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.
Posted by Anonymous at 10:35 AM