My primary financial goal is what I call financial independence. Though financial independence can have a number of meanings, I define it as being a state in which I no longer have to actively work for money and my savings and investments cover all of my needs and reasonable wants for the long-term future. In other words, I live off of part of my investment income, with the rest being channeled back into investments so that the system is sustainable even with inflation.
Naturally, one key part of achieving this is to reduce my expenses as much as possible. If you spend less, then you have more to invest. The more you have to invest, the quicker you reach a point where your investment income is covering your (lower) expenses.
So, how do we do that without making life miserable?
Most of our expenses result from purchasing items and services from others because we can’t (or won’t) produce them ourselves. We buy food at the store because we don’t produce enough food to survive, for example.
Because of that, one method of moving toward financial independence is to simply find ways to produce what we need for ourselves without paying others.
This is a self-sustainability strategy. Wikipedia defines self-sustainability in this way:
Self-sufficiency (also called self-containment) is the state of not requiring any aid, support, or interaction, for survival; it is therefore a type of personal or collective autonomy.
In modern society, it’s basically impossible to be fully self-sustainable without becoming a complete hermit. However, there are many self-sustaining strategies that people can incorporate into their lives to save a great deal of money over time.
Here are thirteen strategies that may work in your life. Not all of these will work in every life, but almost everyone can pull out one or two of these tactics to incorporate into their own life. Just because one or two or seven strategies do not fit your life does not mean the rest should be overlooked.
Install Solar Panels
When you install a solar panel system in your home, your roof is lined with black solar panels that soak up energy from the sun. The amount of energy they provide depends on the sunlight in your area as well as the dimensions of your roof.
So, let’s start looking at the numbers. The average American home uses about 900 kilowatt hours per month. There are 720 hours in a typical thirty day month, so a home is usually using about 1.25 kilowatts (on average) at any given time. Obviously, this does vary a lot – it’s usually lower at night and higher during the day.
A typical home solar panel install will cost you between $18,000 and $40,000. The systems tend to last about 40 years. A home solar panel install will generate about 3 to 7 kilowatts – let’s assume it’s 5 – and we’ll use the average cost of the system in that range – $29,000 – for our calculations.
When you install a home solar panel system, you’re eligible for the federal solar tax credit, which is equal to 30% of the cost of the installation and reduces your taxes by that much. On a $29,000 system, that’s an $8,700 credit, bringing your bill down to $20,300.
Such a system would completely eliminate your energy bill. Beyond that, many energy companies will buy any excess energy you produce at various rates (depending on the company). Let’s say they pay you $0.05 per kilowatt hour; in an average month, you’d produce 2,700 excess kilowatt hours. That adds up to $135 per month back in your pocket. If you’re eliminating a $100 monthly energy bill this way (close to the national average), that’s $235 per month.
At that rate, the system pays for itself in seven years and two months; after that, you don’t have an energy bill and receive $135 a month from the energy company.
Obviously, these calculations deal in averages and are in the realm of back-of-the-envelope math, but the reality is that you can likely pay off a solar energy system in several years with the proceeds and eliminate your energy bill.
This is a great option if you want to make a single large investment in energy self-sustainability.
Install Geothermal Heating and Cooling
My in-laws have a geothermal heating and cooling system that provides climate controlled energy in their home. This system essentially replaces their furnace and central air conditioning units and reduces their monthly energy bill by about half.
The math on these systems parallels that of a solar panel system in many ways. Generally, a geothermal system is less expensive up front, coming in at around $20,000. It also offers a 30% tax credit if you install one, bringing the out-of-pocket cost down to about $14,000.
For that, you’re able to eliminate roughly half of your energy bill. However, you’re also eliminating the need for a separate central air conditioning system and/or furnace, which is an additional savings, particularly if you choose to install a geothermal system when one of those units fails.
This is a great option for partial self-sustainability if you’re in a situation where you need to replace a furnace or central air system anyway.
Install LED Light Bulbs
If the idea of investing $20,000 or more in an effort to become more self-sustainable leaves you shaking your head “no,” you’ll thankfully find that the rest of the list is much more manageable – starting with LED bulbs.
A single LED light bulb sets you back $8 to $10, whereas a normal incandescent bulb might set you back a dollar or two. The difference? LED bulbs use a fraction of the energy and seem to never go out. I’ve been using LED bulbs in my office since 2007 (!) and none of them have failed yet.
