The Financial Balancing Act: Musings on Balancing Being Responsible with Having Fun
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Don Fulano Sometimes, balancing debt (or staying out of it) with fun things we really enjoy brings up hard questions. You know that you need to pay down debt or that you're barely making ends meet as it is, yet you want to see that movie, buy that purse, or take that vacation. How do you decide what to do?
Ramit, over at Iwillteachyoutoberich, provides a great illustration for this question. Yesterday, he posted about a friend of his who was going to charge an international trip in spite of having over $6000 in credit card debt. When he talked to his friend about not going and instead putting the money toward the debt, his friend replied that the debt had been there for a long time, so it didn't matter when it got paid off. Ramit found that fascinating.
I'm not sure it's fascinating so much as it is normal, at least for those who live with debt or who can barely make ends meet. Living with debt (even "good" debt, like student loans or a good mortgage) can be draining. The debt starts to haunt many of your financial decisions. When you have to get the car fixed so you can go to work, you think about how you could be paying extra on your loans. When you get your hair cut, you wonder if it's wrong for you to go to the stylist you've seen for years because there's a cheaper place down the street. It can get into your life and make everything a little less brilliant, a little darker and more discouraging.
One way to counteract that seems to be doing something that makes you feel like you have the money to do what you want. For some, that's a new pair of shoes. For others, it's a spa day. For others, it's a trip around the world. When you're in debt or struggling financially, that tendency is always there. "I'm not rich," we think, "and that's hard. I would feel so much better if I was just free to buy that X." And instead of paying off the debt so that we can actually be free, we often choose to enslave ourselves more for the false feeling of freedom that comes from doing or buying something we really want.
I don't think that those of us with debt need to be reclusive, never going out unless it's free or close to it. I don't even think we need to stay home, to not take vacations, to never get out and get away. But we need to monitor WHY we want those things, and we need to take care of our responsibilities first.
When I think about it, this is what I come up with: If I ponder for a while and realize that I HAVE always wanted to see Thailand and the perfect time to do it is coming up, I think it's fine to make minimum payments for several months so that I can save the money I would have put toward debt for a trip. The payments are made, I'm on top of it, but I'm also responsibly heading towards a goal. On the other hand, it also seems fine to realize that Thailand is important and redouble my committment toward paying off my debt so I can go on this tour the next time it comes around. What wouldn't be fine would be for me to hear that my friends are going to Thailand and put a deposit on my credit card because traveling makes me feel better, before I even think about whether it's important to me to go.
And yet, I'm sure that what I've said above is only the beginning of my thoughts on the subject. I might change my mind later. And what about little things? Is it different if it's a $10 movie rather than a $2000 plane ticket? And I'm sure you don't all agree with me. So tell you think? How do you balance debt and fun?
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Tagged: Budgeting, Debt Management, Art and Leisure, balancing act, balancing finances, being responsible, debt and fun, having fun
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Funny that I've been struggling with this over the last several months. I've been in credit card debt for almost a year, mostly because I keep finding other things to spend money on, not just bills. I actually won't pay any of my bills with my credit card--only my checking account. But recently, I've found myself in a place where I feel trapped, and I've been thinking about charging a trip to Montreal to my credit card. Ironic that your post would come when it does.
It's a terrible internal fight. Best case scenario is that I pay off my debt and at the same time, concentrate on my business and bringing in income. Then I could take my trip. In the meantime, I tend to satisfy my desire to travel and "free" myself of my situation by walks down to the river in my city, or hour long drives to neighboring areas, where I can explore and feel like I'm out and about without spending a ton of money (yes, gas is always an expense).
Going out with friends is always an option, because a club soda with lime doesn't cost more than a couple of bucks, and it's free re-fills. The movies? Matinee everytime. Food for the house? When what I'm buying can compliment something I already have in the fridge. It's entirely possible. It's just a matter of finding out what you can live with, or without.
Maybe my post isn't much help as that it's ambiguous at best. It's up to the individual to choose what's valid to spend money on. But nobody ever feels entirely free when they're in debt. There's always that payment you could make, instead of that next beer at the bar.
I have some old debt from medical expenses and about six months ago I was going to superhuman efforts to pay it off-- no luxuries, no movies, no books, no eating out, second guessing every cent I paid out. It was exhausting. Yes, I paid off a nice percentage of the debt over the 5 months I lived this way, but I got little satisfaction because I was so weary and anxious otherwise.
I finally came up with this solution: I went over my budget (yet again) and budgeted in some luxuries (a book or movie here and there, a small yarn allowance, and so forth) that I thought were reasonable while at the same time budgeting a set amount to pay down the debt. I feel like I'm making progress on the debt, but I'm not feeling utterly deprived doing it either.
My solution is to budget in small luxuries every month or two. This is usually just something like $20-$25 that I am free to just go out and blow however I want to. It might be a nice dinner and a movie, or something new for one of my hobbies. It isn't so much about how much it is as long as I keep it small. I find that it can be a welcome break from frugal living when you need it most. Yes, it does set me back a little on paying off debts, but it keeps me a little more sane.
I wonder how to balance nearly every day, and though my assets outweigh my liabilities (now that I'm past my 20's), I still think it's tricky.
Based on my observations, people tend to have very different priorities and different perspectives on what they consider luxury vs. essentials -- I'm not talking about small items (though those things can add up) but how people order their lives, meaning how they make big decisions on how to pursue a career (changing jobs frequently can often net more income but can cause family instability), where to live, what to drive, what schools to send their kids to (private vs. public), whether to buy a vacation home, where to vacation, etc. I guess I've learned that there are some things I may buy that are important to me but seem frivolous to others, but then I realize that I can buy certain things because I've saved on other things (the balancing act). Basically, at some point when you become semi-solvent, you can have what you want but (for most people) not everything you want.
And, as I know you know, there is a difference between having debt that is easily paid each month and debt that is oppressive. So if you can handle the payments and still take a dream trip, do it!
My husband and I take a about $120 a month each in personal allowance to spend freely. This also covers gifts to other people (not holidays) and personal things like haircuts. He is always wanting more money because he has "needs" at work--nearly daily fund-raising or contributions toward gifts, etc. Then he has nothing to treat himself with and complains, while I spend my allowance to treat him and the kids.
I work from home and don't have to give away 5-20 dollars a week. I think it is nice to contribute at work, yet not every single time. I think he should start to say no sometimes. He thinks he should just take a bigger allowance, but I think the amount we take is actually too much considering our finances.
I've recommended he volunteer his time in some way at work instead of his money, but he is not agreeable. I think I am right in sticking to my guns. But I'm not sure how to tell him this in a kind and respectful way, because at this point it's a sore subject. Any advice?