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If you’re jumping right in to read the analysis of my February 2018 personal finance report card, and you haven’t read January’s report card, (I highly recommend you read that before or after this post 😃) then this might seem a little weird to you that I’m applying the KonMari minimalism concept of “spark joy” as the lens through which I view my money interactions.
A quick recap: using the spark joy criteria, I label every interaction I have with my finances as either “Yes I enjoyed it” or “No I didn’t enjoy it.” Then I tally them all up to see my “enjoyment ratio.”
The idea is to see if, via detailed reflection, I can make financial decisions that will increase this enjoyment ratio.
For example, to see if I can buy foods and things that actually bring me joy, or spending it on family and friends, experiences, that bring me joy, etc.
My hypothesis is that “Yes, I can.” But we shall see as the months go on!
If you want a more thorough walk-through/explanation on what exactly is the KonMari method and how I apply it to my finances, you can read about it via this tutorial post.
I’ll be noting in the relevant sections what my privileges are and will try to be as transparent as possible about why my numbers are the way they are.
That way, you will have a better understanding of my biases and viewpoints as I talk about the different topics.
With that said, let’s get right into it!
1. My Savings Ratio For February 2018
Without going into too much detail, I put away 19.34% of my after-tax income into investments and savings accounts in February 2018.
It’s still not a ratio I like, AT ALL, but it’s better than the 17.30% savings rate from January 2018. I’m still aiming to put away over 50%-80% of my income to reach financial independence and FIRE but it’s currently slow going.
Aiming to make March and April be even better! 😃
How am I going to do that? Most likely get a second part-time job, increase my side hustles, and/or both.
Why am I going to do that? Because I want to reach the pinnacle that is financial independence and not work till I’m 65 to retire on a social security income that most likely won’t be around when I’m “that old.”
3 thoughts on why I think my savings ratio was low for February 2018.
1) It was the month before my girlfriend went to Korea to teach English, so I think I took her eating out on many occasions to celebrate and this “ate” into the savings ratio. Punny, no? 😬
2) The economical sedan that I was driving also needed to be repaired in order to pass inspections. So that was money that could have gone into savings and investments but didn’t.
3) Still catching up from January’s “staycation” where I didn’t work for 3 weeks and didn’t get paid. This was money I wasn’t making and I think it affected the savings ratio (Can’t save money you don’t make, right?). Partly I think it’s because of that darn biweekly pay schedule. So even if I submitted shorter hours toward the end of January, I don’t really get that paycheck till mid February.
Transparency + Privilege: This is all the more reason to be your own boss and/or have entrepreneurial side hustles that generate income in lieu of, and/or to supplement, your biweekly paychecks. I say “privilege” because I live in an area where I have access to so many opportunities to do side hustles, and the health, technology, and connections to take advantage of them.
Summary of Savings Ratio:
- January 2018: 17.30%
- February 2018: 19.34%
2. My Expenses For February 2018
My Total Expenses For February 2018: $1,823.06
Compare that to January 2018 where my expenses were $1,117.25. I’m disappointed in myself for spending that much in a month, and it wasn’t even for backpacking Asia. It was purely for living life in central New York, though I think eating out ($276) and car maintenance ($441) did have a sizable impact.
I’m going to analyze some, not all, of the expenses in that order (otherwise we’d be here forever…which I don’t mind if you stick around and read some more :).
Transparency: I didn’t pay for rent this month because I lived for free at my girlfriend’s family’s house. However, I do chores around the house, and help around their farm, so it was pretty much an exchange of “farm labor” for lodging. Nor do I have any student loans (3 reasons: went to the cheapest State college, SUNY Purchase, where tuition was $4000/semester. Commuted from home, so no room & board cost. And Dad paid for my tuition).
Summary of Expenses:
- January 2018: $1,117.25
- February 2018: $1,823.06
3. Analyzing The Expenses
I still didn’t enjoy refueling the car, as evident from the resounding 100% “No’s.” March will be better. I’m moving downstate to live with my family, handing in my car’s license plates, and not driving it anymore. Expecting these costs to go down to $0.
Credit Card Payments
Working on paying off over $8,000 of credit card debt via the method proposed in David Bach’s The Automatic Millionaire.
Transparency: if you buy the book via that link to Amazon, I might make a couple of pennies. Hey, it’ll help me pay for this blog…and maybe a pint of Ben & Jerry’s milk and cookies 😃.
What I like about Bach’s method is that if the monthly minimum for a credit card is, say, $250, instead of waiting till the end of the month to pay that minimum, I would pay something like $70/week.
So over 4 weeks, I’d pay $280, cover the minimum, and end up cutting off some interest weekly instead of letting it accrue till the end of the month. Not to mention, I find paying small increments weekly to be more sustainable than waiting till I have money for a big payment, because sometimes, emergencies arise and I end up spending that money before using it to pay the credit card.
That’s a heck of a lot of eating out. 16 times this month versus 11 times in January.
In January 2018, I had an eating out enjoyment ratio of 63.63%. For February 2018, it was 62.50%. Roughly the same, and I predominantly enjoy eating out, apparently 2/3 of the time.
There’s something nice about having food prepared for you, and while I do like to cook, I also enjoy having other people cook for me.
Transparency: I can afford to eat out. And when I do, I try to eat quality, regardless of price. If you are what you eat, then if you eat crap food, you become crap. Yes, I’m currently in a privileged enough situation where I can say that. It wasn’t always the case, but it is now.
