Budgeting for a lifestyle change

Have you ever thought about doing something different with your life? Maybe you've decided that you'd like to do more world traveling. Perhaps you want to explore that entrepreneurial idea that has always been buried deep inside you.

For me, it was both. In my past life, I was a portfolio analyst for a small investment firm. While the job would have been perfect for the right person, I found myself yearning to do something more than just crunch numbers and help other people build their businesses.

A few years back, job obligations cut my three-month trip through Europe down to three weeks. Ever since, I've had an urge to travel more, and held bit of resentment towards the normal 9-to-5. I wanted the freedom to get my oil changed on a Wednesday morning — I wanted the freedom of time.

The catalyst for change occurred in March when all of my hard work earned me a 20% pay cut. I knew there was a better way for me to live. I wanted to be my own boss and see the world at the same time.

I started researching business ideas and talking with other people who had seen success working for themselves. There was general consensus that a combination of blogging and social networking were great starting points if I wanted to create a business online. So in May I began Location180, and set out to learn as much as I could by the end of the year.

I knew that in order to be successful with my new lifestyle, I'd have to make changes in my day-to-day life. I'd have to do something that, despite my financial background, I'd never been very good at: stick to a budget.

It wasn't that I didn't know how to stick to a budget. But my affinity for nice things always seemed to get in the way. When I saw something I liked, I'd buy it. The times I was most successful at sticking to my budget were the ones that resulted in me getting something I wanted, such as a new car or HDTV, for example.

Over the last year, however, I've learned a lot about how to successfully prepare for a major lifestyle change. Probably the most important thing is to be diligent about applying the stuff you already know. For instance, one of the most important rules of personal finance is still very applicable:

Pay Yourself First

Seems like a simple concept — and it is. But I can't tell you how many times in the past I have let bills, events, or other obligations get in the way of me putting 15% of every paycheck into my high yield savings account.

This savings is essential when you make a lifestyle change. If things don't work out as planned (in my case, I lost my job much earlier than expected), you'll be glad you kept it up. Automating this process is the best way to ensure it gets done each month. You can't spend what you never see.

To take things a step further, I'd actually take whatever you're saving and increase it by 25-50%. This will force you to make changes that you may never have made otherwise. In my case, I became the king of bootstrapping. In order to meet my goals of starting an online business while also traveling, I adapted myself to a more frugal lifestyle long before I needed to. That has made it much easier on me now that a lifestyle change is no longer a choice.

You should also:

Create a Budget

In the past I've used both Quicken and spreadsheets with only limited success. It wasn't until I started using Mint.com that I really started to see success in my budgeting. Its ease-of-use makes this stand out among everything else I have tried. Two features in particular helped me save more money:

  • The ability to categorize my spending in any way I see fit, and
  • Being able to track trending over months.

I had no idea how much my car cost me each month until I started tracking all of the related expenses. It was tough to realize that I was paying over $500/month for transportation alone. Dusting off the old bicycle could definitely drop a couple zeroes off of that number!

The next step toward a lifestyle change is to:

Cancel Accounts

It's funny how easy it is to rack up monthly expenses. I had expenses that I didn't even know I had!

After careful review of my monthly statements, I noticed that there was a monthly “credit protection fee” on one my cards that had been there since I set up the account — three years ago. I also found a $7/month web hosting account for some random domain I'd purchased and done nothing with. And don't even get me started on the gym membership that hadn't been touched in weeks.

By carefully looking at your financial statements, you may find recurring monthly expenses that you'd forgotten about. (Or, in some cases, never even realized were there!) This simple step alone can help you save hundreds of dollars annually.

And, of course, the most important step to a lifestyle change is to:

Have a Plan

Depending on the lifestyle change you're trying to pursue, there are specific ways you can prepare. Since one of my goals is to do more traveling, I've decided that getting more air miles under my belt is a worthy goal. I was able to rack up around 50,000 miles from opening a new mileage card and transferring my balances. I now use that card for all of my purchases, and pay it off in full every month.

