Money for Nothing

News Flash! The economy is all jacked up!

Oh. You heard?

In light of the disaster that is the economy, I'm going to do something that I never do on Slice of Pink and actually follow up on something that I started to tell you about, once upon a time. I often tell you things only to never speak of those things again. Largely, this is because I lack follow through, both on this blog and in real life. For instance, hula hooping to health? Despite my best intentions--despite actually purchasing a hula hoop--I did not once hula my way to physical fitness. 

But let's ignore my failures. 

If you have been around these parts for awhile, you'll remember back in 2006 I did a little experiment. The experiment was called June Money Madness and for one whole month I tracked my purchases. I wrote down every dollar I spent on sun dresses, movie tickets, cokes, hairspray and nachos. I dutifully kept track of pancakes and pizza and postcards and purses and presents and parking fees. 

In one month, I spent $1169.94. Over half of that money was spent on just three things: clothing, eating out, and trips to Target. The nearly $1200 outlay did not include a single bill--I did not pay a penny to the electric company or the car insurance. Not a penny went to rent or utilities.

I was shocked that I had spent so much money, largely on nothing at all. As I pointed out:

Last month, I could have purchased a Burberry trench coat with the money I spent, and still had some change leftover for, oh, maybe a Coach tote. Instead, I have two skirts I picked up at Costco, a stand of fake pearls from Target, and a bottle of hairspray. The other thousand bucks? Who knows!

The following month, July 2006, I decided to spend less, but I implemented no actual plan to meet this goal. I was just going to, you know, spend less. No biggie. I just wouldn't go to Target so often. 

I ended up spending more.

So over two years ago, I went on a budget and cut my spending in half. I gave myself $120 a week to spend in any way I pleased.  I never talked about it here again, which is a real shame because the budget? It worked.

I stopped using credit cards. I stopped using my ATM card. I had $120 cash each week and I made that $120 last from Monday to Sunday. Some weeks I spent it all by Wednesday. Some weeks I had $80 left over at the end of the week. Some weeks I spent it all on a single clothing item. Some weeks I blew it on coffee drinks and cheap lunches.

It's crazy to say, but the budget actually changed things. Our savings account grew and grew. We paid off our credit cards. I stopped feeling guilty about buying a great pair of shoes, because if I had the cash, I knew I could afford them. It was less money, sure, but it was liberating. Profoundly liberating. I could throw the money in the trash, if that's what I wanted to do, and it would be okay because the savings account would continue to grow and the debts would continue to be nonexistent.

When I got to law school, I went really crazy and turned my $120 allowance into a $60 allowance, cutting my monthly outlay in half for the second time.  I now live on $60 a week, plus an extra $60 a month for a haircut. All said, I spend about $300 a month. It was a personal mission of sorts--a choice I made myself. I think that is absolutely critical to the success of a crazy, strict budget.  I'm not sure I would be so onboard with a similar sort of budget imposed on me by an accountant or a husband.  The challenge, it is personal.

I use my credit card for only three purchases: groceries, health care, and law school expenses (which, I admit, included a pretty cute suit. What? I have to go to interviews for legal jobs, people!). My monthly billing statement is extremely short, maybe three or four items, always paid in full at the end of the month.

Getting control of my spending meant that I had to get really bossy with myself. To be frank, sometimes it sucks. Sometimes it means drinking a bottle of wine in, rather than going out. Sometimes it means choosing between a good pair of shoes and a good skirt. Sometimes it means saying no. Sometimes it means being--dare I say--a miser.

But, really? It's not so bad. Somehow, I still have great wine and great friends and great memories. Can it be true? Money doesn't buy happiness? My 2006 self might not have agreed, but my 2008 self has a whole new perspective.

And, funny, now that I don't blow $400 at Target each month, my husband is so much more inclined take me out for fancy meals.

From Saturday Night Live: A sure-fire way to get out of debt.

Comments

[BethanyWD]

My husband and I did something very similar a few months ago. I keep my total monthly spending (gas, groceries, lunches, coffee, clothes for me and my two kids, gifts, entertainment, etc.) under $1000. This may seem like a lot, but I am feeding a family of four, clothing a family of 3, and buying gas for commuting (actually not that much!). From how you describe your budget - sound like yours doesn't include groceries (food for meals at home), etc?

