It came as much of a surprise to me as anyone when I did my tax return for the 2016–17 tax year. I don’t keep good ongoing records of my income and expenses, but rather have this vague but usually accurate sense of how much is coming in and going out. I guess it’s the result of a lifetime of living frugally, influenced by a mother and former partner who are much better with money than I.
Last year I paid all my bills on time, I had ample free time, I travelled abroad, I went out for dinners and drinks, had a gym membership, ate well and enjoyed my regular diet, and lived in an apartment by myself 6km from the CBD. My total income was just shy of $20,000 for the entire year — which in case you aren’t aware is below the poverty line (currently about $22,000 in Australia, or roughly half the median income).
Because we have a progressive tax system I received a 100% tax refund, not that I’m against paying tax anyhow. It’s fundamental to a functioning society that we collectively contribute to our nation. But last year I didn’t need to, along with 1 in 3 multi-million dollar corporations apparently.
But that’s not what this article is about.
My poverty line income had me stumped. How could I earn so little and yet have such a high quality of life? How could I not feel ‘poor’? What am I doing that others aren’t? Which invisible privileges do I benefit from that are not afforded to others? And crucially, what traps do so many ordinary people find themselves in that results in a struggle to make ends meet in one of the most affluent and fortunate nations in the world?
At this point I need to stress that there is significant systemic and social disadvantage in Australia, and I am not demonising the most vulnerable and poor people. There is no blame attributed to people who live on low incomes and feel it’s a struggle. Mine is a choice. I only seek to offer a pathway to help those who are capable and, importantly, willing to live differently. Simply put, this is about the freedom to live on less.
Most of my adult life has been an exercise in lifestyle design: conscious decision-making, purposeful living, re-prioritisation in line with my values, and sacrifice. I’m not going to espouse the myth of ‘hard work’. Yes, when I am engaged in employment I work hard. And when I branched out on my own I gave many hours and much effort to my work. Do I believe hard work gets most people the success they crave? Hell no! Do I query whether people’s ideas of success are aligned with what is actually important at the end of life? Frequently.
So how did I do it? I know you want to get to the juicy bits! It’s coming. But first there are caveats to get out of the way. They’re not ‘catches’, but I’m not so arrogant to believe everyone can live my life (or even that they’d want to for that matter!).
The Caveats (aka Privileges & Luck):
- I am university educated (with an utterly worthless B.Arts) plus a raft of additional lower qualifications
- I’m blessed with natural intelligence, I am able-bodied, free from injury & illness, and possess valuable traits such as adaptability and self-confidence
- I have been married meaning I was one half of a ‘DINK’ (Double Income, No Kids), although there was that 8 months of unemployment during the GFC when the bankers f**ked everything for the entire world
- My ex-husband and I overpaid to enter the housing market in 2009. I haven’t always lived in the property but I currently have stable accommodation owned by the bank. (More on this below)
- I have no children. Repeat: I do NOT have dependents! (This is by choice and is a significant factor for my living on less)
- I have broad skills and can mostly get some kind of work when I want it, and those times I couldn’t, well…I’m grateful for the social security safety net
On the other hand:
- I was born into a ‘working poor’ family, and grew up with a single mother and 3 siblings. I left home at 17. There was no silver spoon!
- I’m not especially gifted and don’t possess any specialist expertise
- I’ve never had a job with a base salary above $47,000, but I have worked in a developing country for $100/week (which practically made me a millionaire by comparison)
- I have a HECS-HELP debt and have never participated in any sophisticated tax avoidance — I’ve never even used an accountant!
The 10 Principles for Living on Less (and loving it!)
These 10 principles* are how I managed to live well on approximately one quarter of average full time earnings. From the banal to the downright radical to plain common sense, there’s a lot we can do to get out of the rat race if that’s what we truly want.
Are you ready?
1. No Debt
I mentioned I was married. My ex-husband is one of the most frugal and financially responsible people I have ever met. When we met I owed my Mum money and I had thousands in credit card debt. I was wasteful with money. I made minimum monthly repayments and had very little concern about my financial future.
He taught me very quickly the freedom that comes with being debt-free.
