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Yeah, I like things.  Just yesterday, I vowed to Chris that I wouldn’t buy from Amazon for two months.  Then I learned this morning that the ebook of Neil Gaiman’s Neverwhere was on sale for $3…

No, it’s not much.  But I promised myself!  And we had just decided to eliminate our CC debt by a combination of cashing out of tanking investments (yes, Chris was on board with yesterday’s idea) and some strict-ish budgeting for two months.  Which means I can continue to buy stuff I had already planned for (like theater tickets!), but not random crap.

And there’s so much random crap that I love and want.  I’ve got a crafty hobby (cross stitching).  I love books (real and electronic).  I love iPad games.  I love TV shows on DVD.  I love Apple gadgets.  I want to refurnish our bedroom and the dining room (and not with IKEA!).  I love shoes, purses, and sweaters.  (But I hate bathing suits.)  I love fine dining and great wine.  Can I tell you how badly I want to score tickets to Next Restaurant’s El Bulli menu?  I love to travel, especially to Europe and especially in first or business class.[1]

Not to mention the absurd part of me that wants a house (!) in our neighborhood.  (What on earth would I do with a whole house?)

Chris shares some (many) of my vices (but not the house thing) and has a few of his own.

It’s been hard (and sometimes costly), but we have learned some self control with time.  After all, first and foremost, we also want to enjoy financial stability.  So over the years, I’ve consumed quite a few personal finance books to help us figure out how to balance love of spending with financial stability.  We started with Ric Edelman and I read The Millionaire Next Door.  Liked Edelman, hated MND (not surprisingly, given the number of vices I’ve got).  I then moved on to a slight tangent on consumer behavior (Stumbling Towards Happiness & Affluenza) to better understand my own spending.

We even started to see a personal finance expert in 2005.  She rightfully scolded us over our credit card debt but then hooked us up with a turkey investment.  We stopped going to see her.

Yes, I’ve also read Dave Ramsey.  But his co-mingling of personal finance and Christianity (as well as his gender stereotyping and his reliance on familial norms) drives me crazy.  Not to mention that he’s weak on investment strategy and he’s too extreme on the evils of credit card use (although we are on a CC fast until it’s all knocked out).  So while he does say some good stuff, it’s hard to see past his preaching.  (I have not subjected Chris to Ramsey.)

Lately I’ve been reading personal finance blogs and one of them directed me to Elizabeth Warren’s PF book from 2005, All Your Worth.  This sounds like the secular viewpoint I’ve been looking for (not to mention I joined the Warren fan club a few years ago).  She (and her co-author/daughter) repeats some of the good Ramsey stuff, but the message is in tune with our philosophy: personal finance is about personal balance.

The basic idea: income gets split among three buckets.  Needs, Wants, Savings.  50% (preferably less) goes to Needs (food, clothing, shelter, insurance, transportation).  30% (at most) to Wants.  The remaining 20% (or more) goes to Savings (which includes debt reduction).

This is completely in line with our experience.  When we realized we were in over our heads (thanks in large part to my unemployment), we first tried to pare down Wants.  But the most effective change we made was reducing the amount we spend on Needs (especially shelter) to about 28% so that we could take our Savings to 50%.  Leaving us with 22% to spend on Wants.

Could we get out of debt faster if we reduced the Wants portion?  Of course.  But we’d be miserable in the process and since we have a reasonably aggressive debt elimination plan in place, it’s just not worth it.

Does that make us hedonistic?  Perhaps.  But it also makes us realistic.

 

[1]  To be fair, there are stereotypical things that most people want that I don’t.  I’m not a diamonds girl (I truly can’t tell the difference between real and fake except for the price).  I have no desire to ever own another car.  Awesome kitchens with granite countertops and stainless steel appliances?  Been there, done both, no need to do so again.  Neither one of us are really into gift-giving to each other for special occasions.  We HATE hitting restaurants for major occasions too (how awful is dining out on Valentine’s Day?).  And, most significantly, we don’t want kids.  So there’s some savings right there!