Not a Wasted Word

Instead of commenting to each comment on my last post, I’m going to write another post that is pretty much one big response to all the comments. It might seem a little disjointed, so please bear with me.

My last post didn’t give an accurate portrayal of my financial history. I didn’t purposefully omit anything, but I realized reading the comments that it I failed to convey the reality of the situation. It’s true that I haven’t ever paid interest on my credit cards, but I have carried debt a few times, always rolling balances onto 0% APR cards and hustling to pay them off before the interest started accumulating. I did that when I traveled with my sister in Europe in my early 20s, and when I was on maternity leave both times. There have been other times I couldn’t pay my credit card off completely and had move money around or get help from my husband to cover my payments. My parents also gave me $10,000 in an investment account and I’ve dipped into that on occasion. My spending has always been irresponsible and I’ve never kept track of it, let alone monitored it carefully. I’m sure you all remember that I was actually lying to my husband about my spending habits for a time, when they got really excessive. Please let me assure you that I really do need to overhaul my attitude about money. It really is a serious problem that I need to get a handle on, and that is not me being overly self-critical. It’s just a fact.

And yes, it has been nice to have my parents help me so much. I’m sure I don’t realize how nice it’s been, because I have not walked in the shoes of those who had to hustle for financial security. It’s also the reason I haven’t been forced to figure this shit out until now; I’ve spent two decades walking the path of financial irresponsibility and now the ruts of overspending are so deep it will be really hard to get my wagon off this track. I’m not saying I have it harder than people who have not received financial support from family, I’m just saying that it has hindered as well as helped me.

The purpose of posting my spending online was first and foremost to hold myself accountable in my only-buying-consumables spending freeze. There were no other immediate goals intended in posting my spending this summer. Of course being aware of where I DO spend my money is a valuable exercise and I want to add the goal of figuring out where my money is going so that I can eventually make more informed and intentional decisions about how I spend my money. This will help me make realistic financial goals moving forward; by the end of the summer I want to have a budget in place that includes a manageable savings plan. If I am going to be setting aside money for savings, I will need to change how I spend, and I’m hoping these eight weeks of publicly tracking my spending will help me to plan and carry out those changes.

One thing I haven’t talked much about is the not insignificant matter of my husband. I am, of course, only one half of a couple. We both make money. We both spend money. We both need to be on board with this budgeting stuff right? I believe we do, but All Your Worth cautions not to come down to hard on your other half when you start overhauling your budget. I have tried to bring up my concerns about our financial situation a few times but my husband has expressed interest in pursuing the topic. It’s not that he doesn’t care, I think it just overwhelms him and he never feels like there is a good time to really hash it out (mostly he’s just too tired at the end of the day to participate in any meaningful conversation, let alone one as charged as how we spend our money). This definitely complicates things, but I’m not letting it get in the way of me making the changes that I need to make.

My husband and I have separate bank accounts. There is a very good reason for this: we are lazy. Well, that isn’t the whole truth, but it’s the easy truth. The honest truth is that for a long time I didn’t want our accounts joined because I didn’t want my husband to see my spending. (Remember that part about how I was hiding it, when it got really bad?) And since I’m the one who GETS THINGS DONE, the merging of our bank accounts just never happened. He has his accounts. I have mine. He pays certain bills and I pay others. We kind of sat down at certain points and figured some things out, while other things just happened without us saying much about it. Clearly it’s not the best way to go about things. Again, it’s more decision via indecision than any specific choice to do it this way.

The final nail in the coffin of merging our accounts is we can’t figure out where to put our money together. I don’t love my bank. He doesn’t love his. We’re too used to the mobile conveniences of our massive institutions to put our money in a credit union, where we want actually want it to be. So I bring up putting our money together. We realize we’re not sure how to proceed. The conversation ends and nothing happens. Lather. Rinse. Repeat. Times a thousand.

