MMS087: Budgeting and Cultivating a Dream Lifestyle

EPISODE 87

ANNOUNCER: Welcome to the Money Mastermind Show. Let’s Talk Money.

[EPISODE]

[0:00:18.7] MM: Welcome to this week’s episode of the Money Mastermind Show. Today, we have Jason Vitug from Phroogal. He is going to talk to us about how you can budget to create your dream lifestyle. Jason is the author of the forth coming book, You Only Live Once and he is also the entrepreneur behind Phroogal.com.

Welcome to the show today.

[0:00:48.5] JV: Thank you very much for having me. I’m excited to be back.

[0:00:52.7] MM: We also have today on the Money Mastermind Show, we have Peter Anderson From Bible Money Matters, we have Tom Drake from the Canadian Finance Blog, Kyle Prevost from Youngandthrifty.ca, should be joining us shortly, Glen Craig from Free From Broke is not with us this evening and I am Miranda Marquit from Planting Money Seeds and I will be the moderator today.

So let’s go ahead and just sort of jump right in with the big question is, can you really create your dream lifestyle? A lot of the time, we think about life as this list of milestones that we have to hit. You graduate from school, you get married, you have kids, you buy a house, you work for 30 or 40 years and then you retire and then maybe you get a few years of living life and then you die. Is it really possible to create your dream lifestyle and create it now? So go ahead Jason.

[0:01:56.7] JV: Yeah, I definitely think so. I followed that traditional path that you talked about, graduate high school, go to college, get your dream job and then eventually I said to myself, “I don’t feel satisfied, something was missing,” and I didn’t necessarily know what that’s was. I think when we talk about dream lifestyle, we have to not just think about the financial goals that we tend to set or think about when we’re thinking about dreams.

“Oh I dream about owning a big house or a luxury car.” It really is about kind of having a vision for your life and so I tend to think or tell people when you’re thinking about your dream lifestyle, you should definitely think about the vision for your life. The vision is taking all your hopes and dreams into this idea of living with purpose and with meaning and then aligning that. I definitely think it’s possible but there’s a process that goes about achieving that dream lifestyle sooner rather than later.

[0:03:02.3] MM: I think one of the things too to point out is that the dream lifestyle for you might be different for everybody else and I kind of wanted to get an idea from the rest of our panelists just what makes your dream lifestyle? So Tom, What is your idea of dream lifestyle, what’s your goal here?

[0:03:21.3] TD: I think sometimes when people are thinking of dream lifestyle, they kind of think like, they dream too big maybe, they don’t look at it realistically. It becomes this big idea that they’ll never reach. When I think of even the term lifestyle at all, I think more about having more free time, spending more time with my family, it’s not about how much money I’m making or anything like that.

So yeah, leaving a corporate job would be a good start. Because that would kind of hit those goals that I have of sort of spending more time with my family and everything. I don’t think it so much about I need to be a millionaire to do it or anything. It’s more just arranging what I’m doing and how I’m doing it to have that time.

[0:04:16.3] MM: Yeah that’s a good point. What about you Peter, what do you think?

[0:04:20.1] PA: I think for me, thinking about creating that dream lifestyle, I think first you kind of have to just sit down and think about what’s most important to me, what matters most to me? Again like you just said, that can very pretty drastically if you’re a single guy or a family with several kids or whatever the case may be.

So for me, what’s most important to me is my family and being able to spend more time with my family, being able to volunteer and give to causes that I believe in and things like that. So a lot of my, creating my dream lifestyle kind of revolves around being able to do those things, being able to give more, to spend more time with my family and things like that.

[0:05:08.5] MM: That’s interesting that everybody here is kind of — Jason’s talked about finding a purpose and Tom and Peter you’ve both talked about spending time with family. You’ve talked a lot of this kind of intangible things that really make life, in my mind, worth living and when you look at the research, the research shows that a lot of millennials feel that way, a lot of millennials actually want to live with purpose and have that flexibility to pursue things that give meaning to their life and not necessarily worry just about money.

A recent study from fidelity found that Millennials were willing to take a pay cut of $6,000 to $7,000 if they could work in a field or work in a job that had them feel like they were doing something meaningful. So I think that that’s a big part of where we’re going is figuring out your purpose. Going back to you Jason, you quit your corporate job and sort of struck out into this entrepreneurship. So what did it take for you to live your dream? What kinds of things did you have to prepare to get there?

