The Struggle with Enough

If you’ve read any of the more popular personal finance blogs, books, or attended any of the seminars, one of the more pervasive themes is the idea of enough. Heck, I’ve even written about it before.  Just what is enough, or how much is enough.  They’ll tell you that you need to find your “enough”, and then hold yourself to it.  Instead of using the inflated “enough” that the Joneses next door use, you’ve got to take a good look at your finances and find your own “enough”.  Now, a show of hands, how many of you have actually found what enough means to you, and held to it?

I can’t actually see your hands, so maybe a show of hands wasn’t the right way to measure the tally.  But, I’d bet that only a few of you actually would have put your hands up.  Why?  Because, you struggle with enough.  I do too.  Enough is an arbitrary measurement.  What you think enough is today isn’t necessarily going to be enough tomorrow.  So many factors go into what we believe enough is, and many of them change regularly.

A few years ago, if you’d have asked me what enough was, I would have told you that it was having a good paying job, a nice house with room for my family, and enough leisure time to enjoy the benefits of having those things.  Today, my answer is a bit different.  I quit my job a few months ago, and have had no other income besides what a part-time job and a handful of small sites provides.  We still have my wife’s income, but, compared to what we were making before, it’s a fraction of what it was.  Today, enough has a totally different feel to it.  And, we struggle with it.  Just like I’m betting you do to.

Enough money does © by Michell Zappa

The struggle is rooted deep into our psyches.  Growing up, we’re inundated with commercials touting the latest and greatest toys.  As adults, the only difference is the price of the toys.  Instead of a “Castle Grayskull Playset“, we want to have the newest credit card with all the fancy bonus miles, the new car with the rearview camera, or the house with the dedicated room for a library or mancave.  And that doesn’t even begin to touch the use of money as a security device.

People fear being broke.  A quick reminder that the name of this site is Beating Broke, will tell you that even I am not immune to the fear of being broke.  I’ve got a small secret to let you in on though.  Like “enough”, how you define “broke” makes all the difference in the world.  For some, being broke means making less than $100,000 a year.  If that’s the case, my family is way beyond broke.  Even when I still had my job, we were a full-time income away from making $100,000 a year.

What does broke really mean to you?  To me, broke is a place where you have tons of debt, and your income is the only thing keeping you afloat.  You’re stuck in a job you don’t like, so that you can make money to pay your bills.  The funny thing is, I feel less broke now that I don’t have a full-time job, than I did when I had my job.  Part of that may be straight up delusion, but it’s true.  But, I think a good part of that also comes from changing my definition of enough.  Instead of the good paying job, nice house, and leisure time, my definition of enough is something that feels a little bit more like satisfaction.  I’m satisfied with just barely making enough to pay the bills.  I’m satisfied with finding free or low cost activities that will entertain us.

And yet, we struggle with it.  For the last few weeks, I’ve been struggling with the idea of getting a new full time job.  Partially because the income from this and other sites hasn’t scaled to the degree that I thought it might.  Partially because with the amount that I’m making we teeter on that precipice of being able to adequately pay our bills.  And, partially, because we still struggle with the definition of what enough is.

What is your definition of enough?  How has it changed over the years, and do you feel that your definition of enough is enough?

Creating a Simple Budget the Beating Broke Way

One of the most important parts of paying off your debt and becoming financially independent is creating a budget.  At the very least it gives you an outline of where your money goes and where it should go.  At it’s most extreme, it serves to create strict limits for your spending.  How lax or strictly you adhere to the budget is up to you and how die-hard you are about your budgeting.

One thing remains constant however.   When the end of the month comes, the ending balance should be 0.  Money in – money out = 0.  If you have a deficit, you overspent and need to compensate for that by either reducing budgeted amounts in another category or by reducing the available money for the next month.  If you have a surplus, (good for you!) then you need to budget that money until your end result is 0.  Most of us looking to become debt free will budget any surplus towards excess debt payment.

Here’s how we have things set up at the Beating Broke household.

Income.  We keep a very simple income spreadsheet.  It lists the sources in Column A.  The amount in Column B and any notes for the income in Column C.  All of that gets totaled at the bottom.  That’s all we do with our income.  It’s the expenses that we really need to focus on anyways.

Expenses.  The expenses spreadsheet is a little more complex.  I have a field for the income that I carry over from the income sheet.  I also have a field for a total of all budgeted amounts.  I then have a few calculated fields.  The first is a field that gives me the budgetary deficit or surplus.  I get that by subtracting the total budgeted amount from the income.  A second calculated field gives me the true deficit or surplus.  This is calculated by subtracting the actual amounts spent from the income.  This field is really only useful for balancing at the end of the month, but if you’ve done your budgeting properly, the amount should be small and easy to take care of.

