For a personal finance blog, Get Rich Slowly hasn’t been very personal in recent months. That’s partly because of the book project, but also partly because I’ve moved to a stage in my financial life where not a lot happens. I’m not repaying debt, I’m not learning lots of new stuff; mostly, I’m “getting rich slowly”, letting my savings accumulate, and pursuing long-term goals.
One goal that Kris and I share is to take a trip to Europe later this year. We’ve been saving for nearly a year already to make this happen, and I’m sure to write more about it in the future. (In fact, I have one short post about our trip coming up soon.)
But I want to take a moment to get a little more personal than I have lately. In mid-January, I shared a brief summary of my 2009 discretionary spending. I pointed out two things:
- Last year, I spent an average of $286.97 per month on dining out. We typically dined out about six times per month, and paid nearly $50 per meal.
- Despite this, my spending on other discretionary items was down. In fact, I noted that I as experiencing what I called a “waning of want”; I didn’t feel the urge to buy Stuff.
More than in past years, I’ve been thinking about the results of my 2009 discretionary spending survey, and I’ve actually tried to act on them. During January, I did my best to keep my spending in check. How’d I do? Let’s look.
Last month I spent:
- $83.09 on Entertainment ($13.98 to purchase two multi-record sets at a thrift shop; $69.11 on iTunes downloads, including multiple seasons of The Amazing Race)
- $125.69 on Dining Out (we dined out five times, for an average of just over $25 per meal)
- $14.78 on Pets
- $5.97 on Books (again from a thrift shop)
- $12.20 on Cable TV and $45.99 on Internet
That’s it. For me, this is a huge victory. I didn’t feel deprived in any way, but spent less than $300 on discretionary items. (And that’s including cable and DSL, which I don’t usually lump with discretionary expenses.)
To some of you, $300 will seem like a lot; for others, it’ll seem like a pittance. For me, it’s pretty skimpy, especially compared to past spending levels. (Again remember: I spent nearly $300 a month on Dining Out last year alone!)
Now, I’ll admit that I don’t think this level of spending will last indefinitely. The longer I put off buying comics, the more things I want to buy (Dick Tracy and Little Lulu are calling my name at this very moment). Plus, being holed up working on my book for the first three weeks of January played a huge role in my decreased spending. So did saving for our trip to Europe.
But still, the larger point is that it is possible for me to spend less if I put my mind to it. Just yesterday I decided I wanted to play a computer game. I’ve worked hard lately, and I deserve some time to goof around. I considered buying something new (or re-activating my World of Warcraft account), but instead I downloaded the free Battle for Wesnoth. Turns out it’s a fantastic game. Instead of buying new comics, I’ve been going through the un-read stuff I already own. And for entertainment, I’ve been trying to exercise. (My one goal for 2010 is to lose 50 pounds; I’m down five.)
There’s nothing earth-shattering in this article, no profound lessons to be learned. I just wanted to take a few moments to share the personal side of my personal finances. I’m pleased with how things have gone so far this year. How about you? One month into 2010, are your finances where you want them to be?
This article is about Real-Life
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I was sooo on track in Jan – finally started that e-fund, increased IRA contributions and charitable contributions, and hit $10k combined in my cash accounts (much of it earmarked, but still a nice number). But now our car is dead and it turns out I underestimated our tax bill, so I’ll have to start over.
However, JD, it’s thanks in part to you that I have that little bit of savings I have, and I won’t have to go into debt to pay my taxes, and we might be able to get away with a small car payment, and my retirement contributions are safe. I forget at times how much worse it could be – how much worse it would have been just a few years ago. For that I’m thankful.
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WOW!! Maybe I’m crazy but it seems like people budget way too much. It’s so much effort and what does it really get you?
We don’t budget at all, I simply max out my RRSP’s and TFSA’s, pay for all my fixed expenses, and anything leftover every month goes to pay down debt. I think RRSP equates to 401k in the US and TFSA is like a Roth. This equates to about 35% of our income for saving.
Now, we don’t really have much “discretionary” spending though. I might go out for the odd lunch but we don’t really dine out for dinner, we cook, and neither my wife or I have any habits that cost any significant money. Maybe a ball or two of yarn for my wife now and then ($20?).
