire.
I learned it from my grandfather. He worked full-time until 7 days before his funeral at the age of 99.5 years old. I learned from him the value of work and the importance of seeing work as contribution. This view of work changes everything.
Work is no longer something to avoid or retire out of as soon as possible. Instead, work becomes joy. Now, just to be clear, it is still wise to plan financially for the future and old age.
The truth remains that our physical bodies break down and some types of work become difficult (or impossible in some cases) to continue. I would never argue against the importance of transition in life or saving for it. But getting set in a mindset that only looks forward to retirement without the possibility of embracing work during it is one that should be adjusted. And ought to impact our financial decisions today.
6. Pay with cash.
Every study reports the same finding: We spend more when we pay with plastic than when we pay with cash. And one of the most commonly offered pieces of advice for those trying to stick within a budget is to pay with cash rather than credit. Yet the strategy remains rarely used.
While we have only used the strategy off and on over the years, we have found great personal benefit each time. Not only does it help us stay within a budget, but it also helps us keep a tighter record of where the money is going. And greater intentionality in tracking expenses is advantageous regardless of your income level.
7. Give away (at least) 10%.
There are numerous religious traditions that teach the importance of giving away 10% of income. Personally, it is a financial philosophy that we have put into practice during times of both little and plenty.
Certainly, the gifts benefit the receiver. But more than that, the gifts benefit the giver. Generosity is an important step towards contentment. It brings the fulfillment and joy and meaning to life that is often sought in financial purchases and personal gain. It reminds us of how much we already have and how much we have to offer others.
And while it seems entirely counter-intuitive, one of the most important steps we have taken to financial freedom is to embrace the practice of giving some away.
8. Put the spender in charge of family finances.
While this may or may not suit your family’s unique dynamics, it has been entirely helpful for mine. I hold a college degree in Banking and Finance and Accounting was one of my favorite classes in high school (seriously, thanks Mr. Fink). I understand budgets, spreadsheets, assets, and liabilities.
But my wife is a bigger spender than me. And one of the most helpful actions we took as a family was to put her in charge of the finances rather than me.
Because our bank account levels were always small, she became far more careful with her purchases… and worked hard to keep me in line too.
Again, I don’t offer this list as an exact prescription for each reader. Each and every family situation is entirely unique. What has worked for us may not work for you. But if financial freedom has eluded you, earning more money may not be the answer. It may require a bolder, more countercultural decision to getting out of debt..
Although I agree completely with the idea behind buying the car you need, I think using a large chunk of cash up front may be the wrong choice for many people. Interest rates for car loans are generally pretty low right now (obviously if you have good credit), so you could end up ahead with your cash invested elsewhere earning returns and paying a little interest on the car loan. I would say to run the numbers both ways even if you have the funds to pay cash up front.
I also agree with the philosophy about no credit cards since you are more likely to let things go overboard since you’re delaying you financial hit; however, a lot of credit card companies give you really great perks. With some discipline (for example, using your credit card like a debit card and checking your bank balance before making purchases), you could end up ahead; however, if you are buying from places that offer cash discounts, I would expect the discount to be the better choice.
The added benefits to these strategies is that they will help you build your credit as well. Again, I agree fully with your overall philosophy and would recommend against anyone taking what I said above to justify making an unnecessary or extravagant purchase. Great article!
I think you’re missing the point.
How large of a chunk of cash are we talking about? Most people who pay cash for cars don’t buy $20K cars. We buy $5K or less cars. I’m not going to pay “low rates” for $5,000, they want you to finance an whole new car @ 20 to get the rates – a car that will lose 30% the first day. That’s now “low rates”, that’s basically a 30% rate.
Even if you pay $1500 for a car right now, and drive it for a year (and save what you would have paid in payments), in 12 months you’ll have saved just shy of $5K (assuming you set aside a “payment” of $416,which is what you’d be paying for 20K @ 0%).
