In the first quarter of this year, nearly six thousand more bucks left my wife's and my joint checking account. To be specific, $32,635 left it while only $26,778 was deposited into it.
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Had $32,600 been deposited into the account while "only" $26,800 went out, now that would be a post worth reading.
Although those numbers never would have been known had I not shared them, I can quickly explain how it came to be that a regular middle class suburban family "spent" nearly a third of a hundred grand during the first quarter of the year.
First of all, I always use the term "left our account" because I invest every month. During the first quarter of the year, I automatically sent $400 on the first of every month to our daughter's Bright Start 529 account, plus an "extra" $200 last month so as to meet my annual goal of contributing five grand to the account. I have already surpassed my long-ago goal of saving over one hundred grand per child for their college educations and have accomplished that by doing just that: automatically contributing every month.
So $1,400 of the $32,600 went to our daughter's college account.
Speaking of college, our largest expense during the first quarter of the year was our largest expense, in general, since our son began attending a private liberal arts college to study music in August 2016.
I transferred over $8,000 to his college since January first including an extra charge for lodging at his dorm for a few weeks over his school's extended winter break, during which he took a class.
I realize that many parents would not have paid that large amount, splitting it with their child and having him or her take on student loans. I made a conscious decision over fifteen years ago that I did not want my children to have to borrow any money, like my wife and I did not, to complete their undergraduate years. Little did I know at the time the whopping amount that college would cost in the future, seemingly untethered to the reality of the overall economic environment.
As people lost their jobs and their homes were foreclosed on, colleges blithely raised tuition and room and board costs every year. Especially in my home state, Illinois.
We still have a mortgage on our not-so-great middle class home that we moved into ten days before 9/11. I hesitate to say that we "bought" it or "own" it because we still owe about $128,000 on it, having purchased it all those years ago for $200,000 and putting down $40,000. If you think about it, paying down $32,000 in debt over the course of nearly seventeen years is f-ing pitiful. But I did do a cash-out refi with an extra $14,000 or so back many moons ago.
We paid almost $2,400 to our home lender during the first quarter.
Because we live in the second highest property tax state, just a few bucks behind New Jersey, I had to shell out nearly another three grand to pay our property tax bill in March. I do not have an escrow account, like so many people do, so I shell out that amount twice per year instead of paying an extra $500 per month to our mortgage lender.
I Pay Ourselves First. My wife works extremely part-time, generally only earning about $150 per week during the school year. Not enough to invest in retirement funds or pay for much of anything at all. But being the mensch that I am, I do invest on her behalf and sent $250 per month to her Roth IRA, which I have invested in the S&P 500 Index fund with Vanguard. $750 more leaving our account, but not exactly "spent." I Paid Myself $400 on the first of every month, adding up to another $1,200 that left our account but was not spent.
Grand total $3,350 invested during the first quarter. If anything, I need to pick the pace up with that.
Thousands of dollars went to debt service. This was definitely due to spending.
One silver lining is that we finally paid off our daughter's braces, now that they have been removed and her teeth are beautiful. Our children's orthodontist had automatically billed my wife's credit card for both of their braces, both of which cost us about five grand each and each of which we paid off in monthly installments for a bit over two years. For about six months, we were paying for both of them at once, costing over $400 per month.
Our debt service, paying down our credit cards, was thousands of dollars. I paid about $3,500 towards my wife's Visa card and still owe about $1,500 on it. I probably paid about two grand towards my own card including airfare to and from New Orleans for me and my son. I'll be paying off the rest of the charges on the trip later this month.
During the first quarter, I was paying off a trip that my wife and son took to Disney World to see our daughter march down Main Street U.S.A., and our daughter returned there again in February with her poms team to compete in the U.D.A. nationals. About three hundred bucks of the thirty-two grand was me giving her spending money for her trip.
Also, my wife charged many other things on her card that I will not detail, but it includes books ordered for our son's college courses on Amazon, food credits for the high school cafeteria for our daughter, many pizzas ordered, clothes and gifts ordered on Amazon, a portable dance floor for our daughter and on and on.
Without profligate spending, my wife somehow adds an average of over $1,500 per month on her Visa card, plus a few hundred bucks per month in clothes charged to her Kohl's card. Some female readers might misconstrue this as to me supporting an ongoing spending spree by my wife, but she basically buys what we need with a frivolous purchase every so often. Everything that we all wear comes from Kohl's and many of the charges that have been made have been recurring, like $200 per month for our daughter's dance company or $200 per month for braces.
If anything, our joint mistake over the many years has been not gaining points or money back on our credit cards, but that is something that I intend to change.
I paid $267 per month for the Subaru lease, adding up to another $800 that left our account.
Enough about how much money flew out of our accounts. It is not enjoyable for me to think or write about it.
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So what about the pain of paying that the title of this post alludes to?
Was it for an $80 dinner that I enjoyed with my son in New Orleans? Hell no!