The meat of the expenses spreadsheet is everything else.  Column A holds the categories.  I’ve broken them down into header categories and sub categories.  For instance, the Health header category has sub categories for Health Insurance, Aflac, Prescriptions, and Medical Bills.  I could go even further and list each bill, but that would greatly increase the amount of time I spend on my budget.  I want it to do it’s job (keep my money in order), not take up hours of my time.  Column B holds the budgeted amount for that sub category.  Pretty simple really.  Column C is the amount that I’ve spent to date on that category.  Column D is the % the budgeted amount is of the income/budget and Column E is the % that the actual spent amount is of the income/budget.    I’ve also thrown in some totals for each header category as well as the % of total for those as well.

Each week, we go over our checkbooks, credit cards, and all other financial happenings and enter them in the appropriate places.  By doing it every week, it keeps the task down to a half-hour or less which helps with reducing the stress level of working with your finances.  Especially if they are a little wonky to begin with.

Budget deficit and surplus.  Occasionally, we get to the end of the month and we have a surplus or deficit.  We’ve either spent less than we budgeted for or we have spent more than we budgeted for.  The latter is a little rough, but the first is always fun.  Because we don’t usually figure out the overall surplus/deficit until the month has ended, we can’t budget for the surplus/deficit in that month.  So, I’ve thrown in a field on the Income sheet that is titled “Carryover” and one in the expenses sheet that is titled “Shortfall”.  If we have a deficit, the carryover value is 0 and the shortfall amount is the amount of the deficit.  And vice versa.  This helps with taking the surplus and budgeting it as an extra debt payment or in accounting for previous months deficits.

Most of these ideas are pretty basic budgeting principles.  We’ve tweaked them around a little to fit our financial style and to be loosely based on the Dave Ramsey system.  If you’ve got questions on budgeting that we might be able to answer, drop us a line and we’ll try and answer them as soon as we can.

The Scales of Finance

IMG_2394Not to be confused with the scales that our friend Lady Justice carries around with her everywhere, the scales of finance are a bit different in function.  To truly weigh something, using a scale, you load up one side of the scale with that which you want to weigh and then put weights of a known mass on the other side.  When the scale is balanced, you count up the known mass weights and you’ve got the weight of the item(s) on the other side.  Lady Justice, as the story goes, does this by weighing a persons crimes and adding the appropriate amount of punishment to the other side so that the Scales of Justice balance.

When we think about personal finance, there are those that are die-hard frugalers.  There is no other way to save money, retire comfortably, or live, than by being frugal.  The more frugal you are, the more you save, and the less you spend.  Coupons are their best friends, as are black friday deals and places like farmers markets and flea markets.

There are also those that are the die-hard incomers.  Skipping a latte isn’t for them.  The only way to get ahead is to make more money while not spending any more.  They’ll work three jobs to achieve levels of income that were previously unheard of and use that added income to pay off debt and save for retirement.

But, much like justice, the scale can pretty easily be tipped into unbalance.  Frugaling, while a good idea, can only take you so far.  Income increasing can only take you so far.  Eventually, you’ll need to make a bit more money, or work less.  The right way to do it is to strike a balance between the two.  Cut your costs as much as you can, without going to extremes.  Increase your income as much as you can, without going to extremes.  Find a place where you can balance your financial life while still getting to live life and not be classified as a cheapskate work-a-holic.

Balancing the Scales of Finance

  • Create a budget. Know where your money is going (even if it’s going down the drain), and plan where you want it to go.
  • Cut costs. A little bit of frugal living isn’t going to hurt you.  Drop cable T.V.  You can replace it with Netflix, or books.  Find other things that you can do without completely or cut usage of.
  • Analyze your finances. Use your budget to determine the inflow/outflow of your finances.  How long to payoff your debts?  Could it be accelerated greatly by taking on a second job?  Maybe you only need a second job for 6 months to pay off a credit card.
  • Increase your income. There are other ways, besides taking on extra jobs, to increase your income.  Prepare for, and then ask for a raise.  Sell off stuff you no longer use.  Find a way to get paid for hobbies you already do.
  • Don’t over-do it. Maintain focus on your end goal, but keep your sacrifices to a bearable level.  All that extra income won’t do you any good if you burn out in 3 months because you’ve been working 80 hour weeks.  And all the frugal in the world won’t do you any good if you burn out in 3 months because you’ve been manually separating the plys on your TP.

Don’t think that just because you do all of this once, that you’ll remain in balance forever either.  At first, you will probably benefit from regular weekly or bi-weekly check-ups.  As you get more comfortable with it all, you might be able to do it once a month.  Much more infrequent than that and you’ll lose your focus and begin letting things slip.  If that happens, pick up where you left off and continue on.

As you continue on, the Scales of Finance will become easier to balance.  You’ll become better at it, and the scales will gain a little extra margin for error.  It may seem hard now, but it does get easier.  And, believe it or not, it can be fun.

Photo credit: Thatedeguy on Flickr