Sell your $1500 clunker for close to what you’ve paid for it – say $1200 – and now you have $6200 to pay for a newer car if you need it (see point #1). Where I live, you can buy a decent car for $6200. Now turn around and invest that $416/month for the rest of the 3 year term you had left of your 4-year car loan. Who’ll come out ahead do you think?
As for credit cards, it’s possible to use them “wisely”, but again that defeats the point. It takes an enormous amount of discipline to do that, and most people simply can’t. Most people don’t get in credit card trouble with extravagant purchases, but rather the grind of the everyday. Even those dedicated to minimalism can get caught by that. Avoiding using them for the everyday minimizes that.
Thank you for your thoughtful and thought provoking blog. I too am on this journey of minimalism, and I believe that I have more joy and contentment because of it. The not retiring comment was interesting. I am fortunate to have a career that I love. I have been careful not to change my standard of living with advancement, and I anticipate being mortgage free in my early fifties. A motivator behind these decisions is to retire as early as possible. Although we travel and explore the world today, to do that freely, to have time to explore new passions is a dream that I will hold fast to.
Thank you for the wonderful articles on “simplicity”. My husband and I have been married for 31 years and have put into place many of these principles. Some taught by my father ; always pay your self, give generously and save second income were his marriage advice. We purposeful put biblical principles in place even when we were a poor college couple. I had my nursing degree and put my husband through college including master’s work with no debt incurred. Even with small income we always gave to our local fellowship. I worked odd shifts so my husband could watch the little ones as the came along so we did not have to pay for childcare. My husband’s income became larger and the family grew, I stayed home full time . He travels extensively with his job . He now makes a good income but we still live on a fraction of his income. We live in a small, simple older home , no A/C , one car garage, not even a dish washer ( that would require extensive renovation, I would rather have the money in the bank then the $20,000 cost of putting in luxury of the dish washer). Our room is in the basement , the kids on the main floor. Simple! We pay for repairs and maintenance as we have the money saved for it. We drive a 9 year old Toyota . Most furniture is second hand or very loved. We have made tough choices . But, we can give generously, we eat good healthy food ( much of which comes from my garden) . We are with out want or need and can do with little. What bothers me is that many people I know of my age tell me that they have NO savings , no retirement fund, are in huge dept, have trouble making the house payment on their new , much to big homes. They make me feel guilty for being debt free and say that I can not understand what it is like to be poor. I am being condemned for living simply and not having debt. I am just curious if you get comments on your simple life that are not so nice. We live simply , make daily financial choices to stay simple, save , work hard and give generously . People do not understand us.
It sounds like you are doing everything right. We live a simple life. Our house has been paid of for the past 10 years. We have no car payments. We have a car fund for our next car. We pay cash for everything. I get comments from other people about our lifestyle. Some can’t believe that we don’t have cable, like that is so important. My husband and I have low paying jobs, but are still able to save one income per month. We have a car fund, a retirement fund, and an emergency fund.
Thanks for this post Joshua. I enjoy reading your posts. The message you share is so beautifully simple and inspiring. Thanks for generously sharing your journey, it has inspired me to look at my life and move toward a simpler life with my family.
I agree. It is very inspiring. Even for those of us with children, it shows a philosphy that is worthwhile and offers ways to live a satisying life.
All good points, except the retirement one. I have no interest in working for someone else til I’m to old and decrepit to enjoy life. I wanna go hiking! How ever, I may be making an income writing. We’ll see.
I meant TOO old… :/
Maybe don’t work for someone else. There are many opportunities to be retired and be self employed. Especially if you are “older and wiser”.
Becoming the one who is consulted, because of your accumulated work and life experience, is highly valued, and profitable. Best of all you can be at home earning as well as being “on site” if necessary.
I’m 68, an electrical engineer, and still enjoy my work because I can opt out of the heavier physical work in favour of brain work.
Clint, totally agree! I retired 2 years ago at age 50 and have never been busier or happier! I do things but for myself and others now rather than for money…it brings contentment and happiness and deep personal wealth and satisfaction…far more than my high paid global job ever did!
