Tuesday, January 22, 2013

The Bittersweet Epiphany

In 2008, when I was twenty-four years old, I wrote on my Facebook page that while I enjoy the conveniences and technology of modern times, I could easily sell off most of my possessions and move somewhere remote. Yet, one year later, my blog was filled with desires to have a large, lush wardrobe and a massive record collection. I wanted a different job that paid more money so I could make numerous cosmetic upgrades to my home and to eat at fancy restaurants.

When I got divorced in 2011, my expenses doubled. I was now paying the full mortgage and utilities instead of just half. I also took a 10% pay cut at work due to budget constraints. Now, I had to pay more bills with less money. Shortly after, a distracted driver hit me on the freeway and totaled my car. Then, my dishwasher malfunctioned and flooded my kitchen. Finally, there was that knee injury and its related expenses. And I couldn't help but whine to myself about it... at first.

The end of my marriage forced some obvious change, but it also instigated some more gradual shifts in my approach to life. I didn't like my ex-husband's attachment to money and things, and I was beginning to notice a correlation with my own version of materialism. Sometimes an event can change the course of how we see things, and the exposure is bittersweet. It's so challenging to think you know what you want and how to live well, and to have that notion blown to smithereens. It created an uneasiness in me, and I could feel my heart grasping out into the void for attachment and meaning. The process of enduring that was very uncomfortable, but crucial to the growth that followed.

Despite the daunting task of restructuring my life views, I no longer had the deceptive veil over my eyes. Inevitably, I had to shift to a different way of spending, or I wouldn't be able to afford my home. I felt trapped by my house, which I'd owned for less than a year; I couldn't sell it because I had no equity, and I couldn't afford to keep living the way I was. I wanted to seek release by going out with friends or indulging in retail therapy, but would stay home alone knowing I couldn't afford it. I found that I couldn't pay my mortgage in full by myself; I had to ask my family for help. I am so fortunate to have such helpful, loving parents who were capable of financially assisting me... But I felt I was letting myself down because I'd lost my independence. All of this was better than staying in a toxic marriage, right? Right? At the time, I was very unsure.

While I had always been fiscally responsible with a budget, I now had to get more selective and more creative with my finances. As my knee surgery loomed, I knew I'd need to account for copays and expenses not covered by my insurance. I challenged myself to a spending fast for one month, and though the process was very difficult at times, the final results astounded me. Resisting that initial urge to spend when everyone else wanted to see the latest film or go out for a drink paid off in the long run, and I was able to cover my additional expenses without dipping into my savings.

The results didn't last, however, because I went back to my old method of budgeting. I realized I couldn't go on a spending "diet," because like food diets, they are temporary and yield temporary results. My mind shifted again to that twenty-four-year-old me, who didn't yet see the wisdom in her own words. I began to read blogs and books about minimalism, and the idea resonated with me immediately. Shortly thereafter, I was selling my possessions online or donating them. I was being more mindful of what I did choose to acquire.

I fasted on my spending again, this time for two months. During this period of fasting, I became even more aware of what I truly value. I know that I want to get rid of more stuff, and invest more of my time in experiences: enjoying the company of loved ones, playing guitar, being outdoors, reading a book, painting, exploring. I want to spend less time living vicariously through the Internet and more time seeing things with my own eyes and hearing them with my ears and touching them with my hands. I also want to regain my financial independence and invest in my future. Most of all, I want to drink in new cultures and obtain fresh perspectives in a way that only travel can provide.

Wednesday, January 16, 2013

Money-Saving Tricks For You To Start Using RIGHT NOW!

