Monday, December 10, 2007

Watching it Evaporate

It seems so easy right now to just live paycheck to paycheck. I've gone through long phases in my life where I didn't buy very much stuff, but right now is not one of those phases!
Here's a breakdown on the simplest level: when my 401k deductions are taking place, my take home pay is about $2,000, twice a month. One of those paychecks basically covers my housing costs with just a little left over. Then I tend to have a Visa bill that comes to around $2,000 a month on average, or more, lately. So, poof, my money is gone.
Yes, the 401k savings aren't gone, but often my spending eats into other savings. There are some mitigating factors: at some point, a tax abatement for my condo should kick in and lower my monthly costs a bit. And I have spent a lot of money this past year on one-time things involved in furnishing a new home. And of course every month I am building equity as I pay off my mortgage. But still, I don't like living this way. I knew when I bought the condo that I'd be trading off some cash flow for a nicer standard of living, but I'll feel better about it when I am back in a more consistent money-saving mode.
Thinking about things this way keeps me on track. I went shopping with a friend this weekend, which involved a trip out to a suburban mall. Theoretically, we were supposed to be looking for Christmas presents, plus perhaps a new pair of boots for each of us. My friend ended up buying a couple of presents, plus, for herself, a pair of expensive sunglasses, two sweaters, some underwear, a bra, a pair of sweat pants, and a pair of shoes. I'm not sure how much money she spent but she said when she got home there was a phone message from her credit card company telling her she needed to call and verify that her card hadn't been stolen!
I bought myself some more new underwear, on sale (note to self: file for future "costs of dating/new relationship" posts) and some cute pajamas for my niece and nephew even though I already have enough presents for them. I think I spent a total of $90. I was tempted by a few other things but I felt a little tired that day and also just felt a kind of spending fatigue. It was like my inner shopper just went into shut-down mode and I stopped wanting to try things on or even look at anything. I helped my friend decide on some of her purchases, and she was trying to return the favor by asking what else I needed and offering to help me find things to try on, but I was just DONE.
I'll have to brave the stores probably one more time to finish my Christmas shopping, but thank goodness this season is almost over. I need to go into total retail hibernation for a while!


frugal zeitgeist said...

December is always a costly month even though my family doesn't exchange gifts. I just shelled out $242 for homeowner's insurance, plus several hundred dollars for tips for the doormen and other building staff. I've got major dental work coming up in two weeks and that's going to be another $1200 out of pocket, $600 or more in total after insurance reimburses me.

I know I'm not really broke (or even close to it), but I sure am sick of feeling like it.

PiggyBankBlues said...

it seems like no matter how much i save in my xmas fund, i am ALWAYS broke this time of year! i can't seem to be able to buy presents without picking up a few for myself along the way...

Anonymous said...

Perhaps we all feel broke during December, what with Chanuka, Christmas, and the Winter Social Season. January will be much less expensive; you can hibernate, monetarily, and pay off the credit cards.

You can't change behavior that's already past, so there's no point in worrying about it. But you can change the way you live in the future.

I have always made a lot less money than you, Madame X, and I lived paycheck to paycheck (sometimes hand to mouth) for years. It helped me tremendously when I stopped using credit cards this February. I do use a credit card when buying online, which I don't do often. Other than that, I pay with cash, or write a check, or use my debit card. I carry my checkbook, and when I use my debit card, I subtract the amount immediately from my check register. I try to get receipts for everything, even an 85¢ candy bar.

Every evening, I look at my financial life for the day, and compare it to my budget. So I always know how much money I'm spending, and how much I have left in my account.

Since I started doing this, I have almost never bought something on impulse, I have never overspent my income for that month, and I've saved a lot more. Yes, I've given up the credit card reward points, and I suppose that if I traveled more, that might be more of an issue. But -- something I didn't expect -- I enjoy the game of trying to spend less, I feel much more secure about my old age (yes, far in the future, but it will get here before I expect it, I'm sure), and I love having control over my life.

Within my budget, I got great presents for everyone this year. And if they don't like them, I hope they will snicker or pout behind my back, instead of telling me.

Noel Larson said...

This year we tried something different then just budgeting. We took the amount (x per person) and held it as cash and then kept the money in named envelopes.

We ended up spending less than we ever have and it was very clear when we were out of more cash :)

Lastly, the best way to stop the itch is to either avoid the scene as much as possible (like an alcholic stearing clear of bars!)or leaving the plastic elsewhere,or even cut them up.

I know easier said then done, but it helps knowing that we aren't going to be looking at our CC bill in January going, "We spent what?!?"

Anonymous said...

This is the part of the year that is really rough. I sacrifice and pay off debt throughout the year and then come December, end up using the plastic on Christmas. It makes it very difficult to ever get in front of things doing this. We're going to attempt to set money aside to plan Christmas next year, but even still it's hard to say what will happen.

Statistics show that quite a few people will buy something for themselves when Christmas shopping. My wife got something for herself yesterday that really was not necessary but liked and bought it anyway. I bought some stuff too but nothing for myself. I'm just glad the financial pain is almost over and dread the damage in January.

Anonymous said...

Makes me kind of glad I don't have to deal with New York rents.

I agree with some of the others, December is an annoying month for spending. It seems like expenses just come up.

mOOm said...

It's great that you can buy a condo in NYC for only $US2000 a month. Our monthly rent here is $A1911 and buying a similar condo would cost considerably more. Does seem surprising though that if you are earning what I think you are that you are only bringing home $4000 a month, though when I did the maximum 403b conribution I only brought home $3300 from a $75k salary so I guess it makes sense and you have slightly higher taxes in NYC than I did in upstate NY. Always amazes me that so many wealth people live in the two highest taxing jurisdictions in the US - NYC and CA....

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