During my last net worth statement, I was completely ashamed of myself. How can I make so much money and spend it all? It’s one thing to reward yourself (I’m a big believer in behavioral psychology!) but you ain’t doing anything good if you finance your rewards through your credit card! So this is how I went on an austerity plan (feels like a Greek guy!).
My austerity plan has 1 objective: cut on dinning out!
We are tired, we want to celebrate or we simply have this obsessive image of a BBQ chicken with fries and sauce (my favorite is the combo double chicken legs! Hum…. So tasty!). I love to eat and I know I spend a lot of restaurants and ordering food when it’s Friday and we don’t feel like doing supper. Well for the past 6 weeks, we haven’t ordered anything and we didn’t go to the restaurant either!
The second important source of expenses in my household is my cost of transportation for work. I live 85 km away from my job (that’s a 1 hour drive on the highway for US readers 😉 ). While I really enjoy driving (after all, I did Montreal – Virginia Beach in one shot, no stops 😉 ), it cost me a ridiculously high amount to make this distance. There is gas, parking (yup, I don’t even have free parking!) and a higher cost for car maintenance. With the price of gasoline rising, it is now a $10,000 expense per year in my budget. The most disgusting part is that since I’m at a marginal tax rate of 42%, my last $17,241 earned on my notice of assessment goes to transportation… Even if this year I’ll reach a total income of about $150,000 (more on that later on), it is 11.5% of my total income going to transportation!!!! I can’t do anything about this right now, but I will in February. I can’t tell you more right now, but let just say that regardless of what is happening until then, in February, I’ll be working in the same city I live. So I’ll go from 10k to $500 per year for gasoline to go to work ;-D.
My Halloween Horror Story
I’ve delayed my net worth statement on purpose to get it on Halloween’s day because I have a horror story regarding my personal finance. I feel like living the sequel of an old horror movie of a story that happened 11 years ago (I would have preferred the tragic number “13” but it’s only 11 years…). For the very first time in 11 years; I wasn’t able to pay my credit card in full! I have municipal taxes and school taxes coming in November and I needed to leave a few more hundreds in my account. This is how I was able to pay only a part of my credit card statement. I could have taken the missing amount from my company’s account but I wanted to act different this time.
For a while, I’ve been taken resources right left and center to pay off my lifestyle. This time, I’ve decided to stop counting on the fact that I’ll be making more money later on and take the hit. I guess that if you really want to change your behaviors, it needs to hurt. Pain is probably the biggest motivation factor I’ve ever experienced in my life. I felt the pain a few weeks ago when I paid partially my credit card.
The pain of paying interest.
The pain of feeling like a slumbag who’s not able to manage his budget properly.
The pain of publicly writing this article you are reading this morning.
But when it hurts, you do something about it. This is why I decided to take a deep breath and take out the stitch one shot!
But there is still a good news ;-D
My “austerity” plan actually worked though, my debts have decreased by $300 or so this month. This was the very first time since a while that I’ve actually decrease my debts instead of taking more money out of my line of credit. While $300 is not an incredibly high amount, it is definitely a good step in the right direction!
So my net worth has slightly declined (thx to the value of my 2 cars!) but my debts has slightly reduced as well. This is what the most important part is for me right now!
CHANGE (%) CHECKING ACCOUNT $1,000 $1,000 0.0% EMPLOYER STOCK
$2,395 $2,699 12.7% RRSP ACCOUNT $30,441 $30,309 -0.4% PENSION PLAN $20,218 $20,218 0.0% HOME $345,640 $345,640 0.0% COMPANY SHARES $98,000 $98,000 0.0% MAZDA TRIBUTE $19,530 $19,096 -2.2% MAZDA RX-8 $7,200 $6,800 -5.6% TOTAL $524,424 $523,762 -0.1%
CREDIT CARD $20,721 $22,342 7.8%
LINE OF CREDIT $19,912 $19,868 -0.2%
HELOC $264,309 $263,109 -0.5%
CAR LOAN $19,530 $19,096 -2.2%
Personal Loan $11,666 $11,458 -1.8%
RRSP loan $10,000 $10,000 N/A
TOTAL $346,138 $345,873 -0.1%
Total Net worth: $177,889 (-0.2%)
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