Cutting Back On Monthly Expenses, Worth The Stress?
My base expenses are less than $1,200/mo. My actual expenses are far higher. I’m currently using the excuse that I have a lot of balls up in the air, I’m stressed at times and so need to spend a little extra to make things easier.
I’m spending somewhere in the $3k/mo range. Let’s be honest, for a doctor living in Portland that’s not much.
But what am I giving up? I mean, there is always a trade-off right?
There is a difference between those who save aggressively and those who try-their-best-to-save and those who will save only when they need to.
It’s 11am and I just did some push ups and sit ups. I have some veggies simmering on the stove top so that I can have a healthy lunch for my work today.
I will be biking to work because I want to save money and don’t care for the headache of owning a car. I also know it’s healthier for me to bike into work rather than drive in.
I’m doing all this because I want to save money and be healthy. It’s interesting that it’s the little things for the most part that make the biggest difference in the long run.
Doctors are among the few ‘fortunate’ professionals to have enough income that they can and do shoot themselves in the foot by actually making just a few large financial mistakes.
They will pay nearly $1k/mo for household auto payments and on average $5k/mo for housing payments.
The average household might have $250/mo in auto payments and a little under $2k/mo in housing payments. That is a difference of $3,750/mo or $45k a year.
To earn this $45k/yr that doctor didn’t just have to work $45k worth of hours at his/her job. Don’t forget Uncle Sam, your biggest expense category.
In order to make $45k that physician had to work worth $80k. That’s 800 more hours in the year. 80 10-hour shifts. 80 days of extra work. 21.9% of an entire calendar year of work to pay for that extra piece of car/house.
The average physician household could save that money if they didn’t have to spend it on the cars/house. But let’s say you were among the intelligent and refuse to make those big expenditures.
What about shaving a little off every month. Well shit, guess what, that’s harder.
So I feel for you, really. Not buying the Ferragamo shoes and not taking the $11k trip to Europe with your family is easy, relatively. Trading your expensive car in for a reliable Kia is easy too. Even selling your house and moving to a more affordable residence is relatively easy. Easier than cutting your general expenses by say, $2,000 per month.
In my case I know exactly where that $2k goes. I eat out, I get too many drinks when out with friends, I buy shit for my condo that I could get used without losing functionality.
These things creep up on you. Like that belly sticking out or the extra love handles on top of your love handles. If you would go from a healthy body to a flabby body overnight by eating a burger I can almost guarantee that you wouldn’t even look at the burger.
If you could cut one item and save $2k/mo then I’m fairly certain most of us would. Isn’t that the difference between success and just-making-it?
It’s not the idea but the execution and the perseverance. If I want to be a better tennis player I’m gonna have to do drills. I’m gonna have to get the ball machine and hit 500 back hands. I’m gonna have to do line drills to get from the volley line to the baseline. And as soon as I stop practicing I’ll go from 4.0 straight down to 3-3.5.
I have tricked myself into thinking right now that it’s not worth it to save the extra $2k. I use the word tricked because I don’t have a convincing argument that the extra effort needed to save $2k isn’t worth it. I haven’t fully weighed all the pro’s/con’s of the loss of an extra $2k/mo from my coffers. “I can easily make an extra $2k/mo just picking up a few extra shifts!”
The Obvious Math
The boring math is that by 2019 I could have an extra $81,460 if I actually pocketed that $2k/mo and invested it.
$81k could net me around $200/mo. That might seem like very little money but look at it in terms of the hours you spend working. That’s the equivalent of 3.5 hours a month of working in the urgent care.
$81k could also be a 50% down payment on a rental income property which could net me $600/mo.
Reliance On Income
More important than the value of the money is that by not needing to spend $2k/mo I develop a bit more self-reliance.
My $2k is spent on somewhat meaningless consumer goods and experiences. Sure, some of it is spent socializing with friends but if I tried even an iota I could still socialize spending far less.
I keep talking about wanting to cut back on my hours. By cutting back on $2k/mo I could essentially cut back by 25%.
I don’t have an effective way to measure the decoupling of income reliance and spending. I know it is far more valuable than that $81k but I need to read up on this topic a little more before being able to explain it.
The Stress Of Cutting Back
It’s not necessarily stressful to decrease one’s spending. It’s just a set of habits that one has to change.
I have to be a little wiser when I shop for groceries. I need to make a list and not just buy whatever I’m craving.
I need to think ahead and prepare meals. On days where I got no food prepared I should have some frozen or canned shit that I can just throw in my bag.
Buying shit for my condo … my fucking god! I bought this place in December, nearly 6 months ago and I’m still buying shit. Granted, I’ve spent <$3k… but, I’ve spent nearly $3k!!!
Changing one’s personal finances is hard not only because we have to break habit but even worse is the societal pressures. If my partner was the exact same way as me then it might be easier. Or if we had built a group of friends with similar outlooks on personal finance then I wouldn’t need to exert as much effort.
The habit to break is the cycle of wanting-getting. I’ve been fortunate to afford most things that I want. So if I want something I just have to reach into my wallet, get out my card and cha-ching!
The Reason I’m Even Thinking About This Extra Expense
So what’s the big deal. Fine, I decouple from the income-spend cycle. I could have an extra $80k in the bank in 3 years.
I already have decoupled quite a bit. And I can make an extra $80k either by working more hours or working a few extra months before retiring.
The main reason I scratch my head at the end of every month wondering why in the hell I spent over $3k… again! is that I know it’s not helping me achieve my goal.
Not only does it make it harder for me to reach my goal but that extra $2k is not making me happier. In the heat of the moment it satisfies an urge, I get that rush by meeting my needs. Being able to get what I wanted satisfies an urge which I have just like anyone else.
So I guess it’s a little bit of that inherent negative emotion that comes with letting myself down. Trust me, I’m not sitting there shedding a tear every time I spend a dollar. The money is less important, it’s perhaps more about being true to myself.
If I want to eat healthy and be healthy yet sit down with a McD burger every night in front of the TV then in time I’m just gonna die on the inside. How often can you let yourself down before you lose faith in yourself?
I’d rather throw up my hands and say fuck it, my goal is changing. I no longer want to save that $2k/mo, I’m cool with spending $4k/mo and will redraw my financial plan accordingly.
But I’m not ready for that, I don’t believe in that, so I’m gonna keep struggling every month until I get this fucker down to $1,500.