I want to first thank I Should Be A Minimalist for introducing me to something called You Need a Budget, more commonly known as YNAB. Oddly enough it wasn't the budgeting and putting-things-into-categories information that was the most helpful. I do lousy with budget categories. It reminds me too much of the dieting I did during the worst times of my eating disorder. No, it was the YNAB book that was the awesome eye-opener for me.
YNAB is effectively a really fancy spreadsheet. But you can download a free copy of the principles behind the YNAB-budget lifestyle. (He also sells the same thing on Amazon, but I don't know why anyone who cares about their money would do that instead of just printing out the obviously free PDF. Anyways.) The YNAB creator, Jesse, said that one of the best and worst parts of a budget is the moment when it shows you a time when you know you are not going to be able to make ends meet or achieve a particular goal.
Sounds pretty lousy, right? Not for us. Why? Because it let us know that our goals were way too lofty.
I'm thrilled that I'm no longer living paycheck to paycheck as I did after college and in grad school. I am blessed to be well off. Except that my spending has risen to the level of my professional paycheck. I've always spent just about every penny I make that doesn't get sent to a retirement fund before it leaves my paycheck. My husband doesn't have this problem. Why? Because I have affluenza and he doesn't. I have a need for stuff. Let's take a look at my "needs" for the next 2 years:
1. Make three changes to our kitchen. $27,000 (within 18 months, the max allowed by our condo association.) It doesn't have to be done all at once though.
- Remove the wall in our galley kitchen so there's room for both of us. Cost: $7,000
- Add in an island so that we have more than one counter to prepare food on. $8,000
- Replace the countertops, backsplash, the damaged ceramic sink, and fix the couple water-damaged cabinets. $12,000
3. Go to Australia: $12,000 (Dec 2013?)
4. Have a baby: $12,000 for start-up costs, hehe
- Temporarily ignoring the $250,000 it will take to raise this kid from diapers to diplomas, I'll have to take three months off of work with no pay. We'll need to save about $9,000 to make up for that. Plus the cost of pre-natal care, meds, delivery, and diapers etc. in the first year, I figure $12,000 would be a good number to aim for.
6. Go to Spain. $4,000 (within 18 months)
7. Replace our 20-year-old TV: $1500 (within a year)
8. Sell my old guitar and get a 15/16 size instrument that fits my tiny hands so I can play without pain (by my 30th birthday in April.) Net cost: $300.
Total: $86,300 of activities.
That is frakking insane.
I do not need nearly $100K of activities to keep me happy in the next year.
Gram would be really, really ashamed of me and that thought makes me sad. No, it's time to get my priorities straight.
So here's what we figured out. The emergency fund comes first. Baby comes...whenever I can get off my lovely new eating disorder medications that are apparently, well, really dumb to be on while pregnant (I know there are some that are safe to take...I'm just apparently still too sick for those to be enough for me). And everything else comes as the money shows up. I get to let go of my goals a bit and stop stressing. I can't do everything. Problem with affluenza is, I think I can do and purchase everything.
We will be paying attention to our finances but we've discovered that locking ourselves into budgets (eg. $300 on food a month) just makes us both insane. Over the last few months we've tracked all of our spending as a couple on things like gas, food, eating out, and day-to-day fun. The numbers are pretty consistent. It's a level we're content with. My husband's spending on stuff he wants is quite low and very fine. The point is just to pay more attention. If we don't have money for something, then we don't do it. I may have to give up or trim down Australia or Spain, or put off the kitchen as long as the condo association will let us. When we have $7000, we'll take the kitchen wall down. When we build back up and have $12,000 again, we'll get tickets and hotel reservations for the Land Down Under. Then Spain. Then the kitchen. And a little bundle of joy whenever that gets to happen. It's like debt snowballing without the debt.
But as we know, my spending on stuff is just stupid. I'm really the only one who needs to change. My erratic, impulsive spending is making it hard to plan what we can do when (this is a bit of a problem when you're trying to buy plane tickets to somewhere halfway around the world!) To help us know when we can afford to do one of the items on our two-year list, we've set up four accounts:
1. checking account, with enough to pay the bills in it
2. an emergency fund
3. a future expenses fund
4. a checking account just for me. It gets an allowance of $500 twice each month. Of this, $30 a week goes into a brokerage account so I can learn to invest (literally) in my future.
I can hear almost every one of you saying -- how is $220/week not enough for me? All it takes is one $140 visit to my psychiatrist, one monthly $50 copay for the antidepressant that keeps me from injuring myself, and two $35 physical therapy appointments for me to blow $260 in two days. That's what last week looked like. It was a good thing I cancelled my guitar lesson last week because that would've brought me up to a total of $295 of expenses for that week and I only would've considered the guitar lesson optional. Healthcare in my town is boutique-style. Most providers around here don't take insurance. The ones who do are either hours away, are lousy providers, or have 3-month waiting lists for new patients (as is the case with every psychiatrist in a 10-mile radius who takes BlueCross health insurance. Bloody hell.)
But we know I like to spend for fun even beyond that. So the Chief Engineer helped me figure out the first of many changes that we'll have to make to keep me from spending and slowly teach me to stop wanting to spend.
The first step we took together was removing my online access to our joint checking account. We've also taken away my credit card. In the event of an emergency I can call the bank and get access or visit the branch around the corner. I'm not brash enough to take money from the emergency or future expenses funds for myself. There is one exception, though -- my Renfrew eating disorder treatments go on our joint credit card. It's on file with Renfrew so I was actually able to destroy my plastic card so I can't use it. Ultimately, if the money is not my checking account I can't spend it. I don't have a credit limit on my debit card.
|A cute money journal, just like in grad school|
It seems to be working now. We started this experiment two weeks ago and at the end of two weeks I had a little over $100 left in the bank. I just got my paycheck today and now have a little over $550 to get me through the next two weeks. Oh, and I have four physical therapy visits alone in there. Let's hope I can keep from running over to Guitar Center for this baby in the next month or two. I need to build up savings in case I, say, need another $800 crown like I did three years back.
So how do I build those savings and resist the long-practiced temptation of spending everything I have? What did I do in grad school that let me live on $100 a week and still buy the occasional expensive piece of jewelry? Patience, it turns out. It's something I've lost. When I wanted a $200 piece of jewelry in grad school, I stuck pennies, dimes, quarters and single dollars into an old coffee tin for six months before I finally bought the ring (and I still have it, love it, and wear it often.)
Say hello to the guitar fund! It's no longer a coffee can but it'll do. What can I say, I like fruit, even when it's plastic. I thought about pitching $20 bills into the sound hole of the guitar I have now, but somehow I think that might make my playing sound *so* bad that I would immediately rush out and buy a new instrument.
I've now told myself that I can have the guitar. I just can't have it now. That's a feeling I haven't felt in a while. But it's a good feeling. I will be able to have the guitar, I will eventually have enough saved to know that I can pay for a personal emergency if I need to, and I am learning to deal with the long-term ups and downs of stock market investing. It feels like a good year. I just need to be patient and relax. It's going to happen this time, because I've done it before.
Spend slowly. Save slowly. Think slowly. Change slowly.
And stop buying cute Jordi LaBanda notebooks.
(I must have 15 of these things. It's just glorified hoarding.)