Anyone who has known me for more than about 10 minutes knows that I am a fairly frugal individual. If you've known me longer than that, you'll probably just call me flat-out cheap!
When I first got out into the "real world" I managed to get by on a series of minimum wage jobs. Then I experienced something that I know others have also experienced: as my wages increased, so did my cost of living. Every time I got a raise or moved to a higher paying position, I took on more expenses: newer (and more reliable) cars, larger apartments, trips overseas, etc.
Then, several years ago, my good friend Angela gave me the book "Women and Money" by Suze Orman. Though I don't enjoy listening to Suze in person, the content of the book really smacked me upside the wallet. While I had managed to pay off my student loan and keep a few hundred dollars in the savings account, I couldn't help but thinking that I could, and should, be doing better. So began my critical thinking about money, budgeting and consumer lifestyle choices in general.
I began tracking all my spending in an Excel spreadsheet. I opened money market savings accounts for Emergency Savings, Periodic Expenses and Travel. I taught myself about retirement options and set up a plan to save more each year (raises get automatically added to my pre-tax contributions). I chose not to pay for cable, Internet, gym memberships, and many of the forms of entertainment that others consider necessities (think books, music CDs or downloads, DVDs, going out to drink/eat/watch shows regularly). Later, I began to make my own yogurt because it saves me about $10 a month over buying mass-produced yogurt. I even volunteered to help with the Savannah Music Festival so that I could see some of the amazing shows but not have to pay and seek out other free activities around town. Maybe the most drastic action of all is the fact that each quarter I take a "spending vacation" where the only thing I buy is gas for the car and groceries. That's right, I don't spend money on ANYTHING except gas or groceries.
A lot of folks think that I live this way because of my job: if I'm teaching others how to live below their means, pay off debt and save money then I have to practice what I preach. In fact, I was doing most of these things before I took this job, and have just kept building on my previous experiences. Living below my income actually allowed me to take a pretty drastic pay cut to take this position (my gross adjusted income dropped by about 25% on my taxes this year!) but maintain a comfortable standard of living.
Last night I sat down and reviewed my finances for the first quarter of 2010. Whereas I used to just track my spending, this year I wanted to stick to a pre-planned budget to take my money management to the next level. My monthly budget for all expenses is $2000 (which includes a double car payment to have my car paid off within 3 years), with another $200 assigned each month for savings. For the first quarter I managed to spend less than my budgeted amount and save more than projected!
You may be wondering why I am posting such detailed information about my personal finances. I mean, people aren't supposed to talk about their money, right? Well, I'm writing about my budget exactly to GET people talking about money. There is a social taboo, a code of silence, about money matters, and it does little more than make us feel more isolated and insecure about how we deal with money. I encourage you to talk to your friends and family (especially children!) about money, buying habits, costly consumer choices, use of credit, debt levels and retirement goals. One of the best ways to break the mentality of keeping-up-with-the-Jones is to realize that the Jones are up to their eyeballs in debt and can't keep up with themselves! No one is perfect, but if you talk to others I can almost guarantee that you can learn, or even teach, something new.
1 comment:
Nice post! I especially like the part about need vs. want, because I think people convince themselves they need things they really don't. The moment we decided not to buy a car when we moved back to Georgia was THE MOST LIBERATING THING. We figured if we bought a car, we would set our lives up such that we needed a car, and we'd end up with thousands of dollars of additional expenses as a result. If we didn't buy a car, we would set our lives up so that we could get by without one. And I learned really quickly through a bit of research that we'll be able to get everything we need by just walking. People told us, "You'll need a car to live here." But you know what? You don't. They say that having a car saves you money because you can buy your groceries at Wal Mart or Sam's Club. But that savings does not cancel out the cost of a car, insurance, etc. When we realized we didn't NEED a car, that it was really a false need in our situation, we felt like a huge burden was lifted. And now we can spend our money on the things we enjoy more than being a slave to a machine, like movies and travel. And health insurance. Good GOD is that stuff expensive! I'm going to miss Canada.
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