So a few weeks after bouncing my rent cheque I decide that enough is enough and I"m going to take action. Taking action included actually answering the phone when the credit agency called and dealing with the unpaid phone bill I'd been avoiding for a year. Feeling empowered by the thought of finally getting my stuff together, I picked up the phone only to find out that the amount I owed last year was accumulating 25% a day. Needless to say I was once again beside myself and once again had to rely on someone else to help me out of this jam for now.
So as of today I have a clean slate. Pay day is in a week and I have a plan.
This blog is set up to document my journey and hopefully help other women be empowered to get control of their finances. I'd appreciate comments, articles...anything you can contribute.
My plan so far includes:
A budget - I've completed my budget and allotted a certain amount of money to everything and anything I spend money on.
I'm the QUEEN of debit. I LOVE my debit card, but I don't pay attention to the amount of money I have (or don't have) in my account. So as of my next pay day the debit card stays at home. I've put together envelopes for everything and I am going to stick to my budget.
Will let you know how that goes!
4 comments:
Good luck in getting your finances in control!
Me & Brian have been running off a budget since January for our common expenditures. It's been working pretty good so far. We have 3 main categories: apartment, car (insurance & maintenance) & general monthly expenditures that are variable (5 sub-categories: groceries, restaurants, booze, gas for car and "other")
Here's a few things we did that you might find useful:
#1: We wrote up a yearly budget (as opposed to just a basic monthly) so that payments that only happen once a year were accounted for (for example, condo/renter's insurance that that we pay as a lump sum 1x/yr). We have a savings account that we add to every month so that when a big "yearly" payment comes, the money is available. Similarly, we put away 25$/month into a car savings account in case we need to do maintenance.
#2: For the general monthly expenditures, I've found a good motivation to beat the budget is putting the money left at the end of the month into a savings account that is specifically only for something fun (for us, it's our vacation fund). Makes me always want to beat the budget since there's going to be a nice reward at the end.
#3 The budget only works if there is proper discipline and you keep track as you go along. Envelopes with cash is definitely the most disciplined way to go. We go by credit card (I'm a fan of the 1% cash back), but as soon as anything is bought, it goes into a giant spreadsheet we have so that we know how much of our budget is spent so far in the month and how much is left. If we happen to spend the allotted amount for a sub-category before month-end (restaurants for example), it just means there's no more restaurant outings till the next month or one of us pays it out of our personal money...
#4 We made sure to be reasonable with the budget so that it's not too drastic and allows for an enjoyable lifestyle. If the budget is too "tight", it's easy to loose motivation.
Thanks for your input Maya. I have to say that I really like the idea of #2 --- I'm going to tear up the envelope that says 'overflow'! I also like the idea of when the money that you've alloted is gone, it's gone.
Seriously, thanks for taking the time to write out this!
Here is what has worked for me:
a) Consolidate all high interest debt into a lower interest loan. I personally decided to stay away from a credit line. You need the consolidation to be something firm and set, not something that you can access as you pay it off.
b) Once all debts were consolidated, I got rid of my high interest and high limit cards. I reduced my limit to, what I felt was, an acceptable emergency amount. From that point forward the credit card was only used for emergencies (tow trucks, vehicle repairs, ect). When the card gets used, that debt is paid off immediately, or becomes top priority in the budget. The attitude that I took was 'If I can't pay cash for it, then I can't have it' That extended to material things, and fun things like going out. I think, that also applies to what Maya is saying about the 1% cash back credit card. Unless you can pay that card off immediately you're not reaping any benefits to the 1% cash back on a 18% - 27% interest rate.
c) In order to create an effective budget I needed to get a solid picture of what my current and past expenses/income were. The use of a program like Quicken will enabled me to download transactions from all major banks, credit cards, investment banks (ING) and investments. It's one thing 'guesst-i-mating' expenses, it's another when it's a finite amount.
d)Once I had a good idea of where I was 'pissing' my money away, I was able to set up a budget. I also used Quicken for this, excel spread sheets work, but I truely suggest using accounting software. It will also help come tax time. Like Maya said, a budget is only good if you're disciplined.
e) For savings purposes, I opened a high interest savings account. This account is used to stage all of my mandatory expenses (Rent, gas, electricity, phone, cell, insurance, ect) and slush fund. Every paycheque 50% of my expenses get transfered into that savings account. Then once that money is needed it is transferred back.
f) As Maya said, if you beat your budget you take that money and transfer it into your slush/fun fund. The one thing I would add, is prior to my fun fund, I set up an emergency fund. This is like a float, so when I have an emergency I don't have to resort to credit cards(or if I do, I can pay it off immediately).
g) The next thing I did, was started to shop more cautiously. Especially groceries, it's amazing how much you can save when you cut out junk, or name brand stuff that you can substitue for a generic brand. In the north, I found Save On is the cheapest place to shop.
All in all, these things don't happen overnight. It has taken me two years to reduce my debt by 50%. The first few months were the toughest. I know it won't work for everyone, but the big thing for me was cutting back on the small fun events, and only going out on the big fun events. People will call you lame, cheap and say you gotta have fun. But I would say for most of us, it was fun that got us into this mess to begin with.
A final note, Kristy, you know me and my spending habits. So, all hope isn't lost, you will succeed. You may have to miss out on some goodtimes, but they will come back.
Sounds like you're on the right track! I'm no expert, but I do keep a "loonie hippo!" One of my students knew I loved that "house hippo" commercial a few years ago and she bought me a hippo (piggy) bank she saw at a flea market. Haha. I put every loonie I get into the hippo, and it's about $300 already! Who woulda thought?! XO
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