Thursday, June 26, 2008

When is it Enough?

I haven't mentioned it, but I've been working on a new, very short-term editing project for a new client. It pays well. With that income for this month, I'm on track for June 2008 to be my highest income month ever. Which is pretty cool.

Except... Bills. Debt.

My snowball fund is pretty healthy right now, and I need to transfer it to one of my debts.

My economic stimulus check should be delivered next week, and it should go to savings or debts.
And my emergency savings account isn't yet quite at the level I'd like, so I should put some of the largesse there, too.

But really, I want to go and spend some of this fantastic cash!! I'm working a lot and hard this month (hence the sparsity of posts...), and I want more than the measly 10% I give myself for non-primary client work. I've talked about taking a week of vacation in the next month or so and going somewhere, and I'm probably going to visit a friend in mid-July (not the beach vacation I want, but it will be relaxing and sunny).

And then I started thinking: when does the scrimping end?

I know that once my debt is gone, I will be scrambling to hyper-fund my condo downpayment fund and retirement savings accounts (and thank the government for allowing us self-employed folks SEPs in which we can contribute something like 25% of our income, even after funding a regular IRA account). Which means I'll switch from scrambling to pay off my debt to scrambling to fund two other savings accounts.

When does it end?

What level of savings do you have to have to feel secure enough to say "hey, I just earned more money this month than ever before, and I'm going to celebrate and not feel guilty because everything is paid up, my savings accounts are great, and the retirement funds are maxed out"?! Is the secret in the balance (which I suspect, and this is how I manage my finances anyway), or is there really a dollar amount on this? Is it the price of finding financial freedom?

I'm not usually like this about my's just this month is turning out so great for me financially, and I wish I could just go do something frivolous and expensive and not worry about the cost. As it is, with the extra 10% I will have (once everyone is billed and paid up), I will probably just go buy a new pair of shoes (which I desperately need).


Zee said...

I struggle with this a lot too. I'm a long way from being completely debt-free and after I am, I'll be saving up for buying a new (used) car - which I'll need by then. My feeling is that frugality is a lifestyle, the way eating healthy is. You can't go forever without having some kind of favorite treat; similarly, I think we need to reward ourselves when we've been "good" and indulge a little bit.

The key for me is to plan the indulgence and not go totally overboard. When I know I'll have a little extra income I budget in a bit more "fun" money for the next month, pinpoint something I've been wanting but haven't been able to justify before, and go buy or do that thing. :)

This approach helps me feel less deprived and also keeps me from breaking my budget by frivolous, random purchases. Win-Win, in my book! :)


Daniel Fackrell said...

I think this decision really depends on what your goals are.

My goals are such that what I need isn't a few years of hard-core self-discipline, but a permanent lifestyle change. When I manage to finally clear all my debt, I want to use the money that was going toward debt to support causes I believe in, or to invest carefully so that the investment proceeds can support the causes I believe in.

Probably the best advice I could give is to not make this decision too hastily. Give yourself some time to really weigh the benefits of both approaches and a few between, then run them by your financial mentor(s) and sleep on all that information for a couple of nights. That should be enough to ensure you won't regret whatever decision you finally reach.

Congratulations on the great month. :-)

Anonymous said...

I believe in a balance to all things. I will not be stupid with my money, I will think about what I spend it on and not fritter it away, but I will enjoy it too. Eventually, the goals will be met, but don't stop living for them.