May 17, 2010
Crystal of Budgeting in the Fun Stuff and Simple Life in France recently imagined their lives without debt. Having spent a full quarter of my life in the state of debt repayment, I’d like to point out some potential lingering effects you might observe after you bid adieu to your personal interest-sucking leech.
Facial tics: when people who brag about taking on unnecessary debt. As witness, Jersey Mom’s overheard conversation by the Woman Who Wants to Wear Her House.
More severe side effects may include the barely suppressed urge to slap the person in question, or a totally reasonable rage.
Ulcers: when a loved one reveals plans to embark on a fantastic unfunded business venture. Without funding. Or a business plan. Or an exit plan. Or anything except blind optimism.
Migraines: when you discover someone deep in debt or without sufficient cash flow has purchased Yet Another Gadget.
I take a few pills of Mind Yer Own Derned Business every morning now, to offset those ingrained reactions. That and a pair of earplugs means much less stress and (verbal) slappin’ all around, at least for the people I’m not related to.
Do these sound familiar to anyone or is it just me?
April 29, 2010
Have you ever rushed to the store with a soon-to-expire coupon because you didn’t want to “lose” the $15 (off $30 purchase)? Or gone shopping online to take advantage of the stackable coupon codes expiring in a couple days? Specifically, have you spent money because you could “save” money instead of saving on a necessary purchase?
Guilty and guilty.
It’s a habitual behavior, I’ve noticed. If you’re ignoring all coupons, it’s easy to keep on ignoring even the juicy ones. But once you open the floodgates and start matching coupons to sales to cashback sites, it’s on.
Of late, I had to purchase some work clothes because of the Bekins debacle which is the only time I’ve shopped without even considering price. That meant my Bargain Antennae (powered by guilt!) went up, which has cost even more.
My clothes went astray just after I’d already ordered a replacement for the “good” jeans that I detroyed; I went for trouser jeans which are even more elusive than regular jeans. Supply and demand totally kicked my butt: trouser jeans that fit never make it to the sale rack.
After resolving to suck it up and jump on the fattest coupons I could spot, I was too eager and bought the first pair at only 30% off with free shipping ($69). When a 40% off regular priced merch came up, I couldn’t say no. I knew it was only a matter of time before I broke the new jeans. With free shipping: $59.
Confession: Since I won’t wear jeans to work right now, saying they’re for work is a little disingenuous.
*Note: I actually wore them to work once. For a half day, as we had an offsite that included 5 hours of walking for which my knees demand tennis shoes.
At least I won’t buy jeans for more than 3 years as the average life span of my jeans are 2 to 8 years.
Last night, another sale was on and there were two work-worthy tops in the right size, so I spent another $52.
Luckily I had some forethought. Knowing that I was tempted, I’d redeemed CC points for gift cards so all but $11 of the above purchases totaling $180 was not cash out of pocket. Regardless, that’s a lot of money spent just because there were sales and/or coupons. It’s not that I won’t use them – I’ve cycled through three pairs of pants and 5 shirts over the past 12 days – but it’s definitely a slippery road where buying because of a “bargain” becomes a reflex.
March 22, 2010
“Finite means, and deciding how to spend them, has a delicious tension that infinite means can’t supply.”
– From Carla Power’s The Pleasure of Pinching Pennies on Oprah.com
I can’t tell you know much I love that sentiment. The paragraph continues …
“If the lamp’s genie had granted Aladdin limitless wishes instead of just three, where would the fun be in that? The link between thrift and being fully engaged with life’s possibilities was recently noted by Barbra Streisand, of all people. Back before she got famous, she had to stretch her $45 clerk’s salary all week. “Those were amazing times,” she told a talk-show host, “when you have your future ahead of you, and the challenges of making that $45 last, and appreciating every penny.
Spoken like a true multimillionairess, you may scoff. The glamour of making ends meet frays pretty fast when you’re worried about losing your house or going without health benefits. There’s thrift, and then there’s fear, and nobody should confuse the two. But for those fortunate enough not to want for basics, there is a glorious discipline in trying to stretch your money to fit your vision of the world. Like a good workout, or great sex, weighing up how you spend your money recenters you, allowing you to feel the reach and heft of yourself moving through the world.”
