Earlier this week, I lamented the fact that my net worth plunged by more than 15% in 2018. Although much of this was due to accounting quirks (buying back this website and remodeling the house, neither of which get tracked by my personal net worth) and larger economic forces (the stock market declined by 6.2% last year), some of the problem is that I've allowed myself to succumb to lifestyle inflation. I've been spending more than I used to.
As a result, I've resolved to make some changes.
I've already trimmed nearly $500 of recurring monthly costs. (This number will increase to nearly $750 once a couple of contracts end.) But that's just the beginning. Over the past month, Kim and I have discussed other steps I can take to cut costs. It's time for me to get back to basics.
Back to Budgeting
Because I track every penny I spend, I have a pretty clear idea of where my financial weaknesses are. When Quicken shows that I spent $4675.56 dining out last year, that's clearly an issue. (And that doesn't even count what Kim spent!) When it shows that I spent $2820.39 on iTunes downloads, that's clearly an issue too.
Analyzing my spending summary for 2018 allowed me to find several ways to curb my spending.
- I'm going to cut back on groceries. To start, I'll give HelloFresh a trial run. Kim and I enjoyed a free two-week taste of this meal-delivery service last spring. We liked it. It seemed a little expensive but not outrageous. (Here's my HelloFresh review.) Because my grocery spending continues to be higher than I'd like — primarily due to impulse spending in the grocery store (beer! juice! fancy cheese!) — we're going to use HelloFresh for three months to see whether this actually cuts costs. If not, fine. We'll try something else.
- I'm going to build barriers between me and “frictionless spending”. Big companies like Apple and Amazon make it easy to achieve instant gratification with one-click shopping. I'm a sucker for this kind of stuff. I spend far, far too much on the iTunes store, for instance. Back when I was trying to get out of debt, I deliberately avoided bookstores and comic book shops because I knew they'd tempt me to spend. Similarly, I'm now going to deliberately avoid browsing online stores. If I have a need and want to order from Amazon, great. If Kim and I decide we want to rent the latest Marvel movie from Apple, great. But I'm not going to kill time by browsing.
- I'm going to move from tracking my finances casually to tracking them seriously. For the past two years, I've used two tools to manage my money. I use Personal Capital to keep tabs on my accounts, to get a sort of overview of my financial situation. And I use an antiquated desktop program (Quicken 2007 for Mac) to manually enter my earning and spending. These habits won't change. What will change is how carefully I use the tools. I'll monitor Personal Capital daily. I'll be much more accurate about how I enter expenses in Quicken.
These are the big changes I've already begun to implement. There are plenty of smaller things I hope to do, as well. [Read more…]