What is your core spending?
Think of core spending as the money that you have already committed towards a current or future purchase. If you own stuff that need to be maintained then that’s part of your core spending. Same with ongoing bills and other recurrent payments. My hypothesis is that the more core spending commitments you have, the higher your stress level will be.
If you own a car then any and all spending associated with your cars are part of your core spending. Same thing with a home or most gadgetry. Also included in your core spending are food, housing, transportation, clothing, and healthcare in your core spending. I’ll delve into these in a bit.
My current core spending includes the following list below. Some of these I can easily jump out of without looking back. Others are more tattooed and would be much harder to get rid of or replace.
- a membership to a gym
- a podcast subscription
- website fees
- rent in Barcelona
- property taxes in Portland
- HOA dues in Portland
- utility bills in Portland
- Medical license fees
Your house will have repair, maintenance, taxes, insurance, utilities, etc. All these will become part of your core spending once you buy a house. Also, air conditioning units that need servicing. A yard with tons of plants. A pool or tennis court.
When it comes to cell phones it’s not just the monthly bill but the fact that you will have to upgrade that phone eventually. It could be because it gets stolen, because you lose it, or because it needs upgrading.
Most don’t consider the cost associated with storing their stuff but the more things you have, the higher your core spending will be. If you decide to move then you have to move your stuff, which means moving expenses.
Consider things that require batteries, that’s another recurrent expense.
Your car has an endless list of ongoing expenses and even bicycles, motorcycles, and other infrequently used items can add to your bottom line.
Minimizing Core Spending
The reason I am bothering with making a distinction between actual spending and core spending is that our society is designed to lock us into an ever-higher core spending commitment.
We don’t view it as a commitment because we think we can get out of it whenever we want. That may be true if you have a couple of ongoing payment commitments. But owning just a car could be associated with 5-6 different core spending line items. Then there is a house and whatever other kind of roots you decide to grow.
The fewer items you have in your core spending and less of a payment commitment you have the more flexibility, mobility, and independence you can enjoy. I believe there is a very obvious correlation with our stress levels and our core spending commitments.
The higher the core spending commitment, the higher the chance of burning out.
You can get rid of your need to upgrade phone by getting accustomed to purchasing your cell phones used. Also, if you get a cell phone service from companies such as Ting then you won’t be dependent on a monthly cell service plan. It takes practice and it’s something you have to do before the next iPhone is set to come out.
To go a step further, it’s figuring out ways around having a cell phone altogether. Sure, I realize most need cell phones for their jobs – but that’s not the case for everyone. There are ways to use free services to replace the utility of a cell phone.
The distinction here is that feeling dependent on a phone is worse than using it daily. Could you get rid of you cell phone tomorrow with the click of a button and be fine? If so, then you are decoupled from that core expense. That’s one extra layer of freedom that you can enjoy.
In my case, I have a Google Voice number. I communicate mostly by email and I have a good sense of where free WiFi is located around me. I can’t cancel my Ting plan online but I can call their 800-number and within seconds I can cancel the cell-plan. I still can use the phone using WiFi if needed.
The fewer financial commitments you have the better you can recover from a financial setback. And the better you can react in a fluctuating economy. More importantly, you’ll just be less afraid. You’ll react from a place of security as opposed to fear – this is an incredibly powerful position to be in.
Decoupling From Expenses
We can minimize our core spending commitments in order to have the lowest overhead possible. That alone will make a huge difference in your financial health.
Another important step is to decouple from items we own and expenses we are used to carrying. From the example above, there is no need for me to get rid of the luxury of have a cell phone but I can get rid of it very easily without affecting the quality of my lifestyle.
The same can be said about a car. You can own a car and carry the burden of its related expenses but if you have figured out how to piece together your commute using a bike, public transport, Uber, or carpool services then you are essentially decoupled from your transportation expense.
Decouple from your MacBook by having an older laptop which you can use in case your primary one breaks down. Or know a friend who can lend you a spare laptop. Or be comfortable using a public library computer.
Is your beauty routine so strict that you wouldn’t know what to do if one of your products was discontinued? That’s a good sign that ya’ probably should simplify your de-uglification process.