Monday, January 4, 2010

Apparently I'm not thrifty

I don't normally talk about "the money" on this site, but I have a big problem that may impact the projects that I document on the blog, so I think you deserve the dirty details.  It's also that time of year for resolutions, so without further ado: 

The problem:  I'm a waster.  A money waster.  A big-time, celebrities-going-bankrupt-after-appearing-on-CRIBS money waster.  A couple weeks ago, I casually clicked on the 'Spend Analyzer' feature on my Discover card website, and immediately yelled "HARK THE HERALD ANGELS SING, that's a lot of monies!!!"  It was the Monday before Christmas, you see.  Then I downloaded all the year's transactions from my other credit cards and bank accounts I use for purchases, and was HORRIFIED!  Completely disgusted, I added all of our checking and credit card accounts to the free online budgeting tool Mint to see how we did as a couple.  IT WAS SHOCKING!  I spent over one third of my after-tax income on frivolous retail purchases.  And thanks to me, we also spent over one third of our combined take-home pay on just these categories:

General Shopping - clothing stores, speciality stores, places like Target, Kohls, TJ Maxx.
Home Furnishings and Minor Improvements - Menards, Home Depot, Pottery Barn, Overstock.com, Etsy, eBay, and any purchases I tagged as 'home' items.  
Eating out  - together, we spent about 2k on eating out last year, or $166 a month.  We also spent $4500 at grocery stores, which means we're drinking too much booze because two people don't need to spend almost $400 a month on groceries.  (Groceries are not included in the '1/3 of our income' figure, either!)
Cash (ATM Transactions) - $1700!!  Where did all that money go?

The bad news:  We have added next to nothing from our paychecks to our savings accounts for the entire year.  This is probably because our nice big tax return (which included a $7500 homebuyer tax credit) gave us a sense of security and a fat savings account.  We could've paid cash for a new car with the money we spent on 'things.'  What a sickening feeling. 

The good news:  We both contribute alot to our 401k (I've put in 12% for years) and have CDs/money market accounts that don't ever get touched.  We do have savings in place already.  We are not in debt, every credit card and bill is paid in full every month, so we're not necessarily living beyond our means and definitely aren't paying any interest.  In fact, we earned TONS of rewards on our credit cards.  We have a pretty house, and I have lots of nice outfits.....hey, I gotta make myself feel better somehow!  

Why it happened:  It's totally my fault.  I was excited about the house, and went all 'Shopaholic Takes Wisconsin' decorating it.  I also let the blog be an excuse to buy many things that I shouldn't have.  Combine these things with my hardwired-since-birth need to buy clothes constantly, and you've got a serious spending problem.  We also love to drink $10 bottles of wine every week, watch premium cable channels, and go out to dinner.  Oh yeah, and we bought a $3,000 mattress, so that didn't help the bottom line, either.

The resolution(s):  To give myself a monthly budget of 'fun money' that I can use for whatever I want....and when it's gone, it's gone.  To HOLY-COW-STOP-BUYING-CLOTHES because I have an entire room devoted to my clothes and only 1/3 of them will fit in there...I'm like a Midwestern, un-glamorous Mariah Carey.  To stop overspending to get that 'perfect look' seen on other blogs.  To be more like thrifty goddess Kasey* and stick to a budget that helps me put dollars into savings, not into more Etsy pillows and Pottery Barn rugs.  To challenge myself to do things more cheaply.  To save for a new vehicle because mine is almost 6 years old and won't last forever.  To use Mint to closely track our spending throughout the year to avoid this suprise at the end of 2010. 

So tell me....how many of you are shocked when you tally up your spending at the end of the year??  Please tell me I'm not alone!

* ps Kasey, I hope you can still respect me now that I've proven to be a 'money loser!'    

25 comments:

Kasey at Thrifty Little Blog said...

Unlike me, you must be swimming in rewards at this point :)! I really need to hop on that train asap!!

Look at the bright side to it all: You might be on a tighter budget in the upcoming years, but your home is seriously beautiful... I mean, really!

Kasey at Thrifty Little Blog said...

Oh, and how could I have not thanked you for the title of "thrifty goddess"... I mean, that's a t-shirt waiting to happen!

Leigh @ Kesler Expressler said...

I'm the book-keeper in our household and track our money and budget daily. At the end of each quarter and year I tally up how much we've spent in each category... It's frightening! I definitely know the feeling of shock. Good luck with your new budget!

cottagewish said...

