Limit shopping to food. (Hsinya at a farmer's market in Taichung.)
A tablet computer with a $499 price tag will actually cost you $2,070 over your lifetime.
Your money could be worth a small fortune if you invest it instead of spending it on shopping. Here’s a quick round-up of last year’s popular holiday gifts, along with their sticker price and net lifetime cost (inflation-adjusted):
| Product | Sticker Price | Net Lifetime Cost |
|---|---|---|
| Kindle | $139 | $575 |
| Kinect | $150 | $620 |
| iPad | $499 | $2,070 |
| Macbook Air | $999 | $4,140 |
| iPhone 4 | $2,399 (1) | $9,940 |
| 2010 Ford Fusion S | $18,000 | $74,600 |
A little cash can snowball when left untouched for long periods of time. Investing is an extremely effective, time-tested strategy for building wealth. Most of us, though, love to spend money. In fact, the average credit card holder owes around $16,000 in credit card debt, at interest rates as high as 15%. That credit card debt doesn’t even include the student loans, car loans, and home mortgages we borrow. But by going green, you can put some cash back in your bank account.
You don’t need to be rich to start investing. Even if you earn the minimum wage, you can probably start today. The key is to start living a Greenimalist lifestyle: minimize your environmental impact, and the money will follow.
The first step is to switch to a low-carbon, low-pollution, low-cost lifestyle. Sell your car, cancel your auto insurance, sell all your possessions, cancel your cable TV, stop shopping, move to a tiny apartment, and start cooking from scratch. You’ll probably earn a few thousand dollars by selling your possessions, which you can use right away to pay off your existing debt. You’ll also spend less than you earn; store the surplus in investments.
Don’t hesitate to sell your possessions. Most of the stuff you own is practically worthless. Unlike investments, possessions usually depreciate over time. An iPod Touch once priced at $199 in 2008 is worth less than $99 today. In as little as 3 years, it has lost 50% of its value. After a decade, it’ll be totally worthless. But if you sell the iPod today, you can reclaim most of your money back and store it into investments, which will appreciate over time. $200 today could be worth $265 in a decade.
When you pick a company to invest in, choose one that is morally responsible. Look for companies that aren’t involved in abortion, deforestation, oil drilling, tobacco, alcohol, pornography, sweatshop labor, and exorbitant lending. Scripture clearly forbids Christians from charging interest from the poor (3), so don’t invest in companies that profit from personal loans (avoid credit card companies). The Bible also forbids us from committing murder and treating people inhumanely, whether poor or unborn. Avoid companies involved with abortion or embryonic stem cell research.
Investments aren’t synonymous with stocks, bonds, and mutual funds. You can invest in yourself or your own business. I’m saving up money this year to pay off student loans and to work on Greenimalist full-time. You can invest in other people by donating to charities that help the poor. If you’re a Christian, you can invest in local churches and overseas missions for an eternal impact. Investments aren’t limited to banks, and our profits aren’t limited to just ourselves.
What will you do with the money you save?
1 Apple advertises the iPhone 4 at just $199, even with the cheapest data plan available, the phone costs $2200 over two years.
2 I used Calculator.net: the cost is the starting principle, and the interest, inflation, and tax rate is set at 7%, 4%, and 0% respectively. Compound annually.
3 See Exodus 22:25-27, Leviticus 25:35-37, Nehemiah 5:10-11, and Proverbs 28:8. Also see Luke 6:32-36.
Nice article! I wish I had such a good understanding of finances and compounding interest at your age! Great job with that! But, oh no…not the ipod touch! Ok that’s my weakness…and it’s so funny that you mention it, because I was thinking of craigslist-ing it yesterday and upgrading…lol! Our place is pretty minimal and empty looking here. My friends wonder when we are going to unpack all of our stuff…lol. But I dunno about the ipod touch… :0)
I was describing my own mistake with the iPod Touch example. In 2009, I bought a new iPod Touch at $199 and a Mac Mini for $599 (total: $800). When I sold the two in 2010, they were only worth $100 and $475 (total: $575). That’s 30% depreciation in a single year! I was working on iPhone/iOS development, so I was forced to buy the equipment, but I hope you’ll learn from my mistakes.
