How to Start a Business: 23 Steps to Becoming Operational

Starting a business is daunting.

There is so much to think about and so much to do.

It’s hard enough trying to figure out how to build and grow a business. The last thing you want to think about is figuring out how to put together an operating agreement or pick the right accounting system.

The good news is that all of the things that need to get done in order to start your business have been done a million times before. You don’t need to reinvent the wheel or waste brain power on figuring out what to do.

There are at least 23 things that you should do when starting a new business and I will walk you through each one of them step-by-step. These are the exact steps I take and the tools I use to start my businesses.

I cannot stress enough the value of building like you are going to grow from day one. I get that you are probably the only person in your business right now. You should operate as if you are an organization of people, not just yourself. This will save you an incredible amount of headache down the road, and also leave you room to try and fail in areas that you won’t want to fail when you do have a sizable organization.

I’m going to assume you already have a business idea, and I’m not going to show you how to build or grow your business in this article. These are the practical steps necessary to begin operations.

First, define your business

1. Put together a very high level and basic business plan

Don’t overthink this. You just need to be able to answer two big questions:

1. What do you need to do in order to get to profitability?
2. How are you going to pay for the things that you need to do in order to get to profitability?

If you think long and hard about these questions, you’ll end up with a good starting plan. Be realistic about what it’s going to take. Do your research, and know your numbers. Put it all to paper, and the business plan will evolve into a useful tool and true north for at least the first 6–12 months.

2. Come up with a name

Coming up with a name can be harder than doing the business plan! Your name is…well…your name. It has to be good. It does not have to be perfect and it does not have to be a fancy, made up word like Google or Yahoo. But, you will be saying this name a lot and it will be your url, too, most likely.

I wrote an entire guide to How to Buy the RIGHT Domain Name, which you might want to check out. Generally speaking, here is what matters:

• You have to be confident in the name. Honestly, this is probably all that really matters. It’s definitely the most important aspect of coming up with a name. If you don’t love it, then you can’t sell it. You’re going to be selling it 24/7/365 for a long time. At least that is the plan!
• You need to pick something unique. The general rule of thumb is that when you search Google for the name there isn’t an established business or product that already has the same name.
• Your name must be memorable, brandable and simple. You don’t want to make it harder than it already is to be found and known.
• You need to have the .com of your name. This is critical! It’s unbelievable how many people take this for granted and just completely disregard their domain name. If you want people to take your business seriously, make sure you have the .com.

A good process for coming up with a business name

1. Brainstorm words, concepts, ideas, beliefs, descriptors, etc.
2. Brainstorm names based off your initial brainstorm in step 1.
3. Check the names in Google. Delete any options that are already a known business — especially not one in your space.
4. Make sure the domain name can be acquired. Check out our guide on how to buy a domain name for help here. Do not expect to register a domain name for $7/yr and call it a day. You really need to invest in a domain name for your business name. If you have a tight budget, get creative! You can get a great name that checks off all the boxes for under $1,500 if you put in the effort.

More tips for coming up with a name

• Imagine your name with a logo on a big sign in your future office space.
• Imagine your name on a T-shirt.
• Say your name out loud. “Hi, I’m Name from Business Name.” How does it feel? Do you like how it sounds?
• Bounce your options around and talk to people about it.
• Spend some time thinking about it and let it sit for a while. Do you continue to come back to the same name?

Next, create your business and marketing collateral (V1)

3. Buy your domain name

Again, do not take this lightly!

Your domain name is not an area it makes sense to be cheap. I use Domain.com or Namecheap to buy my domains — you can read more about why in our review of the best domain registrars.

Depending on your business, you might say the url as much or as often as you say the actual name of your business. The more budget you have for your domain name, the more you’ll be able to do.

4. Secure social media accounts

It’s tough enough to find a good name where buying the .com is possible. Chances are, you won’t get exact match social media handles as well. Do everything you can to get them, but if that fails — get creative. Your social media handles / urls are much less important than your website, but they’re still worth putting effort into.

