Monday, May 20, 2013

Constant Optimization: How Pretending to be a Pioneer Saves Me Money

The latest post on the Mr. Money Mustache blog is called "The Principle of Constant Optimization," which put a voice to a philosophy I have practiced for a long time without realizing it.  I recommend checking out his post first to get a good overview of the principle (his tone is a little aggressive, so here is your warning if that kind of thing bothers you), then I'll explain why this practice makes me feel like a pioneer.

photo credit: Al_HikesAZ via photopin cc

When I optimize, I like to consider how I would survive with a different set up.  If you want, you can pretend that you woke up one morning and this change has been made for you.  How would you handle it?  Get creative.  Think like a pioneer!  If they could survive with some oxen and a hatchet, then surely you can conceive a plan in which you can make it without a data package on your phone.  This is how it works for me.

1)  I have no minimum requirements.


If you say "We need at least three bedrooms," then you will never explore the cheaper options that come with fewer bedrooms.  You may have perfectly good reasons for wanting three, but if "three bedrooms" is truly a need, then it will survive the optimization process.  Allowing for the possibility of a smaller place doesn't mean you have to get a smaller place.  It just means you have to honestly entertain the idea of a smaller place.  That's it.

As a family of two adults and two small children, we live pretty comfortably in a two-bedroom apartment.  However, I wasn't content to say "This is as small/cheap as we can go."  I wanted to consider all my options that might save us money.  There are one-bedroom apartments in our complex that have washer/dryer hook-ups and are right across the parking lot.  What about one of those?  Nothing is too crazy to consider.

2)  I imagine what would happen if this change occurred and how I would deal with it.


This is where you start playing the "what if" game.  What if we made that change?  How would we adapt our life logistically?  What kind of conflict or challenges would arise?  What sort of advantages might there be?  How would we have to do things differently?  Plan it all out in your head. 

In a one bedroom apartment, we would put the nursery in the bedroom and our bed in the front like a studio apartment.  Maybe we could find some cheap room dividers of some sort to give the bedroom privacy from the living space. What about storage?  We could get rid of more stuff and/or buy a big wardrobe or dresser piece for storage.  It would be very difficult to have company over, especially overnight guests.  We might need to get rid of our dining table and guest bed.


3)  Failure is not an option.


In this experiment, you cannot say "it won't work" or "it's too hard."  Remember, you woke up this morning and you no longer had a car.  You have to figure out how to make this work, no matter how outrageous the solution.  You are living on the "no car" frontier now, so figure it out, even if it means moving to a different place, finding another job, buying bicycles for the whole family, or whatever.  Make it as workable as possible, but find a way to survive.  No excuses.  If you don't come up with a plan, you are going to catch typhoid or get eaten by coyotes. 

4)  Decide if the savings (and other benefits) justify the change in lifestyle.


In our case, the one-bedroom apartments are only about $100/month less than our current apartment.  We would have one fewer bedroom and bathroom to cool/heat which might bring down the utility bill.  We might need to buy some things for the move (room dividers, extra storage pieces, etc) that potential sale of other things probably wouldn't cover.  Plus, I really like our dining table, and we use it, and we would probably want one at the next place we live.  Same for the guest bed.

Right now it's not uncommon for a baby to be napping in the nursery, my husband to be studying in the bedroom, and me to be working in the living room.  This set-up isn't necessary, but it's nice.  Plus, we have overnight visitors pretty frequently, and I like it that everybody gets a real bed when that happens.  There is also the fact that we just really like our current apartment.  It is nothing extravagant, and we genuinely like the size and lay-out.  We are very happy here, and I am constantly de-cluttering so we don't "out-grow" this space, because I want to stay here.

The verdict:  We could make it work; it would be tight and unconventional, but possible.  In order to be worth the hassle, though, it would need to save us at least half of our current living expenses, and the savings aren't even close to that.  We could consider moving to another complex, but then we have the added expenses of application fees and deposits.  Plus, this location is perfect because my husband can bike to work and class from here, which saves us money on gas.  We will stay here and look for other areas to cut costs... until I optimize our living situation again, which I will.  The principle is constant optimization, which means you have to keep doing it.

5)  Live it out.  Be a pioneer.


In the case of the apartment, we decided to stay put, but many times optimization leads you to find waste and fat in your budget and life.  Don't be afraid to cut it out.  Who cares what people think?  You are a pioneer now, okay?  You have to be a little crazy to live differently than everybody else, but you have to be a whole lot of crazy to live just like everybody else without questioning what actually works for you and what doesn't.

Here are some questions you can entertain to help you optimize:

  • Could we live with one fewer bedroom?
  • Do we need high-speed internet at home?
  • Could we live with one fewer cell phone?  Or one fewer data package?  No cell phones at all?
  • Could we live with one fewer vehicle?  A smaller vehicle?  No vehicle at all?
  • What if we didn't have central air or heat?
  • What if we didn't have cable?  Or TV at all?
  • What about items we automatically buy more of when we run out (make-up, cleaning supplies, paper plates, paper towels, toilet paper, diapers, wipes, printer paper, etc.)?
  • What would it take to work without commuting?

Basically, if it costs you money, can you live with less of it? Or none of it?  Just because you can live without it doesn't mean you should.  It's just good not to accept "the way we've always done it" as the way you have to do it, especially if it's costing you.

Do you practice constant optimization?  What is the craziest thing you've considered doing?  What's the craziest thing you've actually done?


7 comments:

  1. Okay so you piqued my interest about optimization. I had never heard that term before. I like that you are giving this so much thought. I'm sure there are things in my life and budget that need to be optimized.

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    1. You know, I hadn't really heard the term either until I read the post I linked to, so you are not alone in that at all. I find myself doing this in other areas besides the budget (like... arranging my kitchen so the most used things are easiest to get to, for instance), but I never had a name for it. If you end up optimizing something, I would love to hear about it!

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  2. Thanks for this, Hope! I don't think I have heard it put like that before and I enjoyed reading how you put things. We try to ask the question, "is this something we really need?" We read the Dave Ramsey book and it helps put things in perspective. We aren't always great at it, but we try!

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    1. Moriah, you are welcome! I agree that identifying the needs among the wants is such an important part in smart spending. What's funny to me, though, is how difficult it can sometimes be to discern what those needs actually are. THEN there is figuring out which wants aren't necessary but give our lives the best boost for the money (making them worth it). It feels like it ought to be straightforward, but it often isn't (in my opinion). Asking ourselves the questions, though, is the right place to start. =)

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  3. When I read this, I thought of the possibility of child #2 for us -- still just a possibility at this point. My husband has always said if we go for two, we'll have to move to a bigger house, but he hasn't said that in a while. I think "optimization" is where it's at for us. Really, we've already started, but having some tangible examples and processes (and yes, giving the thing a name) will be helpful for me. The funny thing is optimization is totally in his nature and not mine, so it will be interesting to see how this all turns out. Thanks for the post! Love your blog!

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    1. Hello Valerie! Yeah, adding another baby to the mix can definitely cause you to reassess just about everything. Our transition from one to two wasn't bad, but if another one came along, we would literally have to get a new car. No amount of optimization could get three car seats to fit in the back of our station wagon! =)

      I'm so glad to hear this post was helpful, and I really appreciate you saying hello. Good luck babies number 1 AND 2!

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