Wednesday, January 21, 2015

Shifting the Spend

Shifting the Spend
Like so many other personal finance enthusiasts, we have settled into a routine with our monthly budget. Most of our expenses, groceries and gas and utilities, are more or less the same from month to month. The once-a-year expenses, the life insurance and Christmas, don't sneak up on our budget anymore. Everything is ordered, everything is planned for. It's gotten to the point that we barely need to discuss our monthly budget, so much as to simply give it a glance and say, like great God Almighty did all those years ago, "It is good."

Blasphemy aside, there is a downside to our spending routine, in that routines resemble ruts. You don't want to do the same thing for too long. Like Big Tom Callahan says, either you're growing or you're dying...there ain't no third direction. When you've got everything figured out, dialed in, and ratcheted down, there isn't much room for improvement.

So, how do we change?

Cutting deeper into our budget, say, trying to save an extra one percent, does not appeal to me at all. At this stage, I don't want that kind of improvement. I don't see the point of saving 78% this month instead of 77%. Those sort of incremental gains now come too dearly, and I've played that game for years. We've scrimped. We've cut the fat. The remaining luxuries we have are worth keeping around. Instead of squeezing another hundred bucks out of an already wrung-out budget, I want to try something else.

First, a little story. Last week, my wife got pretty sick. She's lost her voice from a sore throat, walked around like an injured puppy, and coughed to the point that it hurt. The saddest bit was that she even held her ears when she coughed, as she said it eased the pain in her head. It was awful to watch, since I couldn't do anything to help. One night last week, settling down to bed, we realized that we ran out of Nyquil. Despite her protests, I went out to the grocer in my pajamas, socks, and flip flops (nerd Asian casual), to pick up more drugs.

While there, I figured I'd get some groceries. Peanut butter, some cream cheese, eggs, and some tomatoes. I usually get the on-the-vine ones, because I like to pick up a bunch and hold them close to my nose, and breathe in that tomato smell. It's my favorite thing to do at the grocer.

But I saw they had some cool looking heirloom ones: with the bumpy shapes and weird colors, and I wanted to give them a try. I usually won't get them, you know, because they're more expensive and, being a creature of habit, I always get the on-the-vine ones that smell good. Plus there's just the frugal habit itself: I have an ingrained routine of being as efficient as I can with our money, to retire early and all that. But I found myself putting the green and purple tomatoes in the basket anyway. So what if they cost a bit more?

And, like they sometimes do late at night, a new idea came to me. If I don't like spending more because I'm naturally frugal, but don't want to spend less overall either (because we already are frugal enough and spending less would have marginal benefits) the only choices left are to just keep doing what we're doing, or to shift our spending.

I'm pretty sick myself now, so maybe this idea is no good, or only makes sense to me. But here it is: we spend about the same every month, say, $2,000. And within that two thousand dollars are a bunch of static categories: $300 for groceries, $50 for gas, $400 for future travel, and on and on and on. Instead of trying to reduce the $2,000 figure to $1,900 to increase our savings rate, let's intentionally move some stuff around from one category to another, experiment, and see what the results are.

The one I'm starting with is to cut out restaurant spending (e.g. - no more chicken fingers) and put it in our grocery line item. (Maybe we'll buy organic chicken...and make chicken fingers. Really, the sky's the limit.) So we now have an extra $150 or so this month to spend on fancy groceries. We're going to eat like the other half does in February. I think we'll try caviar. Or eat more crab. Maybe we'll head to the food section of Bed Bath and Beyond and pick up some capers. I don't know if we'll have time.

Of course, if our overall spending doesn't change, neither does our savings rate. So what's the point?

For one, change is a good thing. There's a benefit in mixing it up, and varying our experiences. Maybe eating organic food makes you smile more. I don't know.

