My 2009 Opportunity Costs
Following up on yesterday’s post about opportunity costs, today I share how we made our finances work during the lean early years. Here’s our $32k 5-person-family 2009 budget.
Things to point out:
- Less than $700 for a 3-bedroom, 2-bath mortgage on a 1/3 acre. Big benefit of Atlanta.
- We bought high-deductible health insurance.
- We pay 10% tithing.
- We enjoyed vacations and a family trip to CA.
- We had no car payments.
- Living in the suburbs led to a large car gas bill.
The startup began in 2007, and this was our family budget in 2009. In 2007 and 2008, our family budget was even less. It’s true that bootstrapped founders pay themselves less than employees in the early stages of a business. When we got our first revenue dollars, we reinvested those into the business rather than take them home. Reinvesting in the business means paying the dollars to other people.
I took a significant opportunity costs to begin the company. My peers who left graduate school to go to McKinsey or some other BigCo were receiving $150k salaries, while I was choosing to take a $32k salary. Well not really. I was actually choosing to take a $32k salary + own/invest in an incredibly valuable startup asset.
Now that startup asset is more than covering the opportunity costs incurred. It’s unquestionable that I made the right financial choice.
What are your thoughts about living on a low budget as an early founder? How have you bootstrapped?