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The offbeat personal finance blog for responsible people.

True Story: How a Broken Washing Machine Fixed My Finances

By Guest

Readers: Awhile back I received a message in my inbox from Steven, who lives in the United Kingdom. He agreed to share his story with you. I hope you find it as inspiring as I did. — Len

Last November my washing machine died. Because I make decent money (the equivalent of about $35,000 US dollars), that should have been a trivial event. However, it turned out to be much more important to me because, after looking at my bank account, I realized I had no money to replace it.

The exquisite humiliation of being 32 years-old and having to go to my parents to ask for money to replace my washing machine broke something in me. I love my folks, and I know they love me, but they shouldn’t have to support me — and I resolved to never be in that uncomfortable position again.

So I started looking for budget and expense planners and came across Len’s website. I spent almost six hours here, til’ the wee hours, reading about finance, about personal responsibility, about how I should be able to live on $40,000 a year, and the 10 commandments of personal finance.

Mostly though, I kept thinking about a post he wrote on running your household like a business.

You see, at work, I’m a pedantic list-maker when it comes to the expense accounts and the department’s monthly budget. I know where every penny goes, I know where every penny in my department is earned and spent, and my books have had an ‘approved’ stamp from our auditors every single year that I’ve been running the logistics department.

Somehow, though, the idea of being a household CEO had never crossed my mind — but it’s turned out to be great advice.

For more than three months now I’ve been tracking every penny I spend. I’ve roped my parents (who do love me, even when I exasperate them) into doing a monthly audit of my expenses, which I email to them on the first day of every month, and I’ve adjusted my want/need scale in a rather brutal fashion.

The change has been so completely and utterly breathtaking, that I wanted to share my results with you.

Treating my household like a business has changed my life. In January, I managed to reduce my monthly spending from more than $2200 to less than $1800. I also started putting the first money into my emergency fund and I also started putting money into other replenishment funds so that I could have cash in advance for clothing, birthday presents, home repairs, and other things. By the end of January my credit card was fully paid off.

Over the last three months I’ve managed to reduce my monthly expenditures by about $600 dollars, and I’ve now reached a comfortable minimum balance where I can pay my bills with money to spare in my checking account. I’ve also managed to put the first $519 into my short term emergency fund; I hope to have that filled by the next paycheck and then move on to the next fund.

And perhaps most importantly: I no longer worry or wonder about my finances. I’ve gone from having no idea where my money was going, to now knowing where every last penny is being spent — and I’m continuing down the path to personal financial responsibility!

My entire life has completely changed. The change in the way I track my money means that I’m now eating healthier (it’s cheaper), I actually feel happier, I’m objectively wealthier and I’ve gone from dreading checking my bank account to an almost impatient need to do it every morning as I have my breakfast.

It’s amazing how much better I sleep these days.

I’ve still got a long way to go. But every month I now know how much money I have, how much I need for living expenses, and how much I have left over for discretionary spending. For example, I know that Kerry Ellis (my hands-down all-time favorite singer) is doing a free concert in London tomorrow and, happily, I can afford the train ticket to go see her.

If reaching for my notepad to track every penny I spend sometimes amuses and exasperates my friends and colleagues, I can live with that. But for someone who never had any financial discipline, I think it’s a necessary step.

And if I can do it, I know you can too.

Photo Credit: jim212jim

22 Comments March 6, 2013

Comments

  1. 1

    Doable Finance says

    I take it you are not living in the States. Equivalent of $35,000 tells me that. In my old country, you can live like a king with kind of money let alone buying a washing machine.

    Reply
    • 2

      Steven Quinlan says

      Hi Doable Finance,

      I’m UK based, on about 22,000 pounds a year, and you’re right. Even in the UK I should be living much better than I have been, but then that was more or less then point of the lifestyle change.

      Reply
  2. 3

    Belinda says

    I love stories like this one. I did the same thing when I first found this site, I read for hours. Maybe the next step will be to start your own blog, so we can read all about your continued success on your finances. ๐Ÿ™‚

    Reply
    • 4

      Steven Quinlan says

      ๐Ÿ™‚

      I’m not sure blogging about money is something I can do better than Len, or for that matter something I’m as passionate about as he is.

      Reply
  3. 5

    Olivia says

    As they say in Great Britain, “Lovely”.

    Reply
    • 6

      Sawan says

      Or…well done mate.

      Reply
      • 7

        Steven Quinlan says

        Thank you both.

        Reply
  4. 8

    Scotty says

    Good for you Steven! Len’s blog gave me a big kick in the butt too, so I understand where you are coming from. Keep that pedal to metal!

    Reply
  5. 9

    Jane Savers @ The Money Puzzle says

    I am new to reading Len’s blog but every post seems like a kick in the butt for someone.

    I am in a big hole of debt and looking for a way out and Len helps mark the way.

    Reply
    • 10

      Len Penzo says

      Well now … I’m starting to almost feel guilty about all these butt-kicking articles I’ve apparently been posting here.

      (I said almost.)

      ๐Ÿ˜‰

      Reply
    • 11

      Nina says

      Try going to WhatsTheCost.com to learn about snowballing.

      Reply
  6. 12

    Joe @ Retire By 40 says

    Great job! Tracking every penny spent is the first step to becoming financially independent. I’m glad you woke up with the whole washing machine episode. ๐Ÿ™‚ Keep at it!

    Reply
  7. 13

    Bret @ Hope to Prosper says

    There always seems to be a “wake-up moment” for everyone who takes control of their finances. Mine was buying a red sports car I couldn’t afford.

    It’s amazing how comforting it is to have some money put away. Your worries seem to melt away as you realize you are prepared for life’s setbacks and opportunities. I tell this to everyone who will listen, but most people aren’t willing to change. They just keep hitting up their parents.

    Reply
    • 14

      Steven Quinlan says

      Agreed. It’s amazing how much better I sleep knowing I’m putting money away for rainy days.

      Reply
  8. 15

    Thomas @ Finance Inspired says

    Thanks for this article Len. I’ve just come out of a massive gambling problem so i’ve got some way to go. Reading articles like this will only help me sort things out sooner.

    Reply
  9. 16

    mike crosby says

    Reading about being my own CEO is one thing. Actually seeing it through this man’s experience makes it more powerful.

    I am responsible for the monies spent.

    Reply
    • 17

      Steven Quinlan says

      That was the same realisation I had, that I could come up with a million reasons why I wasn’t responsible, but no excuses.

      Reply
  10. 18

    krantcents says

    I wrote an article recently discussing this topic, it was called “Everyone is in Business”! Your goal is to achieve a surplus every month which may be considered savings.

    Reply
  11. 19

    Jose says

    That’s a great and inspiring story. Steven, you have definitely taken the right path (one which I sometimes have a hard time staying on). I get a sense of focus and dedication from what you have written. It sounds to me like your a lot further along than you give yourself credit for, Congrats!

    Reply
    • 20

      Steven Quinlan says

      March has been a rough month, with birthdays, events that I can’t reasonably ignore and graduations that I wasn’t willing to miss, but I’m in a place now where I can afford to do these things. So it’s all good

      Reply
  12. 21

    Spedie says

    Steven: Bravo! I know that looking at the hard numbers, on paper, is a wake up call for many folks when they decide to take their spending responsibility seriously. It is quite a reality check.

    Good job. In a few years you will be surprised at the progress you have made. Keep up the good work!

    I am now nearly 50 years old and have had a budget, on paper, with purpose, since I was 15 years old. It works.

    Reply

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