I Can’t Afford It
A fabulous reader left a comment in my random thoughts post and I wanted to highlight it for discussion:
Your comment: There’s a Food and Wine Festival at the National Harbor in June. Wish I could go. The Essence Music Festival is in July. Wish I could go to that too. I can’t afford either. Sometimes living within your means and being responsible suck monkey balls.
This really hit me. It is funny, I like to think I am so smart, but sometimes something so simple just knocks me upside the head – hard! My first thought when I read… “Wish I could go . . .I can’t afford either” was Um, why can’t you go Single Ma? I’ve been reading your blog for a minute and I know you’ve got thousands of dollars in savings. What do you mean you can’t afford. . ? A coupla trips ain’t even gonna put a small dent in your bank account.
This thinking is exactly what separates people in my financial position (paycheck-to-paycheck) from people in yours (people with savings and emergency funds, etc.). Historically when my monthly bills were all paid, I felt good. I’ve had the nerve to be saving and planning a vacation for later this summer. The truth is, I can’t afford a vacation. And I don’t mean like YOU can’t afford it because you prioritize and plan and spend responsibly. I mean I don’t-even-have-an-e-fund can’t afford it! I mean I have-a-small-business-but-profits-aren’t-enough-to-quit-my-day-job-yet can’t afford it!
I needed to read this today. While your topic is Random Thoughts. . . I needed that part about living within your means and being responsible to jump out at me.
The reader’s initial thoughts are how most people think. But if I thought the same way, I wouldn’t have anything in savings because I’d always think of a reason to spend it. If I viewed every purchase with short term focus and tunnel vision, I could probably “afford” any and everything my heart desired. However, as the reader mentioned, this way of thinking is exactly what creates “paycheck to paycheck” living.
I call it the Poor Man’s Mentality – a false or temporary sense of security to justify a poor financial decision. Other variations of the Poor Man’s Mentality include:
- earn a decent salary = decide what to buy in terms of the “monthly payment”
- all bills are paid = think about how to “spend” the rest of the paycheck
- a little money in the bank = use the “charge” option carelessly
In all of the above scenarios, the poor man justifies his actions with 4 magic words.
I. Can. Afford. It.
Well guess what playa? No you can’t! When those monthly payments, cash strapped weeks, and credit card bills finally catch up to you, then you wonder “how did I get into this mess?”
*shock*
To avoid financial strain, I prefer to assess my entire financial picture. I consider the purchase in question, as well as other things I have ongoing, then ask three simple questions:
- Will this purchase delay progress towards my financial goals?
- Will this purchase result in consumer debt?
- Will I regret this purchase in a month?
If I answer either question with a YES, then I know I can’t afford it. If I want it bad enough, I ask myself HOW can I afford it. Otherwise, I move on.
How do you decide what you can afford?
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Have you read the Fabulous Financials comment policy lately?
This is just what I needed to read today. I had a girlfriend say to me last night, “I don’t need an emergency fund b/c I just make sure to hold on to at least 40hrs of PTO. If I lost my job they’d have to pay it out – that’s enough to tide me over plus I’ll have unemployment.”
*sigh*
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it is more like.
Ok I want this car, now we ask, How can i afford it?
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I decide if I can afford it if all my ‘bills’ are paid. But bills for me include savings – so only after I’ve added the amounts to my planned savings (401k, non-retirement investments, emergency fund, vacation savings, etc) can I afford it.
My friends laugh at me when I say I’m broke right now, but essentially I am. I gotta replenish my savings after putting so much down on my house.
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It is hard for me to be honest about what I can afford because I am a full-time graduate student and I feel like I’ve delayed gratification so much I succumb to the feeling that I deserve certain treats. I also feel like my salary once I’m done with school will more than compensate for any overspending now. My car is paid for, my credit is good, and I manage to maintain a very small e-fund. I’m obssessed with trying to do things frugally. Like I’m planning on going to essence (I’ve never been) but if I go, I’m driving, staying with a friend and sitting way up in the nosebleed section.
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Hi SM,
I wanted to ask a question. You said that you ask yourself those three (very good) questions before making a purchase. Can you provide more insight into this process? Do you only ask yourself these three questions when you are making a “big” purchase and if so, what dollar amount qualifies as “big”? Do you only ask it if you’re tempted to buy something you didn’t “plan” to buy? For example, if you’re going shopping at Ross, do you give yourself a budget of X dollars and then only pose these questions to yourself if you want to spend outside of your budget? Or do you do it with everything? These questions are really really good tools to use and I’d like to try implementing them into my financial behavior. My problem (one of them anyways lol) is that I only ask myself such questions when buying something over say $20.00. Of course we all know that several purchases of $4 can add up (ahem Starbucks) quickly to $20.00 within a week, and then I’m wondering why I don’t have any money. So any more details about how often/when you implement these tools would be greatly appreciated!
