Thursday, July 8, 2010

My observations of FB's observations

Yesterday, FB did a really interesting post about how people's spending changes across income categories. In the last five years, I've gone from the smallest to the largest category in her post, so I thought it'd be interesting to take a look at my own spending and see how it mimicks her observations.

Five years ago I was making just under $30,000. Currently, Peanut and I make between $100,000 and $125,000 and our income is for all practical purposes joint income (and for all legal and access purposes will be totally joint in less than three months!!!).

When I made less, interestingly enough, I spent more (both in terms of percentage AND actual dollar amounts) on entertainment and eating out, as well as "blow" money (a category I don't even have anymore  -- mostly it meant cigarettes). I also spent a lot more on making money, through dance expenses and mystery shop expenses (to be fair, I never went into the red).  It was at this point that my rent was at its highest as well, more than 50% of my take-home pay (!!!!). I managed to save quite a bit as well, but my spending in general seems a lot more frivolous.

I know I went to the movies a lot, paying full ticket prices. I bought cigarettes and ate out a lot more (my argument was that I was eating out cheaply -- like Taco Bell prices. Now I eat out less frequently but have better food). 

Now, I spend more on groceries and travel. My rent has gone down. My clothing costs remain about the same, as do my personal needs and household expenses. I spend a lot less on making money -- almost nothing actually. Last year I didn't turn a profit from dancing, and this year's winding up to be the same. As a money-making hobby, it's suddenly become too expensive timewise to be worth it.

I'm saving much more aggressively. I put a lot more into retirement. I'm saving for things much further in the future, like a car when we move away from the city. I'm saving for things with huge price tags, like a wedding and fun vacations. I'm preparing to start hammering away at student loans. Basically, I haven't upgraded my lifestyle a whole lot. I agree that some upgrading of lifestyle is unavoidable, and actually I think that's a good thing. Even when I made the lowest amount, I gave myself some blow money based on Dave Ramsey's principle that if you don't have blow money you'll blow the whole budget. As your income increases, you should recognize your hard work and allow your money to do something for you -- you just need to prioritize and tell your money what to do instead of wondering where it all went.

This exercise was very exciting, actually. While I do fall in the "normal" range for a lot of FB's observations, in a lot of important ways (particularly general spending and electronics), I don't. I've been putting money aside instead of upgrading my lifestyle, and I intend to continue this level of frugality at least until all of our student loans are paid off -- at which point we can REALLY go wild. We'll have almost $50,000 a year to play with, to save for a house or for traveling or for whatever we want.

2 comments:

  1. Thanks for the link back and your own experiences in a post.

    I definitely went the other way. I have lifestyle deflation syndrome rather than inflation.

    I make much more now (this year, $140,000), but I spend quite a bit less than I used to when I made $60,000 doing the same job.

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  2. Seems like your views on money and finances are along the line with those who view money as wealth rather than lifestyle. For the link.

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