The Money Diaries: The 20-something semi-conscious spender
Today is another post in the Money Diaries series, which is based off New York Magazine’s Sex Diaries. We’ve collected stories from real people about their spending habits over seven days, anonymized them, and posted them here.
Today’s post is by a 24-year old social worker who also works a second job. She’s a semi-conscious spender who’s struggling with the willpower to cut down on spending. But in strict financial terms, she might be doing ok.
I’m trying something different today by offering some advice and resources in the diary below. Let me know what you think.
* * *
Day 1
5:40 p.m.: Got the email requesting me to do Money Diaries! Sweet. Checked my Wachovia Account Statement and saw that my loan payment of $200 went through although I submitted it last week. While I enjoy the convenience of online payments, I loathe the turtle pace it often takes to see my true available balance. Bought a Caramel Frappacino at Starbucks with the debit card. I thought about it for at least a half hour in the car beforehand and flip flopped, but I rationalized it by telling myself that I ran this morning so I am allowed to treat myself. Brought lunch so that was an avoided expense. Total Spent today: $3.79
Day 2
4:45 p.m.: After at least 4 days of visiting the Nike Running website and looking at some sweet new gear (training for a marathon) and ordered a Dri-fit shirt and shorts with the desirous zipper pocket in the back, totaling $61.99 including shipping. I have an Orange (ING Direct) Savings sub account specifically for clothes so I transferred the appropriate amount over. I haven’t been too spendy lately; the last time I bought clothes was over a month ago. I am proud of myself – clothes are my weakness. T-Mobile Bill came in today: $84.10. That is an automatic deduction, which after 4 months of having my AWESOMEDONTKNOWHOWIEVERLIVEDBEFOREIT Blackberry (suck it iPhone-users), I still am unable to get a handle on when the bill comes and is deducted from my account. Total Spent today: $146.09
Day 3
3:15 p.m.: Bought breakfast this morning, but I basically had no choice – ate breakfast #1 at 5 a.m. and then after my track workout, I had to eat (obviously) and I had to be to work soon after I showered and left the locker room. So I got sausage egg and cheese and an Odwalla smoothie (new obsession), bringing the breakfast total to $8.45 on debit. In the back of my mind I know I should start leaving my debit card at home for the day thereby forcing myself to bring lunches, breakfasts and any other snacks I might need. Somehow I counteract this thought with “well what if there is an emergency?” Total spent: $8.45
[Ramit's comment: What she is talking about is using barriers to prevent yourself from spending money]
Day 4
10:12 p.m.: I managed not to spend any money today! I actually lost my wallet for about 2 hours (it was in a binder in my work car). Made pancakes at the boyfriend’s house for a late breakfast/brunch and was treated to what basically is a guaranteed weekly Saturday dinner by my bf. Upset after checking the mail and seeing I still haven’t received my paycheck from my second job. Total spent: $0
[Ramit's comment: See the results of going cash-only for a couple weeks]
Day 5
2:40 p.m.: Bad morning, failed attempt at a running workout due to knee pain which in turn made me have to spend 12 bucks on a Runner’s Knee strap at Sports Authority. Please note, I spent about 25 minutes perusing the store although I KNEW what I was going for, which is usually the more desired approach to shopping. Not seeing anything I liked more, and because I just spent $60 on running gear, I left with only the strap. Oh but look, Barnes and Noble is in the same strip so of course I had to run up in there and get a Dean Koontz book and another book I had been eyeing. I am very impulsive and have difficulty really restraining myself. I spent $23 on two books that I EASILY could have gotten on half.com for half the price, but I like the instant gratification of having what I purchase. The positive of today is that I was able to refrain from buying food! Total spent: $36.57
[Ramit's comment: I'm not opposed to spending money, but much of this unplanned spending could be mitigated by (1) using barriers and (2) PLANNING WHAT YOU'RE GOING TO SPEND BEFOREHAND AND USING WHATEVER MEANS NECESSARY TO NOT GET INTO SITUATIONS THAT TEMPT YOU TO SPEND MORE]
Day 6
4:30 p.m.: So I was in an extreme rush this morning and in an effort not to be late and for an excuse to get a frozen coffee from Panera, I stopped after my first appointment to get a sweet breakfast sandwich and aforementioned iced coffee $8.42. I also neglected to bring lunch so I took out a $20 at the bank and bought a meatball sub for $5.08. I did have some snacks that held me over for later. I didn’t feel guilty however. I find that the closer I get to receiving my paycheck, the less restrictive I am on myself about my spending. When I got home I saw that my paycheck came from my second job: $259.50. Whoop! Total spent: $13.50
[Ramit's comment: It's interesting that this Money Diaries participant is pretty perceptive about the causes of her overspending -- for example, how she loosens her spending near payday, or how she is impatient and spends more to get something NOW! -- but isn't so clear on the solutions. In this case, she could plan lunches at the beginning of the week and save significantly.]