We have talked about taking a small step in the right direction and I plan on opening a savings account at the credit union that opened an office in our neighborhood. When we figure out how much we’ll be putting into savings every month, that money (from both of us) will go there. We will both contribute to it. It will become our six-month emergency fund, the place we go to get money when something big needs fixing with the house, etc. We do plan on merging our finances completely some day soon, but without my enthusiasm driving it, it simply won’t happen.

The separate accounts, and the fact that we pay for things separately, also make tracking our spending habits harder. Luckily my husband doesn’t buy any THINGS with his money. He NEVER spends his money on stuff. But he does like to spend his money on food, and drinks, and going out and having a good time. And he usually is the one who puts the card down when we do those things together. So it’s going to take longer for those habits of ours to change, because right now he’s just not that interested in making sacrifices when it comes to that stuff. He does want to start contributing to his retirement (on top of his pension contribution) and putting something away for savings and he is aware enough of his balances not to spend more than he has left over, so I’m hoping that alone will help him make the necessary changes in our “eat/drink/be merry” budget. I will be trying hard to track what he spends on that stuff, at least when we’re together, so I can be more aware of how we can reign it in, but I will not be posting that spending because it’s not mine and I don’t feel comfortable putting his choices out there. (I’m sure he wouldn’t appreciate it either.)

{Oh, and to answer the question about what my husband does, he was a big firm attorney for two years, right out of law school, and used most of that crazy money to pay down his high interest student debt. Then he worked for a non-profit for five years (making significantly less than I did as a teacher) and now he works for the city (making a little bit more than I do as a teacher, but with incredible health benefits.}

So this post got really long again, and I apologize. I hope that clears up any confusion from the last post and answered any questions people posed. I will be responding to comments on this post. Thank you for sticking with me while I flog the topic of finances to death. These are not changes that come easily to me. I’m taking baby steps, and baby steps take a lot of time. I promise my next few posts will be about something more fun, or at least less financial.

Do you and your partner have joint or separate accounts? How did you come to that decision? Does your partner share your financial aspirations? If not, how do you deal with that?

(Any tips on us joining our finances are welcome. Maybe hearing your suggestions will light a fire under my ass about it.)

So, my thoughts on posting about my spending. In a word? It’s been hard. Really hard. I don’t think I realized before how intensely personal spending money is to me. Or at least, how intensely personal it can feel. There are so many aspects of who I am, how I grew up, what I feel is important, wrapped up in my choices. Some choices happen on autopilot, the results of habits hardening over time and some are well thought out, even agonized over. To put it all out there, for people to know and judge, it’s a lot. (And yes, we’re all judging, it’s what we do. In fact, it’s what I asked you to do,)

It’s hard because I only write down what I spend, not the (many) things I choose not to get. It’s difficult because I feel a lot of shame about my spending. It’s one of the two biggest “problem areas” in my life, and I am not proud of anything, really, when it comes to money. I don’t feel competent. I don’t feel capable. I feel like a glutton. And a fuck up.

So sharing where every single dollar goes makes me feel very open, exposed, raw.

The thing is, I have never limited my spending. Not in any real, productive way. I grew up getting whatever I wanted and I got used it (I’m sure I didn’t get everything I wanted, especially when I was a little kid, but it felt like I did when I was older). I honestly don’t really know how to not get what I want. I feel horrible saying it, but it’s true. I’m spoiled. And entitled. I’m the product of two parents who had next to nothing growing up and overcompensated later in life, giving their kids everything they never had (to be fair, my sister grew up in the same environment and she never buys herself anything, but she does have very high expectations for every aspects of her life, those expectations just aren’t centered around stuff).

I started working when I was in high school, but my parents paid for everything I needed, so I was able to spend what I made on what I wanted. And I wanted a lot. I kept up these irresponsible, sometimes even destructive, spending habits well into my 20s. It wasn’t until I had kids that I started becoming aware of how much I was spending on stuff I didn’t need, and even then I couldn’t seem to do anything about it.