The distinction made here between thrift and penury is critical — there was absolutely nothing fun about working 80 hours a week, trying to make decent grades in college, all the while wondering if I was going to bring home enough to pay both the rent and utility bills. There was nothing glamorous about dropping silent tears over my checkbook, willing the numbers to match up and stay in the black.
But years after that was over, when I graduated and started making a little more money, I made choices for myself. I started to appreciate what was truly important and why they meant more to me than eating out or buying Stuff. My parents’ choices made more sense: buying used clothes; handing clothes down through four cousins; only allowing me to borrow, not buy, books; and helping displaced family with comparative luxuries like take-out food, money and shelter. It took some years before I realized that they were making perfectly acceptable sacrifices for their kids to provide basic necessities to our extended family.
When you have just enough to get by, your choices are your values. Your lifestyle brings out the grit and creativity that usually hides deep in your bones.
_____________________________
My post on buying a car (should I or shun’t I?) was included in this week’s Carnival of Personal Finance! ’twas rough times out there, the Carnival is overrun by the classic ninja vs. pirates vs. nuns vs. fighting robots vs. real estate agents vs. zombies!
October 9, 2009
This comic is pretty funny all on its own, but I unearthed this gem from the archives recently and thought y’all’d appreciate it. It’s the best example of contrary human fiscal behavior yet.
Shortpacked by David Willis, folks. Sometimes, purely genius.
September 12, 2009
These are permutations of this question: How do you help others help themselves? Turns out, the answer can be quite simple: identify the appropriate resources and let them help themselves.
With the wealth of information and financial knowledge available online, I don’t buy financial advice books. There are a few “classics” or commonly discussed books that are constantly referenced, but they’re available at the library or through Paperback Swap, so it seems pointless for me to pay money for basic financial wisdom.
(Ramit would dispute this vehemently. But that’s not the point. The point is here, I’m agreeing with his premise that sometimes you should spend money to save money. Point also made on Consumerism Commentary’s podcast. So I guess you could read his post, listen to his commentary and skip this post. But you shouldn’t! Embarassing story ensues.)
This (perpetual and time-consuming) willingness to root for information, however, isn’t for everyone.
For those who are only interested in avoiding the biggest potholes but don’t yet know how to identify them, the exhortations of an exasperated PF blogger to “know your budget, understand your spending, run your numbers!” just doesn’t translate as constructive advice.
To fill that need, those black and yellow Guides for Dummies are good resources. I spent last weekend previewing the Mortgage for Dummies book because as an English major, I was skeptical of what seemed to be the Cliff Notes to money. The alternative, if the book didn’t pass muster, was to go dredge up more mortgage advice links and posts which weren’t terribly appealing in the first place. Plan B wasn’t looking too hot.
Happily, I was impressed at the concise and engaging writing. It wasn’t just my natural nerdiness and affinity for the material, either. After a few chapters, my non-blogger friend was moved to ask me questions about concepts raised in the book! Normally, this friend’s eyes sort of glaze over a bit when I start in on my really involved financial diatribes. You know, the “I’m watching football lalalaaaaa” kind of look?
For the record: I got to explain why people pay for points when shopping for a loan. In some situations, if you’re staying in the house long enough that your total interest paid is less than without paying for points (after factoring in the point cost) it’s worth it. That summary is pretty ok, but my original example didn’t clear things up, so I explained how I used the concept in a totally wrong and financially detrimental way.
When I bought my car *cringe* I made just about every mistake. I did negotiate and worked with the Fleet salesman instead of the floor salesman but that was about the only thing I did right.
Sensing blood, they presented a “pay for percentage” situation that only a total newb would fall for, and I did. *more cringe* They offered to knock a full percentage point off my interest rate, financed through a credit union they worked with, if I would pay an additional $1000 for GAP insurance. Since the car purchase was under duress (see Mistake #7) I wasn’t prepared for the cash expenditure, thus, easily freaked out about the prospect of having to make up the difference between my drive off the lot value and appraised value if anything happened to the car early on.
They preyed on my ignorance and created fear of a situation that actually isn’t impossible to bear. (Which is, btw, how most of them sell extended warranties and such.)
