I must say today that I really hate money...or lack of it.
other than that i'm pretty irresponsible. :-S
So how do I manage? I rarely use credit cards. If I do my balance is usually under $200 a month and I pay it in full when it's due. I use my credit card just a few times a year. Mostly I use cash or a debit card (i.e. the $ is automatically withdrawn from my account). I spend money on necessities and rarely on luxuries.
When I became diabetic 7 yrs ago, I had to revolutionize my eating habits and lifestyle. After I was forced to see how much I was actually eating—I guesstimated once that I’d been ingesting about 10,000 cals/day—forcing myself to see how much I ate also forced me to see how much I spent, or misspent as well. Once I “cleaned up my act” w/food, I also got a better handle on my $$. I also came to see that the 10,000 cals daily weren't totally my fault; b/c my blood sugar was off-kilter, that was fueling the hunger more for exactly the wrong foods, etc, so it became a vicious cycle that was finally corrected. It's not that I had no "willpower;" something was physiologically wrong w/me.
I saw too where I ate for reasons besides hunger—comfort, solace, companionship, etc. I was also spending a lot of $$ to “feed the habit,” and once I re-established my eating habits—3 meals a day, no snacks (except for Sat, where I eat what I want w/in reason)—that also re-established my spending habits. That’s where I learned that I was spending a LOT of $$ on food, very often when I wasn’t even hungry; food had become a hobby rather than sustenance.
When I told my therapist how changing my eating habits also changed my spending habits, she told me that there are 3 things all of us MUST do to live: eat food; drink fluids (water, etc); and spend $$. That’s why those 3 addictions are so hard to correct. You can cut out drugs, alcohol, sex, gambling, and the like w/less difficulty b/c those things aren’t absolutely essential to survive. But eating, drinking and spending addictions are harder to “cure” b/c you’ve gotta do all 3 to live each day.
Changing my eating habits to what they are now has worked—I’ve kept off 110 lbs for 7 yrs. Gaining back the last 30 lbs were the result of illness and/or injury (not to mention divorce), so I can’t claim responsibility for that—and once my knee surgeries are behind me and I can start moving, I can take those off again. The same is true of $$: the point is getting to where you’re “in position” to make the best of where you are now, to get to where you wanna be later on.
Anyway, my best $$ habits are these:
- Plan your food budget. I get paid every other Fri, so that prior Wed or Thur (I think of that time as the “week-before-payday blues”), I go through the cabinets and fridge and see what I need. I also consult the calendar; if I’ve got work events that’ll take me out to eat, I won’t need to buy food for those days. That way I can buy ONLY that which I need for the following 2 weeks and nothing more. That’s how I also learned not to keep snacks around; if it’s in the house, I’ll eat it—so I just don’t keep them around (except on Sat, and then I finish them off by Sun, at the latest). And taking your lunch to work also saves a bunch.
- SAVE $$. Even if it’s only $5/wk, it’s vital to “sock it away.” What all those experts say is true; it’s not how much you put away, but establishing the HABIT of saving that’s crucial to start your savings account. If you can do any given thing for 21 days, it’ll become a habit, so this is how you begin your savings habit as well.
- Do a 6-mo, 1-yr, and 5-yr budget projection. You have to get a “long-term” approach about $$, especially if you have a goal you want to reach. I want to go to law school when I retire early in ’08, so I’m working on paying off everything right now while still spending a little to furnish my new home and just “get my home in order” w/out spending a fortune. To do this, you also need to…
- Review your budget on a regular basis. Every Sat morning after breakfast, I sit at my desk and either do my checks for the upcoming paycheck for mailing the following week, or review my current $$ status. I call the bank to find out if all my checks have cleared, so I know exactly how much $$ I’m dealing w/ at any time. But to do all that more easily, you MUST…
- GET A DESK. My front bedroom is my study, and though I wasn’t really in position to buy a desk at the time that I moved in, I bought it anyway b/c I figured it’d save me $$ in the long run by organizing The Business of Life. It’s more than paid for itself by now, and I can’t recommend it enough. The desk will keep all your affairs in order, and you must be organized to handle your $$. I always think of it as “respecting” $$; by keeping better track of it, you’ll have more of it to play w/ eventually. Keep it in your bedroom, in your living room, but HAVE it; it's worth the expense.
- Get the right approach about credit. Credit is not a bad thing to have; you just have to use it correctly. I had to buy a new water heater for the house—a $700 major and needful expenditure. Sears had them on sale, so that’s a justifiable expense for credit. A fun fur on sale at Macys is not, unless you absolutely love it and can pay it off in a few months’ time—which is the whole point of credit anyway. Use credit only for things you plan to pay off soon, except for emergencies and major expenditures. And even then, NEVER pay only the minimum amount. I always check the amount of interest I’m paying, so I’ll pay the minimum payment, plus the interest, and a little more if I can afford to.
- I saw a really good formula once to figure out if the price of any given item was worthwhile. For example, a $200 sweater:
cost divided by approximate #s of wearing = justifiable expense
If you buy that sweater to wear it only once, you paid 200 bucks for a one-time shot. But if you love that sweater and wear it to work 5x/week all winter, and continue to wear it for the next 5 years til it drops—then the $200 was more than worthwhile. I had a long sweater that I wore every winter for 10 years, so the $75 was more than worth it.
- If you really want a “wake-up call,” get a copy of your credit report. Find out what’s “dinged” you, and start working on “cleaning up your act.” I had a lot of medical expenses that health insurance didn’t quite cover, and those showed up on my credit report. I wrote letters to all of those creditors and told them I’d start sending them $10/paycheck, and eventually they were paid off. I’m still doing it today, and doing so has kept them from “dinging” my credit history for non-payment. Most creditors are willing to work w/you if you stay in touch w/them, which shows them you aren’t a deadbeat and are running from them.
Hope I didn’t get too wordy, but these are my habits that have helped me profit enormously, and hopefully so will others…
My new job (if it ever starts) will pay about 20% less than what I'm used to making, so lately I've been trying to force myself to get used to living off less in preparation for leaner times (and to supplement my savings in case an emergency arises). Refinancing my house and paying off my student loans a few months ago made it possible for me to get by on a reduced salary. I also do occasional part-time petsitting work for a few extra bucks and have made quite a bit selling old books, movies, and CDs online. I'm afraid I'll be cutting things to close for the first year in the new job, so I'm doing all I can now to get a little bit of a cushion.
So how do you do w/ money?