At the beginning of this year, Tony was hired for a full-time teaching position, and our income doubled. That sounds like we’re making a lot more than we really are considering the fact that Tony was seriously underpaid as an adjunct professor. But for us, it’s a lot of money, and it’s finally enough to cover all expenses, save a good bit of money, and treat ourselves every now and then.
Along with the income increase, our goals increased, too. Now that we can afford to fund our savings account again, we’re working toward the lofty goal of saving for a down payment and other necessary costs that go with buying a house. We’ve set a tentative deadline for two years.
Aside from buying our car — an admittedly huge expense — and an increase in rent, we haven’t increased our major living expenses at all. We budgeted carefully for the car payment and the increase in rent, and these increases were offset a bit by a reduction in health insurance premiums, so those two things don’t affect our monthly savings allotment anyway.
One thing I’ve noticed, though, is that big expenses aren’t what really affects my budget. I always think carefully before adding a big expense. We carefully looked at our budget before adding a car payment to it, and we thoroughly discussed how much we could afford in rent before signing our lease. I know what to expect when I add a big expense. What gets me though, is the hundreds of tiny little purchases I make throughout the year. The amount is so small that I don’t give a second thought to swiping my debit card, but at the end of the month (or year), it adds up to a significant chunk.
For example, if you buy a soda from a vending machine every day on your lunch break at work, it doesn’t seem like a big deal. It’s just 50 cents a day. But that adds up to $2.50 a week, $10 a month, and $120 a year. Is a soda a day really worth $120 a year to you? If the answer is yes, then great! But most of the time, when I really think about purchases like this, it’s not worth the money to me.
My biggest vices?
- Starbucks beverages – At $4 each, the expense adds up quickly even if I only indulge 2 or 3 times a month.
- Movie rentals at the local video rental store – Sometimes we run out and rent a movie if it’s not available on Netflix Instant Play or Redbox. This is mostly TV shows or older movies. We pay $2-$3 a pop a few times a month for the convenience of watching something now, but if we just put it in our mail queue and wait, we wouldn’t have to pay extra at all.
- Cute baby clothes on the clearance rack – I’m guilty of paying as much as $5.50 for a pair of pajamas just because they’re cute. Yes, it’s clearance, but he really doesn’t need any more clothing. Even if he did, I could get a much better deal at a consignment store.
A few dollars here and there doesn’t seem like a big deal at the time. We’re making more money, we can afford it, right? But these purchases add up. All together, if I buy 4 Starbucks beverages, rent two movies, and buy one outfit, that’s $25 a month I could have been saving toward our house. That adds up to $600 over the next two years that could go toward a house. The $25 isn’t the problem; the problem is that I spend $25 without even thinking about it.
This isn’t to say that I believe in total deprivation. You guys know that I’m all about budgeting for life’s little luxuries. The point is, it’s important to budget for these things. You wouldn’t drop $600 without thinking seriously about it, so why should this be any different?
Sit down and think about the little mindless purchases you make. How much are you really willing to spend when you think about it?
I enjoy treating myself to the occasional Starbucks beverage, but $16 a month seems like too much. If I limit myself to one per month, that’s only $4 a month. That’s much more reasonable to me. Even better, I could cash in MyPoints or Swagbucks (referral link) on Starbucks gift cards and get them for free.
When I really think about those movie rentals, I remind myself that I’m already paying $120 a year to rent through Netflix. I’m not willing to spend any more than that for entertainment, so I should really skip those stops at the video rental store and just wait for the things we want to watch to come in the mail.
And Judah is going to look cute in whatever he wears, whether I pay the clearance retail price or a fraction of that at a consignment store. So I should stay away from the clearance racks and be more strategic in my clothing purchases for him by shopping consignment sales and setting a seasonal budget for how much I can spend to keep him clothed.
It’s important to be mindful about every penny you spend, whether it’s several thousand dollars for a car or a few dollars for a coffee. Every penny counts, and if you’re wasting money on things that don’t really matter to you, it’s easy to sabotage your goals for the things that do matter.