You can choose how much effort to put into your social media right off the bat — you can simply get the name and hold them, you can populate them with a few images and pieces of information, or you can go all out. That’s up to you. For now, I just want you to make sure you have the handles.

5. Develop a brand identity

It’s nice to have a logo, colors, fonts and a general look and feel to go along with your name. You can always update your brand identity down the road, so the initial run just needs to be good enough. 99 Designs is a great option for a full brand identity package. You can run a design contest that allows you to pick from hundreds of options.

Unlike your business name, your brand identity isn’t locked in stone. It’s more than OK to go with a “starter approach” here — it doesn’t need to be perfect (or expensive); it just needs to get done. You can always come back around and do another design round — most businesses do.

6. Set up a G Suite account

G suite is the most important tool for our business. I do almost everything using G Suite. My team’s emails and calendars are all on G suite, too. We also rely heavily on Google Drive / Docs.

You’ll need to get this set up as soon as you have your domain name. Then you can easily get your business accounts set up. As of April 1, 2019, a Basic account is $6 per user.

7. Create a basic, foundational website

Your website can be a very big project depending on your business. In some cases your website could be the business. That’s why the focus here is simply on a basic, foundational website.

It’s good to have a one-page site live with information about your company. Then you can build further from there.

You can be up and running in the matter of minutes with Squarespace. Once you’re ready to do a full feature website, it’s easy to switch over to WordPress, using our guide on how to create a website with WordPress.

8. Get some business cards

Your brand identity package from 99 Designs will come with business card designs. You can use them to get business cards printed online by Vista Print.

This might seem like an antiquated idea to you, but believe me. Once you start your business, you’ll be talking about it and every person you talk to should be handed a card with your information on it. I like to keep my phone number off the card, and hand-write it on there for people who I would actually want to call me. It makes it easier to hand the cards out freely — and it lets the people who I do give my number to know that I really mean it.

Now, get your business legally squared away

9. Find an accountant and an attorney

This one is easy to put on the back burner. You’ll save yourself a lot of hassle and potentially save your business altogether by getting ahead here. Line up the legal and tax pros ahead of time. There are lots of great options and your accountant and attorney can both be remote.

I haven’t personally used it, but I’ve heard a lot of good things about Upcounsel.

10. Set up an LLC

You can use your attorney for this, or you can use a service like LegalNature. Setting up an LLC is simple, so it’s a good spot to save some money by using a service like LegalNature or Legal Zoom.

11. Get an EIN

Getting your Employer Identification Number is something you can take care of along with the LLC. They typically go hand-in-hand. You’ll need that to do just about everything, including business banking.

12. Create an operating agreement

Even if it’s just you, an operating agreement is needed. Unless you have other people involved with your business, you can definitely get away with LegalNature here. Chances are, things will evolve and you will update your operating agreement down the road anyway. If you do have other people involved, have your attorney help out here.

13. File necessary paperwork with your state

If you’re using a lawyer, they can do all of this for you. Otherwise you’ll need to do some research into the requirements in your state, which also vary depending on the type of business you’re starting.

14. Open a business bank account

Pretty straightforward. You’ll need that EIN. It’s typically most convenient to go with the same bank you’re already using for your personal accounts.

One thing to watch out for is a the upselling that many of the bigger banks do. For example, with Bank of America, I went ahead and took them up on an offer for Intuit Payroll. It ended up being a terrible user experience. The people at Intuit recommended that I sign up for a new account directly with Intuit because they couldn’t figure out how to solve some of the problems we were having. They put the blame on Bank of America. This ended up working out because instead of signing up for Intuit Payroll, I researched other options and found Gusto, which is much better.

The point here is to use your bank account for a bank account and be wary of using them for other offers or services.

Sign up for your key operating tools

15. Set up a payroll service for employees and contractors

As I said, I really like Gusto. They are very good. I use them and find the service to be superior to Intuit Payroll.

You won’t need to worry about this until you start paying employees or contractors. It’s good to have it ready and on deck though. Not only will the service automate your payroll, but it will also take care of taxes and forms that need to be filed.