I actually spend most of my time not budgeting and learning/executing on how to *increase* our income. In the past year I’ve increased my salary by $15k (by asking), started a side business, bought another home to rent, and am working on another web-based business idea.
People losing sleep over a $4 latte is just going to give them migraines or ulcers.
Here’s my focus:
1. Earn More
2. Pay myself first
3. Pay down bad debt
4. Kick back and enjoy.
I still have some non-mortgage debt, so I’m not sure exactly what I’ll do with the extra money every month after that is paid off. Probably look into other tax deferred investment vehicles, and maybe buy myself a new big screen TV and an iPad.
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JD,
Weight: 8% through the year and 10% of your weight goal achieved! Sounds like you are in great financial health but the personal health needs a boost. You might want to prioritize your health first. If you spend $100 more a month but it is on better food, vitamins, gym, etc you may not look so good in your spreadsheet financially but you’ll help yourself physically.
Last year I made a point of absolutely working out 4 times a week and buying foods that would support intense workouts. It was really tough in the beginning but after 5 months its a world of difference.
My kids wanted to go to a fast food joint for a burger this week and honestly it was hard to eat the food. 5 months ago I loved that stuff but now it makes me sick.
A pound a week JD and you’ll feel like $10 million bucks ($1 million won’t be worth much by the end of the year with inflation!)
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Interesting article, it made me think of an experience i had years ago. I put it in story form. Here it is:
A long time ago and in a land far far away… well actually it was 1980 and my wife and I, as newlyweds, just moved to Alaska-this is a true story. I was working for a financially secure and slightly older gentleman who, one day as I was passing by his office, called me in and asked me an interesting question. “What’s the difference between a rich man and a poor man?” Being young and just starting my career, I thought the answer was rather obvious and so I quipped, “one has a lot of money and the other one doesn’t.” It doesn’t take a rocket scientist to figure that one out. However, his response back, was somewhat surprising.
He stated that the difference between a rich man and a poor man was a $100 bill. He asked me if I had one. “No,” I answered. He then asked, “how many people out on the street walking around right now do you think have a $100 bill in their wallet, pocket or purse.” I responded, “probably not very many.” He said, “my point exactly.” He then took his wallet out of his pocket and pulled from it a $100 bill and handed it to me and said, “put this in your wallet, keep it there and know that you have more money in your wallet than most people do, and that if a small emergency comes up, you’ll be okay.” So I gratefully put the bill into my wallet and left. You know, I actually did feel rather rich, and knowing that a $100 bill could cover about any minor emergency that could come up, like running out of gas or an unexpected business lunch with co-workers or whatever it might be; I really was covered. Back then my wife and I didn’t have a credit card or debit card-just cash and a checking account, and for some reason my wife said I wasn’t allowed to carry the checkbook.
Two weeks had passed, and I was again passing by his office, he called me in and asked if I still had the $100 bill he’d giving me. I lowered my head and said, “the other day I was low on gas and didn’t have any money so I used it to fill the car up. Once I had broken the bill the remainder went rather quickly.” He chuckled and pulled out his wallet again and handed me another $100 bill and said, “see if you can make this one last longer this time.” My first thought was, this isn’t a bad deal we have going here, but he quickly said that this was the last one he was going to give me. Well, again I was back on top of the world feeling rich. This time I kept the bill for almost 6 months before I needed to use it, once again, once it was broken it went fast.
So the bottom line of the story is: If you want to feel great each day even if you have financial stress; since fewer people carry cash these days compared to 30 years ago, tuck a $100 bill into the bottom of your wallet or purse and know that you have more money on you, than most people you’ll meet and pass each day.
Also, see if you can make your $100 bill last longer than 2 weeks or 6 months. It truly is a great feeling.
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JD,
Thanks for the wake up post. I set my goals for this year around trying to get in shape and loosing some weight. It didn’t really even dawn on me to try and get into better financial shape as well – maybe that’s my problem – well I’m now going to set some goals in this area as well.
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I am so happy about where my finances are! We just paid off our last debt, my student loan, with our tax return. We are acting on our New Year’s Resolution to put $450/pay period into savings, thus stocking our emergency fund. We are putting 20% of my husband’s pay into retirement. And I am researching ROTH IRA’s to open my own retirement fund. (I’m 29, a stay-at-home parent finishing up my BA.) My husband and I each get an allowance, and since I never spend it all, I’ve decided to start putting 50-60% of it into a ROTH IRA. I’m also planning a little side business to help me reach my personal goal of maxing out my ROTH IRA this first year.
