People always ask:

“I’m starting to save, and it’s beginning to hurt. How do I save without feeling like I’m saving?”

At first glance, you might think: What kind of fool question is that?

But I am not guilty to admit that I thought the exact same thing when I first started!!!

When I first started budgeting and thinking about my money, I felt like saving was being in a horrible mental prison.

“I am making all of this money, 70% of it is going to debt each paycheque, WHY THE HECK DO I NEED TO SAVE THE REST? ARRRRRRRGH!”

It was torturous to see my money disappear so quickly towards debt, and then to know I had to spend another 30% of it in bills and a small, small bit of it on fun.

I didn’t see the point. I felt angry. I wanted to go on shopping binges.

I wanted to do MORE. Buy more. More of everything.

I felt like life was not fair, why didn’t I learn about money sooner, blabbedy bla bla….

*cue the waterworks and the pity-me princess routine*

After I got over myself, I realized that my focus on money, debt and saving was very negative.

So how do I do it now without throwing a mental temper tantrum at life?

My Secret: Change your focus

I needed to change what I was doing from being negative (crying about deprivation of money and stuff), to being positive.

I am doing what  I did before (actually, MUCH more), and I’m happy doing it…(which is something I never thought I’d say).

I can still buy anything I want

I tell myself all the time:

You COULD buy that if you wanted to.

But do you? Really?

Is it going to improve your life significantly?

Or do you just want it as an impulse purchase?

Think about the precious space it’ll take up in your suitcases when you move — is it worth the space & weight?

99% of the time, it’s just my inner repressed shopaholic lusting after something shiny and new, but then my saver personality takes over and is way more practical.

So yeah. I can truly buy anything I want if I set my mind to it.

I just CHOOSE not to, which is very different from not being able to.

…and saving money is the happy result!

My #1 priority is not to buy things to clutter up my life and physically tie me down anywhere (hence the aversion to home ownership), or otherwise known as “minimalism”.

I choose not to buy.

I don’t buy what I don’t need or really, really, really want.

Since I don’t buy anything I don’t want, I save the money.

And the more I save, and the more I realize how unnecessary STUFF is to make me truly happy, the happier I get thinking about and using what I already own.

It sounds so New Age-y and strange to get happier over time, but it’s true.

My top 3 happy (PG-13) buttons:

1. Great, stimulating & fun conversation (BF, Friends, Bloggers, Socializing in general)
2. Delicious food – it’s seriously orgasmic when it’s done right. Totally makes my day.
3. A really great night’s sleep

So, what are your triggers to save? Are you happy to be doing it?

ThriftyGal of the blog Chasing Prosperity made a good point on my retirement post about $20,000 being sort of conservative for someone who makes $100k/year.

(Read: “Just stick a fork in me when I’m 50-ish!“)

And she’s totally 100% right.

However, as a freelancer, income is a bit trickier to pin down as a confirmed amount than working for a company and getting paid bi-weekly.

Therefore, $20,000 to me, is a good goal as a bare minimum even though I am making more than $100,000 a year right now.

Here’s the reasons why:

I am being realistic, rather than conservative

I don’t always work full-time.

This contract is a rare opportunity that is not even guaranteed to last either!

They could boot me out at the end of March and my plans for my future earnings could go up in smoke.

I am not mad about it, I am just trying to be really conservative and not expect what hasn’t been confirmed.

See, without statistics, I cannot say: “I will make $60,000 this year, and $20,000 can FOR SURE be set aside for savings.”

There are months where I won’t work, and there are months where I will work a lot.

I need at least 5 years of stats for that, and I am currently pushing 2 years.

• From Aug-Nov 2008: $90,000 as a freelancer (note: I was with a company before)
• All of 2009: $0
• Now, am earning a confirmed: $34,500 which is really $24,000 after expenses

I am hoping to stay on and work until end of 2010, but nothing has been put on paper yet or signed, so I can’t count my chickens before my eggs have hatched.

