Who doesn't like to have money? Most of us want some of it; a few of us want a lot of it. And yet, none of us seem to have enough of it. Whose fault is that? The government? Corporations? Banks? El Niño?
My opinion is: yes and no.
Sure, the economy sucks. And this is the first time ever that this has happened! We've never as a civilization been in a recession, or a depression, or a society that existed before monetary exchanges! Right? Oh, wait... Never mind.
It's always easy to blame someone or something else. Some of the impact can come from decisions made by elected officials, or the price of oil, or neighborhood residence, or whatever. Those of us fortunate enough to have jobs usually receive paychecks with automatic deductions for taxes and insurance and benefits before it even arrives in our hands. But here's the bottom line: regardless of your political affiliation, religious preference, sexual orientation, cultural background, gender, age, or socioeconomic status...
You are ultimately responsible for how you spend your own money.
Whether a person makes $20,000 or $200,000 annually, it is up to the individual to decide to live within their means. This is not always easy. I can't speak for anyone else, so I will offer insight into my personal situation:
Last year, I went through a divorce. The marriage was short-lived, and that was very much for the best. During that time, however, we bought a house. I ended up with the house and am now responsible for paying the full mortgage and utilities. This change alone literally doubled my expenses. On top of that, due to funding restrictions, I had to endure an 11% pay cut at my job. Suddenly, I had less money but had to pay for more things.
In the spring of 2011, my car was totaled on the freeway by a driver texting in his Jeep. I suffered severe whiplash and had to go to physical therapy for several months. I was also stuck driving a rental car until my vehicle was repaired. Insurance covered part of this, but not all of it. Thankfully, the ligaments in my neck are now back to normal. Those are harder to replace than lost income.
As the months wore on, I began to see my checking account dwindle. I was spending more than I was making. Surely, this was due to my added expenses, and not my fault. I decided to do the responsible adult thing and get a second job, a part time retail gig at a bookstore.
One week into 2012, my knee gave out and I fell on it, resulting in a severe sprain. I had to go to the Emergency Room, get an x-ray, a leg brace, and crutches. Later, I began physical therapy but made no progress. MRI results showed that I had cartilage fragments floating around in my knee. Now I'm facing the likelihood of an operation to remove the cartilage and correct the injury. Though I have health insurance and feel very blessed to be able to use it, I have a much higher deductible this year as a result of budget cuts. This means I am responsible for the first $1000 (at least) of medical expenses pertaining to this accident. I also lost my bookstore job because of my inability to stand for long periods of time.
As my financial safety net continued to shrink, I was convinced there was not much more I could do about it. Again, I tried the responsible thing and drew up a budget after using my bank statements to calculate my average spending in various categories. I found that I was still managing to eat at restaurants, go out for the occasional cocktail, grab a chai latte on the go, pick up a quick snack, buy new items of clothing, attend concerts, go to the movies, purchase household decor, and so forth. Not a single one of those things was a necessary purchase.
Yes, I admit it: those expenses are my own damn fault.
While I am very fortunate to be currently debt-free, I'd like to keep it that way. This led me to ask myself: How much money could I save in just one month by spending exactly zero dollars outside of my necessary expenses? How quickly could I pay off my medical bills? How much more of a nest-egg can I build? How much closer could I get to saving up for that new camera I want so badly? Granted, I won't likely reach all of these goals as the result of a mere 31-day financial experiment... but it certainly can't hurt my bank account. Besides, I can commit to one month of change. Thus, the Spending Fast will commence in four days.
Up next: my personal guidelines for the March 2012 Spending Fast.