Throwing the Excess Over the Wall

Back when I first started working full time and living on my own I recall that the transition from part-time work to full-time was an eye-opener. They really put the “Full” in Full-Time; I was working harder and longer than I ever had before. I was supporting myself for the first time and it wasn’t long before I came to realize that, well, I needed this job. It was putting a roof over my head, clothes on my back, food on my plate, and without it I would be with my hand out asking for help from my parents, and that would have been too much humiliation to bear. Maybe I didn’t need this job, but surely I needed a full-time job, and this was the full-time job I had.

By that time I was already somewhat frugal so it wasn’t too long before I had accumulated some money in my checking account. When I realized this I opened my first brokerage account, thinking that it was better to start investing than to keep they money in a low-interest-bearing checking account. Which is true provided the money gets investing wisely, and which I’ll admit wasn’t always the case.

I read about investing and money management, much of it at Motley Fool. I learned about keeping an emergency fund and, at the time, the general consensus was to keep six months of living expenses on-hand. It took some time but I reached that goal, but still I wasn’t comfortable. What if I lost my job – would it take me only six months to get another? Getting the one I had took longer than that, and I would need to pay for travel, food-on-the-go, probably some business clothing for interviews, and so forth. I’d need more.

What if I lost my job and crashed my car? Hey, it could happen. I decided that I needed enough to simultaneously cover both, just to be on the safe side, and besides which I’d need a new car eventually. After I’d reached that goal I started thinking about retirement, and what to do about it. My employer doesn’t provide a 401K or anything resembling a retirement plan. It was going to be up to me and I knew I’d better start immediately. I doubt I’ll ever save enough, really, but I can only do what I can do.

I divided up my finances into two categories – my main checking account, into which all my money came, and out of which went my expenses, and the rest was “over the wall”, my savings and investments.  I called it “over the wall” because, in my mind, “over the wall” money was untouchable, save for extraordinary circumstances. I knew I’d have to use it for the next car, whenever that time came, and I’d dip into it if I had some emergency (which I would consider to be a loan, i.e., it had to be repaid), and I’d use if for retirement, but other than that once it goes over the wall it stays there.  Every now and again, maybe two or three times a year, I find that my checking account starts getting “too big” and so I’ll take a chunk of it and throw that over the wall, too.

One thing I’ve found is that having this money and these investments, together, has given me some peace of mind. Unexpected expenses are annoying but I can cover them without wondering from where it will come.

When the financial crisis hit in ’08 it was a real question whether the company for which I work would survive. Sales were down, some of our customers were going out of business, and credit was drying up. The company had bills to pay and capital investments that had to be made, along with payroll and various fixed expenses. We employees got the bad news: we had to go to working four days a week, with a commensurate cut in pay. I cut back on some expenses like insurance – less coverage (but still not bare minimum), I temporarily eliminated my automatic monthly investments in savings, and frivolous expenditures became subject to even more skepticism and scrutiny – but the thing is, although I was concerned, I wasn’t afraid.

I knew I could go for three, maybe five years without any new money coming in and although I’d be burning through my savings, I wouldn’t have to ask for help from my parents or end up homeless. It wasn’t long before I did hit a snag, and I had to borrow money from my “over the wall” savings for one month due to a confluence of bills coming due simultaneously, but I repaid it, and after eight months or so I looked over my finances and knew, for sure, that I was going to be just fine. I not only resumed my monthly savings, I did so at the same level as when I was employed full-time, and I resolved to make up for the months, in full, when I had suspended these investments. I did it, too.

I had some peace of mind, and I valued it greatly. It allowed me to sleep at night and concentrate on my job during the day. I was able to enjoy my three-day weekends, much more than I should have – going back to a five-day work week, which we did after a couple of years, was kind of a mixed bag for me. More money but less free time.  I’ve gotten some pay raises since then but I just bump up my monthly savings. Sometimes I get to work extra hours and I’ll throw that extra money over the wall, too.  If I win the Lottery, well, anything under a million will probably just go over the wall.

I still have a hanging question mark when it comes to my retirement, about how much I’ll need and if I’ll ever get there. Thing is, I know that although I may get wiped out, I don’t want to end up kicking myself in the ass because I’d wasted my money on stupid stuff I didn’t need. Sure, I spend a little on little stuff, but I won’t be regretting years of cable, or phone plans, or vacations I’ve already forgotten, and so forth. If it comes to that I won’t have peace of mind, but I’ll have few regrets about my finances because I’ll know I did what I could.

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