If you want to leave your job to start a small business, consider running it part-time while you're preparing to make the leap. Depending on the size and scale of your business, you can register it quickly to start taking advantage of some of the tax benefits right away. The ability to write off things like a home office or mileage can be a great bonus, while giving you a head-start on your business plan.

Ultimately, preparing for a lifestyle change isn't much different from how you'd prepare for any big event, such as purchasing a car or buying a house. While it may take a little while for some people to adapt to living on a stricter budget, finding the courage to pursue the goals you're really passionate about will make it all worth it.

In January I plan on heading to either Central America or Thailand to work full-time establishing an online marketing business. Despite some nervousness, my planning has put me in a great position to succeed, and I couldn't be more excited about the adventure to come.

J.D.'s note: If you have a success story that you'd like to share with other GRS readers, drop me a line. I'm a strong believer that the personal part of personal finance is much more interesting than the theoretical stuff. Photo by Eulinky.

More about...Budgeting, Career, Planning, Side Hustles

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Gary
Gary
10 years ago

Thank you Sean for the great article. I agree totally with what you said about the planning. I am also with you on what you have done with your life. Most of us with jobs, are dieing. Just look around you, how many of us are vibrant and full of life when we are in the 9 to 5 daily grind? I know that I am not. That is why I started a part time business. I have hope and purpose again. I go to work and come home, then I get to work for my future. I hope that… Read more »

Baker
Baker
10 years ago

I love Sean’s blog. Great to see him featured on here! Hopefully our paths will cross in unexpected places ;-).

ami | 40daystochange
ami | 40daystochange
10 years ago

This is great advice. But the best part is knowing that you are succeeding at what sounds like a life changing effort – makes me think I can do it, too 🙂

scheng1
scheng1
10 years ago

You are lucky not to live in Asia. In Singapore, most of us enjoy 14 days vacation leaves, and it’s hard to get away for just 2 weeks. Malaysia is worse, many people work on 6 days work week, and going on a long trip is a once-in-a-lifetime event.

DreamChaser57
DreamChaser57
10 years ago

Excellent post, Sean! Well written and engaging. I wish you the best of luck and providence on your journey. There is something about a 9-to-5 that makes me recoil on the inside, the monotony, the structure. Middle class people typically think of a job as a means to an end, retirement or financial security. This recession makes you challenge what you’ve been conditioned to think – pension plans are the going the way of the dinosaur and so is job security. You cannot plan to stay on a job for thirty years, get a sliver watch and comfortably retire. The… Read more »

frugalscholar
frugalscholar
10 years ago

It’s a good idea also to see if your behavior matches your goal. For instance, if your goal is to see the world on an extended trip, then buying stuff not only impedes your goal in a financial sense, but burdens you with more stuff that needs to be stored, sold, given away, etc.

Ryan
Ryan
10 years ago

I’ll be a little more interested to hear young Sean’s wisdom after he’s established some means of supporting himself. After scanning his blog for a couple minutes, that’s a crucial part that seems to be lacking. I may have missed it though, and hopefully I did.

Tyler Tervooren
Tyler Tervooren
10 years ago

Sean, glad to hear things are working out so well for you right now.

I know you had proposed a plan to your employer for a remote work arrangement that didn’t turn out as planned. If you hadn’t been let go, did you have a solid plan to quit on a specific date?

Do you think it would have been easy to leap without the shove?

Sean
Sean
10 years ago

@frugalscholar I have definitely learned that. Over the past few years, I wasn’t entirely sure what my long term goal was, and stuff just seemed to keep piling up. Now that I have a more specific sense of what I want to be doing, I am in purge mode and trying to get rid of as much as possible… @Tyler I didn’t have a solid date, and I would like to think that it would have happened by the end of the year. Although leaving a comfortable job and paycheck is not an easy thing to do, so in a… Read more »

Financial Samurai
Financial Samurai
10 years ago

Sean! Love the post and thanks for sharing your experiences! The finance industry has definitely been in a rough patch with multiple rounds of layoffs and hefty pay cuts. Why did you choose Central America or Thailand to start your new venture? I love both btw, and definitely think you’ll have a lot of fun. You’re not going to look back on life and say you wish you didn’t go. Do you think you’d like to come back to the finance industry in the future? Things are really starting to pick up again, with bidding wars on talent. I have… Read more »

