Last month (July):
Years left: 1.6666666667
P =$1,121.04, I =$93.36, Escrow =$809.48
This month (August):
Years left: 1.583333333
P =$1,125.48, I =$88.93, Escrow =$809.48
One month’s prepayment savings: $0
Yes yes, I know spending more than you earn, no matter the circumstances, is heretical among certain segments of the PF community (particularly the early retirement community, though presumably not all of them are living off dividends, some of them must be drawing down based on some % rule post-retirement).
This year I’m at half-pay and our housing, health insurance, and daycare expenses are approximately doubled. We could actually make that work (barring big emergencies) without spending more than we earn if we didn’t eat out, cut down on organics, didn’t spend money on activities for DC1, were less quick to throw money at problems, and so on. Essentially, if we cut down our discretionary expenditures from what we were spending before we got to Paradise.
But we planned and saved for this. Right before we started having to spend out with deposits, moving expenses, and so on, we had saved 84K in checking earmarked for this year. (Technically 20-30K of that is emergency fund and money for next summer when I’m not paid at all, but that’s still at least 54K earmarked for increased expenditures and riotous living.)
We want to be able to enjoy living someplace where there’s things to do and food to eat. We want to take day-trips and go to restaurants and have the ability to say “yes”… just for a year before we go back to our small town where we have to drive 2 hours to get to the nearest real city. Where it’s harder to spend money. There’s lots of free things we want to do around here too, but for the year, we’d like to try some of the not so free stuff as well.
And gosh darn it, I want to be able to do it without feeling guilty!
How best to do that?
Well, one of the things that bothers me is when I have to transfer money from savings to checking. DH’s paycheck goes to checking while mine goes to saving. Whenever we spend more than he makes, I have to transfer money from savings to checking. That always provides a check on the spending… if I have to transfer more than the usual amount, I feel guilty and cut down on spending.
But in this case, I don’t *want* that guilty feeling or that check on spending.
Still, I also don’t want us to go hog-wild.
So… I sat down and figured out how much over our regular amount we should be spending, multiplied that by 12, and transferred that lump sum amount from savings into checking. (The interest rates on both savings and checking are small, but the rate on checking is marginally higher.) When that amount is gone, then we really will need to put the brakes on spending. There’s still plenty extra left in savings as a cushion, but depending on when we run out of the checking money, we will be able to re-evaluate at that point if we want to transfer more, cut down our spending, and so on. Rather than making adjustments every month, we’ll make an adjustment if the money runs out.
Will the money run out? Previous experience suggests that we tend to spend a lot of money when we first move to a place, and then settle down into predictable less spendy patterns wherever we are. I imagine that will happen here within 12 months as well, after we’ve done the museums and zoos and tourist traps and have figured out where the best low-cost and free things are that will make up our regular routines. We’ll get closer to spending what we actually earn, possibly a little less. But we’ll see where that crossover point is!
Do you ever feel guilty about spending money when you shouldn’t feel guilty? Or the opposite– do you sometimes not feel guilty spending money when you think maybe you should? What do you do to manipulate your feelings about money so they match up with your thinkings?