After doing some research Patrick started sketching some ideas. First of all he needed to figure out what his household expenses were. A little bit hard considering they had a lot of them.
He had to find a way to distinguish what necessary expenses were and what discretionary expenses were.
He reflected “Ok, there are fixed expenses, like food, utilities, mortgage, insurance, cell phones, etc. And then, there are discretionary expenses for things that we can live without like new electronics, restaurants, brand-new tools, spontaneous shopping sprees, eating out, etc.”
Joan was super excited, dreaming of a time when she wouldn’t have to spend one more day planning a meeting for the staff at school or attending “another” workshop that seemed like the bridge to nowhere.
“Patrick could you imagine, just the two of us with our baby? Maybe living in a quiet place with no traffic, a small community, some land around us, lots of outdoors?”
Patrick was also picturing a time of peace when he didn’t have to deal with behaviors anymore; those social externalities that Jon talked about and he was also so tired of.
His journey to financial independence and retirement required some work but it was quite possible.
His first step was to start challenging all his expenses; one by one. He helped himself with technology, by using a couple of Apps in order to have the upper hand on his budget and expenses. His favorite App was Mint. An easy-to-use App that would keep track of each of their bank or card transactions, compiled in easy-to-read graphs and pie charts. This was a nice visual to see where their money was going.
Quickly, he realized that his reality was the same as many other Americans. Their major expenses were their home mortgage( the largest), food and gas.
In their case their mortgage was a large percentage of their income. They couldn’t rent it because it was too much house for a renter’s market. Without hesitation they decided to put the house up for sale. They realized that they didn’t need all the space they had.
They figured they could rent or buy something small without the need of financing the purchase, which would allow them to save a huge amount of money every month.
The next day, they called up a realtor and the house went on the market.