So for those of you who don’t follow my twitter, some of the random budget angst from last week turned out to be a little premature. Turns out — ha ha! — I had accidentally hidden a category in YNAB, which happened to have $250 in it, so when I found it I relaxed some and also moved the $$ into my down payment fund, which now stands at $5250. I’ll just have to hustle back the $750 that went into my Roth IRA last week to make it back to the $6000 it was at.
Wait a minute, why hustle?
I’ve realized this week, as I stared at my budget and then read endless blog posts of “ways to save money,” that I’ve just about hit my frugal limits. My core monthly expenses are only about $800 (rent/utilities/groceries/gas) and, while I typically spend a few hundred more than that on anything from personal care to theater tickets, I’m not really interested in cutting back any more. I don’t have a car payment, I’m spending about $25 a month on gas right now, I almost never go out to eat, I rarely buy meat or alcohol, I don’t have cable, I’ve eliminated all my autopay subscriptions including netflix and amazon prime. I’ve almost totally quit buying books and music (I get books from the library and, for now, listen to the music collection I have.) About the only thing that remains to cut, when I look at my budget, is the gifts/charity category, but I want that to get BIGGER, not smaller.
This isn’t to say that I never mess up (hello, speeding ticket from last fall) or that I never have fun (that’s why I don’t want to eliminate the money I still do spend on travel, entertainment, and other personal stuff) but I feel like I’m about to the outer limit of what I want to do except in case of extreme circumstances like job loss. I’m literally saving until it hurts (psychologically.)
This is relevant to last week’s dilemma because, if I can’t/won’t cut the spending budget any more, then the amount I can save from my regular salary now has outer boundaries on it. That means I either take as long as it takes to reach my goals (buy a house in November instead of June, retire at 67 instead of 60), or am satisfied with a smaller number (buying a house with a 10% down payment instead of 20%, retiring on less), or find a way to increase my income. If I don’t make one of those choices, I will inevitably keep finding myself in situations where I’m trying to make a finite amount of money (currently about $1000-1300 of cash every month — separate from my automatically deducted 401(k) contribution) serve multiple purposes. I can’t BOTH put every spare penny into my house fund, AND contribute to my IRA when the market is down. I could, however, choose to accept a smaller/slower house fund in favor of taking advantage of market dips. (A result of last week’s moves is that my 2015 IRA is now fully funded, which I’m actually very happy about.) And I could also choose to try to expand my freelance work. This is actually my preferred option, but realistically it’s of course limited by various factors. I think/hope some of this will get better when I get a raise this summer, but even so, it’s likely to be an issue for a while, since I have a lot of pent-up saving to do in order to get to a rough approximation of where someone my age “should” be.
[By the way, you might be wondering why the rush on the house, and why a house at all. Because I live in a largely academic city, houses tend to be available mostly on a cycle related to people graduating/taking new jobs elsewhere in the late spring and early summer. Inventory right now is as ice-cold as the weather. Therefore, even waiting until September or October would likely mean I’d missed the majority of the action for the year. It’s overall a better deal for me to buy with a smaller down payment in May or June, and make rapid payments to get up to 20% and ditch the PMI, than it is to wait. I’m not opposed to renting either, and will look for rentals, but buying is probably a better idea here. So: probably buying, and if buying, ought to be ready to make a move in May/June/July.]