Our Income is Going Up, Our Spending is Going Up Too
Having just moved recently, we’ve travelled up the social ladder from very, very, very low, to very low. And the view is a bit better. With the CPA exam firmly under my belt (we found out on Saturday I passed all the sections) and my first “real job” starting on Tuesday, we’ve given ourselves license to move up said ladder.
I’m not really sure. It just kind of seems like the thing to do.
For instance, our new apartment is 50% larger than our last apartment. It’s still quite small (less than 1,000 square feet) but it’s large to us! We also are now a two-car family (though that wasn’t entirely on purpose). Heck, we even have cellphones now. And a Costco membership.
What else? Instead of jimmy-rigging a kind-of-broken shower curtain, we just bought another one. We bought two matching picture frames for 8x10s of the boys (that had been waiting to be hung for several months). We have 8×10 frames — but not matching.
We’re paying an extra $10 per month for covered parking. Dallas does have the ability to heat a car quite nicely.
Why the sudden surge in spending? I’m thinking of a few reasons:
- Our income is going to increase from internship/part-time-job-while-in-school levels to starting salary as a bean-counting staffer. (And no, I won’t be paid overtime).
- We’re living in an area with people that are making more money than what we’re used to (we previously lived in family student housing — not your richest population for sure).
Number two is an interesting subject, whether it be keeping up with the Joneses or just subconsciously adopting some of the lifestyle habits of those around you, it’s a very real force. Number one is what I want to hit on though.
Now granted, not all of our expenses fall under the umbrella of “well, our income is rising, so let’s buy this.” Some of them (especially one I didn’t bother mentioning) are part of the “settling in” costs of moving. But I’ll admit, some of this is for no other reason except that our income is higher. We’re finally out of graduate school. We pinched and pinched and scrimped and scrimped (and budgeted, of course) to make sure we had what we needed and didn’t borrow any money from banks, family, or the government.
So you can imagine the type of excitement (jubilation?) I feel, my wife feels, to imagine that we’re finally maybe going to be able to start investing for retirement, buying a few Wants, going on a vacation or something, maybe having our oldest boy sign up for T-ball (okay, he’s only two, but still, I’m thinking about it).
It’s almost like there’s this pent up desire to let go a little bit. In I-just-ate-too-much-at-a-restaurant terms, to loosen the belt.
This morning we discussed this to a degree. Tonight is our own budget meeting (it’s the 30th of August, a fine time to budget for September!) and it will be crucial. I don’t think we’ll knock it out in our patented 12 minutes (while I advocate holding the budget meeting regularly, I don’t think you should spend all evening doing it, except maybe the first time). This meeting will be crucial because we have a lot of new obligations: higher rent, more utilities, higher car insurance, those cellphones, etc. We’re also having to pay for high-speed internet for the first time (the nice thing about living on campus? Free extremely fast internet). Our health insurance premiums are quite a bit more.
So it seems that this increased room we’ll have in our “belt” may be taken away from us before we even get started. A few of those things are our own doing, but a lot of them are just kind of coming to the party uninvited (but you’re obliged to let them in).
As I walked out the door this morning to get some work done, I told my wife the following:
“We just need to slow down, pace ourselves, and evaluate.”
By slowing down, I mean that when you see this increase in income, don’t automatically assume it’s all going to you. Don’t assume much of anything. And certainly don’t spend your raise, your first salaried paycheck, your anticipated bonus, before you actually get it in hand.
Pace yourself when acquiring new things — especially new month-to-month obligations. This $50 cellphone bill…can we afford it every month? Even in the months where things may be a bit tight?
And finally, evaluate. Evaluate your budget. Evaluate your purchases. Ask yourself why you’re purchasing whatever it may be. Evaluate your long-term goals (if you don’t have any, get some) and make sure your actions on a daily, weekly, monthly basis are in line with those goals. When budgeting your Available money, make sure you start with the top-priority items and move down from there. Make sure you’re giving some away, giving some to yourself (retirement) and providing the necessities of life for yourself and family.
Proceed with caution when you receive the raise, the bonus, or the windfall. It seems that the longer you’ve anticipated these things, the stronger your desire may be to match your expenses to your income without too much evaluating. Proceed with caution! Enjoy your good fortune to a degree, but keep your head about you. And stick with the jimmy-rigged shower curtain for a month just to reenforce to yourself the fact that you can.