We Have a Money Problem, and It’s Only Getting Worse
By: Rocco Pendola
Tags: Budget, Personal Finance, Money Mindset, Money, Life

As a kid into my first several years living on my own, I never thought I could live in a big city. Or in the core of any decent size city, for that matter.

I saw all of these other people doing it on my frequent visits to cities. However, I considered city living out of my reach — culturally and financially.

All I heard growing up was how expensive or unsafe cities are. I went to Buffalo and Cleveland (two underrated cities) as well as larger Toronto frequently prior to moving from home.

When I moved — to a suburban environment in South Florida — work provided the opportunity for me to travel frequently. It wasn’t until a trip to Boston in 1999 that I realized I not only wanted but was wholly capable of living in a city.

Later that year, I ended up in San Francisco and never looked back. I have spent 20 of the last 22 years living in either San Francisco, Los Angeles, or Santa Monica with a quick two-year stint in Orange County, California.

The first thing that happened — I realized it actually wasn’t all that expensive to live in San Francisco.

I could get a good burrito for under $10 within walking distance from almost any part of The City. I could get enough dim sum for eat for two or three days for less than $20.

And so on.

City living is more about knowing where to go than it is about having enough money to go there.

As for the biggest expense that scares people out of cities — housing — it became instantly clear that you can afford to live in a vibrant city neighborhood if you’re not an apartment diva.

We’ll save the details for another time.

Generally speaking, I had a mindset problem. A vision problem built on years of errant experience. I mean, it wasn’t even actual experience. It was just what I thought I knew on the basis of my fleeting and limited experience, as well as the people around me who never lived in a big city and, as such, had no idea what they were talking about.

Mention Manhattan to somebody in my family when I was a kid, and all they’d do is list the reasons why it’s impossible to live there.

This brings us back to Steven’s point.

Sometimes the answer is a money problem.

You don’t make enough money. In this situation, your hands are tied. It’s not so simple to just move from a place you can’t afford due to lack of resources. So you’re hamstrung.

However, if you’re earning middle to upper middle-class money or more and you’re having money problems, it’s probably just a vision problem.

I have always broadly defined the word vision.

When you think about or plan the future with imagination or wisdom — the definition of vision — you consider what you want things to look like in a perfect world. But you also have to assess how you can get in your own way.

If you don’t, you’ll probably call what is actually a vision problem a money problem.

You can’t live in a city — or The City — because of money. Untrue. You just didn’t include your lack of firsthand, real-life experience in your vision. Maybe if you went out there and tried to make it happen — or just did better research — you’d realize it’s possible.

We see this in action in a recent Making of a Millionaire article —

Direct to what Steven does in his spreadsheet.

His idea of vision is creating a view of your money that extends years into the future on the basis of what happened in the past and what’s happening now.

In his conception of personal finance, you can’t know what’s possible if you don’t have a firm grasp on where you have been and where you are — down to the penny. You can only see and predict the future with a solid handle on the past and present.

Steven’s impressive assessment of his transportation costs drives this point home hard and crystal clear:

Actually, it’s like a strategy game for me now. It really helps when planning to buy a car. After my car had a few major repairs, my averages showed that I would have paid about $600 per month, for the year. And since my car was relatively old, I projected more repairs at that rate. Sure enough, I had another breakdown that also caused me to miss a day of work, which was another thousand dollars of paycheck loss on top of the car repair, not to mention problems rescheduling dental patients, etc.

Pretty incredible. Steven goes beyond the obvious. He factors in the seemingly indirect costs of his increasingly frequent car repairs.

I realized then that an unreliable car was more expensive than just the repairs to keep it going. So, I simply set up a new column for buying a car. I plugged in the estimates for a new car, new insurance, possible repairs after 5 years, gasoline, and everything else I could think of, while keeping many of the same vehicle expenses from the old car. After erasing some projected major expenses from the old car column, EXCEL finally came up with a vehicle price that could fit my budget.

Such a nerd! And I say this in the most positive, endearing way possible.

I ended up buying a new Chevy Volt Hybrid for about $646 per month that costs me 1/2 as much for “propulsion” as a regular “ICE” car. So, I also modified my gasoline expenses WAY down (92 mpg! average) and my electricity slightly up by about $60 per month. Plus I factored in the hybrid car rebate. After 6 years of virtually trouble-free experience, my only major expense was a recent tuneup and repair for $1,400.

He thought (thinks) of everything!