Brian O'Connor found the writing about personal finance out there informative, but dry. So he took matters into his own hands, starting the hilarious and smart Funny Money. Brian spoke with us about making personal finance a laughing matter, especially through the focus of his $100 a Week Challenge, where he and his family only spent $100 a week.
Let's start with your $100 a Week Challenge. What inspired you to cut $100 a week from your family's budget for 10 weeks?
It was during the depths of the Great Recession - toward the end of 2009, and a few things struck me. First was the fact that a lot of personal finance writing just didn't make sense during this crisis - you don't need to know which credit card gets you the most rewards miles when you've been laid off from your job for six months. Second was the idea that, in a crisis, the one thing any family needs is cash - it buys you time and options and choices. I focused on the idea of saving $1,000 because it made a good headline, and even for a middle-class family it would be a stretch.
What did trimming your budget more each week teach you that you weren't expecting?
The big lesson is that a lot of our spending falls into categories that can be cut only with continued discipline. Some of the first big saves that I made were easy, such as shopping around for a lower price on Internet, phone and cable bundles. You make a few calls, make the change and then, bang, you are saving that money month after month without any extra effort. It's one and done. But with things like groceries and entertainment, you need to plan and make continual choices every week.
We recently had a month where for three weeks in a row, either my wife, the long-suffering Mrs. Funny Money, or I was out of town. I have no idea how we even ate that month. But I do know that we didn't make a meal plan, look up the specials at the supermarket, clip coupons and shop with our budget in mind. So, with some things, it's easy to cut and make changes, but in other areas of your life, it's an ongoing process that, quite frankly, you win some weeks and lose in other weeks.
How did you make those choices? What were your criteria for a cut?
The first filter I used was easy - do I use this damn thing? It was, frankly, embarrassing to look over all the automated charges to our checking account or credit cards in one week and find all kinds of small, recurring fees we paid each month without thinking. In one case, it was for an abandoned email account I hadn't used in years, but at more than $20 a month for a couple of years, that really added up. I found a total of $132.89 in that kind of spending, and it was all completely wasted money, spent month after month.
The next filter was whether I could get the same thing cheaper, which was the case with Internet/phone/cable service. The next level was whether I could substitute something cheaper, which came into play for food and groceries and, I would add, with no discernible sacrifice to our quality of life other than making the time to plan and shop. If we had been in more dire straits, then the choice would get down to luxuries vs. necessities. I lived alone in my own apartment in New York when I was a college graduate working at a weekly paper in Queens, and believe me, it's amazing what you can live without.
Was there any negotiation? How do you recommend families talk through financial decisions?
I can definitely say that Mrs. Funny Money was quite less than thrilled to have me discussing our family spending in the big local newspaper each week. We didn't have any big issues with these cuts but, again, we weren't facing a crisis so we didn't really go after stuff that was important to only one of us.
I'd say focus on sharing any sacrifice - for instance, she despises grocery shopping, so making that a more involved process, at least at first, the involved checking lists of specials and coupons wasn't going to work if all I did was put that burden on her. We did it together the first several weeks, and now we tend to share that chore. In other cases, I think you need to share the pain - if the husband gives up X, will the wife give up Y? And you have to tune into your sense of entitlement - I mean, how can I justify paying for workouts but also hiring a lawn service?
That kind of negotiation isn't going to work, by the way, unless both partners in a couple agree that changes need to be made. You first need to look at your financial picture together and set a goal, whether that's cutting enough so you can bank $200 a month for the college fund, or catching up on the back rent and avoid being evicted.
This can be a real problem when one partner handles all the money - first, that person is going to be blamed for the financial problems, but that person is also going to resent the other person for sidestepping all the responsibility. Both parties need to take the attitude that what's done is done and, as Nixon said, "Mistakes were made." Then they need to agree to change, apologize where necessary and forgive where necessary, and focus on getting their finances in shape. If a couple can't do that together, then you might need to have a few chats with a third party, such as a counselor or therapist.
After the challenge, how did you find your approach to family finances changed?
A lot of the changes were easy and permanent, such as eliminating wasteful spending, so there was no big change except for savings. I'd say the danger comes in thinking, "Well, that's done, we're all set." Managing your money has to be an ongoing, joint process.
Eventually, you do need to get to the point where you have a working budget and you track where all your money goes if you are really going to be financially secure. My approach gets you started fast and helps you focus on a crisis or major goal, but you need to follow up with a good monthly budget and more medium- and long-term planning. On the bright side, once you've tackled a $1,000 Challenge of your own, the rest of it doesn't seem daunting at all.
If you did the challenge all over again, what would you do differently?
Within the $1,000 Challenge itself, not a lot. I would stress that an exercise like this is just a beginning. It's a quick start and a way to score an initial success, clean up your spending and see that it's not all that impossible to start making sure your money goes where you want it to go. But I didn't address any of the institutional issues - income inequality, the elimination of pensions and rising benefits costs, the huge abuses of the financial system that created the recession and which take advantage of so many consumers, and the overall attack on middle-class and poor families. And I didn't get a chance to delve into budgeting and debt management - it doesn't help nearly as much to cut $1,000 a month out of your spending if you are overspending by $2,000 a month. That's a longer-term issue that requires bigger changes.
Another issue that I touched on but didn't emphasize was that, while saving $1,000 is good, in a real crisis it's not enough to save someone who spends two years looking for a job, is forced into a lower-paying position, or is pushed into early retirement. Cutting $1,000 of monthly spending is great, but if have no income, all it does is stretch your savings and buy you time until you deal with the inevitable. When trouble hits, there's no substitute for having a big cash cushion to break your fall.
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