Many years ago I visited Monticello, Thomas Jefferson’s home in Virginia. The home itself, of course, is architecturally fascinating, and it was furnished to emphasize Jefferson’s eclectic interests and wide accomplishments. The estate too was a wonderful lesson in the social history of the period, with a sensitive treatment of slavery. What stuck with me most, though, was the simple fact that Jefferson died broke. He lived beyond his means, and is heirs had to auction his estate to meet his obligations. Among our founding fathers, as I later discovered, he was not alone.
The other day I once again moved money from my home equity line of credit into my savings account in order to cover my monthly bills. This is not an exceptional happening, but was made all the more difficult for me by having recently done our taxes. We will owe a little over $2,000. Our economic stimulus payment is going straight back to Uncle Sam.
We make about $150,000 each year and we are broke. I find that infuriating – this is a healthy income, and somehow we cannot live within our means. The $25,000 tuition bill from our children’s private school (already we are on scholarship) takes a big chunk of our monthly income, and I’m not worried about our retirement accounts. But still, I can’t figure out where all of our money goes.
The correct answer to this question, of course, is to track our expenses and make a financial plan (aka budget). Yet again, I went running around the web looking for blogs and tools about budgeting. There are plenty, and they seem to be good. I particularly enjoyed debtfreeRevolution (an outrageous concept); noCreditNeeded; Blogging Away Debt; and My Two Dollars. Although I enjoy these blogs, I feel like they are from a different planet – none have made the kinds of lifestyle decisions that we have made (living in a city; three children; sending them to private school) and all seem to have an infinite amount of time to pursue a 25% discount. As for tools, I particularly liked MEnvelopes, which was mentioned some months back in the Times, and might be a good way to start.
But the very thought of budgeting fills me with dread. Not only because every time I’ve mentioned it over the last 15 years to my wife she withholds sex with me for a week. We seem (to me at least) to deny ourselves a lot, and I doubt that it is the rare splurge that puts us into the red. The thought of budgeting raises for me the fear that our life is simply unsustainable as it is. Then what? I don’t see where to trim.
Every time I think panic about money, though, I also think about Th. Jefferson. I was raised very much a Yankee – live frugally within your means, etc. That was not a life for Jefferson and our other founding fathers. We have but one life to live, so we shouldn’t live it completely irresponsibly, but we should live it well. So as I dig myself deeper into a hole, and every fiber of my being begins to scream, I calm myself with the thought that maybe incurring a bit more debt is not the end of the world. Our income will continue to rise, and I am always at work trying to locate additional cash. So rationally, it might very well work out. Maybe more significantly, though, I am growing less patient. If I cannot live the life I want and think I deserve within my means, then I am more willing to live outside of my means. Hopefully, unlike Jefferson, I will be able to clean up my mess before I die (if the occasional panic attacks don’t kill me). If not, though, I have a good amount of life insurance to do it for me.
How to be a Middle-Aged Man 
An outrageous concept? 🙂 Maybe so in this day and age, but it works for me. Oh, and for the record, I ***DO*** have my son in private school. With a taxable income for 2007 of under $29k it takes some serious budgeting, but with a little math and science geekling it is worth it for me to make the sacrifices necessary.
I know it seems daunting right now, but getting on a balanced budget will be worth the learning pains for the first couple months. The panic DOES go away once you get the budget working smoothly (usually takes 2-4 budgets to get things right).
I do have to ask: does your wife feel the same panic you do? Is she aware of the money situtation?
Thank you for this comment! And the encouragement, despite my pessimism.
I did not see your full budget posted on your site, but if you would point me to it that could me to better understand the possibilities. What, precisely, are the sacrifices? To what extent is your position analogous to mine?
As to my wife: she gets so anxious about money in general that she does not want to know, and does not want to hear. This is from a very smart professional woman who has to handle an organizational budget, and does it well! Personal finances are weird.
