Bad Decisions 4: Budgets are a four letter word

When I was growing up I saw my family go through cycles of budgeting vs not budgeting. My dad saw budgets the way most people see diets, a means to an end, but nothing that is sustainable or pleasant. Essentially, mom would implement a budget, it might get stuck to for a few weeks, maybe even a few months, but inevitably dad would feel too shackled by the constraints of the budget and go back to spending as if he was made of money, which he wasn’t. I never saw budgets as something useful, but rather viewed them as negative and something that meant you weren’t doing it right and needed to be told how to spend your money. I kept that view for way too many years, and didn’t realize how helpful budgets and tracking finances could be.

Clearly, I was wrong about budgets and now I realize that the only thing a budget does is let you see where your money goes, and it helps you divvy it up so that the important things get covered before you spend on excess things like gym, boats, dinner out, etc… You can make your budget as strict or loose as you need. I viewed budgets as a fascist rule over my finances with strict lines I couldn’t cross, or I’d face consequences! Consequences! Therefore, I avoided implementing budgets in the real sense of the word, because who chooses to get ruled by anything? Let’s be honest, I still hate budgets. The word itself brings up negative memories associated with being broke as hell as a little kid, arguments associated with money issues, and the feeling I’m getting punished for something I did wrong financially. It’s no wonder I never had a budget or tried to stick to one.

I’m just fortunate I married someone financially minded, that is way better at money, finance management, saving, and has a hell of a lot more financial discipline than me. Even she implements budgets or tries to. Seriously, whenever Mrs. SSC mentions the word, I recoil and get edgy and defensive. It’s amazing what gets imprinted during our upbringing. Back to budgets. If you’re reading this you have some interest in finance management so let’s get to where I went wrong with mine. Straight out, I’ll tell you I still don’t have one. Never could get one implemented, stick to it, or even had the desire. I had the desire to get out of my situation, but it’s like dieting; I didn’t want to be fat, but I didn’t want to work to be skinny either.

Sooo – here’s was my  “budget strategy” from back in the bachelor days. Money in = ~$800 and money out = $737.50. Clearly this wasn’t sustainable, because I only had ~$30/week to “have fun with”. What a crock! And note there isn’t anything going to savings at all either. And honestly, the check would just get deposited and this was all “deducted” theoretically, not actually set aside in different accounts. Even when it jumped up a few hundred more a check after undergrad, it didn’t matter because my spending habits were to spend more than I made. Plus, I had more than that going out in student loan payments… Gah!

However, even this could have worked with a little mindful spending, but therein lies the flaw in my whole system – tracking spending! How did I track it you ask? I kept a running total in my head, money in vs what was in my account. Yeah, it worked great, that’s why I’m writing about it in the “bad decisions” posts. Remember, I’m not super great with numbers, plus, I have to remember everything and keep a ledger in my head and make sure what was spent was deducted and added up correctly. I have a pseudo-photographic memory so actually, this worked better than you’d think. The main flaw was when I would have “extra money”. My $ in and $ out would be totaled, and even if I accounted for auto-draft bills that were coming due, I’d think, “Yeah good job Mr. SSC, you’ve trimmed costs and done well, and you have some extra coin to spend!! We’re going out!” Inevitably, within a week or so, a bill would hit, something I forgot about and I’d be in the hole.

So, yeah, I never actually sat down and figured out money in/money out and saw the stark reality that I was broke! Always… Constantly… And there should NEVER be extra money, ever. Had I actually just sat down and figured out what bills I had, and then put my pay next to it, and could see how close they were, and maybe I could’ve saved myself a lot of trouble. BUT I never did this. I just “knew” what my rent was, my cell bill, car insurance every 3 months, credit cards were always something, utilities varied depending on season, and gas and groceries were background noise.

This didn’t ever really change until I met Mrs. SSC and saw you could live differently. It still hasn’t changed really, Mrs. SSC just holds me to an allowance that’s brilliant and evil! I’m forced to decide if I want or need something. That’s changed my spending habits more than anything. Being forced to be accountable might suck, but has ultimately been great.

Another positive is that I have seen the positive effects of budgeting and finance tracking. Essentially, without Mrs. SSC, I’d still be in the same boat even with my salary being pretty comfortable. I would have just spent it on a boat, a truck to pull the boat, a sweet semi-restored classic muscle car (dude, I sound pretty country when it comes out like that). Anyway, the point is, I’d just blow it on more expensive crap and not be able to retire in 4 years like we’re planning on. I totally understand how most people are in debt to their eyeballs or making 6 figures and broke as hell. It doesn’t matter whether you make $40k a yr or $140k a yr, if you don’t know how to live within your means, you’ll overspend regardless of your income. Just look at how many pro athletes making millions go bankrupt, actors too, musicians… Bad spending habits just mean you blow more money per purchase not that you have enough money to cover your dumb decisions. I just suck at managing finance. I try really hard, but ultimately I’d fail at managing it well, because I haven’t gotten there yet.

BUT, seeing the spreadsheet and last 6 yrs of finance tracking and our budget, I see the benefit of it. Because of Mrs. SSC doing that and her amazing skills, we can retire in 4-6 yrs. living the same lifestyle we do now. Because of budgets and finance tracking, we even have savings to bridge the gap between now and 60 when we can access our 401k. Our budget includes savings, investments, college for kids, and all those other things most people see as secondary. But shifting them into your budget forces you to save and account for that. Like pre-tax 401k contributions, suck it up and do it if you’re not already. I did it even when I was making $35k/yr. You’ll never notice it, except for when you get older and think to yourself, “Thank goodness I saved that money, I can retire now.”

Or, you can cash it out at some point like I did. I would never recommend cashing out your 401k. Read why I did, and what I did with it, from what I can remember, because yeah,it was that great I don’t even know where it all went except general frittering away….Let me know if and how you track your finances, and stay tuned to the next ” Bad decisions” post: Cashing out my 401k!

Mrs. SSC:  One tip I have for budgeting, is that I treat our savings as a bill. I set it up to get automatically invested every month, so I have to make sure our budget stays on track. If we need to cut corners on something make ends meet, we are forced to try and trim the grocery bill or other superfluous spending, and not our savings.