This is a guest post from Sheryl in Ontario, who is 40 years old with a grown daughter, and is trying to rebuild her retirement dream just 20 years too late for early retirement.
That small stash of cash I
have had for emergencies? Gone. The line of credit I had set up for emergencies? Used. March has not been kind to me. My boyfriend’s father passed away (it was expected) so we had to go out of town for the funeral. Fortunately, I have family with whom we could spend the night, so expenses were kept to a minimum, mainly gas and about $20 for food on the road.
While we were away, I got into a fender bender with my van. The van is 15 years old, and knowing that insurance companies will only pay up to the value of the car in repairs, I didn’t have collision coverage. (By the way, I’ve been driving for 24 years, and other than a small collision 2 months after I got my license, this is my first accident.) This has cost me about $2,500 (including hiring someone to fight my ticket, don’t want my insurance to go up, so I think it will be worth it). I also finalized my taxes, and I owe approximately $1,800. ( I know what I did wrong last year, but didn’t think a few “small” amounts would add up so fast, lesson learned). On top of that, 2 of my closet inserts collapsed this month, not too much expense, but time and stress when I didn’t need it (patching walls, cleaning up smashed nail polish bottles out of my carpet).
Getting towards the end of the month, I noticed myself getting into my old way of thinking. “Things have already been so bad, and expensive, why not just make this a really bad month and start fresh next month being REALLY good with my money”. The old me would then go and do a big grocery shop, and then look to see if anything was coming up to being replaced (those sheets/towels/jeans are wearing thin, I better replace them), and buy anything I’d been putting off until things were “better”. Of course all the stress of having a bad time would result in more eating at restaurants, and perhaps other leisure activities to numb the stress. I caught myself wanting to do this, but did not follow through. OK, maybe one extra food shopping trip that was less than $20 for non-essentials. It got me thinking about why I fell into this trap though.
I work in the accounting department of a car dealership, and every month I produce a financial statement. Years ago, when the store wasn’t doing well, when we were having a bad month, we would put expenses that normally would get accrued, or that we knew would be coming up (repairs to the building etc) all into that bad month, and start fresh the next month. Over the course of the year, it would show that we had one or two disastrous months, but the other months looked great. It was all mind games for the owner (I was instructed to do that by the managers, a lot of politics at the time). I was learning this at the same time I was learning how to look after my own finances, and applied the same principle. It’s similar to being on a weight loss diet, eating a piece of cake, and deciding that the day is already blown, so I may as well have fish & chips for dinner, and go back to behaving tomorrow.
Unfortunately, I have found that my personal finance cannot be approached in the same manner. I can use averages of months as a guide, but I have to look at the big picture too. Using a setback as an easy excuse to relax my self discipline is not going to get me where I want to be in 5 or 10 years.
I’m proud that I figured out why I used to do that, and that I can change how I think now. The financial damage in March has been controlled, and I think April (and possibly May) will be a “spend nothing” month to get as much of this paid back as I can.
What bad habits have you changed, or are changing with your financial behavior?