[0:06:19.5] JV: Well the first step was changing my mindset. I was mindlessly consuming and obsessively complaining. I was saying that I wasn’t living the life I wanted to live and I was just shopping, just to kind of make myself feel good. Eventually when I realized that there was a disconnect in terms of the life that I was living and kind of that dream lifestyle, I had to make a change and that wasn’t just, “Okay, well I’m going to stop spending,” because then moments when I was depressed or sad, I would go and do retail therapy and that would take me away from kind of achieving the things that I wanted to do.

So I think that’s really important to address the money mindset because that in effect impacts our financial behaviors, our decision making when it comes to a variety of things, especially when we’re making purchases that we don’t necessarily need. One of the key things that I like to talk about is when people say, “Oh, I live a luxurious lifestyle,” for instance right? So they have the big house, the fancy car, the nice expensive brand named clothing but then in reality, they’re spending 60, 70 hours a week working.

The reality is that their lifestyle isn’t luxurious, it’s a work centric lifestyle, and it’s kind of coming to terms with that and being aware that that is the fact and so for me, that’s kind of the realization part of this awareness, self-awareness that I went through and that had a lot to do to say, “Well, I am making six figures, I get to purchase the things that I want to do,” but then I was also living paycheck to paycheck. There was a disarray in my mind, disarray in my financial life and that made me make the changes that I needed to make.

[0:08:12.4]MM: I know Tom that you have a dream of quitting the day job some time. Are there some steps you’re taking to get to that point? What are some of the financial things that you kind of have to do to get your ducks in a row?

[0:08:27.9] TD: Similar to what Jason said, certainly controlling the spending, you even sort of the spending you to some degree have to do. Paying down the mortgage would certainly help. Whenever you got those kind of big commitments there, it’s hard to sort of go without some guaranteed salary.

But it’s just like financial for anything, whether it’s retirement or just an earlier version of it kind of thing. I think getting rid of some of those big commitments not being, obviously not being in any real debt or anything kind of lays the ground work to be able to really do what you want.

[0:09:13.3] MM: Yeah, that makes a good point. What about you Peter? One of the things you also did think about is if you have a family. Jason of course doesn’t have to worry about that. I have one less person to worry about. But what kind of different things you have to consider as you’re building your dream lifestyle, when you have a family, when you have a partner or when you have kids or both?

[0:09:45.6] PA: I think probably one of the biggest things for us is just being cognizant of the other person’s needs as well, having those shared goals that you can talk about and work towards together and not just thinking about your own needs and the things that you want for your dream lifestyle. You have to find ways to work with your spouse and significant other to come up with those shared goals that you can look towards together and work towards and that can help you to really live a shared dream, I guess you could say.

I think that’s kind of important when you’re married and that you have to be able to sit down together every once in a while and talk about your plans for the future, where you’re planning on going, what you want to do and maybe set some goals for where you want to be heading together. If you don’t do that, you can end up going two different directions without even realizing it and kind of drifting off into a direction you’re not even realizing that you’re going.

[0:10:50.7] MM: Yeah, kind of maintaining that focus and then making sure you’re doing it together is a really big thing. So Jason, are there some sacrifices that you have to make if you’re going to do this? If you’re going to leave your big corporate job and head on out, hit the road to financial wellness? What are you going to do to make it happen, what are some of your sacrifices?

[0:11:15.4] JV: One is, first it’s understanding what you truly value. I think when we’re setting financial goals, we set financial goals kind of based on things that society or our culture tells us that we need to have. That may not align to the things that matter and so there are going to be things. For instance, when I was dissatisfied at my corporate job, people were telling me, in order for me to be happy is that I should buy a house.

That was kind of like the next stage, “It’s okay, you know, you got the senior executive job and now what you’re missing is become a home owner, that is next stage, that’s what’s going to give you the satisfaction that you’re missing.” Eventually I just realized I’m like, “Well wait, what I want to do is kind of have freedom to travel all over the place.” I wanted to be able to be a digital nomad and kind of work wherever I want to work and not be glued to one location.

So again, part of that growth allowed me to say, “Wait, owning a home is not part of my dream.” Yeah, in many ways when you look at it financially, if I bought that house during the height of the great recession, there would probably be some major growth investments return in that but I can tell you right now, that “sacrifice” of not buying a home below market value has been one of the best decisions of my life because I am doing a kind of like the work that I want to do in serving my purpose.

