I had a money wake-up call this week. Wednesday morning, I got a text from my bank, USAA, saying that I had a low balance. Actually, it said my checking account balance was “$0.00.” WTF? I logged in to check on this right away. It was true: I over-drafted my checking account, and my balance was zero.
Luckily, USAA offers free overdraft protection, so the money was transferred automatically from my savings to cover my deficit. Ironically, I over-drafted my account by paying off the last of my credit card bills after vowing not to use credit anymore. Turns out I also got a little too excited about paying off my loan debt and saving for my “quitting” fund, too.
This whole overdraft situation is almost comical because before I even got my first paycheck after getting my first real job, I was joking with my girlfriend about how I’m rich now. I didn’t made any stupid purchases, but I did notice a bit of a psychological change and feeling that I really did have much more money. I was making a lot less before my job when I was serving as a VISTA, but I obviously haven’t hit rock star status here, either.
But this over-draft (which had never happened before in my life) made me realize something: even though I’m earning a decent salary now, I’m far from being “rich” and comfortable. I’m glad this realization came now and only a couple months after getting my first job, and I imagine that everyone learns it at one point or another like I did.
We’re Not Entitled
This led to me think about what many people feel they’re “entitled” to once they have a job, and that’s mostly because everyone else spends on these things. But just because everyone else is doing it doesn’t make it okay, and this is a large reason why people are in such bad financial shape in this country, old and young. Here are some of the things I’m talking about (and have been guilty of myself from time to time):
- Expensive apartments in popular neighborhoods
- iPhones, HDTVs, and other gadgets
- A new car
- Eating out multiple times a week
- Expensive nights out with friends
I’m not saying you can’t have these things, but I am saying that there are still consequences to wanting to have it all.
For me, reality has already set in. I’m putting 30-40% of every paycheck towards either my debt or towards my savings goal. I even have my loan payments automated to pay $560 on each payday for the rest of the year so I can be debt free by December 31. My $400 rent plus utilities is only about 17% of my net pay every month, which I’m happy with. I don’t own a car, which makes me and my wallet happy. I’m not saying these things because I think I’m better or smarter than others out there that haven’t realized this yet. I’m saying this because I feel like I’m cutting back, but I still don’t feel “well-off” despite doing that.
It’s really easy to fall into spending traps when you’re a recent graduate with a new job and all of a sudden have extra income to play around with. But this is where there’s great opportunity for those that seize it. Perhaps never again will you have the opportunity to save so much money to spend on something great. This could be for a year of travel or to take on a new business venture or to just save for retirement and start taking advantage of compound interest. I find it sad to see so much opportunity squandered on new Honda Accords, Kindles, and gourmet restaurants.
Don’t Get Comfortable
I don’t feel financially comfortable with where I’m at, and I think that’s good thing. I’m not a cheap or extremely frugal person, but I don’t feel like it’s okay to just go on shopping sprees without having to consider what the consequences on my life may be. If I had extra money just lying around, I’d say that means I’m not managing my money and saving to meet my goals as I should be.
I’m by no means comfortable with my salary, either. It’s pretty hard to meet any ambitious savings goals now, even though my expenses are pretty low. I’m going to want to move to a larger apartment at some point (my bedroom is sorta like a closet now), and, if I end up with a kids and house someday, this kind of salary isn’t going to cut it.
Bottom line: we all need to strive to do better. I don’t want to feel resigned to the typically American life, and I know a lot of others aren’t happy with that either. Money is a part of that. If you’re one of those people, what are you doing to change that?
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photo by: f_shields