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Wednesday, January 28, 2009

More For Less: Détente

I am going to tell you the secret to solvency, blissful marital relations, and a good night's sleep.

This technique has been working for us for close to 34 years. It's not always easy but it is the most reliable method I know for staying within budget.

Now tell me, how good is your marriage?

I'm asking you this because this method won't work unless both parties are willing to make the commitment.

Some of you may be doing this already in some veiled form. Others will balk at this system and ignore me completely. Suit yourself. All I'm saying is that we are living proof it works.

I call it The $50 Rule.

Many, MANY moons ago, we were like every other young couple. We had no money. We lived on next week's pay check and we were running up the one and only credit card we were approved for. A lot of people live this way. But we knew early on that this was a disaster waiting to happen.

I was in charge of paying bills in our household and I decided to put us on a budget so that we would always have enough for important things like food and house payments.

In 1975, $50 was a goodly amount of money. But we reasoned that was the least amount of money we needed for common expenses. That was the day The $50 Rule was born.

In The $50 Rule, neither I nor Greg are allowed to spend more than $50 without the approval of our significant other. There are agreed upon loopholes though.

The $50 Rule could be adjusted if:
• it were a direct replacement for something we already owned. This is usually something like a power tool, the air conditioner or lawn equipment. Useful, but not necessarily crucial equipment.

• any emergency requiring immediate attention. This was usually cars breaking down or appliances or people needing repair or replacement. (I've had Greg repaired a number of times, but I've never needed to replace him. He's on extended warranty.)

These are the only two allowances we make. And so far we haven't had to fudge on the system.

Asking the spouse for his support for said purchase does a couple of things.

• it provides a natural cooling off period. Many purchases are emotional decisions. Giving yourself time to think about it and ask the other person's opinion forces that emotional response to bear responsibility. By the time you get an answer, it may not be as wonderful a purchase as you thought it was.

• it forces both people in the relationship to examine their buying habits.

• it makes for a very honest and sympathetic relationship. Over the years you get to learn what's important to your better half and you learn to respect each other's shared resources. Think about it. If you both spend money like crazy, you are only thinking about yourself. When you put your spouse's opinion into the equation, it is a shared asset that entitles you both to its responsibilities and rewards.

You might say that $50 is too low for you. (that's what most people tell us) The number is totally up to you and your particular finances. Greg has been trying to get me to raise that amount for YEARS! LOL! It's never happened. Why? Because we are no longer those kids trying to start a household. We have nearly everything we need. He only wants to raise it so he doesn't feel the pangs of guilt when he eyes a new toy in the store.

The $50 Rule has been perfect for us. It's conditioned us so well that we even ask each other's opinion if the item is below $50.

Talk it over with your spouse and set whatever amount feels right for you. I promise you it works.

Greg and I will be retiring EARLY, my friends. We didn't do it by dumb luck. We did it by following one rule. The $50 Rule.


Mallory said...

What an excellent post - you should migrate a link over onto some of the financial blogs - info like this helps everyone who reads it - whether they apply it or not.

Maria Zannini said...

Thanks! I put this particular post on Digg, but I don't have a clue on how to migrate links. If you or anyone out there knows how, let me know.

E J Frost said...

Yup, very good post, and congrats on early retirement, baby! That's excellent.

Kaz Augustin said...

We do the same thing, M. Except, in our case, we'd have to call it the $5 rule! And only birthday/name day presents are exempt. Not that it's anything codified like yours, more something we both fell into. But, yes, if it costs more than $5, we discuss it with our other half, to see if: (a) we absolutely need it, or (b) if there's a better option available. I've never thought of it as demeaning...more the result of a partnership.

And congrats on the early retirement! That's wonderful news!! :))

Maria Zannini said...

Thanks, Em. I'm looking forward to it.

Maria Zannini said...

Kaz: But 5 bucks buys so much more in your part of the world. lol!

What you said was spot on though. It's a partnership. A lot of people don't see that.

Marianne Arkins said...

Actually, aside from groceries, we do the same thing. I never found it odd to discuss purchasing big ticket items, and $50, to me, is a goodly sum... I realize many folks spend that on a pair of jeans ((fans self in horror)), but we're pretty conservative. DH never seemed to find it odd, either. And, fact is -- if it's reasonable, the answer is usually "YES".

Heather Moore said...

That's a great rule. My husband basically tells me about every expense (except for lunch). Sometimes I say--you really don't have to explain it. But I think we've always communicated very well about money. I don't complain when he wants to go golfing AGAIN, because I know there's probably a book that I'm dying to buy.

Maria Zannini said...

ref: we've always communicated very well about money...

I think that's the real secret, don't you think?