But the main benefit, for a dork like me who takes board games way too seriously, is that shifting our spending creates an opportunity for gamification. Like in Settlers of Catan or Power Grid, our budget now becomes about using our finite resources to the best of our abilities. If we don't want to spend more (or less) than we currently do, all that's left is to figure out is the best way to spend that $2,000.

We're in a position in which a whole lot of our budget, maybe the whole thing, is "discretionary." It can be whatever we want.

If we're just going to spend some set amount, we might as well spend it in the way that makes us more successful, more efficient, and happier. Let's figure out what that is. Suggestions are welcome. Who knows - maybe happiness is a fridge full of fancy chicken and weird tomatoes.

56 comments:

  1. I think that's an interesting approach - after all, there's only so much blood one can squeeze out of a turnip! I don't actually keep a budget anymore, but I did recently tally up all of my spending for 2014 - came to $17.5K ($4.5K of which was on cats... OY!) Not sure it will change my spending habits, but it did provide me with some food for thought. Speaking of food... I totally do not understand the whole heirloom tomato thing. I bought some once and found them to be mealy and flavorless, what gives?

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    1. I'm similarly underwhelmed by the heirloom tomato, but I'm drawn to them nonetheless. They're pretty.

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  2. I smiled at the chicken fingers comment - I can relate. Actually, I can relate on the whole. I do feel like we've been stuck in a rut with our budget. We've already cut so much, and I'm programmed to save however possible, but it hasn't led to having the best experiences.

    I started to focus on making more money, but there's only so many hours a day I can work. What's the point if I can't enjoy my time? Dining out has never been exciting for me, so I lowered that category, though it was pretty low to begin with. I think at this point, we have to ease into spending a little more to get more from our money, as there's not much room to shift our spending. So my goal is to simply spend in a more meaningful way and hope I feel less guilty about it. =)

    Sorry to hear you and the wife have been sick! Hope you both feel better soon.

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    1. Thanks, Erin. We're both on the mend. I feel so good that I think I'm going to drink a beer tonight.

      Earning more is another avenue we could pursue. I'm really lazy when it comes to side hustles though. I figure we are pretty happy with what we earn, which unfortunately only allows for so much motivation when it comes to the hustle. I think about starting a side business and I'm like, meh, that'll cut into our board game time. :)

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  3. Love the Old School reference and I like the move if not for anything more than a change and to be a little healthier. We are still honing in on the eat out budget, but very similar to what you outlined have gone to more organic foods and meats or going to the local fish market instead of the frozen wonder in the big grocery store. Good luck trying new things!

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    1. Thanks, Even Steven. I think I'm going to go into a Whole Foods and actually buy some of their meat and produce, just to see if it tastes better. Placebo effect alone, my guess is that spending more will make me like it better. :)

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  4. I'd say you're onto something awesome there, DBF! The potential your'e unlocking is what I'd say is of the most value. In your particular example you're not only shift spending away from restaurants, your trying to shift from passive to active! I love going to restaurants. LOVE IT! A whole team of people flit around for my every bidding - for pretty damned cheap considering that. But, as good as some of my restaurant experiences have been, 9/10 times I enjoy cooking at home more. I get to do something. I get to create something. Both of those are good from your brain, and typically your health. So, get that organic, free-range, friendly, happy, cage-free, no-hormone, grass-fed, poetry-read chicken. Get those fancy-ass tomatoes. Get that pasta that costs $1.50/lb instead of $0.89, and create a baller dish. You'll likely not only have created something healthier than a restaurant would serve, but you'll feel a hell of a lot more like a badass afterwards. Keep it real, brother. Cheers.

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    1. You've got me inspired, M Squared. Fancy chicken dish is coming up.

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  5. Honestly, this is something we do. We're bad budgeters. I have a given amount that is discretionary after bills are done, and then it's a free-for-all (not really) in the remaining money. I know that $x has to buy groceries, pay for entertainment, fuel the car, and feed the kitties. If I decide to splurge at the grocery store (I bought a roast last week that didn't NEED to be slow cooked for 6 hours to be edible!), maybe we won't go to the movies that week (okay, honestly, our entertainment budget is pretty much non-existent and constantly gets pouched for other categories).

