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How to Splurge on a Budget

I’ll give you an intimate peek into our finances for a moment. My husband and I generally agree on finances. He is not uber-frugal like myself, but has a healthy respect for savings and loathes being in debt. When I met him he had paid off his college loans at 23 (that was a plus in my book!), was financially independent and had no other debt. On the other hand, my husband also enjoys a “toy” here and there. It’s one of these “toys” that we’ll be discussing today.

The Background

When Paul proposed to me and we sat down to have that first financial discussion, we calculated that collectively we were $25,000 in debt. On top of this, we wanted to get married sooner rather than later (in under a year), put a down payment on a home, and travel for as long as possible on our honeymoon in Austria. During this conversation, I brought up one of my own personal wishes. I knew firsthand how money can affect a relationship [1], and with marriage statistics being what they are, it was highly important for me to go into our marriage without debt. In my mind, if we took debt off the table, then there was one less obstacle for us to succeed. Thankfully, Paul agreed wholeheartedly. So we set out to buy a home, pay cash for our wedding [2] and honeymoon, and pay off our $25,000 in debt (my student loans, his car, and our engagement ring) in 10 months (April the following year). It took us a little bit longer—4 additional months—but on September 10, 2010 we declared ourselves non-mortgage debt-free [3]. What a day that was!

It hasn’t been completely smooth sailing since the debt-payoff as far as finances are concerned. We’ve had cars die, various appliance replacements, medical bills, etc. But all of these purchases have been with money, not with credit. On top of that, we have been able to save that extra cash flow and interest that had been going towards servicing those debts. So what is the problem?

What My Husband Really Wants

Paul has wanted a flat screen television for about three years now. It simply was not a priority when we were paying down debt, or when we got married, or when we did any other number of things (and I was perfectly comfortable with this), but we I don’t really have an excuse to vote him down now…except that it is just not a priority for me. I would much rather see that money in savings, or put towards something else for the house. I realize that I am not the sole person in this relationship, and that Paul has been quite patient about this. Three years is a long time, especially when we are in a financial situation (and have been) to be able to afford this upfront: we max out our retirement accounts [4] each year, we have a healthy cash flow, put money consistently into savings each month, and have accumulated an 8 month emergency fund [5].

Would I be purchasing a flat screen television if I was by myself? No. But I am not by myself, and my husband and I have worked hard to be in a sturdy financial position.  So here’s our alternative.

Our Compromise

In order for Paul to get what he wants (and has diligently waited and worked for), and me to not feel like I am watching precious savings going down the drain, we came up with a compromise. My husband can have his television, but the money for it must come from outside of our budget. What do I mean by this? Essentially, we need to “find” the money through rebates [6] or refunds, extra freelance income, from selling items around the house, etc. No money can come from our cash flow, which is already earmarked for bills, savings, investments, and retirement. As long as we meet all of the numbers we normally do each month, then I will consider it “found” money.

We did this once before for our honeymoon, and it worked amazingly well. In September 2009 I made the goal of putting $2500 aside for our honeymoon using as little of our normal income as possible. By March, 2010, we had “found” an amazing $2334.78! This was from freelance work, bank account opening bonuses [6], selling stuff, wedding shower cash gifts, rebates, etc.

The Results – Did We “Find” the Cash?

Call it Law of Attraction or what you will but once again I am floored by the cash we were able to “find” and focus towards Paul’s wants. While he has not purchased the television yet, we are close to being able to do so. Here’s a rundown from the past several months:

  • Refund from our Natural Gas Company: Two months ago our natural gas company debited our account $169 in error (big error). That month we made up the shortfall and were still able to put the same amount into retirement and savings as previously agreed upon. So when we received the refund, I considered it “found” money.
  • Google Adsense Check: I reached the payout level of $100 over the last three month period from my blog and will be putting this check towards the television purchase.
  • Refund from our Closed Mortgage Account: Amazingly, we also received a $43.48 refund from our mortgage company after we refinanced our loan [7] and they closed the previous account.
  • Rebate on an Appliance: In January our dishwasher went kaput. We saved up money for three months on top of our normal savings to purchase a new one with cash (we did not want to take any money from emergency savings). Surprisingly, we found that the manufacturer was having a rebate for the installation and delivery of any of their appliances the week we shopped (we had budgeted to pay for installation and delivery anyway because we don’t touch plumbing and we do not have a truck). This added about $130 onto the pile from short-term savings we had earmarked to spend.
  • Selling the Old A/C Unit in Our Garage: Two years ago we had to replace our central A/C unit after our home warranty had refurbished the inside (new compressor, new capacitor, new fan motor, etc.). I have been unlucky in selling it on Craigslist thus far, but we’ve had a few bites this time for around $175. Let’s hope it sells!

Potential Total: $617.48 (Actual total currently is $442.48)

This experience has taught us both so much. For me, I see that it is possible to meet everyone’s needs and wants with a little patience and smarts. For Paul, he has learned to be patient with his “toy” purchases, and learned that I am willing to compromise. Together, we learned that big ticket item purchases do not mean discontinuing our savings plan.

Of course, after the purchase I will definitely enjoy putting any future “found” money back into savings. What can I say? I’m a squirrel at heart—except my stockpile is at the bank.

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