I should have considered the time horizon. The loan was written for 60 months even though I had no intention of taking that long. On the other hand, with all the financial turmoil at home, I also didn’t know how long I’d stay in that loan. Predictions would have been wild guesses. I signed the paperwork, went home, and privately committed to paying $500/month instead of $370. It was PIF in 3 years – that reduced one percent was not worth it. I don’t have the paperwork anymore, but roughly speaking, because I was dumb enough to roll that 1k into the loan, I paid 1k for the privilege of saving about $200. Yay me!
Back to the point: it’s good to know that there are smarter folks than I out there writing guides to help those who just don’t have the time for this kind of obsession. Simple writing is often the smartest writing.
There’s something to be learned there.
August 19, 2009
They’re back, now.
As a former FatWallet Grocery Forum frequenter, and a fairly avid couponer for some years, I
know the value of a price point. Knowing the best price you should get for products keeps shopping levelheaded and budget-friendly. Even if the gimmes strike, the impulse buys are tempered by the internal price book. [Or the little black book where the best TP prices (after double coupon and sale) are recorded.]
For example, $3.99 is the usual price for a pound of asparagus: too much. When stores are motivated to move the asparagus, they’ll sell for as little as 99 cents per 1-lb bundle. That’s usually the lowest the supermarkets go around here, so $1.99 is an acceptable off-season price when the pantry is decidedly starch and protein-heavy.
For other products, clothing, accessories and the like: almost-broke student budgety price points. There are slight variations depending on the merchant, ie: Target versus department stores. Still, that doesn’t excuse the Macy’s version of merchandising where a junior’s day dress might be priced anywhere from $60-$100. In my book, page 4 of the Clothing section, that’s a no go since when the sales and coupons roll around? You can get those very same dresses, assuming your sizes are still available, for as low as $12-$16! Dresses are not a necessity, I’m willing to take the risk.
My few purchases before the layoff, though, whew! I upsold myself in Richter scale fashion.
- There was the much beloved bag purchase several months ago for 60% off = still above my price point by a factor of ten.
- There was the dress from Gilt.com [$150], plus the cost of tailoring [?].
- There was the bespoke dress from a dressmaker on Etsy [$192], which also required tailoring [$22].
And there’s the netbook I’ve been yearning after. Priced out at~$400, I’m still safe from that imprudent purchase, but all the travel of late had got me thinking that $200 was a reasonable price. [As my friend said about a shoulder bag, “if you like it.” Um, what?? It’s a purse!]
Granted, the netbook is a piece of technology so it’ll cost more than Payless shoes, but when on earth did my price points migrate to “$200 is an acceptable price” on more than just electronics?
(I can’t even blame it on the Recessionary Sales a la Free Money Finance.)
Well, I’m just glad they’re back now, I can’t afford that luxuriant lifestyle quite yet!
August 14, 2009
FB’s post on keeping up with her credit card transactions explains a very similar technique I used when my family was still involved in my finances.
They had credit card debt, half of which had been balance-transferred to my name, they had regular rent/utilities bills which weren’t always covered by their income, they had loans from me, the list ran on for some length.
My finances became this huge non-linear web: income (mine) – outflow (mine) – income (parents) – outflow (theirs) + income (mine) to cover their outflow – outflow (brother’s) + income (mine) to cover his inadequate or non-existent income.
To make things even more complicated, there were debts I’d forgiven, there were new debts accumulated, there was irregular income, irregular overtime, and periods of non-payment. The budgeting calendar was a hot mess!
Eventually, the best way to coordinate things during the time before business credit cards (to divide and track our purchases by user) was to tally each deposit and outgoing check by highlighter and separate transactions.
Every single payment from the family was labeled by name (Dad), amount ($50), reason (loan), and type (cash). While the check ledger was never reconciled in the traditional sense, each outgoing cash loan was recorded, and later struck through once a payment was recorded and
color-coded.
Nowadays, payments are only bundled when I’m scheduling them for bills to be paid out within the same week, preferably in the same day.
As long as a quick glance shows that each transaction is accounted for, I don’t have to worry about running short on funds, overdrawing, or any such thing. Saves me time and fuss, it’s my form of automation.
Ms. Ginger touched on this yesterday in her combo confessional and fix-it post. She and I must be channeling each other this week. 😉
