That Time I Lived Beyond My Means
“This is why I have an emergency fund,” I thought to myself as I burned through more cash in one transaction than I had in the entire previous month. Well, it wasn’t really an emergency per se, but it might be soon, so better to get a handle on it early. Yesterday I bought a dryer. A nice dryer. A dryer with a better warranty than its rivals. A dryer that will last for the entire time I’m gone and renters are here unsupervised, which could be many years.
See, I’m moving. And even though I’ve known about the potential move for almost a year now, and even though I know the basic principles of personal finance as well as anyone, I still fell into a pretty common trap of waiting until the last minute to buy and sell everything I needed to make the transition a smooth one. I now have somewhere between one and two months before setting sail, and it’s no understatement to say I’m overextending my budget to make it happen.
Those of you who know me know I keep a tight budget, so in the grand scheme of things, I’m probably not spending all that much. But I’m fitting in about a half dozen trips to see people, a new wardrobe, a year’s worth of home and car repairs, and some desperate craigslist posting all into two months. For these two months I, for the first time in my life, fit squarely into the “sad poor souls who stupidly live beyond their means” category, and no sir, I do not like it.
So consider this post a lesson in living apart from my most cherished value of frugality, if only for a short time. I know it will come as a shock to most people unfamiliar with this blog and Monte Largo’s core beliefs, but I can’t remember a time that I’ve spent more in any given month than I earned in that same month…until now.
Yes it’s temporary. Yes it’s self-imposed. But that doesn’t make it any less jarring. I can’t shake the slimy, sinking, panic-filled feeling of sitting down in front of my computer to add money to my investments and instead say “oh right, this month I’m not adding anything.” This month I’m not adding anything is foreign and scary to me.
What Am I Learning From This Experience?
Let’s start with how I feel…Some of the expenses are 100% necessary. I’ll be renting out my house, so there’s a whole host of expenses necessary to get it ready. Luckily I anticipated this scenario, and have been slowly doing repairs and yard work for a year now. So the big purchases like the dryer that I left until the end don’t hurt as bad as they could. I don’t feel so bad about these.
But I bought new shoes…and new shirts…and new pants. You might be thinking “why on earth do need new clothing for a move?” and the answer would be I’m moving abroad to a part of the world where wearing old University of Texas fraternity shirts and wolf pajamas out in public is probably a no-go. Considering my entire wardrobe is either from high school or early college (and it shows…), it was time for a change anyway.
The problem here is that while I was slowly replacing my wardrobe already, I’ve been forced to buy a year or more of stuff in one month because I won’t have access to the same high quality, low cost stores I have stateside. This is the part that I feel nervous about.
Then there’s the unique stuff – among other things, I’m buying a tuxedo. What? Why?! I know – talk about the consummate example of over indulgence and excess. Basically it’s a requirement for the life I’m about to venture off on – and renting one as often as I’ll need it will get way more expensive than purchasing one very quickly. This purchase obviously makes me feel icky. It’s so un-frugal. But the new life will help me save more money than I ever thought possible, so I’m taking it in stride. You win some, you lose some.
Taking a Step Back
In people for whom living beyond their means is a constant reality, chronic stress is common, long term outcomes for their children are lower, and their working memories are strained. Being poor, either in real terms or in relative terms, has dramatic effects on a person’s psychological state. I know that I cannot even comprehend the impact chronic poverty has on the poor, their communities, and the world as a whole, but being armed with this information at least gives me some ground to deconstruct how I’m feeling at this moment.
It’s not a good feeling. I keep telling myself it’s temporary so I can calm down. And given my past spending habits, I’m confident it actually is only temporary. I’m not kidding myself or anything. In all likelihood, this tumult will truly be over soon, and I’ll be quietly able to stash money aside as if nothing had happened. But right now, at this very second, all my stress sensors are screaming, “you’re actually using your emergency fund?! For a set of expenses that could have been easily anticipated and spread out over the course of the last year?!” which makes me feel both frustrated and dumb.
Why Is This Actually An Amazing Experience?
First off, my situation is incredible because I’ve trained my senses quite well to recognize good vs bad spending. My internal alarm system is working properly, and while I don’t want to test it too often, this particular scenario is probably the best possible scenario I could be testing it under.
What’s happening here, unlike illness or other events that might strain me financially, has a definite time limit. I know the date I move out of my house. I know what I need to buy before that date. I even know what priority each purchase is on my list. As far as doomsday scenarios go, this one is a walk in the park.
So why the sad face? Like I said, it’s a trained response. And I think that kind of training is an exciting new step Monte Largo can take. We’ve constructed dozens of client plans, but at the end of the day, some are followed better than others. Ultimately, a purchase decision can’t be evaluated against an overall budget in the moment very easily except by the biggest fanboys of personal finance. Now the question is how do we help ourselves create trained responses to whole swaths of purchases, so day by day tracking of our money becomes automatic?
Really, we’ve always had this service. We consult hourly for all of our clients who receive a financial plan, but now it will take on a new, softer element. Generally folks ask us questions about specific parts of their plans or how to change them, but going forward, coaching and training will be a much bigger element.
Learning to recognize patterns in your own spending, rather than having a financial planner dissect each big purchase will not only help you see the bigger picture, it’ll save you money. I’ve always been a fan of teaching a man to fish (working with him on a financial plan and showing him to invest his money by himself) instead of giving a man a fish (managing his money for him at exorbitant prices). This new development is simply the next logical step in that framework.
For example, if you know a big move is coming up, we’ll construct an easy to follow financial timeline together that takes you to and through moving day. Boy do I wish I’d done that for myself back in 2015. By creating a system of ready responses and flexed mental muscles, we can recognize pitfalls in both the immediate and long term.
So What’s Next For Me?
Monte Largo will run on exactly as it does today. Even though I won’t be in Virginia every day, I’ll be working tirelessly for my clients all the same. And as far as my personal financial life goes, it isn’t as bad as it seems.
In reality, I’ve been planning nonstop, so I don’t have that much left to do before I depart this summer. But I did create a bias toward doing the less expensive things first instead of spreading out the purchases wisely, so I’ll be on edge a little longer. Of course the real lesson here is that in the end, I’ve got nobody to blame but myself.
Nathan is the Chief Financial Advisor at Monte Largo Financial