16. Set up QuickBooks

A QuickBooks account is essential from day one. This is how you’ll manage your books and ensure you always have good records. Going back and importing historical data isn’t fun. The sooner you get it set up the better.

17. Put a basic accounting system in place

The best bet here is to work closely with your accountant. A good approach is to ask your accountant what you need to be doing throughout the year to make things easier when tax season comes and to make sure all quarterly obligations are met.

QuickBooks does all of the heavy lifting, but there are still things you’ll need to stay on top of. There is some crossover with what’s already been outlined here, but Shopify put together a good guide on small business accounting.

18. Start using a project management solution from day one

The biggest thing here is to get in the habit of tracking all of your work. Even if you are the only person in your company, you should operate like an organization because someday you will have no choice. The other benefit besides creating good habits is the historical information and data that will come from working like this starting day one.

It’s very valuable for new people to come into your organization and be able to look back at what work has been done in the past. It’s context that will help them (and your business) be successful going forward.

It doesn’t matter what tool you use. You’ll likely change it a bunch of times anyway. We use Trello. There are dozens of great tools.

19. Build an internal wiki system from day one

Just as you should use a project management tool from the very early stages, it’s extremely valuable to start documenting everything right away.

If you ever want to scale your startup, you’ll need your brain to scale too. Your internal wiki is like your brain. Giving your future team instant access to your brain is huge. If you already have a disciplined approach to documenting things in the wiki, your team will follow suit.

It’s not fun figuring out the value of a wiki system 3 years down the road, 50 people deep. You’ll think of an endless number of documents you wish you’d have written out as you went along.

We use Confluence.

20. Set up a Slack account

Everyone loves Slack. It just works. Mobile communication is key. There is a Free plan that’s a good place to start. It’s about $7 per user per month for the next plan up, which grants you controls like guest access to different channels, and more storage and app connections.

21. Set up 1Password

By now you are starting to see the theme here: Reduce future headache! Set up your systems now and you’ll be able to focus on growth moving forward.

1Password is an excellent tool for managing all of your passwords and sensitive data. It makes it easy to securely share logins with your team — which is key because Centrify estimates that lost passwords cost $416 in productivity per person.

22. Create a subscription tracker

This is easy but often overlooked. 1Password is great for keeping track of your subscription logins. You still need some way to quickly see everything you have and what you are paying for, especially as you grow and have more people using and signing up for different tools and subscriptions.

A simple spreadsheet is all you need. Track the subscription, cost per month or year, terms (if any), payment method (what account or card is it tied to?), and renewal date.

Now, plan your goals for your first year in business

23. Create a strategic plan for the next 12 months

Like your business plan, your strategic plan doesn’t need to be complicated.

Here’s how to write a simple startup business plan for year one

1. Come up with one big goal for the next 12 months.
2. Determine what you need to do in order to reach your goal. What projects or activities will you need to perform?
3. Figure out what metrics or parameters you can use to monitor progress. Put in place a system for tracking them.
4. Review and challenge monthly. Make any necessary adjustments.

Even in a one-person shop, taking the time to do this will force strategic thinking and purposeful action. It will help you avoid being reactive and randomly doing whatever comes your way.

It becomes even more important when you have a team that needs to know what direction to march. They will need that context in order to do their jobs.

Go to top

Other guides written on how to start a business are pretty general. I don’t see a lot of value in reiterating what is already out there, so here is a list of guides that I would recommend for further reading on how to start a business:

• Startup Checklist by Business Know How
• Guide for Entrepreneurs Starting a Business
• 105 Best Tools to Start Your Business

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Should I Do My Own Taxes? 4 Times You Can Use Free Tax Software

If you have a traditional office job and receive a W-2 with no other complicating circumstances, preparing your tax return isn’t hard — just a pain. You’ll populate a number of boxes in some tax software, review it for accuracy and send it off to the IRS. All told, it’s not necessarily time-intensive. It’s just something else for your to-do list. 

On the other hand, imagine having a W-2 from one job, receiving a collection of 1099s in the mail and then tracking a laundry list of write-offs related to your business or freelancing. For the uninitiated, this is daunting. 