I’ll let you in on the world’s best kept secret: Debt is the foundation of the capitalist economy. Banks make money by creating it out of thin air, then loaning it to you (and the government in fact) at interest. If you didn’t have the money in the first place, how can you pay it back plus the interest? Well, you’ve gotta keep working and earning and working and earning. But along the way you need to pay for other stuff too. So you gotta work and earn even more. It’s never ending. This system keeps you so busy buying a life now you hope to pay for in future on the assumption and necessity of a stable job and steady economic growth. Everybody is so single-mindedly focused on paying back their past there’s just no room to get distracted with the really important stuff — like family and friends and your personal passions and whatever you’d really rather be doing than working 40+ hours a week with people you don’t even like for a company you don’t much personally care about. And there’s definitely no room to question the madness of why we spend 50 years or more as wage slaves simply so that we can feed, clothe, house, and educate ourselves and our kids, and maybe have a few creature comforts.
Rule #1: Pay down any debt you have and avoid taking on any more. EVER! Keep reading if you need more help imagining how that is even possible.
2. Leverage the Bank — like the big guys do!
Yes I have a mortgage. I know this is in direct contradiction to Rule #1. But everyone’s gotta live somewhere, and in 2009 my ex-husband and I made a smart purchase of a simple one bedroom apartment in an upcoming area close to the city. We paid way too much, but it seems there’s never a good time to buy in a real-estate obsessed country with generous investor tax breaks.
We saved hard (using many of these same principles below), and found a very modest place within our budget, allowing us to pay a 20% deposit to avoid Lender’s Mortgage Insurance (the biggest scam ever!). We received a First Homebuyer Grant, renovated it ourselves (a very steep DIY learning curve), and planned to live in it for the minimum 6 months then rent it out. That didn’t happen. Life’s like that.
Fast forward 7 years and I refinanced with another lender. Shopping around is critical, but two important points:
1) Things change, government introduces legislation, banks get greedy, the economy goes sour, interest rates rise, honeymoon periods expire etc.
2) People lie and deceive. Yes, even banks and financial advisors and mortgage brokers. Do not wholly trust anybody, do your own research, be prepared to negotiate, and fight for your rights!
For the second time I set up an Interest Only (IO) mortgage with an offset account held by a reputable minor lender that values business more than the Big 4. For the uninitiated, an IO mortgage means that the monthly repayment doesn’t include the principal loan amount. This keeps my obligations very low. I pay roughly 65% of what most people pay just to rent a share house! The offset account does just that — it offsets the loan amount by the balance in the account, so this is where I keep all savings and money which is not for everyday expenses. Unlike when homeowners make extra repayments on their mortgage (which is then locked away and hard to access), all the funds in the offset account remain mine to use at will, but which still reduces the amount the bank uses to calculate the interest payable. I know someone who offset their loan by virtually 100% and literally paid no money at all to live in his own place.
Why is this better? As I said, my monthly housing costs are, comparatively, very low. I am using the bank’s money to fund my home. But wait up….aren’t I paying money (interest) to them for nothing and don’t they still own the property? Yes. But if you rent you’re giving money to someone else to live in their property too and you get nothing more. In my case I can either pay off the loan in one lump sum from the savings in my offset account, or sell the property, collecting any capital gain above the loan amount without ever having paid a single cent of the principal. Do the banks like it? Not really. But I’m small fish (and it’s definitely not illegal).
Note that IO mortgages are time-limited, and have recently come under stricter ASIC rules. Plus they’re not really appropriate for expensive properties. Furthermore, not all loan products offer an offset facility. Shop around!
Rule #2: Use the bank’s money and keep your money in your own pocket
This is where some people will decide the freedom of living on less isn’t for them. Personally, downsizing is totally aligned with my values. I’m not materialistic and the people in my life don’t determine my worth by the stuff I own (or rather, bought on credit).
As I mentioned above, my apartment is small, modest and starting to age. But it’s comfortable, affordable, and large enough for one or even two people and a dog.
I ride a scooter. When I tell people that they ask if I also have a car, which makes me laugh. Two vehicles for one human? No! I love my scooter. It saves me time in traffic, I can park literally right outside my destination, costs very little to run (petrol, rego, tolls — they’re all much cheaper), and it’s cool ‘coz it’s bright red! It’s my third scooter and I’ve used it to go camping, transport my dog, I can ride on the freeway, regularly load up with a trolley full of groceries and I’ve even carted furniture! Of course I also bought it outright, so I don’t have any loan repayments.
