Yesterday, we worked out exactly how the hours you spend at work break down
into three areas: your living expenses, your debts, and your dreams. Since this
was only a thumbnail sketch, today we’re going to look more carefully at the
breakdown in living expenses.

Let’s get started. Take out a sheet of paper and start another list. This time, we’re listing every expense you have in a given year that do not directly
relate to your employment. We’re not going to worry about amounts yet, just a
list of all of the things that we spend money on in a given month. Here’s a
sampling of the expenses that I listed when I did this exercise:

Rent
Electricity
Telephone
Cable
Student loans - minimum payment
Health Insurance
Car Insurance
Clothing
Food
Entertainment - Books
Entertainment - Music

Spend some time thinking about this. What do you spend money on each year?
House insurance? Christmas gifts? Household items? Car repair? Home decor?
Toiletries? Just keep listing things as you think of them. It might be useful to
leave this list out somewhere you can see it and add things as you think of them.
Don’t worry about amounts yet; we’ll worry about those in a bit.

Now, let’s figure how much you spend on each item in a given year. For
the amounts you know on a shorter timeframe, multiply them out. For amounts
you don’t know, use some estimation over a shorter timeframe (and estimate on
the high side) and multiply it out. The point is to get a rough thumbnail sketch of
what you spend in a year on various things. Note that we’re not making any
value judgements yet; we’re merely trying to see what’s there.

This will take some time, and during that time, think about each of these
expenses a little. Do they bring you joy when you look at them now? Do they
really feel essential to your life, or when you think about them, do you feel like
you’d be better off if you spent money on the list of goals you created earlier this
month?

When you’re done with this list, total up everything. Then calculate 10% of that
and add it to the bottom, labeled “incidentals.” Add that into the total. That
number is roughly what you spend on your living expenses in a given year. You
can divide it by 12 to see how much it is a month, then divide it by 52 to see how
much it is in a week.

Now, let’s see how many hours you work in a week just to meet these expenses.
Take the weekly amount you just calculated and divide it by your true
hourly wage. A typical American usually winds up with a rather large number
here.

Spend some time meditating on this - you spend that many hours a week at work
just for the expenses you listed. What does that mean? What could you do with
your life - with your future - if you trimmed away some of the extra fat? Your debt
could be gone - and you could be working towards a better and brighter future for
yourself.