Since you’ll be buying far fewer replacement bulbs and the energy use of each bulb is so much lower, buying LED bulbs is a simple and convenient way to move yourself in the direction of self-sustainability.
Start a Garden and Save Your Seeds
Gardening – and preserving the produce from your garden – is a great way to become more self-sustaining. With a bit of effort, you can transform a few handfuls of seeds into a bounty of fresh vegetables – and with a bit of forethought, you can save some of the seeds for use during the next year. A garden grown with non-hybridized seeds can produce a bounty year after year without adding a single seed to the mix.
Of course, there are some startup costs – you’ll need a few tools, some initial seeds, and some space to grow. You’ll also have to be careful about the seeds that you buy as you’ll want to avoid hybridized seeds and you’ll have to do some preservation (canning, drying, or freezing) during harvest season to keep the excess bounty for later.
The rewards, though, are tremendous. There’s nothing more fantastic than covering a kitchen table with the bounty from your garden. Turning those vegetables into a bunch of wonderful home-cooked meals and then canning or freezing or drying the excess for use during the winter months not only helps you to feed yourself (and rely less on spending money on food), but it also fills the senses with amazing colors, textures, aromas, and flavors.
Live in a Strategic Location
The simple act of owning an automobile is an incredible money sink. The cost of fuel, maintenance, parking, insurance, registration, tolls, and tickets adds up incredibly quickly.
The best option – if you can get away with it – is to simply live in a location where you can get by without an automobile. Can you walk or ride your bicycle to work (or, better yet, can you telecommute)? Can you walk or ride your bicycle to the nearest reasonably-priced grocery store? Are other aspects of your area available via mass transit?
If you can answer yes to all of those things, get rid of your car. If you’re looking for a place to live, look for locations that enable you to get to the things that you need without the use of an automobile.
Live in a Smaller Space
Living in a small home has a number of distinct advantages when it comes to achieving self-sufficiency.
First, the direct financial cost of maintenance, insurance, and taxes are substantially lower than a larger home. Your required bills just to maintain a place to live are simply smaller, making it easier to save and build toward financial independence.
Second, a smaller home means that you have to be more selective with your possessions. This makes it easier to move and much more likely to focus on experiences and less on the accumulation of stuff.
Third, including small homes in your search for a place to live opens up many more options for living. You can often find a much more desirable location if you’re willing to live in a small home or apartment, making it easier to do without an automobile, for example.
You’ll also spend less time on maintenance and upkeep, leaving you more time for simply living your life.
Use a Rain Barrel
If you own your own home – and especially if you garden or have flowers or simply water your lawn – a rain barrel is a great option.
A rain barrel is simply a large drum that attaches to your downspout, allowing all of the water that would otherwise just run off of your roof and out of your yard during a rainstorm to stay in the barrel. Then, you can use the contents of that barrel to water the yard, the garden, and the flowers.
In areas where there are water conservation issues and water prices are high, a water barrel can save you a surprising amount of money. Even in areas where there is plenty of water available, using a water barrel can be a thoughtful conservation move.
If you want to go beyond this, you can consider drilling your own well to provide your own water, doing away with an energy bill entirely.
Raise Productive Animals
During my childhood, my family raised a goat, dozens of chickens, a number of rabbits, and a few pigs. All of them were used to provide food for our family – the meat, the eggs from the chickens, and even the milk from the goats were consumed.
It’s not too hard to pull this off on a smaller scale, particularly if you have a yard. A small fence with chicken wire and a small hutch can set you up with space for chickens which can provide eggs and chicken meat for a long time.
This is a great route to take if you enjoy caring for animals. Food-producing animals can provide a surprising amount of food for your family and can even produce extras that you can sell or trade for other items.
Build a Large Social Network/Community
A large network of friends and a thriving community to live in provide several benefits for self-sustainability.
First, it gives you many opportunities to borrow the tools and items you need. Rather than buying something you might use once every few years, you can just ask around and someone will likely have it. Of course, at the same time, you can offer your own tools for others to use.
Second, it gives you the chance to share skills. You might be able to help a friend with a problem and someone else might be able to help you. This can avoid the need to hire someone to fix a problem or to help with a repair project.
