When I was in my 20s which was (ahem) almost 20 years ago, I (naively) believed I would find a good man, get married, and never have to worry about my financial future again. Throughout those years, I had a lot of fun – I traveled, partied, moved to Seattle, San Diego, and back to D.C., bought luxury cars, went shopping for the latest fashions, but NEVER saved a dime. In fact, I put myself in a lot of debt, living my carefree lifestyle, enjoying every bit of it. I justified the high balance on my credit cards by claiming I couldn’t just sit at home and live a boring life…
In the first half of my 30s, I started my own company, which was accompanied by a huge dip in income in its first year. I went from spending recklessly, to searching for pennies to feed myself, almost overnight. I missed birthdays, baby showers, bachelorette parties, bridal showers, weddings, and other of my friends’ life milestones because I had no means to bring a gift, or even pay for parking/gas to get there. I was so embarrassed by my financial situation that I would decline their invitations, citing I wasn’t feeling well (mentally, I wasn’t), or that I had work that needed to be done, because I was on a deadline (trying to make sure I could get paid in a timely manner). I looked back at my twenties and cursed myself for not having saved any money, yet also longed for the fun I had been having, which told me that if I had had the means, I would have kept on with my fast and carefree lifestyle. It wasn’t until I was married (and subsequently divorced) in my mid-30s did all of that change, forcing me to face my “demons” head on, and change how I viewed/handled money.
When you throw yourself into a situation of having to take care of someone else because they, themselves, make very little, AND you’ve been surprised with a puppy (which I’ll admit, was the greatest surprise of all time); you’re forced to grow up. I went from a carefree, crazy lifestyle; to almost being homeless; to making a modest income, while having to a support a “family”.
Being married puts a very different lens on how you live your life, as well as the choices you make. Purchases I used to make independently now affected not just myself. If I wanted a new top, I had to think about whether I was able to buy enough food for the week, for two people, and still afford it. While I could go without a lot of food, my ex could not. There were times it drove me crazy to not be able to even go to Forever 21 for a cheap t-shirt, but I also knew that there were long-standing lessons I needed to learn out of this, and that one day, it wouldn’t be so bad (or so I kept telling myself when I was home on Saturday nights).
To compound this, we moved to San Diego to start a new life together (as D.C. had left me with nothing but sub-par memories and a lifestyle I couldn’t afford), and it meant that my ex (who was a bartender by trade) had to search for work. We had no idea how hard it would be to 1. Find him a job, because bartending positions were hard to come by; and 2. Find him a bartending position that actually paid decent (sometimes, he came home with $20 cash, since tips are split on a sliding scale). This meant that rent, utilities, food, car payment, gas, puppy care, mounting debt payments, etc. all fell to me. While it was the second most stressful financial situation I had ever been in, it was also one of the most gratifying and empowering.
While I had been keeping a spreadsheet of my expenses for years, I started to plan out an entire year’s worth of finances, assuming I was the only one making a solid income every month. I put us on a year-long plan to save as much as I could in case one of us (including the pup) had an emergency, and that meant making large sacrifices in the short term (i.e. never going out unless it was a day trip to the beach, or somewhere else that allowed us fresh air without costing us anything). This included anything leftover from budgeted financial line items (i.e. we didn’t use all of our grocery or gas money), which would go into savings, as did the small amounts of cash he’d bring home from work.
Unfortunately, this belt tightening led to us moving on from each other, as he didn’t understand why we had to make financial sacrifices in the first place. He didn’t seem to understand the realities of being on a modest salary, as he had always lived with his parents (he’s from Europe where family life is very different), and didn’t worry about much beyond any money he may have borrowed from them. He found our situation to be too constrictive and thus, our chapter ended. Sure, it was painful, but I also found solace in 1. Knowing I was only responsible for myself and my little furry son; and 2. Having a better understanding of what it meant to be financially free, while saving as much money as I possibly could.
In the last 2 1/2 years, since I moved back to D.C., I made good on my self-promise to save more and spend less. Even while getting raises and bonuses, I opted to save that money, and invest it, so that I could focus on my bigger life picture (including having enough money in my bank account for six months worth of expenses, in case something happened to my job). I got rid of my car (perks for living closer to the city), saving me almost $1000 a month, which also went into savings. Before I knew it, seven months ago, I was able to buy a home with a small down payment, and still sock away enough money into some investment accounts and three different savings accounts. Next year, my savings plan is even more aggressive.
You might be wondering, “Does she actually go out and have any fun, or even see the world?!” From my other blog posts, you can see the answer to that 🙂 I am lucky to be in a great relationship, in which I’m able to share some of the household expenses, allowing for an increased “entertainment” budget. Compared to most people’s going out in D.C. expenses though, it’s highly modest. Below are some of my tips on budgeting and how you, too, can save for the future, while also being able to enjoy life too!
- Consignment – You love to shop, especially luxury brand names (my weaknesses include shoes and handbags). Go through your closet and pull out any items you aren’t using anymore, and consign them at your local consignment shop, or on a consignment site, such as Poshmark. If they are luxury goods, head over to The Real Real and set up an account (best site for that), and opt for store credit when you consign. I allow my sales balance to grow before I purchase a new item on there so that the money I spend comes from the items I’ve sold – not a credit card, or additional cash from my bank account.
- What to do with a raise – Treat it as though you never got it, and invest it! When I got a raise at work, I took that additional cash and threw it into a ROTH IRA (for now). I don’t ever miss it, because it’s auto-debited on purpose!
- You have extra money in your checking account from budgeted items that you didn’t end up purchasing – Throw that into a savings account! Those cents/dollars add up quick!
