Wow am I glad May is over. Not because it was completely horrible – there were some really great moments – but because May was super expensive, and the end of May means that RD comes home in just over a week. :)
I had planned two trips for may – home for the long weekend, and a camping/hiking trip with Cait. My three nights home were really great. I got to spend time with friends and family (and eat a lot of delicious food!). Plus, I took my sister to the spa (as you can see in the ‘Gifts’ category below). However, my camping/hiking trip with Cait ended up not happening. She got super sick with the flu – and even if she hadn’t gotten sick, the weather last weekend was so horrible I doubt we would have gone anyway.
- Food – I got lazy and stopped cooking meals at home. It was surprisingly hard to keep disciplined, even though we’ve been cooking the majority of our meals at home for the past 6 months.
- Clothing – I got two dresses altered, and bought a new pair of workout pants.
- Car & Transportation – Well, now. My little car got new tires, an oil change, and a couple of other random fixes that I’ve been putting off for a while. I knew I was going to have to get this done before our October road trip, but I didn’t anticipate doing it this month. One of the little fixes got to be too bothersome, so I ended up taking it in and just getting everything done just out of convenience. I’m glad it was all taken care of, but ouch!
Income and Savings:
This month I saved 48.6% of my income, which is just a bit below my target of 50%. I brought in $3,000 through freelancing, and still have $6,250 in outstanding invoices yet to be paid.
May 2016 Goals:
- Be diligent with cooking meals at home. FAIL. Oh, yes, this was a complete and total fail. I had all these grand ideas of cooking my meals at home and not getting lazy just because I was cooking for one this month. :) I actually did fairly well for a while, but a bachelor mentality set in, and I ended up going $60 over budget for the month – mostly in take-out food.
- Workout 5x/week. CHECK! I worked out 19 times this month, and did a mixture of yoga, spin class, climbing, and the gym. I shed a couple pounds (which was not the intention, but I’ll definitely take it!), and feel much stronger.
- No alcohol or coffee. PASS. I did quite well with not drinking alcohol (I had 4 drinks all month), and I was doing well with coffee for the first three weeks … but the last week has been hard. Work got really busy and I ended up coming in early a lot and grabbing coffee on my way in.
- Be creative with freelancing opportunities. PASS. I had some good conversations with potential sponsors. Nothing has been confirmed yet, but I’m just glad I was able to flesh out my ideas and pitch them.
- Save $2,500 towards retirement. FAIL. My huge car bill ate up the majority of my freelance income from the month, but I still managed to put over $3,000 away in retirement and savings combined – so even though it was a fail, that’s still a win in my books. :)
The last handbag I bought was in 2009, and it cost me $275. It was an expensive purchase for sure, but 7 years later, it continues to be my everyday purse. It still looks great, and I will keep using it as long as I can. However, a few days ago I decided that I wanted a new purse. The one I have is pretty big and not super practical anymore now that I don’t carry as much stuff around with me like I used to. Plus it’s pretty casual and not very professional to carry into meetings.
So I went online and started looking at purses. There were a couple that I liked, and after about an hour of reading reviews and looking at pictures, I finally decided on one that was $268. But if I was going to spend that much on a purse, I would qualify for free shipping. So obviously I should look at the sale items, right? Twenty minutes later, I had a cart full of stuff and my credit card in my hand. I could afford this purchase – and I deserved it! Plus, it’s not often this store has a sale, I should buy while I can. Wait. What? I snapped out of it right then, put my card away, and very quickly closed my laptop.
Not only was this purse going to be an impulse purchase, but I also found myself justifying a bigger spend just because there was a sale on. Even though I knew that a sale was not reason to buy things that I didn’t actually need.
No matter how good you think you are at managing your finances, we are all guilty of lying to ourselves from time to time in order to justify indulgent spending. Luckily I caught myself before I spent nearly $500 on stuff I didn’t need! Because while splurging on occasion is healthy, one of the keys to financial independence is to stop making poor spending decisions and unnecessary purchases. I didn’t need a new handbag, and I certainly didn’t need the sale items I had gleefully added to my shopping cart.
