Starting off the New Year right
Dec. 30th, 2009 09:39 am![[personal profile]](https://www.dreamwidth.org/img/silk/identity/user.png){kind=small}
jamethiel posting in ![[community profile]](https://www.dreamwidth.org/img/silk/identity/community.png){kind=small}
actyourwageHi everyone! How are you? How was your Christmas?
Looking around my reading circle, it seems like most everyone had a pretty horrible, awful, no good year. Mine was actually okay.
But, I kind of blew my budget. Not awfully--but I couldn't find any suitable presents for my parents, then when I did find one it was in a store where I ended up spending more on myself (I hate Christmas. I hate shopping. I hate crowds. All of these add up to a very stressed me, and when I'm stressed, I spend.) and then my Dad's present cost more than I thought it would.
I have $0.20 in my bank account and $32 coming out in a week. It's okay, I have a no penalties overdraft which it will fit into, but that's not the point.
I should have managed it better. I didn't.
However: Remember when I said money was as much about psychology as anything else? Part of the problem is to know yourself. I feel a lot of guilt about things, and it's quite easy for me to beat myself up about having failed. So I have a checklist that helps me put things in perspective.
1. Assess your situation. Compare it to where you were three months ago, and a year ago
I have 20c in my bank account. I also have a hundred dollar overdraft that will cover anything unexpected without further fees. I'll have to use a bit of it for my gym membership, so I'll end up being $31.80 in overdraft. I have no money in savings. My house deposit fund is $20. My current credit card debt is $1844.00
Subtracting the debts and adding the savings, my current financial position is -$1855.80.
Three months ago, I was $19.40 in overdraft and I had $1.97 in my savings account. I didn't have a house deposit account and I was $2709.82 in credit card debt.
Then, my financial position was -$2727.25
A year ago? I don't have the exact figures but: I had no savings. I was at least $3500 in debt with the credit card, and I'd just spent several hundred dollars on Christmas presents. I know I had nothing in my bank account and had to put everything on the credit card.
We'll just call that position -$3500. I'm pretty sure it was worse than that, but that's what I can verify.
Right at this moment? Okay, I could have done things better, but:
I made a mistake. It's not the end of the world.
I managed my Christmas shopping for 6 people (family and housemates) for under $150. And I paid it in cash.
My financial position has improved by at least $1644.20 in a year. $871 in the last three months. And that's including Christmas.
That's an overall improvement. As for yourselves, do the same calculations. Take all the money that you have, whether you can access it or not. Investments, savings (credit unused on a credit card is not money). Take any debt that you owe. Subtract your money from your debt. Don't look at the size of the figures, that makes me panic a bit.
Look at your progress. Give yourself a pat on the back if you've made some. If you haven't made any, then the next section will apply to you.
2. Stop digging
You're in a bit of a hole? Fine, that's your situation at the moment. Now STOP GETTING DEEPER into the hole.
For me, at the end of next week I'm going to be $31.80 overdrawn. I have all my immediate needs met: I have ingredients so that I can make my lunch and take it to work. While the dinner I can make from the stuff that's at home is not particularly appetising (pasta with tuna and tomato sauce and a side salad), it's nutritious and only for one night.
All of my immediate needs are met. These are:
Shelter (Just paid my rent)
Food
Transport (I have my monthly public transport ticket)
Medical attention if I should need it (Australia has a fairly good safety net and I've paid my health insurance)
It's a question of weighing up your goals. My desire to feel wealthy (by spending money that I don't actually have.... yeah, it makes sense inside my head) is less than my desire to get out of debt and be financially secure. Even if you're just starting and haven't made any progress, it's just a question of: do you want to go backwards?
3. So you made a mistake. Now what?
Where were your mistakes? My mistakes were threefold
I didn't budget enough.
I didn't allow myself time to find presents that were within my budget.
I forgot about other expenses.
How to fix this?
For budgeting: If I can save $8 from each paypacket, I will have $208 by next Christmas. That's more than enough for everyone. I'll rename one of my ING accounts and set up a regular deposit.
I will start looking out for presents sooner. I'll do a google search for books on subjects I know Mum and Dad are interested in, and I'll see if I can buy them on AbeBooks or something. Second-hand should save a lot.
I know what my bills are. I know when they come out. For the ones that come out on a date which is more than 6 business days away from my pay, I'll transfer the money to my savings account where I can't spend it.
For the ones that are under 6 days away, I'll put them in my calender at work. If I know they're coming up, I'm pretty good at not spending the money. If you have difficulty not spending the money even if you know about the upcoming bills, get a piece of paper with your expenses written on it and wrap it around your card. Secure it with a rubber band. When you go to get your card out to buy something unnecessary, take the time that it takes you to get your card out to think "Do I really need to do this?"
