Frugality has become a hobby for me, and like all my hobbies, there are times when I'm more and less into it. Right now, unfortunately, is one of the "less" times. I give myself a pretty generous Free Spend budget category each month, and I chafe against it, running through it easily by mid-month. At my most frugal, I budgeted a fraction* of my current Free Spend amount and I'd end the month with money left over.
So, I think it's important to stop and remind myself every so often: what's the point of this frugality business, anyway?
The Non-Frugal Years
I've never been a big spender. Here's a snapshot of pre-budget me, five years ago: living in New York, working in my first software developer job. I made less than industry standard but I didn't know that, and I didn't care because I made a lot more than I had before, and I was so green that I was grateful to company for taking me on. I shared an apartment with a roommate from a Craigslist apartment ad. My possessions were whatever I could fit in my room: a metal frame bed, a borrowed desk, a huge number of books, a desktop computer and some art supplies. My typical dinner: rice and beans (not for frugal reasons, I just love them.) My idea of a fun night out: dropping my brother's to play video games and split a pizza.
I made enough to cover my basic needs, and I didn't want anything in particular. This is a great situation to be in! Talk about simplicity.
Every time my bank account felt lower than usual, I got nervous and cut back a bit. Every time it felt higher than usual, I felt rich, and I'd spend it down. Maybe I'd take a trip with my friends or buy a new computer or something. I had a mental set point of how much money I should have in my bank account, and I'd either save or spend to keep it there.
This worked fine for me for years. I occasionally took a stab at making a monthly budget, but I never stuck with it, because there was no real reason to. My system, or non-system, was working for me. It's easy to be on top of your money when you make enough to cash-flow your ordinary expenses, you've never run into an emergency, and you don't have any goals.
My First Goal
I'm not going to pretend I got into home ownership for the best of reasons. The truth is that my best friend bought a condo and I was jealous. Her place was a lot nicer than my mouse-infested studio apartment. She had laundry in unit. And her mortgage was less than half my monthly rent! Suddenly, there was a reason to save money: a down payment.
Adulthood Kicks In
I managed to pull together the down payment from a combination of saving and borrowing from friends and family. It wasn't until the dust had settled on the home purchase that I began to feel that my money situation was more than I could keep track of in my head. Now instead of one goal--Get That Down Payment--I had several: pay back X, Y, and Z in installments. Save up for the repairs I know the house will need. Save for the repairs I don't know the house will need. Buy furniture. Pay my mortgage, condo fee, homeowner's insurance, property taxes, and utility bills, all on different schedules (yeah--it turns out there's more than just the mortgage payment to deal with).
Things were getting serious with my girlfriend. She moved in. More furniture. I wanted to help her pay off her student loans. We started thinking about getting married. Medical expenses loomed.
In summer of 2013, at age 27, I went from zero to obsessed with personal finance. I began budgeting with You Need a Budget. I listened to Dave Ramsey and Suze Orman for awhile (I no longer do, because I have my problems with their advice, but they're fun entertainment for a personal finance junkie.) I read books like Personal Finance for Dummies. I became the go-to person when my friends wanted to learn about their 401(k) options.
Eventually, I was destined to run into that little article that has blown so many minds: Mr. Money Mustache's The Shockingly Simple Math Behind Early Retirement.
Big, Audacious Goals
Right now, my wife and I have two big, audacious goals. I'll use actual numbers, because I want to track my progress.
Wife's medical expenses
My wife is transgender and there are various medical procedures, mostly not covered by insurance, that would improve her quality of life.
Goal amount: $50,000.
Saved: $8,000 (16%)
Early Retirement, Baby!
I like my current job, but I've changed jobs a number of times in the last few years and I know that (1) good jobs can disappear with very little notice and (2) another good job can be hard to find. I've always always self-motivated to do lots of projects whether I'm working or not, so I'm not worried about being bored. My wife and I love the idea of choosing projects because of their interest to us, or because of the social good they do, rather than having to worry about what is the most lucrative. To me, retirement represents freedom.
Goal amount: One Million Dollars (cue evil laugh). This is based on a Mr. Money Mustache "shockingly simple" calculation of twenty-five times our living expenses, which I estimate, probably optimistically, at $40,000.
Saved: Our combined 401(k)s and IRAs add up to about $100,000 (10%). Not bad--better than I thought--but there's still quite a ways to go (90%)!
And now it's today
Because these goals are so big, and we're so far from the finish line, it's hard to keep up motivation. They are also less tangible than, say, a house. But they are things we really want, and spending hundreds a month on ridiculous things isn't helping me get there.
So this is why I am frugal. There are things I want out of my life; they are very expensive; I want them more than I want, say, a new shirt. But I can have a new shirt neeeooowww. In future posts, I plan to track my progress, lack of progress, and any tricks I find to help me keep up the motivation and save, save, save.