People don’t always directly associate expenses and income, and very seldom calculate taxes when they do. Here’s how I gave myself a $18,642.80 raise with a few phone calls and a craigslist ad. Your mileage may vary.

1. I called Comcast and asked them to cancel my landline phone and cable TV (retaining Internet). They offered to cut my rate to let me retain all three services. I declined. They offered an even lower rate. I accepted.

   Total Savings: $1080 per year.
   Total amount I’d have to earn at a 33% tax rate to earn that money: $1436.40

2. I called the Seattle Sailing Club and canceled my membership. I love sailing, but at $200/month I wasn’t using the boats enough to justify it. There are hopefully places around town where I can rent boats from time to time, but I’ve also got a few friends with boats who invite me from time to time, so I’ll likely get my sailing fix there.

   Total Savings: $2400 per year.
   Total amount I’d have to earn at a 33% tax rate to earn that money: $3192.00

3. My wife and I made a commitment to eat out more at our cheap favorites and limit our extravagant favorites to once a month. Our favorite cheap-eats places have outstanding meals and we’re always delighted to go there. Also on the plus side, this make the extravagant favorites a slightly more special experience.

   Total Savings: $2160 per year (replacing 3 $100 meals with 3 $40 meals per month)
   Total amount I’d have to earn at a 33% tax rate to earn that money: $2872.00

4. I’m selling my sportscar. I’ve got a bit of cash in it and have been paying $600 a month (to pay down the principal faster). I don’t get a ton of joy from cars, and can’t find a way to justify owning an expensive one. I’ll be buying a cheap 4-door sedan with the cash that I get from selling the car. While most people don’t have a $600 car payment, most people DO pay monthly payments for a nicer car than they could afford with cash. There are plenty of reliable vehicles for sale– why pay a monthly premium just to have a shinier and newer vehicle? If you get a lot of joy from cars, of course, this might be worth it. But how many great family vacations could you buy with this money?

   Total Savings: $8377.44 per year (payment plus estimated insurance for comprehensive coverage and a more expensive vehicle)
   Total amount I’d have to earn at a 33% tax rate to earn that money: $11,142.00

As I said before, your mileage may vary. The point of the exercise (for me) was to look at all optional recurring expenses and do an honest analysis of just how much happiness and satisfaction they generate when compared to the cheaper alternatives. The changes above don’t substantively change the quality of my life and bring me that much closer to my goal of having my passive income (from real estate, investments, etc) cover my life-expenses. It also, as an entrepreneur, frees my money up to invest in more interesting (and potentially lucrative) things.