These tactics work for me. I'm not a financial expert or debt counselor, so consider yourself disclaimer'd:
  • I don't care if the drive-thru "value menu" seems cost-effective. Rarely is the phrase "cheap and easy" ever a compliment. It costs far less to buy your own ingredients, put in some time and elbow grease, and make meals yourself (see photo above, and click to see a larger version). If your concern is that you don't have enough time to do this, consider making several meals' worth of food one evening or weekend when you do have time. Then portion off leftovers and store accordingly. If you're complaining about the time factor, then eating healthier food while saving money is honestly not really a priority for you. You will make the time for what you value most. So quit complaining, then, and enjoy your Taco Bell.
  • Don't bring cash with you anywhere. Keep one credit card on hand for emergencies, and make sure it has a low balance. This inhibits impulse spending. If you don't have the money with you, you can't spend it.
  • Pack meals and snacks ahead of time. It took me a while to adjust to this, but now I completely avoid the office kitchen and lobby cafĂ© because I can fulfill my hunger urges with better options. I find that I don't pine for the doughnuts and cookies if I'm armed with something satisfying, like a homemade trail mix or granola, fruit, carrots with hummus, or tea. I actually have a box of tea on my desk, so I can make something flavorful to curb hunger (often times what feels like hunger is dehydration anyway). I even keep some instant hot cocoa packets around for those inevitable sweet tooth cravings.
  • Keep a water bottle with you. No sense in paying for bottled stuff that isn't any different from what's in the drinking fountain. I even have a water bottle with a built-in carbon filter, so I can fill up with tap water when I'm on the go and it doesn't taste like butt.
  • Libraries! You have free access to books, music, videos, learn a new language, even surf the internet if you don't want to pay for that anymore. Of course, late fees are not free, so be timely in your returns as well. Wen the weather is pleasant, I've been known to walk a mile to the library, pick out a book or movie, and walk home. I just exercised and picked up some evening entertainment, without spending a penny.
  • Having a social life can add up: a cocktail here, a lunch outing there. For date nights it is easy to go out for dinner or see a movie. Consider paring down the spending without losing out on time with your favorite people: invite friends over for movie night (free from the library, perhaps!), to play board games, to do a clothing swap (hello, free new wardrobe!), to have a drink (buying the wine or beer--- or mixing drinks yourself---- is way cheaper), or just to sit around and chat. Sit in front of the fireplace, if you have one. If not, sit in front of a TV or computer screen playing video of a crackling fire. Go outside, play yard games. If the weather sucks, stay inside and roast marshmallows over unscented candles (yes, this works when you really want a s'mores in January)! Take turns cooking for each other, making cocktails for each other, hosting BYOB or potluck gatherings. One group of my friends likes to host theme parties and set up their own photo booth with a camera and props. This is much more fun, much more creative, and much more wallet-friendly. If you must go out, only have one alcoholic drink, or seek out local specials, or watch a movie in the cheap seats.
  • Turn off Groupon and other coupon e-mails. Seeing stuff offered for a fraction of what they normally cost will--- surprise!--- really influence you to make a purchase. I actually set up filters in my Gmail account to automatically send any of these coupon offers to a folder without even appearing in my inbox. You could also just unsubscribe from everything, too.
  • Stay out of the mall, dammit! There is nothing in there you need. You need groceries, you may need gas for your car, you may need electricity... none of these things are at the mall. If your weakness is Target or TJ Maxx, don't go there either. Just don't. If you think you have an exception to that rule, you're wrong. If you really wanted to, you could live your life without ever setting foot in Target or Wal-Mart again. I once stayed away for five months and didn't miss it. Their stuff may seem cheaper, but it also breaks or wears out faster when it's cheap, so you have to go back and buy more. If you must buy, take the extra time to seek out an item from a locally-owned business. You will also go in one day intending to buy cat food, and you'll walk out with a new scarf and lipstick and DVD and pants and... now you've hit a setback. Know your weaknesses and avoid them.
  • Those things your grandparents used to do? Learn them. If you tear a seam in the sleeve of your shirt, could you sew it instead of throwing it out and buying a new one? I bet you could learn. Instead of paying several dollars for a loaf of bread, could you make it by hand for mere pennies? I bet you could learn. If your car gets a flat tire, could you change it yourself instead of calling AAA? I bet you could learn. Could you create your own laundry detergent for a few coins instead of dropping eight bucks on a jug at the store? I bet you could learn. Acquire a skill that modern conveniences have all but dismissed a need for, and you'll not only be cool like MacGuyver, but you'll be saving dollars, too.
  • Get rid of your $#!T. By setting up an eBay account, you can take pictures of stuff you no longer want and sell it to someone who does. I made over $500 from September to December just by selling things I wasn't even using! (And then I used that moeny to pay my mortgage... how sexy!) I'll cover the world of eBay in another post. Craigslist is also an option, if you're trying to sell items like furniture or kitchen appliances. You could even take a carload of items to Goodwill and write it off on your taxes. If you itemize and list what you donate before you drop it off, you can see savings come tax season.
  • Don't use the car if you don't have to. This doesn't apply to everyone, but reducing your time in a vehicle can cut costs rapidly. You save on fuel, you save on wear and tear, and if you walk or bike to your destination you can give yourself some health points as well.
  • Post a picture or other reminder of what it is you REALLY want, and refer to it all the time. Each time you decide to buy a new nail polish, or order a new item of clothing, or grab a latte on-the-go, or impulsively buy a bunch of exotic cheeses, you are taking away money that will pay for your rent/mortgage/debt recovery/travel dreams/college loans/slimmer waistline/new camera or scooter or thing that would truly mean a lot to you. When you keep pining for something but don't have the funds, or if you're stressing about being able to pay the bills on a monthly basis, then you're depriving yourself of the peace of mind you genuinely want. You're sacrificing the big desire for a short-term one, and you're only hurting yourself.
  • MAKE A BUDGET AND STICK TO IT! Learn how to track your spending, sit down and do some math to figure out your average cost in categories like food and gas and rent, and don't spend more than you make. Then honor it. Have someone help you set one up the first time if you're feeling overwhelmed. Keep tabs on it, and don't deviate. You know how when you gorge your face on holiday food over two weeks in December and suddenly you're thinking, "Whoa, these must be someone else's pants!" because they don't fit? You have no one to blame but yourself and your impulsiveness. Fiscal responsibility will prevent your debt's waistline from expanding. If you don't want to honestly face where your money goes (mine was always getting sucked up in new clothes and dining out), then you can't complain when you've got a house full of collectible Voltron toys but no money to fix that alternator in your car. Seriously, you're a grown-up. Don't be an idiot. Make a budget, be straight with yourself, and adhere to it.

