So, Mrs. RB40 finished reading the Money Code and she agrees that she has the fear money mind. This means she sees money as security and is conservative about spending. I think it got her thinking because she asked – “what’s the goal for our money” – at 1am. This confused me at first because I wasn’t sure what she meant. Anyway, she is wondering if hoarding money and being super cheap is really the right way to live. It seems that I have been overly cheap for a while now and she thinks we should spend some money to have a bit more fun.
How did I get so cheap?
I have been considerably cheap for about 3 years now. I think the turning point was when I found out I wanted to quit my career AND we were having a kid. As you can imagine, this put a crimp on my spending pretty quickly. Raising a kid will cost a ton of money. We are planning to pay for his college education as well so we are saving in a 529 for that.
The bigger factor has been me not wanting to work in a corporate setting anymore. I made about 2x more money than Mrs. RB40 and I knew it was going to be a huge income reduction. How many of you can function with 66% decrease in income? It became a challenge to save as much as I could. I might have taken this a bit too far though. For 2013, my challenge is no clothing purchases and I’m being similarly cheap in other area as well. Am I being too cheap?
I have always been inclined to save rather than spend because we didn’t have much money when I was growing up. When I finished college and got a job, the first thing I did was to invest in the 401k and Roth IRA. I also invested in various after tax accounts. However, I didn’t mind spending money either. We traveled internationally every year and supported the local businesses by going out to eat at nice restaurants once or twice a week. Mrs. RB40 also enjoys cultural events and we didn’t mind spending there.
No time to spend
Over the last 3 years, I have cut back quite a bit. A big part of it is due to the time factor. Baby RB40 has kept us very busy and it seems we haven’t had time for anything else. We rarely go out to nice restaurants anymore and haven’t traveled much. Now that I’m a stay at home dad, I don’t have much energy after a day of craziness either.
Baby RB40’a former daycare had a parent’s night out once a month. We took advantage of that a few times and went to see plays and enjoyed some nice dinners. Now that he’s not going to the daycare anymore, it’s more difficult. We haven’t found a baby sitter that we like yet and I don’t think he is ready for one either. I just know he is going to throw a huge tantrum for 3 hours if we hand him off to the poor babysitter.
My mom is here to help out for a while though. He is comfortable with her now and she doesn’t mind being alone with him for a few hours. We really should take advantage of the situation while we can and go enjoy ourselves a little bit. The problem is we haven’t done it. Mrs. RB40 is too busy and she hasn’t initiated a date night. I’m too cheap and I don’t want to spend $100 on a night out.
We still eat out about once a week, but we have been going to family style restaurants lately. It’s easy for us because we can bring Baby RB40. We usually spend around $30 and I’m comfortable with that.
As for entertainment, I don’t mind watching a DVD at home. I also like attending free concerts and events, but that’s mostly in the summer. There is not much free stuff going on in the winter.
Need a date night
Now that Mrs. RB40 brought it up, I realize that I need to put more effort into some nice date nights. There are a ton of great restaurants in Portland that we haven’t been to. She wants to try the Little Bird Bistro so I’ll get us a reservation this weekend. I’ll leave the entertainment up to her. It will be nice to spend a little time together without the third wheel.
Need to figure out what to spend
The more difficult part is to figure out how much money to spend on entertainment when we are not making much money. My tendency is to save every dollar now that my income is minimal. When I was making good income, we saved over 50% of our take home. Now, we are probably saving around 25%. It’s a big reduction in both amount and percentage, but that’s still better than most families.
I need to figure out some kind of formula to reach a happy median between saving and hoarding. We have a stable emergency fund and we’re comfortable with the amount we are saving toward college and retirement. Perhaps if we take 50% of what’s left over after saving and target it toward entertainment/travel? That way we can still save extra in our dividend portfolio account and also allocate some money to make life a more interesting experience.
What about you? Do you have a good formula for entertainment spending? We have been doing well in the 6 months since leaving my job so I feel a bit more comfortable with spending. International travel will have to wait a few more years though. It will be a pain in the butt to drag a little kid around in an unfamiliar country, so we’ll travel more in the US.
Sam @ Yakezie wrote The Cure For Overspending Is Also The Reason For Spending Paralysis