But it’s not a car. It’s not suitable for every situation. The times I really need a car (which for me is very rare) I either borrow one from a friend, use a share service, or hire it.
The main point here though isn’t to buy a scooter. It’s about the concept of ‘enough’. I don’t own a scooter because it’s all I can afford. I own a scooter because it’s all I really need. I have a one bedroom apartment close to the city because I hate commuting and because it’s big enough.
What are the most important things to you? I’m talking about what you really value in life, what your lifestyle demands, and what you really can’t live without. Get those things. Don’t upgrade because it’s better ‘value for money’ and definitely don’t get bigger or better because of what your colleagues and acquaintances will think. Meet your needs, align your values and be happy with enough.
Rule #3: You need less than you think you do. Downsize your life.
4. Convenience is Expensive
There’s convenience that makes space for more of what matters, and there’s convenience we’re trained to want because someone can profit from it. The former is smart living, the latter is an enormous waste of money for very little return.
Do you buy lunch every day because you’re rushed in the morning? Do you grab snacks at the petrol station because they’re right there? Maybe you set up phone roaming when you travel abroad instead of working out how to get a local SIM, or park at a car park because you can’t be bothered driving around for a space?
There are literally thousands of ways convenience is packaged up and sold to us as a way to manage our busy lives. The cost to our planet (think plastic packaging for pre-cut vegetables) and our hip pockets is unsustainable. In almost every case the justification is time saving. Everybody is so time-poor. But remember I said at the start of this story I have loads of free time? I don’t need to pay a premium for convenience because I have time. I don’t work full time — can you imagine how many extra hours that frees up for me to walk my own dog, shop around for a superior deal, or learn new things myself so I don’t have to pay for someone else’s expertise? The bonus is that I am enriching myself in the process.
I’m paying myself twice.
Remember, it’s about prioritising what matters to you. I’ll pay more for a flight with a better connection, and skip the home-delivered pre-prepared dinners.
Rule #4: Redesign your life to give you more time so you don’t need to pay for convenience
5. Save as Much as You Can
I set myself a New Year’s goal in 2017 to save a minimum of 10% of my income. I knew that wouldn’t be much money, so I set a ridiculous stretch goal of $500/month. Keep in mind my total income for the tax year was under $20,000! I was very shocked in October when I realised I’d actually saved well in excess of the stretch amount each month for the previous 3 months. I’d returned mid-year from my holiday to Indonesia with a depleted bank account, but was very fortunate to be offered a steady stream of work on different freelance gigs. I went back to living simply and ploughed all the leftover into my offset account to replenish my savings.
Just as well because I hit the end of November and the work dried up. Instead of this being a catastrophe, I have enough buffer to pay my bills and live my life for about 6 months. I’ll have more work by then.
Rule #5: Avoid exposing yourself to financial stress by saving money when times are good
Note: I’m not a huge fan of investing in stocks, and I didn’t drink the Bitcoin kool-aid (over-invested speculators are going to be a world of pain real soon). The lessons of the GFC weren’t learnt by the bankers who lost other people’s money, but I was sure paying attention. The winner in the Tortoise vs Hare race of life is compounding interest, in my humble opinion. I’m a bit old school like that.
6. No, I don’t need a new iPhone
Or Netflix, or a larger TV than the one I already own, or a refrigerator that’s connected to the internet, or underfloor bathroom heating, or a new outfit for every occasion, or a shaver club subscription. You get the idea.
These things are just distractions.
They’re novelties to keep you temporarily satiated so you don’t look around and notice your shitty life that sees you spending more time with your co-workers than your kids, or wondering why you’re always so damn tired and broke.
Advertising companies are excellent at convincing us we can’t live without some crap that didn’t even exist last year. Remember what I said about capitalism relying on growth? It’s all a giant ploy to get you to buy more stuff, newer stuff, better stuff so that companies can pay back their debts. Just say no!
