Fear of failure keeps me from budgetting

I’m serious!

I want lots of thing. Lots and lots. In my head, my want list looks like this:

– winter vacation to Mexico

– climb Mt. Kilimanjaro next year

– French classes paid in full

– guitar lessons

– a new computer

– a Mini Cooper (I’ve given up dreams of the Lexus)

– a downtown loft

– another trip to France to visit D

But I refuse to sit down and plan out the cost. I don’t want to make little goal tickers to measure my progress — hell, I don’t even want to know how much I’d have to save every month to accomplish all of the above.. probably $2957249274 + tax. So long as I don’t sit down and do the math, I get to exist in a happy universe where everything I want is possible. I feel like knowing the pricetag to my wishlist would be a rude awakening to a reality in which I have to make adjustments to my plans. Maybe I can’t have everything.. or maybe not all within 12 months. And that’s sad to me. I want it all!

When I look at the list, I feel good about it. I don’t think anything on there is frivolous and should be cut. The car and the loft can definitely be procrastinated for all time & eternity, but trips and self-improvement are worth shelling out for in my opinion. I mean, it’s not like I’m striving for a closet full of designer shoes or you know, really expensive dresses… ahem. What I’m saying is: because I feel like these are worthy goals, I feel like I deserve them, so I don’t want to entertain the possibility of not receiving them.

Now, we all know a sense of entitlement is a dangerous thing when it comes to spending money. It’s the best and most often employed justification for ringing up debt.

I think of “I deserve it” or “I earned this” a lot like getting on a bus for a pub crawl. A debt bus. Where every bar is actually a store and you start buying and buying, growing more and more intoxicated with every purchase. Finally, it’s the next day and you have a credit card hangover that feels like it will never, ever go away. But it was fun… right?

So I’m not ready to lay out the details of just how much I have to set aside to get to Tanzania or have $16,000 to put down on a vehicle. That’s way too scary. I’m not ready to set up a timeline because it would just add to the pressure. What if I don’t make it? I’m getting as comfortable with failure as I can — and by that I mean I’m pretty comfortable with the idea of failure for other people, but it’s still not yet something I could possibly do. Don’t worry, I’m working on this.

Just writing all those things down is a step for me. Look how expensive I am! I’m cringing as I read this. Oh spoiled girl, your wants have no end.

When in Europe, automate your banking

I’m counting down the days to my trip, trying not to get too distracted from the schoolwork I have to do in the meantime. Everyone is asking me why I even bother with my academics since I’m leaving graduate school, but I can’t stomach getting a C in a class even if I have no real intention of ever being a microbiologist again. I’m really excited and terrified about leaving, and part of my planning in the meantime is how I’m going to pay the bills and continue to save while I’m away.

Just because I’m not working for a month (oh god, that just sent my heart into my stomach as I typed that), doesn’t mean I’m giving myself a get-out-of-jail-free card. I couldn’t if I wanted to: turns out even when you leave the country, you still have to pay your bills. Weird, right?

Because I won’t have income immediately when I return June 1, I am putting aside 2 months worth of the following expenses to cover both May & June:

– $200/mo for my RRSP ($400)
– $100/mo in mutual funds ($200)
– $300 rent for May, $650 rent for June ($950)
– $75/mo for cell phone, this is assuming I rack up a few dollars in international roaming ($150)

Total: $1700

Yikes! Ah, the hidden cost of vacation. I think when many people plan a trip, they often just account for the cost of flights, accommodation and fun — not the true cost, which includes not working and therefore not earning an income while you’re away. Also the fact that those bills just don’t stop!

I am SO GLAD I don’t have anything like car payments (no matter how much I want that Lexus!) or utilities or a mortgage right now. I really don’t think I would be able to go if there was another thousand or even a few hundred dollars tacked onto that total. Also special thanks to roommate-of-the-year for discounting my rent for the month I am not here. I really didn’t want to add the burden of moving out of my home to my wild French adventure, and giving me a break on the rent is a huge bonus!