Day 7
6 p.m.: Deposited my check today and felt fine about buying lunch at Whole Foods. I know it really will just make much more sense to buy lunch fixings at the grocery store, but I hate making it and putting everything in a bag. [Ramit's comment: I know what you mean, from my original article on barriers and my mom's Indian food.] Buying ready-made food is just so much more appealing, albeit expensive. I spent about 40 minutes in Best Buy today looking at laptops as well although I believe that I am very far from purchasing one. I am constantly reminding myself that it’s not a necessity at this point, being that I have a work laptop. I do have a sub account set up, and to date it has $25 in it. It may just end up being funds for a laptop that I want to buy for a friend for upcoming b-day present. Generous, I know, but she spilled milk on hers, has had a bad streak with electronics and has no money (but is learning from tips I’ve provided via I Will Teach…). Total spent: $10.96
In Sum
I spend way too much on food, and would do better buying – no, USING the food I have at home to make dinner and lunch. I realized that I don’t spend AS ridiculously as I once did, but the food thing is getting out of hand. $100 got automatically deducted from my Wachovia Checking to ING Direct as well as $25 towards the “clothing account.” In all reality I should be saving way more being that I have a company car and a second job. I need to write down my savings goals because they aren’t currently clear. I can appreciate however, my discretion and not going absolutely nuts and draining my checking account on a regular basis. This week: $125 saved, $219 spent, extra $259 earned. Not a bad 7-day stretch.
* * *
My comments:
- If I were her and I knew that willpower was a problem for my spending, I would automate the hell out of my money and make sure it was aggressively going to sub-savings accounts to hide it from myself.
- She seems to identify some of the reasons WHY she’s overspending, but that’s only part of it. There is a lot of emotion in this post (”I felt fine…I am constantly reminding myself…I spend way too much…”). Though most people cannot turn off all emotions like I have, I like to move towards a slightly cooler, systemic way of handling money, rather than a hot/emotional way of thinking about it.
Also, guilt drives me nuts with money. We all know people who sigh and say, “I know, I know…I really should pack my lunch / contribute to my 401(k) / work out more…” and then do nothing. Just identifying what you “should” do. Guilt is one thing. Action is another.
- She’s right that it’s not all bad. Process-wise, there’s a lot to work on. However, while I don’t know her income or debt, the spending numbers here are modest enough that they could probably be handled with some automation, a change in perspective, and perhaps some earning on the side. Easier said than done, of course.
- This reminds me of a lot of my friends who spend extravagantly because there’s no overarching goal to save for. In other words, their savings account is really a “should” account — “I really should save for something… — until the next shiny item comes along and they buy it. Forget the 10 Year Savings Strategy. Sometimes, it can be something 3-4 months away. And we need these sub-savings accounts for specific items, not guilt-inducing “should” accounts that invariably get ignored.
All in all, pretty interesting to read.
To be featured anonymously in a future Money Diary, click here.
Follow me on Twitter at twitter.com/ramit.
