Now Frugal, Now Not

I have noticed that my spending habits are kinda cyclical. There are days when I am so frugal that my behavior borders on being miserly. Then there are days when I am definitely a contemptible spend thrift. My actual expenditure tends to fluctuate quite a bit around my average expenditure. We eat at home and are good at avoiding impulse buys for a period of time and then slowly the frugal fatigue sets in. Some arcane desire in me triggers off the itch to start spending again. Expenses start to pile up - some necessary while others decidedly not. And the trend goes from bad to worse until some hidden internal threshold is crossed and alarm bells start to ring and I am woken up to the reality of having crossed over into the wastrel territory. I spend a few days feeling guilty, but still not able to reign in the expenses. Slowly but surely they start to decrease and I get back to being my frugal self again. Here is a picture to explain graphically what I seem to be going through.

As I ponder over this I realized a few things.

There really is no point in feeling guilty since this seems like a natural cyclical behavior in me.

Based on my past experiences, except for a very short period of time when our “high” threshold trigger was messed up and we ended up raking in debt, we have always managed to shrug off our spend-a-lot tendencies. So the bouts of spending are not really something to beat myself about, but to treat as short spells of rewards for good behavior for the time preceding it :) Hell, if I am going to spend anyway, might as well enjoy it, right?

With guilt out of the equation, make sure I respond to the warning signs that I have reached the “high” threshold.

Guilt was a sub-conscious reaction to the warning signs that reigned in my spending spree. If I chose not to feel guilty, I need to make sure that I consciously watch out for signs that I have hit my max threshold and pull myself back down.

Keep an eye on that “high” threshold.

I have made a very conscious effort to prevent my “high” threshold from going up when I moved from a below-the-poverty-line student salary to a relatively well-paid job. The creeping up of the “high” threshold is nothing but a sign of impending lifestyle inflation. For instance, while I was a student, my weekly grocery limit was ~$25 for me alone. Most of the time I stayed below it but every once in as while I would go over board and buy all kinds of unnecessary stuff. If the bill exceeded $25, I would pull myself way back during the next trip to compensate. Now when I shop for two, my limit is $60. Most of the time my bill is in the range $40 to $50, but every once in a while it shoots way up and triggers my internal alarm to pull back. The only creep up in lifestyle is, now I have an additional budget of around $100 once every 3 months or so for a trip to Costco to pile on some of the goodies. Similar logic applies to eating out, entertainment budget, travel budget etc.

Keep an eye on that “low” threshold where the itch to spend kicks in.

There are two things that seem to influence this. At least for me. One is frugal fatigue, where I have stayed frugal for long enough that it is time to stop for a bit and take a short break. This is a good trigger or a threshold. The second one is an unexplained, irrational urge to spend. I was raised in fairly frugal environment. So while frugality is embedded in a part of me, there is another one that wants to break free and go live a life of luxury. It is hard to maintain a balance between the two warring selves and every time I receive a bonus or heck, even receive $20 in “found” money, the part of me that resists being frugal kicks into full gear. This is a bad trigger and needs to be controlled. Overall, as long as I ensure that the low threshold does not slowly creep up, I should be fine in the long run.

Try to increase the length of the frugal period and shrink the spendthrift period whenever possible.

This is what I have managed to do this time around. I had several months of really frugal behavior – grocery bills in control, eating at home most of the time, taking lunch with me, no unnecessary trips to the mall etc. This was followed by a short spell of non-frugal behavior. It wasn’t really spend-thrifty, but I was not really very frugal either. Somehow within a few weeks of being in this mode my alarm kicked in and now I am making an effort to get back to being frugal. With only a short period of non-frugality, I don’t really know how long I will be able to sustain the next frugal bout. Let’s see…

Keep an eye on the average.

I think this is ultimately the easiest thing to monitor. I charge all my expenses to credit cards and every month when I get my statement, I know exactly how good or how bad I have been that month. It is very very important to make sure that I have a fixed threshold and hold myself strictly responsible for staying in a range around that fixed threshold. Once this is done, I think the “high” and “low” thresholds will automatically be controlled.

As you can see from the picture, I am just coming off of a not-so-frugal bout and trying to rationalize my way back into frugality. I don’t know how much of this rant makes any sense to others, but among other things this blog is an effort to keep myself accountable. By recording this and publishing these ramblings, at least I have a reference for myself of when I was last in the top part of the curve. And the direction in which I should now be headed now.

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Dennis said...

in any case, at least you can manage your cyclical spending habits

Rob in Madrid said...

interesting. I find it hard at times to undo years of social conditioning that I need it now. While I've done good at keeping the spending under control I find at times I want new things, not because I need it but because I'm conditioned to think that way

ispf said...

Dennis: It's a lesson learnt from past experiences... the hard way :( Hopefully, we will remember it for a long time to come...

Rob: You are right... social conditioning is hard to undo... I am kinda hoping that if I keep harping about frugality on this blog, I will eventually re-condition myself a little :)