So there is sacrifices but that really depends again, I want to stress, on what you truly value because you might think, “Okay, I really want to won that car and I want to travel the world.” I see this a lot, people are willing to spend $500 a month on a car payment and then tell me they can’t afford to go on vacation. What they’re saying is that, they value the car over their vacation but the words coming out of their mouth are completely different. So there are some sacrifices in terms of that but we have to take a step back, figure out, gain clarity of what you truly value and then set those financial goals that align with what matters to you first.

[0:13:27.7] MM: Yeah, one of the things that I’ve kind of noticed is people look at me sometimes and think that I’m making a sacrifice but it doesn’t feel like a sacrifice to me. I always use my TV as an example because that’s a 32 inch TV and I’ve had it for 10 years. It’s like an LCD, it’s still a flat screen but it’s like this 10 year old 32 inch TV. People look at it and are like, “Oh my gosh, you must be really poor because you can’t afford a new 50 inch TV. Why haven’t you upgraded your TV?”

They act like it’s this big sacrifice, like I’m sacrificing something because I’ve got a 32 inch TV and the reality is, I don’t watch TV that much and I don’t care about the TV and I’d rather spend the money on something else. So people look at me and they’re like, “Oh you’re making this sacrifice.” “Well no I’m not, it doesn’t feel like a sacrifice to me.” I think Jason, when you’re talking about, well figure out your values and your sacrifices, all of a sudden, the things that you leave behind that you originally thought might be sacrifices, maybe you find out they’re not really sacrifices after all just because you’re doing something better.

[0:14:44.4] JV: Yeah, absolutely. I mean I haven’t owned a car since 2011 and so everyone will tell me, “Isn’t it about time that you owned a car?” And I’m like, “Why?” I live in the city, it’s easy for me to use public transportation. The bus system where I live in Jersey is horrible but everything else works. There are ride sharing, Uber, and I can get to the places I want to and I realize I’m healthier because I stay within this two mile radius.

So this sacrifice of not owning a car and having this freedom to drive wherever I want to has actually became like what you said, it wasn’t a sacrifice. It actually improved the quality of my life. So that’s again aligning the things that we want with what we value and what we think our sacrifices aren’t necessarily sacrifices, it could be improvements towards that dream lifestyle.

[0:15:37.5] MM: So Tom, I’d love to know what are some of the things that you’re doing that you’re leaving behind to help you reach your own personal goals?

[0:15:52.2] TD I certainly have a car and I have a house so I’m not doing that good at…

[0:15:57.6] MM: Oh but that’s the thing though. Who cares? I have a car too, it’s all good. It’s all about what your personal things are, right?

[0:16:03.3] TD: Yes I completely consider those necessities but we don’t do a lot of other shopping though really. Everybody I know that I work with and my friends and everything, it’s pretty common to go out and just buy new things all the time and I may have a couple of 50 inch TV’s but it doesn’t mean that I’m shopping at the same rate as a lot of people I know.

It’s kind of what Jason said, you pick what sort of motivates you towards your actual goal. Constant shopping and stuff just doesn’t really do it for us. When we first had our kids, we kind of went overboard with things like toys and stuff and we’ve realized through the years now that we did do much shopping there and it wasn’t lined up with any of our goals at all.

All these toys were kind of sitting around and here we are spending money, taking us away from where we want to be and it’s not really being used and appreciated. So we’ve cut back there too. We really don’t spend other than on the things we actually truly want.

[0:17:23.4]MM: That makes a lot of sense. What about you Peter? How have you kind of adjusted your lifestyle to meet your goals?

[0:17:32.9] PA: Well, gosh. Sometimes I don’t really feel like we’re cutting back that much. I just bought a new car last weekend or a week and a half ago.

[0:17:41.4]MM: Oh fancy.

[0:17:43.1] PA: I’m pretty new to that whole spending a ton of money on a car but then again I have to drive 25 miles to work every day. So that kind of necessitates the car. Anyway. I think it really comes down to realizing the things that you value in your life and being okay with spending money here and there, maybe a car is important to you so you save money for that.

But on the other hand, I don’t buy the newest cellphone every time that cellphone comes out. I just have a cell phone and I use it till it dies basically. I only got rid of my flip phone a couple of years ago when I got a free phone because of my blog to write about it.

[0:18:22.3] MM: Oh that’s right.

[0:18:25.2] PA: I’m not as into technologies as I used to be and I’ve kind of cut back on a lot of the new upgrades and everything that I used to just pay for. We don’t spend as much money on shopping as we used to, we’re trying to cut back on the eating out. Just a lot of the small things that add up to a lot of money over time.