Short Backstory: When we first came to this country, at some point in my childhood we didn’t have much money so we subsisted on rice and cheap hot dogs, with some free ketchup we took from McDonald’s, if that means anything? And even then, we at least had food to eat, so that already made us more privileged compared to the starving homeless throughout America.
Life Goals: One of my life goals is to be able to reach a level of financial independence where I could eat out indefinitely (within reason). And that’s one of the reasons why I like backpacking Asia so much. It’s just so affordable to be able to eat out all the time versus eating out in America. For example, $5 for a good meal in Thailand versus $9 for Panera Bread Pick-2 in New York.
Mistakes I Didn’t Fix: I still ate McDonald’s! Like what am I doing with my life?! >_< I didn’t just make this mistake ONCE in February, but TWICE. The same as January. You think I would learn by now. But we shall see what March 2018 brings. I think it might be because I was at low points, where my self-discipline breaks down and I just want a McDonald’s cookie or an Oreo & M&M Mcflurry…But the enjoyment ratio for McD’s is still 0% because I would physically feel like crap afterward.
I Created A Splurge Account
February 2018 was when I finished the audiobook of T. Harv Eker’s The Secrets of The Millionaire Mind (affiliate link to my Amazon store) where he talked about making a splurge account where you put in a certain amount of money each month, to be completely spent by the end of the month on anything that makes you feel rich.
His reasoning was that on the road to being rich, wealthy, etc., you can sometimes get discouraged.
Before listening to his book, I was starting to feel that way. Like I was becoming a frugal, miserly, old Scrooge who pinched pennies and tried not to spend money on anything (you can see how that backfired this month).
I was not happy on the road to financial independence and it wasn’t fun anymore.
Eker’s reasoning for the splurge account was to counteract these feelings.
He reasoned that if you force yourself to save money against your nature for too long, you start to have pent-up emotions and “spending” urges that express themselves in negative ways, such as going on a buying spree after you save up a lot of money, thus leaving you in a position near where you started.
If you allow yourself a splurge fund where you can “go wild” and spend it on anything, any experience, that makes you enjoy life or “feel rich,” it will help you release those pent-up negative emotions, and keep you encouraged on the long road to financial independence.
By being able to have a fund that was dedicated to just enjoying life, it took me out of the miserly old Scrooge scarcity mentality and started me on the road to a cultivating an abundance mentality.
There is more than enough to go around in life. The Universe is ever-expanding and scientists have yet to find an edge to it.
I’m assuming this means that the Universe is a limitless resource of wealth and abundance.
By putting myself in this state of appreciation for the abundance that life has to offer, I was, and still am, sending out signals to the universe that life is abundant.
What does the universe do? It sends back more situations and opportunities for me to feel abundant.
Not to spend too much time on this in this blog post, but pretty much the universe is a mirror and a magnifier that gives you back more of what you send to it.
Therefore, send it positive energy and you get back more positive energy. Send it negative energy, and…you get the idea.
So far, writing this in April 2018, I can vouch that creating the splurge account has helped me to “stay sane” and “enjoy life” on the road to Financial Independence.
Transparency + Privilege: I have enough disposable income to create a splurge account and the health and capacity to enjoy it.
4. The Enjoyment Ratio For February 2018
- January 2018: 19.04%
- February 2018: 29.40%
More than a 50% increase in enjoyment of my financial interactions, woo hoo! But I just want to say that some of you might scoff at such a notion.
“As if you can quantify true enjoyment? 🙄” you might say. And you might be right.
I am not an expert on these matters, nor am I espousing that this way is right for everyone.
It might not be for you, but so far, it is helping me analyze what brings me joy and what doesn’t bring me joy with regards to how I utilize my money.
5. Analyzing The Enjoyment Ratio Through The Lens Of Reaching Financial Independence
29.40% is closer to the 50/50 enjoyment ratio that I’m currently aiming for.
Quick recap: I’m aiming for a 50/50 enjoyment ratio with my money because, to bring in a Star Wars reference, there must be balance to the force.
If we’re not enjoying our money and the abundance of life that it can bring us, than what’s the point of reaching financial independence if you can’t enjoy the journey?
If we’re enjoying (and spending?) our money too much (I haven’t reached that point yet), could the ramifications be detrimental hedonism that hurts us and slows us down on the path to financial independence?
Also, I say 50/50 instead of a 100% enjoyment ratio because sometimes there might be stuff that society “requires” us to buy, such as car insurance, that might not always bring us joy.
It might give us peace of mind, but not joy. If you enjoy paying car insurance, please let me know in the comments below! I want to say hi to you! 😃
I consider myself still currently “off-balanced” in regards to my whether my money “sparks joy” for me or not and will keep working on first trying to reach the 50/50 “enjoy to not-enjoy” ratio and go from there.
*Limitations to The Enjoyment Ratio Analysis
- It treats every interaction as equal, regardless of the amount. So whether you didn’t enjoy a $2 McFlurry, or a $200 bottle of champagne, they both still get a “No” of the same weight. This might under-value or over-value certain experiences.
- A future iteration of this Enjoyment Ratio could feature a scalability feature, say on a scale of 1-5, or 1-10. I feel like that might add more complexity to the already complex lives we live. Might be better, or might be worse.
For example, with the interactions that bring us joy, the rating scale method might help us narrow our life actions and choices toward those that bring us a resounding “YES!”, versus a mere “Yeah I enjoyed it.”
It could be worth a try for future months, or if you’re reading this, care to try it and let me know how it goes for you?
You’re still here?! Thank you so much for reading through all of that!
Would you do the same for your finances? If you’re already doing this, how is it going for you? Let me know in the comments below! I respond to every single one 😃
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