I went ahead and wrote roomie a cheque for the full $950 already, because I don’t want to be thinking about rent the day I get back. This means I have all of June to work worry-free, my only focus scraping together $650 for July. How nice is that? I’ve taken care of rent for the next two months!

While I’m gone, I will also automate credit card payments for the minimum payment only rather than the full balance. I have a fear of running out of money in my chequing account unknowingly, and then having any of the above payments bounce and then getting charged a barrage of fees. Consequently, I will be coming back from France with a balance on my credit card and I won’t pay it off immediately. I’m not going to tackle that until I’m back to 40+ hour work weeks — even if I could kill the balance in a single transfer from my savings account. Maybe this doesn’t make sense mathematically, but the thought of removing anything from my savings accounts always causes me intense mental anguish. To be honest, I would much rather carry a $1000 balance on my credit card for a month or two, rather than remove $1000 from my savings account. I think over such a short time, the interest is negligible even if it is 19.9% (but mine is 6.75% which is actually SUPER negligible, really). Does that make me a bad PF blogger? I don’t do the balance-transfer dance if the time frame is short. I just don’t think saving $6 is worth it!

You know what? Sometimes I don’t really feel like a grown-up, but then I see that I budgeted RRSPs out of my vacation money and I’m like… wow, when did I get all adult and shit?

Budgeting for San Francisco

I leave for San Francisco in 2 weeks! I’m so excited — it’s providing a welcome distraction from some very stressful academic demands right now. I’m going for 6 days and will be staying in a hostel in the centre of the city. I paid for a private room with my own bathroom because I just don’t do the dorm thing. I have little to no plans set for my time away. One picture of the Golden Gate Bridge will make my vacation complete, the rest of the time is really just going to be devoted to relaxed wandering through a new city, visiting some friends, and eating.

I AM SO EXCITED FOR THE FOOD.

I like vacations because it means you get to eat out every day. It means a new coffee shop every morning, a new sandwich vendor every lunch, and a new fancy restaurant for dinner every evening. It’s nothing like real life where grocery store sushi is a treat or I’m at Hudson’s ordering a burger for the 600th time. I can’t wait to see what San Francisco has to offer my stomach!

Well, since the above is a “must” not just a “nice to have” for me, it inflates my food budget, and consequently the whole price tag for my trip. So far I’ve established a rough idea of the cost of the trip, some of which I’ve already paid:

I am not buying souvenirs, and I don’t plan to do much shopping. I am in desperate need of jeans though, and because the dollar is essentially on par I’ll stock up if I find something awesome — but I would count this as “clothing” money not “vacation” so that’s why I’m not including in the cost of traveling.

Does anyone have any thoughts on how much cash I should bring? I’m not comfortable carrying large amounts, but I feel like it will make things easier and reduce any exchange fees I might incur using my credit card. I was thinking $600 but I just don’t want to walk around with that everyday.

I think coming in at just under $1500 is reasonable for this trip. I’m paying for it straight out of pocket and not using my vacation fund. I want to save that money for my trip to Iceland in the summer. Before booking I had a series of mini-freak-outs over handing over such a sum that could make significant headway in saving for a home or meeting my emergency fund goal, but after reminding myself how important travel is I went ahead & hit confirm. I really didn’t want to miss out on the opportunity to go, and I need the break from winter!

Now it’s just a matter of surviving my to-do list until I leave..

If I had to buy a car tomorrow

You guys know I really appreciate the financial rewards of taking public transit, but if for whatever reason I had to buy a car tomorrow, I have a plan.

I know it probably seems a bit excessive to entertain such a “what if”, but I really like calculations (like, really) and having a plan of action for every single possible scenario makes me feel super secure so a few months ago, I made a spreadsheet for buying a car.