Like I said, I am so happy. The debt is paid, and I’m learning so much about how to invest my money now that it’s not going to debt. I am also having fun researching banks and automating our finances. The goal is to not have to think about how much we’re saving/spending.
Love this blog!
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Yay, I love the personal part of this PF blog!
Around here, even having only the most basic of basic cable would cost you around $30+.
I’m also curious about the pets bit. In your comment #14, you said you count pets as discretionary spending, even though you don’t think of your cats that way. $14.78/mo for four cats can’t possibly include all pet-related spending. You can’t get healthy food for four cats for that price, even ignoring litter for the moment. Are you only counting “extras” for the cats as discretionary, like treats, toys, a new brush, etc.?
It’s not a requirement to own pets, but it’s a requirement to feed them and take care of them once you decide to have them (same as kids), so once you’re a pet owner I wouldn’t consider the basics of food/water/litter as discretionary.
(my husband I are totally those people too!)
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Good for you! Just remember when you buy used or read old stuff, no money goes to the people creating more content (aka writers and artists). So perhaps judicious spending on new stuff might be helpful.
Of course, I’m biased, because I’d like to make money as a writer somedy.
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Judging by my signed name, you can tell I have cats.
We have 2 cats, and we buy Science Diet dry food + treats + Fresh Step litter. It’s about $25 only a month. The trick is to buy the biggest packaging possible. I know we pick some expensive brands, so I can see in some areas, you can survive on less than $20 a month
And yes, I treat everything as discretionary spending other than my mortgage, water , electric/heating. So my food + toilet paper and kitties food + litter are definitely in the discretionary category.
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JD- “$125.69 on Dining Out (we dined out five times, for an average of just over $25 per meal)”
Seeing as though you and Kris keep seperate finances, is this the total just for your meals or for the both of you? Just curious.
I didn’t track my January spending as hubby and I were in Iceland, England, Germany, Czech Republic, Hungary, Austria, France and Thailand in January and spent way more than we usually would as we were holidaying. Now we are back home and back at work we will be back to our usual habits and will start tracking again.
I must say though, after reading your blog (and fostering a general interest in PF) for the past few years we were able to travel for 2 months over 4 continents and come home to zero debt- and that feels great!
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Good post!
We had a bad January which threw our already BAD financial planning and habits out the window, but in two impulse decisions we’re on our way to turning things around.
1. Opened a 2nd checking account at our bank and the wife and I are getting bank cards which link to that new account. We will still have our paychecks direct deposited into the old account, but will NOT carry the old bank card with us. (in an emergency, we can go to our bank’s ATM and pull money out of that account with our new cards, but that’s the only way…) When we get paid, I’ll transfer enough for two weeks of groceries and gas into the new account. That’s all we have to “spend” for two weeks. Any dining out, ordering food, and little things that get bought at random stores comes out of that account balance. We typically go a few dollars over on our Groceries budget, but then still order food or grab something on the way home when feeling lazy and our discretionary spending is BAD. The trick to this will be to ignore the balance shown in our “For Bills” account and only look at the “Spending” account.
2. Bought YNAB 3 (www.youneedabudget.com) We’re already working towards our one month “Buffer”. I had played with the 7 day trial version of YNAB and was impressed with the psychology behind it. It made a lot of sense, but I wasn’t ready to drop any money on another piece of financial software. In our hectic January I made a mistake when entering transactions into Quicken. Luckily, I had double entered about $300 worth of debits so it turns out we had $300 more than we thought! The first thing we did was purchase the full version of YNAB. Eventually we won’t [often] be looking at the online banking balance except to check for errors and will only be “spending” from the budget amount in YNAB.
Both of these decisions were made in a SNAP and I feel they are both very big steps in the right direction.
Oh, and on the same day I called DirecTV and had all our extra “stuff” turned off since the 1 year promotions had ended. Our bill went up $20 from where it had been; now it is down $20 from where it was. That’s a $40/month swing when compared to just sitting there and paying the extras that we didn’t use anyway.
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