I think you are wise and have a great point! Good job!
What a good article. I agree with your thoughts about a greeni,alist lifestijl. I’m busy now reach it and selling my stuff etc.
Greetings from The Netherlands
Awesome! Let me know how it goes.
I appreciate your Christian perspective and enjoy reading about your and your wife’s adventures into minimalism, Thanks for being such an inspiration.
Glad we could be an encouragement. Have you considered making the leap to minimalism, or are you a minimalist already?
Hi Aaron,
Great blog! I enjoy reading your posts.
I’d like to get your thoughts (and perhaps a blog post!) on what you think about housing in relation to greenimalism. The idea of the “American Dream” usually includes home ownership as an example of achieving of the Dream. People tell me all the time that I should look to own a house. But the more I think about it, it does not make any sense for a greenimalist. I figure-
- owning a house provides ample opportunity to purchase more things you don’t really need
- why do you need a house when a small apartment would do just fine for a minimalist
- it’s expensive! In California, after the cost of the house, mortgage costs, property taxes, and maintenance costs, you’re easily paying more than if you rented a modest apartment for a lifetime
- with monthly mortgage payments for 15 to 30 years, you might not be able to quit your job, take a long trip around the world, or have the free money to spend to do the things that really matter
- you’re also stuck! you don’t have the freedom of moving around from place to place, unless you want to sell the house (a big hassle) or rent it out (another big hassle)
- a big plot of land for a house (and the resources used to build that house!) is surely a waste of the Earth’s land and resources since that plot of land and use of resources is only supporting a small group of people, as opposed to an apartment building or skyrise that could support hundreds.
Well, these are my quick thoughts on greenimalist housing. I’d be interested to hear yours!
Thanks!
Hi dknight211,
I agree completely.
1) Home ownership is often touted as cheaper than renting, but I doubt it. You’ll be paying for mortgage, property tax, home repairs, and possibly insurance. Yes, home ownership is theoretically cheaper per square foot, but houses are always more expensive in practice since they are larger than apartments.
2) Home ownership is one of the most illiquid investments you can get. It’s much easier to sell stock than it is to sell a house. You don’t want your money tied up in investments you can’t sell easily.
3) You are taking on a lot of debt. Do you really want a $300,000 home mortgage? Long-term debt will take away your freedom and flexibility. You may not be interested in traveling the world, but in 5 years, you may want to move to closer to work, school, church, or family.
Here’s an excellent “Rent vs. Buy” financial calculator by the NYTimes. To use the calculator, I’m plugging in the median house price and the median apartment price for my hometown (data courtesy of City-Data and Rent-Range). The median house is $440,000, and the median rental is $1600/mo. for a 3-bedroom apartment. According to the calculator, renting is always more financially profitable than buying.
Home ownership isn’t always bad, though. If you can build a tiny house, you might be able to do it without incurring debt. The important thing is to not get wrapped up emotionally and financially in your possessions.
What a great article! I love how you mentioned we shouldn’t take interest from the poor. I think these verses are most often ‘forgotten’ for convinience sake ;)
As for investing itself.. I’m not one to look at my personal long-term benefits (such as interest) from investing. Right now we’re investing by sponsoring a child in uganda to go to school. It would be awesome if he will be able to provide for his family in the future!
Greetings from the Netherlands (wow, two people said this on one post, how cool is that? haha..)
What sponsorship program are you a part of? I’d love to hear! I’ve been searching for a charity to be a part of, but I haven’t found any credible international ones. The 2010 Haiti Earthquake disaster is still lingering in my mind. The world donated so much money, but it was mostly stolen by either the charities themselves or by the corrupt government.
I frequently use Ministry Watch to evaluate charities.
Greetings from Taiwan ;)
I would recommend World Vision to sponsor a child. Also there is a small group centered at Grace Brethren Church Long Beach (CA) that sponsors orphans in Uganda. You can read about it at ugandanlambs.org. My husband and I have sponsored a boy through Ugandan Lambs for the past seven years.
Thanks Willow, I’ll check them both out. I also remember Children’s Hunger Fund doing a good job during the Haiti disaster.
