So How Much is Enough?

It took a lot of tweaking to get us to the budget we have now. When we looked at our budget, we found we actually have very few costs that we don’t have the power to increase or decrease by significant amounts each month. In fact, there are three:

1. Home (Mortgage, Strata fees, Taxes)
2. Student Loans
3. Interest owing on our Line of Credit (where that $20k is sitting)

Everything else is negotiable. Since we car-share instead of owning a car, if we drive less we pay less. We could eat out every meal, or we could eat nothing but beans and rice. We could pay for monthly transit passes, or see if we could bike more. We could buy designer duds or off the discount rack. We could change (or cancel) gym memberships, dog care services, cell phone plans, cable & internet package.

So the hardest, but most important part, was finding out how much we could cut our expenses to be as effective as possible at paying off our debt, but not so far that we’d feel so deprived and end up setting ourselves up for failure (and a big “I give up!” splurge!).

After a few months of really looking at how much we were spending on things, what we feel are our needs, wants, and sanity savers (those things that are technically “wants” but their true value comes from keeping us in a sane place so we don’t blow our budget on other things) are, we managed to form a budget around those.

So things that stay in the budget, along with our fixed expenses, are:

My personal trainer fees. Health and wellness are an investment, and I still feel like this is a worthwhile one.

Our cable package and high-speed internet (we don’t have digital of any flavour, so it’s only about $100/month)

Our dog walker (if anyone should bear the pains of our sacrifice, it’s us, not our pet)

My cell phone/iPhone plan (Neil’s is covered by work) and our Vonage home line

Our bus passes

We budgeted for our average use car-sharing bill, which is about $200/month for all our car-sharing needs. If we don’t hit it, we bank the difference for the occasional month we may go over

We also put in the budget enough of a contribution to our RRSPs that we don’t have a tax bill in April

And that left us with a tidy chunk left over for “everything else.”

We looked at that chunk, and said to ourselves “Selves, if we can take most of that chunk and put it toward the line of credit, we could pay off that line of credit by the end of the year. But can we live on the rest of the chunk?”

So we tried it. And after many months of failing to do that, we have finally nailed it.

Our chunk of the chunk is $1500/month.

Of that, $500 goes straight into a savings account for emergencies (because, like so many others with consumer debt, we just don’t have one).

The remaining $1000 covers our groceries, dining out, dog food & vet appointments, entertainment, clothing, personal care, household goods, gifts, leisure pursuits, events and basically anything else we do that I haven’t already mentioned.

I’m actually embarrassed to admit that for so long we really struggled to spend under $1000 on those things in any given month (and for the couple years before that, we didn’t even aim for it – we just did what we wanted). It would be so much to so many. And I remember not so long ago when I was a student and living on well under that.

But it is what it is. It’s an amount that means we can easily cover feeding, clothing and caring for ourselves in a manner that we’re comfortable with, and we still have room for a few little luxuries, like the occasional Starbucks (which is now a Tall Americano Misto instead of a Grande Soy Chai Latte).

We can, in addition to that, have a couple or three meals out a month. Or buy some new clothes. Or go to a hockey game. Or go skiing. Or to the spa. The key here being OR not AND. We used to live in the land of AND. Now we live in the land of responsible choices.

I know, feel free to tell me what idiots we are (actually, please don’t, we are aware and it’s just not good manners).

The point of this all is really to come clean, to put it out there, and perhaps find that there are some of you out there who have (or maybe still do) live the same way. Live in the Land of AND. And talk about what it’s like to move past that, and maybe some lessons learned on the way.

In the next post, I’ll tell you about how we deal with the accounting.