Sean
Sean
10 years ago

@Financial Samurai The main reason for both of those places, were just that a couple opportunities kind of fell in my lap. One of my best friends is doing a backpacking trip and wanted me to go with him, and Thailand provided a great opportunity to take advantage of geo-arbitrage, live in an exotic locale and work on my business. At this point it is looking like Thailand will be the winner, but I will keep you posted when I find out for sure! As for returning to the finance industry, I don’t know at this point. I would like… Read more »

Jen
Jen
10 years ago

Great to see you here Sean and some great advice.
Jen

Tyler Karaszewski
Tyler Karaszewski
10 years ago

Calling this a success story is a bit premature, no? He hasn’t even left yet. “Over the last year, however, I’ve learned a lot about how to successfully prepare for a major lifestyle change.” I think the word “successfully” in that last sentence is a bit optimistic. That’s not to say I want you to fail — I’m glad you’re excited and I hope you succeed. But this is a little bit like hearing the designer of the first airplane say, “yeah, it’s great, I built an awesome airplane, let me tell you about it,” after he’s built one prototype… Read more »

Jan
Jan
10 years ago

You are young- travel. See the world.
Don’t think that moving to anther local will make things rosey. Make sure you know their laws. IT is not the US and your rights are much more limited by not being a citizen.

Financial Samurai
Financial Samurai
10 years ago

Tyler – Don’t be such a downer. Sean’s success is his success in FREEDOM and finding his passion! Sean – Good stuff. Thailand is awesome! Cheap, food is great and you can get real massages for like $5/hr if you get too stressed out. That’ll be cool if you and Baker link up. You may never want to leave! The political situation there is dying down. But, it’s important that the King doesn’t die or else there will be financial chaos.. at least for alittle bit. I worry about whether there will be an uprising too if that happens by… Read more »

Ryan
Ryan
10 years ago

Tyler (#12) is right. This is not a success story at all. It’s a story of a kid just a couple years out of college who got fired from a decent job. His writings imply that he was not exactly a dedicated employee. He writes a blog with daydreams about traveling the world and publishes an extensive list of things he hopes to accomplish. Except they’re mostly not so much “accomplishments” as they are a scattered list of excursions one would book with a cruise ship activity director. Sean, you say you have plans for starting some sort of online… Read more »

David Damron - LifeExcursion
David Damron - LifeExcursion
10 years ago

Sean–

Great to see you out there posting on big blogs. Congrats!

I think Thailand is your best option. It is cheap and there seems to be a lot of movement there from other growing bloggers like Cody McKibben (@codymckibb) and Adam Baker (manvsdebt)

Good luck and keep us posted over at SeanOgle.com

David Damron
LifeExcursion

Ryan
Ryan
10 years ago

Tyler #12 and Ryan #15, Who are u to say what successful is and is not? I think your idea of successful may be different than other peoples views of successful. I follow Sean closely, and sure he hasn’t quite pulled the trigger yet, but he is doing what he WANTS to do, not what he is told to do. I have no idea what your ages are, but my guess is middle aged. As for us “kids,” we are pursuing more and more what makes us happy, not what brings us the paycheck. And I think that is a… Read more »

Financial Samurai
Financial Samurai
10 years ago

Wow Ryan #15 – A lot of negative energy there. First of all, it is a tremendous accomplishment to start your own site. It’s more difficult to produce a quality site out there than you think. Sean has done that. Second, it takes courage to put yourself out there and share your thoughts and feelings with the world exactly b/c of negative feedback. That said, I enjoy criticism, so you’re welcome to come over my site and share your negativity with me. Finally, Sean may be young and inexperienced, but it’s always good to dream. There are those who do… Read more »

