After complaining about my crappy smartphone for more than a year, I finally broke down and bought a new one. A Moto G5.
Finally, I can check my email without deleting apps or clearing my cache. Plus, it has a great camera and terrific battery life. Every time I look at it, I cackle in glee.
Jon, however, soldiers on with his old Samsung Grand Galaxy, the same model that drove me crazy. He uses far fewer apps than I do, and it just doesn’t bother him other than camera envy. Still, I worried about phone inequality. After all, if I had an awesome new phone, shouldn’t Jon get something at least a little nicer?
“Um, maybe we need to slow down on the spending, honey.”
A Tight Month?
I was sort of taken aback. Not only had we talked about new phones for both of us, but I thought I was totally on board with the frugal lifestyle that’s allowed us to maintain our semi-retired status.
“It’s gonna be a tight month.”
Well, Okay, maybe so. Our renters vacated one of our properties after their college graduations (and got some awesome advice from Jon as they moved out.) We expected that, but we haven’t found replacements yet and have a few things to do on the property. And, as usual, there are a few things to be done on the other properties.
Our property insurance rates increased, raising the mortgage payments a touch. Car insurance was due for the rest of the year. And we’d spent more than usual on Little Bit’s birthday with a trip to Great Wolf Lodge and a movie outing with three of her friends.
Plus we’d paid for swim lessons, a new tail pipe and muffler so the pickup could pass inspection, Father’s Day gifts, grad gifts, some new books…
Ye gads. Jon was right. Like mushrooms after a rain, expenses seemed to pop up everywhere we looked.
Were we spending or overspending? We needed to evaluate our situation to tell the difference.
First, we avoided the real trouble sign: We hadn’t added any debt.
While we had spent a fair amount, there was more than enough cash to cover the expenses. Paying for our purchases didn’t concern us. Still, spending more than you’re bringing in or budgeting for can bankrupt us as easily as it can Johnny Depp.
Expenses over Income might be okay short-term. Long-term, it’s a disaster. Which scenario were we looking at?
Some of the expenses, like the car insurance and repairs, are budgeted even if they aren’t regular. For that matter, every landlord should anticipate having an occasional renter transitions with no rent. That goes double if you rent to college kids.
So we had a financial cushion, just for that reason. Still, you don’t want to rely on your cushion too long.
Was this a blip or a trend?
Ask the Questions
We needed to look at what we were doing more carefully. First, we had lower income in June. Was that a permanent situation or a temporary one?
Will income go back up?
Probably. We don’t have new tenants yet, but Jon received several calls inquiring the property. We’re looking at August, though, not July, so we’ll have at least one more month of lower rental income.
It might be a good time to see if we can’t sell some of this excess stuff in our house, but income doesn’t look bad long term.
Next, I took a look at our expense tracking for June and asked some questions about our past and future spending. I updated the spreadsheet as best I could with receipts and online banking. Then I started running reports.
Would we be spending a lot more this month?
Maybe. We wouldn’t need groceries other than milk, and I didn’t see any more entertainment spending. But we’ll have some business expenses getting the rental ready again.So it might go higher by $100 or so for the month of June.
What happened last month? The month before?
I checked where we were for the previous 5 months, and while our June spending was on the high end, it wasn’t ridiculously high. Our six-month average is about where I thought we’d be, right on track with our numbers from last year.
And that average is well within our projected income/expense expectations. Yes, rental income is down. But the market’s way up and I earned more in my seasonal job this year, which gives us some leeway. Our net worth should still be higher this quarter than last.
So why did our spending seem high?
Lost rent and cost shifting. We paid for our Great Wolf Lodge stay in April, not June (just like we’d paid for our May beach trip in February.)
Going on vacation twice in a three-week span contributed to the feeling of excess. So did a packed refrigerator, despite the fact that our grocery spending wasn’t that high. I’d picked up some summer clothes this year, too, after several years of not picking up any. We spent some money on cheap books a couple of times and there were a few impulse purchases.
Plus the fancy new phone.
It was all accounted for in the budget, though, even the vacations.
We didn’t spend a ton, but we spent often. And when you spend often, there’s always a concern that if you aren’t careful, your little purchases add up to more than you thought. T
Are there discretionary items to cut?
Sure, there always are. I just mentioned that our fridge is overly full, and I didn’t HAVE to get new clothes…or a new phone.
That said, I don’t feel like we wasted a ton of money either. Aside from our vacation and a couple of donuts, we haven’t eaten out, which can be way more tempting when we cut back on groceries. Little Bit’s become a much better swimmer after a week of lessons. Everyone enjoyed Captain Underpants, because who doesn’t love potty humor?
That said, we probably will cut back a bit on some of the discretionary expenses in July and limit our shopping excursions to picking out school supplies for our new school year. (July 10th!) Even if we’re within budget, a period of extra-vigilant savings works pretty well as a reset button to keep the bad habits at bay.
The Verdict: Spending, not Overspending (for now)
So after careful consideration, I’m now convinced that Jon may have a point.
We weren’t overspending…yet. While our month might not look so hot, our trend for the year showed us well within our means. We looked good for the year, even with a temporarily empty rental house.
But we got a little closer to stepping over the line than I’d realized, and it’s probably good to scale back our spending a bit. We had gotten comfortable with a few extra luxuries. We probably should put some of them on hold until we find some new tenants, just to be on the safe side.
How do you decide if you are spending or overspending? Does your budget allow your income to fluctuate? And how do you bounce back from a spendy month?
*Part of Financially Savvy Saturdays on brokeGIRLrich.*