I knew my spending was out of control when the man who delivers packages to my building recognized a box for me immediately.
I was slow to catch on to shopping online, afraid of the mythical shadow creatures that await behind screen names to steal credit card information. But now that I’ve discovered Amazon, and worse, Alexa, shopping has become as easy as verbalizing that I want something. And not even big clothing purchases, but lunch, household items, anything the mind can imagine. Plus, this year I took on a huge additional expense: a new place to live.
I’m actually pretty great at saving. Growing up poor, I’ve developed some (probably very emotionally unhealthy) habits of locking money up in a savings account and never touching it except in cases of emergency (Homelessness! Getting hit by a car! Mysterious diseases! Apocalypse!). But in the last few months it’s been open season on my poor checking account, with no real parameters and, worst of all, no clue how much I was withdrawing in comparison to what I was putting in. When I took a closer look, I realized that I’d spent $1,200 more in July than I earned. And in June, I spent $2,000 less than I earned. No parameters, no rules. This was problematic.
Slinking back to my apartment that day, boxes in tow, I made the decision to document every dollar I spent for two weeks. I’d make actionable items: to first of all understand my spending habits, then create a budget, and then make changes where I could.
There are myriad apps that were recommended to me, but I knew that if I had to buy or download anything or change my daily habits whatsoever, I wouldn’t do it. So I opted for good old-fashioned email drafts, creating one for each day of the week and adding to it, via my iPhone, whenever I spent a dollar. (I also kept a very loose “food diary” in tandem, so that I could draw any connections between cash spent and snacking, or buying lunches and eating out.)
At the end of each week, I double-checked those notes to my bank’s list of debits for the week and rolled up the total of all purchases by week, and eventually by month. Here’s what I learned.
1. Hidden fees are everywhere. I spent more than I thought I did. Many of my purchases had added taxes or fees that I didn’t write down. So a charge for $20 became $22, and after a week, those small charges added up.
What I did about it: After two weeks I slowly gave up cataloguing my purchases myself, since the notes turned out to be inaccurate anyway. But I downloaded my bank’s app, and as awful and archaic as it is (seriously, HSBC, truly horrible), it was great to see those debits on a more regular basis.
2. Prepared foods are expensive. Buying lunch was depleting my checking account fast. My office moved downtown, where lunch is a few dollars more expensive than our old work neighborhood, and just those few dollars were making a big dent in my wallet.
Not to mention caffeine: I spent $44 on coffee in one week, and $177 for the entire month of July. Sure, some of that was buying a colleague a coffee, or an iced tea on the way home. But in truth, I wasn’t even finishing those coffees, sipping them slowly, then letting them turn into murky, dripping puddles on the corner of my desk. Turns out my coffee trips were just about the walk.
What I did about it: I started making lunch on Sunday nights. This began as a huge effort until I found a few dumbed-down formulas that even I could follow: Add some veggies to pasta. Grab some peppers for a stir fry. Anything fits in pita bread pockets. This shaved off about $60-$80 a week, or around $250 a month.
My coffee habits were the expenses that really bugged me, though. $44 a week is an absurd amount of cash to throw away on a drink you don’t finish. A friend gave me an extra Keurig machine, and try as I might, I can’t get myself to enjoy it. As it turns out, I enjoy the social aspects of the coffee shop more than the actual coffee. So I’ve stopped buying it in the mornings, opting to read the news in the park instead of sitting in a coffee shop, and taking short afternoon walks around the block as a work break instead of, again, sitting in the coffee shop.
3. Healthcare is rough, even with great insurance. I spend hundreds of dollars on health and wellness. Even with amazing insurance, I paid at least $300 out of pocket for a gym membership, visits to specialists, and over-the-counter medications.
What I did about it: There’s not much I could do about this one, honestly, although I did change my thinking a bit. (Read to the end!)
4. Paying the minimum isn’t enough. I only have one credit card and one line of credit, but paying the minimums, or even slightly above the minimums, was not doing me any favors.
What I did about it: I took a leap of faith and paid off 80 percent of my revolving credit in one transaction. This put me in a tough position for a week or two, crossing my fingers and praying an emergency wouldn’t occur, but the next time that bill popped up, the minimum and overall debt was so low that I can pay it all completely down in about one more payment. That will shave off $250 next month.
I also set up an online-only account with no debit card and no IRL access, and I funnel $50 a month from my checking account into this account. I hid the password in a drawer at home, so if I really need it I can access it, but definitely not on impulse.
5. Home is the biggest expense, but also the most important to well-being. I spent a big chunk on my home, and that isn’t going to change any time soon. I own a house that’s going through a series of big renovations, and I rent an apartment, where I spend most of my time. With both homes together, I spend 40 percent of my income on housing, much higher than the 25 percent recommended by financial analysts (although analysts focusing on NYC alone advise your gross annual income be 40 times your monthly rent, which puts me at even). Either way, while the house is not yet ready yet to sell, I’m stuck with this, so changes will need to be made elsewhere.
Along with my home I also own a car, and even though it’s paid off, insurance is still an expense, even bundled with my homeowners insurance.
What I did about it: I called my insurance provider almost immediately after noticing that my monthly car insurance rate went up nearly $100 within the last few months. I received a few options to lower the rate, and that is set up to save me $60 a month. I don’t have cable, but if I did, I would have called to check their rates, too, based on suggestions from colleagues.
I did discover two habits I really don’t want to change:
I donate a ton. I’ve always known I’m happy to donate, but did not realize I give about $50 a week to various charities. It’s a chunk out of my budget, but not something I really want to change. And wanting to continue this habit is great motivation to quit buying coffees I don’t drink.
I also don’t want to skimp on wellness, but there’s probably more I can do to curtail spending. For one, I have a membership to a gym near my office, but the building I live in has a gym. It’s a waste of convenience I can likely do without. And all those specialist visits? I could likely space those out more and spend less.
But overall, the knowledge of where my money was going was the biggest eye-opener for me. Small luxuries were adding up to dangerous habits that I definitely wouldn’t have gotten a handle on without doing this exercise. Next step: checking into disputes on my credit score, and taking some of that money out of dormant online accounts and investing intelligently. But that’s for another time.