So. Now I feel better about where I am. I'm full of renewed purpose to keep myself on track for the year ahead.
Now, I'd just like to put a few words in for other blogs. Because finances aren't something we're taught, I'm having to teach myself. I read widely and try to read sceptically. (For instance, "Rich Dad, Poor Dad" has some very poor financial advice) But some blogs that I've found that really help me:
Get Rich Slowly. Get Rich Slowly is awesome. It's sensible. The blog author is all about frugal living, sensible investments and life balance.
He is in favour of totally getting rid of your credit cards, though. It's not an approach that works for me, but horses for courses.
The Simple Dollar. Again, common sense. Trent Hamm is a guy who has dug himself out of debt and established an emergency fund. He's got some fantastic ideas (if I ever buy a car, I will be buying one from Craigslist).
He is a proponent of keeping your credit cards, but tends to get a bit frothy at the mouth and all "If you can't keep a credit card and use it sensibly, you've failed at managing your finances!" While I intend to keep my credit card, money is about psychology and people can be different without being wrong.
So go! Read!
As always, comments are valued. How did you survive Christmas? Does the approach above work for you? If it doesn't, why not and what does work for you?
If you've got any other financial blogs you read on a regular basis, I'd love to read them. Link me!
Looking around my reading circle, it seems like most everyone had a pretty horrible, awful, no good year. Mine was actually okay.
But, I kind of blew my budget. Not awfully--but I couldn't find any suitable presents for my parents, then when I did find one it was in a store where I ended up spending more on myself (I hate Christmas. I hate shopping. I hate crowds. All of these add up to a very stressed me, and when I'm stressed, I spend.) and then my Dad's present cost more than I thought it would.
I have $0.20 in my bank account and $32 coming out in a week. It's okay, I have a no penalties overdraft which it will fit into, but that's not the point.
I should have managed it better. I didn't.
However: Remember when I said money was as much about psychology as anything else? Part of the problem is to know yourself. I feel a lot of guilt about things, and it's quite easy for me to beat myself up about having failed. So I have a checklist that helps me put things in perspective.
1. Assess your situation. Compare it to where you were three months ago, and a year ago
I have 20c in my bank account. I also have a hundred dollar overdraft that will cover anything unexpected without further fees. I'll have to use a bit of it for my gym membership, so I'll end up being $31.80 in overdraft. I have no money in savings. My house deposit fund is $20. My current credit card debt is $1844.00
Subtracting the debts and adding the savings, my current financial position is -$1855.80.
Three months ago, I was $19.40 in overdraft and I had $1.97 in my savings account. I didn't have a house deposit account and I was $2709.82 in credit card debt.
Then, my financial position was -$2727.25
A year ago? I don't have the exact figures but: I had no savings. I was at least $3500 in debt with the credit card, and I'd just spent several hundred dollars on Christmas presents. I know I had nothing in my bank account and had to put everything on the credit card.
We'll just call that position -$3500. I'm pretty sure it was worse than that, but that's what I can verify.
Right at this moment? Okay, I could have done things better, but:
I made a mistake. It's not the end of the world.
I managed my Christmas shopping for 6 people (family and housemates) for under $150. And I paid it in cash.
My financial position has improved by at least $1644.20 in a year. $871 in the last three months. And that's including Christmas.
That's an overall improvement. As for yourselves, do the same calculations. Take all the money that you have, whether you can access it or not. Investments, savings (credit unused on a credit card is not money). Take any debt that you owe. Subtract your money from your debt. Don't look at the size of the figures, that makes me panic a bit.
Look at your progress. Give yourself a pat on the back if you've made some. If you haven't made any, then the next section will apply to you.
2. Stop digging
You're in a bit of a hole? Fine, that's your situation at the moment. Now STOP GETTING DEEPER into the hole.
For me, at the end of next week I'm going to be $31.80 overdrawn. I have all my immediate needs met: I have ingredients so that I can make my lunch and take it to work. While the dinner I can make from the stuff that's at home is not particularly appetising (pasta with tuna and tomato sauce and a side salad), it's nutritious and only for one night.
All of my immediate needs are met. These are:
Shelter (Just paid my rent)
Food
Transport (I have my monthly public transport ticket)
Medical attention if I should need it (Australia has a fairly good safety net and I've paid my health insurance)
It's a question of weighing up your goals. My desire to feel wealthy (by spending money that I don't actually have.... yeah, it makes sense inside my head) is less than my desire to get out of debt and be financially secure. Even if you're just starting and haven't made any progress, it's just a question of: do you want to go backwards?
