So about that FIRE thing, Minimal5 dad, how are we progressing on that. – “well, the short answer is that I actually don’t know.”
That is not entirely accurate, but OMG, with a full time parental thing for 3 boys going on, and a full time job on the side, a full time working mom with 24 hour shifts, and coming back to a normal 9-17 routine with kindergarden, 3 grade and fifth grade, it is hard to be fully on top of bit of the situation all the time.
Generally, as keeping scores (aka updating the budget) and having that Net Worth in the back of the head, is a bit time and mentally consuming, my very simple strategy over the years have just been very simple. – DONT SPEND. That is a very good general rule, because no matter if you make a lot or you’re working poor, then if you don’t spend it, there will be some left at the end of the month. Which is a good thing.
Acknowledging that as I have decided to become more structured about my finances, I have generally recognized that I need to do more. More control, more oversight, more structure etc etc. I have to BE the my own personal banker.
We did make a budget some years back, and we even updated it last year, but we never really kept scores, on a month to month basis. My wife started doing it this year, somewhat before I started out blogging on our financial independence journey progress, but I can see she is also struggling with it. TIME, or lack here of is the matter.
That is why, I spend most of my vacation time thinking about ways to do this score keeping in an easier way. It must be easier. Like my old strategy, that is easy. I just need a simple way of structuring that in a shape and form that will allow easy oversight and provide insights.
TADA – I give you, the ZERO COST DAY.
In its simplest form, what is financial independence about, – or at least the journey towards becoming financially independent about – it is about not consuming.
In a family of five, with one bank account for all our necessities, this is bound to be hard score keeping. Especially so, when you feel your role is basically reduced to being a provider, both of funds and the checking account. I mean, money is flying left and right it seems sometimes. So instead of sitting in the twilight analyzing individual transactions in the homebank, I have come up with this easy concept.
So what is a zero cost day. Well it is basically a day you did not spend any money.
“No money” – I hear you say. “Like no money at all. But I have fixed cost every month, for rent and other important stuff.”
And I hear you, that is why when I thought about it as well during my vacation, I debated it back and forth. Should a ZERO COST day, just be a day of zero variable cost, or how much should be included in the definition of cost? Should it include fixed costs as well or what Mr. Minimal5 dad.
My answer is, that it should include all costs, fixed and variable. It will be the easiest metric to consistently measure over time, reduce any problems with regards to defining fixed vs. variable cost, and the metric will also incentivize the reduction of as much fixed cost as you can take out of your house hold.
Further, as we in Denmark 🇩🇰 basically do virtually all our transactions electronically, quantifying the metric will be as easy as extracting all your transactions out of your banks homebank, filtering for all negative transactions, doing a quick pivot on date and summing on amounts.
I think 🤔 I reached this eureka moment some 2 1/2 week into our vacation, and now sitting here at home in front of the computer I thought so would just see what our ZERO COST days were for the last 12 months.
So there you have it. Me summing cost days in a pivot. Total of 217 cost days. Can that be. That means – assuming 365 days a year, that we had 148 zero cost dats last year.
148 ZERO COST DAYS.
Simple as that, my entire financial behavior for a year, summed up in a simple transparent metric that can be tracked, improved upon and set performance goals against.
PS. I will not be taking any patent out on my invention, or trademarking it or anything. I hereby donate my invention to all of humanity to use as they see fit.
If you use it though, it will be view upon with gratitude if you backlinked to my blog as the original source.
I am so nailing this blogging career thing. 🤩