Monday, 8 February 2016
Life as a Frugal Entrepreneur Revisited
The Frugaldom understanding of self-sufficiency is one of self-sustainability. It's about earning your own living and then spending accordingly, living within your means, regardless of how great or how meagre these may be. It's a lifestyle choice. Frugaldom is freedom from debt by way of living and working in frugal ways.
This is an old post, first published in 2011 (original can be seen here) that I thought I would share here before doing the follow-up, now 5 years further down the line.
Over the past few years we have organised various challenges relevant to money saving, clearing any debts and building a lifestyle that fits in with the whole ethos of sustainability. With a little bit of planning, this lifestyle can embrace greener living or a more environmentally-friendly way of conducting business within the household and workplace. Frugaldom is about taking on the responsibility of providing for yourself and, hopefully, being able to share skills, goods and services in a way that can both benefit others and cover all associated costs.
True, cash free self-sufficiency, in my opinion, isn't legally possible within the UK. In order to live and work, we need shelter and that shelter incurs a tax. In order to live we need food and water - we could attempt to rear and grow all of our own food and pump our water from a well, but in order to do so there are welfare issues and legislation to be considered - these things cost money. We still need to earn and, as long as we earn, we need to pay taxes where and when due. Some might trade and barter or move around but, at the end of the day, everyone needs an income and earning that income costs money.
True Frugaldom means the ability to provide all things for the household in order to sustain a chosen lifestyle and afford everything that it entails. There should be no need for State hand outs but neither should there be an aversion to seeking financial help where and when genuinely needed. In this respect, it is time to start building our self-sustainable business in order to help secure our future. We are our own employers, without working (for ourselves) we can neither pay ourselves nor keep a business running.
On the surface, it's always handy to grow whatever fruit and vegetables you can, as everything you can produce from home is one less thing you need to spend money on, allowing you to focus your hard-earned cash elsewhere. Over the past few years we have documented the costs involved in setting up a garden to produce as much as possible, including eggs from the assorted poultry. We can make each micro-project self sustaining or cash-neutral; hens lay eggs, selling the surplus can pay for their keep. Quail lay eggs and are quickly hatched and reared - the sales of surplus birds and eggs can cover the costs.
Cash generated from any source can be used to neutralise each of these individual budgets, each of these projects can be built up to combine into one business. It's what microholding is about - all these small, self-financing pieces of the jigsaw fitting together to form a much bigger picture - that picture is your business of the future.
Christmas and all the festivities have now passed and we're halfway through the first month of the new year. For those who are still relying on other people's money, the credit card and bank statements will be arriving, reminding you of the dire state of your finances. But not for all of us. For the debt free, each statement is a reminder that there is an alternative route, one that can and should be followed carefully if Frugaldom is to be achieved.
I have estimated that for every £1,000 it costs you to exist each year, you NEED to save £2.75 each and every day that you're not earning. So, if life is costing you £12,000 a year, you need to save £33 for every day that you won't be earning, weekends included. The figures are simple - the less life costs you, the less pressure you are under to earn or save extra.
Building a business isn't so different. Everything has to pay for itself, some things need to pay more to cover the inanimate objects that house them, some need to cover the cost of storage and distribution. In the case of gardening, plants need to cover the cost of the patch of land they take up each and every day it takes them to grow - fertiliser, protection from pests, time in planting, tending and harvesting... consider all costs, don't ever assume that because you did it that your time is completely free.
Any legislation governing what you do needs to be accounted for, just like the costs involved in owning a car to enable you to go about your daily life. If that car costs you £500 to have it parked in the driveway for 365 days of the year then that's almost £1.37 that needs to be earned every single day without even driving the car. (The figures get much bigger when you factor in the percentage that's needed to cover tax and National Insurance etc.) Only by analysing the true costs of living and working can we begin to understand the basic principles of self-sustainability and self-sufficiency. After 10+ years of lifestyle planning, 2011 is my year of Frugaldom business planning.
All of the above was first published over 5 years ago and it's good to look back and see progress. Between then and now, we have bought a small house without the need for a mortgage and have been chipping away at the renovation. Then, in 2014, we managed to buy about 5 hectares of land and a lovely wooden barn - again without the need for credit each project is scheduled over the long term, so the 5 years duration for renovating this house should end this year, but it won't, because we chose to grasp the opportunity to invest in the land project.
With hard work, planning and the usual frugal budget, I hope to complete the house in 2017, which will then give us a further 2 years to complete all our plans for the land - now known as the Frugaldom project - which we hope to have open by 2020.
Stick with the plan. It may take several detours and incorporate a few extra stops along the way, but you will get there. As they say, 'seeing is believing' and if you can see it in your imagination , then it is there, just waiting to be made a reality.