While keeping within my budget has helped our bottom line, it really helped me see where I was spending (or WASTING) money since I recorded every single purchase in a Google docs spreadsheet. I, too, like to have a little freedom to splurge every once in awhile, and now I know I can do that without plunging us in debt.

[Stephanie]

What a great idea! Is this why, long ago, our parents gave us an allowance? Sounds good to me. I'm on the "Slice out of Debt plan." :)

[Amanda]

Wow, This is amazing. I really am going to try this budget because I spend so much money on who knows what.

Thank you for this post!

[Dynamita]

Ever since I got my first allowance when I was a kid, I sort of 'got' the benefits of budgeting. I could choose to blow it all out on trinkets at the mall on the Friday, or I could save it for bigger things, like cool clothes and stuff my parents wouldn't buy for me. I have done this all my life, and I agree with you that it's liberating and it works! I am not really feeling the credit crunch at all becaus of this.

Great post!!

[iMommy]

We're just about to start something similar... we make enough money to NOT be living paycheck to paycheck.. yet we practically are! And things will get tighter as this economy continues to play out. So, we're moving to a cash-envelope system, too. We need to eliminate the debt that we do have and get our savings up. Thanks for the post! *i think i can, i think i can*

[Janssen]

Great post. . . frugality rocks :)

[Operation Pink Herring]

I put myself on a $50/month clothing allowance over the summer when I realized that in May alone I'd spent over $500 on Ann Taylor Loft clearance racks. Sure, it was all cute stuff and sure, most of it was a total bargain, but still! $500! That was completely unacceptable. I managed to buy a gorgeous SLR camera with all the money I saved over the summer. I'm really tempted to try your idea of tracking every penny spent for a month... I already track certain expenses, but it would be really interesting (and probably sobering) to really see where ALL my money goes.

[rachel]

I cannot believe it was 2 years ago that you did that! It feels like yesterday-I think about it often when shopping.

[Nicole]

Janet, I am so impressed. And holy shit, I think I'll do the same thing! Thank you for reminding us of this great idea. How sad is it that I am excited about budgeting?

[jesser]

I was going to write you a long comment about our budgeting strategy, but instead I stole your idea and did a whole post on the subject. Have a look: http://www.jesser.org/index.php?pid=1262

[Sensibly Sassy]

wow this is great. I really want to try this!
Does this money go towards groceries,gas etc or is it just for fun stuff?

[Jaime]

I am so happy about your post today! This is a great plan and I'm jumping aboard the SO Pink plan.

[lesli]

I NEED a budget. I might "borrow" this idea, so to speak...but have to decide how much to allow myself per week. But I really like this idea, very much so!

[TJ]

I remember when you went through the experiment in June 2006. You have come a long way since then. Has it been over two years that I have been reading your blog?

[Amanda]

I just took a position that had a million perks compared to my old job, but was going to require a reasonable pay cut. I added up my husband's pay plus the pay I get for a side job I have and then deducted our expenses to see how much I had to make to change jobs. What I learned was that we could actually do it with just those two things and still have money to pay all of our bills (even the Y bill my husband keeps trying to cut) and eat out or do something frivolous sometimes.

I was ashamed to see how much we waste in little 10 dollar purchases here and there..like you, it was A LOT of money and we had NOTHING to show for it.

I not only changed jobs and took the pay cut (and am so far SO much happier at the new job). We also decided to put ALL of my new paycheck in savings.

The only responsible thing we did last year was use our tax refund to pay off our credit cards.

We need to build our savings for retirement or emergencies, but we can also use some of that money to do the things around our house we keep thinking we can't afford to do.

[Zandria]

I remember that 2006 budget very well -- that's the month I left your hometown!

This budget is just another example of your awesomeness...good for you for making it on $60 a month! One of these days you'll be able to afford a lot more than that, but you'll always know you CAN do this if you really try. And no debt! (Other than school tuition, of course...but that's the "good debt!")