Striking a balance: Saving for future wants while maintaining current wants

There is no clear cut solution to this problem. Being highly frugal and watching every dollar I spend sometimes creates an imbalance for me. I catch myself penny pinching a little too much every now and then and later realize that my happiness is declining as a result. I am still trying to figure out the "magic formula" where I can be happy now and later.

My main solution is to be sure I travel overseas at least once per year and also do a long weekend on a fun domestic trip. Last year was Cambodia for a month and Myrtle Beach, SC for a long weekend. This year I have the 2 day Bahamas cruise at the end of this month and a month in Thailand with a few days in Malaysia and Singapore thrownin.

That is great but what about the day-to-day stuff? Being an ethnic food buff is a really fun hobby but restaurants get expensive. I limit myself to 1 nice dinner out a week and try to have dinner at home the rest of the time, if possible.  I also do my homework to find the best restaurant for a particular type of food and it usually is very reasonable. I tend to stay away from $30+ (per person) meals as it is simply not worth it to me no matter how good it is.

I thought I had a pretty good balance but I do seem to go back and forth a bit. Sometimes I will eat out more than my budget allows. I will see the busted budget the next month and pull back and "suffer" a little as a result. Part of it comes down to willpower and also comes down to if I have achieved the right balance or not. It's an ongoing process but I have noticed that it does seem to even out some over the long haul. I must say that my budget has come a long way since I started it and I will just have to keep tweaking until I get it right.

Time for a new job?

I am weighing some options and am looking for a new job. I like the people I work with--which is important--but other factors are becoming more and more bothersome to me. I am getting to the point where it is affecting other aspects of my life. I need to either find a balance or move on. Problems:

• Underpaid: I fell way underpaid for the work I do. Comparable jobs pay more than what I earn.
• Unpaid Overtime: The salary system is crap. If I work an extra 4 hours to get a project done I don't see another dime.
• Bored: The work is becoming monotonous. I do the same things over and over. I also work in an industry (marketing) that I despise.
• Micromanagement: It is not constant but I have a boss who tries to micro manage sometimes. 
• Feel lied too: I was told when hired I would be doing one thing. Now I am doing the job I don't want.

That said there are some good aspects to the job:

• People: I have no problem with the people I work with (with some exceptions, as always). 
• Travel: not nearly as much as I want but I do get some work travel
• Small Company: The good side of this is flexibility.

Overall I am in a pretty good position. I am getting to the point where savings is slowly increasing and I am starting to gain ground again. I am looking for another job but being very selective. I feel the need for change and expect that to increase as time goes by. I took the job hoping pay would increase a lot than it has.  My goals require more than I currently earn. If I stay here life will pass me by!

Seeing the light: Happiness is more important than money

I am in Romulus, Michigan today (near the DTW airport) for work travel. I went online and found a local restaurant/bar that had good reviews from other business travelers. I gave it a try and am very glad I did! I scored a half pound cheeseburger for $3 and $2 beers. Dinner + drinks = $11.66. Nice.

I also met an older gentleman (soon to be 50) named Mike. We had casual conversation about various subjects and money and happiness came up. He is retired from the Army after 30 years and now works as a prison guard in Detroit. He lives nearby the airport and is into local rental property. He seems quite savvy with his money and makes good choices.

He moved around a lot in the army and owns a few homes as a result. He rents them out and uses the rent proceeds to pay for his 18 year old son's college. He is looking into buying another as he has a tenant waiting for a place and is bidding on local forclosures (as low as $4,000!) and would make a tidy sum from renting it. He said he plans to use the money to save for his yearly vacations with his wife.

He then told me about a neighbor of his who is a former NBA player. He said while he was in the NBA he would have lavish parties, throw around money, and got caught up in the fame and fortune of the NBA salary. He went on to say the guy now is retired and realizes that he does not need all the fancy stuff and big parties. Instead of a Porsche he now has a Camry and has sold most of his high end jewelry, cars, etc and is happier. He specifically mentioned that he wants to sell his $35,000 Rolex as it will "collect dust in the drawer."

One thing that I really liked about Mike is his view on television. I mentioned it to see how he would react and he said he doesn't watch TV except for sports and sometimes weather reports. I am glad someone agrees with me! A TV is just a devices that forces commercials down your throat. News is just crap to get you to watch commercials. Moving along...

Mike and his friend are 2 people that "get it" in my book. They understand that people and experiences are the most important things in life. They also understand that money is required to have these experiences (and sometimes to visit the people) and therefore channel their money towards it. They don't have BMW's and 8,000 inch plasma TV's. They save a lot of their money and use it for their goals instead of running up credit cards.

Mike said it took him years to get into the idea of saving and not simply spending the paychecks as they come. I personally attribute this to television, society, consumerism, and flat out horrible job of the education system of teaching people about money. If everyone had to take a personal finance class in order to pass high school I think a lot of good could come of it.