Here are four common lies we often tell ourselves in order to justify unnecessary spending:
I work hard, so I deserve it
When I lived in Europe, I traveled a lot. And when traveling, I was often times surrounded by tourists. I’ve overheard countless conversations about money, once-in-a-lifetime opportunities, traveling to escape obligations, and travel debt.
There’s one conversation that has always stuck with me: Nic and I were in Prague waiting in line to take a tram ride up to a viewpoint. We were standing behind two 20-something women who were discussing how they couldn’t really afford the six-week European vacation they were on, but they were happy they did it because they “deserved it after a hard semester.” They each financed their trip with a credit card, and fretted for a few moments about how they planned on paying it back. “We’re young, we need to enjoy ourselves,” one of the women exclaimed. “We only live once!” the other woman agreed.
Luxuries like vacations are definitely something we should indulge in from time to time – but only if we can afford them. If you can’t pay for your trip in cash, you cannot afford to go. I can’t stress that enough. It is so much better to wait and save up for a big trip, or scale back and take a less expensive vacation. The last thing you want to do is stress about your money when you’re supposed to be having fun, coming back home to a huge credit card bill, or having to work hard into your retirement years in order to pay off all of the things you thought you “deserved” along the way.
The savings isn’t worth it
Most of my friends don’t do much comparison shopping. They don’t clip coupons, they don’t ask for better rates, and they don’t bring back receipts for price adjustments because “the savings isn’t worth the hassle.”
I don’t know if I should be repeating this story on my blog, but I remember when RD and I were first dating, he confessed that he sometimes didn’t submit his receipts for contact lenses to his health care provider. It wasn’t very much money, and he just felt like it wasn’t worth his time. So he kept putting it off until he eventually forgot about it. I was shocked. Not just because he wasn’t using his extended health care benefits, but because I claim every little expense I can. My blog is called Give Me Back My Five Bucks, after all. :)
A few years ago, I was chatting with a friend who had about $4,000 in a “savings” account with a big bank that offered 0.05% interest. That’s right. 0.05% interest. On top of the low interest rate (if you can even call it an interest rate!), she was also paying a monthly fee for her chequing account. I asked why she didn’t move her money to a bank with free chequing accounts and a higher interest rate (at that time, PC Financial was offering 4%). She replied by saying, “its not worth the hassle, and I don’t need the extra money.” Even though she was in debt and paying her bank to keep her money for her, she wasn’t willing to trade a few hours of her time in exchange for saving $12/month in account fees, and a higher interest rate on her savings.
Maybe $12/month didn’t seem like a lot to my friend, but it’s a lot to me. Especially when you consider evaluating all of your expenses to make sure you’re getting the best prices on the items and services you pay for. It all adds up, and you could potentially save hundreds of dollars each year.
It’s an investment
Sure, you might need new clothing and shoes when you land your first job out of school; looking professional truly is an investment in your career. However, buying a $500 pair of shoes is not an investment. If you want to buy a pair of $500 shoes, and can afford to do so, then go ahead. But buying them with the idea that you are somehow going to financially benefit from them is a lie. A true investment is something that will make you money over time, not plummet in value the moment you leave the store.
It’s a once-in-a-lifetime opportunity
If I indulged in every “once-in-a-lifetime” opportunity that has come my way, I would be in some serious, serious debt. :) I get it – when something fun and unique comes along, it’s hard to say no – but very few things are truly only once-in-a-lifetime experiences.
In my early twenties, a friend asked me to go backpacking in Asia for the summer. “We’ll never get to do something like this again,” she had said. I remember thinking to myself, why can’t we do this trip later when we are both out of debt? Asia will still be there, and we’d be able to enjoy ourselves more if we didn’t have to put our trip on credit. So even though I wanted to go, I knew I couldn’t. Plus, if I could have somehow come up with the money to fund a trip to Asia, that cash would have been better off put towards my debt. Spending money to increase my debt load (while decreasing my net worth) didn’t make a lot of sense to me.
It can be so easy to fool ourselves into thinking it’s okay to spend on things that we can’t afford. That’s what got me into debt in the first place, and I count myself lucky that I figured that out before I spent myself deeper into the red.
What other lies do we tell ourselves in order to justify spending?
