This is a guest post from Debt and the Girl blog who writes about her student loans, mortgage, credit cards, and her other priorities.
Do you ever feel overwhelmed by the endless supply of budgeting advice these days? I see tons of articles that tell me how to break up my budget every which way and then some. I, for one, am trying to live a simpler life. I try to pick out the best information that I can for my financial situation, but I know I would go crazy if I paid attention to every little thing out there. This is why I came up with a little rule that has helped me put things in perspective from an economic point: the cup off coffee rule.
Many people take for granted their cup of coffee (or other favorite beverage) in the morning. It is something very simple that can bring an immeasurable amount of joy. Many would not be able to function without their coffee and, therefore must have it to feel good. I find that this is a way to measure your finance as well.
How much does a cup of coffee cost in your area? One dollar? Two? Whatever it is, it’s probably not very much. Okay, now let me tell you a little story. Back in college, I was a spendthrift type of person (to say the least). No, seriously, I had packages coming daily to my dorm room from all sorts of lovely online shops that were only too happy to take my credit card. I was also a broke college student with little in terms of employment as I went to school full time.
One day, it was particularly cold outside as it had been snowing for a few days. The roads were paved with ice and everyone on campus was bundled up to the neck. I remember thinking how much I wanted a cup of coffee and, luckily, I saw a nearby cafe. I jetted inside and ordered some java but my credit card was declined. I left that cafe feeling colder and more embarrassed than ever and I immediately began thinking about all the money I had wasted buying unnecessary things that I could have really used to buy that coffee with. It made me feel like two feet tall that day. The truth is when you waste money on things, then it can be preventing you from doing something else in the future that might be important to you. I ended up just going home.
I decided from that point on that I always wanted to be able to afford a cup of coffee and not think twice about it. This may seem silly or overly simplistic to someone else, but I find it very helpful. This means that I need to make sure that I budget my money carefully today so I don’t have to worry as much about tomorrow. Does this rule solve everything in regards to budgeting? Absolutely not, but I find that it does give me motivation to lead a more satisfying life. If I woke up tomorrow and I couldn’t even afford a cup of coffee again without going into a financial panic, then I know I am doing something wrong. However, I would like to stress that you should try and make your own coffee and take it to work as much as possible. After all, it is a great way to save money and isn’t what this is all about?
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Jeffrey strain is a freelance author, his work has appeared at The Street.com and seekingalpha.com. In addition to having authored thousands of articles, Jeffrey is a former resident of Japan, former owner of Savingadvice.com and a professional digital nomad.
This is a good concept, but the threshold for panic is way too low. For me, if I don’t have enough money to pay all of my bills for a month then that’s a problem. And that’s the bare minimum. It does indeed take a while (or it can) to build up that bare minimum but it’s good to have a bit of a stretch goal to push you.
For you, that threshold of panic is too low. For her, it was a wake-up call. I think it’s different for everyone. But, if you wake up in the morning, and find you don’t even have enough for a cup of coffee, then perhaps there really is something wrong. If you wake up and find you don’t have enough to cover your bills, that’s another problem entirely, at which point coffee is the last thing on one’s mind.
Trying to get out of debt isn’t just about paying one’s bills. It’s also about planning, and preparing, so that you can spend your money on what you like, not just what you have to. There is a difference. I think she explained it well.