Cutting back on a few small things here and there add up to big numbers if you really think about it. I don’t know if that’s a very good answer, but basically, cutting out the things that aren’t important to us and still spending money on things that we get pleasure from.

[0:19:01.2] MM: I think that’s a good point though because we’re not saying, “Oh well, you have to spend money on these things, we tell you, you have to spend money on.” Or just because Jason doesn’t want a car doesn’t mean the rest of us have to go out and get rid of our cars. That’s the beauty of personal finance and the personal journey, right?

[0:19:20.7] PA: Part of it is finding a good deal when you do buy something. Maybe you buy a car but maybe you’re going to go out and find a good deal and try to find something that has low miles for a low cost instead of going out and spending $25 grand on a brand new car.

[0:19:35.8]MM: I’m not going to judge you Peter because when I bought my car almost five years ago, I went out and spent $25 grand on a new car and I financed that thing. I’m not judging you Peter.

[0:19:50.4] JV: Miranda, you hit something really important. I think when we’re setting, we talk about budgeting for our dream lifestyle, there’s so many people that will say, “Okay, well I’m going to set a goal to buy a car or buy this product or that product,” and it’s not necessarily something that they want. So it is important to determine what it is that you truly want versus kind of following this regiment.

So it’s not about saying, “You can’t have the things that you want.” Truly determine what is it that you want and it’s something that you truly love, then make sure you budget for it, you save for it to make it happen. I think that is kind of the key importance and when I go and I talk to a whole bunch of people, one of the biggest issues is when they talk to a lot of financial advisers or even some coaches out there, they’ll tell you, “Okay, well you need to set for this goal, that goal,” and then all of a sudden, three days later, they’re not following the budget.

Because they’re not budgeting for their dream lifestyle, they’re budgeting for someone’s version of their dream lifestyle. So if it’s a car, definitely allocate funds to it. I mean I allocate my funds to traveling and eating out because that’s what I do enjoy. However, I do have a savings account where I stash $20 here and there for a down payment for a car or purchasing a car outright in cash. So I’m not saying I won’t ever own a car in the future but at this moment, I’ve lived without it for four years.

[0:21:20.4]MM: I think you make a good point at figuring out what you want a budget for and your point about — I hate the word budget because it does, it just has all these connotations and restrictions everywhere. But you can change it around and kind of look at it as a — I call it a spending plan because that makes me feel good about things. Makes me feel like I’ve got freedom and then I’m directing my fate.

But being able to say, “Okay, well here are the important things. I want to make sure that I’m setting money aside in my retirement account, I’ve got my travel fund, I’ve got a charitable donations, I got to make sure that — I want my son to be able to do this extracurricular activities, I’ve probably got to be able to pay the rent.” So I have this hierarchy of things that I spend my money on and it’s all kind of automated and it’s the important stuff that matters to me, the trip to the spa, the facial, got to have that.

So all of that stuff comes out first and then if there’s usually something left over then I can use it on stuff that doesn’t matter as much. But really, taking care of that stuff first is the key to creating some sort of budget or spending plan that you're going to stick to and I would love to hear from Tom and Peter both about how do you guys make it work, how do you guys stick to your budget?

[0:22:55.1] TD: Well I think it’s kind of what I said before, we don’t really spend on anything extra very often. Similar to what you said, we pay for the mortgage and get groceries and things like that but anything else, we kind of look at it first. We don’t just go, “Oh we’ll just throw it on the credit card and figure out later.” We kind of consider, “Is this something we actually want?”

And yeah I agree that the budget term isn’t always so positive but certainly at least stepping back and thinking about what you’re actually considering spending and if that actually will benefit you if it’s heading you towards your goals.

I’ve always kind of liked the idea of even just don’t make any impulse purchases at all, to take that day and then think about it and see if it’s something you still actually want, and if it actually will do anything for you to make it worth the money.

[0:23:59.0] MM: Oh yeah, for sure, that’s a really good point and that reminds me of when we had Kyle Richards on and he said, as you’re spending money on something, as you’re putting it in your cart, stop and say, “Oh, that’s interesting,” and think about your reason behind it. What about you Peter, how do you stay on track?

[0:24:17.3] PA: I think the important for us in staying on track is just making sure that we’re regularly checking in on what we’re doing. It can be extremely easy just to kind of start drifting and let things happen around you and before you know it, you’re going over a waterfall. You’ve got to sit back, every once in a while and kind of reset. Sit down and talk about what your goals are, look at where you're spending and income and where everything else is that.