This past weekend, I went home for the first time since February. It was really nice to catch up with friends and spend time with family. On the Saturday night a group of us went out for dinner and drinks. We’ve been friends for about 12 years, and were reminiscing about how different our lives are now. It was so interesting to hear my friends openly talk about personal finance – mortgages, savings accounts, and credit card rewards. These were things we would have never talked about even just a few years ago. And when we were in school? Even though they were my closest friends, I remember trying very hard to cover up my debt and what a financial disaster I was.
I can’t believe it’s been 10 years since we graduated from college – that means it’s been 10 years since I actively started taking care of my finances, and 9 years since I got myself out of debt. Looking back at who I was 10 years ago, I can barely recognize myself. I was a self-serving, arrogant, entitled brat who spent her way into $20k worth of debt. I’m proud of who I’ve become and how much I’ve matured, but I know there’s a lot more growing and learning to do on my part.
A couple weeks ago I went hiking with my blogger friend Cait. We were talking about (of course) blogging, and I mentioned that I don’t write on this blog as often as I used to. It’s not from lack of things to write about (my content calendar is full of blog ideas) – it’s the decision to prioritize my time doing other things instead. I’m also not as engaged on social media, but I try to be present and post things at least once every couple days. I’ve also been struggling with how much information to share on this blog. I know I shouldn’t have been surprised by this, but it recently came to my attention that a lot of my friends and family in real life do actually read this blog. I even know of vague acquaintances reading here, and while that’s amazing and I appreciate their support, I’m also very aware that my partner has no social media or blogging presence (and values his privacy). So I guess you could say I’m struggling with how much to share while I respect him and his desire for privacy.
Anyway, those are a few things that I’ve been thinking about lately. As for my finances? Things are running smoothly for the most part. Here are a few notables that have happened in the past month or so:
- Thanks to an increase in my RRSP contributions last year (and a decrease in my freelance income), my tax refund for 2015 comes out to around $520. I’m going to have to do some calculations for this year, but since I’ve already more than doubled my freelance income from last year, I’ll likely have to pay taxes when it comes to filing for 2016.
- We’ve been living together for over 6 months now, and things are going really well. We have really made this little place into a cozy little home, and I don’t think either of us want to leave once our 1-year lease is up. That being said, I am keeping a very close eye on the rental market in the neighbourhood. I’d love to live in a laneway with a balcony or some sort of private outdoor space, but for the price we’re paying compared to how much those cost, I think we’re okay for now (a 2-bedroom laneway with a balcony a few streets over is renting for $2,600 – that’s $950 more than our place!).
- Speaking of living together, we’ve come up with an okay system for splitting shared expenses. We take turns paying for groceries, and reconcile at the end of each month right before one person sends an Interac money transfer to the other person when rent is due. It works for now, but I’m slowly moving towards the idea of having a joined chequing account to streamline this process a bit more. Neither of us has had a joint account with a partner before, so it will take some talking to figure out if it’s the right move for us.
- My goal of only spending $500 on clothing/shoes for the year is dead. :( I had already bought new rock climbing shoes this year, so I ended up going over my $500 budget on the weekend when I bought a hoodie to replace one I bought 5 years ago (the cuffs were all frayed), as well as new workout tights (because I split the inner thigh seam on the ones I currently own – don’t ask). I’m actually okay spending the money because these are items I wear multiple times each week, so I wanted to make sure I was buying good quality items that were going to last me years to come.
- I’ve mentioned before, but freelancing has been going quite well this year. I’ve made over $20,000 in freelance income so far this year, and have saved most of what I’ve actually received in payments. This means my savings rate has gone through the roof, and I think I’m hovering at about a 65% net income savings rate. I’m extremely happy with this, but I’m going to have to take a really hard look at my short term vs. long term goals. Right now I don’t think I’m saving enough outside of my Retirement Portfolio. RD has a much larger down payment at his disposal, and if I toned down my retirement savings, I could save at a faster rate to try and match that (for when we do eventually buy – likely years from now). But since early retirement is my number one financial goal, I’m not sure I want to do that. Some thinking has to be done.
Anyway, that’s it from me over the past couple weeks. :) I’m making it my goal for this week to wrap up a few unfinished blog posts that I’ve been working on over the last month, so be sure to look for those. In the meantime, it’s a short 3-day work week for me, as I’ll be headed to the Sunshine Coast on Friday morning for a camping adventure with Cait. :)