So the last few months have been spent in what I’ve been calling “austerity.” The trick is, you give something a somewhat clever name and you will get more enticed to see it succeed.
But the end result has been positive. Prior to starting this exercise, I was blowing my budget on my credit card spending. Usually, that’s not bad because the budget isn’t the full amount I have available. Then I started blowing through that buffer and had to start drawing from savings. That wasn’t as bad as it could be because I had some silent transfers into the savings account. But it was bad. My savings account balance was about cut in half and I began to get worried.
However, at the same time, I paid off the car loan and did a refinance on my second mortgage, so that was two monthly payments that immediately went into savings. Then I went hard-core and eliminated all extra spending except for food and gas. That has been very productive. I’ve been slowly draining my savings account for probably a couple of years now, and even with the replenishment I’ve been doing lately, it’s still at only 50% of its peak value.
Right now, I can see the future balance forecasts and they look great. I look at the amounts being deposited and I think, “I could be buying (this gadget) every paycheck with that money.” And somehow, that really puts things in a sad perspective. Every paycheck, I could be buying some neat new toy. One thing, for all that money. That makes it seem like I’m not saving that much at all. Then you all all those together and it’s like, “that’s really not a lot of money at all.”
Wait a minute. I had a spending problem where I persuaded myself that I wasn’t spending a lot of money, now I have a savings problem where I feel like I’m not saving a lot of money. What a mental mess this is. So let’s look at it from another perspective.
They say you should have 6 (used to be 1, then 3, now 6) months worth of income saved for emergencies. So right now, I’m at almost 3 months. To get to 6 months savings, it’s going to take maybe another 4-5 months of my current effort. What’s that say? I’m saving 33% of my pay by “hiding money” and another 14% in voluntary savings. My fixed expenses are about 25% of my net pay a month. Almost half my pay is being saved. I shouldn’t feel bad about that at all.
So why do I feel bad? Is it the watched pot never boiling? Is it a case where I can’t see the forest for the trees? Is it a psychosis like washing your hands over and over and never believing they’re clean? That’s what I’m worried about. I have to keep reminding myself things are good and I’m on track. But does that mean I can give myself permission to spend? And then what? Will I fall back into my over-spending habits? I have a big list of things I want. I don’t need any of them.
We’ll revisit this in a couple of months.