One of the major ways I live on less is not being a snob! Buying well-known brands rarely translates to a proportionately better experience. Did you know a single national TV ad costs hundreds of thousands of dollars? That’s what you’re paying for — advertising and brand awareness. Sometimes it makes sense to spend more (it can certainly be true “you get what you pay for”). Mostly it’s so the CEO can take home a larger pay packet.
Rule #6: Step away from the shiny new thing. Keep reading for an alternative way to participate in consumerism.
7. Reduce Your Expenses & Don’t Lock Yourself in to Ongoing Costs
This entire article is ultimately about reducing my cost of existing so I can actually live more. But it deserves its own category because of its exquisite beauty. By spending less, I don’t need to make as much money, which means I can work less, which means I have more time for the things I really want to be doing, and can use the money I do have to pay for stuff that adds real value to my life.
When I first returned to Australia after living abroad I could not believe phone contracts had become 24 months! I am a complete commitment-phobe and I might as well be in jail for 2 years. When my phone died (and I started a business) in fact I did lock myself in to a contract so I could get a new one, but that expires this month and in the meantime there are loads of new deals offering cheaper options. When I visited the phone shop of course they tried to entice me to upgrade my phone and lock in again. Did I accept? Refer to point 6. That’s a hard no. I’ll keep my still-working phone and go month-to-month which gives me complete control over when and how much I spend.
I even offered to share my wi-fi with my neighbours because I use so little of my data allowance, but I haven’t had any takers yet.
Last year there were myriad ways I still met my needs and had the experiences I wanted without the price tag. I use the free versions of software, I live in a city that hosts world class events through to local meet up groups I can attend, I do my grocery shopping all at once and buy things on special or nearing the use-by dates, and I’ve already mentioned the awesome scooter and my lovely apartment and the travel abroad.
There are tonnes of ways to reduce your expenses, and you it’s up to you to work out where and how is appropriate for your own life.
And remember, there’s no shame in free stuff. I believe much of what we are forced to pay for shouldn’t be privatised for profit anyways (think water and natural gas), but even if you don’t subscribe to my ideology, the fact is companies earn a lot more money than you do, and most of them offer free or low cost versions as a hook. Take the bait, and be proud of living smarter!
Rule #7: Unburden yourself from ongoing expenses that necessitate you pay for something whether you use it or not, and find cheap or free alternatives wherever possible
8. Reduce, Reuse, Repurpose
Together with Recycling, these are the 4R’s sustainability experts the world over have been banging on about for decades. Anyone who has ever found a treasure at an unbelievable bargain at the charity shop will tell you it’s more than the environment that wins when we find ways to keep using what we’ve already got.
Really it all starts with a simple principle:
Buy quality goods that you expect to last over time.
There’s a saying that “they don’t make ’em like they used to” and there’s no better example than (priceless) vintage car collections. Those things were built to last, and when they broke down they were able to be fixed with some spare parts and know-how. These days if your car gives up the ghost you’ll have to buy a new one.
I’m a 4R-er from way back. My mum recycled before it was cool. Growing up poor(ish) embeds a ‘conserve and repair’ mentality. It actually causes me distress when I see perfectly useable hard waste on the kerb getting rained on and ruined. I’m like the cat rescue lady but for stuff. (I don’t actually take the stuff though because I have more than I need already!)
There’s a monthly Repair Café, in my local area where I can take broken stuff and learn how to fix it (and meet some folks and eat some homemade brownies). There’s a website called iFixit, which is a free online repair manual for almost anything, and the founder is part of the Right to Repair movement fighting against the likes of Apple and John Deer who seem to think stuff you buy and own isn’t yours to fix because they’d rather you buy new.
Equally exciting for me is my next project (I hope). It’s a Recycle Mall with roughly 13 shops, plus a grocer and a café, selling (and repairing) everything you need in one place. 100% of the items are recycled, reuseable and repurposed goods (and excess produce). Watch this space for updates!
As for me, I just don’t throw stuff away. I use it till it’s un-useable, or I donate it or sell it. Most people throw out Christmas wrapping. Not me. I fold it neatly and store it away to use next year. Most people toss the Kinder Surprise plastic egg. Not me. I clean it and use it to carry headache pills in my handbag.
