Extreme Budgeting

I am coining a new form of financial thought: "Extreme Budgeting." For many years, I have made models of my finances to guide my financial decisions. My models have told me how much things will cost in the long-term, how much money I will have at the end of each month, and what my debt:income ratios are. I am now trying to change my financial position rapidly with minimal income. And the scene isn't pretty.

I'm finally making more per hour than I was before grad school. That's a huge feat, but there are two significant problems. First, my net salary is tiny after taxes and insurance are deducted. And, second, I now have more debt than I have ever had thanks to the terrible decision to go to grad school.

The predicament I am in is this: In my current situation, I can only save about $1,800 per year after taxes, rent, utilities, insurance, food, debt payments, and such. If I get rid of my trusty old Nissan Sentra, I will only be able to save $700 per year. The thought of shedding a car and losing money is almost preposterous, but the car is so fuel efficient and reliable, it's a fundamental truth.

I don't know about everybody else, but it's pretty pitiful when someone with such a high hourly wage can only save $700 per year. Thanks to student loans from almost a decade's worth of classes and degrees, that's my reality. What it means is that, in my current location, if I wasn't living in an RV, I would not actually be able to afford a single-bedroom apartment.

Enter "Extreme Budgeting." My parent's generation won't understand this. Most don't understand the predicament that my generation is in. My generation can't save money, we can't get jobs that pay well enough to own homes, and education no longer means what it used to on the job market. Sure, there are engineers, computer programmers, and other highly-valued vocations that are doing well. But I'm not an engineer -- I'm an idiot that studied things that are worthless.

Given that I'm an idiot, but a tough idiot, I am going to have to find a way around this predicament. And I have to do it with skills I have that set me apart from others. The economy we live in is built very similarly to the natural world; Those who can find a niche and exploit it win.

My niche is the ability to live very minimally in very harsh conditions. And the difference it could make in my finances is almost too fantastic to be real.

In my financial model, I accounted for all the core living expenses; rent, utilities, phone, etc. But I also accounted for gasoline consumption, groceries, and fun money. On a yearly basis, given all of my expenses, including student loans and a storage unit, I will... never... be able to buy a house. Or even rent an apartment in the city I work in.

My answer is to eliminate everything I possibly can from my budget, including rent. As soon as my student loans start coming due, I will have so little money each month, I will not even be able to afford doctor visits.

The next item I want to eliminate from my finances includes the following: Rent and utilities. Hold onto your butts.

The way I plan to do this is to move into my truck. Full time. And it's the only way. I have the numbers in front of me. There is no other way to get ahead. Without a miraculous promotion, my financial progress is frozen and my freedom completely garnished. I am the only person I have ever met who can pull this off and pull it off well.

The RV will be sold. The car sent to the scrap yard. And the truck improved. I am ready for it and it is the only way to achieve my goals. Patience? Yeah. Because at 32 with a dual-masters degree and 10 years of professional experience, I should be patient to the tune of being able to save $700 per year. Nope. Sorry. No thanks. Life is too expensive. The rent is too damn high. And there are too many mouths to feed.

The difference in the model shows that I can save $1,700 per year by keeping the car up and running. Or I can save $8,300 per year by living in the truck. How is that even possible? Here's the equation:

Savings = (Income - (Rent + Utilities + Phone + Insurance + Student Loans + Food + Gas + Fun))*12

It's a painful equation because it accounts for everything (except car repairs). And when I add the approximately $7,500 I will retrieve from the sale of the RV, I can either have $9,200 or $15,800 in the bank by the end of the year.

My only goal is to buy another property by February. Selling the RV and living in my truck is the only way to that goal. Welcome to a new era of extreme budgeting. Only the extreme will survive.