Day 107 | $50,944 paid | $39,773 till freedom
I’ve been beating myself up about my lack of spending discipline in November and even, to a certain extent, this month (e.g., the tow bill, New Years’ Eve party ticket & hotel, Christmas gifts, etc.). Then I started looking at past spending, and I realized that my spending hasn’t been that bad. With this post, I’m hoping to put things in perspective for myself by contrasting my spending levels these days with my spending habits before and directly after I graduated from Harvard. It’s a story with visual aids like charts and pictures. Buckle up.
The first couple of pictures are me about to embark on what turned out to be a 22-hour, straight-through, no-sleep drive from Michigan to Austin in August 2005 to start my first real-world job. I had just graduated from Michigan debt-free (thanks to my parents) and was moving to Austin to take a job with a $52k annual salary + bonus, but I bought a 2002 Ford Focus for about $10k. I was very focused on my spending habits at that point in time, and I had successfully fought the very strong urge to buy a slightly used Mustang GT convertible that was calling out to me on Autotrader like the Sirens.
Those are all my worldly possessions–just enough to fit into a compact hatchback. I was the definition of “mobile workforce.”
I got to Austin and moved into a one-bedroom apartment for about $500/month. All of the furniture in the pictures below except for the bed was free from my aunt and uncle living in Fort Worth.
Note the following:
- Lack of nightstand next to bed
- My desk doubled as my dresser
- Lack of dining room table–I literally ate all my meals on my couch
I stayed there only for a year, then I got rid of the couches, coffee table, and end table and rented a room in my buddy’s house to save money and be less lonely–I had lived with seven friends at Michigan, and I just wasn’t cut out yet to live completely alone. I had gotten a raise and was making $67k/year, but my frugal self decided $500/month for a lonely rent was too high a price.
I sacrificed when I moved into the room below–for example, my closet was across the hallway rather than in my room. But I was still happier there–and paying less–than I was at the apartment.
(I did end up selling the Ford Focus and getting a red Honda S2000 for $18k, so I wasn’t a completely innocent consumer.)
Below is a pic of all of my worldly possessions packed up in August 2007, almost exactly two years since I had moved from Michigan to Austin. The boxes were staged for my colleague to put them in his rented U-haul truck on the way to Boston. He was also headed to HBS, but I couldn’t drive with him–I had to take a flight to visit my family for the weekend before heading to Boston. Note the lack of car that I had sold a week before this pic was taken.
I graduated from HBS in May of 2009 and moved back to Austin, and that’s when the spending really kicked into gear. I ended up moving back to the same apartment complex I lived in when I initially moved to Austin in 2005 (I’ve since bought a house), and the result is a before/after portfolio that is pretty darned poetic–I ended up spending a good chunk of my signing bonus on new furniture when I graduated. I had not one, but two nightstands, a real desk, and even a place to eat meals.
Oh, yeah, I also got a 2004 BMW M3 the same month I graduated in May. Then I got a motorcycle in October. Then I got a house in July 2010. Then I sold the M3 and got a Murano and an S2000. During this time, I also got a huge LCD TV, a surround sound stereo system, gadgets, more furniture, and I also went on trips.
What the hell happened to the guy renting a room from his buddy who owned just a car and some clothes? And who, by the way, was pretty content to live that lifestyle (but did wonder what it would be like if he had more money).
I want to take a second to stress that all of my spending was in complete control. I never carried a balance on my credit card, and I always had at least $15k in savings. I was buying stuff that I could afford and spending at a sustainable rate–not at a “retire-by-age-35″ sustainable rate, but sustainable nonetheless.
But seriously, why did I buy all of that stuff? What was I thinking? I’m only in my fourth month of NMHD of living a relatively frugal lifestyle, but looking back at my spending history, I cringe.
And it’s not like the stuff made me happy. Far from it. I remember how much stress the furniture purchase caused me. The morning after I bought it all, I woke up at 4 AM in a panic and couldn’t fall back asleep. I called the furniture place as soon as they opened and asked what their return policy was, which turned out to be quite lenient, and I came within an inch of cancelling the entire order.
The thing was, I had been quite content to be a guy renting a room out of a house, then a guy living in a dorm, always able to cut ties a moment’s notice and do what I wanted, go where I chose. I had freedom. And then, just like that, I was grounded. Tied down. Completely trapped.
At the time, I was able to talk myself off the ledge and convince myself that I was doing what “adults” do. This was all about growing up and being a responsible, contributing member of society. The argument worked; I kept the furniture, and I went on to consume more stuff.
Now I’m not so sure anymore.
I prefaced this post by explaining that it was an attempt to put my so-called lack of spending discipline in November and this month in perspective, and it’s sort of working. I don’t know that I deserve a pat on the back or anything, and I’m far from out of the woods, but I think I’m doing alright–I’m doing better, at least, which is something I think we can all agree on. A couple of data points that support that claim are the sales of the Murano and the motorcycle.
Other supporting data can be found in the charts below. I started NMHD at the tail end of August and my spend for Sept-Nov in 2009, 2010, and 2011 is graphed below. My min/max spend pre-NMHD was $15,831/$4,002 with an overall average of $7,911. Those same data points for the NMHD period-to-date are $3,420/$2926 with an overall average of $3,196. In other words, during the past three months, I spent, on average, $4,715 less per month than the same time period a year ago and a year before that.
Below is my consumption rate from the past 18 months, including average indicators. The Pre-NMHD average is $7,754 versus the NMHD average of $3,196 for a delta of $4,558/month. The peaks, from left to right, are 1) down-payment on the house, 2) Murano purchase, and 3) S2000 purchase. Even when I wasn’t buying big things like a house or a car, I still managed to throw down $7k in a single month, and on more than one occasion. (All expenses in both charts exclude student loan payments.)
I was a certain consumer when I drove down my parents driveway in the Ford Focus in August 2005. I was a similar consumer when I packed my bags for Boston in August 2007. When I came back in 2009, I was…different. It sounds weird, but I’m trying to get re-acquainted–on a certain level–with the guy I was before I came back from Boston.