Know that you are not alone. I am believing that 2010 will be a better year for all of us spenders. We'll learn how to use what we got, or sell it for cash. We'll learn how to enjoy eating in and spending quality time with our families. We'll be thankful for what we have as opposed to wanting what we don't need. I'm right with you! Thanks for being honest and sharing.

Oonafey said...

I keep track of all of my spending and our joint spending. I spend way too much money on crap. Period. But it always seems important at the time. Like curtain rods for instance: Curtain rods for the main floor are going to cost me about $500. At least. But we need them. So where do I draw the line? I haven't bought clothes in months, I don't smoke, I have Starbucks once a week. I keep telling myself "When the house is done, I'll stop spending money". Hah!

micah @ the yellow front door said...

You are not alone! "Thrifty" is not how I would describe myself, but I'm trying to be smarter about my purchases. We also need to cut back on the clothes shopping (well that's just me) and eating out. Thanks for the wake up call!

britni said...

I am with you. When i get my W-9 at the end of the year and see what i made. i'm like where is all that money??????? I ditto that resolution.


Wish me luck!

Danielle and Clint said...

It's hard to not want to spend when you can. Kasey was right. What you got out of this is a beautiful home. What good is money if you can't spend a little!?! But having goals to save is always a good idea.

Kristi W @ Life at the Chateau Whitman said...

Ugh, I can relate. It never feels good to track your spending and see where it all went. But now that you know, I bet you'll tighten up the spending. We used to be pretty bad too. Making a "fun money" account like you mentioned has really helped. It was a big adjustment for me. I've been working since I was 16 and my money was always MY money, to spend on whatever I want. So having a personal spending budget was tough at first and frustrating at times. But it gets better. I promise it does. And then you feel accomplished when you realize you can be patient and buy things next month or the month after (or decide you don't even want them any more). We also have money deducted from our pay checks automatically and transferred into savings. That has helped a lot too. Good luck!

Kim @ NewlyWoodwards said...

Don't they say the first step is acknowledging? (Or maybe that's for another problem?)

I had the same moment, about 3 years ago, before I married my husband. It took a ugly realization for me to stop buying crap that I "had to have" and save. I was so embarrassed when I told my husband. I still fall off the wagon sometimes, and all these lovely blogs don't help, but I try to look at the bigger picture. And, I have my fun budget every month (with a totally reasonable amount in it) that I use up. Sometimes I wish I had more, but I try to remember that saving is much more important than *insert needless item here* =)

Here's to a successful, beautiful, thrifty and happy 2010.

Sharon@Sharon at Home said...

I am pretty frugal, and make saving a priority, but I am resolved this year to start tracking my spending. I'm getting close (5-6 years) to retirement and want to know where all my money is going.

On the upside ... your house looks fabulous ... and what is already done, is already paid for!

I also get your comment about the blogs out there. I see blogs where people seem to do a projet a day ... what must that cost, even doing it frugally?

I think the economy the past year has many people re-evaluating what they spend money on.

Congratulations Sara on taking a stand on your spending.

Sara @ Russet Street Reno said...

Thanks so much for all the supportive comments, ladies! I'm going to start taking orders for 'Thrifty Goddess' t-shirts, who's in?

Mrs. Chic said...

Yikes! I hate when I look at my spending too - Target always gets me in trouble, I try to avoid it during weekends, I'll spend way too many hours there!

When I get really anal about our budget, I start using Excel spreadsheets it really helps me stay on track.

Yes I need a T-Shirt lol

Meg said...

Let me just say how much I admire you for baring it all. You and Kasey have inspired me to do a very honest and open blog post in a few weeks about our monthly spending and maybe get some advice from other bloggers about ways to save that we didn't think of.

Here's where you can pat yourself on the back. You have no debt! I don't have any debt besides student loans and my car, but my husband unfortunately racked up a little in college. Lots of people our age have some debt, and the fact that you have a clean slate is fabulous. The house is really an investment and opportunity to get money back, and if you can cut back a little, you'll be golden!

So many people don't even think about saving, so really focusing on that now means you'll have an awesome later. Thanks for sharing!

Keeley said...