By the way, our home church is at Long Beach, too!
I agree: World Vision is a Christian organization that does wonderful work around the world. Something like 90% of your donation actually goes to the child and/or family that you sponsor. Friends of mine have also sponsored families through Heifer Intl. and think highly of their work.
Thank you for your comments about renting vs. buying. You are absolutely right on target. I only wish my husband and I had understood this principal when we were your age.
As always, I enjoy your blog.
When Hsinya and I decided not to buy a house, we faced a lot of opposition from family and friends. They told us we were naive, that we were throwing away money on rent, and that when we had a family, we’d need the extra space. It was tough to ignore the critics–we felt like we were constantly being attacked–but almost anything worth doing in life will meet with opposition.
Chris Guillebeau’s Who You Are and What They Say reminds me of what we faced.
Thanks for the link, Aaron. Chris G. is so right about this. I’ve been told since childhood to get my head out of the clouds, stop being so stupid and naive, and join the “real world.” It gets really hard to hear that over and over, and real courage to ignore it. Remember that Jesus was mocked, as well, because his teachings did not uphold the status quo.
Keep me filled in when you get the chance to downsize!
I enjoy reading your blog, but your calculations regarding the investment of money otherwise spent on gadgets is not realistic. 50 years is far too long a period to base your calculation on, unless you are 15 and invest that money until you’re age 65.
Use a 30-year calculation and then see how far less compelling the numbers are, except for the new car!
Hi Fern,
I wrote this from my own vantage point. I’m 22, and since I never plan to retire, my money might be stashed as investments for 60+ years. It won’t necessarily be in my bank account, but I won’t waste my money on junk.
Some investors, like Peter Lynch, get 20+% returns on investment, which is far larger than the modest 7% returns I used. He’s probably not careful about screening morally responsible companies, but it’s a ballpark estimate of the returns you could be getting. If you start your own business, you could be getting really high returns as well.
If you donate your money, who knows how much good a few hundred dollars can accomplish?
i read this after your ‘how i save $10,000 a year’ post and they work well together, i definitely liked your comparison of a kindle being worthless in a decade but those $200 being well invested being worth much more. thanks for the insight and incentive!
Hi there,
Glad you liked it. I wrote this post because many people were telling me that “Greenimalist is impractical in the real world.” Saving money seems pretty practical to me!
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If you are looking for a great place to give money, time or talent LDS Charities does not take any administration costs ( I believe we members pay that with our tithing) so 100% of your donation goes to the people in need. There are also paterns / supply lists for needed items you can donate. They help in Japan, Haiti, all over the world. They have clean water programs, neonatal programs and partner with other agencies where it makes sense to be more effective.
http://www.ldsphilanthropies.org/humanitarian-services/
Oh yeah, I forgot to mention the most important part:
Your blog has totally INSPIRED me. Thank you!
@Karoleana: I’m glad the post helped you. Unfortunately, I cannot recommend the LDS charities. From the sound of it, they seem very honest with finances and they probably accomplish a lot of good with their money, but I am concerned about the teachings of their church.
I don’t mean to put down Mormons. As a whole, they are very sincere people. Unfortunately, the LDS church has many teachings that go completely contrary to the Bible.
The problem with the LDS church is that they believe the Bible was corrupted over time. To them, our Bible today is full of errors, so they have additional books which they use in place of the Bible. These books teach harmful doctrine. One of them is that the forgiveness of sins does not come from Jesus’ death alone, but also requires good works of our own. But if you look at what Jesus taught, you will realize that we do not have a single righteous bone in our body. We are all sinners, destined for hell, with Jesus as the only way to salvation.
Not one of us is righteous. Not one of us have kept all the Ten Commandments. We do not love God with all our heart, nor do we love our neighbor as ourselves. So if we put confidence in our own ability to do good, we will–sadly–face the wrath of God in hell. So I pray we turn to Jesus, and Jesus alone, that we may be saved.