I agree. I retired from engineering 4 years ago, and spent 3 years traveling and investing. This winter I took the first job I’ve had since then, part-time ski instructor. I had a blast and will do it again this winter. Since my basic needs are covered by my savings/investments, its great to be able to do a job I like, even though the pay is lousy. It’s very freeing.
As to point 6, a friend of mine last week mentioned that when we were growing up, it was an embarrassment to buy something on credit. How sad that it is no longer that way.
I agree. I live a simple life on a military and state pension I worked many years for. Now I volunteer in my grandkid’s school, a humane society, and for other causes. Also go to the gym almost every day and help family with house and yard work. I have no interest in working for $11 an hour, stress, and aching when I get home.
I have been minimalizing for a couple of years without realizing it had a name…just trying to get rid of clutter. I found your site and others in the past few months and have started over in earnest, since I have learned what it really means. I have come a long way, but just this morning I cleaned out a large media cabinet that is used for storage…I was sickened at the things I had in there that I thought was lost, and replaced. Expensive things like external hard drives, etc. I am 67, and when I think of all the money, stress, worries that have been for naught. I am on board now, please keep up the good hints, blogs, ideas…I am loving learning how to really live life lighter.
One of the more difficult things for me has been gifts; not giving but receiving. I have told people for years not to give me anything for my birthday or Christmas, but they don’t seem to believe me. I have boxes of stuff, most of which needs dusting if it were on display. I tell my family and friends, “Please don’t buy me any ‘thing,’ let’s enjoy a nice long meal together and have some laughs.” They still bring gifts. I’ve even asked them to make donations to charity in my name, but that doesn’t work either. I am planning a garage sale and hope to purge many things, and it will include most of these gifts. I just wish I knew a way to make them understand that I’m serious.
i find it ironic that u show a beautiful outrageously expensive beach scene to tell viewers to spend modestly – subliminal coveting ?
I am a recent “follower” and love your blogs and philosophy. However, this is the first entry I cannot relate to and here is why. A few years ago, my husband and I, seeking a simpler and better quality of life for our children sold our 5 bedroom, 4 bath house, purged 70% of our material belongings and bought a MUCH smaller house in the country. We do not regret this decision in the least but the decision actually put us farther in debt. Country homes in our area are simply expensive. And we still have debt from our past “living beyond our means, trying to keep up with the Jones” years. While we have given up our old lifestyle and are happier, I don’t see financial freedom ANYWHERE in our near future. Suggestions? :)
Come on Joshua no alcohol!! Lol
I love your blogs man, however I love having a beer with my friends while discussing them!
Regards,
We are working towards a more minimal lifestyle- sold our big home and yesterday moved into our camper (errr its pretty fancy). We took cable out of our home a year ago but we’ve been in a campground for 24 hours that has a few cable channels in the past 24 hours our son has asked for more things than in the past 6 months together. Ahhhhhh!
Love this article!!! I think the first point doesn’t just mean for houses though. I know so many people who purchase because they convince themselves that they will need it someday.
The other thing I noticed was the comment; ” I’ve never attended a church that demanded 10%”. I attend a church that suggests this amount, but it still comes down to free will, and there are a lot of blessing that come from this.
Joshua,
What kind of work does your grandfather do? Many of us do physical work that requires bending, lifting, getting down on the floor & back up, etc. Most people reach the point long before turning 92 when physical work becomes too difficult or impossible to do. Also, many jobs require working at a pace or under pressure that would be difficult for a senior citizen to handle. How does your grandfather do it?
working on step 1 right now! Have a 5br 4300 sq foot house on the market, hoping (better yet praying) to purchase a 2100 sq ft home down the road. Still a great size but considering where we’re coming from and with 3 kids it’s going to be a challenge and one that I’m looking forward to! Learning how to be more minimalist, looking to be better stewards of our money and following Gods nudges are leading us into 2014 and our best year yet!