I see a bright side to all this. You are investing in your beautiful home, you qualified for that HUGE new homebuyer tax credit (which didn't exist when we purchased our home in the SELLER'S market of 2005), you have no credit debt, and you contribute a lot to your 401k. It will be (relatively) easy for you to get back on track with saving as long as you start budgeting and tracking your spending. Thanks for your honesty - budgeting is definitely a hot topic in these "tough economic times".

Brittney said...

Don't feel bad! We totally did that too. It's hard not to get excited about decorating and fixing up. In 2009 we went all Dave Ramsey and it really has helped!

Katie said...

we started using mint about a year ago and i looove it. the first couple of months we just let it do its thing and track our spending - then we set budgets and have been working hard at sticking to them. last month (with christmas) was the first month that we've gone a little over in a while. but the previous months we were under so i think it balances out. we also recently opened two savings accounts - one for long term saving that we contribute to first and will only use for emergancies, and our short term savings that we will use for bigger house reno projects, car repairs, etc. we have $ transfered automatically from our paychecks each week to both of these accounts so we've not tempted to spend it. thanks for posting this - i agree that it is difficult to see a lot of these blogs where people are doing project after project and i just don't know how they can afford it! good luck :-)

Heather @ McKinney Living said...
This comment has been removed by the author.
Heather @ McKinney Living said...

Mint.com forced us to be VERY honest about the spending habits I was ignoring, too. Kudos to you for being debt-free and not sweeping your money habits under the proverbial Pottery Barn rug! :) Here's to a heavy-saving, thrifty 2010 for all!

carrie said...

We need to budget. We don't spend more than we make and, like you, pay everything off at the end of the month. We contribute to our retirement plans and put savings away in ING. I don't feel like we spend frivolously but I have no idea where exactly every dollar goes. I'm positive I'll be shocked when I actually look at the spending breakdowns. Getting our finances organized sounds like an EXCELLENT resolution.

Peggy said...

I just about fell over a year and a half ago (or so) when I sat down and figured out my spending. It was enough to scare me into budgeting (I use YNAB) and, while I'm still not perfect at sticking to it, at least I'm tracking it and living within my means and on my own income (as opposed to credit).

It's scary how it can be so easy to spend without thinking, isn't it?

Amanda said...

Well first of all let me agree with the others- your home IS beautiful so it's not like you have nothing to show for it. And second, congrats on not having cc debt (sadly you're probably not the norm in that respect). Third, the fact that you at least TRACK your spending is admirable- I know people- adult, educated,successful people- who never even look in their bank account and just kinda hope they have enough money when they make a purchase! I'd say you're doing fine, especially now that you've set some goals.

Kelly@TearingUpHouses said...

it doesn't sound like you're being completely irresponsible per se, since you have no debt and (i'm assuming) plenty of savings and retirement, as much as perhaps (in your opinion) frivolous?

i have 2 (humble) suggestions:
1. make a goal to save for something ultra exciting that you REALLY want. if the money you're spending truly is disposable income, put it towards something you'll appreciate (a new car, a trip to europe, helping homeless children) so that you won't look back a year from now and go, "wha?"
2. this is advice someone gave me in college THAT IS SOME OF THE BEST ADVICE I'VE EVER GOTTEN: if you want the money for x,y,z, MAKE IT. not earn it in your salary. take the money you've earned that you would normally spend on x,y,z and invest it (cd, etrade, real estate, whatever). the profit is yours to be as frivolous as you want with.

great, interesting post!

kelly

Hasina said...

Hi Sara, I love your last post. It shows you're a smart lady and I love your blog even more now :)
I embraced minimalism a while ago after years of spending my hard-earned money on expensive shoes and bags and stuff for my house, and I haven't looked back. I do love nice things and interior design/decor, but I realized it's more important for me to travel. I'm happy to say I saved enough money to pay for a trip to Japan next April.
Anyway, great post and happy new year!

Amanda said...

Even being the bargain-hunter I am (usually), I still probably wouldn't want to see the total bill over the past year! In addition to clothing and home decor stuff, we've also had to spend a lot of $$$ on one-time things like appliances, sprinkler system, sod, water softener (not a necessity), etc. It's depressing to think about how much all that cost! I feel like we are never getting ahead.

And if this makes you feel any better, we don't even HAVE a savings account yet (so embarrassing to admit that!). That's my resolution for this year.

I think even if you cut back on your spending, you'll still manage to be creative and come up with some cheap yet chic projects. I'm looking forward to it!