J.D.
J.D.
10 years ago

I agree that Sean is young. I also agree that for some people, he may not meet the definiton of success. (And one of those people might be me.) But I think the key here is that Sean feels that he’s been successful, and that’s great. Or, more precisely, it sounds as if he’s on a journey to meet his definition of success. We each define success in our own ways. Who is to say that Sean is wrong and Tyler and Ryan are right. (Or vice versa?) I’m happy to hear from any reader who is proud of what… Read more »

Tyler Tervooren
Tyler Tervooren
10 years ago

Sean, you should have waited until you were 85 to write this post so that you could be sure nothing ever went wrong and this change was an outright success. 🙂 Folks, lets not get off track with technicalities that aren’t relevant to the story. This post isn’t a manual for becoming a successful entrepreneur while living the high life and traveling the world. It’s a post about budgeting to make a lifestyle change. Sean has made some changes in his life recently and this is what he has found helped him along the way. He’s not giving advice on… Read more »

Patty - Why Not Start Now?
Patty - Why Not Start Now?
10 years ago

Good post and good advice, no matter if Sean is young. And I say this as a midlife woman who pursued a significant lifestyle change, going from being an employee to running my own business. Not only that, but I also coach people who want to make significant changes in their lives. Sean is absolutely right when he says to save as much money as possible, and to start the new lifestyle while you are still employed. My business had been up and running for three years before I left my job, and when I did I had a good… Read more »

Foxie | CarsxGirl
Foxie | CarsxGirl
10 years ago

JD – I like the point you made in your comment about defining success. I’m going to try and remember that little nugget of wisdom — You are successful if you believe you are successful, not when people tell you that you are. (Because they may never tell you that!) My biggest hope is that I can instill good financial habits now, while I’m young and in school, so that I will continue with them later on. Saving half of my income would be very hard to do if I was ever used to spending all of it, but might… Read more »

Tyler Karaszewski
Tyler Karaszewski
10 years ago

*Happiness* is whenever you feel happy, the same is not true of success. Happiness may be a worthwhile goal, in fact, it’s probably a more worthwhile goal than success, but they aren’t the same thing. Success in many things is easy to measure. You set a goal, and when you’ve met it, then you’re successful. If you plan a trip to climb mount everest, and only make it three quarters of the way up, you weren’t successful. You may come back the happiest person on earth because of your experiences on your unsuccessful trip, but the trip was still unsuccessful.… Read more »

J.D.
J.D.
10 years ago

@Tyler
Also, who is calling this a success story besides you? 🙂

I just looked back at the article, and Sean doesn’t say he’s been successful — he says that he’s in a position to be successful. And I consciously removed the “success” from my usual “reader success story” title.

If I’d had time when I wrote my comment this morning, I would have been able to catch this. So, you’re challenging Sean on something that he hasn’t even claimed! 🙂

Tyler Karaszewski
Tyler Karaszewski
10 years ago

You sure you haven’t changed the article since this morning? I swear I saw it in there somewhere. The article does contain the word “success” six times, maybe that made it seem implied? It ends with requests for success stories, maybe that made me think you viewed it as a success story? Regardless, looking at the article right now, I have to concede that it doesn’t, in fact, claim success in anything. Even if the article doesn’t claim any particular success, the comments seemed to have turned to a discussion about what counts as success, which is sort of an… Read more »

Sean
Sean
10 years ago

I have to say, that it has been really interesting to read all of the comments on here today, and has even inspired a post on my own blog for tomorrow. I was going to hold off on adding to the contribution, but I think now might be a good time to say something. One thing I want to make clear right now, that you guys seem to have caught on to, is that at the moment, I don’t consider myself a success or successful. I have a long ways to go, and this is just the beginning of my… Read more »

John DeFlumeri Jr
John DeFlumeri Jr
10 years ago

Having a plan…Some people I know have never had any plans, only short term things, like a vacation. They are directionless and in debt. They need to follow your advice.

John DeFlumeri Jr

Marko
Marko
10 years ago

Thanks for the article Sean!

Do you (or anybody else?) have any alternative suggestions for mint.com but working for Europe (or working international)?

