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.

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    9 thoughts on “So How Much is Enough?

    1. Kate

      Thanks for sharing this, Jen! We have a similar goal for 2009 and similar reasons for the consumer debt (sigh – wedding expenses). Posts like this are definitely inspirational to those of us struggling with some of the same issues.

      Good luck!

    2. peechie Post author

      It’s basically half milk/half water.

      So an Americano Misto is a shot of espresso, with half the cup of water, the other half steamed milk. Most coffee places make tea mistos as well (earl grey is an especially good one).

      It’s a lighter alternative to a latte, both for the waistline and the pocketbook, but still feels a bit more indulgent than a regular coffee.

    3. Laura

      Good for you! I don’t think you need to be all “feel free to tell me what idiots we are” about it. Yes, you spend more when you’re sticking to a budget than some people dream of. But, if you can do that and pay off $20k of consumer debt in one year, then you have a budget that’s working for you, so you shouldn’t apologise for it. Thanks for all the tips.

      I got laid off from my job in February last year, and after 3 months of travelling, I came back to a horrible horrible job market that I hadn’t anticipated. I’ve only worked about 2.5 out of the last 11 months and boy has it been a wakeup call in terms of my spending habits. I’ve learned that I can make do with about $150 of spending money per month, although that includes very little in the way of grocery money. (I had to move back in with my parents out of necessity, so at the moment I don’t have to pay for either groceries or rent.) Although this year has been really hard, I think some of the financial habits I’ve made will serve me well when I’m back up on my feet again.

    4. peechie Post author

      Thanks Laura (and everyone else for the kind comments) – I just meant being idiots about living in the “Land of AND” for so long, instead of being conscious about what we were spending.

      And Laura, I hope your job-hunt delivers you something great soon!

    5. Pingback: Make big budget problems into small ones |

    6. crissy

      Kudos to you! I wish you nothing but the best in sticking to your budget and achieving your goal for debt reduction in 2009.

      Debt reduction is something that has been weighing very heavily on my mind for the past 4-5 months. When debt is on your mind as much as it is on mine, it’s time to do something about it. My plan was, after we got back from travels in October, to buckle down – get a full time day job in addition to still working on my own business – and get debt paid down, no matter how much work it would be for me.

      That said, here I am, a couple of months into my job hunt, and nothing. I guess I was being cocky in thinking I’d be able to land one in no time … let me tell ya, I’ve been put in my place! I have excellent experience and credentials, yet no job … it’s so very frustrating, and disappointing.

      But your post has lifted my spirits. I’m going do as much as possible with my own business in an attempt to bring in a bit more $$, and my job search will continue.

      I look forward to hearing your updates, and will send positive thoughts your way! šŸ™‚

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