The fact that I didn’t rack up any credit card debt until I was on maternity leave speaks to the fact that my mom was actually REALLY good with money and taught me to never bounce a check or carry a balance. So I suppose I did put restrictions on myself, but even as an adult my parents always helped enough with my “needs” that I hardly had to reign in my “wants.” And I never looked ahead enough to put even a cent away into savings. A meager $300/month retirement contribution was all I’ve ever managed.

When I met my now-husband he worked as a corporate attorney and made huge amounts of money, but continued living within the means of a law student as far as the big ticket items were concerned (he rented a room in an apartment with five other guys, didn’t own a car, didn’t buy nice clothes or things). We got used to eating out at all the trendy restaurants, or just ordering in when we were too tired to cook (which was most of the time). We got used to doing whatever it was we wanted to do.

Now a days we only regularly get take-out meals that end up being $4 (or less) for a single meal (like our local extra large pizza or steamed buns). We treat ourselves to $8 burritos (which is just a regular burrito in our area, nothing fancy) about 2x a month. And yes, when it’s a special occasion we go out to eat. It’s what people in San Francisco do. (And I know it’s not a reason to do it, but it’s hard to ignore).

Really though, it’s true. All the people we know in this city live this way. Everyone is making the choices we make. All our friends go out to eat, see shows, and go to events. They just do. It’s what people in this city do. It’s why they live here, because they want to do these things.

I don’t know how they afford it. My guess is they don’t. Some of them still don’t have kids, so that helps them make ends meet. Some of them definitely make more than us, but most of our parent friends are in our socio-economic bracket. They all order in, or go out to eat. The do date nights. (And the vast majority have to pay for a sitter to do it! I bet we save over a thousand dollars a year by having grandparents around to watch our kids for us–and we have more opportunities to go out because of it.)

I’m not saying that because we see other people doing it, we should be able to as well. I guess I’m just trying to explain some of the choices we make. I don’t think we’re trying to keep up with the jonses, we just see people living a certain way and we assume we should be able to live that way too. It’s why we’ve never looked closely at what we spend, because we didn’t consider our choices extravagant. It all just seemed normal.

Creating a budget that includes savings is going to seriously alter the way we live. We will have to make so many different choices. We will have to determine what is most important to us, and what we actually need We’ll have to learn to say no, to others but most importantly to ourselves. It’s going to take a lot of hard work. It’s going make us feel uncomfortable, and upset, and angry, and frustrated, and depressed. In the end we need to find a way to make it work. It would be irresponsible not to.

Posting my weekly spending is just the first baby steps of a thousand mile journey. I’m not going to get it all right in week two, or three, or even 15. It will be a work in progress and slowly, but surely I will move in the right direction. Already the idea of ordering from a Thai place we used to frequent seems like a luxury, I’m sure the idea of getting a pizza will feel that way in a few years.

In the meantime, I’m going to keep posting my spending, even though it makes me feel a lot of things I’d rather not feel. I’m going to put it out there, because it does help. When I know I’ll be held accountable by all of you, I’m better at holding myself accountable. There have been times I’ve wanted to get something, something that would absolutely break my spending ban. I’ve even toyed with the idea of buying something and just lying to all of you about it. A simple omission and it would all be okay, no one would be the wiser. Except for me. I would know. And I have to remind myself every time that lying here, in this space, is only lying to myself. And that is what keeps me from doing it, every time.

So I’ll keep posting an inventory of what I spend. I’ll keep writing about this budget journey. There is still so much for me to do and it’s going to take a long time to do it. One budget post at a time.

Do you think spending is a personal thing? How much do you feel comfortable sharing about it?

There were three big purchases this week: (1) I renewed our membership to the Discovery Museum because we always go way more than enough times to make it worth our while (it’s $50 for our whole family!) (2) I had to get new tires on the bike riding on them. (3) I went grocery shopping at Costco.