I am glad to say that I "saw the light" on what's important with money a few years ago. I took me a lot of internal struggle and being resilient with habit changes to get to where I am today. The tide is turning and I see my assets finally moving into the positive. I bet we all could still learn a thing or two from people like Mike. Focus on what's important (and getting more stuff should be nowhere on the list of what's important!).

Daily Struggles That Affect My Finances

The old adage says "we all have problems" and that is true. Some of these problems can have impacts on our financial well being. I do my best to combat this but in the end some of it still happens. We can only do so much damage control.

Things in my life that negatively affect my financial situation:

• Stress: This one can cause me to spend where I otherwise wouldn't. I get a great deal of stress from work (IT Industry) and this sometimes makes me purchase outside of my budget. Whether it be a few drinks after work here and there or eating out from a long day where I have no energy to cook.
• Worrying about money: I do this daily. I now it is not a good thing to do but having debt makes me worry. Will I lose my job? What will I do? I also have to fight against myself to not buy the new toys I want. It is hard to convince yourself that debt repayment is #1!
• Unhappy with my job: I like working in the IT Industry but my particular job is of little interest to me. I am stuck because of my bills and cannot seem to locate a replacement that provides the same level of income (recession). This adds to me stress.
• Feast and Famine Spending: From time to time I tend to go on somewhat extreme spending restrictions. When I do this I hit a wall and then spend money I shouldn't. Over time it evens out a bit and I am trying to find a happy medium. So far no luck.

I can attribute most of my bad money decisions in recent memory to stress and unhappiness at work. I am doing the best I can to alleviate this in a rough job market and am researching alternatives. I am not planning any big change until after my month-long, much needed vacation to Asia in November. This also gives me time to save up some extra cash and plan my move before I make it.

Financial Happiness Formula

I have been doing a lot of reading on getting my finances in order and also being happy. Debt is a big burden and is the source of much unhappiness for me. I am looking at the big picture to find out what I can do to be happier once I am done paying it. I have seen many formulas and this is what works for me:

60% of income goes to needs
20% of income goes to wants
20% of income goes to savings

The above is what I aspire to reach. I think it is a balanced breakdown of my income to make sure I am happy and reach my goals. This is the ideal target to reach once I am over the mountain of debt that I still have to climb slowly. Currently my breakdown is more like this:

70% of income goes to needs
< 1% of income goes to wants
24% of income goes to debts
5% of income goes to savings

The problem is I have almost a quarter of my income going to debts. Any extra income I get also goes to debts so I can get it paid down faster. I spend very little on my wants, by force, since I have no income left for it. This is most certainly why I am not as happy as I want to be. Right now the only solution is to wait. It will take time to pay off the debts.

How does your current financial formula measure up? Are you over/under in these categories?

Year End Milestones

Today I am reflecting on the past year, which has been a rough one, and trying to look at the positive things I have done. Some are financial and some are personal goals that I met. It is a good feeling to reach a goal and be able to move onto the next. Here is what I have to report for 2009:

• Paid off Prosper loan: I had a $1,500 personal loan that I paid off early
• Bought a house: Aside from the $6,000 tax credit I gained equity and a lot of knowledge from a major remodel. I also lowered my total expenses with a roommate.
• Emergency Fund: I finally have 2 months of take home pay in savings to lean on if I need it. This mostly came from the refund mentioned above.
  
• Overseas Travel: This year I visited Colombia and Thailand. Thanks Skymiles!
• IT Certification: CompTIA Network+. I recently passed this exam to make myself more marketable in the job market.
• I still have a job: This is saying a lot for some folks. A lot of my friends were laid off this year and I am happy to still have my job. It is a rough job market out there right now!

Even though 2009 was a rough year I am still keeping my chin up and pushing forward. I don't do New Year's resolutions but rather update my goals for the next year. They may or may not get completed within 1 year's time but I have to have a sense of direction. Here is what I wish to accomplish:

• IT Certification: MCITP, Microsoft Certified Information Technology Professional. This will greatly help my future job prospects.
• Debt Consolidation: Once the house remodel is complete (by Feb) I am going to consolidate everything in to lower, tax-deductible (interest) loan.
  
• Debt Pay Down: After the house work is complete I can focus on putting every extra dollar towards my debt. Any extra bonuses or side work will go to debt payments.
  
• Travel: I would like to see at least 2 more countries this year. Travel is my passion!
  
• Health: I am going to focus on eating less and eating better. I want to lose some weight and feel better. This is going to be a tougher goal as I love all kinds of food!
  
• Consulting: I am going to work on my network of people and side jobs to earn extra money and stay on the path to self employment / IT Consulting.

I am sure that my goals will change as the year goes by. I will have to make some difficult adjustments to parts of my life. Being stubborn about my goals and honest with myself is the only way I can get ahead. Hope everyone has a great New Year's holiday and weekend!