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Money Management

Yesterday while driving home, I heard yet another commercial for some bogus "tape" on how to get out of debt and get rich, even if you don't make much money. Another quick fix huckster preying on the financially brainwashed. I was disgusted.

Our whole society is so brainwashed and programmed to just throw money at our problems, even when our problems are due to bad money habits! Buy, buy, buy!! Yes, money solves some problems - if you can afford it. But if the problem is debt and bad money habits, they you don't need to buy schlocky tapes, you need to stop spending more than you make!! Especially credit cards at restaurants and grocery stores, where you don't even have anything to show for your debt except wrappers!

I've gotten myself into trouble with credit cards - when the dot bomb happened and my income vanished, rent, utilities and food came first. I tried to bridge with my Visa cards - it had worked before during short downturns. I overextended, and it came home to roost. However, I managed not to file bankruptcy - I couldn't afford the paperwork!!

I finally have another general credit card again, after 5 years. I have almost paid and settled all of my debts - the last major one will be done this year. I never lost my department store cards because I had credit insurance on them that was good, and I kept them low. Between then and now I have made some spending style adjustments, and I recommend them:
  1) For the most part, if the money isn't available, it doesn't get spent.
  2) If there is travel or a major purchase to go on the cards, it better be at least $100, preferably twice that, or just pay it out of cash on hand. Food is *always* cash or debit.
  3) Pay more than minimums on credit accounts (at least 10% of the outstanding balance). Try to zero the balance on all of the cards at least once per year.
  4) Put a chunk of cash every paycheck into savings instead of checking, and try not to spend it unless it's a major "gotta do" expense (like the move, car repairs, dental work, replacing appliances.)
  5) Put aside a hard cash "Oh Shit!" fund. Not twenties. Something that's hard to break, convert or spend easily. Lock it up.
  6) Write a tight budget, and stick to it. Any items that aren't expended get converted to savings.
  7) Don't buy conspicuous consumption stuff, even if it's shiny (this has been the hard one).

There's other stuff, too. I'm trying to reduce my volume of crap - by giving away or tossing out stuff that doesn't fit, that I know I won't wear again, or that is broken beyond simple repair (I'll never fix it, and I know it). If I want shelving and stuff, I need to make it, not buy it prefab. I'm shopping eBay and Amazon more, and being pickier.

But seriously, folks, there are no quick fixes, just discipline. The only way you get rich is if your income exceeds your outgo. You don't have that if you have credit card and other non-secured debt. This advice is free, too. Would you take it more to heart if I charged you for it??



( 1 comment — Leave a comment )
Jul. 7th, 2006 09:32 am (UTC)
A new member of my frugal group asked what the group's number one money saving tip was and she got a lot of "Don't spend it" replies. *grins*

( 1 comment — Leave a comment )

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