How do you know when you need a professional’s help with taxes? Understandably, you don’t want to make any mistakes if you decide to do your own taxes.

Quite often, the question of “Should I do my own taxes using tax software or hire a professional?” comes down to how comfortable you feel doing your taxes yourself. 

These days, the best tax software programs do an excellent job of guiding you through preparing your tax return, often eliminating the need for a tax professional. And if you start down this path but find yourself needing extra assistance, some also provide access to professionals for a fee.

Last year’s tax season was the first with the new Tax Cuts and Jobs Act rules in effect. After learning how you fared under the changes, you may have a bit more certainty about your tax circumstances this year. Even so, maybe last year’s changes proved too much for you to handle on your own. Perhaps you’d still like to hire a professional to ensure the job is done correctly. 

While this represents another expense, it might result in a bigger refund in the end. By hiring a tax professional, you might find yourself with a bigger refund as a result of better handling your tax deductions and credits. 

4 Times You Should DIY Your Tax Return

To understand when it makes sense to DIY your tax return vs. hire a tax professional, consider some common scenarios described below.

1. You Only Have One Job

Have you ever heard the phase, “Keep it simple, stupid”, or K.I.S.S.? Basically, it means you shouldn’t add unneeded complexity to a situation. When you prepare your taxes and you only have one job with a single W-2 and no other income, seeking help from a tax professional may violate the K.I.S.S. ethos.

This situation probably doesn’t require a seasoned pro. It can usually be left to the likes of free tax software to prepare your form and submit it.

2. You Didn’t Experience a Life-Changing Event

If you didn’t have a major life change in 2019 (think wedding, divorce, birth of a child, etc.), you can likely roll forward most of the previous year’s information and elections. But make sure to update any new sources of income or deductible expenses. 

In years you do encounter significant life events, if they’re pretty straightforward, tax software still may be able to handle your needs. However, when several events stack up in the same year, things can get confusing. Seeking the help of a tax pro might be in your best interest.

3. You’re Claiming the Standard Deduction

Tax reform did a useful thing for many: It made itemizing your deductions more difficult. 

It essentially doubled the standard deduction, making it less worthwhile to itemize your deductions. So it’s less likely you’ll need to know about what does or doesn’t qualify as a deduction. Free tax software might handle your needs just fine.

While you don’t need to track your expenses to claim the standard deduction, you will still want to track and tally your deductions because these might prove useful on your state income tax return where applicable. 

If you understand and can easily insert these expenses into your state income tax return, tax software will handle your needs just fine.

4. You Didn’t Buy a Home

Before tax reform, buying a house was often the gateway into itemizing your deductions. Numerous expenses qualified for deduction including mortgage interest, real estate taxes and more.

These are still deductible, but the higher standard deduction, along with new caps on state and local taxes and the qualifying amount of interest associated with mortgage principal that you can deduct have hampered the cost-effectiveness of owning a home.

Fortunately, the new limit on qualified mortgage interest associated with principal only applies to mortgages originated on or after Dec. 14, 2017.

In the event you did nothing with real estate and did not buy a house, you won’t need to track such expenses. In that case, free tax software can be a better choice.

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4 Times It Makes Sense to Hire a Tax Pro

Here are some common scenarios where you may benefit from hiring a tax pro.

1. You Had Multiple Sources of Income

The Tax Cuts and Jobs Act brought significant changes for those who work multiple jobs, freelance, have side hustles or own their own businesses. 

Those savvy enough to earn extra income and consider it as part of a trade or business will likely qualify for a 20% qualified business income (QBI) deduction on that income. However, the QBI rules are complicated, so it might make sense to hire a professional.

If you operate any of these activities as a sole proprietorship, you might miss numerous benefits by doing your own taxes. And when these activities scale enough, it could amount to significant tax liability — and potential missed deductions and credits.

While you might think a minor side hustle is not worth speaking with a tax professional about, it might still be a good idea. While software can serve as a great tool for uncomplicated tax situations, a CPA can help you find tax breaks by learning more about your unique circumstances.