- Budget for a whole year – include EVERYTHING you think you will spend money on – this includes birthdays, weddings, engagement parties, hair, nails, makeup, food, weekly gas, vacations, etc. Set a budget for each of these items, and be realistic, yet not too conservative. You might spend $30 on someone’s birthday gift, but estimate $50. You might spend $100 a month on getting your hair colored, but what if you need a haircut 3 months later? Did it also include tip? Seeing a budget helps put in perspective your spending habits.
- Plan for vacations a year in advance – Yes, I’m serious and no, you don’t need to pick a location right away, although it’s helpful! We’re planning on a 10-day California adventure for November 2018, and we know we want the experience to be everything we want in a trip like this. I put together a spreadsheet of our drive down the coast, which includes places to stay, the cost per night/person (including taxes), and the URLs so I don’t forget; things we want to see that cost money; the car rental, the one-way flights, etc. We vowed to start saving January 1st so we wouldn’t have to worry about money on the trip. (Note: It’s also always wonderful to have things to look forward to, and if you get closer to your vacation date, and you can’t go, you’ll be amazed at how much money you have now saved!)
- Become your own chef! I budget $200 every two weeks for food (for me), I buy food on Tuesdays, and meal prep for the week (I can’t make poor eating decisions/spend money on takeout when I’ve done this). I’m not saying don’t eat out, I’m saying reduce how many times you eat out in a week – it adds up! I go out to eat once a week, and I grocery shop on Tuesdays because that’s when all of the sales/deals come out – buying generic brands definitely helps too, as they oftentimes get deeper discounts. Sounds old-ladyish, but I’ve actually saved anywhere from $20 – $40 by shopping on that day! I then take that money, and put it into savings, or throw it towards another part of my budget.
- Be realistic with your evenings out – I used to get major FOMO when I didn’t go out, but I paid for it dearly in credit card debt. Ubers/Lyfts and drinks ADD UP BIG TIME! It’s one of the hardest habits to curb when you like to have a good time. For me, I had to stop going out, little by little, allowing myself only a night a week. While it sounds miserable, it has done wonders for my waist line, my mind, my sleep patterns, and my wallet. I also find myself looking forward to those evenings more, knowing it’s my one night to enjoy myself. Still, if there’s a special event, such as a concert, musical, or a charity event I want to go to, I have to work through what I’m sacrificing to be able to go to it. Usually, it’s one of my weekends, or something else in my budget I can live without. And yes, I have friends, which means it’s also a lot of pot luck dinners at each other’s homes!
- Staying on fashion trends while not breaking the bank – I’ve learned that trendy clothes are rarely worth the pricey investment, yet I love to look my best. For my staple items, such as jeans, coats, classic shoes, etc., I’ll spend money on those investment pieces, knowing I’ll have them for years. For the trendier stuff, I have no shame in admitting I go to Forever 21 🙂
- Reward yourself – Whether we want to admit it or not, we are a reward-based society. I’ve learned that there are milestones in my life that I want to be able to celebrate (no matter how small), and if I don’t have the means, it brings me down a bit. Thus, I set aside part of my bonus, or even part of my tax return, for monthly rewards that allow me to feel like I’m not so restrictive.
- Find ways to make a passive income – There are SO MANY WAYS to do this! Back in the day, I took writing side gigs. These days, I’m opting for honing my writing craft on evenings and weekends to publish my books, and sell my screenplays – something that will net more passive income in the future, than if I were to take on other writing projects in the short term. Find something you’re good at, and find a way to monetize it!
- It’s okay to have a credit card (as long as you’re responsible) and if you do have one, make sure you get rewards! I have a United card, which equates to MILES! Every purchase I make, is on that card (which I review the expenditures daily to ensure I’ve not overspent on my budget). Using this card for everything has allowed me to spend a total of $22 on two flights for next year (which would have totaled $800 otherwise), as I racked up enough miles using that card (responsibly).
- My Amazon Prime account is worth every penny – From movie and music streaming services, to Kindle books, free shipping, Prime Pantry, and Prime days, I’ve saved A LOT of money on things that bring me daily joy.
Now for the first step, and for some real words of advice … none of this will even be possible if you don’t take stock of you and your life first. I had to ask myself a lot of difficult questions to get here, and many a time, the truth was ugly. I was spending to fill an emotional hole because I didn’t want to face some of my harsher realities. When I was depressed with absolutely no self-confidence, I’d spend more to make myself look better. When I was happy, I’d spend less, opting to save the dollars. I had to take a look around to see if anyone noticed my shiny exterior, and as it turned out, it didn’t matter what wrapper you put around me, my dull light within was noticeable, far more than a pair of Louboutins.
If you’re one of those that is reading this, and feeling totally helpless because you are where I was 10 years ago, there is always HOPE and always TIME to change this part of your life around! Start small – one week, go grocery shopping, and each time you have the urge to go out, take that money you would have spent, and put it towards your credit card, or throw it into a savings account, but DON’T SPEND IT! Otherwise, you’re not moving any closer towards your goals.
Or, for another perspective, take your net income, divide that by how many hours you work in a week, and ask yourself if that purchase is worth x hours of work? For example, Sally wants a new pair of shoes that are $200, and would probably not be worn very much. She calculates that it would take her four hours of work to afford them. She realizes she’d rather put that towards a much-needed night out, and leaves the shoe store.
Regardless of how you approach heading towards healthier habits, it’s an incremental process that (literally) pays off in the long run. I hope that through this, I’ve at least inspired some of you to set yourselves up for better, freer future selves that will certainly be able to breathe a lot easier when you’re ready to retire, make that big purchase, or are able to proudly say you are no longer paycheck-to-paycheck. And remember, if you HAVE to borrow, you SHOULDN’T spend!