My real “secret” plan is to save as much as possible

With uncertain and unsteady income, I have to save as much as possible. No ifs, ands or buts about it.

So for example, if I work for the whole year, I will gross $190,000, or $154,000 net.

Note: I am taking out January because I started a month into 2010, and July because I am going to Europe for a month. In a full year, it’s really $230,000 gross taking into account holidays, or $186,300 net.

I am going to save as much as I can of that $154,000, because…..

…I have my priorities set in a laddered system

This is something I’ve done, even earning much, MUCH less than that (on minimum wage), because you should always know how to prioritize where to put your cash which means paying for shelter, food and warmth.

The rest is just bonus.

Since I cannot count on that income as being confirmed yet, having my money priorities set out beforehand are so much more important!

Therefore, I cannot say: 25% of my paycheque will go to savings, 30% goes here, and so on.

I need to allocate the money on a laddered system based on when I earn/get it.

If I don’t have enough banked to move on to my next priority, then I don’t move on until I do.

And they go a little sumpin’ like this:

Here’s a handy chart and my notes will follow.

Priority #1. Expenses for the whole year = $20,000

I need about $25,000 net this year, so all of the money that I make (net) up to $25,000 will go towards living expenses for 2010.

That, is just cash in the bank to pay for expenses so I don’t have to worry about having saved/spent too much on other priorities.

This is my true #1 above all the others.

Last year, I spent $30,000 in net expenses, but this year, I have a plan to spend $20,000 as I am going to try and control that this year.

Priority #2. Expenses for two Emergency Fund years = $50,000

Like in 2009 when I didn’t work*

*As rightly pointed out by ThriftyGal:

Yes, I could have worked another job, but aside from my French not having been strong enough to work in even a minimum wage job for most of 2009, the bigger thing is that I also chose not to work a minimum wage or a 9-5 job because I had the financial savings and the option to do so.

I will need another $25,000 for one year, but I am actually shooting for $50,000 as my emergency fund because I feel good with 2 years.

I am saving an extra $5000 over what I expect to spend, because I like having some extra room.

I am putting it all into high interest savings accounts and other safe, super conservative investment vehicles.

This does a double duty, because it’s subtly a part of my retirement plan as well, but I won’t consider it as such.

Priority #3. Retirement Savings = $20,000

Max out my RRSP.Put the rest in laddered savings.

My TFSA is already maxed out with Priority #2.

This is my bare minimum for retirement for 2010.

Priority #4. Fun = $10,000

Ahhh! FUN!

I honestly cannot think of anything I’d like to buy, but I like leaving myself some breathing room after being so serious with my earnings.

Need to have a break once in a while!

I’m probably going to spend some of it in Europe, eating wonderfully foreign candy, and buying foreign products.

We’ll see.

Priority #5. More Savings = $54,000

Anything left over = bonus to be banked as savings.

I can draw on this to help pad up my retirement funds in future years, or for whatever I’d like within reason.

But it’ll all stay as savings.

So, that’s the plan.

It’s a bit unusual, but I think everyone follows the same principles/strategy in theory, just perhaps not as regimented or as conservative.

Everyone spends their money on what they value the most.

Just look at your spending for last year (if you have the stats), and see where you spent the MOST money.

The top 3 spending amounts are what you value most in life, and hence where you put your cash.

I think mine was Retirement/Savings, Rent and then Food.

The rest were considerably smaller amounts in comparison, except for the shopping & electronics part that scared me.

So what’s your ultimate goal? Do you have a saving and spending strategy?

It seems as though everyone would rather make more money than cut back on expenses.

Just the other day, I heard the following lines coming out of The Idiot:

“We don’t have any money coming in now, but we CAN’T give up cable TV!

What would we do all day in the home, since I’m not working now?”

Uh.. cook instead of buying pre-made, processed, frozen meals?

Go to the library and read?

Play with your kids and teach them how to sing, learn, read and be children?

Go to the park and take a walk?

Rent DVDs for free from the library?

