ZOG

I have a lot of friends who have their own businesses.  Some are “micro businesses”.  Some are “small businesses” (like mine).

And, unfortunately, nearly all of my friends have made the same mistake… which has caused a lot of problems, and a lot of stress for them.

Their mistake was to increase their spending when their business started to grow.  They got intoxicated with the new income and freedom.

As their income rose, so too did their spending.  They bought a nicer car.  They got a bigger apartment.   They bought new stereos or other toys.

And most importantly, they didn’t save.

What happened next was predictable, because it ALWAYS happens:   “unexpected” problems arose, “unexpected” expenses rolled in.   Because their expenses rose to match their income, they had nothing to handle the “unexpected” expenses.   So then they borrowed money.  From credit cards.  From friends and family.

Now in the hole, they struggle just to get by.

We are trained by society to value appearances.  This training is deep and it’s everywhere.  It seems natural that if your income increases, so should your “lifestyle”.   Most people, for example, would consider it ridiculous for someone making 250,000 a year to have no car, live in a small studio apartment, and eat at inexpensive restaurants.

We are trained to consume consume consume as much as we can…. and this leads to our enslavement.  Read the business section of the newspapers… you’ll notice that when they talk about “consumers” saving more money… it’s always considered a BAD thing.  And it is bad, for them.  They want you in debt.  They want you to blow every available dollar you have.  Stay on that treadmill.

The most basic secret to freedom is to spend less than your income… preferably MUCH less than your income.   If you are lucky and your income rises– ABSOLUTELY DO NOT start spending more money.

Instead, practice ZOG– Zero Overhead Growth.    Overhead means rent, utilities, food, and any other “expected” expenses in your life.   DON’T buy a better car.  Don’t move to a more expensive apartment.  Don’t increase your lifestyle expenses at all until you are saving, saving, saving tons of money.

Always strive to INCREASE the gap between your spending and your income.   Widen that gap as much as possible.

This is the most basic form of financial literacy and self-reliance.

Do whatever it takes to achieve this (I lived in a Nissan Sentra for a summer, and a Toyota Van for a year….  and that was the start of my freedom).

Even tougher times are coming…   don’t get suckered in…  simplify your life as much as possible and save, save, save