Sometimes maybe even take a personal finance day, that’s something we do here is just take a day off from work and sit down and actually go over everything in our finances. Everything from our insurance and what we’re paying for all of our regular bills and maybe canceling certain bills and basically just take a day to go over entire financial picture and just get everything straight.

So for us, I think that’s important in staying on track. It’s just checking in on things regularly.

[0:25:16.4] MM: Yeah, that’s a good point too, it’s really easy to sort of drift off track and kind of follow that path of least resistance and after a while you look and say, “Wait a second, what happened here?” I know there are times when we were moving and I was like, “How to get all the stuff that I don’t even like or use, what is this doing here?” So that can be something that’s easy to do.

Well, I think we’re getting close to time so we’ll go ahead and wrap it up. One thing we like to do is do a final word so we’ll go around and do that and Tom, what is your final word about budgeting to create your dream lifestyle?

[0:26:00.7] TD: Well just that financial planning isn’t just about retirement. You kind of opened up with it that is very common for someone to work up to 40 years or more just so that they can retire and then start enjoying their life then. This is not something you have to wait till, until then. If you plan things out right away and you can kind of decide how you want your life to look five years from now, not just 40 years from now and just plan it out just so you can reach that goal.

[0:26:30.6] MM: Okay, what about you Peter?

[0:26:33.0] PA: Well for me I think it’s just important to sit down and think about what you want your future to look like, what’s your major priorities in your life, and how do you want those things to look five 10 or 25 years down the line? Then just take a look at what your current reality is, what’s your situation that you’re in right now and how do you get to where you want to be from where you are, and then just sit down and think about what steps you need to take in order to get there.

[0:27:02.5] MM: Okay, and Jason, what’s your final word?

[0:27:05.8] JV: Yeah, I echo one statement. I think definitely gain clarity of what you value before setting financial goals so this way you’re setting goals that align with things that matter most to you and definitely have that overall vision for your life because that’s your guiding principle, that’s what you want to work towards and bringing back the budget.

Yeah, it seems limiting. I felt it was limiting as well but then I look at it as a framework, a blueprint for you to achieve that vision in your life. Again too, using it as a tool. So I think that’s very important for us to kind of take that word, think of it as a tool, a framework again, a blueprint towards that vision for our life.

[0:27:47.4] MM: Great, before we go off, why don’t you let our audience know, Jason, tell us a little bit about your book that’s coming out and a little bit about this sort of movement that’s sort of taken a life of its own, your road to financial wellness. Why don’t you tell us about those things real quick?

[0:28:02.8] JV: Yeah, thank you so much. So my book is coming out on June 7th, it’s called, You Only Live Once: the road map to financial wellness and a purposeful life. It is about a book that’s not just personal finance, it’s self-help, it’s personal skill development. The goal is to get you to change your money mindset and then again as I mentioned, gaining clarity of your values before you set financial goals and work towards that vision for your life. Since we do target generation Y, millennials but it is cross generations, it is about purpose, creating a life of purpose and that is what the book is about. So it’s not just about the numbers, it’s about crafting and creating and living a purposeful life.

So on June 7th as well, I’m going back on the road to financial wellness. This time I said this is going to be the road trip to end all road trips and 15,000 miles, zig-zagging across the country once again. We’re going to start in my home town of Elizabeth New Jersey, we’ll end in San Diego on September 21st, we’re planning 50 events, one on each state. So it’s going to be the first of its kind to complete this financial education, movement, all across the United States.

[0:29:23.7] MM: That’s awesome. I’m super excited that you’re coming to my home town, Idaho Falls. Then it’s super exciting that you’re going to have your last even there right around FinCon. So, excitement!

[0:29:37.8] JV: It’s going to be awesome, for those listeners and viewers, definitely check out Roadtofinancialwellness.com for more information on the road trip and I’d love to see many of you at the events.

[0:29:50.2] MM: Okay great, well thank you again for joining us Jason. Make sure you come and visit us at Moneymastermindshow.com, subscribe to us on iTunes and stitcher, feel free to leave us a review or if you have an idea for what you would like to hear us talk about on a show in the future, go ahead and drop us a line and let us know.

Until next week, be good with your money.

ANNOUNCER: Thanks for joining us on the Money Mastermind Show, get more information at Moneymastermindshow.com. Don’t forget to subscribe to the show on iTunes and YouTube and follow us on Google Plus.

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