2. You Own and Rent Out Property

Rental properties are a popular tool for building wealth because they can produce capital gains as the property appreciates in value, along with income from renters occupying the property. The numerous deductions associated with the property can go a long way toward shielding that precious rental income. 

A tax professional can help you manage the expenses related to maintaining your unit(s) and navigate the tricky depreciation, capitalization and expensing rules.  

The time may come to sell this property, and handling the disposition will prove especially tricky for the inexperienced. Don’t risk misstating your gains and potentially costing yourself thousands in taxes.

3. You Itemize Your Deductions

If you’re not claiming the standard deduction, you may have incurred a significant level of expenses during the year. Because some expenses exist in a gray area and there are numerous deductions to know, soliciting the help of a tax professional might prove a smart investment on your part.

Hiring a tax pro could result in claiming more tax deductions and, therefore, reduce your overall tax liability. In a sense, if you hire a tax pro who can uncover more expenses than you otherwise could yourself, the additional savings on your tax bill might end up paying for the tax advice. Not only would more money stay in your pocket (as opposed to going into Uncle Sam’s), but you’d also spend less time preparing your return.

4. You Experienced a Major Life Change

Life has many turns — suppose that in 2019, you made a cross-country move, had a change in family status or welcomed a new child. As a result, you want to make sure to prepare accordingly from a tax perspective.  

The number of events that can affect your filing status and claims are endless. Navigating these changes isn’t always straightforward, especially when your mind may not be up for the task. A professional will make any tax benefits work to your advantage, as well as use other strategies to minimize your tax liability.

Specifically regarding divorce: Married taxpayers who file jointly are both responsible for all taxes owed on their joint return. In other words, should Spouse A work as a lawyer earning $300,000 per year, and Spouse B work as a school teacher bringing home $30,000 per year, both spouses share equal liability in paying for the taxes owed on their joint tax return. 

In divorce, when these taxpayers file separately, they will only need to claim their earned income and should not include any potential child support or alimony paid/received.

Should I Do My Own Taxes or Hire a Pro?

When you weigh whether to hire a tax pro or prepare your own taxes using tax software, the choice ultimately comes down to the complexity of your tax situation, your comfort level, the effort you’re willing to invest and the cost.

Finding your unique balance between these elements should guide your decision and lead you to the lowest tax liability.

Riley Adams is a CPA who is originally from New Orleans and works as a senior financial analyst at Google in the San Francisco Bay Area. He also runs the personal finance website Young and the Invested, which is dedicated to helping young professionals explore financial independence and entrepreneurship.

This was originally published on The Penny Hoarder, which helps millions of readers worldwide earn and save money by sharing unique job opportunities, personal stories, freebies and more. The Inc. 5000 ranked The Penny Hoarder as the fastest-growing private media company in the U.S. in 2017.

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What I Gave Up And What I Gained

There’s a strong perception out there that living on less than you earn translates into some kind of miserable existence where you don’t have any of the things you enjoy and you sit Scrooge-like in the corner of some decrepit room counting your coins. It’s not hard to see some variation of this in popular culture, which constantly portrays spending above and beyond your means as “cool” and being thrifty as either outright weird or only something that a few specific subgroups care much about.

I believed that for years. I believed that if I tried to commit to a life of spending less, it would be a miserable existence. I believed that if I tried to change financial direction, I would just be a Scrooge-like miser. I believed that anyone cool couldn’t possibly save money. I believed that I had to spend every dime I had to keep up appearances and to keep myself entertained. I believed that, sure, being financially responsible might gain me something in the long term, but in the short term, life would be pretty un-fun.

It turns out that none of those things were true. I gave up far less than I thought, and I gained far more than I thought, both in the short term and in the long term.

Let’s take a look.

I gave up one hobby — among quite a few — that I cared about, and had to change a couple of others.

The one hobby I gave up was golfing. I used to go golfing with a small group about once every other week for years. We’d get a golf cart, cruise around, hit some balls badly, talk some trash and go back to the clubhouse. It was fun, I’ll admit, but it was honestly just one hobby of mine, something I did about once every other week.

