the countdown-to-simpler-living budget v1

“Every financial transaction you make today is not so much a deal with a mortgage company, car dealer or department store. It’s a deal with your future self.” Mr. Money Moustache

Last month, I started creating a budget to use for the next two years.  It’s not the budget I will have to meet supported by my goal of a 2-hour work day, but the budget to help me start saving more/spending less now.  Initially, the math did not work.  Then before I got too frustrated, I reminded myself that this could be iterative.  The most important thing is reducing risk to the overall plan, so working through some of the budget cuts gradually may be the solution to forming these habits again.

One change that I made after only two weeks was to simplify tracking food-related expenses. Rather than break into individual categories to track how much I am spending on restaurants and coffee as I had previously done, I combined everything together in one FUD* category. I can make the negotiations with myself between groceries, lattes, and dinners out.

Next, I have to determine:

• How much $ I’ll need to live in a SL year.
• How much $ I’ll need to save for a SL retirement.
• How much $ I need to earn during a SL year based on the above and my current savings.

Up until five years ago, I was disciplined in tracking expenses. The more details, the better – I entered it all in a $ tracking software program.  Then I got a little distracted, got a big pay raise, and really for the first time in my life had $ to spend on vacations, spa treats, and unexpected expenses (like a large vet bill or new tires) without giving it much thought.  I was haphazardly achieving my savings goals and carrying no consumer debt, so I made the budget a lower priority.  But my current savings goals are based on working for this salary at least another ten years.  Now I want out in two.

One thing I’m very curious about is how expensive the work-stress-spend loop is – I spend more $ on relaxation, distraction, food and entertainment because of the stress and time suck of the job so then I need to make more $ and it repeats. If I step out of the loop (and don’t have a mortgage/rent payment), how much do I really need to earn?

In the past eight years, I’ve also very consciously been working through some deep-seated beliefs about $ formed in part by the modest and frugal society I grew up in.  Things like:

• Believing I don’t deserve lovely and/or expensive things.
• Feeling guilty about spending money on myself.
• Feeling stupid for paying full price.
• Hearing a voice saying “who does she think she is?” when wanting the better or best quality item and not wanting to settle for the cheaper “good enough” one.

$ beliefs can be complicated. I don’t think I would have considered returning to a simpler living without having worked through a lot of this stuff first.

And I cannot berate myself for not having fixed this all by now – I can only start from here. I have been minimizing material purchases for a while, so now it’s time to apply that to all expenses. This budget v1 is twofold: to maximize my savings and to remember old habits of minimizing my expenses. If I’m going to get to my goal of a simpler life, I need to start spending like it now.

References:

• *FUD = food in a Gary Larson (source: Wikipedia) cartoon as spelled by a dog.
• SL = Simpler Living
• No Time to Lose post
• Are you giving the shaft to your future self? by Mr. Money Moustache
• The Latte Factor: 8 Ways We Often Overspend by Lama Farran, guest post on Becoming Minimalist