What Do You Really Need?

I’m about halfway done with “Ego is the Enemy” (stop reading this blog and go buy this book) and a paragraph really stood out to me. Okay, in reality, there are A LOT of paragraphs that stood out to me, this is probably the most underlined and highlighted book I’ve owned in a long time, but one particular paragraph stood out even more. I think it is kind of applicable to my way of thinking right now.

The paragraph is:

It’s time to sit down and think about what’s truly important to you and then take steps to forsake the rest. Without this, success will not be pleasurable, or nearly as complete as it could be. Or worse, it won’t last.

This is especially true with money. If you don’t know how much you need, the default easily becomes: more.

I don’t really sit down and think about what is truly important to me enough. I get in grooves and coast along and just kind of go where the river is taking me. For the most part, I think that is fine, it is valuable to “row with the flow” as Halcyon says. But, if you want to accomplish something then you need to be able to articulate what it is or how much you need.

Money isn’t terribly important to me, but it is easily quantified. So, as a thought experiment, I sat down and thought about how much I really need to have the things I want in my life. Then, I can work backward from there to figure out how much I need to be paid or how much I need to work. Caution: we are going to get into some math.

Current Monthly Financial Needs:

  • Rent: $387.50
  • Cell Phone Bill: $50.00
  • Internet: $20.00
  • Electricity: $75.00
  • Water: $30.00
  • Food: $400.00
  • Renter’s Insurance: $5.00

So, that takes care of the lower levels of Maslow’s Heirarchy:¬†food, water, shelter, and internet. The total is $967.50 per month or $11,610 annually. In order to pay for that, I need to work at least 30 hours a week at minimum wage before taxes.¬†After taxes are figured in I need to work 42 hours a week at minimum wage. That sucks… but I am not making minimum wage so there is some flexibility. Just working for $10/hr gets my work needs down to 30 hours.

As cheap as that is, there are things that I want to do that cost money and aren’t really “needs”. First, is saving for retirement. I’m going to use the 4% rule and make some wild assumptions.

  • Assumption 1: I retire completely at the age 65. That gives me 31 years to save
  • Assumption 2: The inflation change between now and 2047 is the same as the inflation change between now and 1985. Which means to cover my needs I will need to withdraw $36,000 annually from my retirement.
  • Assumption 3: There will be no technological advancements that will significantly decrease the cost of any of my needs. I find this highly unlikely and expect many things like internet, electricity, water, and maybe even housing to be lower when I retire, particularly since I’m willing to move to a cheaper place to live.

So, with those assumptions, I need $900,000 in my retirement account when I retire. That means it grows by $29,000 per year for the next 31 years. Shit.

Well, maybe it isn’t that bad. Investment and retirement accounts accrue interest. Time for some more wild assumptions… If I take the average annual rate of stock market return of 10%** and move it to a more conservative 9% I can reach my goal of $900,000 by 2047 if I invest $500 a month in the account.

That seems pretty far-fetched but let’s see where this rabbit hole goes. I can’t reach my financial goals unless I actually articulate them. With retirement included in my calculation, I need a monthly income of $1467.50.

I also want to be able to have vacations and travel and such. I’m going to call this the “Burning Man” fund. I won’t be going to the Playa every year, but I am sure I will be going some places every year… Iceland, or a series of small festivals and events, etc. I am going to be more liberal with this estimate and allocate $3,000 a year to having fun like this ($250 a month).

I guess I should also start paying my student loans (maybe). They are another $500 per month, and I also want to take some classes like yoga ($100 per month), have a weekly outing to drink beer with friends ($100 per month), and improve the house ($100 per month).

Where does that put me?

  • Need: $967.20
  • Retirement: $500
  • Burning Man: $250
  • Student Loans: $500
  • Classes: $100
  • Weekly Fun: $100
  • Home Improvement: $100
  • Monthly Total: $2,517.50

To reach my goal I have a few options.

  • Reduce my goal by decreasing my living standard
  • Earn more money (I’d need an extra $750 or so per month given my current income)
  • A little bit of both

I think Option 3 is the best option. To help with that I need to get a hold of my copy of 4-Hour Work Week. In it, Ferriss talks about researching and setting realistic goals over time frames. I could likely reduce my “Burning Man” goal by planning and be more reasonable. I can also reduce my home improvement, weekend fun and classes expenses. I’d also like to start dumpster diving and finding other ways to decrease my “need”.

I’d also like to start bringing in more income. I can start working more at my current job, look into finding a part-time secondary job (unlikely), and work towards what I really want to do… be a writer. If I can focus on getting my writing polished and sent to publishers (or self-publishing) I might be able to bring in the funds I need to have the life I want.

That monthly total is a pretty lofty goal for me, but now that it is quantified I actually have a chance of reaching it. Instead of just needing “more” money per month, I need $2,517.50 per month.

** A friend of mine who is a financial planner says my 10% was way too optimistic and 5% is a more reasonable growth rate. With that, I need to add about $1,000 per month to reach my goal. So, my new monthly goal is $3,017.50 without any reduction in expenses. I think I’m going to plot out things one at a time in a more detailed way to see if I can reduce those costs.

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Need

I love my partner, but I don’t need her. I want to be with her, I want our lives to be intertwined, I want to grow and explore and experiment with her. But there isn’t a need there, and because of that I think our relationship is healthy.

Our relationship is built on a desire to be together and we both know that we would be fine if the relationship broke up. It would suck. There would be great sadness and mourning over what we thought our lives would be, but we would be fine. We would both thrive as we ventured out into the world. We would find new loves, or maybe live our lives perfectly content alone. We would grow and explore and experiment, with or without each other. The direction and speed of those things would differ, but they would still happen because we are not “two that have become one”, we are two who make each other stronger as individuals.

To need someone (or something) is to enter into an unbalanced relationship. It is giving too much power to the other person, it is to lose your identity and take on theirs. It is to pursue an addiction that is unhealthy. It is juvenile to need a person and it is unhealthy.

By needing another person you give them control of your life. When things end (whether through breaking up or a tragic death or being fired or being injured) you are unable to strive again until you break that need… and the need for a person can go on long after they are gone.

It is not only romantic relationships that can involve such imbalance. It can be an adult child who isn’t stable without their parents supporting them (emotionally, financially, etc). It can be a friendship where one person needs the other person to face the world. It can be a professional relationship where one person needs the job in order to survive and doesn’t have the skills to find a new one. It can be a hobby that requires your mind or body, things that will eventually fail.

When these relationships break down it destroys a keep part of our being. We have defined ourselves based on our relationship instead of as an individual. We become a boyfriend, instead of a person who has a partner. We become a father, instead of a person who has a child. We become a writer, instead of a person who writes. By defining ourselves in relation to other people we destroy ourselves, we become dependent on someone else’s acceptance, love, and stability. Then, when we find ourselves alone we can’t cope.

And that is suicide.

I love my partner. Each year with her has been better than the last. We continue to grow and challenge each other. With every day I spend with her I find new depths and strengths and passions. With her I feel strong.

But I don’t need her, and she doesn’t need me… and that is one of the best things about our relationship. Need takes away the voluntary nature of our relationship. Need means dependence. We don’t have that, and I hope we never will.