I had to somewhat change two other hobbies. I’ve always been a big reader, but I bought a lot of books, enough that they were overflowing our shelves. I simply scaled back my book purchasing and started focusing more on “collecting” a list of books I’ve read (I’ll get back to this in a bit). I was also an avid player and collector of Magic: The Gathering, a hobby I really got into in college and one that expanded in expense after graduating. Rather than just buying and buying more cards, I transformed this hobby into one that was focused on trading for value. Those things both remained a part of my life, just with some tweaks.

Those three changes — giving up golfing and tweaking two other hobbies — cut my hobby spending by something around 90% by my best estimates at the time.

I basically didn’t touch any of my other hobbies. I loved going on hikes, reading books, taking long walks, and I love them now, too. I still enjoy playing computer games and video games, though my tastes and style of play has changed due to my own changing interests — I’m now much more of a completionist and a deep-diver into specific games rather than getting games and playing them for a short while before moving on, and I don’t really enjoy playing games that rely on fast reflexes at all anymore.

I gained a few other hobbies.

In the process of learning how to be more frugal, as well as simply having children and exploring new things because of them, I picked up a few new hobbies along the way. My life didn’t become some kind of empty shell.

I became much more interested in board games and other tabletop games, kind of as an outgrowth of my Magic: The Gathering hobby. I started building a collection of these games and playing them with family and friends, mostly funded by trading Magic cards for them and trading games that didn’t click with me for other games. Trading games to acquire other ones so that I eventually have a shelf full of games that I deeply love is a big part of this hobby for me, though it’s secondary to actually playing the games. This also helps keep the cost low.

I’ve become very passionate about cooking and making food items. I love preparing dinner for my family and trying new things while balancing tastiness and healthiness. I love making food items like fermented pickles, sauerkraut, homemade bread and tortillas. I love the process, and the end result is usually something delicious for my family to eat that’s often less expensive than buying the equivalent at the store.

My entire family practices taekwondo together as a family activity. A local school tries to get whole families involved and offers a really nice family group rate, so we go to lots of classes and work on techniques at home together as we all progress toward improving our belt rank.

In the end, I actually have more active hobbies now than I ever have. Some of my other hobbies have actually declined in the amount of time I spend on them simply because I have so many things to choose from, and the time I used to spend on golf has been more than eaten up by other hobbies.

I learned that I don’t have to throw money at a hobby to deeply and passionately enjoy it.

I gave up a lot of forgettable incidental spending.

One big misconception about cutting back on your spending that people have is that you’re going to cut back on things you really care about. People always envision “cutting back” by thinking about things they love and about how “cutting back” on that thing will be miserable and un-fun.

Guess what? It is miserable and un-fun to cut back on things you care about.

The real trick is to figure out where you’re spending money on things you don’t care about or that you care little about in the big scheme of things and cut back hard on those things.

I cut back on trips to the convenience store near our apartment — in fact, I basically deleted those.

I cut back on stops at the coffee shop and gradually migrated to making cold brew coffee at home because I realized that I really liked a cup of good coffee in the morning but it didn’t have to be made by a barista and cost $7.

I switched to buying store brand versions of a lot of things at the grocery store rather than name brand versions.

I took on a lot of little projects around the apartment (and, later, the house) to make everything more energy efficient with little or no further effort.

I looked at how I did a lot of common tasks (like doing the laundry) and worked to make them as time and money efficient as possible.

None of these changes altered anything I really cared about. When I thought about spending that mattered to me then, or spending that matters to me now, none of these things are touched upon.

Perhaps some of these things — like the coffee shop visits — really matter a lot to you. Great. Don’t cut them. Look for the stuff that doesn’t matter much and cut that instead. Does buying name brand dishwashing detergent versus store brand really matter much to you?

I gained a more low-stress life.

When I first started changing my finances around, I didn’t really appreciate how much low-level stress our financial difficulty was adding to my life.

I felt additional professional stress because I knew that a job loss, even for a little while, would be apocalyptic. Even a late paycheck could be a problem.

I felt stress about my own future because I knew I was getting older but I wasn’t really preparing for my old age. This was small and subtle, but real.

