In 2007 I sold two successful restaurants that I owned to a gentleman who had three other similar restaurants. He was looking to expand his empire, and I was looking to simplify my life a bit.
This sale was GREAT in that it put a couple hundred thousand into the bank pretty fast. What was NOT so great was that I was GIVING UP the approx. 50K in income that those restaurants provided each year.
I learned a hard business lesson that many business owners simply don’t consider when they sell their businesses. It is easy to think, “Great, I’ve got a large chunk of money!” It is not as easy to think, “Wow, I need to change my lifestyle as I just gave up a recurring revenue stream!”
That being said, in 2008 my family needed to change our spending habits SIGNIFICANTLY or we risked blowing our entire nest egg. Here is a snippet of what we did to cut 30K of fat from our budget without too much lifestyle change. And I can tell you it felt AWESOME to get the spending under control! As a family we didn’t feel like we were giving up much at all…2008 was probably our best year yet!
1.) Gave up expensive travel and vacations for frequent camping trips to local state parks. $6000 yearly savings!
2. Gave up eating out all the time and trying to buy “Organic Everything!” $3500 yearly savings!
3. Stopped shopping when we were “bored” and realized our closets ALREADY were overflowing! $4000 yearly savings!
4. Got rid of our most expensive auto payment. $5000 yearly savings!
5. Gave up going to the movies and out with friends all the time and traded it for Blockbuster Online and popcorn with our girls. We were spending almost $3000 per year on BABYSITTERS! Crazy, I know! $4000 yearly savings.
1. Refinanced our mortgage to a 5.50% 30 year fixed rate. $1800 saving per year.
2. Appealed our property tax assessment. $500 savings per year.
3. Learned how to set our programmable thermostat, and dropped the temperature about 3 degrees. $800 savings per year!
4. Dropped expanded cable and phone service $1200 savings per year.
5. Stopped mindlessly driving everywhere and stuck to a fuel budget. $2000 savings per year.
6. Misc. small cuts not worth mentioning $1200 savings per year.
I hope this helps some of you and encourages you to “tighten up the belt!” I know it is a lot more sexy to buy a new 60 inch plasma than to increase your permanent life insurance coverage…but what has the better long-term payoff for your family? That’s what we all need to decide!