Marcella
Marcella
10 years ago

I kind of agree with Ryan at #16. Sean does offer some food for thought, but not sure I am willing to take it as easily from a guy who hasn’t actually pulled the trigger. Sure, you’re out of your 9 to 5 job, but you admit you would have “hopefully” quit at the end of the year. Yes, we can debate the semantics of whether or not he’s claimed success but he’s offering advice on how to prepare for a new lifestyle and a major life change, yet he has not made it yet. Call me crazy, but I… Read more »

brooklynchick
brooklynchick
10 years ago

Such a great post. Thanks to JD’s advice, I took many of these steps last year, and boy did they come in handy when I got laid off unexpectedly! No panicked “What do I cut?!!” Because I knew where I spent my money, AND that non-essentials had already been cut!

Kevin M
Kevin M
10 years ago

I’m a recent reader of Sean’s site and while I think Tyler K and Ryan have raised some valid points, I decided to keep reading about Sean’s adventure since it is evolving right in front of us.

It’s not like a Chris Guillebeau who is already successfully living this way. To me, that’s what makes it interesting. We get to see the bad and the good he is going through, which I think is important. I think a lot of times, people see the end result and think it was easy to achieve, which is usually not the case.

Kevin
Kevin
10 years ago

I’m sorry, but I agree with Ryan (#16). I’d never heard of Sean before, so I took a quick look around his own blog. My first impression is that Sean is very shortsighted and self-centered. The only suggestion that he is able to express any empathy at all is when he describes his last day of work. He admits he felt guilty about parting ways with his former employer – and rightfully so. They took a chance on him, fresh out of college, gave him a foot in the industry’s door and a steady paycheck, invested time and money training… Read more »

Anon
Anon
10 years ago

During the past 15yrs I have lived in 3 countries on 2 continents. I have a husband and three children and we have experienced these major life changes together as a family. The one thing I have learned is that true freedom means you owe ‘nothing to no one!’ We have been able to uproot 5 people within 3 months, sell our home and move lock,stock and barrel to another country because we carried no debt (except a mortgage)…..and we’ve done it twice! Sean’s preparation for his lifestyle change is his ‘success.’ Working hard on your financial situation, so that… Read more »

Paul
Paul
10 years ago

JD, love the post and would defintely like to contribute an article to your site. I should note that GRS is one of the primary reasons I am pursuing “my own thing.”

Live Well,
Paul

AP
AP
10 years ago

Having made some serious financial mistakes in the past, I can say that it’s much better to live a frugal lifestyle when it’s still a choice rather than forced upon you! I can look back and laugh now at how one Christmas I had to do my shopping at Good Will and was devastated. A few years back I found something there and marveled at how lucky I was to find something that would be perfect for the kids and only at $8!! Perspective (and choice) makes all the difference! With the economy the way it is, I’ve speculated that… Read more »

David/yourfinances101.com
David/yourfinances101.com
10 years ago

Its all great in theory–its even better when actually put into practice.

For a lot, that is easier said than done

Joel Reese
Joel Reese
10 years ago

The comments here are very interesting — some people wish Sean well, some people thank him for the advice… and then some absolutely slag Sean and call him, essentially, a naive, self-centered fawn who will come crawling back to “reality” within a few months.

So which is right? Well, my take is that he’s simply giving some advice and taking a bold step with his life. If we fast-forward five years, will he be pale-faced and typing away at some anonymous cubicle? Maybe. But at least he went for it, and surely there’s something to be said for that.

Dan
Dan
10 years ago

I just dropped by to check out this tread from a link from Sean’s blog Location180.com. I always wonder about people who take the time to outline ad hominem arguments on blogs…. if you really care about the person (as implied by your argument), and you know better, why not just offer the crucial piece of advice? Instead its you-shouldas and you-better-watch-outs. Wait around for the folks who know all about the “real world” and you’ll be waiting forever. Entrepreneurs, at any level, are interested in making the world. I hope Sean has learned that steering clear of crap like… Read more »

lawyerette
lawyerette
9 years ago

A lot of comments from folks who seem jealous that Sean is living the life they want, and at a much younger age.

Laura
Laura
8 years ago

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