Last week a friend and I were talking over coffee. She said that she didn’t know how I could live on a budget, or afford to do all of the things that I do – like go skiing, play team sports, travel, buy concert tickets, and even save for retirement. She said that the few times she tried budgeting, she felt deprived and irritated, so she stopped (a feeling I could absolutely relate to). I told her that the only reason I can afford to do anything is because of budgeting.
Some people are just good with their money. They know how to spend less than they make, without having to use money tracking software or a big Excel spreadsheet – but not me. I’m bad with money – always have been (which is how I got into debt in the first place). And that’s why I personally need to account for everything that I purchase, as well as every dollar that I save.
It’s difficult trying to explain budgeting to someone without getting preachy. And for someone like my friend, who has never been able to successfully put together a budget, it can be overwhelming. It was especially hard because I’m not yet comfortable talking about my struggles with money with people in my real life. I tried to explain as best I could that being on a budget does not automatically mean you have to cut out every single fun thing you’ve ever done, or will do in your lifetime. It is about taking control, understanding where your money goes, and realizing what you value in life.
When I was in debt, I spent money I didn’t have because, like her, I didn’t want to feel deprived of anything. I wanted to experience everything, and have fun. Everybody else is in debt, so why should I be any different!? Whatever I couldn’t afford, I always found a way to justify the purchase to myself, and bought it anyway. Obviously I didn’t think about the repercussions … and then one day I woke up and realized the extent of the mess I had created. I was literally spending my future away.
My friend and I ended up chatting about how we live in a society where we want everything quick and fast and now. And the reason so many people are struggling with debt is because debt repayment is slow and cumbersome, sometimes exhausting, and very difficult for most people who are used to getting everything immediately. Instant gratification, right? Not so, when trying to get out of debt. But you know what’s weird? Since I’ve started budgeting, I’ve probably cut my discretionary spending by more than half, and I felt more deprived then – when I was spending money on whatever I wanted – than now. It is absolutely amazing how fast those little purchases add up (most of them I barely remembered buying). And at the end of the month, did I really appreciate those items that I had bought? Or could I have saved that money instead, with little impact to my life.
I used to absolutely hate the feeling of being broke. And I was broke. A lot. It was a desperate, extremely stressful feeling having to count the days until my next pay cheque. I always say that the turning point for me was when I realized I didn’t even have $10 to my name in cash or credit in order to buy bus tickets – and I had to ask my (then) BF of only THREE WEEKS to borrow some cash. I’m still mortified to this day about that phone call. And it was the motivation to avoid that desperate, extremely humiliating feeling that made me want to change. Understanding that I didn’t have to ever feel like that again was what made my brain click into a completely different mindset. As soon as I realized that budgeting wasn’t about deprivation, it was about empowerment – my entire life changed.
Instead of “I can’t afford Item X,” it became, “I am choosing not to buy Item X.”
Instead of being reactive and saying: “how did I spend $458 on clothing last month?” I became proactive by saying: “I know I have $100 to spend on clothing this month.”
It was about changing my mindset from letting my money control me, to me being the one in control. I decide where my money goes, and that’s a very liberating feeling.
So to my friend, I hope you get a chance to read this. I know I probably didn’t make much sense during our talk, but this how budgeting has affected my life in the most positive way possible.
I was asked another question to my Formspring account:
So do you still keep in touch with friends from your high-spending days?
The answer is yes and no. I do stay in touch with my old friends, but there are two distinct differences: 1) we don’t talk about money unless they specifically bring it up, and 2) I’m not around as often anymore. This is partially because I don’t live in the same city, but also because I can’t justify spending money on the things that they like to do. Good for them if they can work it into their budget and can afford it, but going to the mall, grabbing beers, or heading to the bars/clubs are not priorities in my life anymore.
Whenever I go home, I will grab a coffee with a friend, go for a walk or a hike, or do something relatively low-cost. That’s not to say that I don’t do anything that costs money – a few months ago I did a high ropes course with a friend for $40 + tax. And I usually go out for lunch with a few friends when I’m home as well. I just make sure that it’s worth it for me, and that I can justify the cost. Over the past few years, I’ve really gravitated towards friends who live the same sort of lifestyle as me – and that’s only natural.
I’ve talked about it before, but I try extremely hard not to judge my friends who don’t have the same personal finance goals as me. Everybody is different, and everybody has different priorities in life. If someone chooses to spend their 20’s and 30’s living it up and will work (extremely) hard later in life to make up for it – then all the power to them. But at the same time, it’s hard for me to relate.
I’m at a point in my life where struggling with debt is behind me, so I don’t feel like I am at risk to fall back into a spending pattern. While I was getting out of debt and my immediate goals didn’t align with the lifestyle my friends were leading, I had to distance myself from them. Yes it was hard, but it was what I wanted and it was what was best for me. Thankfully I had close friends who understood how much it meant for me to get out of debt, and those people are still closest in my life.
Hearts to everyone in the PF community.
I just read an article on CBC.ca that says in a recent poll, 59% of Canadians live pay cheque to pay cheque. The article also stated that almost half of respondents are saving 5% or less of their income. And 40% of respondents weren’t even attempting to save money at all.
Now, okay. I cannot criticize anyone who spends all of their money and doesn’t save anything, because I was once there too. But that isn’t the way to live. It’s stressful and it’s hard. So you either have to cut down on your expenses or work harder and make more money. I love shows like Till Debt Do Us Part, because Gail shows every single person on that show that no matter what their situation is, there IS a way out. And there IS a way to change their lives and start getting out of debt/saving money. Even if they don’t like it (which they usually don’t). She solves money problems for everyone from the minimum wage worker to the 6-figure executive.
Right now, BF and I have a household (combined) income of $50,000 because I am the only one working. That’s like each of us making $25k/year. And while we do pay a minimal amount of rent, I do have a $540 car payment every month (roughly $270 bi-weekly), plus car insurance on both vehicles which, in total, is equivalent to “real world” rent. Not including cell phones, internet/cable, gas money, food, etc. All of this and I’m still able to save a minimum of $300 from every $1,400 bi-weekly pay cheque.
For a lot of people, I’m sure they can relate to making $25k/year. And that’s not to say that my way is the right way to go about dealing with money. All I’m saying is that even with a single income coming in, we can still find ways to save money. Although we are lucky that I’m making the income that I’m making right now. It could be a lot worse.
There are definitely those who are in tough financial situations where saving money just isn’t going to happen for them. Those are rare cases, because most people could save money if they wanted to. And most people could make more money if they wanted to. Unfortunately, they don’t. And that’s their choice. But it really bothers me when they complain that the reason they can’t save money is because internet & cell phones are too expensive, hockey ice times have gone up in price, cable TV is $70!, student loans are too expensive, the government does this, corporations do that, HST, blah blah blah. All excuses. Just look at the comments in that CBC article. Everyone is blaming someone. Anybody but themselves.
People love blaming other people for their misfortune, and I’m certainly guilty of that from time to time as well. Sometimes the situation really is out of our hands, but for the majority of us, we create our own path. Felt like you were dealt a bad hand? Life is what you make it, and your future is dependent on the choices that you personally make. So if you have the ability to save money, but you choose to spend instead, that’s fine. Likewise if you have the opportunity to work hard and make more money. Just don’t blame anyone but yourself when you’re close to retirement without a penny in the bank. Or when you lose your job and you don’t have any money to fall back onto.