We'll start with Ben's suggestion: name one thing you can invest in that will amplify each category, figure out what it costs. Go look it up if you have to. Then total it up.
Now, if you're like some of my readers, you might just be saying to yourself, “But Dave, I don't know how I'm supposed to pay what I've got to pay right now.” And maybe you don't really know what your current life costs.
Now try this on. You go to the bank, you ask the clerk how much is in your account, and he says, “Well, that's a good question. I'll have to look into that. Why don't you swing by this afternoon? I should be able to figure it out by then.”
I don't think this would leave you with an easy feeling. Yet this is how most of us run our lives. As Jim Rohn would say, “keep strict accounts.” And while I'm not going to ask you to figure it out to the penny, it'd probably be a good idea to at least get a ballpark figure.
If you don't already know, download your bank activity for the last three months of 2017, and break that down into categories, multiply by four. If you need more detail, go open your credit card statements and include that detail. If you only, or mostly deal in cash, you can keep a journal of your expenses for a month to figure it out.
The point is when you know it, you can now ask Ben's question: “Does your current situation give you the ability to pay your current bills, purchase these things in the next 12 months, and still save at least $500 to a $1000 a month.
And if the answer is no, you want to look at how long you want it to stay that way.
And if the answer is, “I've had enough,” then it's time to start designing your life to have what you want.
If you are having trouble with this, I'm going to suggest you use two credit cards. One is for essentials, food, toiletry, necessary clothing, household expenses you can't avoid, etc. The second is for stuff you don't absolutely need. And this might include checking out twice at the supermarket. You use this for your beer, soda, chips, cookies and other junk food, cigarettes, Starbucks, clothing and shoes you buy just because you like it.
This just makes it a lot easier for you to look and ask yourself: “Did I really get $200 of enjoyment last month, or would I have rather saved it for a good night out, or put it toward a new phone?”
Now we've just done an add on to your current life. That's nice, but sometimes it's not the right approach. Maybe you don't much like your current life. Then it might make sense to instead price out the life you do want.
The truth is sometimes that's much more affordable than we think. Maybe you want to live part of your life on the road, or overseas. Go figure out what that would cost, and what you would save. It might be that if you get out of your apartment, or out from under your mortgage, you really could afford life in an RV. It might be you could rent out your house or apartment, and it would cover your expenses while you backpack through India.
Or it might be you're just a couple hundred bucks shy of upgrading your apartment, or driving the new car you always dreamed of. As another one of my virtual mentors, Alexis Neely suggests, you should price out your minimal acceptable life, a good life, and the dream life. Just the knowledge of how much these would or could cost you is often enough for you to take the necessary steps to get there, and that's usually because we find it's far closer to our reach than we imagined.
So get to it. Next up is saying No.