Wait, wasn't this Spending Diet supposed to begin on September 1st? Yes, yes it was. Then I remembered I was having my garage roof re-shingled so I had to pay for that, along with food and beverages for the workers (my wonderful relatives will always do labor if rewarded with a sandwich and a beer). Then the beau and I went to breakfast the next day--- where we split the tab--- followed by the Renaissance Faire--- where he paid for most things but I bought an iced chai latte for $4.00. Obviously, my Spending Diet was not off to a good start. Today, September 4th, is the new start date. Clean slate!
I decided to embark on this journey again because the results of my Spending Fast were so good. I saved over $900 in just once month by spending money on only what was completely necessary. The experience was pretty extreme, but so were the results. I'm not going to be as strict this time around, but try to maintain it over a longer period of time. If I can hang on until the end of the year, I should see some pretty impressive changes.
This, of course, was not the only factor in my decision to try a Spending Diet. My health was an obvious concern (and now the medical bills are tapering off with physical therapy ending next month). However, the notion that most affected me was one that many people my age aren't really thinking about right now: retirement.
Based on my income, inflation costs, interest, and the nest-egg I have already started, I would have to set aside about $200 per month (every month) for the next 37 years if I want to retire by age 65. If I wait one year to start saving, that amount increases to $260 per month. This number quickly increases to an unreasonable rate in a very short amount of time. This isn't about saving up for a relaxing trip to Santorini in my golden years; this is money that I will actually have to live off of when I am retired.
(Side note: I don't think 65 is a scary old age where people stop functioning. In fact, I will likely want to keep active and working beyond that age. It is a good benchmark to use for goal setting, however.)
My parents offered me some very good advice when I was younger: work hard when you are young and able, and then save your money... so when you are older and can't work, you won't need to. (Click here to read an article about the worst retirement investing mistake.)
I really don't think enough people my age consider this. Climbing out of the cycle of living paycheck to paycheck while hacking away at student loans and other debts is daunting enough. Thinking that far into the future is overwhelming! While I am privileged to say that I do not have debt other than my mortgage, I know that is not the case for most. What are the chances any of us have to retire at a decent age?
Right now I set aside an amount of my salary to savings every month. It's only about 10% of my income, and that savings is partitioned into different categories: house fund, travel fund, long-term fund. The house fund is for repairs, renovations, and unexpected events (like the water heater leaking or tree roots overtaking the drainage pipe). The travel fund rewards me once a year with a trip to somewhere, though I often pull from this fund to pay for other things that are more pertinent. Not nearly enough goes into that long-term fund to meet the rate of saving I should be seeking.
The obvious course of action would be to get a second job. So far I've tried part-time employment and freelance to supplement my income. The latter has been more successful and less-time consuming. The even more obvious action is to spend less with what I already have:
- I don't need to buy those chai lattes (even though they taste good and sometimes I could use the caffeine).
- I don't need to buy that dress (even if it's cute/on sale/the last one).
- I don't need to go out to eat at restaurants (even though I can be exhausted and not feel like cooking, or I'm really in the mood for that amazing lasagna down the street).
- I don't need to have a cocktail (even if it is a nice way to unwind from the week and catch up with friends).
- I don't need to go to the movies (even if everyone is talking about it... because it will eventually be on Netflix and I can wait).
Retirement is a huge subject--- especially during this election season--- and I will definitely be returning to it more throughout this journey. But for now, just get those wheels in your head turning about saving not just to get out of debt, not just to have things you want... but to live on when you can't work anymore.