Though the hustle and bustle of the crowds last week, as I was finishing my Christmas shopping last week, it suddenly struck me how many of the people around me were using credit card after credit card to pay for their Christmas shopping. Now I am sure some of these people are in a financially sound position and will have the money set aside to pay their bills in January. However, I am also sure that there are large portion that will be facing a credit card crisis come the new year.
Trent, over at the Simple Dollar, recently wrote that his father “likes to joke that the happiest day of the year is December 25th and the saddest is December 26th.” I think that the saddest thing for me is that this isn’t even a joke anymore. Thousands of people are maxed to their limit on their credit cards and facing a debt crisis. The ever increasing pressure from society to spend, spend and spend some more, especially around the festive season, can only exacerbate the situation. CNN Money recently published an article highlighting the problem, stating that “Americans are falling behind on their credit card payments at an alarming rate, sending defaults and delinquencies surging by double-digit percentages in the last year.”
So many people seem to be lost in a whirl of consumerism and unable to grasp what Christmas is really about. While it depends of your own personal beliefs, for me, as I am not religious, it is about enjoying spending quality time with my family and being thankful for all the things we have.
I am not attacking buying Christmas presents or spending money on your loved ones - I have been know to splurge on the perfect gift for my mother. I do however feel that too many people are not only risk their own futures, but also those of their children because they are unable to see the bigger financial picture, unable to live within their means, and are unable to break away from the materialism that pervades society. Children so often copy the behaviour of their parents, and if they grow up seeing that Christmas as a materialistic competition to see who can get the most presents or spend the most money they are likely to carry this on into adulthood.
With our countries facing such a debt crisis, I think it is time for people to take stock of what really matters. Paying off your debts matters more than an buying expensive Christmas present. Starting an emergency fund matters more than buying an expensive Christmas present. Saving for retirement matters more than buying an expensive Christmas present.
Best of the Rest;
One thing I am particularly keen on is highlighting posts from other bloggers that relate to my posts and that I think make worthwhile and interesting reading.
Busy - Originally posted by donjuanna.
What a week it’s been - my boss has been off sick for most of the week and we are drastically short staffed. The end result of this is that I worked about 65 hours this week. Added to this I am doing a 4 hour commute every day in an effort to save money. So my total for this week has come to about 85 hours. While this may seem crazy to some, my situation is in no way unique - a recent report shows that one in eight people now works over a 48 hour week. While the personal impact to me is obvious - my free time has reduced to near zero, something which explains my complete lack of posts since last Monday (apologies here)- it has also got me thinking about how a person’s work life balance can effect their spending patterns, and whether being busy is a help or a hindrance when it comes to money saving. I have come to the following conclusions;
1. The Long-Term Cost of Your Work - Life Balance
I will confess now, I’m a workaholic. I am very lucky that I love what I do. I have bad days, and even bad weeks sometimes, but the great aspects of my job more than compensate for the crap work throws at me. Added to this, I do get rather obsessive about getting things done, and getting them done perfectly. Finally, I hate leaving my staff in the lurch. If we are short staffed - which we are more often than not - I will inevitably find my self staying back at the office rather than see them struggle. While there are a lot of advantages to this type of work ethic, especially if you are looking to advance your career, the impact on your life can be tremendous. The time I have spent at work this week has meant;
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I have not managed to publish a single post - something that is particularly frustrating as I have a back-up stock of posts for occasions just like this, but I didn’t even have the time to format and post them.
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I have not had any ‘ down time’ - this is time that I schedule for myself every week and I use it to do something just for myself, to do something just for the pleasure of doing it. It varies every week but it can anything from taking a long bubble bath, to taking a couple of hours out to read or spending quality time with friends or family.
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I have not had any ‘personal development’ time - again this is time that I schedule for myself every week. I use it for a range of things including personal development activities - I am hoping to join my local Toast Masters - and work or career related reading.
Not being able to do any of these things has not only had an immediate impact, but could also have long term consequences which can magnify depending how long these activities go neglected. A clear example of this is the impact of neglecting the work or career related activities. Not only do I do these for personal enjoyment and satisfaction, they are also part of a longer term plan for career advancement. My hope is that the time spent with the Toast Masters, reading management books, or networking - to take a few examples - will help me further my career, and therefore help me increase my earning potential. By neglecting these activities I run the risk of doing long-term damage to my career and to my earning potential.
2. Being Busy Can Save You Money - But It Can Also Cost You Your Sanity
Not only can losing your work-life balance pose a risk to your finances it can also pose a threat to your sanity. While I love my work, I also need that down-time away from work to recharge my batteries. A week like this one has meant that I have had almost no time to just relax. In my experience, spending too long without any downtime can start to have a serious effect on your sanity, and along with it your commitment to work and also to your personal relationships. One of the most important things to me, both when managing my time and my money, is creating allowances for personal relationships. Much like plants, they won’t grow without a little love and attention, something which definitely requires time and often money - what better way to spend a lazy Sunday morning than having brunch with a good friend?
Valentines Brunch - Originally posted by Amit Gupta
Where does money saving fit into all this? Put simply, no time means no spending. This week, for example, I have saved almost all of my ‘fun’ money. This is the money that I allocate every week for discretionary expenses such as eating out, socialising and activities like the theatre. This week there has been no time for any of these activities, so there has been no money spent. In a purely rational world, I’m sure I should be jumping up and down with the thought of all that extra money I can put towards paying off my overdraft. While that is obviously great for my financial health, much longer and my sanity is definitely going to be at risk.