Using what I already have on-hand both saves me money and it’s more convenient than shopping for another one. Some people are super creative with repurposing stuff (like old guitar cases used as wall shelves). Sadly my RRR is more mundane, but it still serves to make what’s old new again, and stops us digging more shit out of the ground.
Rule #8: Think twice when buying sole-purpose or single use items (or packaging). Consider saving things you’ve already acquired and using them again for the same purpose or something different.
9. Lower Your Standards, Live Consciously
Now we’re moving into uncomfortable territory. Some of you will be all like, “I’m out”, and to you I say take any or all of the above and run with it. For those of you keen to dig a little deeper and find other ways to live, take the red pill!
F**k being comfortable; I want to be free.
Much of how we live is driven by habit, cultural norms, the influences of our own parents’ ways of living, and sometimes because we’ve just never really thought much about it; it’s just done that way. Developing mindfulness about your habits can help highlight whether or not it’s something you prefer or need, or whether you’re just following the herd.
Like the Japanese, I don’t need to have seasonal fruit year-round.
I’m pretty good at doing my own nails and colouring my own hair.
“If it’s yellow let it mellow, if it’s brown flush it down.” Like seriously folks; 6L of drinking-grade water for 200mL of pee?
I don’t have heating but I have blankets and jumpers that keep me warm and cozy.
I’m a Powershop customer and a few months ago they sent me an invitation to join a demand response program whereby they send a text when electricity demand hits peak load over summer and if you reduce your usage you get rewarded. I’m environmentally-conscious so I really wanted to join but I honestly couldn’t use much less than I already do! (If only my daily supply charge wasn’t 35% — 50% of the expense.) When this program was first announced in the media, politicians went to great pains to tell the public “You don’t have to be uncomfortable. We’re not saying don’t use the air-con, just don’t have it on so cold” and so on.
I started to realise how very different my way of thinking was to perhaps the majority of the population. I am happy to sacrifice some ‘comfort’ for the sake of the environment, or for example, for the sake of owning my own life instead of giving it to an employer and the bank.
For me it’s about the bigger picture.
Perhaps the biggest investment I ever made in myself was travelling to and living in developing countries. It taught me first-hand what we can really live without, and ultimately what matters most to be happy….and free! I’m not suggesting I want to live in poverty, but if nothing else these people show us just how trivial our first world problems are when we can’t get a ‘decent coffee’ or the crappy NBN is slow. We’re a long way removed from the desperate survival mode of the 3.5 billion at the bottom of the pile, and I’m pretty sure that if one of those people were substituted into my life of ‘sacrifice’ of comforts they’d feel like the luckiest person in the world. #perspective
Rule #9: You can be happy, healthy and live a moderately comfortable life with a few minor adjustments to your habits. Unshackle yourself from other people’s ideas of how you should live, and look to alternative lifestyles and examples of perfectly satisfactory cultural norms elsewhere. Australia is a neat little privilege bubble; you might be happier popping it!
10. Radical Ideas
Ok, now for the really wild stuff. Maybe ease in to it!
- I started eating a vegetarian diet in 2017. I actually didn’t do it to save money, but it definitely does. (The choice to eat meat is by far the most significant negative impact you have on the environment — more than plastics, car/air travel, light bulbs and long showers combined)
- I eat food past the use-by date all the time. Honestly I may have a stronger stomach than many because I lived in South East Asia and that’s a test of your mettle! But in most cases Use By/Best Before dates are indicative only, and often they’re part of marketing (convincing you to throw out the vinegar — a natural preservative — for example, so you buy another one).
- Same goes for cosmetics only more so! Eye shadow goes off in 12 months? Really????
- I pick overhanging fruit off my neighbours’ trees while I’m walking the dog. Lemons anyone? (There’s a movement called Freeganism, and Grow-Sell-Swap groups, and websites with maps telling you where to find free food)
- I haven’t set it up yet but my neighbours and I will host a community garden so we can harvest our own fresh veggies
- Hard rubbish is my friend. If I need something I’ll check out what my neighbours are throwing away. I love my ‘new’ sofa.
