You can’t out earn your spending
This year, I finally realized that I need to get more organized, budget, plan, and take charge of my money. For most of my life, my plan was to “out earn” my spending And I should add I am an excellent investor.
I realize now that it is impossible to “out earn” my spending. I dont think anyone can unless you are naturally frugal. And I am not. Spending was the reward for making money.
Take my word for it, you cannot “out earn” your spending. It cannot be done.
The reason for the buffer is for all the stuff you have to buy that comes out of nowhere that drives you crazy and eats away at your financial freedom.
Want an example? I had to pay Microsoft $69 to keep using Outlook. They sent me an email that basically said if you dont upgrade, you’re email is not going to work anymore. Really?
Did I have a choice? Yeah its only $69, but that’s the little stuff of life that adds up and over time we wonder, Why am I not making more progress? Why am I not getting our of debt? Why do I never have any money left at the end of the month? That’s why.
Want another example: car registration $213. Every year. For every car.
Once you get organized and know where your money is going, you can actually prepare for things like taxes and still have money left over to pay down debt or start investing.
I’m getting on top of my budget now. So, Im looking at every little charge and cutting back on any that doesn’t add value. And my Microsoft charge will be paid for by my business, but that’s not really the point. The point is that all those charges that come up like medical deductibles, anti-virus programs, cell plan charges, parking fees, uber to the airport, checking fees, on and on. They’re coming.
So, the only logical thing to do is plan to save a little more ie have a buffer for things that come up. The reason is really more psychological than economical. The buffer is to make sure you dont get thrown for a loss and get discouraged. If youre trying hard to save money in a month and you get three $70 charges hit you out of nowhere, its reasonable to be discouraged. So, Im cutting back a little extra and its game on.
Im not happy, but Im ready.
Im gonna win with my money. Whatever it takes!