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    1. Hey Alicia! I really like the budgeting approach you've described: put a certain amount towards financial goals/necessities, and then splurge with the rest. I think it sounds free-ing. The kind of budgeting we do is tight fisted and regimented, but it's what's worked for us. I might try that as a change of pace though: just putting X towards our savings goals, and spending the rest however it fancies us.

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  6. I think it must be great to be at such a comfortable place that that is where your head is at! I'm quite jealous! :)

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    1. Hey Tonya! If it helps at all, I'm jealous of your healthy lifestyle there in SoCal.

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  7. I think that's a fantastic approach DB40, and a great way to keep life interesting and try different things, whilst keeping your financial progress intact. It does require some pretty decent budgeting skills and discipline though - as you say many people tend to reach autopilot with most of their spending categories, and could 'accidentally' end up just spending more without that discipline.

    Getting sick is a real pain, sorry to hear - but at least your creative cylinders are still firing! Hope you're better real soon.

    Cheers,

    Jason

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    1. Thanks, Jason. I want to write more often this year. Work is picking up, but that's more of an excuse. I could write daily if I want to: once a week would be an improvement.

      Budgeting has become a (healthy?) habit for us over the years. It's second nature and we don't find it restrictive, except for that it also creates spending habits of sorts. Ideally, we can find a way to introduce some variance without losing all the benefits.

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  8. Hahhaa.... "I don't know if we'll have time."... Almost spit out my coffee on that one :)

    LOVE this idea though -change is good even if it remains the same! (Wait, that didn't make sense...)

    Reminds me of something I read last week that said when you get tired of an old painting or picture, just move it somewhere new in the house. You'll have a new appreciation for it once it's in a different surrounding.

    Moved my "money" painting to a different wall in my office and voila - already liking it more again! :)

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    1. I swear the only thing I want is for people to laugh at my posts. It's sad, but I could care less if people's finances improve...so long as they think I'm funny.

      I'm going to steal your idea about moving paintings around and see how I like them. Thanks for the tip, & for reading, J Mo.

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  9. How interesting. The best question of all, are the bumpy weird-shaped and colored tomatoes yummy? :)

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    1. You know, they're just okay. I prefer the grape tomato or even the vine ripened ones.

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  10. I have never had the pleasure of eating heirloom tomatoes so I am really feeling like I am missing something in my life. I can't wait until the time I can set a set amount to live off of for the month and save the rest. I have been throwing all my cash at my debt, but that day will come.....I can feel it.

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    1. Hey Petrish. I remember the day we became completely debt free, and it is a pretty awesome feeling. I also found it a lot more motivating to pay off debt than invest, for some reason. Putting money in an investment account isn't quite as satisfying.

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  11. I totally agree with you. We often have to find the balance of what we call frugal vs. cheap. Cheap is where you try and save money at any cost, where as to us frugal is you know what matters and what makes you happy and that is how you spend your money.

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    1. That's really the rub: finding that line between the two concepts. It's a moving target.

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  12. Very curious to see how this shakes out for you guys over a longer term. I think there's a kind of natural equilibrium that we have found with our spending that when we have a month where something is really expensive (like when we bought the antique benz last summer), we kindof tone down the rest of the spending without really noticing it (our other spending dropped by ~$1500 from our "average" and we really weren't aiming for that).

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    1. That's a really cool concept, Mrs. Pop. I wonder if we're seeing the same thing. We have to calculate our 2014 spending as well, but would love to see that same sort of pattern after we make big purchases.

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  13. Really interesting way at looking at the budget! It makes me wonder if we are spending our money as best as we can. Besides using lots of money for debt, we could probably be using it towards a more fulfilling way of life instead of a smorgasbord of stuff.

