Our next entry is brought to you by another guest writer and fellow BGP fan Avni Shah! She is teaching us the importance and challenges of pulling ‘em up when it comes to finances and a budget…
The end of 2012 and the beginning of 2013 brought big changes for me: I got married, moved out of my extremely overpriced Venice apartment (you should’ve seen my husband and I’s faces when our landlord confirmed we’d been paying a fortune for a mere 600 square feet tucked behind a bean bag store/hippie den/rave) and into a much larger and only slightly more expensive one in San Pedro. The extra $300 in rent and the cost of another new addition—our dog Sully, who we adopted in January—got me to thinking: can we afford all of this?
I was reading an article about this exact issue in Real Simple this morning and one of the author’s points was we often believe that getting a great deal means we can afford what we’re buying, and that if we can pay for things at the end of the month, they are part of our budget. Since we were getting so much value compared to Venice—our YMCA membership is less than the Westside gyms we looked at, for one, and our rent is $300 cheaper than we would’ve spent for a comparable space anywhere close to our old neighborhood—our sense of our finances were: we are saving so much each month. We can pay for everything we purchase—no credit card balances at the end of each month—yet still, there’s a cost we’re not accounting for, which is what we’re not saving.
Since moving in, I’ve wanted to have a big financial discussion. I kept telling my husband that we had to sit down and go over the numbers. For the last six years since moving to Los Angeles, my savings plan has gone out the window. I’ve been coasting on the following plan: put in savings whatever you have leftover at the end of the month and haven’t spent. I put some money away this way, yes, but the amount I spent cut away from better uses. Paying $200 for a pair of jeans when I could’ve used it for my 45,000 mile car checkup (which returned worn front brakes and a $500 bill) or for my pending MRI that is going to cost a sweet $516.18 (the technician was very specific) was short-sighted and a bit ludicrous. It would be one thing if I had room in my budget for all of these things, but when all these expenses arose in one month, the thing that got cut short was my savings contribution. In short, I have been living a life I cannot afford; I just didn’t realize it because I was able to pay for everything I purchased.
My husband and I finally had that hard talk, that, if I am being honest, I was avoiding as much as I accused my husband of doing numerous times. It is not pleasant to look at the numbers, especially when it means you have to make some hard choices (no more delicious smoothies that cost $9, for starters). So where did we begin? We talked about our income and enumerated every single monthly expense, from gas estimates to health insurance bills to the aforementioned YMCA membership. We put it all down and subtracted it from what we would bring home after taxes. And then we backtracked. How much was available to save and what percentage did we want to attribute to each of our savings categories? Is travel a bigger priority than our IRAs? (It feels like it should be, but I had a panic about working at age 90, so the answer’s no on that one.)
Then we looked at long-term goals. What would we need to save to have a kid, for instance? A lot of this was difficult to put on paper and to truly anticipate or even imagine, but at least having the conversation began to make the costs of living the lives we hoped to live become clear. I put some numbers into a college tuition calculator. It was meant to shock my husband, an I told you so lesson from me to him, but it blew my mind instead. The monthly savings contribution to be able to contribute even a small amount to your kid’s education 18 years down the line is double a decent sized car payment. And what if my husbands 140,000 mile car breaks down soon as well?
In the end, what we had was what I suppose every “responsible adult” has at some point in their lives: a budget. Now my husband and I have a spreadsheet that tells us how much money we can spend on dining out and at Target (no more just grabbing things cause they seem useful or cool). We know what we each can spend on miscellaneous items, but we also set a budget for things one considers a necessity, like groceries. We started making weekly lists of what we’ll eat for dinner so we buy with these meals in mind instead of just grabbing what looks delicious and then wasting it.
May is the first month we’re implementing this budget and it’s already a bit confusing and rocky. Where do gifts fit in? What about Mother’s Day and weddings? What about my dry cleaning? But the point is, we’re learning just how much our lives actually cost and what they should cost, and trying to find the middle ground on this.
It’s a first step, but a good one. Though I am totally depressed I can’t buy any of the clothes or shoes I’m lusting after this month, I feel more in control and responsible. I guess in a way, more than anything else over the past few years—even marriage—this has made me feel like an adult. I’m more aware of where our money is going, and what I do purchase these days is a treat, instead of an entitlement.
to read more from Avni you can visit her blog www.avnishah.com