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The inspiration for today’s post came as I was going to take our clothes out of the washer at the RV park. It’s $1.50 per load, so $3 for a wash and dry. As I pulled the six quarters out of our reused Ziploc coin purse I thought “Wait a minute, I’ll just hang these on the rack.” Usually I dry socks and undies because there isn’t room on the rack, but today was a small load and there was plenty. As I write this I realize we should just be hang-drying everything, but space in a camper is a premium and that’s not the point right now. The point is, those quarters got to stay in the bag and they’ll pay for our next load, which is amazing, I don’t care who you are.
Purposeful spending means every dollar we make and save actively funds our life plan, and every dollar we don’t have to spend a serious victory. I go nuts over a dime on the ground. Ten dollar bill? Forget about it! That’s over six loads of laundry!! People have accused us of being “cheap”, but enabling our money to keep working for us isn’t cheap- it’s ingenious. It’s like a game for us, or a challenge, and Greg and I are pretty competitive people; we want to win. And winning at this game means we don’t have to make as much to support our lifestyle so we can work less, experience more, and retire earlier.
I know it’s hard to imagine how saving an extra $1.50/week on laundry could possibly help in the long run, but a compound interest calculator and/or a great app called ‘Pretirement’ come in real handy when it comes to justifying a save or a spend. Pretirement plots a retirement course based on our current investments, plus projected annual contributions and spending, and according to those figures it predicts that if we were to save that extra $1.50/week we could retire 27 days earlier than originally planned. Hang-drying our clothes for nearly a month of unemployment eleven years from now?! Yes please! Imagine if that $78/year became $78/month. 10 months earlier. $78/paycheck. 1 year 10 months 23 days earlier than our originally planned retirement date. Every dollar, quarter, dime, nickel, penny… is a victory, and just a heck of a lot of fun.
Our incomes are inconsistent it’s even more important I track every dime we make, save, spend, and invest, and budget far in advance so I know exactly how much we have to spend over the next year, or in any given month, or on any given day. Purposeful spending literally makes every difference in our finances. We have a year’s worth of expenses sitting in a money market (also acting as an emergency fund) compounding interest, and keep just a month’s worth of expenses in our checking account (which also earns interest- holla!). {Side note: If you don’t know about compounding interest, you should Bing the hell out of it. Albert Einstein declared it “the greatest invention in human history” and when it works against you can be truly, truly horrible, but when it’s in your favor can do extraordinary things.} Everything we earn goes into the money market, rather than checking, so that limited monthly spending is always apparent, and if we stay under budget (woohoo!) I only supplement the difference from the money market instead of the allotted monthly amount. For example, if in March we only spend $1400 of our $1600 budget, then for April I’d only transfer $1400 to checking to make it $1600, and keep the extra $200 in the money market snowballing into perpetuity. At the end of the 2018, everything that isn’t set aside for 2019’s expenses, IRAs, and HSAs will be invested in our taxable index funds at Vanguard, or sooner if we meet those savings goals quick fast and in a hurry, because we want compound interest working for us as quickly as possible. Those investments are our adventures, our life plan, our future. You see now why I’m so passionate about spending less and saving more?!
Make a plan for your money. Tell it where to go, spend with a purpose, and see how easy it becomes to find- and get super excited about- the savings. I found a quarter on the ground last night. One less needed for next week’s laundry, and another $0.25 saved for the future. I had the same reaction as last year when I got an unexpected $2500.00 nursing bonus: you’d think I’d won the lottery. What joy! What purpose.
