Negabucks – The Currency you can Earn Without a “Job”

apple-money-treeI love the concept of “negabucks.”

If you google the word negabucks, the #1 hit is a post about the financial value of home gardening. I think the term is used somewhat widely in the personal-finance community, but I’ll admit I first saw the term used by David of The Goblin Chief. The essential meaning of a negabuck is money earned by not paying for someone else’s work/labor. It’s a gratifying way of quantifying money saved.

As someone who considers himself to be relatively early on the simplifying-personal-expenses journey, it’s amazingly fun to just chop hunks of dollars out of the previous monthly budget. Thanks to the ol’ pink slip, I have had the time to locate it, analyze it, and begin to hack it away in an intentional way – one that doesn’t reduce our quality of life, but does reduce our costs.

The term “negabucks” is an easier way to grasp the hard work done without a “job.” People are used to being paid to do jobs. Unless you’re a professional chef, you’re not paid to cook though, are you? Replace those terms with their equivalents in gardening, carpentry, sewing/knitting, or general stewardship of your household, and you get the same result. By doing these things though, you reduce your expenses and therefore increase your net income. You are earning negabucks.

Earning negabucks by doing something you like has the double-whammy effect of speeding up your FIRE date as well as giving you the enjoyment you get from doing that thing you like. It’s not necessarily something effective enough for you to do something you don’t like solely for the sake of retirement – as mentioned in the above gardening article, she thinks she earns about $6/hr from her hobby. Financially you’d be better off working just about anywhere, but if you like gardening, those negabucks are pure gravy.

I never really pegged myself as someone who would enjoy cooking, but lo and behold, I’ve been cooking a lot more lately and it’s kinda fun, folks. Part of the fun has definitely been quantifying the savings, which recently came out to a 22% reduction in our food budget. But it’s also been fun (and tasty!) just to eat better. It feels good to make what I eat and know it checks off the affordability and nutrition boxes.

I don’t know if I would have embraced cooking so much if I hadn’t first read about the possible savings, but trying something new allowed me to find out whether I actually liked it. I was always more of an I-eat-for-sustenance kind of person – a year ago I very nearly purchased soylent. But I guess I like home cooked food. Who knew? I’m not really interested in going back to a cooking free lifestyle, even when I get a new job. Hopefully these negabucks will keep flowing and my life will be better for it.

The path to FIRE is not a quick one, but you speed up the process dramatically when you work at it from both ends – earning more real dollars while also earning more negabucks is a surefire way to hit FI faster than you think you can. Roughly six weeks in, I took a look at our overall expenses to try and identify the effect my current efforts can have, as well as to find more places to target. Hard numbers and I have a complicated relationship right now, but I’m on better terms with percentages, so here we go:

Negabucks Earned So Far (compared to 2014 averages)

  • Food Budget: 22% reduced (and expecting to lower it further in March!)
  • Phone bill: 12% reduced
  • Car insurance: 41% reduced (pending – quoted, just haven’t switched yet)
  • Internet Bill – 12% reduced

I’m not sure if all of this qualifies as negabucks. The phone bill, internet bill and car insurance reductions required no “work” on my park – just the time and motivation to do the research and find out I was paying more than I had to be. If you’re trying to save money, I recommend taking a look at those three factors yourself, but in total they add up to maybe 5-6% of annual expenses, whereas food alone is three times that. Altogether these moves will trim perhaps 4% off the annual bill, the majority of which is a result of food-related savings.

The traditional big-ticket budget items are housing, transportation and food, and after examining Quicken I found there really isn’t another massive category for us to pare back on. Our home goods budget may tick down thanks to the wholesale shopping that is doing wonders for the food budget, so maybe that’s another 1% or so, and there’s a few other places to clean up around the edges. Perhaps we’ll move to a lower cost-of-living area someday, but we just bought our car, and for the moment those expenses are fixed.

You may have noticed above I talked about working your way to FIRE from both ends, and there’s only so much cutting you can do – increasing your income has the potential to make a far larger impact on your finances and can’t be ignored. I am not going to negabuck my way into financial independence without a job, and unless you’ve already built up a large enough stash that you were almost there anyway, neither are you. The income is essential.

That’s not to say 5% in negabucks can’t make a financial impact though. Suppose you’re earning $50,000 a year and spending $35,000, netting a 30% savings rate. Using the 4% rule, you’re aiming for a portfolio $875,000 before you can call it quits, and it will take you 24 years. Ouch. Not as fast as you’d like. Trim just 5% off your budget, and suddenly your target portfolio shrinks, your savings rate grows, you’re retiring two full years sooner and enjoying a greater quality of life thanks to a hobby you enjoy. Awesome! Total win.

Again, there are ways to slash budgets further and faster if that’s the goal, and raising income will be a critical step for me as well. This post isn’t focusing on that though – it’s focusing on the new interest I’ve come to enjoy, plus greater care to our household bills that I’m happy to have taken, which has improved both my financial and emotional life. Thanks, negabucks.

What do you think? Do you have any great negabuck-earning tips to share that work for you? I’m sure there’s a lot out there I’ve never even considered, and I’d love to hear any and all ideas in the comments.


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