I felt stress about my child’s future and my wife’s future, too. I knew, on some level, that I wasn’t taking care of my family.

I felt stress about checking the mail because I knew there were often bills in there that I didn’t want to face.

I felt stress about a lot of spending situations because I was always worried about a declined credit card or an overdraft.

I felt an enormous flood of stress every time something went even a little wrong because I was unsure how to pay for it.

I felt these stresses, but I didn’t really understand how much they added up or how many of them were directly tied to my finances.

As I began to get a better grip on my finances, every single one of those stresses began to melt and fade into the background. They gradually became less and less prevalent.

I gave up a lot of stuff I didn’t use.

One big step I took initially was to go through my closets and collections and do something of a Marie Kondo strategy in terms of processing all that stuff. I simply went through each thing and decided if I really loved that thing a lot or whether I didn’t, and if I didn’t, I sold it off.

I was under the impression that this would be a very painful thing to do. It really wasn’t. It mostly just required some honesty about my possessions. I just kept the stuff that was really meaningful to me, and that meant honestly thinking about what stuff mattered and what stuff didn’t. When I started realizing which things mattered and which things didn’t, this actually became really easy and not painful at all.

For me, the breakthrough came when I considered whether I had used each item in any significant way in the last year or so. If it had just sat on a shelf or in a closet for a year untouched, my actions were showing me that it really wasn’t very important to me. I might want to think it was important, but if I hadn’t touched it in a year, was it really that important?

For stuff that I was in doubt about, I put it in a box and wrote a date on top, a date several months in the future. Anything still in that box after that date could be sold off, no questions asked.

This served a few purposes.

First of all, it generated some quick cash to tackle my debts immediately. I took a lot of those items straight to Craigslist and eBay and converted them straight into cash, which I immediately used to pay off my highest interest debts.

Second, it showed me that I was in the habit of buying a lot of things that I didn’t really care about a month or two later. Those kinds of expenses are really, really wasteful. They don’t make your life any better in the long run, but spending that money so foolishly certainly does make your life worse. This was actually pretty useful in terms of positively affecting my spending habits going forward.

Third and finally, it freed up a lot of space in our apartment. It was getting pretty cramped with stuff and clearing out a lot of items made it feel a lot more livable. I didn’t realize how cramped things had become and how much time and energy I was spending moving stuff around and looking for items.

This “item purge” was a huge net positive when I initially expected it to be somewhat negative.

I gained a ton of professional freedom.

At the time of our financial turnaround, I had a job in a very different career path. I wrote software in a research environment that was intended to help researchers make sense of large quantities of data. This meant that I was doing some data mining myself as well as writing tools to help scientists that weren’t programmers perform specific data mining tasks on very large data sets.

I enjoyed the intellectual challenges of the job a lot, and I enjoyed the people I worked with, especially the small team I worked most closely with. Unfortunately, that was balanced with a lot of things I didn’t like. I spent a lot of time on paperwork and bureaucratic tasks. I was traveling a lot and I felt like I was missing my child grow up. I was also charged with a lot of work tasks that were way outside of my field of expertise and held responsible for things that I didn’t really understand and didn’t have time to learn about, but my neck was on the line if anything went wrong with those things.

As time went on, the interesting and joyful parts of my job became smaller and smaller and the parts that made me unhappy became larger and larger.

What made this worse is that I was financially handcuffed to this job. Our financial instability made it such that I couldn’t risk rocking the boat at work, or at least I felt like I couldn’t. Looking for a different job in the same field felt pretty risky, too.

All of this meant that I was very prone to unreasonable demands at work. I was thrown all kinds of responsibilities way outside of any sort of reasonable expectations of my expertise. I was asked to work unbilled hours on weekends. I traveled far more than I wanted to. If tools weren’t working, even if I had nothing to do with the reason, intense pressure was put on me to get them working immediately. The team size was downgraded at the same time that our production schedule was accelerated. I was actually asked to do work tasks while my wife was in labor with our first child.

This was not the life I wanted.

