A year and a half ago, I had no budget. And I don’t mean an anti-budget, where I artificially restricted our access to funds by diverting them to our savings account and “paid ourselves first.” I mean that we simply lived by the method of “spend less than you earn.”
Of course, that meant some months we had a decent buffer between our incomes and our expenses. But then, some months, we were close to zero – or even negative, if we had some extra expenses pop up that we weren’t expecting. I was too familiar with the game of dancing between credit card payments and paydays where our money would be direct deposited into our accounts and then immediately sent out to balance those debts.
I was very proud that we never paid any credit card interest, but the cycle of pulling from or more accessible savings and then putting it back later in the month was exhausting. Throughout that time though, no matter what, I did pay off those credit card statements in full every single month, even if I had to pay close attention to how pay days and due dates lined up.
Even so, this hummed along reasonably well in the background. We paid off our medical bills from when I had our son. We paid off the energy efficiency updates we made to our home in the way of a new furnace, hot water tank, and gas piping. We went on vacation. We put – some – money away into retirement accounts. We invested other income. We slowly paid down the mortgage on our home.
From the outside, we were doing extremely well financially, and we were putting more away than the “average” person our age, especially on average incomes. But we had no direction on how we were spending our money, and that was stressful. We didn’t look past my student loan payoff and saving up for a child, so once those loans hit zero and we paid off the medical bills associated with our son, we drifted.
This drift never sent us spiraling into debt because I kept a close handle on paying off our bills in full monthly and we each kept a buffet in our individual savings accounts, but beyond that, we let our money get spent without our knowledge of where it was really going. And then we had an abnormally expensive summer, and our money suddenly felt fully out of balance. At the end of that summer, I had to make the hard choice between using our emergency fund and applying for a 0% interest credit card, because we didn’t have the regular cash flow to cover those extra expenses.
And during that time, I had just started writing my own personal finance blog. While I’m not one to feel imposter syndrome very often, I felt it acutely when I started researching credit cards to find one where I could do a free balance transfer. It feels especially bad to publicly start writing about finances to turning around a few months later to realize things are a bit bumpier than you expected. While it’s easier to look back at that time with kindness for myself now, I’m glad I didn’t keep that story offline because there’s a lot of power in sharing the not so good along with the great.
Britt from Tiny Ambitions is going through something similar right now, and her words echo so well what I’m reflecting on here. As much as I don’t wish that stress on anyone, it’s good to know you aren’t alone even among personal finance bloggers who should (not) have to have it together at all times.
Money Shame
While in the grand scheme of things, needing to open a zero percent interest credit card to pay off things like larger home maintenance and emergency vet bills isn’t the biggest personal finance catastrophe by any stretch, but it felt awful. For someone who had always prided herself at being pretty good at money, it was clear I didn’t have quite the handle on it that I thought I did.
Had our incomes been smaller, or our base expenses larger, this might have made reasonable sense, as we spent an extra $8,000 – $10,000 over the course of a summer on those “extra” expenses (including over $2,500 on vet bills), but we wouldn’t have landed in the red if we’d had a closer handle on the unnecessary expenses: lunches out at work, expensive local wine and craft beer, weekend brunches, weeknight dinner delivery, amazon prime packages.
The gap between our income and our expenses that summer should have been covered by the space we created rather than the mindless wants that grabbed our extra each month, and it only took a few expensive months to show how precarious that balance could be.
Finding myself in the situation of needing to dig ourselves out, no matter how small, felt really bad. And it felt really embarrassing as someone who always had a handle on her money. I knew we could right ourselves, but I also knew we needed to get to a difference place than we’d been; one that wouldn’t land us in the same place with another expensive season.
Automatic Savings
When I look back at that point in time, it felt like we were very much living paycheck to paycheck, and from the way I write about it, I know it looks like that as well. But The truth of the matter is, and why I let things run unconsciously for so long, is that we were putting some money away separately.
I hadn’t quite realized how disconnected from reality my narrative was that I told myself until talking to Brad and Jonathan on ChooseFI. I talked to them about that stress and those feelings of a paycheck to paycheck cycle, but at the same time I told him about our savings rate in the low twenties that we achieved at that same time.
Most of the savings rate was in ways I didn’t see though. It included our mortgage principal pay down on our house, which lived entirely in our standard monthly payment at that point. It included paying off a real estate investment that we’d signed ourselves up for. And it included putting money away in an IRA, but I thought of it first as a way to pay down our tax burden, not as a savings for our future. And then the balance was spread out over a few savings accounts that made up our emergency fund as well as a base balance that would partially get transferred back and forth depending on the month and the size of our credit card bill.
So while I say that we didn’t have a “pay ourselves first” method in the same purposeful manner that we do today, we did manage to set ourselves up for a base level of success there. And while a 22-23% savings rate can be an amazing achievement depending on your personal situation, the truth is that number included a lot of fluff and mindless spending.
Looking back, it’s incredible to think about just how much of our money slipped through our fingers and out of our checking accounts on things we didn’t need to spend money on. Of course, quite a bit of this was food related expense, but it was also things like books, new clothes, and random little toys and other things that we could have gotten from the library or second hand. Or skipped altogether, as I continue my attempts at decluttering our home.
Not buying things isn’t just about the financial cost, but the environmental cost as well. Many times, picking the frugal choice, like packing a lunch in a reusable Pyrex container, versus picking up take out in a single use package, is the superior choice in terms of sustainability. Just one more reason to pay close attention, if a higher savings rate alone isn’t a big enough motivator. I’ve always been environmentally minded, but being more intentional with my spending has improved things there as well.