Do all the little chores you’ve been ignoring because you were soooo busy?

It totally sucks to be at home, doing nothing, trying not to spend money, but when money is tight, or you are going into debt with each passing day, you have to make drastic cuts and changes.

But to be fair, he isn’t the only person to say that, nor will he be the last.

I’ve heard it from my brother, my sister, my friends, and just in general online around the blogosphere.

“Nuh uh.

No way.

My nails and my hair are THE most important things about me.

I am NOT giving up my manicures, pedicures or blowouts.”

I have heard that coming out of a girl at a party I was at.

She was willing to go into credit card debt for her nails and hair each week, because they were the definition of who she was.

While I can understand that taking care of yourself, and dressing nicely is important.. I don’t see how it can become so important that it defines who you are.

Or that it requires you to go into debt for it.

“We NEED a maid and gardener twice a week, we just don’t have time to clean, because we’re working so much.

And we eat out all the time because we have to.”

(My brother)

Uh.. if you didn’t have to pay your maid and gardener, and cut back on your lifestyle inflation, you wouldn’t have to work so much.

And no one has to eat out all the time if you’re organized.

You can spend 4 hours cooking one major pot of soup for the whole week, making stock from scratch to do it and it would not be a waste of time.

Why?

Because you can supplement it with freshly cooked chicken or sausage during the week to add to it, and having pasta inside for a heartier meal.

There, slightly altered meals for the whole week, that are different enough to be interesting.

But then again, I am the type of girl that LOVES to eat the same meal over and over again, if I really love it.

“It was $3000 a month for a mortgage and about $2000 more than we wanted to realistically spend, but the baby needed a house and we couldn’t live in that tiny shack.”

“We didn’t want a starter home. We wanted to just skip all that.”

The Idiot and a former co-worker said those choice lines to me.

Well, at $3000 a month, I am not sure you will have anything left for the baby.

Or for emergency savings, or college fund savings.

No one needs a house.

Much less, a baby. A baby doesn’t care if you live in a mansion or a small, but cosy home.

A baby wants food, shelter, love and attention.

Period.

So let’s be clear. We all want a house.

We all want a place to call our own and to do whatever we want, but no one NEEDS one, when there are other options out there, like renting.

And if you have to start with a small house, then do it. You’ll find that you seem to make do, and if you feel like you need to upgrade later, then you can do it.

Later.

Not now, before you’ve even made the money.

“We NEED a break. We work so hard, and we need to treat ourselves. Our debt can wait.”

The Idiot again.

Everyone needs a break.

Everyone works hard.

But it’s up to YOU to set the priority of whether or not you can have a short-term, blow-it-all vacation in Las Vegas for a week, or put that money towards your debt instead.

If you decide to go to Vegas anyway, then own it.

Live with your decision and love it.

Don’t feel guilty about it after, and think: “Gee I should have put that towards debt.”

No one is forcing you to do anything.

But sometimes, I feel like people need to step back, and say “Do I really need, what I think I need?”

You may be surprised at what you can live without, do without and actually need.

You may find that NOT having a membership subscription at Barnes & Noble for discounts, may make you feel less pressured to spend money on books to make up for the cost of the membership (true story, happened to me).

You may also find, that giving up that membership, will force you to get out of the home, go to the library and spend a wonderful day, being able to check out ANY book you desire, to read and peruse.

And if you love it, you can buy it after. Not before.

You may find that no one cares if you wear the same sweater or outfit twice, and you do NOT need to buy a new outfit each month.

You may do a little organizing while you stay at home, trying to save a couple of bucks, and find that cherished necklace behind the dresser you thought was lost forever.

February Income: $12,937.50

This is before 19% year-end taxes, so my real “net” is $10,479.37.

February Expenses: $3620.13

$2643.01 – Business-related

$977.12 – Personal expenses

NET EARNED: $9317.37

BUDGET BREAKDOWN: $3620.13

Ouch.

This is where business & personal are inextricably linked.

