One of the greatest disappearing acts your money pulls off is into your stomach. Translation: You ate it. Groceries you didn’t need. Restaurants you patronized too often.
I admit it. I spy on people. It’s my job as a writer to do so. 🙂 So, there is this girl struggling to get out of debt. Not me, for once. She doesn’t really make any excuses for why she’s only paying $200 on her debt a month, but she writes everything down, and she just can’t understand why she isn’t making more traction.
One look at a few of her bank statements and I can immediately see three problems:
1 – She’s eating out too much – about $15 a day! (Or $300 a month)
2 – She’s spending $150 a month on online subscription services to various things.
3 – She spends about $75 at Walmart a week.
This is a total of $525 a month that she’s wasting. This is $525 extra that she can be putting on her debt and would be putting on her debt if she was serious about kicking it to the curb. That’s $6300 extra dollars a year. About 2x what she’s paid off in the last year. There is no reason she shouldn’t have been debt-free in 2 years when she started. Instead, she’s not even 1/4 of the way there after 18 months.
And I didn’t even bother trying to calculate the entertainment purchases, the stupid tax (aka) late fees, and other miscellaneous purchases that probably aren’t necessary. You do need to have fun money built into your budget so you don’t go insane or get too intense. Being too intense can result in a rebound effect when you reach your goal. I think she’s probably still spending too much in general, but I’m just going to focus on the big picture items.
First of all, the girl is broke. She needs to stop eating out for lunch everyday. It’s called a sandwich. Freaking make one at home and bag it. Will she get sick of PB&J and Turkey sandwiches, YES!! Is it worth it to be out of debt 4x faster than the rate she’s going? YES!!!
Second, the subscription services need to go. Netflix. Hulu. ALL of them. She can do that stuff when she’s out of debt.
Third, I’m assuming some of these Walmart trips are grocery shopping. That said, she is only responsible for half of the grocery shopping. Is she telling me that her household spends $600 a month on groceries? No way. If so, they need to cut that in half, at least. So, she is clearly making frou frou purchases during her weekly runs.
The biggest problem I see is that while she’s keeping track of everything, she isn’t on a budget. It’s not the same thing. Making sure you don’t overdraw your account, is not the same as following a budget. There is really a lack of focus in general. She pays extra on her debts willy-nilly. One month it’s a credit card. The next month it’s the student loan. Her money and her focus are all over the place.
The next problem I see is that getting out of debt is not a priority. She’s trying to live a “normal” fun-filled life and get out of debt at the same time. As a result, she’s barely keeping her head above water. Some weeks she ends up with less than a dollar in her checking account. She also doesn’t know what to do with her savings account. She puts money in there, she takes it out, she puts money back in. It’s crazy-making. The money in savings needs a purpose, too. It’s not just for sticking money in for two weeks so she doesn’t touch it before her bills are due. Has she any self-control?! Seriously.
I was going over one of my old purchase logs in Quicken the other day from when I getting out of debt. Around Christmastime, I spent $98 on shoes. Granted I think I bought 3 pairs, but still. I had plenty of shoes at the time. This was about halfway through my journey, so I think I granted myself a little bit of leeway that month.
When it’s all said and done though, that $98 didn’t slow down my debt snowball. Surprisingly, I pretty much behaved, followed a budget and threw any extra money at my debt. Except for gift money. I made sure to keep that for myself. Since I have records going back to 2007, I can see a big difference in my spending over time.
I know it can be tedious counting every single dollar (I’m assuming – I enjoy it, but I’m weird), but once it becomes a habit, you can put that autopilot. It’s important to remember that sacrifices are temporary. The girl I mentioned above won’t always have to do without Netflix and those other things she’s spending all that money on a month. It’s temporary, and it’s worth it.