Was it $30 for a birthday cake or charging $120 for a year of my wife listening to satellite radio? Nope.
Was it another monthly transfer of $2,570 to our son's college? Well...not really. As a mensch, I enjoy paying for my son's higher education, getting him that much closer to being a productive, financially independent member of society.
Would you believe that the pain of paying that I experienced was sending a check to my dentist to pay off the new tooth that he put in?
Sure you would. Because it's true.
The excellent book that I was reading prior to our NOLA trip and on the airplane on the way there was Dollars and Sense: How We Misthink Money and How to Spend Smarter by Dan Ariely and Jeff Kreisler.
I really liked this book and have several more posts inspired by it on the horizon.
In their chapter entitled "We Avoid Pain," the authors write about the Pain of Paying. The pain of paying is, as it sounds, the idea that we experience some version of mental pain when we pay for things.
We are all familiar with physical and emotional pain, and the pain of paying is what we feel when we think about giving up our money.
The authors attribute the pain of paying to two distinct factors, the first being the gap between the time when our money leaves our wallet or bank account and the time that we receive the good or service for which we have paid. The second factor is the attention we give to the payment itself.
They conceive of a formula: The Pain of Paying = Time + Attention.
In my own case, I have found this to be true. While taking Uber around New Orleans, I did not experience any pain of paying. I ordered a ride on my phone, it showed up and drove us where we wanted to go, and I tipped $5 or more in cash. Handing over the five or seven dollars did not hurt a bit.
What hurts more is seeing two hundred dollars' worth of Uber charges on my credit card bill weeks after the trip. Oh well, it is easy enough for me to pay off the $900 balance on my credit card later this month with an electronic transfer without dissecting every individual charge. If anything, it reminds me of the great trip that my son and I had together. The pain of paying is not so bad.
Ariely and Kreisler write that we can avoid the pain of paying by increasing the time between payment and consumption and we decrease the attention needed to make the payment. No wonder those Uber rides and expensive meals did not cause me any pain of paying.
What did cause me some pain, both physically and mentally, was sending the final $180 check to my dentist weeks after having completed the cap being put on my root canal.
It took two visits earlier this year after he had done some preliminary work on it last fall. After many years of not visiting the dentist, I decided to go full out and get everything fixed last year. Thus, I quickly depleted my $1,500 in annual benefits and shelled out nearly the same amount out of pocket.
Because one of my teeth was so bad and causing quite a bit of pain, my dentist who, by the way, is a great guy, put in a massive filling and told me that he hoped it would hold until the new year.
It did, but I still had to pay a few hundred for the filling.
Over the course of one long and kind of painful visit, my dentist put in titanium post where my tooth should be and took a mold of the top. I paid the receptionist $300, charging it to my debit card on the way out.
I returned two weeks later to have the crown installed and paid another $300 on the way out. I asked the receptionist what the balance would be, and she informed me that she would not know until the insurance paid whatever they would pay. I asked for a ballpark figure, and she reiterated that she did not know.
In early March, a paper bill for $180 showed up in the mail, detailing my $600 in payments and Delta Dental's payments towards the procedure. No website to go to pay like most of the medical bills that we get in the mail.
I carried the bill around in my briefcase for about two weeks with all the other bills like credit cards, insurance, utilities and whatever.
I had a mountain of work to do and bills to pay prior to embarking on my one week vacation. The dental bill had some language about net thirty and, although I doubt they would apply interest if I paid it forty days later, I wanted to get this bill out the door before we left.
So not only did I have to pay $780 to my dentist in one month on top of my other mountain of bills, I had to write out a check, find a stamp and drop it in the mailbox. Talk about unease of paying. Of course, I realize that all of my elders paid and still pay a majority of bills this way. I, myself, paid a dozen bills per month this way for many years. I even wrote out checks to our first few mortgage companies with payment books that they provided. Ditto with car payments.
These days, my bills add up to a lot more than they did twenty, ten or even two years ago before our son started college.
I know that many families do not have the money to shell out nearly $33,000 during the first three months of the year. Frankly, I do not think that we do, either. By the same token, I also know that is the typical amount that my younger brother receives for settling a typical personal injury case and that he most likely spent two or three times that amount during the first quarter. And that would be without investing anything.
Before our son was born, $33,000 would be close to the entire amount that we spent all year, including our rent for our Chicago ghetto apartments, some car payments, and a minimal amount of groceries at the now-defunct Dominick's Finer Foods on Ridge in Rogers Park.
I shall revisit this number for the second quarter three months from now and sincerely hope to do better.
Better yet, I will do better. But my family might not have as much fun.
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One final note: in the past week, I have read two things about people cranking out eBooks within weeks or even in a few days. Me, I only have two out and each of them took far longer than that.
When I write a similar post in July detailing the money spent and investments made from April through June, I hope to write about having made some extra scratch via sales of a yet-to-be written and/or collated eBook.
I had better get started on that. It might lessen the pain of paying my next bill.
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