Actually, I haven’t posted my budget with actual numbers yet. I’ve been toying with the idea lately, along with the idea of writing a post about what we gave up to get out of debt. I think I’ll do either one or the other this week.
Hi, I am not a debt blogger, but I read them for entertainment/education. I’m currently staying home and working freelance for old clients while taking care of my 2-year-old. My husband and I live in an expensive urban area near Boston, and we make about 150k a year as well. My husband is the one who does not want to know anything about money. He’s not a big spender (and we have a rule that we discuss any purchases over $200 before making them). Still, it’s hard to not have a 50/50 partner. Sometimes I would like a reality check. All the “experts” say everyone should have brief money dates to discuss the state of things every week or every few weeks, and we have to make ourselves do them. There’s a newish Suze Orman book about personal finance just for women, and your wife might be moved to get more involved after reading it.
Doing a budget was so eye-opening. It takes fine tuning over a period of several months, but since we’ve done it, we’ve paid off all our credit card debt and turned around our retirement plans and saved up almost 3 months of living expenses.
What might work for us might not work for you, but here’s a few things we found: we were very high in transportation costs and food costs. We are stuck in one car lease, but when the other one ended, we bought the car rather than lease another new one. We also raised our deductible on our car insurance and saved a ton. My husband figured out it’s cheaper to buy a different type of commuter train pass than the one he normally buys. We are also less lazy about sending in our transportation reimbursement receipts, which helps with cash flow.
Food is tackled by making a list and actually planning meals for a week. We build in 1-2 nights of allowed take-out meals for sanity, but we know we could cut this further. Now I shop once a week. I do not fiddle around with pricebooks and driving farther to get to cheaper stores. I rotate between a Whole Foods, a Trader Joes, and a local chain. I still buy mostly organic, but we cut back on our meat consumption, which has health benefits too. The hardest part is “Oh, it’s wednesday, I have to use the stuff for fritatta now. But I don’t feeeeel like fritatta.” Well, now we just eat the damn fritatta. It could be worse.
I also caught a lot of little drains, like Netflix we don’t ever watch and cable channels we don’t watch. I cut back to basic cable, switched our phone line to a bundle through our cable company. We use the DVR service, so I left that. I had an electronic fax service that I wasn’t using. It’s funny how stuff adds up.
We’re more likely to go to the library now than to buy books (I found out you can request a book online through the library website, and our library will then hold it at the desk and email you when it’s in, which saves time).
We’re doing more sale shopping and consignment shopping for clothing, especially for the kid.
We have a discretionary spending allowance, and when we hit it for the month, we can’t spend any more til the next one.
A budget doesn’t have to mean denial, but it makes you think about how important each relative thing is to you and your family. Priorities certainly change and should be reevaluated. It can be very painful to see everything in one place the first time, but its a good exercise to do it. Maybe you are running the ship as tightly as possible and the answer is more income, who knows. Not knowing feels worse, though.
This is a very thoughtful response, for which I’m appreciative. I’d like to see your numbers too – but I know that I have no right to this unless I post my own accounting. I’ll work on it, and I hope to do this soon.
While I appreciate the responses to the very real and practical problem of household finances, I also wanted to explore in this post the emotional and psychological issues. Baldly put, the question is whether the stresses of living with a budget out of balance outweighs the sacrifices of within one’s means, especially when one is not teetering on the edge of disaster. I don’t really have the answer to that one, but it is worth considering.
MAM, I’ve been on both sides of that emotional/money fence, and I can say I personally prefer the budgeting side! After a month or two on the budget, the “sacrifices” don’t seem that large or stressful when compared to the feeling of security when you know you have the money to pay the bills. It lets parts of you relax that you didn’t even realize were knotted up in stress.
I do love suze’s response: “A budget doesn’t have to mean denial” since a budget really is a “cash flow plan” or “allocated spending plan” where you figure out where your money *should* be going each pay period or month.
[…] phrase has turned up in my search hits, and I also promised Middle-Aged Man over on his blog I would do this post. Most people who want to get out of debt quickly will make a budget, then […]