Got Money? Want More?

Many years ago my wife and I lived in a little two-bedroom home. In a very rough neighborhood.  To say we lived on the wrong side of the tracks was a understatement. Between the drug deals going on behind our house, or the abandoned cars with people living in them on our street, it was one of the worst places to live in town. The reason we lived there was simple; like so many others, we were poor. This little house in this rotten little neighborhood was all we could afford.

The previous year we had had our first child. My wife would stay at home with our little one while I went off to work every day.  We were your typical single-income household. We had accepted this. We didn’t like living where we did; it was just how things were.

Every day I would go off to work in some of the nicer homes of the Bay Area, only to come back to my little shack each evening. I used to tell my wife it was like test-driving Ferraris all day, then coming home to a Ford Pinto.

We were doing everything right, as far as I could tell. We just didn’t make enough on a single income to live the life we wanted.

Or so I thought.

One day I was doing a plumbing job at a guy’s house. He seemed to be doing great.  His neighborhood was much nicer than mine. He drove a nice truck.  He had a boat in the driveway. I thought to myself, “This guy must make some serious cash to afford this lifestyle.” I learned that this guy also had a single-income situation. Although he was about 10 years older than I was, I couldn’t see myself acquiring these things within the next 10 years; not making the money I was.

I couldn’t help myself. I had to know, so I told the man I was curious what he did for a living. He said he repaired copy machines.

What? How could that be? I was a journeyman plumber and couldn’t afford to live like this man and his family. What was his secret? Was he selling drugs on the side? Or maybe he came from a rich family.

I must have had a confused look on my face because he said,  “You’re trying to figure out how I live like this, aren’t you?”

He described his former life, which sounded a lot like my then-current life. He said at some point, he figured something out: It’s not so much how much money you earn in life, although a decent income is important. He said that what matters most is how you spend your money – what exactly you spend it on. He went into great detail about how they kept track of how they spent every dime. He said that accounting made all the difference and changed their lives drastically.

I went home to my wife and shared the guy’s story.  She, too, was skeptical. We thought there had to be more to it than just tracking spending. By that point, we’d struggled for years. We talked about doing what my customer had said, to just keep tabs on how we spent our money, but we just never seemed to have the energy or time to do it.

One day my wife said she was going to clean my work van out for me.  This was a chore I hated because it required me dragging out all my tools, picking out all the garbage, sweeping out the back, then putting everything back. So when she offered to help, I was all for it.  It took her quite a bit longer to clean it out than it would have taken me, but that was OK.

When she finished she brought a stack of crinkled-up papers into the kitchen and was going through them.  I didn’t pay much attention. I was just enjoying my alone time with our kid.  After a hour or so she called me into the kitchen to show me what she was up to. She had gone through all my receipts that were sitting on the floorboards of my van. She separated them all and added them up.  It was shocking. She said, “Did you know you spent $387 on lunch last month?” That didn’t seem right. Then she showed me that I spent another $214 on little snacks at convenience stores,  and another $169 on coffees.  That was a total of $770 a month that I didn’t even know I was spending.

At the time, that amount was nearly as much as our rent. That night she bought me a lunch pail with a coffee thermos to take to work.  From then on, she would pack me a lunch every morning, as just one way to save us money.

Then we started thinking, “Where else were we blowing money?” We decided to do what the man had suggested. For a full month, we kept track of everyplace we’d spent money. Every penny was accounted for.

The results were amazing.  That quick run for ice cream at night, the pack of M&M’s I grabbed during the day, the money we were spending on renting movies. They all added up.

We have all heard that saying, “A penny saved is a penny earned.”  I never understood that saying until that day. What the biggest revelation to me was how hard we would work to earn a few extra hundred dollars a month, but we never thought about what we might do to save the money we’d worked so hard to earn.

What if you could walk into your boss’s office and get a $5, $10 or $15 an hour raise tomorrow. Would you do it? Of course you would. Even a $5 an hour raise would equal $864 a month; more than $10,000 a year. That’s huge! Who wouldn’t want that?

So what if your boss is not going to give you that raise? How are you ever going to get ahead? What if you could give yourself that kind of raise?  No, I’m not talking about selling vacuums door-to-door, or hosting some kind of multi-level-marketing scheme party at your house. I’m talking about small changes you could make to better your life and your finances.