3. So you made a mistake. Now what?
Where were your mistakes? My mistakes were threefold
I didn't budget enough.
I didn't allow myself time to find presents that were within my budget.
I forgot about other expenses.
How to fix this?
For budgeting: If I can save $8 from each paypacket, I will have $208 by next Christmas. That's more than enough for everyone. I'll rename one of my ING accounts and set up a regular deposit.
I will start looking out for presents sooner. I'll do a google search for books on subjects I know Mum and Dad are interested in, and I'll see if I can buy them on AbeBooks or something. Second-hand should save a lot.
I know what my bills are. I know when they come out. For the ones that come out on a date which is more than 6 business days away from my pay, I'll transfer the money to my savings account where I can't spend it.
For the ones that are under 6 days away, I'll put them in my calender at work. If I know they're coming up, I'm pretty good at not spending the money. If you have difficulty not spending the money even if you know about the upcoming bills, get a piece of paper with your expenses written on it and wrap it around your card. Secure it with a rubber band. When you go to get your card out to buy something unnecessary, take the time that it takes you to get your card out to think "Do I really need to do this?"
So. Now I feel better about where I am. I'm full of renewed purpose to keep myself on track for the year ahead.
Now, I'd just like to put a few words in for other blogs. Because finances aren't something we're taught, I'm having to teach myself. I read widely and try to read sceptically. (For instance, "Rich Dad, Poor Dad" has some very poor financial advice) But some blogs that I've found that really help me:
Get Rich Slowly. Get Rich Slowly is awesome. It's sensible. The blog author is all about frugal living, sensible investments and life balance.
He is in favour of totally getting rid of your credit cards, though. It's not an approach that works for me, but horses for courses.
The Simple Dollar. Again, common sense. Trent Hamm is a guy who has dug himself out of debt and established an emergency fund. He's got some fantastic ideas (if I ever buy a car, I will be buying one from Craigslist).
He is a proponent of keeping your credit cards, but tends to get a bit frothy at the mouth and all "If you can't keep a credit card and use it sensibly, you've failed at managing your finances!" While I intend to keep my credit card, money is about psychology and people can be different without being wrong.
So go! Read!
As always, comments are valued. How did you survive Christmas? Does the approach above work for you? If it doesn't, why not and what does work for you?
If you've got any other financial blogs you read on a regular basis, I'd love to read them. Link me!
(no subject)
Date: 2010-01-01 09:44 am (UTC)I try to get my gifts during the year, try to start planning around March what I might like to get and then pick stuff up slowly. It kind of works, in that it spreads some of the spending out but then sometimes I either forget that I got something for someone or find something "better". This was my second year doing it and it worked a bit better. I only do bday gifts for my wife (family is too far away to do both) so don't have to worry about giving Christmas gifts away too early.
Am I better off than last year? I don't know. Our personal loan to the bank is almost paid off (will be in March). We've still got credit cards and a hire purchase and my student loan. My cards are about the same as they were last year, maybe a little less available because I got stressed early in the year and spent & put a lot on it when I shouldn't have.
But the new year brings new worries. Just about the time I thought I'd start building our savings but found a really nasty tooth on one of the cats. It's really inflamed and has a huge cavity, not something that can be left :( We should have enough to cover it in the savings, but still.....I look at the fact I'd just started getting it going again and then this :(
(no subject)
Date: 2010-01-01 02:20 pm (UTC)If your personal loan is almost gone, I think you can say you're better off. Have you got a plan for reducing the credit cards?
And yeah. Getting savings together in the face of Life is difficult. But just think--without the savings you wouldn't be able to pay for a vet. If you just keep on saving, eventually you'll get enough of a buffer to take care of stuff.
Theoretically. Mine seems to evaporate myself
(no subject)
Date: 2010-01-01 08:53 pm (UTC)For my cards I do try to pay more but it depends on the NZ$ against the US $ (my 2 cards and student loan are from the US). We got a small bonus this year so I put an extra $300NZ on the one with the highest balance.
One of the downsides is a regular cost that we've got right now (personal stuff so can't say much) is being subsidised and we're paying $20pwk. But soon that subsidy will end and it will be up to $90pwk. It's something for my wife and she thinks maybe she can cut back to fortnightly but that's going to cut into the $150pmth we won't have for the personal loan.
It's all a balancing act but I think like you said, trying to make small steps and plan more can make those life hiccups maybe a little less traumatising. I can hold onto the hope that the $850 we had to sink into the car about 3 weeks ago will hold it out for a few more years. It's been a good car but had a lot of maintenance needed. That depleted the savings, but like you said at least we had the savings to pay for it.
(no subject)
Date: 2010-03-09 02:33 pm (UTC)