I compared the cost of an auto loan, the expected monthly costs, and how much I could comfortably — and uncomfortably — afford. I’ve wanted a mini cooper for the past few years, and nice used minis usually run for $11,000 to $17,000 in local ads on Kijiji so that’s what I generally plan for. After this month’s snowfall however, I think it’s crazy not to own an SUV, but that’s beside the point right now. My spreadsheet lets me know what I could afford if I used an entire loan (a line of credit I already have), borrowed ~2/3’s of it (“stretch”), borrowed only 1/3 of it (“affordable”), or didn’t borrow at all. Here’s what it presently looks like:


A few months ago, I only had $300 saved and couldn’t get anything without maxing out my LOC. Now the red box is around “stretch” because that’s what I’d need to get used Mini from Kijiji. The savings of $3000 is the amount I’d be willing to borrow from my car/house fund for this purchase.

So car ownership right now would not be great, but it’s nice to know I wouldn’t be maxed out. In fact, saving just $3000 has already saved me hundreds of dollars in potential interest:

6.75% is the current interest rate on my LOC, but because there’s no balance and I have good credit, I’m hoping I’d be able to negotiate it down so I included a lower number for comparison.

Now, I would say most people don’t take all the costs of car ownership into account when they buy a vehicle. Generally they zero in on the monthly payment, and ignore the rest. At best they’ll consider the cost of gas and insurance, but I have yet to meet anyone that makes estimates for parking and regular maintenance or emergencies. When my friends’ cars get damaged or ticketed and they’re stuck with huge bills, they panic and work extra hours or drain their savings to cover the it. My expected costs of car ownership are these:

Parking at my apartment building is $85/mo for residents, and I’d expect more than one paid parking excursion at the UofA for a cost of ~$15/mo. Gas is a low-ball estimate at 88.9 cents/L because like I said, this original spreadsheet was made a few months ago before gas went up. Not sure about the insurance estimate at all. All in all, not perfect guess but at least there’s ball-park numbers for me to consider.

$615/mo is a big sum and would be uncomfortable for my budget to absorb, but I could manage it. I think it’s interesting that even with no payments and a low estimate for gas, it would still cost me $315/mo to own a car. Ouch!

In short, I could buy a car tomorrow and it would kind of suck but it would still be manageable, and that’s reassuring. Hopefully I can get into that “affordable” column by graduation just in case a new job forces me to give up the train and the bus!

Confession: I don’t really budget

Maybe some people will find this to be a surprise, since I shared my 2011 Spending Plan last month, but I actually don’t budget my income in any semblance of a detailed fashion.

I pay my rent, my cellphone bill, my automated savings, whatever is on the credit card, and that’s it. If there’s money left over, I make a decision to spend it or to save it, but without any real loyalty to either. I usually hover somewhere in the middle — which I why almost every spending recap shows equal spending & saving.

I do not set limits on food, clothes, or entertainment. Nearly everything on that Spending Plan was a total stab in the dark. I merely took guesses for what “felt” right and put that in, but I don’t actually know if my income is enough or too much for that plan because I never did the math. I have no idea what I’ll earn this year, and I never subtracted those totals I made from so much as an intelligent guess of my annual income. In short, I was just making shit up that sounded good to me, but I have no idea if it will actually work.

Does that make me a bad PF blogger?

Sometimes I read people’s blogs and they do zero-based budgeting where they account for every single penny — they have a plan for how every dollar they earn is going to be spent, even before their paycheque is deposited in their bank account. While I think this is a good practice, I have no interest in doing it for myself. Why? To tell you the truth, planning that way makes my spending feel really restricted.

Yeah, I said it: budgeting makes me feel deprived.

When I start itemizing everything and attaching costs, I start to think that I don’t earn enough. A concrete figure looks small and inadequate, absolutely impossible to work with — whereas seeing a few hundred dollars sitting in my chequing account after all my bills are cleared makes me feel free to buy whatever I want. To be honest, I wouldn’t even know where all my cash was going if I didn’t feel semi-obligated to make those pie charts for my monthly spending recap. Even those are merely an account of where the money was spent, they are never a plan or the rule (which might be why they’re all so different).

I don’t think you need to plan or account for every single cent to be financially healthy.

I think tracking your spending, setting financial goals, and committing to being debt free are important, but I can’t plan every penny I’m going to spend in advance — I just do too much on a whim! So while I think everyone needs to live within their means, I remain sympathetic to those that hate to budget.

Budgeting kind of sucks!