Many years ago, when I was paying off a car loan and some credit card debt, I became really frugal. Almost obsessively frugal. I looked for every possible way to save money, and I dreaded ever having to spend money.
Then one morning my husband accidently broke our coffee carafe. I helped him clean up the glass and caught myself feeling anxious about having to buy a new carafe. How much was that gonna cost?
As it turned out, only $12. That's when I knew I had swung too far in the tightwad direction. I'd gone from not really being in control of my money to being a control freak. And it was making me miserable.
From one money extreme to the other
Before I educated myself about personal finance (starting with GRS, actually!), I never tracked how much I was spending. When my credit card bill arrived each month, I had no idea how high or low it was going to be. If it was low, whew! I could relax. If it was high, I'd buckle down for a few months and pay it off. Then I'd continue with my previous spend-now-worry-later habit.
Opening the credit card bill was pretty stressful back then. Here's what I wrote almost five years ago about that period of my life: "My stomach dropped as I looked at the balance, added the expenditures in my head, and realized that yes, it was correct. The bank didn't make a mistake. I bought that stuff."
Eventually, I started learning about emergency funds and the real cost of paying interest. As I followed J.D.'s story, I slowly started to get my own financial life in order. I saved a small emergency fund first; then I started to tackle my debt.
Being type-A, though, I felt like I had failed in the personal finance area of my life. So I wanted to pay off my debt as soon as humanly possible. I wanted it gone, erased from my credit report and erased from my life. I dreamed of the day when everything would be paid in full.
But somewhere along the way, I started to get anxious about spending money. I worried that I wasn't getting the best deal. I beat myself up because I'm terrible at clipping coupons and remembering to use them. I'd read frugal blogs and kick myself if the writer DIYed something that I just bought. Spending was making me miserable.
Now, there's nothing wrong with being frugal. But replacing a $12 carafe shouldn't ruin your morning, you know? I didn't want to live like that any more than I wanted to dread the credit card bill every month.
I needed to find middle ground.
April in the middle
I didn't find that balance right away, of course. It took time to (mostly) make my peace with spending and saving. So today I thought I'd share what this more balanced approach looks like for me.
Here are my spending guidelines and how I approach spending these days:
I only spend money I have -- meaning, no credit card balances ... ever. I pay off my rewards card at the end of every month. This action alone alleviates a ton of money-related stress.
I spend guiltlessly on things that are important to me. For instance, I greatly value my family's health. So I'm okay with the fact that we pay a lot for grass-fed, organic what-have-you. I'm okay with our gym dues and paying for yoga classes. It feels good to spend money on the things we value.
We indulge sometimes. I like the Balanced Money Formula a lot, which leaves room for indulgences like eating out and, in our case, hiring a housekeeper to clean our house twice a month. Uber-frugal me would never, ever, not in a million years, hire a housekeeper. But it is actually more affordable than I thought and, for me, it's been life-changing. Between cleaning sessions, the house requires very little upkeep, and this means we're always ready for company. I enthusiastically pay my housekeeper. She's amazing.
Here are my saving guidelines and my more balanced approach to saving money:
We have an emergency fund. Right now, it would get us by for at least a year. That's probably a little too much for an emergency fund; but we sold some land recently, and I still need to figure out what we'll owe in taxes and then set that aside and move the rest of the funds.
We contribute to Roth IRAs. Knowing that we're saving for retirement and that we have an emergency cushion helps me feel less guilty about spending money elsewhere. I don't have to worry about what we can spend if we take care of savings first.
I comparison-shop for the bigger stuff. If it is an expensive purchase, like the refrigerator we had to buy last year, I spend a fair amount of time sorting through reviews, looking for the best deals, and Googling coupon codes. But researching like that for something like a $12 carafe? I have to let that go. It keeps me more sane.
I do a quick gut-check. Before I buy most things, I take a little timeout. Do I really like/need/want this? Do I already have something that works just as well? Could I make it myself? For instance, I recently planned a baby shower for a friend. I saw these neat tissue paper tassels I wanted, but they were $30. Spending $30 for something I wouldn't reuse bothered me. So I Googled "how to make tissue paper tassels," and I made my own in about 30 minutes with an extra $3 worth of supplies.
I lower our bills as much as possible. I love to save money on property taxes, insurance, cell phone plans, and other expenses that I can lower without feeling a pinch. This also can include things like cutting subscriptions and memberships you no longer use and refinancing your mortgage when rates drop.
Of course, this is just what works for me, and one of my favorite GRS tenets is to do what works for you. You might be more frugal than I am; and if you are perfectly happy that way, that's great! I'd probably be envious of how much you save. Or maybe you think protesting your property taxes is a waste of time, and you'd rather focus on increasing your salary. I wouldn't necessarily disagree.
So, readers, let me know in the comments: Have you ever been at a spending or saving extreme? What does balance look like to you?