This is a guest post written by Amanda Grossman. Amanda writes for Frugal Confessions, a blog at the Houston Chronicle.
Living Paycheck to Paycheck
I live paycheck to paycheck. Throughout the month I negotiate with myself over needs versus wants, pushing certain purchases into the next month’s budget, neglecting car maintenance for the umpteenth month in a row, foregoing that new pair of sneakers I’ve been trying to squeeze into my budget since December.
By the end of the month, my household budget is as tightly rung as a wet washcloth, and the last week is usually a marathon of negligence to make it through until the next pay period.
The Automatic Millionaire
It’s not that I need to live this way—it’s self-inflicted. Each month no sooner does my paycheck get automatically deposited into my checking account then it gets automatically divvied up into the following: student loans, rent/utilities, car insurance, cell phone bill, 401(K), savings, IRA and spillover account.
I am doing everything David Bach penned in The Automatic Millionaire, which leaves me with a meager amount of leftover cash that I use for groceries, gas, one or two date nights, a few chai teas, and any other unexpected expenses that may creep up.
Essentially, I’ve automated my way into the poorhouse, or at least it would seem so on the surface. I haven’t even looked at a $10 bill in over two years because every single penny is spoken for, automatically.
What motivates me to keep living with this paycheck to paycheck mentality is the larger rewards I am going to reap (hopefully, I should say) on some future date. By socking away every last cent I possibly can now, my money should be worth more in the future.
One day, it should even start working for me and reaping a significant, or at least noticeable, amount of compound interest (not likely to be anytime soon with my current online savings account interest rate of 1.49%).
When is the End?
I guess the question I’ve been asking myself lately though is: when is the end? Each morning I wake up, commute to work, put in my 8 hours, commute home, spend some time in a money-sink apartment (especially considering how much time I actually get to spend there in waking hours), and prepare to do it all over again. I get paid, I automate intangible amounts of money that I have never seen nor touched into accounts, and I repeat. I have essentially put myself on a gerbil wheel, and am spinning, spinning, and spinning.
This strategy seems to be quite successful for people wanting to become millionaires, which I have to admit is good motivation in and of itself. But if you’ve ever noticed, many self-made millionaires have never really learned when to stop, or even how to stop.
It’s like an addiction—earning and saving, earning more and saving more, competing with others to increase the size of your bank account, even though you are well beyond the point of needing to care that much. Rather than being short on money, they become short on life: families suffer, relationships suffer, and fun is always pushed to the side.
Am I headed down the same path? Once I reach this millionaire status, will I continue to wear the same clothes for ten years, use coupons for ketchup, and attend museums only on their free days? It’s very possible. I know myself quite well.
Learning to Enjoy Money
I am sure a lot of people have worse financial problems than the possibility of becoming a millionaire one day and not knowing how to fully enjoy your money and life. But this is my problem.
So here’s how I am attempting to deal with it: for the next month, I will put $10 of actual cash into my wallet, and see where I go from there. I might be tempted to stare at it, smell it, and feel its crisp edges the first week.
Hopefully by mid-month, I will do some spontaneous spending, such as stop in and buy a cupcake at the local Sugarbaby’s Cupcake Boutique, or pop into a salon for a quick manicure on the way home from work. Who knows where this $10 will take me, but the thought leaves me slightly excited.
If nothing else, I will remember what a ten dollar bill looks like. Just to prove I am not kidding, I actually had to google who was on the face of the ten dollar bill at the Bureau of Engraving and Printing.
Just in case you needed to be reintroduced as well, it’s Alexander Hamilton, first Secretary of Treasury of the United States. And if you thought it was Benjamin Franklin, he’s on the new 100 dollar bill.