I heard Sheryl Crow’s hit song playing on the radio while driving home the other day. It really summarizes the changes I have made to my life in the past three months.
It’s not having what you want, it’s wanting what you’ve got.
(Sheryl Crow. “Soak Up The Sun.” Lyrics. C’mon, C’mon. A&M Records, 2001.)
I bought my house a little over two years ago in an affluent suburban city. After serving my country for eight years and saving every penny I could, I felt that it was the right step for my wife and I. I wanted to live somewhere where we wouldn’t have to worry about crime and where our future kids would be going to school. It was the right decision.
However, shortly after moving in, we wanted to do what every new homeowner wants to do: upgrade. We (mostly me) had grand ideas to repaint and remodel. I did a lot of work myself, but I did hire a contractor to help with our master bathroom and fireplace surround. The work was limited to only part of our house, but started adding up quickly.
After we were done, I wanted to keep going. I felt that I needed to upgrade the rest of the house to be as nice as the parts that we remodeled. I was suffering from the Diderot Effect. It’s the social phenomenon of how having something nice makes the other things you own poor in comparison. It’s drives you into a spiral of consumption in order to replace things that work perfectly fine.
That’s when I knew I had to stop. In fact, I stopped for about a year to get myself in check. I had to remember that I came into this house without much, and I could continue to operate as I did in the past. In fact, I wrote this blog post on my computer that sits on a plastic folding table. There is no rush to go out and spend a ton of money on a fancy desk. It works.
At the beginning of the year, I started a budget to examine where I spend money and to find out where I could save. I also started a modified Total Money Makeover to get out of debt. Because I never had debt until I married and bought a house, it is relatively new to me. Learning how to limit my current spending in order to continually pay someone else for money borrowed was hard to make sense of. Paying debt on a monthly basis makes it incredibly hard to save, so this is an update on what I’ve done to make the situation better and keep to my Million Dollar Club pledge.
1st Quarter, 2012 Budget Update
- Went over budget on gas due to rising gas prices. I may have to increase the budget during the Spring and Summer seasons.
- Dining out was also over budget because of birthday and anniversary celebrations. We also went out a few times during Restaurant Week. Because we ate out so much, we were under budget for groceries. It really should have been the other way around.
- We were under budget for clothing. I expect that we may exceed the budget for clothing in the 2nd Quarter because of maternity clothing purchases for my wife’s first pregnancy.
- I didn’t do any home repair/remodeling projects in the past three months, so we saved money in that category.
- Overall, we were over budget because of a property tax payment due to a one time adjustment in our property tax escrow account. The escrow finally caught up to the proper amount, so I can budget accordingly now.
Modified Total Money Makeover Update
- Created a budget and reviewing it regularly.
- Started a 1 month emergency fund in an online high yield savings account.
- Reduced contributions to retirement plans at work to 5% of our pay.
- Started the “Debt Snowball.”
- Aggressively paying down my wife’s car loan.
These changes have really helped me prioritize what’s important in my life. I’ve used budgeting and goal setting as tools to help me identify how I can become less reliant on debt and to appreciate the things that I have. The things that I have, that I no longer want, will soon be sold or donated (for now, they are banished to an unused room). Combined with an aggressive debt payment plan, I hope to achieve financial freedom in the short horizon.