Blow Money?

iVillage Member
Registered: 06-09-2008
Blow Money?
13
Sun, 11-30-2008 - 10:06am
When you do your budget do you include blow money? (money you allocate for you to spend on whatever you want) And if so how much do you set aside for this?

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iVillage Member
Registered: 03-27-2005
In reply to: megpie2182
Sun, 11-30-2008 - 11:23am

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iVillage Member
Registered: 01-25-2006
In reply to: megpie2182
Sun, 11-30-2008 - 11:47am

I have a general category for 'household spending' that includes groceries, gas and 'blow money'. I don't track that money very specifically but this is probably not the best advice for someone on a new journey or one that has a big debt reduction goal. I do encourage people to put some amount of blow money in their budget unless they are really in arrears or in danger of losing home, etc. This journey will just plum wear you out if you take too much of an all-or-none attitude.

As far as the credit cards, this actually goes to your other question on the snowflaking. The way the majority on the board approach this is to pay the minimums on all but your 'target' credit card and then they throw every little bit they can at that bill. Those little bits are what they refer to as snowflakes. These flakes can be things like the amount you save on a grocery trip using coupons/savings card or a purchase that you normally would've made but chose not to (like maybe a magazine or book) and apply that amount to your bill. Depending on their bill and the convenience/payment options, they might tuck that money away until they make their regular payment (which is what I usually did) or they might make little payments throughout the month. The other component of snowflaking is that you 'freeze' the amount you pay on debt month to month at today's amount and as your payments go down, you continue to pay that old minimum. This does eventually build in little snowflakes on all your debts as the min payment goes down on those credit cards. See #3 below for thoughts on when you might not do that.

There are some things that would influence me to consider paying additional $ to more than one card:
1. If you are very close to the credit limit on any one or more cards, those would all get additional $ until I had them down to 80% of the credit limit. This helps protect you from things like missed payments or human error from inadvertantly knocking you over your credit limit. CC's seem to nail you particularly hard for those.

2. If you are concerned about credit score in the shorter run (like you know you'll probably need a car or you had hoped to do a house in the next couple of years), it will be better for your credit score if your balances vs. credit line ratios are below at least 50%. I wouldn't sweat this if you are just trying to get the debt gone and wouldn't be looking to use your credit score for a major purchase until after that is accomplished. This portion of your credit score will take care of itself as you pay off your debt.

3. If you are having trouble making ends meet paycheck to paycheck, making additional payments to more debts MAY help you reduce your overall debt service cost month to month and help you get that amount down to something more doable on your pay. If you think this might fit you, I'd post your detailed numbers and let us take a look and see what might work. One piece of information you'd need that we don't always look at would be the percentage of your balance that the card uses to calculate your min payment. Mary Ann is the master of these calculations.

HTH!

Peg

iVillage Member
Registered: 04-12-2007
In reply to: megpie2182
Sun, 11-30-2008 - 2:15pm

Hi,


I absolutely include blow money in the budget.

Avatar for mahopac
iVillage Member
Registered: 07-24-1997
In reply to: megpie2182
Sun, 11-30-2008 - 2:23pm

My budget is very detailed and based on 15 years of tracking spending. I don't spend a dime that can't find a line in the budget, LOL.

I have a category of the budget that I call "family fun," which includes lines for our family's gym membership, one for each kid (their activities, lessons, uniforms, etc.), and a line for doing stuff together as a family, e.g. skiing or going to a museum. I also have a category called "adult fun," which includes a line for dates with my hubby (one nice restaurant and one cheaper date a month), a line for him, and a line for me. That's our own fun money and we're not accountable to each other for how it's spent, but there is a limit to it. Depending on the cash we have coming in, that line could be just $50 a month or it could be $200. Usually it's $100. I use that money for my cosmetics and skin care, going on retreats, or buying books or music. DH uses it for tennis equipment and matches, iTunes, going out with his friends, or getting a cup of coffee.

When we were paying off debt, we paid all the credit cards together. It was very tempting to want to pay off one at a time, but I do think that's part of "all or nothing" thinking, which I personally need to steer clear of. I was fortunate to be able to actually pay off some debts all at once (HELOC, car loan, and the last 15 months of our DMP), but before we got a nice windfall, I just worked on every loan at the same time.

