In my last post I talked about having had a relapse into spending, and how I was going to need to work hard to come back from this. Well I am happy to report that things have started to go in a much better direction.
I have gotten my emergency fund back above Dave Ramsey’s suggested initial 1000$, and I am in the process of creating an additional 1000$ fun for auto repairs, since I recently had to repair my car and wiped this fund out as a result. I am also in the process of creating a buffer, as per YNAB‘s 4 rules. If you’re not familiar with YNAB, it is a fairly popular budgeting app, and is the one that I have used for roughly the last 5 years. You can find more information about it here. With YNAB, there are 4 rules, and the last one refers to the buffer. The rule is “Live on Last Month’s Income”. Basically you are meant to fund all your categories (phone bill, groceries, electricity, etc.) one full month in advance (at least) so that you are actually using last month’s money to pay for this month’s bills. This means that if something happens and you don’t make the money you thought you would make this month, you are still able to pay your bills. It’s meant to create some breathing room and safety in your monthly money management. I am slowly working my way through this at present, trying to get all categories (rent, phone bill, groceries, etc.) funded a full month in advance, and I have actually made some pretty decent progress. YNAB tracks the “age” of your money, that is how many days are there between when you get your money, and when you spend it, and I have managed to get this figure up to 32 days at present count.
So how have I been doing this?
Well here the plan for recovery that I initially set out:
- I need to recognize when I am feeling uncomfortable, stressed out, or empty, and watch for any impulse to spend / acquire things in this situation. Do I really want this new thing, or am I just trying to escape some uncomfortable emotion or sensation?
- I need to ask myself, in what specific way will buying this item make my life better? If I can’t answer that question in a convincing way, then I need to walk away from the item.
- I need to continue to talk to my partner about our differing financial situations, and how this means he will have to sometimes go to that restaurant (or whatever) by himself. I have had this conversation with him already, but then I fail to live by it. Of course I want to go out to the restaurant and eat the tasty gourmet breakfast, but the reality is that I am not in a position to be budgeting for this type of expense every week.
- I need to watch my unplanned, “small” daily spending, because these things add up fast. This is things like coffee, snacks, etc.
- I have started immersing myself back into the books, podcasts, and online community that helped me to achieve such great gains in the first place. Coming clean and thinking it all through in this blog post is part of the process.
- I need to remember that I am still on a significant debt reduction journey. I have made incredible strides toward freedom from debt, but I still have an incredible way to go. If I really want to achieve my greater goals, then I need to kickstart my motivation and get back at it!
So what else have I noticed as I have moved forward?
- Social media can really fuel my spending.
- I have noticed that social media, specifically instagram and Pinterest can really fuel my spending. I have begun to notice that if I start repeatedly looking at a certain social media figure wearing a certain brand that I am interested in, I might need to put the phone down and step away. Usually, this process results in me purchasing something, and it’s usually something I don’t need. Basically any Pinterest use poses a spending danger to me; I need to remember that at the end of the day, it’s a shopping app.
- I have realized that it is time to reassess my values, in order to ensure that my spending is values based.
- This is something I have done many times before, and I will do continually and forever. Values (financially) are the things you decide are important in your life, and which will help to maintain your subjective sense of life satisfaction and help to make you feel happy. The idea is to make sure that when you do spend money, it is to move your life and experience in a direction that is consistent with your values.
- Immersing myself back into the personal finance media is really helpful for me. I don’t actually mean creating it here, but rather listening to podcasts, audible books, and youtube videos on personal finance, and reading personal finance books. I find that I actually need to keep doing this on a fairly frequent basis to add fuel to the motivational fire. And of course, there is always more to learn.
- I need to set concrete savings goals that motivate me.
- So I have always had the overall goal of “Pay down my student loans”, and when I started out with my roughly 70 thousand dollars of debt I initially broke it down into sections, and the order in which I would snowball them. This started with my highest interest credit cards, and went on from there. Those sections were smaller, and so there was real visible progress eventually, and I was able to feel a great level of success when I hit the end of each one. I now find myself battling the largest section, which started at 48,000, and is now down to 38,000. While I am actually making very good progress, this section of the debt is so large that it’s easy to start to feel like it will never end, and I will be here forever.
- At last calculation, at my current rate of repayment minus the whopping interest payments I pay every month on this (because it is not a traditional student loan), it will take 3 years and 4 months to finish this one. At this point, I haven’t taken a vacation or done any real spending to speak of in over 3 years so motivation can be hard to maintain. It can also be difficult to know whether I should continue to aggressively pay down my student debt with everything I have, or whether I should divert some of my funds toward creating retirement accounts (which is what I have opted to do). This amount is a small percentage of my earnings, but I am always thinking about whether I should have maintained the all or nothing approach. But I digress…In order to help motivate myself through this large chunk of my debt, I have decided that I will set up goals at each 10 thousand (so at 30 thousand, 20 thousand, 10 thousand, and 0) and celebrate having reached each of those milestones. I have not quite thought this through yet but I may also buy myself some sort of (reasonable) reward for having reached each of those milestones. I am hoping that this will help to fuel my motivation.
So this is what I have been doing so far to fight back against the relapse into spending that I experienced over the winter. I am always open to hearing your ideas and feedback, and what has worked for you.
As always, thank you for reading.