I woke up late. Watched the news and drank a cup of coffee. Then scrambled to shower, dress, let the dog out, make my second cup of coffee and lunch. I got on the road and then glanced at the dash to see the time. 7:30am!!! I was going to be getting to the office around 8am. Just in time for the questions from team and leadership to begin.
As a leader, I do expect that this will happen and for the most part I do like that my team requests my input. But…I usually try to get in around 7am or 7:30 in order to start my day off with doing some of my own work for the day. And I usually take some time to drink my coffee and eat my breakfast.
This morning was slightly different, I had forgotten to eat breakfast or pack something for breakfast.
This meant raiding my desk drawers for some loose change and running to the closest vending machine for something edible. After checking a couple of vending machines, I noticed the only options were not that healthy (PopTarts and Danishes). I made the decision to slightly increase my budget for breakfast and headed to the cafeteria for something a little healthier.
I think this highlights something that is a problem for me. I am very good at going “cold turkey” and not spending at all. I am equally good at spending until my credit card wants to cry. The middle ground is where I struggle.
Putting my expenses on a budget…
I don’t like to budget at all and find that I just spend too much even with a budget. For many years, I saved money into my 401k and then used all the rest to live on with no budget at all. And boy did I had a good time!
But…saving for retirement alone isn’t good enough if I want to achieve financial independence. I want to save for those years between now and retirement.
I put together a plan to help me reach Financial Independence, but I still struggle with things like budgeting and daily expenses.
One technique that really worked for me was utilizing the method of “paying myself first”. When I first heard this I thought I was doing just that. I saved my $18,500 or $19,000 into my 401k and thought that was all I could and should do.
As I started to examine the FI lifestyle and began listening to more podcasts, I heard a slightly different interpretation of this statement that really changed my path to Fi.
The individual stated that “paying yourself first” to them meant looking at all of income as savings. Any bill you pay is then getting paid from savings.
For example, lets say all your monthly income totals $5,000 after taxes and your monthly fixed expenses were $2,500. You would setup your direct deposit to place all of this income into a savings account. And then at a specific time each month, you would transfer the total amount of fixed expense, $2,500, into your checking account.
This requires an in-depth calculation of your total fixed expenses. No room for blame or investigation. If its a fixed expense, then you needed to add it to the total. This is purely to get the total dollar amount of fixed expenses you currently have. Any adjustments to this amount will be investigated at a later date.
This lead me to two very important realizations –
- I don’t have to live paycheck to paycheck. Looking purely at the numbers, I should be able to save $2,500 of my salary every month.
- Since I never seemed to be able to save any money, I obviously spend a significant amount of money on miscellaneous expenses.
Stop all miscellaneous spending…
The first few months, as I tried to identify all my fixed expenses, I stopped all miscellaneous spending. I could spend $100 on food and gas, but that was it! I think this just helped to clarify, in my mind, that there was money to be saved. I was just spending a lot of money on things I don’t need.
This continued for a few months but then I went on vacation. To Vegas! All my plans for “no spending” went flying out the window.
I realized I need a better plan. I slowly started to identify ways to lower my fixed expenses so I could spend money on other things that brought value to my life.
Fun trips with my friends.
Lunch with my friends.
A healthy breakfast.