Scarcity Mindset: Brewing Our Path to FI

What if we hadn’t started a brewery and instead continued our lives as they were? Now that it’s been a year and a half since we closed and sold our brewery, I decided to look back at our experience through a financial lens and see how things would have turned out. And also to reminisce a bit about the big dive we took to make the brewery happen. I’ll be honest, the results of the financial comparisons really shocked me. But what has made the biggest difference for us financially is the scarcity mindset we developed as small business owners. Read on!

In 2012, Dave and I were living the lives our college degrees set us up for - I was teaching high school math and he was working as an engineer at Boeing. We lived in a 2br/2ba condo Dave owned in the lively Capitol Hill neighborhood of Seattle. Our evenings and weekends (in my breaks between grading papers and prepping lessons) were spent going out to bars, restaurants, concerts, and overall having a great time living in a fun city in our mid-20’s. Had our lives continued uninterrupted, we presumably would have kept these jobs and continued going out to eat, drink, and be entertained regularly. We probably would have moved straight from the condo into a house when we were ready to have kids, and traded money spent on going out for childcare. We would have probably joined the trend of regularly ordering food delivery so we could continue to enjoy restaurant-level tasty food while stuck at home with young kids. Expenses would continue to rise as we made slightly more, and our lifestyle would basically have inflated to match our annual raises, or worse fall behind as inflation outpaced pay raises.

But that’s definitely not what happened in our lives. Instead, we came up with this crazy idea to start a brewery. The results of opening and running our brewery for 10 years have changed nearly every aspect of where our lives are now. Let’s reminisce a bit.

Dave found a vacant warehouse in a great location in the Ballard neighborhood. We were terrified to sign a multi-year lease and also completely against putting ourselves into debt. After running some numbers, we knew that if we kept our day jobs and if we had no housing expenses (more on that later), we could cover the rent on the warehouse from what remained in our paycheck after personal expenses. That was enough of a reassurance to take the big leap.

We opened a business checking account, put in all the money we had in our savings accounts. At the end of each month, we contributed the extra we had left over in our personal accounts until we eventually quit our day jobs roughly a year later. All in all, we contributed $122,000 of our own money to the start of our brewery, with the added help of a Kickstarter that raised $18,000 (THANK YOU SUPPORTERS!!!). We had no investors or loans because there was absolutely no way I was going into debt following a crazy idea that could very likely fail. Looking back I see how beneficial loans and investors can be for jump-starting businesses, but at the time it was an absolute nonstarter for us. (Look for a future post detailing how we were able to start a brewery with only $140,000.)

The very day we signed the lease, we began living in the warehouse. The zoning didn’t allow anyone to live in the space, but we did it anyway. It was an important part of our financial plan to make this work and thankfully this warehouse had a shower. The warehouse had a small upstairs area that was, like the whole building, covered with at least an inch of dust and dirt and a lot of rat poop. After a celebration with friends, and enough alcohol to not realize how dirty the floor was, we unrolled an air mattress and passed out. In the morning when I crawled out of bed and my clothes that touched the floor were absolutely filthy, I had serious regrets about this decision, especially since we had a nice condo still full of our things including a clean bed! But nonetheless we stuck with it. We quickly moved out of the condo, storing most of our belongings in a storage unit. We then put Dave’s condo up for rent and were able to cover the mortgage with the rent payments. The office area of the warehouse was cleaned up and we kept our clothes in bins mis-labeled as brewery parts. Each night we would shut off the lights in the warehouse and sneak upstairs in the dark to unroll our air mattress and have the uncomfortable combination of sweating from the heated blanket on top of us and freezing from the cold air mattress below us.

Our days were spent working our day jobs and then spending every other waking moment building out the brewery. We lived off hot dogs cooked on our George Foreman grill and cheap quick foods that apparently were so unhealthy a friend kindly made us dinner almost weekly to make sure we didn’t get scurvy. (THANK YOU ZACH!!!) I remember driving back from teaching with the heat absolutely blasting and then putting on winter clothes in the car, sometimes shedding a tear or two, and then heading into the unheated warehouse - because we were definitely not wasting money on heat. Once we opened our doors, we continued living in the brewery for another whole year. Finally the time came to hire employees and we felt that would just be weird to have us sleeping or living upstairs while they worked below, so we made the decision to move out. We then lived in a pretty dingy shared house, a cheap apartment, and eventually sold the condo and bought a home in 2017.

How much do you make owning a small business? That depends. Even in the years when our business was doing well, the mindset of not having money was always there because there were so many business purchases we wanted to use the money for. Decent year of business? Great - we could take the money for ourselves, but do we want a new fermenter, canning line, or delivery vehicle? Pandemic hit and shut down the business? Shit - definitely not making money now, can we at least take out enough to cover our living expenses? Have kids now? Ok - do we really need to pay for childcare or can we just work while also holding, feeding, and changing their diapers? The mindset was always, “how can we not spend money on ourselves and instead use it for our business?” We lived our personal lives with the scarcity mindset of having extremely limited amount of money.

During my many stroller walks, I started listening to finance and FIRE movement podcasts and I was ready and excited to start investing in broad-based low-fee index funds. So when we finally had extra chunks of money that wasn’t needed for a large business purchase, we started putting it straight into our new investment account. With the irregularity of our income and sending it straight to an investment account when we did have a chunk of cash, we avoided having excess spending and significant lifestyle inflation. Well, to be clear it is a big lifestyle inflation upgrading from an unheated warehouse to a heated house, but you know what I mean.

After a great 9-year run renting that warehouse and turning it into the amazing brewery we created, we made the decision to close (read about all our life changes here). We were excited to find a buyer to take over our lease and purchase everything as a turn-key brewery operation, which they now run under their own brewery name. And that large chunk of cash from the sale? Straight to savings and investments.

All in all, over the 9 years we ran and then sold our brewery, looking at all the start-up money we contributed and all the pay and distributions we took out, we ended up with BASICALLY SAME AMOUNT IF WE DIDN’T START THE BREWERY AND STAYED THE COURSE! This totally blew my mind when I did the math. Less than $20,000 was the difference between us spending 9 years starting, running, and then selling the brewery compared keeping our pre-brewery jobs with annual 3% raises. C-R-A-Z-Y!!! But are we in the same financial place now than if we would have kept our jobs instead of the wild ride of business ownership? Not at all. We have so much more money saved and invested that we would have otherwise because it wasn’t a regular, expected, and quickly spent stream of income. Scarcity mindset got us where we are.

I don’t necessarily recommend you quit your steady salary jobs and live for two years on a blow-up mattress in a warehouse mostly eating hot dogs, but how could you spend less of your income if you stop taking it for granted?