I’ve written a few posts on LBYM (living below your means) over the last few months.  We’re trying to become more frugal, examine our spending, budget, etc.  This is new to us.  We used to be free spenders, had lots of debt (not like some people, but new cars, house, RV etc.) and never managed to save much money beyond what I contributed to my pension and employer sponsored deferred compensation plan.  We have made and will continue to make errors in judgement.  Breaking old habits is hard.

Recently, we had a really good month.  We kept our spending very low without really sacrificing.  We ate well, spent a little money on fun stuff and actually put a significant amount of money in savings.  Jen had a busy month at her job that helped too.  We were both really proud of that.  However, we failed to do one thing.  We failed to keep up the good work.

The next month we knew we had a little buffer and spent a little more freely.  Well, as it turns out we spent a lot more freely.  By the end of the month we had spent all our income and more than we had saved the month before!  Huh?  Where did it all go?  How did we manage that?

Who knows?  And that’s the problem.  We forgot how easy it is to ignore spending when we’re not tracking it.  A month is longer than you think.  You can spend money one week and then believe the next it’s been a lot longer since you’ve spent money.  So you go spend more.  Since you aren’t tracking it closely, you have no real idea what  and at the end of the month, you’re in the hole.

I call this the boom and bust cycle.  You are good for a month or two watching your spending and then you get lax and everything goes to hell.  Then a couple of months of forced austerity to catch up and you’re back on the wagon, so to speak.  But a few months later, it happens all over again.  Boom and bust.

I think the problem is two-fold.  First, we have no good way to track our spending.  No real budget, no set tracking schedule or method.  We’ve tried a few methods, but they were all so complex and time-consuming that I just knew we would fail to use them.  Simple budgets and trackers fail to capture enough detail to do any good.  I’m sure there is a middle ground, but we haven’t found it.  Honestly, one-size-fits-all solutions just don’t work for us and the way we do things.  I think I have to come up with something on my own.

This means we don’t have any idea how much we spend on discretionary stuff, or even how much we really have to spend on that stuff.  We can figure out pretty quickly how much we paid for all of our bills in any given month, but we have no budget for dining out, entertainment, hobbies, etc.  We just kind of wing it.  Winging it, isn’t good, let me tell you.

The second problem is the lack of goals.  We don’t have any financial goals.  We don’t have a maximum amount we want to spend and we don’t have a target amount we want to save.  How do we know we’ve done well or done poorly?  To me putting $100 in savings is a good thing, but to what end.  That’s the other half of having a goal.  When we do manage to save some money, what is it for?

Is it to buy something, go on a trip or is it an investment for the future?  We don’t know?  We have no goals.  I think we need to establish some.  Then at least we have a way to measure our success and a reason to put in the effort.  We have goals and plans for our future, but none for our finances.  I suppose that’s partly due to having  a pension.  I put money into the system, but it was compulsory.  I never saw the money and never missed it.  We never developed a habit of saving.

In case, you haven’t figured it out, we’re pretty bad at this.  I’ve always taken the attitude that money is for spending and I’ll always make more.  Jen is just plain afraid of money.  That colors her judgement and causes her to do things for reasons that aren’t always clear and with outcomes that aren’t always good.  We both have some bad habits to break.

So, even though I might have said it before, I mean to work on some tools to help us out.  I think first we will discuss goals and then tailor tools to fit those.  I know I want to get out of this boom and bust cycle.  It’s no fun to be sure.  The lean months suck and the months of abundance are never as much fun as you’d think.

Life is a journey and you learn lessons along the way.  I believe these lessons will serve us well in the future and are worth learning.  With kids and a big house, two cars and all that, we will continue to have surprises and events that blow our budget.  But if the plan is to downsize and simplify our lives, and it is, mastering this stuff now will make our future simplified lifestyle, sans kids and big house, a piece of cake.

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