photo courtesy of cycrolu
Dont you just love epiphanies? I had one yesterday while preparing for the 'weekly' budget meeting with my wife. (She'll get a laugh out of the 'weekly' part lol.) For what seems like months I've been looking at our budget trying to see what else I could squeeze out of it. I could never see it, but I could just sense that I was missing something that was staring me right in the face. And boy was it ever, it was the $500 we've been spending on food each and every month! $500 as in a car note on a brand new 5 Series BMW... $500 as in a PS3 and 2 games! For the record, right now it's just the 2 of us, no kids and no pets! I know of couples with 3 children that get by on spending less!
I know just how we got in this bind, and sadly I know we're not the only ones. Sure our situation may be slightly different, but the symptoms are completely the same for anyone who is overspending on food or any other area of your finances. For me it's a word called COMFORT, that simple, inviting killer of many other positive C words: conviction, concentration, character, courage, & chutzpah!
It might not be called the same thing for you, but you need to understand that no matter what you're calling it, IT is keeping you from that next level in your debt dumping experience. See there are basically 3 factors that determine the relationship you have with money: Emotion, Psychology, and the Numbers. I was reading a great article over at Zenhabits.net yesterday called: How I Paid Off $35,000 in Debt, and How You Can Too.
In the article the author was debating the logic of paying your debt off in order of interest rate from highest to lowest, versus paying your debt in order of account balance from lowest to highest. Both approaches have their benefits depending on your psychology towards money. And it was while he was explaining this that he threw out a quote that hit me like an uppercut!
"Many experts advise paying your high interest debts first. Obviously, this makes the most sense mathematically. But if money were all about math, you wouldn’t have debt in the first place. Debt is as much about emotion and psychology as it is about math."
When we started this budget back in October, I was eating fast food almost daily, and my wife was on a weight-loss program. Because of this, we made the decision to split our food money into His and Hers envelopes. The deal was supposed to be $50 per person per check for personal food, and another $50 every other check strictly for non-food groceries such as cleaning products, toiletries, etc. This worked 'fine' for us because we could basically expect one of us to be paid each week, so it equalled $50 per person each week. That might not sound like much at all right? $50 divided by 7 days is $7.15/day... But when you look at it on a month to month basis, it works out to about $200 per person just for our food allowance, and $100 each month for non-food groceries.
I never needed $200 just for food, it just a comfortable dollar amount for the types of food I wanted to buy. Everybody knows it's cheaper and healthier to prepare and cook your own food than it is to eat out all the time. And everybody also knows that it's far cheaper to brownbag your lunch each day rather than frequenting McDonalds, Wendy's, Burger King, and Taco Bell and letting them hit you up for $6-$8 per meal!
While everybody (myself included) might have already known this, yesterday I was finally willing to admit it to myself. My Emotion (wanting to be comfortable) was not in keeping with my Psychology (Kill off this debt by any means) or my Numbers (Spend less on wants, and more on needs and debt elimination). The three have to be in agreement for things to work at an optimum clip.
By the end of the budget meeting, my wife and I decided that we could do away with the His and Hers food money, and also do away with $150 of that $500 tab each month. We both feel very good about it, because we both realize not much is being lost, but a whole lot is being gained by the change we just made. We basically just created some extra income where there was none by curbing our wasteful spending and thinking outside of the box.
I'm sure there are ways you can do the same if you take the time to balance the Emotion, the Psychology, and the Numbers to work to your advantage.
So here's your homework till the next time we meet up: I want you to A) Find a name for your emotion towards your money or B) Give a name to the emotion that prevents you from whipping your financial picture into better shape. And if you care to share them, feel free to use the Comments section, we'd all love to hear you perspective!
Be Blessed till next time,
@W
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