3. Saving Time Can Cost You Money
While my spending on all these ‘fun’ items has dramatically decreased this week, my spending in other areas has started to slowly creep upwards as I have tried to claw back some free time by any means necessary. More often than not these time saving measures have involved some cost, examples include:
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Taking taxis - not only do I hate the underground at rush hour, there have been numerous maintenance work over the last few weeks, resulting in serious delays for everyone.
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Eating fast food - bad for my health as well - and microwave meals.
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Using my mobile far too much - in an attempt to maintain some degree of conversation with friends and family, I have been using any available time, mostly during my commute, to catch up with people. As I have a Blackberry, this has not only pushed the amount I have spend on calls up significantly, I have also has a nasty shock when it came to my bill for data usage - time spent using the internet.
Last week Trent, over at The Simple Dollar, wrote a great article entitled ‘Simple Frugality at the Hourly Rate’. The basic premise of this article was that you should work out the amount of money saved and the time spent for each money saving activity and use this to calculate a saving per hour figure for each money saving idea. While I love this post, I have to admit I have being using a slightly twisted version over the last few weeks to justify some of my expenditure. The basic idea for me has been the cost of the item or service in relation to the amount of time saved. For example, when making a decision about whether to take a taxi I have basically been looking at the cost the taxi and the amount of time it will save me and working out if I value my time this highly. If a taxi costs me £20 and saves me 30 minutes, is it worth it?
This type of logic is definitely not ideal from a money saving point of view, but it has helped me to justify some of those extra expenses and has, to be fair, helped me resist a few. Is a coffee costing £3 / $6 (London prices!!) really worth saving 5 minutes in the morning.
My conclusions from all of this are that work-life balance matters far more than I thought. This is true not only from a financial viewpoint, where the potential savings seem to be outweighed by the potential extra expenses, but also from a emotional viewpoint.
For me, one clear question rose from this exploration:
Best of the Rest;
One thing I am particularly keen on is highlighting posts from other bloggers that relate to my posts and that I believe are worthwhile additional reading. I plan on including these ‘Best of the Rest’ links is as many of my posts as a I can.
I have been looking at various ways to cut my budget and one of the ways I have been looking at doing this is to reduce my spending or eliminate it all together on certain luxuries. Now I know everyone defines what constitutes a luxury in different ways - the Oxford English Dictionary defines it as … - for me, however, it is an item that I enjoy having but that is not essential to my basic standard of living. While I’ve been looking at the cuts I can make, I have come up with a list of three luxuries that I would find it tough to live without - but that I could definitely cut down on - and three that I just wouldn’t miss.
5 Luxuries I Couldn’t Live Without
- Cell Phone - While not having a cell phone would definitely impact on my overall standard of living, I don’t think I can really argue that it is essential to maintaining my basic standard of living. However, I think I would find it near on impossible to cope without my cell phone. I have one that doubles as a PDA and that I can sync with my laptop every night, so it helps me keep track of my calendar and To Do list as well as all the basic phone functions. I have just switched to a Blackberry - not very cost cutting of me I know - and it runs my life.
- Dining Out - This is definitely a luxury, and it is definitely an area where I can reduce my expenditure. However, I know I would really miss going out for dinner with my friends at least once a month. I’m not a great fan of clubbing, pubbing or drinking in general and this is one of my favourite ways to spend time with friends. I am going to look at ways to save money as well as just cutting down.
- Online Movie Rental - I have had a online movie rental subscription for about 12 months now and I think it has proven to be one of the best Christmas presents I ever received. I don’t have TV (see below) and using the online movie subscription I get to watch what I want, when I want to - a win, win in my book. My annual subscription costs less than my TV license for the year, and I hardly ever go to the cinema anymore (apart from to see the occasional art house film), something which seems increasingly overpriced.
5 Luxuries I Just Wouldn’t Miss
- TV - This is the one that seem to surprise people the most, but I haven’t had TV for over two years now. I do have a TV in the house, but I only have it hooked up to a DVD player so I don’t have to pay the TV licensing fee (currently £X per year) and I don’t have the constant temptation to upgrade to Sky etc.
- Clothes Shopping - In the past I have been slightly addicted to clothes shopping. What this means now though is that unless I suddenly put on a ton of weight, I have enough clothes (with the addition of a few basics) to last me I don’t even know how long. Since I have stopped constantly clothes shopping, I have realised that I don’t even miss it that much and that I can still have a ton of fun coming up with new outfits from my existing wardrobe.
- Owning a car - While I’ll be the first to admit that there is very little need to own a car if you live in central London, there are thousands of people who would vehemently disagree with me. I have never had my own car, and have never really felt the need to have one. I have been lucky to have always lived in reasonably large cities with decent public transport, but even then the vast majority of people still drive everywhere. As it is I don’t miss having a car in the slightest. I am always able to hire one if I want to go away for the weekend, something which works out far cheaper than all the costs associated with owning and running your own car.
What are the three luxuries you just couldn’t live without and what are the 3 luxuries you just wouldn’t miss?
