My Commitment to Financial Sanity
One of my major motivators to live tiny is money.
It started with the realization that buying a home in the Bay Area is likely out of my reach, at least on my own. Fixer-uppers can start at a million dollars, which means I'd need $200,000 just for the down payment. Yikes.
Recently, I've been spending more time understanding my financial life. I'm finally at a point where things are stable—I haven't moved or changed jobs in over a year, I haven't traveled too much, and no emergencies have happened. Here's what I've been committed to:
- I use one credit card and I pay that balance every month. I have a backup card and they both have limits I hope to never ever reach. There have been months I haven't been able to pay the entire balance from my checking account (like when I went on a cruise with my Mom), which meant taking away from my savings—but in most cases, that was planned.
- I have a budget and I actually abide by it. Most months I'm not under-budget—but I am close to being on-budget. Some months I overspend in certain areas, like when I replaced all my bras at once and destroyed my clothing budget. But I use Mint and the rollover feature for budgeting keeps me honest—I haven't spent money on any clothes as I wait for my budget to catch up with what I spent.
- I plan for big purchases. I put away the money I needed for my laptop when my 2009 machine started limping, and I've saved up the chunk of change I'll need to visit my Mom for Christmas. That makes those purchases much easier to handle when they come around.
- I save 20% of my take-home pay automatically. If I don't see the money, I can't miss it. I'm finally building a comfortable emergency fund this way, and it's really exciting and comforting to have.
- I'm contributing 5% to my 401(k). I don't have company matching and the market is shit so this is just about starting to build the retirement savings habit.
It's a privilege to live this way. I was fortunate enough to grow up in a financially stable home (that part with my Dad losing his job excepted), and I was able to graduate from college without any student loans because I worked my ass off for scholarships. I'm now fortunate enough to have a job that pays me well enough to have a reasonable budget and save at the same time. I've worked hard to be where I am, but I also acknowledge the advantages I have.
It can be hard living in one of the most expensive cities in the country, where a big portion of my age demographic is paid ridiculous amounts of money. I see friends post breathtaking photos from vacations around the world, not knowing if it's something they had to save 5 years to afford or if this is maxing out all their credit cards.
It's none of my business, really, but that impulse to "keep up with the Joneses" is real—I don't care about owning a high-end sound system or wardrobe, but I can't deny that I'd like to have a 3-week European adventure, too.
Comparison is, of course, the killer of joy. So instead, I'm finding satisfaction knowing that I can comfortably pay all my bills each month. I can take a nice vacation every once in a while and not worry about how it will affect my credit. I think about taking on good debt instead of worrying about bad debt. I'm starting to understand what kind of investing makes sense for me (tl;dr: 70% low-cost index funds, 30% bonds), and I'm excited that I'll have taken some baby steps in this area before I'm 30.
At the end of the day, my financial sanity is about balancing security and comfort with enjoyment. I refuse to sacrifice either entirely. My tiny life is about figuring out what gives me the most happiness and doubling down on those things rather than continuing to add, and I think it's working out well.