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    1. I'm not sure any of us are 'really' optimizing our money, but that's okay. It's a fun thing to aim for. Paying off debt is definitely one of the best payoffs you can get for your dollar, IMO.

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  14. Interesting!!! I like this, DB40! Can't wait to see how this turns out. Thanks for the usual giggles that your posts bring, too. I now have this vision in my head of you at Walgreen's in your pajamas and flip flops, sniffing tomatoes on the vine.. :-)

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    1. Ha, you weren't the only one! I definitely got a few looks in my green, plaid flannel jammies, sniffing produce around midnight.

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  15. I hope you and the Mrs are feeling better. I hear tomatoes are a good source of Vitamin C, so maybe your body was craving it

    I've never been impressed with the heirlooms from the supermarket, but we used to go crazy every summer with the heirlooms from the farmer's market. They were like candy, but the kind of candy that your Mom wouldn't get upset about you eating too much of

    We've settled upon a similar budgeting technique. We just spend whatever we want on whatever we want, but because we've practiced in the past our spending seems to settle around similar levels each month. I guess we subconsciously optimize our resources in the Game of Life

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    1. The Game of Life! It's been forever since we've played that. We'll have to bust it out again. (As I recall, it really paid off to go to college...so long as you didn't become a teacher.)

      I haven't been to our farmer's market in forever, but that's a fantastic use for our extra dollars now. Thanks for the reminder, Jeremy!

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  16. Haha, pajamas, flip flops and socks! Yea my wife has protested against my fashion faux pas many times. Anyways, glad you guys are feeling better. It's an interesting way of changing things up...sometimes you just need change for the sake of change. You know like how they usually fire the coach in sports even though the main culprit is the players...but somehow that change lights a fire. I, sometimes feel the same way...there's not much more to cut when you're naturally frugal. Sure, there are still things I can optimize, but I'm trying to focus on earning more.

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    1. Right! Great analogy with the firing of coaches: sometimes, everyone needs to mix it up. No blame or anything (I'm looking at you, John Fox)...it's just about getting better results.

      Like you, I don't think cutting more is the answer. Would definitely love to earn more, too. Earning another 10% always seems to be the answer to alot of problems. :)

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  17. I thought, as a Power Grid fan, that you were going to buy The Nest with your restaurant money so that you reduce your coal usage. It's getting too expensive. :-)

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    1. I had to look up what the Nest is, and now kind of want one.

      It's funny, on the last game of Power Grid we played, I was in position to win, but my so-called friends and loved ones purposely bought all the coal before my turn. Should've bought windmills.

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  18. We are not yet at the point where we are just going to spend $X each month, no matter what it goes towards. The lure of early retirement is too appealing. We remain firmly in the nose-to-the-grindstone camp where every cent towards mortgage payment or investments, what we lovingly call our endowment, is a victory. We seek out that 1% improvement. Though, still being early in our frugal journey, I think that position is only natural. Perhaps a few years down the road we will start to mix it up. Until then... save, save, save!

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    1. Hey Mrs. Maroon. I took a peek at your page's 'endowment' -- you guys seem to be doing great! Keep doing what works for you, I say.

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  19. I love love love this! We recently shifted from eating out to buying fancy groceries, and it feels like we are living in the lap of luxury...for the same price :)

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    1. Thanks, Emma! And glad to see someone else out there won some good coin at Fantasy Football, too!

      Money won is the sweetest kind.

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  20. Lol at BBB and not knowing if you have enough time, Frank the Tank (ummm, at least I'm guessing that you deliberately made that an Old School reference)? I like your concept about shifting to different categories considering your amazing savings rate. It breaks you out of the routine and let's you try something different without sacrificing financial goals. Definitely keep us posted on how the tomatoes tasted - did the purple one taste like ube?? :)

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    1. The tomatoes are so good! Once they hit your lips! It's so good.

      Congrats again, Anna, on the baby! That's the very best kind of news.