The bike tires were more expensive than I was anticipating and they have brought the bike project a bit over my hoped-for budget. They were definitely necessary though–it was not safe to ride with both kids on the old tires. Because they cost so much I’m no longer going to try to get a double kickstand to steady the bike when the kids get on. It would definitely be nice but I’ve managed fine leaning the bike against a wall and steadying it with my legs while I get them in, so I can continue to do that without a kickstand.

{Bike update: I’ve ridden a couple time with both kids now, and on our first ride all together I got us all up two considerable hills. The guys at the bike shop were very impressed. I still feel a little shaky on it when I’m stopping and starting, but it’s getting easier every time we ride. I try to take them out at least once a day so we can all get used to it. Next we’ll be commuting to my daughter’s camp on it two times a day.}

I also got two last things for the bike–a small lock for the helmets (that doesn’t work great and was a waste of money; I should have researched this betteR) and a set of bungee cords to tie backs on to the back, because there are times when we need to take things with us (like my daughter’s backpack with her lunch and change of clothes). I’m also in need of a pump to fill the tires–I have a Craigslist alert up for that and I hope to get a hit soon (it’s not looking good, most people sell them only as part of a package deal with their bike). I’m not sure how I’m going to figure this one out, I may just bike over to my sister’s place every once in a while and borrow hers.

The grocery bill at Costco was massive but I’m not yet trying to bring those costs down, I’m more becoming aware of them. I did take a few items off the belt at the last minute because I realized they cost too much and we didn’t really NEED them. (I don’t know if I would have made that choice if I weren’t posting my purchases for you all to see.) I’m sure I could have shaved more off my final purchase, but again, I’m not trying to stay within a specific food budget–at least not yet–I’m just being mindful of where my food/grocery money is going every month.

Oh and on the groceries note–pouches. I bought a lot of pouches this week, because they were on sale in two places and we go through them fast. I know they are not a financially responsible way to spend food-money, but my son is so picky and it’s SO HARD to have food for him when we go out. I bring pouches in an attempt to avoid having to get him something wherever we are, because that always ends up happening when he won’t touch the food I brought for him. I’m starting to experiment with bringing left overs to see how that goes, because he just won’t eat any food that’s easy to take along (ahem, sandwiches!). I know I spent a lot on pouches, but it should last me through the summer.

As for the Discovery Museum membership, that also falls (as far as I’m concerned) into the “okay” area of my ban. Again, I don’t have a budget for this category of “wants” but I am going to have to determine if I can really afford to do all the fun things I do with my kids. Right now I’m just going to see how much I’m spending on this stuff and then make an informed decision after the summer.

Oh, and I also totally shit the bed and bought my son a soccer ball. This totally goes against my ban! My husband sent me out and told me he needed a regulation sized ball since he freaks out when he sees them at the park and is not distracted by our “toy” balls. We literally have to leave if he can’t participate in the ball game, he becomes so fixated. I happily set out to the store with my son in the stroller, and it wasn’t until I was a block away from our neighborhood shit-you-don’t-need market when I realized the ball was ABSOLUTELY not allowed under my “only non-consumables spending freeze.” I tried to take it back but the place does not do returns (it’s a super shady store that specializes in all things knock-off). So yeah, I really messed that one up, and on something so dumb. I’m chalking it up to a brain fart, it’s definitely not something I really wanted, but told myself I couldn’t have, and then bought anyway (there have been things I’ve wanted to buy that aren’t allowed, but that deserves its own post). Still. Totally lame. I’m disappointed in myself for sure.

So, without further (because that was plenty) ado, my spending for week two:

NicoleandMaggie recommended All Your Worth for my financial woes and it became available at the library this week. I’m only three chapters in but I think I can safely say that the premise is to create financial security by balancing your money. In what reminds me of the Zone Diet, their recommended spending 50% of what you make on Must-Haves, 30% on Wants and 20% on Savings.

