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By Mike Barclay of 10CentsWorth.com
A lot of you may be surprised to know that I’m not the most financially savvy person. What might floor you even more is that I’m still learning. Here’s what I’ve learned and where I need your help. Deal?
Priorities and Will Power
If you were faced with the choice to pay rent or your cell phone bill, which would you choose? The logical choice should be rent, right? For a while, I would actually choose my cell phone. I figured it was okay to accrue late fees so I could text my friends. Well no more!
I have a file on my computer that sums up my bill priorities in the order they need to be taken care of and reminders on my calendar to check it periodically. Here are the top 5 things on my list as of right now:
1. Rent (I always make sure my rent is set aside. Being homeless = not a good idea.)
2. Court Fees (Speeding tickets people, speeding tickets. I’m no criminal.)
3. Cell Phone (For me, I need my phone on for potential employers, etc.)
4. Car Insurance
5. Credit Card Bills
I’ve conditioned myself to take care of the important priorities by having my friend reward or punish me with small things, like taking away my laptop for a couple of hours, or we’ll grab a bottle of wine as a reward. With proper budgeting I have enough to take care of everything.
Planning
I was an impulse buyer. I’d go grocery shopping with no list, a rough idea of what I needed, and a wad of cash. I’d walk into the market and out with a whole bunch of random food, inevitably forgetting an essential, like milk. I’d end up spending way over what I’d planned. Now, any time I go grocery shopping, I make a detailed list beforehand and, most importantly, I don’t deviate.
Banking Alerts
If my bank gave me the money they charge for over drafting, I’d be sitting on a beach somewhere drinking wine and doing nothing. I was horrible at looking at my account balance daily and making sure I had enough to spend. Thankfully, we now have modern technology. If you bank online, there’s a way to set up email and text alerts if your account drops below a certain amount. And (depending on the bank) you can even make it send you your balance text after every purchase. I don’t have an excuse to over-draft anymore.
Savings Accounts
My dad taught me the value of a savings account, I just never paid attention. “Have money, will spend” has always been my mentality. What I’m trying to do now is put away 10% of my check into a savings account and never look at it again. If I ever need car repairs or have an emergency, I’ll have money ready to go.
Some of these strategies I practice now. Others, I’m not fully on board with yet (e.g. putting money in a savings account). Do you have any advice to make it easier to manage my finances? What have you learned from your moments of weakness?
May 6th, 2010 at 12:05 pm
I read a really scary article awhile back that talked about how people were actually more careful of paying their credit cards every month than their mortgages these days! The thinking was that if they got fired and had no income, at least they could live on their credit cards for a while or use them for emergencies.
May 6th, 2010 at 2:22 pm
I’m with you on the Overdraft issue! My husband thinks I am INSANE to have overdraft protection on my accounts, but I do that b/c occasionally life sneaks up on me and it gets a little scary at the end of the month. Also, when I deposit a check I make sure to write in my checkbook LESS than the amount I deposited, to kind of fake myself out in how much I have in there… the amount I don’t count is what is taken out of my account every month for different insurances we have, so that I never count that amount as “spendable” and it’s “safe” in my account, ready to be taken out at the end of the month.
May 6th, 2010 at 4:34 pm
Budget, budget, budget. Set up a Mint account. Categorize EVERYTHING. Set up budgets on the site. Then stay within them. In 9 months of having a Mint account I went from having $0 in savings and $50,000 in debt to having $5000 in savings and $35,000 in debt. Huge difference. I made no other changes except for using Mint, no new job, no raise, nothing. Oh and the best part is it’s completely free, so it fits perfectly into the budget! Ha! I should get paid for advertising for them!
May 6th, 2010 at 5:01 pm
Some people learn life’s most important lessons early on, while other (like me) make lots of mistakes before finally seeing the light. My own grown sons still haven’t truly learned the ABCs of budgeting, which always includes saving. A financial advisor once told me that if I can save $25 a month, then I most likely can double that without really missing the $$$. In the long run, that worked for me. With interest rates so low right now, it’s a toss-up as to where you put your savings. Just find the best deal you can. Credit unions sometimes offer better rates than banks. You already know the importance of making a shopping list and sticking to it. Do you also keep a mental running tab as you go, to be sure you’ll have enough cash for the bill? Rent/mortgage must always be #1, and paying your bills on time (especially utilities) comes next. Going without those luxury items when things are tight can make a big difference between being temporarily broke and being in trouble. Always allow time to really think about that impulse buy before actually making it! Common sense should be your guideline. Sounds like you’re pretty smart, so please let us know how things are going from time to time.
May 10th, 2010 at 7:03 am
sometimes being broke is a blessing, well, yes it can be , because it teaches you to be creative with your money..case in point, I am redoing my color scheme for spring/summer, I want green, so I was shopping for fabric, hadn’t found anything I was in love with, so I went to Tuesday mornig, found some new green plates for cheap, they were marked down to 1.19 each, (3 needed) and some green silk Indian fabric for $2.00 All on the clearance aisle. I cut the fabric to make new lamshade covers, and used the rest for a buffet tablerunner, and had a piece left over for a small pillow. Now its adorable, and I couldn;t even find any at WallyWorld for 2.99. One person’s trash, can make lots of little ‘treasures.” Just rethink how you can use your items..its not always what its meant for (in this case, window curtains).
May 11th, 2010 at 4:12 am
Those look like nice suits you posted. Thank you!