Most of these are very good and valid points to consider, however I’d like to focus on point #5 – Never Retire.
“Once in a while it really hits people that they don’t have to experience the world in the way they have been told” – Alan Keightley (Posted by Becoming Minimalist on Facebook)
As an advocate of the Downshifting lifestyle, this quote is very inspiring and relates to my husband and mines major goal to hopefully “Retire” before we’re 40. I am currently 31 years old, (soon to be 32 this January), and my husband is 32. We have lots of time to plan for our goal. Does this sound drastic? Not really if you sit down, crunch your numbers and spend a lot of time, dedication, planning, researching, and figuring out what you NEED to maintain your home and have a happy, simple life instead of spending money on frivolous things and working the 9-5, 5 days a week system. Our plan of attack is to eliminate our major debt, which is our house mortgage with a principle balance of $39,000. We do not own credit cards, our cars are paid off, and we only pay cash for what we need. The closer we get to getting that mortgage monkey off our backs the closer we will be to our early retirement goal. Minimalism plays a huge factor in reaching our goals, because once we eliminate the “Stuff” and debts in our life, it will open more finances for more important things.
Once we reach our goal, we will open up more time for more important things such as volunteering, writing books, spending more time with the people we love, and occasionally go out for a good time on the town.
If everyone wants to become financially independent, it’s imperative to get out of the “Keeping up with the Joneses” mindset and get rid of the clutter and things you think you “need” but it’s actually a “want.” It’s truly amazing when you realize how much more money you will have by cutting out the frivolous. Own your material possessions, but let those possessions own you.
Once we reach our goal of “retiring” early, we still plan to continue working, but will be reduced to working 2-3 days/week. We enjoy contributing to society, but we want to pursue other interests as well. I believe this would be a healthy balance of having the work life we want, and loads of free time to explore other activities.
PSS. I meant to say “Own your material possessions, but DON’T let those possessions own you.” :-)
I love this post (and your blog in general) It really makes me step back, breathe and relax when I read it. It’s easy to get tripped up, not following the concepts of minimalism, when you’re first starting out. Society influence creeps in everywhere and before long I feel like I’m caught up in the rat race again! Thank you for this blog!
I was wondering if you had any thoughts, posts you could link me to, or ideas on understanding more about finances. What’s your opinion on financial things like 401(k)s, IRAs, etc.? I love the idea of saving more by spending less, but beyond that I don’t know where I should go with that extra saved money.
Put the spender in charge of the budget? Wow – I never thought about that. Spouse is the spender in our house. I may just try that and see if that doesn’t change things up a bit. Love it!
I like your great, down-to-earth approach to life. Thank you.
Really solid advice here. We are currently completely debt-free, renting our apartment, have one car we bought used from MIL with cash, have no TV, we don’t read magazines so we are not bombarded by ads… We do have and use credit cards (paid off fully each month) because both of us shop on-line. We don’t like going into shops and it’s just too easy to shop on-line.. And when buying groceries I don’t have to worry if I have enough cash in my wallet.
But actually I would love to be paying with mostly cash. I think I would still occasionally use my credit card though. I’ve just gotten used to the convenience of the card.. but perhaps I will try to go without it for a period of time. It would be a good challenge and I KNOW I would be spending even less money. I would not go shopping unless really necessary!
We have savings because we will probably buy a home sometime around next spring.. Rents are really high and there are just a gazillion more options when you buy your own home. But beyond buying that home (and I do think owning a modest home is reasonable) I wish we would not start stockpiling money for “retirement” or “emergency” or just because it piles up because we are not spending it on ourselves but not willing to use it to help others.
