Money Tip: Fake Yourself Out

July 15, 2013 — 6 Comments

It’s easy to save money when we have a job, the car is running fine, and you’re not worried about the economy falling off a cliff… so why is it so hard to actually save money when everything is going well??

I’m guilty of it. After 22 years of not having my own money and finally graduating college and getting a job, I spent my new paycheck faster than one of those Sex In the City girls at a Jimmy Choo store (I’m not sure what that means but Jocelyn told me it’d be a good analogy… ok, ok, I’ve seen a few episodes but I’m not proud of it). Things where finely going my way, so I had to screw up and create my own company store that I was in debt to.

In 2007, when I finally paid off my $50,000 of debt with two hard years of scraping by and living without, I found myself slowly moving back into the bad mindset that got me in trouble in the first place. I felt like I deserved to take a break as I had worked hard to pay off my debt. I was at risk of losing my financial momentum and without discipline I could easily fall into the same debt trap.

To combat this, I discovered I couldn’t be in a “comfortable” state of mind if I wanted to continue doing well with money. I’d need to continue tracking my expenses and telling my money where to go with a budget. Most importantly though, I needed to continue with the mindset that I’m in debt and can’t go crazy with spending. In essence, I needed to fake myself out and create an artificial environment of need so I could continue controlling my money. I did this with the cash budget which let me visually see my money disappear and be near zero at the end of the month – even though at the beginning of the month I had already stashed some away in my savings account.

“Save when you can and not when you have to.” – John D Rockefeller

The mindset has returned now that we’re on our round the world trip. We have a certain budget we want to hit so we have enough money to come back to when we return to the US and continue our lives. Through hard work we were able to build a sizable emergency fund outside of our “trip fund”, but we can’t let ourselves get too comfortable because we could easily dip into the emergency fund and be screwed when we get back.

This is why we’re continuing to track every dollar we spend on the trip which you can see in the spending summary pages of each country. It’s essential that we continue our discipline now so we’re in good shape when we get home. It’s why we used our campervan as a “home” in Australia and almost always cooked our own meals and lived off the grid, why we took the bus through Cambodia when flying would’ve been much more comfortable, and why we’ve stayed at places in Thailand we wouldn’t normally stay in while “vacationing”.

What about you? Have you ever created an “artificial environment” so your spending doesn’t get the best of you?

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6 responses to Money Tip: Fake Yourself Out

  1. Sometimes we have to remind ourselves that now is not the time to splurge. Sometimes when you have just a little bit extra it can be so easy to have that nice night out or even just dinner you didn’t have to make yourself. It is only when you are chasing something more than that instant gratification that you can find the strength to push through such feelings.

    I like the idea of faking yourself out to keep control of your spending habits. It can be so easy to just let the money slip through your fingers and end up with nothing.

  2. Dan — happy to see that you’re enjoying your trip while economizing by busing instead of flying. How do decide that you will spend more for extra comfort, or not? In other words, what advice do you offer about how you make the decisions about trade-offs regarding what you’d like to do (spend) and what’s economically practical? These are decisions we all face everyday.

  3. The kind of trade offs you mentioned are personal, but nonetheless important. For me? I do this all the time. It is the single most important reason I have been able to get to where I am financially. I have three funds. I have a general saving for anything outside of the normal everyday expenses. I have an emergency fund for anything large and unexpected and then there is my long term portfolio for the future retirement or when I don’t work. 🙂

  4. Yes, my friend. We have created a budget. I have left the corporate world behind so a budget was one of those items that was at the top of our list. I think we are doing well. We are cord cutters and limit our expenses to those items we really need. We are doing well so far. I am loving hearing about your tracking of your expenses. The photos are the best!

  5. For years, my husband and I did really well at just putting money in savings and forgetting about it, but then we moved, and some of our better savings habits have suffered more often than not lately. Once I get back in the habit, I just treat savings like an expense. I pay savings after necessary expenses. If there’s any funds left after that, then the extra can go to “fun” stuff like travel 🙂

    • Well, we’ve definitely fallen off the savings wagon now that we’ve started traveling :). Paying yourself first is definitely the way to go – otherwise the money always finds somewhere else to go!

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