Business: $2643.01

I’m traveling Monday to Thursday to work in another city, and I am incurring a lot of extra expenses.

Note: I’m taking a rental car just for the winter until the snow & ice melt and it becomes safer to drive my own car.

I was pretty thrilled to have the rental last week, as a snowstorm moved in, and we were crawling at 60 km/h on the highway. It was slippery and very dangerous!

The car I own was just meant to drive within the city to clients, not city-to-city for 4 hours a week on the highway. It’s 10+ years old and I’d rather pay and be safe than be cheap and sorry.

Personal: $977.12

Just squeaked under $1000 this month.

NET WORTH = $60,241.17

Increased by $6928.24 or 12.52%

Assets

• Cash: $88.55
• Savings: $7038.82
• Business: $10,051.69
• Business Accounts Receivable: $12,937.50
• Retirement: $30,124.61

Retirement took a bit of a beating this month, but I’m a long-term investor so I’m just going to chill out rather than freak out.

Will also max my TFSA before I receive the first payment from my client at the end of March, taking it out of savings instead.

Debts

• $0

I’ve just recently experienced this.

I don’t keep it a secret about how much I make, but I don’t like to broadcast it.

Strange I know, as I am soooo open on this blog about my cash.

Anyway.

I only tell people if they specifically ask me: How much do you make?

Note about why I am so honest:

I don’t lie because I don’t see the point, and I think that while money is still a taboo subject, it only becomes a problem if you tie what you make or what others make into what you consider to be their “status”.

Ever since starting this money blog, I am less sensitive about the money thing in general, and I’ve learned so much from watching get out of debt shows, from bloggers & great readers online over the years, that I just don’t factor it in any longer.

(Yes, I used to, in my younger, dumber, more ignorant and naive days.)

It’s just a fact. You make X amount of money, and that’s it.

It doesn’t change who you are to me, whether you’re kind or a horrible person.

When I reply that I make around $100/hour, which is about $200,000 a year if I worked full-time.

Upon hearing that, they snort and say: So that means you can afford to give me at least a $1000 gift if I invite you to my wedding right?

I was taken aback.

Yes, it was a joke, but……

Seriously?

First, I don’t have guaranteed full-time work!

I could earn only $20,000 a year depending on where and when the contracts come.

Take for instance 2009. I didn’t work the ENTIRE YEAR (not by choice).

My income was basically $0 from my day job.

I only made some money freelancing here and there, a bit from the blog but that’s about it.

Maybe $3000, total.

The year before that, I made about $120,000, but ended up having to spend 2009 living off it, paying taxes on my company and for myself, and expenses.

I could also not be making more money, if I take a contract where I have to pay my own expenses to work, or if I ask for less money. Nothing is guaranteed.

This is why I like to live on as little as possible, while being comfortable.

It doesn’t all come as a fixed cheque, because I am working for myself.

Second, does more money mean I am obligated to give more?

Just because I supposedly make more money, does that mean I should be giving you 4x as much as what I’d normally gift?

But what is the rule when you make $20,000 to $1,000,000 for example?

Is there a sliding scale of gifts based on income?

I’m not saying that I don’t want to give a good gift, or a lot of cash, but when did it become EXPECTED that I would give more than someone who earns $30,000?

I’m just a guest like everyone else, celebrating in your day.

If I show up with a big cash gift, it isn’t because I based it on some silly sliding scale — it’s because I wanted to give that amount to you.

With the tables turned, if they earned $200,000 a year, would I just gift $0 because they’re SOOOO much richer than me, that they don’t need my money?

What about in that situation?

Third, was this even an appropriate comment to make!?

These were not my closest friends, and it was just in casual company…. but as I said before — I don’t lie if people ask me directly.

Not many people have the guts to do it, by the way, but they feel more open asking me how much I make if I don’t work for a company.

Oddly enough.

Still, I am not sure that joke was made in good taste. Every joke has a half truth, you know.

What do you think? Strange? All right?

Am I just being overly sensitive?