In my last post, I mentioned a pair of simmering issues that came to the boil last week. The first was the trouble I'd been having whilst writing my first draft of Slamdance. The second is finances.
We've been doing pretty good over the past few years; we've got a great house which we've recently re-clad thanks to moving our loan to a new bank and while we're not keeping up with the Joneses, we're certainly not lacking in the mod cons department.
Still, one of the various “gunnas” in my life – you know, those things you always say you're gunna get 'round to some time – is getting to understand and control our finances. Vickie decided a while back that as she'd been handling finances for most of her life she wanted to hand it all off now that she's retired, a sentiment I can certainly understand.
As a result, my recent feed-subscription binge has included a few personal finance blogs, like Get Rich Slowly and Man Vs. Debt. A recent post on how to plan a budget got my attention; I've got a spreadsheet tracking our expenses, but I've never attempted to formulate an actual budget. According to the post, the basic principles of budgeting are fairly easy to grasp; all you're doing is figuring out where your incoming funds need and / or ought to be directed.
The posting pointed me toward finance writer Liz Weston's basic principle for budgeting; the 50/30/20 rule. It works like this: Fifty percent of your income should go to any expense you either must meet to keep going every day or are contractually committed to meeting, like utilities, mortgage repayments, basic groceries and even new socks and undies.
Thirty percent goes to your wants, any expenses that, if push came to shove, you could eliminate from your expenses and still do okay. Wants can range from traditional “disposable income” luxuries (dinners out, movie tickets or fancy clothes) to semi-utilities like Internet access.
The final twenty percent goes into your savings, from paying your credit card/s off to voluntary super payments to “rainy-day” bank accounts, essentially making sure you're still solvent in the short and long term.
Early this week, I took my tracking spreadsheet and recategorised every expense on it into those three categories. The results shouldn't have been surprising, but as I put it together, I was still shocked – and petrified. Without going into specifics, our budget ratio looks more like 86/7/7 than 50/30/20.
(Snarky aside: You gamers out there who were puzzled when I didn't rush out and buy Big Title X at launch like you? I hope you consider your question answered.)
Now, let me state that we're not in this situation for want of trying. Vickie does a phenomenal job of making our grocery dollar stretch every week and her priority is always that we eat healthy. In fact, when I broke our listed expenses down, I figured there were a few things I could do to tighten my belt. One such is bowing out of indoor soccer, which saves me ten dollars a week plus one return trip into Cairns in petrol. (Before anyone asks, this shouldn't affect my overall health; I've recently started parking a mile from work again, so I get at least ten miles' walking exercise per week. Also, we've inherited a cross-trainer from one of my step-daughters, and ten minutes on that is one hell of a workout.)
Still, the unavoidable fact is that our finances are not in good shape. We're relying on credit to get us by at the moment, and while I expect that this year's tax return will help alleviate (if not eliminate) that, there are rises in council rates (we received our valuation notice in the post yesterday and it's gone up around five grand), electricity and even interest rates in the wind.
Let me be honest here, folks. As I wrote above, our situation is no surprise; we've been in it for the past few years. The problem is that whenever I've considered the situation in the past I've gone into one of two mental states: the “we're doing okay, we're in my comfort zone, there's no need to do anything now” state – which results in me not doing anything – or the state of utter panic, which folks can usually tell I'm in when I start proclaiming that I'm going to sell my Xbox 360. (Vickie has told me that she will be extremely upset with me if I ever do that; she sees it as one of the few “Me” things I have around nowadays.)
Now, though, I'm trying to get myself into another mindset: A mindset involving my accepting the facts that we do have some money problems and that we don't have much more belt to tighten, and my seriously, wilfully working to improve the other side of the equation: Our regular income.
Now this is a tricky, sensitive subject, mainly as the first way of increasing income that leaps to mind for any is “change jobs” and I'm fairly certain that some of my readers are work colleagues. Let me draw a line through that option straight off the bat. I've got security, something I definitely value in this age of global financial uncertainty. (See how I avoided writing “tough economic times”, there? Clever, eh? - Oh crap.) It's also a great company to work for if you're keen on writing (my book review gig pays in books). Finally, my colleagues are a great bunch, even with the regular turnover since I started. They give me a lot of emotional stability; I'm much better than the mess I was half the time when working in Sydney. My job has a lot going for it.
How abut a second job? There is a Caltex across the road from us and I could ask about putting in some shifts; that'd bring in some extra cash. That has some problems, though. For starters, I'd have to be an employee, which means more tax for working two jobs. Declaring the income as one must also means that Vickie's pension is likely to decrease. While it's an option, a second employment isn't really effective for the time I'd have to put into it.
Odd jobs? I could put some notices up around town; I'm still a young, fit fella who could do some odd jobs for the significant aging population who live within walking distance. Then again, I'm not sure Vickie would appreciate me popping around to any single fillies' places for an hour or two! More to the point, it's also an immediate patch instead of a long-term solution.
So what other options are available?
Well, now that I'm finally learning to listen to my instincts, I hope you'll forgive a minor indulgence as I paraphrase the great and esteemed Dr. Peter Venkman: Call it fate, call it luck, Karma, whatever. I think I've been destined to get this little financial wake up call.
For what purpose, you ask?
To go into business for myself.
More on that next post...
But Enough About Me, Gentle Readers: What About You?
Have you ever found yourself denying that you're in a tough situation? How did you go about evaluating your options for getting yourself out of it?