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Post of the Day
May 14, 1999

From our
Budgeting Folder

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Subject: Re: How to decide?
Author: NoMudNoGlory

In the last few years, our incomes have grown considerably as we started doing less nonprofit work. The problem is that I can't quite figure out how much we should be spending and savings.

I have had a similar change in income, and it was (is still?) quite difficult for me to make the transition. We went from having our first child on public aid, to now having very good jobs with income well above our family and friends. Back then, decision making meant struggling to find a way to pay the bills each month. Now, we are plagued with choices on what to do after all of the bills are paid! Budgeting on a shoestring is a whole lot different than budgeting with deep pockets.

"When it comes down to it, money is just a tool to accomplish your goals. Some goals require saving, while others require spending."

I constantly fight the urge to be frugal. Sometimes I just get carried away. I am proud of knowing how to buy a car for 15% less than my friends -the extra time I spend working out the deal is well worth it! But in our lean years, I tried to convince my wife that it made more "cents" to buy a whole loaf of bread for 29 cents than 8 hot dog buns for 59 cents. There are times you have to recognize you are just being CHEAP! One way to "draw the line that you're too frugal" is if you're embarassed to say how you saved the money...

Deciding how and when to "live it up a little" is more difficult. I fought an enormous amount of guilt while buying our house. Was it too extravagant? Am I wrong for wanting "to live a little?" After moving in, I have found that deep down, I know what I consider to be a luxury, and I know what I need to be happy. My guilt came from buying a house that was somewhat more than I really needed. The second way you can "draw the line" is when "living it up" causes you to become someone you don't want to be.

When it comes down to it, money is just a tool to accomplish your goals. Some goals require saving, while others require spending. If you have ill defined goals or no goals at all, it's awfully hard to decide what to do with your money. You need to think first about what kind of life you want to live. Let your values dictate your lifestyle.

What I think you are fighting is the lure of "the good life." Life should be good, wealth should be enjoyed, but wealth is a very dangerous drug. The more you have, the more you can enjoy. The more you do enjoy, the more you want to have. Be careful not to let your desires dictate your lifestyle, because for most of us, our desires can never be satisfied. How many people do you know who are content with what they have? Instead, let your values dictate your lifestyle. Think about what is really important to you. Do you want the nice car because your buddy has a nice one and likes his, or because there's nothing you'd rather do than jump in the car with your wife and spend a day driving through the countryside? Is it the car that's important, or the drive with your wife?

"Personally, I think the best way to keep your balance between enjoying life and avoiding greed, is to give away a significant portion of your income"

Personally, I think the best way to keep your balance between enjoying life and avoiding greed, is to give away a significant portion of your income. My long term goal is to donate 25% of my income to causes that are important to me. (Right now, I'm at about 15%.) It's really hard to become consumed by greed when you are committed to giving your money away! Giving has also forced me define my priorities to the point that deciding what to do with what's left isn't all that challenging. Once you have your priorities set, things quickly fall into place.

So what do you do with all this money you now have? Don't be so consumed with frugality that you can't enjoy your wealth, but don't enjoy your wealth so much that you are consumed by greed. Think about who you want to be and what your goals are, and create your budget to get there. Is this easy? Sometimes I long for the days of deciding which bill to pay first. Life was definitely more simple then. It was a poor man who said that wealth was "easy street". But remember,

NoMudNoGlory