What I learned was that it was my own overspending habits that kept me handcuffed to that job. As I began to improve our financial state, build an emergency fund, get rid of debts, and stabilize, I felt a lot less handcuffed to that job. The sense of threat and foreboding that I had about almost everything I was doing there began to ebb away. I started refusing unreasonable things that I would have meekly accepted earlier.

Eventually, as I started writing about my experiences on The Simple Dollar, I began to realize that writing was a career option for me. It meant a pay cut, but it had a lot of other benefits. It was an option that was on the table for me.

At the same time, I also looked at a lot of other options within my data mining career path. I even started considering going back to school and studying a completely different field.

Those options weren’t really there before our financial turnaround. Because our financial state had improved so much, I felt free to walk away from that job and try something new, and I eventually decided that writing full time was the best path for me for a number of reasons (the schedule flexibility was a big part of it). That would never have been an option without a vast improvement in our financial flexibility.

I lost a few friends.

During the process of making these changes, I lost a few friends. It wasn’t due to some kind of blowup or disagreement. Rather, in each case, I found that the friendship was actually more about the shared activity than actual friendship.

The other people that I went golfing with disappeared out of my life in short order. I didn’t play golf anymore, so we didn’t have that common activity to share, so we just had much less in common. What little we did still have in common was replaceable. They found someone else to golf with. I bump into one of them occasionally and we get along fine. We catch each other up on our lives, then go on our merry way until we happen to bump into each other again. I haven’t seen the others in a decade.

I used to go out for drinks with a group after work and thought of several of them as friends, but when I started spending less time with that group, I was no longer involved in the group texts or anything else. It was a group of people to drink with, not friendships.

This might seem like the end of my social life, but it wasn’t. I actually retained a lot of friends and I ended up gaining quite a few more very strong friendships, but I’ll get back to that in a minute.

What I really learned is this: there are some people in your life that will hang out with you because you enjoy a shared activity of some kind, but if you don’t engage in that activity, they won’t engage with you. There’s nothing wrong with that, but it can feel like a lost friendship if you place too value on that connection.

If you change your social activities, you’re going to lose some people that you might think of as friends. That’s okay. Deeper friendships will last, and you’ll find new casual friends with whatever you switch to.

I gained more friendships than I’ve ever had in my life.

As I dropped out of those other social activities, I started filling my evenings with different ones. I consciously decided to explore what was going on in my community, so I started looking at things like Meetup, the community calendar, the local library’s calendar, the local news, and so on. I was simply looking for new things to try and events and groups going on in my community.

I tried out tons of things. Many didn’t click with me. Several did.

Through those activities, I have a more robust social life than I’ve probably ever had in my entire life. I know far more people in my local community than I’ve ever known before. I’ve also built a handful of really strong lasting friendships, the kind where we talk about things far beyond the group, do things together outside of the group that have nothing to do with the activity, and generally keep in touch with each other. Several friendships have lasted far past both of us ending our participation in the activities in question.

Making financial changes to my life forced me outside of my comfort zone a little. I had to try some new things, and my life was richly rewarded for doing so.

Simply spending less than I earned, week in and week out, month in and month out, was the key to all of this.

Literally every area of my life benefitted in the long run, and most benefitted in the short run, from turning my financial life around.

My physical and mental life benefitted from the pure reduction in stress. My hobbies and my social life benefitted from trying new things. My marriage improved because we basically eliminated money arguments. My parental life improved due to a reduction in stress and more time at home. My professional life improved due to the increased amount of professional freedom and the vast increase in professional options.

What did I really give up for that? I stopped spending money on things I didn’t really value very much. I lost a few people that weren’t central to my social life. I sold off some stuff I didn’t use. I dropped a couple of hobbies that were quickly replaced by other things.

To me, that’s a no brainer trade, even from a short term perspective. It didn’t take long for most of those benefits to start appearing, and they grew rapidly.

It’s time to turn things around. Make some changes, look for new things to do instead of lamenting what’s lost, and go with it.

You’ll never look back.

The post What I Gave Up And What I Gained appeared first on The Simple Dollar.

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