As for the questions, I’ve grown accustomed to this way of thinking so I do it subconsciously. There have been times when I’ve asked myself the questions before buying a sandwich from Subway ($5) so it varies.
To be honest, I don’t have a hard & fast rule for what I consider a big or small purchase. But I’d probably say a purchase is “big” if I can’t cover it with regular cash flow. And by that I mean, the money left over from a paycheck after ALL savings and investments are allocated and our basic needs are met.
I don’t really “budget” per se, instead, I “prioritize” my spending. Always. Here’s my spending flow chart in order of my priorities: savings/investments, needs, bills, cash flow. By taking care of savings and investments FIRST, whatever I have left over is cash flow for daily use.
For me, the trick is managing cash flow because when it’s gone, it’s gone. Most people who find themselves broke too often, either their priority list is out of order, they consider every dime earned as cash flow or they keep spending even after the cash flow is gone. [-SM]
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I consider the pros and cons, then ask their trustworthy, honest people they’re opinion, like my husband…who shows no bias, even to his wife…..then pray..gotta acknowledge GOD…then based on the results..i’ll move forward. Gotta learn to accept no from myself..in addition to the yesses.
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Gah! It’s posts like these I want to send to half a dozen of my friends, but I don’t want to out myself inadvertently. Let’s be honest, I would have shared your blog a dozen times over if it weren’t for that fear. >:(
I have the same basic questions as you do, with one extra because my cash flow is still much lower:
~ Is this within my free-spend (small allowance to spend as I please) budget? If not, can I do without however long it takes to make up the money out of my allowance?
It’s a choice, after all, and I can choose to have anything and everything I want if I’m willing to be broke in exchange. Since I’m not, I work it like a zero-sum game.
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Well, there’s a huge difference between having the money for something, and being able to afford it. Do I have the money in my bank account to buy a Chanel bag, or take a fabulous vacation? Yes. Can I afford to do so? NO. I could never differentiate between the two, which is how I ended up so broke. Now that I can? I have something to show for myself. And it’s more rewarding than “things”
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If something is NOT in the budget, I add this to the questions you ask: is THIS worth more than meeting that financial goal? (and yes, it’s just a restatement of your first question, but it brings into stark relief that by choosing THIS, I am not only delaying that Number One Financial Goal, I’m reprioritizing it lower than whatever I’m considering spending money on. For me, getting out of debt is where it’s at and it is my Number One Goal – so new clothes/a vacation/a fancy dinner aren’t ever going to get a yes to my question. Hopefully I’ll hang onto this mentality once I meet that debt goal and replace it with another Number One Goal.
And commenter-to-commenter: K. – please try to clue your GF in – unless your friend has an employment contract or is covered by a Department of Labor policy (like the Service Contract Act) that says so, she can’t count on being paid out anything. Companies change policies all the time and are doing so right now.
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I know how you feel! I currently really want a wii and the wii Fit but even though I could pay for it now, I really can’t “afford” it. There’s a “Get Fit” competition going on at my work right now and the winner get $300, so I’ve told myself that if I manage to win I will buy myself a wii with the winnings. Now, back to my regularly scheduled workout….
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I read this post this morning and have been thinking about how to answer your question on and off since then. It is so automatic, I don’t really give it much thought anymore. I guess, I use variations of two of your questions. Consumer debt is not even addressed as a passing thought…not even gonna happen. I guess I ask myself if it will work against my goals and if it will enhance my life.
For example, yet another handbag will probably not work against my goals, but will it really enhance my life? I also determine if I will have to dip into savings to pay for it. I HATE dipping into savings for “wants” so I guess that also fits into my personal “can I afford it” equation.
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I decide whether or not I can afford something based on whether or not I’m covered on bills and saving and goals that are more important to me than the thing I’m asking myself if I can afford.
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Step 1: Imagine how much money you would like to save each month.
Step 2: Write down your monthly income.
Step 3: Spend the extra cash as you like.
The fiscally responsible go 1, 2, 3. The irresponsible, 3, 2, 1 (imagine seems a fitting description then).
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Hi SM!
I have been following your blog for a few weeks now and I love it! I was wondering if perhaps once a month you could make a “guest appearance” on my blog to offer tips on saving money and money management. Please email me at dana.miller03@yahoo.com if you’re interested.
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This post came right on time. I am sick of living paycheck to paycheck. I have been following you Single Ma for about a year now… and I would think the same thing as what the reader says. Single Ma can afford it..But you are so right..it is that same thinking that keeps us broke.
Thanks for the response SingleMa…
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thanks for the feedback on how you budget! i appreciate you taking the time to respond
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Outstanding post!
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