Aaron,
As someone who had hundreds of thousands of dollars of items (replacement value) stolen out of my modest home, only to be stuck with months of going through everything to see what was stolen, racking my brain to remember what I had, getting lots of order histories, rifling through records for documentation, begging friends for letters documenting what they saw in my house, and dealing with police and insurance company, I can tell you that all that stuff stored and not used in my house was not worth it. Just get rid of it if you’re not using it or it’s not a very dear item.
Even the dear items can be sold or donated and do more good if you really don’t use them. I spent lots of money having enough space to store all that, during a time when I sometimes couldn’t easily pay bills or buy food. I didn’t realize how much I had till I started adding it all up.
My goal is to get rid of 80% of what is left and then dump the house and move to the area I want to live in and live cheap, renting one of the pretty little houses that won’t sell because there are no jobs there. I can work over the internet as a writer, so I’m good.
If I try to sell my expensive stuff, I’ll pay more in mortgage payments while I try to do that than I would if I just gave it away.
My stuff has shackled me to dirt in a locality I’ve never liked. Once I bought this house and put all my stuff in it, I couldn’t afford to move even after I realized how much I hated living here. Then, I could not afford the house when I got cancer, so I had to declare chapter 13 bankruptcy to keep from being homeless as a parent with a child during treatment. No, I didn’t have the money to rent or move, but I would have if I hadn’t bought the house. I bought the house so my son would be in a good neighborhood, but the neighbors were drug dealers and stole most of my stuff. I couldn’t move till the bankruptcy was over or I’d make my credit rating worse and not be able to move my stuff or rent easily in this town.
Also, I couldn’t move with all my stuff if a company would not pay for my move. I couldn’t move overseas until I paid to store it all. I couldn’t go live in a city because I couldn’t afford a large enough place for my stuff.
People, there are reasons to have belongings and to own homes. But, there are big reasons not to.
Here’s how friends of mine downsized from a large luxury home to a sailboat, while giving birth to and raising a small child:
1. Put everything you have that you don’t love or use into a storage unit. Sell your house and rent a smaller home. Sell or give away everything in the storage unit.
2. Fill the storage unit with everything you don’t love or use now that you’ve lived with it in the new home. Rent a smaller home or apartment. Sell or give away everything in the storage unit.
3. Repeat, except rent something without a yard to maintain and find good homes for any pets you can’t have in an apartment. Get rid of all your gardening and big animal items.
4. Downsize again, but this time rent the new place first and only bring what you really, really love and use frequently. Sell the rest to someone who will buy it in a lot, skipping the storage fees. This requires you to afford rent for your small apartment before you move out of your former home, but you won’t have to pay storage for months while you get rid of items one at a time.
5. Start selling or donating the items remaining in your home one by one. Give very special heirlooms to family or possibly sell them if both parties are willing. Scan all your photos and store in redundant places for safekeeping. Eliminate duplicate items. Learn to need less. For example, you don’t need ten pans to stay nourished.
6. List what is truly needed to live on the boat. Start getting rid of everything not on that list. Find good homes for any remaining pets.
7. Outfit the boat and start living on weekends on the boat. Take a small trip or two. Do this in various seasons. Adjust your necessity list and what you have on the boat accordingly.
8. Get rid of the rest of the stuff in your apartment and get rid of your lease. Live full time on your boat.
This took my friends several years to accomplish. It was far less painful than going cold turkey. They were in their forties and had lived the high life. They also had a child in the process. Though it would have been far cheaper to go cold turkey, it might have strained their relationships and traumatized them a bit. They lived on the boat for three years while he worked full time and she worked part time to save more money for the trip and to allow their daughter to reach five years old, the age when they felt she would be old enough to do the trip with them.
For me, I think I really need to pack up what I love and use a lot and dump the garage sale type stuff, selling the better furniture on Craigslist and perhaps some of the remaining jewelry. I will retain enough for a moderately furnished small two bedroom with only a storage shed or back enclosed porch for sports and yard equipment. Not ready to give up my little dog or my skis. But, ready to give up the excess.
Blessings
@Sage: I’ve never heard of people downsizing to a sailboat before–interesting story! Have you ever considered moving into a tiny, minimalist house? Tumbleweed Tiny House company is selling houses that are under 100 sq. ft. for about the same price as a car. I’m considering building a log cabin since it’s the cheapest way to get a house.