“You know, you’ve been spending a lot of money lately,” Kris told me the other day. I’d just returned from yet another shopping trip to REI.
“I have?” I asked.
“Yes,” she said. “Can’t you tell?”
Actually, I guess I can. I’ve been buying relatively expensive clothes (I’ve lost 40 pounds and need to replenish my wardrobe, but I’m not doing it with thrift-store clothes as I have in the past), purchasing travel gadgets (new suitcase, travel radio, collapsible chopsticks, more clothes), picking up books and comics, and even allowing myself to buy frivolous things like a pocketwatch.
But because I decided to stop tracking my spending earlier this year, I don’t have the numbers to show me where every penny is going. Looking at my checkbook, I know I’m not spending beyond my means — my splurges are less than my income and I’m still meeting my financial goals — but I don’t know precisely how much I’ve spent on clothes. Or comic books. Or pocketwatches.
You know what? I don’t like how this makes me feel. It seems dangerously close to the out-of-control J.D. that spent his way into debt during the 1990s. There’s nothing wrong with buying things I want and need, but I truly believe that spending needs to be done purposefully. For me, I guess that means tracking my income and expenses. I’ve decided it’s time to hit the reset switch, to get back to basics.
To that end, I’m going to make some changes to my current financial structure. I don’t intend to revert to the tight discipline I exercised while getting out of debt and working to quit my day job. But I’m going to look for a happy medium — someplace between where I am now and where I was then.
What does this mean? For starters, I’m going to make some course corrections. I’m going to:
- Adopt a spending plan. I’m not a man who can use a strict budget — and I don’t think I need one. I’ve been using the Balanced Money Formula as a broad budget framework, and I think it’s great. But I’m also going to implement a sort of spending plan — a roadmap for my money. This isn’t a detailed budget, but a rough prediction of my cash flow for the next couple of years. It’ll help me see whether I can afford, for example, the trip to Argentina we want to take in 2012 or 2013.
- Track my spending. Yes, yes, I know — earlier this year, I wrote about why I no longer track every penny I spend. Those reasons are still valid, I suppose, but the truth is that after several months of not tracking my money, I don’t like the feeling that comes from having a financial “black box”. I don’t like the mystery. I want to know how much I’m spending on comics and clothes and Crossfit. I want to see it all in black and white. So, I’m going to get the new version of Quicken and start from scratch.
- Give myself an adult allowance. A couple of years ago, I adopted the adult allowance. Every month, I’d withdraw $200 in cash, which was my “goofing around” money. This is the money I’d use when playing laser tag with the guys, or buying books, or walking to lunch at the nearby Hawaiian restaurant. Like many people, I loved having this finite cash reserve. I always knew how much I could spend on indulgences, and I never felt guilty for doing so. Somehow I got out of the habit of using the adult allowance, though, and have just been charging everything to my rewards card. Not anymore!
As I said, I’m getting back to basics. These are all steps I recommend to other folks feel like they’re starting to flounder. And let me re-iterate that I’m not in bad financial shape. Things are fine. I’m just trying to make small course corrections now so that I don’t find myself having to make larger adjustments later.
I may have to implement other steps in the weeks ahead, but I think these three tasks are a great place to start. If you can think of other small course corrections I ought to make, please let me know.