I will tell you something that my daughter said that is going to lead up to this blog perfectly.
My daughter and I were talking about the story of Robin Hood, and she started asking me if it is okay to steal if you are going to give it to the poor (the answer is no by the way, but that isn't part of the story). She thought about it a minute and asked me, "Dad, do you think Robin Hood would rob our house?" I had a good belly laugh over this one.
I got my W-2 last week and I have been thinking of my present financial situation. For the first time in a long time I have had to some creative financing. A couple of years ago a bill would come in and we would cut a check. Now we hold off on this until we get paid next Thursday. What the heck happened? How did I get myself into this mess? And I thought about it awhile, and this is what I came up with...
I will put it in round numbers. Let's say I made $150,000 five years ago. And out of that $150,000 I put $20,000 toward debt reduction and savings. If you look at me on paper, you would say this guy is living right. He is being so smart with his money. He only spends $130,000.
Now to me, I am living right at $130,000. We go out to dinner a couple of times a week. We go to movies, we have all the kids in all sports. We go to "reward" lunches for the kids. Lunch after church. We go through the pay car wash. We have the house cleaned twice a month. Kids in private school. Vacations.
Magic games, Gator games. Broadway plays, caviar, and champagne. You know what I am talking about. I mean $130,000=the good life.
Now the next year. Okay it is a little off, but nothing to get your blood pressure up. The cleaning lady only comes once a month. No more "reward" lunches. No more caviar and no champagne. We cut more coupons, but no real lifestyle changes. Oh and we are still saving or putting $20,000 toward debt reduction.
Then the next year comes and it is off again. But this year it is more off. Hmm?!!
Well, now we have canceled the cleaning lady all together. We don't go to plays anymore. We don't eat out at all. We carpool when we can. We go to the dollar theater instead of the 3-D megatheater. No more lunches at all. No caviar, no champagne. At this point we start to save less and we are not reducing any debt.
Then the next year comes. OH NO. It is still going down. No going out. No buying nice things at all. No lunches out. Pennies are being pinched. No one is saving anything, and no debt is being reduced. We are just trying to survive. We watch EVERYTHING we spend, and I am talking everything. We understand it is not the big purchases that will kill you but the tons of little purchases.
So now, three years later, my income is $120,000 and my fixed expenses are $130,000. I don't look so great anymore. I look (and feel) like a total shmuck. Three years ago, anyone would look at my family spending and say, "That guy is doing it right. He lives in a modest house. He drives modest cars. He is tithing, he is playing, he is reducing debt, and he is saving." People were jealous of what I had going on.
Now they look at my family spending and are saying "He is way over his head." They are saying, "Tisk, Tisk, tisk."
Now, I have taken two of the kids out of private school. We don't go out nearly as much any more. Well, I can't move because my house is barely worth what I paid for it. I guess three years ago I could have saved more. I guess if I knew this was coming I could have done a lot of things differently.
In order for me to get my head above water again, I have to just to make more money.
The bills are not going to stop coming. We have stopped needless spending. I look at my practice and it is healthy, but nothing is going to change that much in the next year. It is not going to be a million dollar practice today and a $1.6 tomorrow.
I think this is what my life looks like for the next couple of years. It looks like a lot of bag lunches in the staff lounge. It looks like a lot of family picnics instead of going out. It looks like a lot of (free) Movies-in-the-Park with the kids.
Is that kind of what it looks like for you guys or am I the only one that looks like a shmuck?
Have a good weekend.
Your favorite shmuck,
Remember all those numbers are made up. Also, I know that I have oversimplified the story, but you get what I am saying.