MyPod v2.0

This is the blog post I submitted to http://www.wethesavers.com/ to be one of their Customer Bloggers.  I didn't get it (darn!) but I don't mind, because I still enjoy this blog post.  I don't really write blogs with life lessons for others, I just write entertaining (to me) stories.  Plus, with the word limit, I didn't have space to explain the real "savings" part of this story, only to entertain with the "spending" part of the story.  But anyway, this story is funny (again, to me) and I want to share it!

I recently invested in a new MP3 player, against my Saver instincts.  My 4.5-year-old one would no longer function without being plugged in, which seriously limited my ability to use it while I worked out at the gym - imagine running around around a track with an extension cord attached to your music player... right.  You should know that it is impossible for me to hit the gym without music (lame excuse, I know), so when my music player became 100% incapable of working longer than 30 seconds, my time at the gym was dunzo.  It's been almost two months - thank goodness my gym membership is free (actually, thank my employer!).

Despite the fact that I had been fighting with my little music player for months, its final demise actually caught me by surprise.  I had not be saving for this!  I'm a big proponent of automated savings and my budget basically runs itself thanks to many different accounts, all with distinct purposes (bills, monthly spending, vacation, etc.).  So when I know a big purchase is coming, I can adjust my automated savings to allow me to save that extra chunk of change.  If I'm being honest, this only happens when I'm being really, really good... so, not very often.

I finally reached the point of annoyance where I had to solve the problem immediately.  No, this didn't mean working out without music - the sensible thing to do.  This meant biting the bullet and buying a new one.  But financially, I had a conundrum.  Because of my automated budget, I really only give myself enough money every month for my usual everyday spending - which left no room for a $160 emergency technology upgrade.  If I wanted to pump iron with sweet beats before summer, I had to dip into savings.

But which account?!  I am much more likely to dip into my Down Payment ING account for things like this (yay for account nicknames!) because while I can envision having a need to dip into my Emergency or Vacation accounts sometime soon, my future car or house (TBD!) is so far off that it's hardly a reality.  But when I thought about it honestly, it made more Saver-sense to take away from Vacation - if the choice must be made, one fun thing should draw away from another fun thing, rather than from an important, grown-up future investment.  Vacation account it would be.  Sorry, summer trip to Canada - you're going to have to be cheap.

And then I had what I consider to be a personal genius moment - I shouldn't just take money away from my summer vacation and leave it at that, but devise a plan to pay it back.  Brrrrilliant - I get my toy, vacation is saved, and I go from feeling really bad about dipping into savings to feeling exceptionally savvy. 

So if I divide my total purchase amount by the number of months that I think it should take me to pay myself back (two ideally, but three or four is much more reasonable), I can temporarily add that amount to my monthly automated savings withdrawal to my Vacation account.  It's not perfect - I know I should do some sort of mathematical equation to figure out how I can also pay back the interest I would have earned on that original purchase total if I hadn't ever withdrawn it... but get real.  At least I'm figuring into my automatic monthly savings withdrawal, right?  My awesomeness has its limits. ...but the possibilities of my cute new little music player seem infinite! 


P.S. I love automatic savings... David Bach in his book Smart Women Finish Rich calls it "paying yourself first" to automatically withdraw your the amount you wish to save from every paycheck, and it works sooo well for me.  I didn't really even notice the missing $50 towards Holland the iPod from my account this month!  

P.P.S.  If you want to be rich when you retire, I strongly recommend reading one of David Bach's books.  Not that I'm there yet... but I feel like I'm on my way!  Smart Women Finish Rich had a very strong impact on me when I read it during a summer break in college.


P.P.P.S.  I'm probably not going to Canada this summer, but it was something AK and I had been talking about.


P.P.P.P.S.  I figured out that by contributing to my Down Payment account at the amount I currently do, I should have a $10,000 down payment towards a new car by February 2012!  That's a lot of money!  Hopefully Pedro can hold out that long...