Kelly

Avatar for earnhardt_jr_fan
iVillage Member
Registered: 03-25-2003
In reply to: megpie2182
Sun, 11-30-2008 - 3:27pm

We set aside "blow money" every paycheck - even if things are tight. It may not be a lot, but I've gone through some very rough times financially and found that I become very resentful if I don't even have enough money to buy a pack of gum. Yes, our bills come first and sometimes the "blow money" is only $5 or so, but it gives you a sense of ... I don't know... contentment to know you have that $5 and can do whatever you please with it. And rarely is $5 going to kill my budget. You have to treat yourself or you'll turn into an ugly ole scrooge. lol.


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iVillage Member
Registered: 11-14-2008
In reply to: megpie2182
Sun, 11-30-2008 - 4:12pm

Blow money. That made me laugh. I love the term. I believe you must have this in your budget or you will not stick to your goals. Try to stick to a certain amount each month $100 or $200, then, as you get each credit card paid off, reward your self with increasing the amount a little even if it is $10 to keep you motivated. Sometimes, if I am particularly down about the debt I will put my blow money on it just to see it go down. I usually end up regretting it though. You have to have some fun or you will be on the insane support group too.

Good luck!



iVillage Member
Registered: 03-26-2003
In reply to: megpie2182
Sun, 11-30-2008 - 4:45pm

Blow money is a line item in our budget. When we were paying off the ccs it was $10 a week for each of us. Now that the ccs are paid, we each get $40 a week for blow money. I think it's important to take a bit of cash to spend on whatever you want. If you deprive yourself of too much it's too easy to fall off the wagon.

As for the ccs, when we paid ours off we paid extra on one card until it was paid and then paid the minimums on the rest. When one card was paid we rolled the payment we were making to that card and put it with the payment on the next card.

You can call it snowflakes or snowballs, but by any name it works. We paid off over $45K in about 15 months.

Sue

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iVillage Member
Registered: 06-09-2008
In reply to: megpie2182
Sun, 11-30-2008 - 5:10pm
What all did you do in order to pay off of 45k in 15 months? Just curious :)
iVillage Member
Registered: 03-26-2003
In reply to: megpie2182
Sun, 11-30-2008 - 6:26pm

We went crazy. LOL

We paid no attention to interest rates. We started with the smallest debt and worked our way up to the biggest. My car was the last debt we paid off in March of this year.

During our debt repayment we cut out a lot of expenses. We didn't buy anything extra when we bought groceries, in fact our food budget was cut considerably. We cut our house phone back to nothing but a basic phone (I would have cut it completely, but I'm required by law to have a land line), we got rid of everything but the very basic Direct tv package. We stopped going out to eat, we shopped for our clothes at Goodwill, Christmas was scaled back a lot. We stripped down to the bare bones because it was so important to us that we be without debt. We gave up extras for 15 months in order to be where we are today. It was well worth it and it went much faster than we thought it would. Once that snowball started rolling downhill, there was no stopping it.

Now that we have no debt but the mortgage, we've loosened up a bit but I have found that our frugal ways have stuck. I don't just spend money to spend money anymore. We go out to eat occasionally, but not nearly as much as we used to. We still shop for some of our clothes at Goodwill. We keep a close eye on our grocery budget, etc. The one expenditure we have increased and will continue to increase is our charitable giving. We have been very blessed and try to pay it forward as much as possible.

If I can help in any way at all, please feel free to ask any questions you'd like here on the board, or you can always email me through my profile.

Sue




Edited 11/30/2008 7:00 pm ET by srmagoo
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iVillage Member
Registered: 12-04-2006
In reply to: megpie2182
Mon, 12-01-2008 - 3:56am

Personally I think that it is important to have blow money in your budget even while paying down debt. My personal experience is that when I cut out all the extras and try to exist on only paying the bills, I usually last for a little while and then I end up resenting the budget and spending more than I can afford to be spending. I would rather budget a little per week - even if it is only $5 or $10 for the peace of mind that I'm not going to go on a shopping spree.

In terms of Credit Cards - I only have one, but have multiple debts. I think it depends on the interest rates you have on your debts as to whether you split the extra across cards or target one specifically. Personally I prefer targeting one debt simply because I seem to see more progress this way.

Lyn

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