I’ve been sharing my general impressions of “Your Money Or Your Life” (YMOYL) on my journey as a book club of one. Part of me feels like I should have started the online book club but I would not have been as thorough as minhus and a bout of flu would have killed any enthusiasm. And as you can see from my distaste for doing the actual exercises, I can’t lead a club if I am doing the minimum to get through the book!
As I mentioned earlier, I did finally come up with my real wage. According to YMOYL, this is your hourly income AFTER you add in your commuting time and subtract all work-related expenses from childcare to work wardrobe to lunches. I think my number is on the low side but I’m sticking to it for now and using that as a mental yardstick to rein in my purchases. This is working so far and I highly recommend this step!
In Chapter 5, you’re also supposed to figure out your monthly income and expenses, then create an awesome chart so that you can have a visual reminder of your spending habits. I haven’t take the step of tracking my real-world expenses. However, I did an estimate which takes my gross income minus health insurance, taxes, and regular monthly expenses. I looked at my previous year’s expenses for auto insurance, auto repairs and renter’s insurance and divided it by 12 to come up with a monthly amount. End result: I have a $300 buffer each month.
It’s a bit of a relief to know that I even have a buffer. At the same time, I’m not sure how/why we have a buffer considering that a few years ago, I estimated that we had about $100 left over after expenses. Since then, expenses have generally gone up while wages have been stagnant.
Possible reasons for this mysterious buffer are:
- Grossly under-estimated expenses: In other words, I really should track expenses.
- Lower taxes due to child credits?
- Lower bills for cable, DSL and phones: I re-negotiate expenses all the time but this year, I was able to really trim these bills by reducing cable channels and getting $40-50/month discount off my DSL/phone. Most years, the rep offers a $5 – $10 discount if I threaten to cancel. As I learned this year, the offer can vary greatly depending on timing and the customer service representative you talk to!
I may have to suck it up and chart expenses and/or go over old credit card statements to get more accurate numbers. Part of me thinks that this buffer is real. I included as many variable expenses as possible from gifts to auto insurance. I also estimated on the higher side for stuff like household goods and toiletries. However, nothing beats a real estimate based on actual tracking of expenses!