$10 a week
I am what they call a magical thinker. Google it, it's a thing. I know it takes me 18 minutes to walk to work but when I'm running late, I'll leave myself 8 and think I can still be on time if I just walk faster. If someone gives me $50 for Christmas, I spend $150 and believe somehow it'll all balance out. I say I'll be ready in 15 minutes even though I still have to shower, get dressed and dry my hair which usually takes me at least 30. Magical. Thinker.
Not properly thinking things through definitely makes it easier to take risks or go all in which can yield exciting results. It can also lead to some challenging circumstances.
Since 2013, I have accumulated $30,000 of debt. I don't own a home. I don't have any children. I don't have a car. I came back from a backpacking trip through Europe and in 3 years, racked up roughly the same amount of debt I had worked so hard to pay off before I left. A chunk of it is attributable to Me & C. start up costs, inventory and losses from that whole copyright thing but if I'm honest, a lot of it is consumer debt. Eating out, taking trips to visit friends, buying things on a whim. I finally hit rock bottom a couple months ago when I borrowed $3,000 from my little brother who saves every penny he earns and only buys what he needs. I'm pretty sure one of us was switched at birth.
Since then I've been working to figure out how the heck I'm going to get myself out of this mess. I took time to get clear on what's most important right now, came up with a budget and enlisted some help from my partner, Jim. He has a knack for finance and knows all my magic tricks which makes him the ideal person to hold me accountable and help me form new financial habits. We've set some ground rules so as not to destroy our relationship (it's not an easy thing, being called out when you're straying from your self-identified goals and it's down-right uncomfortable being the caller-outer) and will abandon the idea if it gets too intense. Until then, here's the plan:
- I'll be focused on quality time with Jim, more time with friends and family, eating well, writing regularly, and spreading the word about my business.
- If I want to pay off my debt in 5 years and continue to only work part-time at my day job, I'll have to net $350 a month in t-shirt sales (that's net profit after cost of goods sold and expenses) and stick to a budget of $10 a week for incidentals like clothes, eating out, coffee, movies.
- Jim and I are going to meet weekly to have a look at how I'm doing, anticipate any upcoming expenses and determine whether they're in line with my goals. a.k.a. reality check.
- Whenever I under-estimate how much time it will take me to do something, I put $1 for every minute I was off into a jar.
A few notable things:
- Singing didn't make the list of goals. Neither did yoga. Neither did learning guitar. These are things that I love and want desperately to have in my life. The thing is, I can only do so much at once. Once healthy eating has become a habit, or I have a routine for promoting my business, I can turn my attention to those things. Until then, I need to avoid them altogether.
- It's hard to make sound decisions about money, about anything really, if you don't know what's most important. I used Warren Buffet's 2-List Strategy to work out what I wanted to focus on. You can read more about that in my post from a few weeks ago.
- One of my favourite books on finance is Debt-Free Forever by Gail Vaz-Oxlade, host of "Til Debt Do Us Part". She's a no-nonsense lady, like "You want to get out of debt? Stop spending money you don't have." Yup. I've gone through the process outlined in her book a few times and it's bang on. It's effectiveness, though, is dependent upon my stick-to-it-ness which is lacking where money is concerned. A budget is great but I needed help to see it through.