I’m a bit late on the new year’s money plan posts, but I’ve been stewing on my plans for a while now (while also fighting the flu, which may jsut be the real reason for the lack of posting). There were a few different paths for me to choose from, but I think I got it down.
There are a few different ways I considered approaching a budget: zero sum, traditional budget with an amount assigned to each category, the envelope method, etc. I find value in all of these. While wanting to follow a budget, I also wanted to up the ante on my shopping ban and go forward with a Buy Nothing New Year for 2017. So in the spirit of a buy nothing new year, I’ve come up with a plan.
My overall money planning will be centred around buying nothing new. Besides bills, debt payments, and consumables (groceries, hygiene products, etc) I won’t be purchasing any tangibles. I know this sounds extreme, but my current “stuff” ownership is already extreme; trust me, I’m not short on anything. However I also need a cap on my budget so I have a balanced approach towards spending on experiences and services. I also need to consider developing a healthy cash cushion so that I don’t have to dip back into credit when an unforseen expense comes up.
Along with these factors, one of my greatest personal development goals is to curb my impulsive nature when it comes to instant gratification – which applies to my relationship with buying things, with food, and other short-term “opiates” as opposed to thinking of the long-term. So the plan I have in mind is meant to consider all of these factors. Seeing my non-debt bills are fixed (rent which includes utilities, internet, insurance, transportation pass), I’ve decided to also make my spending budget fixed, and all else gets funnelled to debt and a cash reserve.
I’ve been looking long and hard at the year I have ahead and what I feel is achievable when it comes to spending on experiences and services (some necessary, some for pure enjoyment), and I’ve come up with a figure. I will allow myself $120/week for all non-bill expenses. That amount needs to cover: groceries, cell phone (I do not include this as a bill as I have a tendency to go over my plan, which is another expense that I need to be disciplined about), toiletries, household items, gifts, services like haircuts, eating out and entertainment.
I think it would be more beneficial to look at it like $480/month to spend on everything except household bills, as I feel like looking at it weekly can be dangerous; spending only $20 by Friday doesn’t mean I have $100 left to blow that week, it means I need to keep the spending at only $20 because the next week I may have my cell bill due and it may be my turn for the grocery run so I must carry that $100 over so I don’t go over my monthly budget. As embarassing as this is to say, that is new for me; I’ve lived completely on instant gratification most of my adult life, so not spending my alloted weekly amount because I’m thinking about the weeks ahead is a whole new ballgame for me. You know that study on delayed gratification where they tell a bunch of kids they can either eat the candy now, or if they hold out and resist temptation, they will get even more candy later? I’d be the kid whose face is smeared with chocolate before the researcher is even finished their sentence. So needless to say, babysteps towards delaying gratification is going to be an important challenge for me.
So now that I have $480/month for living expenses, I’ve decided that every 15th and 30th of the month I move 80% of what’s left in my bank account towards my debts, and 20% stays in my account as a cash cushion for emergencies. I’m in sales so some of my bi-weekly paycheques can be greater than others. I also get quarterly bonuses, so that’s why I want to go off a 80/20 rule, seeing the rule applies to no matter the paycheque figure. I’ve done the math, and if I stick to my plan – correction, by sticking to my plan – at minimum (not factoring in bonuses) I can put $20,000 towards my debt in 2017.
I know $120/week may seem like a comfortable or maybe even lenient cushion, but considering the events that transpire over the course of a year, I will need to commit to frugality and having as many spend-free days as possible to make it work. For example, I know I already have 3 weddings this year (not factoring things like wedding showers, engagement parties, etc) and those alone cost a few hundred dollars each. Seeing $120/week has to also cover cell phones, toilet paper and groceries, it means I need to scrimp from April or May to be prepared for a wedding in June.
I’m really looking forward to sticking to this budget. I think after years of being too lenient with my money, I’m looking forward to working within a structured plan. I have a lot of faith in myself this time around, and I see this going well.
I look forward to posting what I aim to be impressive debt reduction postings along the way!
Happy New Year, everyone 🙂