CNN Money used to run this series called Extreme Savers, detailing the fiscal discipline and ingenuity of people who save a BIG percentage of their income. The profile that still sticks in my mind is that of Jessica Nixon, who started saving at 16 and had almost $50K in retirement funds by the time she was 23.
This is what she said of financial windfalls such as bonuses or tax refunds:
“I don’t even consider it income, I’ll buy one thing I really want and the rest I split it up between retirement savings and shorter-term savings.”
This got me thinking. I recently got a bonus – unless I consciously decide on its purpose, the money will probably just disappear into everyday expenses that I won’t remember in 6 months.
I decided to follow Ms. Nixon’s example and put the bulk of the money into the Freedom Fund, and keep a little bit for myself.
But then difficulty arose: what’s the ONE thing that I really want?
1. I love shoes, but I don’t feel flush enough to splurge on Louboutins or Manolos (just curious – does any of my readers have them? and how much do you love them?).
2. I love food, but I feel like I treat myself fairly regularly as it is – frequent dining out at inexpensive but yummy places and occasional treats at fancier restaurants.
3. I could purchase a new computer to replace the laptop I’ve had since first year of college. But this laptop is still chugging along despite its advanced age, so I’m hesitant to chuck it for a younger, sleeker model. History, people, must count for something.
In the end, I just could not make up my mind on ONE thing (and I feel a little like any luxury that I might want should be paid for by regular income). So I decided to put everything in the Freedom Fund. (But because money is fungible, this means that I’ll feel more lax about spending out of regular income, which means that there probably will be more little “treats” for myself here and there.)
And I am definitely not as uncertain as this kitty!