- And finally….Dumpster Diving! OK so you’ve gotta jump in a bin around the back of a supermarket like a hobo but it’s a) very fun if you go with friends b) not illegal and c) a veritable treasure trove of edible food being wasted by supermarket chains which haven’t found more efficient ways to handle the abundance of food this moment in history has provided us. My friend made an entire gourmet 3 course meal using food from a dive. Nobody had a clue (and no they didn’t fall ill). Trust me; it’s nothing like the disgusting picture you have in your mind!
And that’s it. That’s how I managed to live on less than $20,000 in 2017 in one of the world’s most expensive countries and never feel poor. OK, so it’s not for everyone, but unlike ‘everyone’ I have no interest in selling my soul for money and giving up my precious time to undertake meaningless work until I reach my death bed, look around at my possessions and wonder what the hell happened and what it was all for.
Wage slavery is for schmucks. Get an awesome life! :)
For more tips on Living Good on Less — saving money, earning cash, saving time, enriching your life and re-purposing to spend less - check out our new website thehighlife.strikingly.com or follow The High Life on Instagram @livinggoodonless
A note on living ethically…..
I have a confession to make. Some of my ability to live on less money is borne out of the exploitation of other people and the planet. Buying cheap products usually means low wages for some unfortunate soul at the bottom of the food chain. Often times it means companies are extracting from nature in unsustainable ways or that animals are treated brutally their whole lives to keep costs down.
Let it be said I do not support this exploitation.
It’s very difficult to be an ethical consumer, and never more so than when you’re poor. Somebody is always paying so if it’s not you as a consumer then it’s someone or something else. I do my best to ethically navigate this reality, and honestly I often fail. Much of my (unpaid) work is dedicated to addressing these issues. Unsurprisingly it’s the more radical ideas like those in #8, #9 and #10 above that allow me to live my life with a clearer conscience.
Three small changes I did make (apart from vegetarianism noted above), was start buying free range eggs. At 2–3 x the price of cage eggs it was a big decision on a low budget. The second was to buy milk that provides a donation to a farmers’ fund. Paying $4.50 for a 2L bottle of milk is beyond my current lifestyle, but choosing to spend 50 cents more so that the producers receive a modicum of the compensation they deserve is a small compromise. And finally, I no longer participate in the utterly destructive and totally exploitative fast fashion industry. From Kmart to H&M to Zara and all the rest, I refuse to buy the low quality, 5 minute on-trend items that will be worn out within a few washes from companies that insist I am an inferior woman if I don’t. Everybody in the fashion industry supply chain loses (including the low-paid, casualised retail staff who work in-store), except the very few at the top of the tree. All that waste for shit we don’t even need. How many tank tops can you wear at once? Instead, I either RRR, join a clothes swap, head to the op-shop, buy high quality, long-lasting items, or make do with the hundreds of clothes I already own.
A note on the future….
If you’re a perceptive cookie, you have probably worked out that it’s all good and well when I’m young and have earning capacity, but what about when I get old, or if I’m impaired by accident or illness? And you’re right! This whole living on less strategy isn’t very forward thinking (in the conventional sense). Just last week I woke up in a panic about when my IO period expires on my mortgage in 3 years. I still don’t quite know the answer. I think there’s a balance to be struck for most people — wage slave periodically or find a sensible long term investment in the early days to prepare for retirement.
What I do see as I look around, as I watch documentaries like ‘Inside Job’ or ‘Saving Capitalism’ or ‘Boom Bust Boom’ is that financial stability is an illusion, trust in our financial institutions is misplaced, and that hard work is, in many cases, futile in a world where our systems favour the few to the detriment of the many.
Superannuation is, at the end of the day, an investment not a savings scheme. It could literally be wiped out in the blink of an eye as a result of some poor decision making or sudden changes in the global economy. All those years of squireling away, careful planning, and sacrifice now for a pay off later might be all for naught. We might as well call it gambling. Some people are predicting another financial meltdown, but even if that seems implausible (erm, it’s really not), by the time I reach the age of retirement who can possibly guess what the world may look like. We are living in strange times — derivatives and short selling and cryptocurrency and national debts so large they can never ever be repaid — it’s gotta make you wonder, right?
If your trust lies in our government, our financial institutions and global markets operating in late stage capitalism systems, you may want to reconsider your position. #justsaying Don’t say you weren’t warned!
*I am not a financial advisor. This article is simply an account of my personal experiences and does not constitute personal financial advice.