Do you have any money-saving tricks that work for you? Knowledge is the real wealth... share away! 

Monday, January 14, 2013

Goals For The New Year

My 2013 New Year's Resolution is to continue trimming away the excess in my life so that I can have the time and energy to appreciate what I truly value: my loved ones, my health/wellness, my faith, my work purpose, and my hobbies. To prioritize those things will mean limiting time on distractions, half-hearted commitments, wasteful spending, time in front of screens, and uninspiring people.

There are other lifestyle goals I want to strive for this year as well. I know it's better to focus on just a few things, but I really like to make lists! Some of these changes have already been implemented and are in progress:
  • Become a better photographer
  • Improve my posture, both seated and standing
  • Take the stairs at work
  • Bring my own snacks to work - no eating office treats!
  • Make and log daily food menus at least one day in advance
  • Eat green vegetables five days per week
  • Cook more meals in bulk and freeze extra servings for later
  • Eat at the table for dinner, with the television and phone turned off
  • Learn to cook fish well
  • Make pasta from scratch
  • Save bacon fat in a mason jar to use for more flavorful cooking
  • Consume no more than one serving of soda per month
  • Floss regularly
  • Read at least one book per month
  • Make my own mercury glass
  • Follow my budget plan to save for future home renovations, a new car, travel, and retirement
This, of course, is in addition to my 30 Before 30 list... which is less a list of goals and more of a challenge to try things that interest me. So far, I've knocked off #22 (master a specific cocktail... where I learned to make the Flaming Volcano) and #27 (receive a handwritten love letter... which of course came from the wonderful beau).

So far this month, I've taken the steps at work all but two days (on one day I was carrying a lot of equipment, and on another I wore wobbly shoes). I have logged my food daily, but have not been as diligent about making menus on the weekends. I haven't snacked on office treats, nor have I consumed any soda. I've stuck to my green vegetable rule, and am nearly finished with the book I'm currently reading. The budget is going well (I've spent about half of my allotment so I'm right on schedule). I haven't touched my dental floss arsenal, and I'm horrid about eating in front of my computer. As I keep making adjustments, hopefully I'll improve in those areas.

Tuesday, January 8, 2013

My Super Simple 2013 Budget Plan

To make sure my spending stays in check this year, I decided to make it much easier on myself when it came to writing up my 2013 budget. The less number-crunching and maneuvering I have to do, the better. After all, I'm trying to simplify my life. Who doesn't like simple, effective budgeting?

(I do feel compelled to emphasize that I am not a professional numbers gal, so while you may feel free to use this method for inspiration, I by no means guarantee its effectiveness!)

Okay, fine print out of the way. Here we go!

Fixed Expenses
These are the bills I will have to pay monthly or seasonally, and it also includes guaranteed expesnes. Some of them won't change at all from month to month, and others can be variable. I calculated the average amount I spend on those categories each month (of if it's something like a seasonal bill or an insurance premium, I calculated what the monthly expense would be). These fixed expenses include:
  • Mortgage
  • Internet
  • Cell Phone
  • Charitable Donation
  • Gym Membership
  • Netflix Account
  • Monthly Savings Deposit (10% of my net income)
  • Credit Card (zero-interest fixed payments on a piece of furniture I bought)
  • Water/Sewer (quarterly bill, calculated by dividing average bill by three)
  • Energy (variable, calculated using average yearly expense, divided by twelve)
  • Car Insurance (bi-annual expense, calculated by dividing by six)
  • Home Insurance (annual expense, calculated by dividing my twelve) - Added March 2013
  • Groceries (guaranteed expense, calculated by average monthly spending over past year)
  • Car Fuel (guaranteed expense, calculated by average monthly spending over past year)

