Q1 Report: Financial

Out of the four emotional niggles I had about quitting BigLaw, I thought at the outset that the most difficult would be not making money. I do feel the momentary pang on the 15th and 30th of every month when certain direct deposits do not appear, but overall I don’t think I have obsessed about this niggle as much as I thought I would.

Initially, I attributed this to the fact that we have been spending less money. The less money we spend, the less impact we feel from me not working. However, closer examination shows that the amount we have saved in day-to-day living has not actually made a significant difference to our bottom line. We didn’t “recoup” as much of my lost income as we had budgeted before I quit.

Over the past two months (August data were excluded from the analysis due to the road trip), we did cut down our routine spending — excluding one-off expenditures but including fixed costs like mortgage, insurance and utility — by almost 20%. This is on track with what I had estimated before I quit. Regular expenses (i.e., daily food, transportation, laundry, etc.) and discretionary expenses (i.e., clothing shopping, personal care, entertainment, etc.) accounted for approximately 40% of our routine monthly budget pre-resignation and have shrunk by almost 40% in aggregate.

Two of the major sources of savings have been food and shopping. We used to eat out at least four or five times a week, often at expensive restaurants. Now we cook more or eat out at less fancy places. To us, this hasn’t been a difficult adjustment. Given that I am apicky eater, having control over the ingredients has been a welcome change. Plus, home cooked meals just psychologically taste better. As for shopping, I haven’t bought anything on Gilt.com or Ruelala.com since quitting, compared to buying something on those sites a couple of times a month while working. I realized that I am perfectly happy wearing the $5 no-brand polo t-shirt I bought at a Target in Montana when I ran out of clean clothes. I derived as much pleasure buying the t-shirt at a 70% discount as I used to when acquiring a pair of Louboutins. Since my daily uniform consists of fleece, jeans and sneakers these days, I have no good reason to buy new clothes anyway.

Therefore, cutting the 40% has been relatively easy because the changes described above didn’t seem much of a sacrifice. This means more fat can be trimmed. Our failure to keep to our self-imposed austerity experiment for the month of October confirmed this hypothesis. The goal was to only spend money on non-discretionary items; instead we still “splurged” by eating out (including all the lunches I mentioned here), taking taxis, and getting massages. We even took a little jaunt to the picturesque Hudson Valley in upstate New York last Saturday and bought more antique trinkets that we don’t need. Had we been disciplined, we could have easily cut another 10% out of our routine monthly spending. However, these additional savings would have required disproportionately more sacrifice. It is hard to change habits, especially without a dire need for change. Because we know we can afford living our current lifestyle, we feel no urgency to go the extra mile. Picking the low-hanging fruit makes us feel sufficiently virtuous.

Roll of Money (courtesy of uk2.net)

Going back to the earlier question, given that we have been saving almost 20% from our routine spending, why hasn’t there been a corresponding improvement to the bottom line? The answer lies in the many unbudgeted one-off expenses we have made.

I didn’t fully appreciate how expensive it can be to explore and enjoy the full array of New York City’s offerings. Now that I have more time and energy, I want to take continuing education classes to improve myself, attend talks and events to enrich my mind, get out of the city and enjoy the glorious fall, and network and make friends. All these things cost money — money that I would not have otherwise spent if I were working 300-billable-hour months. Working such a crushing schedule was actually exceedingly cost-effective — late-night dinners and transportation costs were covered by the firm and in turn by clients. I had little opportunity to spend money when there was hardly time for sleep.

So, we are not saving as much as I had expected. Why haven’t I felt the need to be more frugal? Maybe the rising stock market in the last couple of months has something to do with my surprisingly sangfroid attitude. I don’t think so.

I think the reason may be my evolving attitude towards money. I have been thinking about this quite a lot as my husband and I debate whether we should redo our austerity experiment in a future month. On one hand, it would be nice to know our minimum burn rate and prove to ourselves that we could be disciplined if we ever need to be. On the other hand, the experiment of squeezing every last dollar of savings may not be worth the pain and the cost of foregoing opportunities for self-growth and human connections. We haven’t decided yet. But one thing I have learned, as cheesy as it may sound, is that my self worth is much more than my net worth.

Logically, I have always known that my net worth is not a yardstick of my self worth. Yet, this is the first time I have begun to internalize the idea that my identity is more than a number in the bank. Money is more than a safety blanket that allows me to feel better when comparing myself to those who are less fortunate; it is a tool that enables me to explore and define who I am.

I am just at the beginning of this shift, far from reaching a balanced view on the topic. The magnetism of money is still strong and I don’t know if I want it to disappear altogether. After all, it can still serve as a powerful motivator in helping me explore career choices. I still want to make money, but one thing I remind myself often now is that the purpose of my life is not chasing after an ever changing number.

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