Fifteen days into 2018 and I’m finally ready to share my big, scary thing (BST) that I decided to embark on this year. But, first things first: what is a BST? (Hint: it’s an important thing for those who strive to be regular readers of this blog to be familiar with.)
In reference to the official BST, I have to credit one of my dearest friends and colleagues, the Rev. abby mohaupt. Quite regularly, she encourages people to do big, scary things — and she models it herself. She regularly inspires me with her BSTs, and every so often that inspiration is enough to kick me in the butt and take action myself. Since I’m bound to talk about BSTs here, you should keep it in the back of your mind.
Anyway, my BST for 2018 is what I’m calling disciplined abundance. (I know, I have such clever post titles.)
This BST includes two projected goals: financial health and physical health. Today’s post looks at the financial component, and I’ll explore the physical component in the next post.
I’m a fairly typical American Millennial. I’m up to my eyeballs in debt, largely (though not exclusively) driven by my student loan balance. I’m above average on the savings front; one school of thought says an individual between 30-35 years of age should strive to have the equivalent of their annual salary saved (in all savings accounts, including employer retirement programs and other investments) — and I’m at 108% of my annual salary. Most of that savings is in restricted accounts, including my 403(b), traditional, and Roth IRA accounts. My liquid savings is less than three months’ living expenses, meaning I don’t have much reserve to fall back on and I live exclusively paycheck-to-paycheck.
I’m also typical in that I spend a lot of money that I can’t account for. I have a pretty legendary addiction to take-out coffee, and am quite public about my displeasure in cooking. It’s hard for me to pass up a discount store sale, and my home is filled with proof that I live with both IKEA and Target visible from my front room window.
I do have a few atypical circumstances:
- I live in the middle of one of the most expensive metropolitan areas
in the Country on the planetin the universe. This is actually not as much of an impact on me as many others; I live in a rent stabilized rental, and my living expenses are just 28% of my gross income — an enviable ratio in any locale.
- I am in a long-term, long-distance relationship. My partner and I split our time between his home in Milwaukee and my home in Silicon Valley. While we do plan to locate together in California this year, we’ve been spending a lot of money on travel costs.
I’m blessed that I have meaningful employment, in a job that I love, that I can wake up every morning and genuinely look forward to getting to work. While professional Christian ministry is not known for its high pay rates, I do benefit from being near the top of the total pay range for professional clergy across my denomination — driven in part by my position and geographic locale. I also benefit from fully employer-paid health insurance (with low deductible), dental insurance, and vision insurance, as well as a full employer-paid contribution to my 403(b) without required personal contribution. And, of course, clergy taxes are a pain but also a great benefit.
For years I have spoken highly of the benefits of a 10-10-80 financial stewardship principle:
- 10% of one’s income is tithed — returned to the service of the Triune God calling forth creation in the world through financial support of organizations, programs, ministries, or other activities in which one sees that movement of the Divine Presence.
- 10% of one’s income is held in reserve for future needs.
- 80% of one’s income is what one lives on, prayerfully and mindful of the Triune God’s guidance and priorities for its use.
Late in 2017, I got honest with myself. This was the beginning of my BST.
As I saw the credit card balances inch (or, at times, leap) upward since 2014, I knew that my numbers were getting out of whack. Each year as I filled out my pledge card at church and for the other organizations I support, I recognized that my annual increases were not proportionate with my annual pay raises. When I received a major pay raise at the start of 2017, my monthly savings transfers weren’t adjusted compared to 2016. I knew that things were out of whack with my values, but I chose the comfort of ignorance.
When I did the math to look at my actual numbers, it wound up being 2-2-105. Yes, I was tithing 2% of my income, saving 2% of my income, and spending 105% of my income after the first two categories were considered.
No wonder I felt out of sorts! It was sobering to see it all there. I looked at the Excel spreadsheet. I prayed. I meditated. I read Scripture and some of my favorite authors.
And then I knew it was time to get to work.
For 2018, my disciplined abundance includes these major components:
- I rearranged my banking relationships. I started the new year with a new checking account, breaking out my budgeted living expenses into my original checking account, a tithing checking account, and a new high interest savings account for reserve. Automatic transfers funnel monies across these accounts from my direct deposit into the new checking account on payday; the bank I chose for that new checking account makes direct deposit funds available one business day in advance of the deposit, meaning I still receive my budgeted amounts on payday.
- I set my goals at 5-5-90. Being realistic, jumping from 2% to 10% (or 4% and 20% in total) is likely to set myself up for quick and certain failure. Each payday, calculated from my gross income, the appropriate percentage is transferred from my payroll checking account to the tithing account or high interest savings account. Each month, having set up my church and other organizations as vendors in the banking online bill pay system, my contributions are forwarded. Likewise, each month, a deduction from my savings account is made to contribute toward my traditional and Roth IRAs.
- I adopted a cash diet and weekly allowance. Every two weeks, I actually go to the bank and take out two real $50 bills as my weekly allowance. When it’s gone, it’s gone. At the same time, I take out one real $100 bill as my grocery budget. The only exception to my cash diet is using my debit card to pay at the gas pump. (Going into the store at the gas station is a big temptation for me to get coffee, so a cash diet in this specific area would actually be a hindrance.) I do not carry my debit card with me, only putting it in my wallet in the mornings of days I know I will need it (i.e. when I see the gas gauge below 1/4 of a tank).
- I only shop on Mondays. During the week I keep a money journal, and every time I see or think of something I want or need, I write it on a page for that week. Then, Sunday evening, I go through the list and identify whether it is something that I need to get for this week, that I need to get sometime this month, or would like to get sometime this year. So, for example, if I use up the last of the dish soap, I recognize that is something I will need to get for this week, so it would move to the shopping list for Monday. If I happen to notice that I open the last case of toilet paper, I would probably add that to getting sometime this month and review it the following week. Something I might like to get sometime this year could be a personal treat (I have my eye on a new, handmade leather briefcase) or a practical improvement (my partner is allergic to the cat, and before he moves in I want to get a new air purifier suitable for individuals with allergies). Why Mondays? It’s my day off. (Pastors work Sundays, after all.)
So far, I’m already running slightly behind my 90% goal while meeting my two 5% goals. It’s only half a month, but celebrating small successes is an important recognition. I also have deleted most of the things I write down in my weekly money journal list. This has been an eye-opening experience to see some of the impulses and triggers that I have been reacting to in my financial life.
Throughout the year I’ll be writing reflections and updates about this BST. What works for you? Do you have any ideas of changes to make for your own financial health? How do your finances reflect your values in 2018?