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  21. Change is the spice of life! Our budget is variable, and we're still not at a point income wise where were saving as much as I'd like, so congrats on that! We're getting there, though. :)

    Plus eating organic is way good... I seriously feel better every time I'm able to do it for a few days.

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    1. We're going to try going full fancy-pants organic for the month of February, so I'm looking forward to seeing the results. Plus, I want to go into Whole Foods and walk out with more than a single wedge of cheese, for once. :)

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  22. I hear ya- Once you've cut your budget down almost as far as it can go, there may be little value in going any further. That is basically where we are at. We save plenty but could probably save a little more. I'm just not willing to cut that deep right now.

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    1. Right on, Holly. I think it's a message for us frugal folks: there is a point of 'enough'.

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  23. A change is always good! And frugal living is different for everyone. This year I am embarking on the journey, one step at a time, and I'm not sure yet how far it will go... but I'm excited to see. :-) Good luck!

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    1. Good luck on your journey. And great blog name.

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  24. Hey DB40!

    Think this sounds like a really good idea!
    I will try it if I ever get down to your mega frugal levels of spending :)

    Maybe I can flip it on it's head and try randomly cutting out a whole budget category each month and see if I can "survive" without said item? (Groceries would not be the best one to start with here though... obviously!!)

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    1. You know, I don't think we're all that crazy frugal. We just have a high savings rate because we paid off the mortgage. I know there are a lot of bloggers out there that spend way less than us....you may be one of them!

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  25. I like it. I basically have a loose rule that's similar - I save $x for upcoming bills/travel/charity, $x is for weekly rent/groceries/eating out. Everything else has some level of play - and what's not spent is saved. Some weeks, I push hard to live with a tiny chunk of the everything else, other times, I sit with it all week 'just in case' and then save most of it. Just depends.

    I'm not at your level of mastery on savings rate, but then again, I don't really 'need' to save more either. I cover all my expenses, save for retirement, save for travel... So I try to feel freer day to day to enjoy things that money provides. By hosting a party and going all out. Frivolous, but memorable and an experience...

    And I love eating out... :s

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    1. That realization that you don't need to save more is one of the things we finance bloggers miss out on, I think. Saving "enough" is, you know, enough.

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  26. I try to make it a point of not going to a restaurant unless I have a coupon. Outback has 15% coupons regularly, Red Lobster has $5 off. Our pizza shop has coupons every week too. And when I buy gas, .10 off, double on Tuesdays so .20. And my 5% back on gas.

    If you look for discounts, they are all over the place.

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    1. That's true -- discounts abound. I wonder sometimes if they have a net negative impact on our spending.

      Would we spend less on pizza, if not for the coupons?

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  27. This past summer we shelled out $6.99 for 2lbs of heirloom cherry type tomatoes. My kids loved the multi colors so was worth it to have them eat healthy but had to adjust what else I bought in the food budget.
    My expenses are mostly set. I love when the electric bill is less than budgeted amount cuz I can relocate it to play money, like donuts for the kids! It's like found money. It also encouraged my kids to turn off lights.
    I like how you stay set in budget but will play around with what goes where. I hope to have more of that freedom soon.

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    1. I like when we have that 'found' money in our budget, too, Dawn. I find it a lot easier to spend that money on something fun, for whatever reason.

      Like our tax refund: every year, my wife has to convince me not to buy a third scooter with it.

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  28. I personally only spend about 20% of my time going for the low hanging fruit when it comes to cutting expenses. The problem with putting too much focus on cutting expenses is that there is a floor or limit to how much you can cut.

    And as you pointed out that last 1% isn't usually worth it. You can't give up all the joy you have in your life.

    The other 80% of my time is spent on figuring out how I can increase my income so that I can enjoy those luxuries that bring us joy. While at the same time maintaining a respectable savings rate.

    The great thing about personal finance is that there are many roads that can get you to the same destination.

    Cheers!

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    1. "The great thing about personal finance is that there are many roads that can get you to the same destination." This is absolutely true!



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