Your monthly nut is the amount of money you have going out for expenses every month. You should know how much that is and you should make enough money to easily cover those expenses every month. It would also be wise to keep the monthly nut small by avoiding debt and unnecessary expenses that can’t easily be curtailed when finances get tight.
The famous mystery and suspense writer, Lawrence Block, has a post on his blog on getting by on a writer’s income. One of his pieces of advice is to keep the nut down. Since a writer’s income can be sporadic it makes sense to keep the monthly expenses low. He writes about how he would go out to eat and travel when he had extra money rather than buying a car. That way when the money dried up again he could just stop going out to eat and traveling but if he had bought a car he would still have all the associated expenses.
It makes sense that creative types who can’t be sure of their income should keep their monthly nut small. Anyone who has inconsistent income would be smart to keep their monthly nut small as reasonably possible. Even if you have a regular monthly income it is a good idea to keep the monthly nut down. Very few people have total job security and if you lose your job you will be happy that your monthly expenses aren’t higher. If you keep your job but have some other type of financial emergency having a small monthly nut will help make it easier to get through that as well. If you want to increase your lifestyle try to do it in a way that won’t leave you continuing increased monthly costs.
It is alright to keep the nut small when really in a tight situation. But we shouldn’t be just contented with the idea, but instead to something about it.
We call this “living below your means”.
The trouble many of us find, however, is that our earning capacity is still exceeded by the nut, no matter how small.
I can, alas take the risk on insurance, though I feel guilty doing so.
I can get by on 18-cent breakfast, or less.
But how does one obtain minimal shelter (for me, a private room in a cat-free dwelling, with a usable shared bath, and 6-8 hour s of air conditioning/night during hot spells in order to sleep), for minimal dollars?
Years ago, it wasn’t impossible to find rooms for $100/month or less, but today, in almost any city I’m familiar with, the floor is about $300, plus utilities – which in a shared situation seem to run 4-5x what I would use, per-person.
With the right financing, I’m certain I could buy a house in some locale and sublet the rooms to similarly-strapped struggling roomies, and make a go of it.
I can live in the garage, in a small trailer, and/or build a tiny room on the back, and the room rents would more than cover the mortgage and expenses. But how does one get a loan without perfect credit and stable income? Is there any social-media-lending-crowdsourcing for low-end home loans?
I’ve reduced my monthly nut by moving from one city to another and the benefits have been amazing!!
How? What are you saving on? Do you own a home, do you commute? Interested.