22 September 2010


I got another paycheck today, from my anatomy TAing work, and I thought I would write a bit on discretionary spending - how I calculate it, how I determine what discretionary means.

Right now, discretionary spending is set at 7.5% / 5% actual, meaning 7.5% of everything I get goes toward doing "whatever I want." You'll understand why I put that in quotes in a little bit.

Everything I get includes - occasional cheques from my parents for living expenditures, stipend money, random odd jobs I may do from time to time, etc.

So what happens to the rest? Well, most of it goes into rent, obviously. The remaining goes into groceries and utilities (my only 2 expenses besides rent). Simple enough, right? Wrong. Staying within these confines is exceedingly difficult, not because I tend to cross the 7.5/5 limit, but it's much more of a challenge to classify what's discretionary and what's not.

First, let's start off with this 7.5/5 business. What the hell? Ok. 5% actual means someone gives me $100, and I can use $5 on whatever I want, but that [whatever I want] my incur additional expenditures as well - best illustrated with an example.

Say I want to rent a movie (lol). I drive down to my nearest Redbox, pop in $1, come back and enjoy it. Well, what about the gas to go there? The electricity to run this endeavor? The food cravings I may have in the middle? All included in the 2.5% buffer. I realize 2.5% may be a little high, especially in the preceeding example. There is a minor problem with this - what about the time wasted and impact on career and life? Yeah, an extreme - but still a consideration (now that everything else is squared away, lol).

So out of $100, $5 to spend on anything I want (not $7.50) and a $2.50 buffer to allow for some flexibility - "it costs money to spend money" sort of deal.

Even more of a difficult question - What counts as discretionary spending? This actually has a lot of day to day variation to it, really, just depending on my mood. There are a few hard and fast rules, though:

Rent and utilities (except for the caveat above) obviously don't count.
Groceries - most don't count.
Bread / milk / eggs / cereal / rice / meat / pasta / fruit / other essentials don't count.
Gym membership doesn't count.

Ice cream does. Coolwhip does. Even juice does. Almost everything not in that list above does, actually. Clothes are iffy (usually not) but such a rare purchase that it's negligible.

Even still the 2.5% buffer is rather large, but it starts diminishing when you consider variations in expenditures above. The extra 50kWh of energy for gaming. The variations in price in groceries (when two different brands taste the same, one is more expensive and the difference counts as discretionary). So really, the 2.5% buffer is to keep me from going crazy. I think it's a good rate.

By now, a few of you might be thinking - D is a goddamn cheapass. I would argue for 'controlled'. There are some things I care about, and some things I don't. I have quite a bit of [actual] discretionary spending saved up - (some $400 ish), and I'm thinking about taking lessons in a few things. Maybe buy that expensive Sony blu-ray home theatre system I've been eyeing for weeks now.**

Finally, I don't really have the time and energy to impose this on anyone else, and I don't really care what anyone else does. Your limits are your own. Although, if you're doing crazy shit like eating out daily and spending a ton of money on ice cream, you've got issues and I just judged you.

*: Which, I would have done for free. Shhh.
**: To the point that TPTB are sitting on the buy button.

1 comment:

Kevin said...

Damn it. I spent like 10 minutes looking for where the first * footnote was.

Talk about time wasted and impact on career and life, you owe me at least 0.65%. Plus a 2.5% buffer.