Lesson 3--Money

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Last week we covered the first two lessons learned during the last year as I began my BYE victory lap. Those lessons concerned community and time.

Today let's talk about money.

My net income for the BYE to date has been zero. Since I intentionally dropped out of the salaried workforce and wasn't kicked to the curb in the recession like so many others I know, I didn't qualify for a severance package, unemployment or any other government handouts to subsidize my folly.

Prior to the Best Year Ever I made a handsome living, at least by Suburbingham standards. And when you add in Teri's salary, we were doing very well indeed and embodied the American Dream.

Teri and I were both paupers when we married, but it had been many years since we've had to give a moment's thought to money. Except for the first year or two, we always had plenty.

Even though we earned a lot, we managed to spend almost all of it--not always wisely. We were careless with it--sometimes spectacularly so. How about two examples?

One day I woke up and bought a new gold and steel Rolex watch on a whim. I called the local jeweler and asked if they had the particular model I wanted. They did, and I told them I'd be by in a few minutes to pick it up without ever asking the price. I still have the watch, but I rarely wear it. My cheap Timex does the job just fine.

Another time I realized we had just spent way over $10,000 on that year's Mardi Gras expenses when we added up krewe dues, parade throws, costs of entertaining and feeding guests and everything else. Even I thought that was excessive, but we did the same thing the next year and the year after that. I considered it a tax I paid for living in New Orleans.

There are plenty of other examples, but you get the idea.

Money was never the issue. With two good incomes and no kids in the house, there was always more than enough and more was always on the way.

When we began planning for the Best Year Ever, I ran the numbers. The spreadsheet I created wasn't encouraging. Even accounting for a belt-tightening budget and no financial disasters, I calculated we would need to spend quite a bit more each month than Teri's current salary provides in order to sustain ourselves. I think I came up with a $1,500 per month negative burn rate based on realistic budgeting. To get through the year we made sure we had that much in our dedicated BYE savings account plus a little more in padding.

The plan has worked beyond our wildest dreams. After a year with no income we still haven't lost a moment's sleep about money, and we've drawn much less from savings than my anticipated burn rate called for.

I've learned a lot about money in the last year and I want to share some of what I now know with you. Bear in mind that a guy who hasn't made a dime in the last year is giving you financial advice today, so take this for what it's worth.

1. Debt is evil. One of the few smart things Teri and I have done with money is to resolve not to have debts. Other than our house, which is on a 15 year mortgage and mostly paid for, we have no debt of any kind. No car payments, no outstanding credit card bills, no bank or family loans--nothing. If you're not BB&T Mortgage, then we don't owe you a nickel. If we can't pay for it we don't buy it. We began living that way years ago, but living the BYE lifestyle has reinforced the wisdom of that decision. When you're not paying interest to banks, it's much easier to prosper.

2. You really can live well on less. Our income may have dropped dramatically in the last year, but our overall quality of life has improved just as dramatically. Less so for Teri and I don't want to speak for her, but I think she would also say we have lived better in the last year than we ever have before. Our lifestyle is much more modest, but our lives are much more abundant.

3. Saving for a rainy day is a good idea. Trust me, Discerning Reader, someday it's going to rain. Teri and I have always saved. Even in the BYE we have continued contributions to retirement accounts. We also saved regularly for years in ordinary savings accounts we could access any time without penalty. Without having some money in the bank, we could never have pulled off the BYE.

4. Thrift is a virtue. Since we've both lost significant weight (intentionally, we're not starving) in recent months, a lot of Teri's clothes no longer fit her. The other day she dropped off a bunch of those nice over sized clothes at our favorite thrift store. She came home with eleven "new" articles of clothing that cost a total of just over $20. These are beautiful clothes with designer labels women covet. My fashion-conscious wife has a keen eye, and when Teri wears her thrift store clothes she receives compliments. This happens all the time. Sometimes she shares her secret, sometimes she just says "thank you" depending on her mood. The first time she bought clothes at a thrift store, she was almost embarrassed. Had our life really come to this? Now she knows the thrill of finding a hidden treasure.

We're growing a lot of our own food in my little veggie garden. This year's harvest of yellow squash begins this week and the tomatoes, eggplants and peppers are right behind. We buy meat and fresh produce on sale and utilize coupon clipping databases obsessively before going on our carefully-planned trips to the grocery. If it's not on our list, it doesn't go in the cart. We build our menus around what's on sale and not what we're in the mood for.

The lawn treatment guys no longer pay their monthly visits to my Bayberry estate. Instead I put the fertilizer and weed killer on my lawn myself, and the lawn looks better now than it ever has.

I've got a million of 'em. There's no such thing as an impulse purchase at our house these days.

After living the BYE, I feel I could write a book on the subject of thrift. Maybe I will some day, but the bottom line to thrift is finding acceptable less expensive alternatives, spending every dollar intentionally, being willing to do a little work to save a lot and saying no to all unplanned purchases.

5. Budgeting is a virtue. Every month we have a household finance meeting. At this meeting I present two spreadsheets and Teri creates a third.

The first spreadsheet lists the current value of all our liabilities (mortgage balance) and assets (everything else)and comes up with a net worth figure as of that date. The bottom line number has been climbing nicely in recent months as the stock market has recovered from its crash.

The second spreadsheet details all income and spending from the previous month by category, down to the dollar. Church, utilities, insurance, mortgage, cash--it's all there. We know exactly where the money came from and where it went.

The third spreadsheet takes the most time since we build it on the fly from a template Teri created. We discuss what we will each need to spend in the coming month for routine expenses--food, haircuts, clothing, yard, drug store, going out, "blow" money, etc. Some of those numbers are the same from month to month, but others vary significantly.

Then we discuss extraordinary spending anticipated for the coming month. Is one of us going on an outing to the beach (as Teri is this weekend)? Do we need to buy gifts for anyone? Stuff like that. We fill all the dollars into the spreadsheet and withdraw the bottom line number from the bank. In cash. That money goes into various envelopes for their dedicated purposes, and that's what we spend and no more. When the envelopes are empty, there's no more money to spend on that line item until the next month's meeting comes around.

The system works well for us, most of the time.

6. Money is tied to self-worth. This is the last lesson, and the hardest one. Not bringing in an income over the last year has been a blow to my male ego. For the last twelve months my wife has been the sole breadwinner in our house, and I don't like that feeling one bit. It makes me feel like I'm less valuable somehow--less of a man. I try to pretend it doesn't matter, but it does. Teri makes offhand jokes about this once in a while, and I'll laugh along with her, but it still stings knowing that I'm not the provider for her I was a year ago.

I've found that feeling impossible to shake.