Third, it provides a ready-made social calendar. If you have a lot of friends, then you have a lot of opportunity for social events that don’t require paying an admission fee or buying supplies.
A large social network can also open up career and employment opportunities. My social network has helped me to find multiple jobs over the course of my life.
A great social network is an incredibly powerful tool for becoming more self-sustaining. You can get started by getting involved in community events and civic groups; for a list, check out your community’s website.
Establish a Daily Exercise Routine
Health issues can force anyone off of the path of self-sustainability. While some health issues can be avoided, there are a number of free steps you can take to reduce your chances of facing other severe health issues.
One big step you can take is to simply establish a daily exercise routine. Start a routine of going for a half hour walk after supper each evening. Try out some simple body weight exercises, like doing push-ups or jumping jacks. I particularly like the lifetime fitness ladder.
There are a lot of studies out there that demonstrate a major reduction in health care costs for people who exercise daily or get in 10,000 steps per day. You don’t have to go out there and kill yourself – just get your blood flowing a little bit. Not only that, it’s free and it’s a great way to get out and about in your neighborhood.
Eat a Healthier Diet
Similarly, you can reduce your long-term health care expenses by eating a better diet.
It’s not too complicated. I just follow Michael Pollan’s rules. Eat food. Not too much. Mostly plants. In other words, avoid processed food, exercise a little bit of portion control, and make most of your diet consist of fruits and vegetables.
If you stick with that, your health will benefit. There are many, many different diet variations out there that you may want to try, but most of them only have limited evidence that they exceed a simple largely plant-based diet in terms of health benefits.
Not only that, a plant-based diet has incredible synergy with gardening, which, as I mentioned above, is another effective technique for moving toward self-sufficiency.
Eliminate Service-Dependent and Product-Dependent Hobbies
Hobbies that require you to continually pay for a service in your home are hobbies that are keeping you from being self-sustaining. Cable? Yep. Netflix? Yep. Internet access? Yep. Hobbies that rely on any of those things are hobbies that are holding you back.
Cut back on television and internet (and anything else that requires regular supplies) and instead focus your energies on hobbies that don’t require you to continually buy services or products.
If you like to watch television, get a digital antenna and watch over-the-air television. If you like to watch movies, check DVDs by the pile out from the library. If you like online gaming, discover forms of offline gaming, like card games and board games, that don’t require continuing an internet bill.
Most of my time these days is filled with “free” hobbies. I like to read books from the library, play board and card games around the table with friends, and go on hikes in the woods. None of these things have continual costs to enjoy them.
Maintain and Repair Your Stuff
Getting into a routine of maintaining and repairing the things you own will save you a great deal of money in replacement costs over the long run. You’ll go longer and longer between replacements if you take care of those items, drastically reducing your spending on stuff.
Almost everything you buy comes with a guide for caring for it – a guide that many people overlook. If you don’t have a guide like that, you can likely find one online with a simple Google search.
Follow those guides. Whether you’re maintaining your toaster or your knives or your automobile, paying attention to those items and keeping them in good shape will drastically extend their life.
The Big Question
All of these tactics boil down to one fundamental question. It’s the one thing you should always be asking yourself if you want to move your life in a more sustainable direction, pointing you toward financial independence.
What can I do today to reduce my need to spend money tomorrow?
Planting some seeds today means you’ll spend less on food tomorrow. Maintaining your car today means you’ll spend less on repairs tomorrow. Finding a well-placed apartment today means you’ll spend less on automobiles tomorrow. Installing solar panels today means you’ll spend less on energy bills tomorrow.
Make that question a constant element of your life. Over time, you’ll migrate to more self-sustaining practices in your life and that, in turn, will help you rush down the road to your dreams.
Many people will look at a list like this and decide that most of the things on it aren’t feasible, so they’ll walk away from the idea entirely. The catch? Different people will turn away from different items on the list.
The truth is that everyone has a different life and different tactics work for each of us. My life, as a person working from home and living on the edge of a small town in Iowa, is going to have different possibilities than a person living in a large city and commuting to work – a situation my best friend finds himself in. It’s very easy for me to grow a garden. It’s also easy for me to do things like installing geothermal heating. On the other hand, I have no option to get groceries within a ten mile radius.
Find what works for you. Throw out the steps that don’t work and commit to the ones that make sense. At the end of the day, we’re all finding our own path toward financial independence.