Budgeting Financial independence FIRE Loving life

Returning to a simpler time

Funny how philosophical all this budget talk has become around the Greener Pasture$ household.  I recently wrote about the little things adding up to big spending reductions.  By focusing on these little things, all the ways in which we’ve unwittingly come to take modern luxuries for granted and, in some ways, become the blind, impulse-driven consumers capitalism relies on, have come into sharp relief.  (I warned you — it’s philosophical!)

Now to be clear, I like capitalism.  To wildly oversimplify, I’ve benefitted from capitalism all my life; I feel it’s a superior system in practice to socialism, communism, or other isms; I aspire to use the system to my great advantage in the future.  That said, the capitalist masters of the universe have so many tools at their disposal to prey on our basic human impulses at our own expense — to keep them rich and us spending.  Taken to an extreme (which I think is quite common in today’s United States), this results in the feeling that, despite generally rising disposable incomes, you can never MAKE IT.  (I believe John Bogle, founder of Vanguard, touches on this in his book, Enough, which is on my reading list.  For the quick fix before I get to reading the whole book, I read his Georgetown MBA commencement speech.  His is a critique of the financial industry; here I’m more focused on personal earning and spending, but the sentiment seems to overlap.).

So how is it that we now have so much more disposable income than our forbears, yet personal savings rates have declined since the 1960s?  Where are we spending all our extra money?  I have not studied this issue, but looking at my own family’s spending item by item has started to give me an idea (using a sample size of one…).  Let’s see how.

We are in our first month of combining our finances and striving to reduce spending.  At the beginning of the month (which was April 18th — we’ll be getting onto a calendar month schedule, but this first month is April 18th – May 17th), we decided we’d try and minimize our discretionary spending and, if we had leftover at the end of the month after meeting all our expenses and savings goals, we could use it for additional discretionary items.  We started a “wish list” for items big and small, onto which we have started to put everything other than necessaries (e.g., food, home goods, etc.).  Before instituting this practice, both of us spent somewhat impulsively on perfectly reasonable items, but without a plan (“I think we should have some more books for our son, and look, they’re on sale!” “All my work shoes are worn out.  Time for a new pair.”).  With this new system, theoretically, at the end of the month, we will have a bit of money left over, which we can methodically use to get items on our wish list.  OR, if the end of the month comes and we realize we’d rather save the money than buy those items, well then, we’ll have more money to set aside.

There are also some things that, before spending money on, we’ve realized we could do ourselves, for free (or less).  I had a pair of pants that needed to be hemmed.  Normally, I’d drop it off at the tailor, but I thought… I can do this.  I pulled out my sewing machine (which has been sitting unused for about 10 years), and, lo and behold after re-familiarizing myself with how to spin a bobbin, I could hem a pair of pants.  That took one evening and saved me $13 — not a huge savings, but it was an enjoyable evening doing something with my hands, using a tool I already own, and re-discovering a skill I once had.  I have also decided to take haircutting into my own hands.  For $9, I bought a pair of haircutting scissors, and cut my son’s unruly mane.  We normally spend $20 to have someone else do it.  His hair looks…… fine.  I keep seeing spots I want to touch up.  But, he’s so stinking cute anyway, having a little bit of an imperfect haircut could never take away from that!  And, I can only assume as I do it more, my skills will improve.  And, my own most recent haircut was a bust, so instead of spending $60 to go get a new one (or just living unhappily with this one until I could feel less guilty about getting another one) I took my new scissors and… yes… went after my own hair.  And I think it turned out fine!  Certainly, at least as good as the guy I paid to do it last time.

These are the types of things I used to do when my income was much lower.  And, they’re things many people do as a matter of habit today, and certainly would have done historically.  But, I can say with some confidence, they are NOT things most big city professionals do nowadays.  They have money, they have limited time, and they outsource these tasks.  For me, outsourcing any number of things had become a habit I scarcely thought about.  Now I’m thinking about it, because I’m questioning why I work so darn much.  I am selling my time, and buying… what?  Someone else hemming my pants (which I enjoyed doing myself), or cutting my child’s hair (which I also enjoyed doing)?

Now, there are times when convenience is worth paying for.  But this experiment is forcing me to examine these expenditures and question whether each outlay is worth it.  And, early data from our first month of combined finances suggests that these changes are having a serious impact.  We are two full weeks into our combined budgeting, and the results are frankly amazing.  Our discretionary (or variable) spending is on track to be about 30% lower than the average of the first three months of the year — and that’s with one big home repair expense this month:

Discretionary (variable) spending:

Previous monthly average $5,773
This month’s projection $3,966
Difference $1,807
% change 31%

That’s progress!  I feel a little bit like a pioneer woman, but hey.  Those people felt useful and had skills.  There are worse things.

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