A Year Of Tracking No Spend Days
So after that extra expensive summer and fall of 2017, I decided I needed to make bigger changes in the way we spent and saved our money and take a more active role in telling it where to go. Starting November 1st, I opened up a new notes page in Evernote and started logging my daily expenses. Any time I spent money, I logged it as it happened, regardless if it were a necessary expense or not.
I set my goal for the month at fifteen hundred dollars, after mortgage payment, childcare, and insurance, which equated to fifty dollars a day. Each day I managed to keep my spend below that, it snowballed into more money on future days and vice versa on more expensive days. And then I kept myself accountable by first sharing on my Instagram page and later by starting a support group on Facebook.
By the end of the month, I’d come in just under that by all of thirty five dollars (until I realized I’d left out our utility costs. Oops. That put us at $1,692.75 for the month). While there were certain recurring expenses that were low or non existent that month, namely vet appointments and home repair, we spent absurdly little that month compared to our typical expenses. So much so that I had to triple check that our mortgage had been paid because there was simply too much money left in our checking account at the end of the month.
And with that, I was hooked. While I’ve never tracked quite so closely on a day to day basis since that first month, I’ve religiously tracked all of our expenses and reported back in my monthly financial updates here since then. With that change and a newly close eye on our finances, our savings rate skyrocketed to a mind boggling 46% average for the 2018 year. While not quite at the 50% goal I’d set, it was double that of previous years, which is still amazing.
Many times, I had been tempted to spend money on a given day on a want and not a need, but if I hadn’t yet spent any money that day, my consistent tracking of “No Spend” days would stop me in my tracks and reevaluate whether I needed that thing (or more often, that prepared meal). By being intentional and aware of our spending, I transformed our situation from one that felt “pretty decent” to pretty dang awesome.
The Issue With Relying On No Spend Days
In the last few months, though, I started to notice a different trend. No longer did a larger number of no spend days mean that we spent less money over the course of the month. In fact, the record number of those days landed on one of our most expensive months of the last year. While some of that could be explained away by some hefty vet bills and other large expenses, it was more than that.
The other day while at work I started to think about how I really wanted these tofu spring rolls at a Vietnamese restaurant near work, the kind made fresh with rice paper but not deep fried. They were a regular staple of my work lunch rotation at the time I bought my lunch almost every day of the week. Since breaking that habit though, I’ve had them very few times.
I really wanted them this particular day though, and I texted Gwen from Fiery Millennials, in theory to have support from someone who would tell me to suck it up and eat the boring lunch I had in the office. After all, that meal of spring rolls with peanut sauce would cost me eleven dollars with tip.
Instead, we got into a conversation about why I wanted them, what my financial goals were for the month, and how much that meal would impact my odds of achieving those goals. To be honest, eleven dollars isn’t going to make or break it for me these days, and I’m aware enough now not to revert to buying lunch every day just because I buy it once. After I went a full six months without spending money on take out lunch, I’ve averaged just a couple meals a month, if that.
I looked back at my spending logs that day and I figured out that it had been fifteen days since I’d paid for a work lunch (Subway that time, for a total of seven dollars). Between the two meals, that would be a total of eighteen dollars on take out work lunches over the course of an entire month. Even when I was at my brokest and working two low paying jobs just out of college, I had eighteen dollars to spend on lunch. With that, I left my office and walked down the street to go pick up my spring rolls.
That conversation with Gwen continued though, and she shared her thoughts with me about zero days based budgeting, and I realized that I had slowly started to experience much of the same thing after the focus of the first few months faded.
No Spend Days were extremely helpful to me in the beginning when I was just starting to get a grasp of exactly where my money was going, because they forced me to really take stock of those expenses. This was especially true with the mindless purchases that landed on a day I really had no need to spend any money. But then, like Gwen, this slowly transformed into an allowance to spend whatever – within reason – once I’d already broken the zero spend day.
What began as an exercise in being mindful of where every penny went transformed to a degree into a goal of just ending the month with as many days with “$0” next to them rather than paying attention to every single expense, regardless of whether I’d already spent that day or not.
Tracking zero spend days eventually allowed me to get lazy. As long as I was holding out with close to ten or more no spend days over the course of the month, I felt like I was doing enough. While I am certain that those days did reduce my spending overall, and that practice has gotten me able to drive down our spending overall compared to where we were a year and a half ago, the no spend days are not the holy grail of intentional spending like I wish they were.
They were the impetus for the real shift in how I spent and paid attention to money, but it takes more than that to keep things in check. Above all, simply tracking every penny, and then correcting as necessary, will do a whole lot more than just marking no spend days.
The Privilege Of Artificially Restricting Your Budget
This conversation wouldn’t be complete without the discussion of privilege when it comes to voluntary frugality and no spend “challenges.” When you only have enough money each month to cover your expenses, or if you don’t even have that, then frugality isn’t something that done to get a higher savings rate or eventually reach financial independence. Frugality is something you do in order to pay your rent and feed your family.
Poverty is something I have never experienced, and while my family was very frugal growing up, it always came from a place of choice versus necessity. And so as this is not something that I can speak to from experience, I am going to pass this on to those who can talk about it more fluently. Bethany from His and Her FI has a great post on the difference between being poor and being broke, Chief Mom Officer has written about poverty tourism, and Vice really breaks it down well with an article about why Money Advice Is Worthless When You’re Poor.
All of this doesn’t mean frugality isn’t important or that it isn’t hard to save serious money even if you do make a high income. But it is important to acknowledge the inherent privilege of choosing to restrict your spending rather than having no choice than to stretch your last dollar.
Have you ever put yourself through a no spend challenge? Have you ever considered the language you use when it comes to not “being able” to afford something?