No-Kill Finance

I came across a post on Budgets Are Sexy about some guy in Vegas who, as a challenge to himself, voluntarily tried being homeless for 24 hours.  This reminded me of something from my past that merits discussing here.  (No, I was never homeless.  Sorry, but my hard-luck stories aren’t nearly that interesting.)

In the Spring of 2007, or thereabouts, I was very used to the idea of “too much month left at the end of the money,” as Dave Ramsey (and others before him, I’m sure) puts it.  As a fairly reckless 23-year-old, I’d regularly run out of cash long before my next paycheck was due, at which point I didn’t worry too much because I had a credit card to cover my costs.  (Let me say, too, that my “costs” included a fair amount of video games, tons of concerts, books, CDs, and far more alcohol than I should’ve been consuming on a daily basis.)

Eventually, I discovered that banks place a limit on how much credit they’ll extend to you.  Apparently it’s called a “credit limit.”  (Who knew?)  After this point, one must find real money to exchange for goods and services, as the fake plastic kind of money doesn’t work past, in my case, the $5,000 milestone.

I’ve since grown used to the idea that eating cheaply and limiting discretionary spending can stretch a paycheck far past a single pay period, but I recall one occasion in particular when, after an enjoyable week of drinking at bars, attending concerts, and buying books, music, and movies, I still had a full week to go before my next paycheck.

At the time, I was fortunate enough to have a fair selection of not-quite-expired nonperishable foods, which lasted several days…after which I had nothing.  I think there were about three bleak days left when my kitchen cabinets were finally empty.

I decided with a significant amount of shame that I could probably manage to “borrow” a meal a day from a charitable friend.  So I made some calls, penciled some lunch plans, and spent three days eating what probably amounted to about 500 calories a day.  I was shy about money and embarrassed about my irresponsibility, so I told a few minor lies and treated the money situation as though I just didn’t have any cash on me at the time…”Crap, I forgot to go to an ATM, would you mind covering me for a sandwich?”…not an uncommon back-and-forth exchange in most of my friendships, so I didn’t raise any suspicion and didn’t have to admit to my circumstances.  Dishonest, I know, but the thought of confronting my issues terrified me.

I will say that going [mostly] hungry wasn’t as difficult as I thought it would be.  If I recall correctly, I had all three days off from work, so I had the option to be sedentary (watched a lot of those movies I’d wasted my $5000 of credit on), and was able to keep my stomach filled with water…not to mention taking home leftovers and stretching a single Jimmy John’s sandwich into three tiny meals.  Certainly, I’d like to avoid ever being put in the situation again, but it wasn’t so intolerable that I broke down and begged a friend to loan me fifty bucks to get through the week.  Not that they wouldn’t have happily come through for me.

Anyway, that “not-quite-a-conclusion” to the fairly-long-winded story about my not very traumatizing financial trauma brings me to my point:  I have money now.  Money to spare.  I’m working the same low-wage job as I was then for what probably amounts to less pay (comparing my raises against inflation), but I have a positive net worth and plenty of cash reserves for rainy days.  And it’s great, not just because I know that I’m in a position to take care of myself, but also because I’m now in a position where, if one of my friends ever ran out of money, I could repay my karmic debt with actual cash.

That last broke day three years ago, when I was taking the last few bites from the sandwich with which my friend Rob had unknowingly made my day, I was too wrapped up in self-pity to really realize how great a thing friendship is, and how much more valuable that sandwich was than the $5 bill used to buy it.  I’d love to repay that sort of debt, and it’s an amazing feeling to know that, finally, three years later, I can.

Yesterday, I got a phone call from my friend Danielle regarding my blog.  (She neglected to take me up on the free beer offered in the last post.  Big relief, since I can’t afford it.)  Since I neglected to save the message she left, I’ll paraphrase:

Justin.  I’ve been reading your blog.  How the @%&# do you save that much money when you make so little?  My fixed expenses are too high to save at all, and I make more than you.  What does your budget look like?

Well, Danielle, if I may respond in a public forum (though I didn’t ask before posting this), my main trick is that I just don’t spend much money at all outside of my fixed expenses.

I budget a monthly income of $1100, though I usually make a little more than that.  My fixed expenses are:

• $450 Rent
• $70 Transportation (approximate:  bus and train)
• $80 Utilities (approximate:  gas, electric, internet)

I’m fortunate enough not to have to pay for my cell phone, as it’s a recurring Christmas gift from my mother.  I also don’t currently have any monthly credit card payments apart from the not-quite-weekly $20 charges from the Chicago Transit Authority, which I pay as they appear on my statement (see “$70 Transportation”).  I don’t have any student loans (yet), because I was able to make it through my undergraduate schooling debt-free as a result of the responsible financial planning of my parents and grandparents.  (Side note:  this is one of the main things that makes me want to be financially responsible:  I want to provide for my children and grandchildren as well as my parents and grandparents did for me.)

But anyway, after those fixed expenses, I’m left with $500 a month to spend on food, pets, clothes, household expenses, and (if I’m very, very lucky) a bit left over for entertainment.  It’s a sparse existence, but I make it work.

For my non-fixed expenses, I eat a lot of cheap meals (made at home from cheap groceries…I price compare like crazy:  if something is 26 cents an ounce at Trader Joe’s and 27 cents an ounce at Jewel, I buy it at Trader Joe’s).  I keep and am sure to consume leftovers rather than letting them go bad in my refrigerator like I used to, and I scarf down any freebies offered to the staff at work (one of the perks of working for an animal organization:  lots of people want to thank us for our efforts by feeding us…even if it is mostly junk food).

I dine out very rarely, and try to do so cheaply whenever I do.  Again, I save leftovers and try to stretch them over a few meals.  (A trick:  I offer to brave the cold weather and pick up food for co-workers in exchange for getting to keep their change.  If I get six people to order Thai food along with me and they all round up to the nearest dollar – as a delivery tip – I end up getting an order of pad thai that lasts me two or three meals for just a couple of bucks.)

For entertainment, I rely on my “cheapest-plan-possible” Netflix subscription (complete with online viewing) and Hulu, plus the plethora of CDs, DVDs, books and magazines that I purchased and never fully enjoyed back in my days of unrepentant spending.  Mostly, though, I don’t leave myself time for entertainment.  Between school, work, and mindless internet browsing (I mean…constructive blogging), I don’t find much time to yearn for concerts or movies.

Household expenses are easy because we buy most household goods at thrift stores.  We clean with cheap cleaner (or sometimes just diluted white vinegar).  I re-wear shirts and pants until they’re simply too dirty to pass as clean in good company.  I buy clothes at thrift stores, too, and rarely at that since my job doesn’t really require any sort of dress code.  (All of my stained, too-small, white t-shirts are my “work shirts”…which I wear six days a week to match my work schedule.)

Mostly, I just cut back on the things that used to be my weaknesses: if I want a drink, I have $3 Trader Joe’s wine rather than $25 Jameson whiskey; if I want to see a movie, I stay in and see what’s new on Netflix rather than buying a ticket to see a new release; if I want a sandwich, I make one rather than running to the Quizno’s across the street; if I want to buy a book or CD or DVD or video game, I just…well, I just don’t.  And the best thing about it is that my extreme thrift hasn’t really detracted from my quality of life whatsoever.  I’m just as happy being cheap as I was being reckless.  And this way, I have $250 bucks or so every month to squirrel away for a rainy day, which just makes me more secure, therefore happier.