Well, the middle of November is upon us and our American neighbors are getting ready to commence the holiday season with Thanksgiving and people are starting to build their wish lists for Santa and everyone is hustling and bustling to rack up some more debt to tackle in the new year.
So far I have made a tradition of checking in mid-month and end-of-month, probably because my finances and, thus, this blog are front of mind around payday.
So here we are again. How’s your retirement plan?
I’ve been at work for half of the month so far, so my spending is pretty much on track, although I paid my annual auto insurance a few days ago which affected this quite a bit, but it’s still possible I’ll meet my goals this month regardless, so I shall keep on truckin’.
What’s more noteworthy and exciting, is that after a few months of focusing on only the most critical of debts (i.e. credit cards, of which there are no more outstanding balances) and not quite working a system in which I ‘pay’ myself a portion of my income and invest the rest, I’ve been able to work out a pretty tight budget of $1250/month and am near making it work month-to-month. So I’ve decided I will pay myself $750 twice per month and direct the rest towards, for now, debt associated with my house/rental property and, eventually, other investments. This leaves me with $1500/month, $250 more than the budget I’ve worked out over the last few months and which I also intend to further tighten up. So $1500/month leaves me a bit of lee-way to make sure I don’t fail and get discouraged (i.e. put yourself in a position to succeed), but more importantly it also leaves me with the ability to save some money within my budget for surprises or frivolous purchases without using any of my money planned for investing on such things. The theory is that paying myself an allowance in this way and running it all out of one account with everything else being elsewhere, I will continue to get much more in touch with my budget, but will also be incentivized to save because I have permitted myself to spend any money that remains in that account at the end of the month (or accumulated over several months). In this way, I should be able to stick to a budget I am happy with, consistently, while also leaving a small amount of space for the satisfaction of my urge to spend or to make up for any unforeseen expenses without derailing my larger financial plan, and thus retirement, significantly. This, of course, will remain my budget once I have ‘retired’, so I am also building the habits I will need to live a long and prosperous life without the ‘need’ to work ever again.
So as soon as I finish posting this, I will establish this self-allowance and vow to stick to it moving forward, for I can see it as my path to financial freedom and life on my terms. $1500/month. $18 000/year. Canadian Dollars. What’s your budget? (keep in mind I don’t have ‘rent’ or a ‘mortgage’ payment and thus this is not a part of my budget. I am also single without kids and am a huge surf bum.)