Let’s look at the math. At $864 a month after taxes you’re going to bring home around $700, which is still a lot. Remember, it’s not what you make, but what you get to keep. So what does that come out to? In a typical month that comes to roughly $22.50 a day.  Maybe you’re thinking that’s nothing. Twenty-two bucks, that’s like a nice mocha on the way to work and maybe a nice burger at lunch. But you see, that is the secret. The difference between me and the guy with the nice house back then was what we spend our money on.

A very wise friend once told me that poor people tend to think about what will make them happy today, but financially successful people look at what will make them happy in the future, and what will last.

What if the price of that premium coffee, two times a day, was the difference between affording a two-bedroom apartment and a three-bedroom house? Could you give up those two cups of coffee every day? And we haven’t even touched on the topic of tobacco. The next time you’re driving around, see how many people you can find driving around in nice cars who are still smoking. There is a reason for this: Smoking is expensive. Nice car or cigarettes? It’s about financial priorities.

So back to me and my family. After we starting keeping track of what we spent money on our lives changed completely.  We lived better. We soon caught up on our bills and purchased our first home. We stayed within our budget and bought what we could afford.

Here’s my challenge: Take the first step. For just 30 days write down every penny you spend. The results will amaze you.  You owe it to yourself. We all work hard for our money. It’s about time our money worked for us.

Dan Adams
Dan Adams has been a licensed plumbing contractor for nearly 30 years. He owns and operates Edgewood Plumbing  in Redding with his wife, Holly. In 2000 he and Holly moved to Redding from the Bay Area in search of a better place to raise their sons.
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8 Responses

  1. Avatar Tim says:

    You’re exactly right – and very fortunate to have discovered it at a young age. Some people can go bankrupt despite earning millions every year, while others become millionaires saving $5 here and there.

    My favorite example is cable/satellite television. Would you give up cable TV for $250,000? You could still watch abc, nbc, cbs, & fox over the air, but you’d have to give up espn, the discovery channel, amc, etc. I think most people would choose the $250,000, yet instead the average american household pays $103/month for cable & satellite.

    If a 20 year old decided to put that $103/month into an IRA earning 7% they would have ~$18,000 at age 30, ~$54,000 at age 40, $126,000 at age 50, and $272,000 at age 60. At that point they could withdraw an extra $1,587/month in retirement and still have the $272,000…

  2. Frank Treadway Frank Treadway says:

    Every month I list my monthly bills, I then subtract my monthly income and see what I have left for the month, I then go over the bills and see what I can eliminate. It is amazing what one can spend on detritus. However, it’s taken me some 50 years to be accountable for my income vs my expenses. Listen to Dan and let this be a lesson to current generations, start now.

  3. Avatar Beverly Stafford says:

    Words – and deeds – to live by. Thanks, Dan

  4. Avatar Darcie Gore says:

    Great advice Dan! I worked since I was 13 years old. We too started out poor we are now comfortably retired. Our big treat was once a month on payday buy a (then) 5 cent Thrifty ice cream cone. s s Our entertainment was getting together with others to play games, or just visit. We didn’t feel deprived, it was great fun. I I would suggest that one look at a purchase and figure out how many minutes/hours it would take to make the money to purchase that item. Put 10% of income away for emergencies and savings and 10% for retirement FIRST. Teach your children the value of a dollar and the importance of saving!

  5. Avatar Mary Madden says:

    Thanks from a faithfully frugal reader as I make my morning coffee, pack my lunch & plan for my next vacation.
    Your articles are very well written & greatly appreciated.
    Please keep writing

  6. Joanne Snyder Joanne Snyder says:

    Excellent article Don. Your financial advice is so sound, but is goes against the message most people get from advertising that celebrates the importance of status and comfort and entertainment in our lives. Oh, and shopping as a sport! I love reading your articles.

  7. Avatar Janine Hall says:

    I love reading this. I was broke at 21 and then got the shingles from not being able to pay my bills. I swore it would be the last time I would ever be broke again. A good lesson at an early age.

  8. Avatar Richard Christoph says:

    Excellent advice, Dan.

    And here are two books that lay out in an entertaining and informative manner precisely how to achieve one’s financial goals and eliminate financial anxiety:

    1. The Millionaire Next Door: The Surprising Secrets of America’s Wealthy
    by Thomas J. Stanley Ph.D., William D. Danko Ph.D,

    2. The Art of Money Getting
    by P T Barnum

    And this old but still timely classic on what to avoid:

    Extraordinary Popular Delusions and The Madness of Crowds
    by Charles MacKay