Everything Else
I call this money "play money." That doesn't refer to the fake currency used in games like Monopoly or Life, but rather the entire remaining amount of my monthly net income after all guaranteed expenses are paid. These expenses include (but are not limited to):
  • Dining Out
  • Cocktails
  • Clothing
  • Gifts
  • Entertainment (movies, concerts, sporting events, etc.)
  • Toiletries (make-up, shampoo, tissue, soap, etc.)
  • Household Needs (repairs, cleaning supplies, tools, etc.)
  • Medical (prescriptions, co-pays, supplies, etc.)
  • Miscellaneous (books, games, shoes, decor, electronics, shipping costs, travel, etc.)
  • Emergencies (flat tire, tow truck, hospital visit, repairman, etc.)

Once all of the fixed items were calculated, I subtracted them from my monthly net income. I only counted my guaranteed full-time paycheck, because eBay sales and freelance gigs are too inconsistent for me to rely on. (But hey, that means when I do receive alternative income, it's a happy bonus!) The remaining amount is my Play Money. This is the amount of money I really have to spend for the entire month. When it's gone, it's gone.

Monthly Net Income - Monthly Fixed Expenses = Monthly Play Money

I wrote this number at the top of a magnetic marker board I keep on my fridge. As I spend money--- on anything from shoes to chai lattes to body lotion to furnace repairs--- I write the amount of the expense below my Play Money total, and then calculate the remaining amount. Over time, the Play Money budget begins to look like a long subtraction problem from elementary school arithmetic:
-   28.48__
-   71.67__
-     4.31__
Once this number gets to zero, I can't spend any more money for the month... logically, because I don't have any money to spend. I need to make sure I cover my guaranteed expenses. I like to leave the whole subtraction problem up throughout the month (though you could always just re-write the new amount if you want to save space). I prefer to see exactly where it is going and how quickly it leaves my pocket, so I can catch wayward spending before it gets too out of hand. This method should keep me from overspending because I can scale back any purchases if the Play Money account gets too low early on.

That's it. Some initial number-crunching leads to only dealing with one simple math problem for the rest of the year. Even better: whatever I don't spend can go into my savings!

Friday, January 4, 2013

Spending Fast: The Results

A nearly two-month attempt at a spending fast concluded with the arrival of the New Year. So, how did I do?

I'll cut straight to the meaty parts. In comparison to my spending in October, I saved an average of $680 each month in November and December. December fared slightly better, despite holiday shopping. Most of my gift spending was on food ingredients to make my gifts for others.

My biggest deductions were in medical bills (because it's been nearly a year since my injury and the expenses for that are winding down), clothing (because I stopped buying it!), and dining out (though the beau did kindly cover the cost of some restaurant outings). Grocery expenses went down, but not by much (likely due to the consumable gifts I made for Christmas). Car fuel and entertainment spending barely changed. All other expenses are fixed and minimally variable.

For several months (during my attempt at a mere spending "diet"), I was actually having to take money out of my savings in order to pay my monthly expenses. There were several reasons for this: pay cut due to smaller budgets at work, application fees for a house re-finance, initial expenses for a freelance project (later reimbursed but not for several months), a car insurance premium payment, and higher medical bills due to copays from my physical therapy. But also, I was not really monitoring what I really spent money on. A coffee shop visit here, a DVD there... It didn't seem worth tracking in my mind since the expenses were minor on their own; however, they added up. Eventually I was looking at my monthly credit card statement and it was higher than the amount in my checking account.

(For the record, I make virtually every purchase on a credit card and pay it off in full at the end of the month, in order to earn rewards points. This method can get out of hand very quickly for impulse spenders, so I don't recommend it unless you really will pay off your bill each month without exception.)

To prevent making interest payments, I'd reluctantly remove some money from my nest-egg and take the hit, with plans to replenish it as soon as I got my next paycheck. But slowly, over many months, I found I'd removed over $2000 from my emergency fund. Yikes.

With the savings from my two-month Spending Fast, I was able to replenish over half of what I'd removed (twice as quickly as it took for me to spend it initially, at that!) and to finally breathe a sigh of relief. Feeling fiscally secure is much more rewarding than anything I bought during that strained season in 2012.

Now it's a new year, and it's time for a new budget. I'm going about my spending habits in a whole new way, to ensure I won't be pulling any surprise funding from my savings ever again. I'll cover my budget plan in my next post.