How I made it a year on $8,000

A couple of months ago, I finished filing my taxes for 2016 and was reminded how much I made in 2016 — a grand total of $4,604. I started 2016 with a little less than $3,500 in cash in the bank, so if you’re good at math, that’s not a great position to be in. I made it through the year without racking up credit card debt or any other loans by changing my lifestyle and mentality of spending money. I’ve written before about how much Entrepreneurship Sucks and it still Sucking, but I wanted to share this experience as a tangible story about how I’ve approached bootstrapping my entrepreneurial journey.
It’s been both a humbling and eye-opening experience, but one that I hope you can learn something from, even if you’re not an “entrepreneur” (whatever that really means). So how did I survive? Well, I have to caveat this with the fact that I am incredibly fortunate to have graduated from a fantastic institution like Rose-Hulman without any student loan debt — scholarships covered most of it and my parents were able to cover the rest. That has been a HUGE advantage not having that hanging over my head, and I’m thankful for that every day. Everyone’s situation is different, but here are the 5 things that made the biggest difference for me:
- Cost of living in a city like Indianapolis
For a large city, Indianapolis is incredibly affordable from a housing perspective, at least compared to other tech hubs like Chicago (66% higher housing costs according to CNN’s Cost of Living tool), San Francisco (228% higher), Seattle (124% higher), and Brooklyn (257%). There are a number of cities with comparable cost of living like Austin, St. Louis, Cincinnati, Kansas City, and Durham that enable people to keep their cost of living low while they’re bootstrapping or running as lean as possible.
2. Covering my cost of living
For the last two years, I’ve essentially covered my cost of housing by purchasing a modest home and having roommates that have covered approximately 95% of my housing costs. That was a sizable initial investment (I used an FHA loan so I only had to put 3.5% down), but I was able to save up enough cash during my time with Eleven Fifty Academy to make the purchase a year after graduating from college. You don’t necessarily have to buy a house, which has it’s own inherit risks and is a very illiquid asset, but at minimum you can live with roommates in a modest apartment or home to keep costs down significantly.
3. Not being a consumer
I just don’t buy stuff. Until earlier this month, I hadn’t purchased a new article of clothing or new shoes in almost 2 years — I needed some new running shoes so I made an exception. I rarely go out to eat and if I go out with friends, I’ll get water and maybe an appetizer. Otherwise, I’ll eat at home beforehand and just be ok with being the awkward one not eating with them. I also cut alcohol almost entire out of my budget, unless it was business-related. Dates became walks and interesting activities that didn’t cost much, if anything. I cancelled my Netflix and other subscriptions that while small, add up. I only travelled for small, weekend trips with friends. I drive a 1998 Honda CRV with 242,000 miles on it. I cut my own hair. Even my dog jumped on board — no new toys for her :(
4. I track every dollar
I’ve become obsessive about using tools like Mint and spreadsheets to not only track my expenses, but track my performance to budgets and project my personal cashflow out at least 6 months forward-looking. When things have gotten especially tight, I knew that before it became a real issue and would find ways to make money on the side through being an Uber driver (I actually don’t recommend driving for Uber, which is a whole other topic), doing some consulting for Powderkeg, or doing odd jobs for friends like yard work or installing wood floors. But I never felt that anxious because I knew exactly when I would run out of money and wasn’t reactionary. Because of that, I’ve never had to build up credit card debt (…yet).
5. I try to keep my mindset long-term
What started as a more simple vision almost 2 years ago to enable apprentice-style learning has become a grand vision to create a way for learning to be flexible, individualized, and affordable for all. Everything I do is in pursuit of PropelUp being successful and the impact that I know it will have on the lives of thousands (maybe millions) in the coming years. That mindset has enabled me to stay focused on what’s really important, while being willing to make the sacrifices necessary to keep the momentum rolling.
P.S. If you have any questions, or want to talk about your own experiences with the financial plight of entrepreneurship, share your story and drop me a line in the comments, or you can reach me directly at nick@propelup.io.
Nick is a serial entrepreneur and learning addict that has helped launch both for-profit and not-for-profit initiatives. His current startup, PropelUp, is making learning digital skills accessible and affordable for everyone. You can find him on Twitter at @BirchStartups and PropelUp at @PropelUp or www.propelup.io.
