Tuesday, August 31, 2004

I'm poor but doing OK

Some time ago I cut the amount I pay myself down to $325 a week. That's $325 Australian which is about $220 US, £125 or €181 by today's exchange rates. I did that well before I quit my day job to get used to getting by on much less money. It took some adjusting but at the time I left my day job I was within striking distance of my meeting my budget, over spending by an average of only $70 per week.

Checking the figures today for the past 8 weeks (July-August) I come in under budget by an average of $3 per week.

Weekly Spending AveragesMay-JuneJuly-AugustBudget
Trains, buses and taxis$21$22$30
Bank fees and interest$13$3$0
Gas and Electricity$0$16$5

8 weeks at an average of $3 under budget per week. That's a whole $24 I have left over to hit the town with. Look out ladies, big spender coming through.

Seriously though, I think I've done a pretty good job with this both in setting my budget at the correct levels and sticking to it. My plan to go to the ATM only once each week, straight after pay day, has been working well. I withdraw the whole $90 that's set aside for miscellaneous expenses and don't go back to the ATM until the following week. With the cash actually sitting in your wallet you're much more conscious of how much you've actually got left. When it's in your account there's a tendency to forget how much you've spent for the week and keep going back to the ATM whenever you run out of cash.

How's it been living on a reduced income?

It hasn't been too bad. I've gone back to some leisure activities which either cost nothing or cost very little. Things like bike riding, squash, playing music, and going to the gym. There's actually a surprising amount of things you can do without spending a lot of money.

I do miss being able to buy CDs on impulse though and it can be a bit awkward when going out with friends if my money is running low.

Some aspects of being poor are really quite beneficial. I think I've only had junk food once in the past 8 weeks. Whenever I pass a fast food shop and I'm tempted I start to think about how many proper meals I could prepare for the same amount of money. It's about 8 breakfasts, 5 lunches or 2 dinners for the trainspotters out there.

I haven't become a complete penny pincher just yet though. I still shop at the more expensive supermarket (I can't face learning another supermarket layout) and I'll go to the movies any night not just half-price Tuesdays. I enjoy spending my $90 when I'm out with friends and try to make sure I spend it all each week.

I guess it's all a question of balance and keeping my priorities straight. Having to act miserly during the week isn't fun, but it stretches my limited business cash reserves further and means that once or twice a week I can afford to splash out just a little with friends. When you're spending most of your time working alone, keeping that interaction happening becomes more important than you first realise.


At 11:27 AM, Blogger Tejas Patel said...

This is inspiring. Keep up the good work and good luck.

At 5:30 PM, Blogger Daren Thomas said...

Good for you! I am eagerly following your posts since I want to start my own business in 5 years time. I also expect to budget and I know it might take a while until you start to earn decent money with your own business. If you ever need motivation reed "The Millionaires Mind" by... oh, I forgot.

At 6:47 PM, Anonymous Anonymous said...

You are 3 times over your 'Gas and Electricity' budget. Did you miscalculate the budget, or have you been going a little wild with your Gas and Electricity usage? :-)

"I worked well today, I think I'll read the newspaper with a 100 Watt bulb instead of my 60 Watt"

At 6:53 PM, Blogger Lachlan said...

Unfortunately I'd forgot about an overdue electricity bill from the May-June period. It didn't get counted when I was working out my budget and then I had to pay it in the July-August period when the electricity company started sending me love letters.

I'm better organised with the bill paying now so it shouldn't happen again.


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