And most of all, I take seriously what the Bible says about not hoarding treasure on Earth. It doesn’t mean just stuff. It also means money, stocks, other investments, retirement funds. You are putting your trust in the wrong place, you are making your own safety net when the much more reliable safety is found in God’s providence. I listened to a speech by Tim Conway where he said he pays the bills and groceries and gives away the rest each month. I loved that!! I didn’t get a feeling that he was bragging about it, he was just letting people know that it was entirely possible to live like that. I found it inspirational. How many of us really trust God that much? Is he only our plan B, while we are our own Plan A?
For a moment I was into “Your Money or Your Life” but now I’m put off by the part of it that teaches you to save as much for yourself as you can, by exploiting the corrupt system of compounding interest and stock market. The part that encourages you to be thrifty and mindful about spending is all good :)
I have often explained to others why it is so important not to borrow money for a car. (We have purchased both used and new cars with cash.) One woman said to me in real horror, “But you would have to save up all the money ahead of time.” Yes, you would. What a concept.
Isn’t it crazy how financial freedom is so counter-cultural? Our family is on the path to being debt-free, and it often strikes me how much effort it takes for me to say “no” to something that no one in our family actually needs.
Love that idea about buying for necessities and not possibilities. Just because we CAN have something doesn’t mean we should get it.
We bought a used car last year and had to borrow because we had NO cash after 1.5 years of unemployment. Even though it’s not a large loan, I hate having it. That’s extra cash that could go toward savings and other bills, so we’re trying to pay it off pronto. I don’t think I’ll ever let myself be in a situation where I need to borrow money for a car again.
Ahhhhh, number 8. Put the spender in charge of family finances. I wished this would work in our household. My husband is the bigger spender by leaps and bounds but he hates paperwork and paying bills and when he was doing his paperwork things were an even bigger mess. I’ve taken over and he loves it. The solution now is weekly financial meetings. They don’t need to be long, 15 minutes, but it keeps the spender aware of what the money is going. We’ve fallen out of the weekly habit so thanks for the ‘reminder’ Joshua!
I’m not sure that I’d call all of those points counter-culture because I wouldn’t say that they go against the mainstream culture of the United States. I’m also not sure I agree with some of them but I just wanted to add a couple more points.
When abroad, it strikes me very quickly how foreign cultures differ from U.S. culture when it comes to finance. The biggest difference I see is a tendency for young people outside of the U.S. to live with their parents. From the time they graduate perhaps until they get married, they live at home. This is counter to U.S. culture because our culture celebrates independence and financial freedom. The problem with moving out of the parents’ house too young is that young people spend so much of their money on rent. Could they live at home for one, two, three or more years? Depends on the job they might have, but why not save up money for a few years before going out on your own?
The other point I’d make is avoid eating out but for special occasions or date nights. Even if you don’t live in a big city, the expense of dining out (including sales tax) is much higher than the expense of buying groceries and cooking your meals. Cooking is a fun hobby, nurtures creativity, and brings people together at home. It also allows you to tailor your diet. Even when you’re out at a restaurant and you think you’re eating healthy, there are all kinds of preservatives, oils, salt, and butter that make their way into the food.
I’m not sure this is true and suggest that education attitudes could be to blame.
In Switzerland, only 10-20% of young people study at universities. The others do vocational apprenticeships for about 3 yrs so that by 18/19 they are capable of earning a full-time living and usually leave home. An atmosphere of financial responsibility dominates and these youngsters usually manage to afford a pleasant rental apartment, modern furnishings and a car, while saving to afford to travel or to finance further training/education/language courses – I have seen this over and over. Practical skills rule over academic ones!
Those who study, however, are in school till 19/20 (you need to pass high-level exams in 13 subjects to get into uni here), then university till 23/25 and once finished, still don’t really have work skills, so internships etc. till late 20s… that’s why so many young adults live at home in countries which promote further education over vocational education!!
Very wise pieces of advice; personally I made two months trials for my spending; one month I just paid with “plastic” card and the second month was just cash payment for the routine purchases and it was a huge difference.
Very interesting quotation from John Davis. I googled it, there are lots of people named John Davis. Could you give more information about him. I really like his witty remark. Thanks.