Right away they help you calculate what percentage of your monthly take-home you’re spending on Must-Haves. These are your necessities, the things you’d have to pay even if you lost a job or were suddenly put on disability. This does not include anything you could cancel if need be (like cable) or anything you can live without (basically all spending except the bare minimum on food–they suggested inputting $650 for a family of four). It’s your mortgage or rent, your insurance premiums, your transportation costs, your required debt repayment. It’s the stuff you have to pay lest someone come knocking.

I filled in the worksheet and did the basic and math and was shocked to find that just over 75% of what we make goes to the basic foundation of our lives. That includes $650 on food, which is way less than we actually spend every month. Immediately it became clear why we have nothing left to put away each month. We’re using almost all of it just to get by.

I don’t know why I was so shocked by this. I knew we cut it close every month. Back when I was paying for our health insurance, the $2,500 premium was putting us over. We had nothing left. We racked up $10,000 in debt the year our son was born because I was part time, I took three months off (mostly unpaid) and my husband’s insurance coverage at work kicked in six months after we were promised it would.

I guess it’s just seeing it in black and white, and realizing how far we are from the 50%-30%-20% ideal they suggest. There is no way we’re ever going to bring our monthly “must-haves” down 25%, not without selling our house, leaving our jobs and moving very, very far from our family, probably to an entirely different state.

There are suggestions for ways to bring down your “must-haves” but we already collect rent on a portion of our house we don’t live in (and it’s clear to me now we will NEVER be able to move into that space like I once hoped). Our insurance premiums are very reasonable. I guess we could ask to lower our required student loan payments, but it doesn’t make a huge difference as we only have to put $500 (of $7,350) toward them every month. I am going to investigate refinancing our mortgage at a better rate but we’re already at 3.25% and I doubt even the increased value of our house (real estate in our neighborhood is crazy right now) would help us get better than that (rates seem to be 4% right now for 30 year mortgages).

So where does that leave us? I’m not sure. I know we can make small changes to start putting a little more away, but it’s never going to be anywhere near 20%. And this is after I read we should be putting 20% away into our retirement! Right now we’re putting almost nothing toward retirement (except what we contribute to our pensions) let alone saving for a rainy day.

This is sobering news. While it’s validating to know we haven’t been squandering some massive percentage of what we make on things we don’t need, it’s upsetting to think that we can’t do much to spend a smaller percentage on necessities.

In three years things will be better. My district is getting a 9% raise over three years which will mean I’m making about $800 more a month (before taxes). I can just plan to put more into my 403b as my salary goes up (1.5% every six months for three years) so that I never even see an increase in what I take home while putting away a larger percentage toward retirement. In three years we won’t have a $1,500/month childcare payment (assuming I can get my son into a T-K or preschool program through the district the year before he starts Kindergarten) which will bring our “must-haves” percentage to 60% if everything else stays the same. I’ll also be done paying off my student loans. My husband will step up on his salary schedule at least once in that time, which will add another $5,000 annually. We’ll definitely be in a much better place, and if we can learn to live on less now we’ll be able to save even more when later we’re making more.

So there is hope, but that light is a few years away at least. And it’s sobering to realize we won’t be making significantly more money anytime in the future. We’re both very close to our salary ceilings. There isn’t much farther up for either of us to go.

In the meantime I want to make small changes toward saving, even if we have to live on a tight budget to do it. I’m really sad to see my dream of moving into our downstairs unit evaporate in the roaring flames of our (disaster of a) financial reality, but we’ll make it work. (Oh second bathroom, I’m so sad to see the dream of you go). We chose to live in this city for a lot of reasons and we’ll have to keep reminding ourselves of those reasons as we make these hard choices. We could leave (in theory) but we choose not to. And if that is our choice, we need to figure out how to become financially secure while we stay.

Do you have any idea what percentage of your spending in dedicated to “must-haves?” Do you think you’re anywhere close to the 50-30-20 ideal?

{My first weekly spending post will go up this weekend, even if it happens late Sunday night. Thank you for all your thoughts on the bike idea. I will discuss my decision on my first weekly budget post.}