Friday, May 17, 2013

Living Below My Means

After many years of wanting to ignore the facts of my spending habits, I somewhat recently started doing the very thing that motivates me and helps me to not waste my money.

I started keeping a written record of everything I spend money on. I call it a budget book and in it I write down the money coming into my hands and the money going out of my hands.
In any case it is a very good habit to acquire.

Take the subject of drinking coffee. I used to buy 2 to 5 coffees a day. Adjusting for my day quite often being 36 hours long, I believe that an average of 3 coffees in a 24 hour period is close to correct.

As the benchmark I have used a medium coffee from Tim's.

So 3 mediums at $1.60 and I always pay $2.00 for that coffee equals $6.00 per day x 365= $2,190.00.

Well a few months ago I started drinking only home brewed coffee. In the last couple of weeks I have stopped drinking coffee altogether.

This is just one example of how the "budget book" has improved my financial life.

Once I started writing things down I was able to see patterns. I was able to see clearly the costs of those patterns as well.

I used to have a really bad habit of being an impulse shopper. The only store I go to on a regular basis is the grocery store. That is where my impulse buying occurred. I would go to the grocery store for  2 bananas (.57) and a small container of cut up watermelon ($2.99) for a total of  $3.56. Sweet!

Then I would notice that 1 litre of coconut milk is only $4.99! And the cream filled bun is only .99! And that roasted chicken is 50% off at $5.99!
So now I have spent $15.56. That is $11.97 more than what I needed to spend. This behaviour of buying more than what was on my list happened nearly every time I went to the grocery store. It has cost me dearly!

In the last 72 days I have paid $3,700.00 towards my credit card balance. This would not have happened without this major shift in my thinking. Now this major financial change has been intentional. This credit card balance was supposed to be cleared off last year.
But it wasn't paid off because I wanted to move, and then there was the strike at work, and right after I recovered financially from that, the furnace and central air unit in my income property had to be replaced.

So now the concept of delayed gratification is firmly enforced in my habits, in my life.
There will not be any golfing this year, but at the end of the season I may get a very good deal on a golf membership for next year ... because I have earned it.

I will still rent a cottage for a week this August.
The only camping I will do is during my other 2 weeks of summer vacation.
The vacation to Central America that had been planned for March 2014 (March 1st off-season begins), will now be delayed until late 2014 or early 2015.

My new hobby is walking. I am losing weight! And a top quality pair of running shoes will only cost me $225.00. I am still walking in the $200.00 pair I bought 6 years ago for now. Walking is a cheap hobby ... a pair of running shoes is all you need. Forget the fancy shorts. Forget the fancy purchases. Be frugal!

I have reduced my church donation from $20.00 per visit to $5.00.

I have looked at my needs list. The question is "do I need it now"? Why now? Why not later?

I will continue Spanish lessons of $60.00/month.

To sum it all up ... if you'll pardon the pun, writing it all down allows me to see where I don't need to spend money.
It allows me to spend money on the things that will improve and enhance my quality of life.
It will allow me to pursue my passions.

It will allow me to be the minimalist that I have been in the other aspects of my life.

I am still doing laundry with the laundry detergent I made in November of 2011. One year and seven months of clean clothes without spending money on laundry detergent!

The key for me was writing it all down.
Now I understand. It doesn't matter how much or how little I earn. All that matters is what I spend.

Finally, I am living below my means.

No comments: