Windfalls can be both a blessing and curse. When a sudden and unexpected chunk of cash blows our way most of us will squander it all in a New York minute. So say the statistics. We’ve all heard cautionary tales of lottery winners who, ironically, end up destitute within a year and a half of becoming millionaires. Hang on a moment. I need to clarify something here. Before you start getting all excited for me (or jealous), thinking I’ve hit some kind of jackpot, I should let you know right now, my use of the term “windfall” is totally relative. A recent Google search suggests the average windfall amounts to $150,000. For my family, with our 5 figure income, our definition of windfall has a few less zeros; about three less.
If you read last month’s NDYL column you’re probably wondering how things are going, now that my husband has free reign with the debit card again. Well, I have some good news and some bad news. What do you want to hear first? I’ll start with the good, because I’m that kind of person. You can certainly skip past it and read the bad first, if you’re that kind of person.
The good news: As of this article’s first draft, Mr. F. has only used the debit card once.
The bad news: In that one shopping trip he went over budget by $220.
Some more bad news: In all fairness, I’ve fallen off the wagon too. Frankly, I don’t even know how much I’ve gone over budget.
Some more good news: In all fairness, we’ve had some unusual circumstances lately, so whenever things return to “normal” (as if there is such a thing!) we can easily get back on track.
I’ve mentioned before that I can tighten my belt “when the need arises.” Therein lies the problem. Lately, the need has not arisen. As the title implies, we’ve recently had a little extra income; some earned, some unearned. All of it threatening to burn some serious holes in our pockets. In this post I’ll share some fireproofing strategies.
Wait and/or pretend you don’t have it. For some of us this is easier said than done. For me it’s where the windfall blessing-curse dichotomy starts to mess with my head. On the one hand, we could be very strict and continue to live like paupers even when we have a little extra. If we did we’d be able to build up our savings much quicker than expected. On the other hand, there are always things we “need” (such as a robot vacuum cleaner, which would pay for itself eventually with all the time we’ll save not having to run the vacuum ourselves, right?) but have to postpone buying during the leaner times. The logical time to proceed with such purchases is when we receive a bonus that isn’t normally part of the budget.
Both options make good sense, so the difficulty should only lie in deciding which course of action to take. But, remember Mr. F. and I are addicts, so a sensible course of action for an average Joe and Jane is not so cut and dry for recovering spendaholics like us. To be perfectly honest, as with many addicts, if you give us an inch we’ll take a mile. We give ourselves permission to buy just one teeny weenie little Blu-ray player, then several weeks and shopping sprees later, when the money inevitably runs out, we’re on a roll and can’t stop ourselves. We keep feeding our spending habit as if the cash is still flowing. So, we’ve got to be clever and set up financial booby traps for ourselves.
Another good reason for pretending your windfall never happened is that moochers tend to come out of the woodwork whenever they get wind of your good fortune. They say the surest way to lose friends is to lend them money. I don’t know who this mystical “they” are, but they certainly know what they’re talking about. Boy, oh boy, did I ever learn the hard way to never mix money and friendship! Years ago, I miraculously received a significant chunk of the back child support we were owed. I made the mistake of telling my chronically unemployed friend about it. When I say “chronically unemployed” I mean no disrespect to all the hard working folks out there who have struggled through no fault of their own to find gainful employment. I’m talking about a person who wasn’t trying very hard to find work and seemed content to make her living taking advantage of soft hearted friends and strangers. Within minutes of hearing my good news she called me back begging for a loan and promising that she’d have it all paid back quickly since she had just signed up to work as a substitute teacher. I should have known that subbing would not turn out to be a very lucrative endeavor for my friend who, incidentally, hates kids. Five long years and a severed friendship later, the last $50 payback of that sizable loan finally trickled in.
Put up a barrier to easy access. For those of you who have a hard time with the previous tip perhaps you’ll increase your chances of success by placing it somewhere out of reach, literally or symbolically, short term or long term, or any combination of the above. Some options include depositing your money into a savings account, CD, money market account or online bank account; or investing it in the stock market. The possibilities are only limited by your circumstances. For us, a simple savings account suffices. At this point, with our moderate and somewhat erratic income, the other options are a bit intimidating. It’s quite possible we’d need to dip into our savings too early and end up losing money.
We did, however, create a deterrent to easy access by opening our savings account at a completely different bank from our regular bank, so we can’t just willy-nilly transfer money into our checking account if we overspend. We actually have to get in the car and drive an additional 10 minutes away, and only during bank hours, to withdraw cash. That ought to give us pause to think prudently. So far, it’s working. This past Sunday, Mr. F thought he’d just run out and buy a new weed whacker.
Me: “We don’t have that much money in our checking account right now.”
Him: “Can’t we just pay for it out of our savings account? Didn’t it come with a debit card?”
Me: “We can’t do that with this account. Even if we get a card it can only be used at an ATM. It won’t work like our other debit cards.”
Him: “Oh.” pregnant pause (perhaps, a “prudent” pause?) “Ok. I guess we’ll have to wait”
Don’t create a forbidden fruit scenario. All that being said, let’s be real. We all know what happens when we’re told (either by others or by ourselves) that we can’t have something. It’s one reason why so many diets fail. Deny yourself even one cookie for too long, then eventually the temptation becomes unbearable and you end up eating a whole Oreo cream pie in one sitting. Don’t set yourself up to fail. Allow yourself a little treat. Little, of course, is a relative term.
Have some fun … Plan and prioritize. Sounds like a barrel of laughs, right? Ha! But, trust me, there is a madness to this method. What? Yep, I meant to say it just that way. We’re all adults here. So I shouldn’t have to lecture you about how a madcap episode of spontaneous frivolity is undoubtedly fun in the moment, but nearly always comes back to bite you (you know where) later, and ultimately results in a situation that’s no fun. And, if you want to have the kind of fun that lasts beyond that nasty spending spree hangover, like it or not, you’ve got to plan.
Earlier last month my husband and I made a wish list to brainstorm what we could buy with our “fat stacks.” Some needs, mostly wants, but all were big ticket items our typical budget would never allow. The intention was to not touch the extra money until we reviewed our list, prioritized the urgency of the items on it and developed a reasonable game plan for how to wisely handle our windfall. Smart plan, don’t you think? Um. Yeah. You know what they say about good intentions? For some reason the words of that deliciously sassy You Tube sensation, Miss Sweet Brown come to mind, “Oh Lord Jeezus! There’s a FIAR!”
Do as I say, not as I do. Yes, I went there. I did the unthinkable. I uttered those loathsome words. Ugh! If I had a dollar for every time my mother said those words to me I wouldn’t need to write this series. Anyway, in the spirit of keeping it real, I have to admit that “Do … do” (pun unintended, but nonetheless apropos) could be the theme song of this series. Because, let’s face it, I’ve made a few boo-boos along this journey. And, so that it’s not all for naught, please, I implore you, dear reader, learn from my mistakes. Let me be your cautionary tale.
Now, if you’ll excuse me, I have some scorched pockets to mend.
Tune in next time for NDYL 2.0: Relapse Recovery.
