It’s Your Money
Posted by Gail | Filed under Life Lessons, Money Management
People are always telling me how hard it is to manage their money properly. Sometimes it’s because they’ve never had a money management lesson in their lives and have no clue where to even start. But more often, it’s because people really don’t want to take ownership of their own situations.
If you’re from the first school and just need a quick reminder of what’s involved in money management, it boils down to a few simple things:
- Know how much you make
- Keep track of how much you’re spending
- Save for the long term (and use your employer to save for you too)
- Save for emergencies so they don’t throw you off track
- Make sure your money is working as hard as you are
- Know where you are, and where you’re going
- Live within your means
- Accumulate the money you need to buy what you want before you go shopping
- Actively manage your money (automatic savings and bill payment make this easier)
- Only buy a home once you’ve saved your 20% downpayment
- Make sure you’ve mitigated your risks with the right kinds of insurance
- Have a plan for when you die, because you’re gonna.
That’s the easy part. The much harder part for most of the people I meet is the part where you come to the realization and acceptance that it is you, and only YOU, who will make the life you want. If you want to be debt free, YOU must do it. If you want to own your own home, YOU must do it. To take ownership you must look at what you’ve been doing wrong and decide to move in the right direction. You can’t rely on anyone else: not your momma, your hubby, the government or your advisor. You must be self-reliant. After all, it is YOUR MONEY.
Sometimes people are creative enough with their justification to rely on their future selves to dig ‘em out. That’s what you’re doing if you’re spending money on credit, singing the tune, “I’ll be able to pay this back when I’m making more money.” Dumb! Dumb! Dumb!
To make this really work for YOU, you have to find the processes that work best and are the easiest to use. All the idea I try to give you on this site are simply “ideas”… nothing is written in stone. Even your budget shouldn’t be written in stone since it needs to change as you and your needs change.
If you have a partner, consider a tag-team approach to facing up and setting straight. Maybe he’s great at planning for big purchases, while you do the day-to-day transactions. Or perhaps she’s better at researching things like insurance, investments or interest accounts while you head off to the trenches to make more money to pay down the debt.
Through it all, you must be intentional. Each choice you make throughout your days, weeks, months, must be on purpose – not simply a spur-of-the-moment reaction. And it must be based on what YOU want. Without realizing it, we often make decisions based on what other people think. You dad thinks renting is a waste of money. Your sister thinks buying anything second-hand is gross. The media things that the markets are always going to be headed south. None of this is pertient. It’s about what YOU think, and what YOU need and what YOU want to achieve.
Of course, to be intentional, you must know what it is you want to achieve. So, stop for just a moment and think about what it is you want. What is your intent?
Now write it down.
And, finally, tune out the noise around you and figure out how you’re going to get from where you are now to where you want to be.
Here’s an example of what I mean. Think of all the credit cards that have been thrown at you. There was the department store card that offered to give you 10% off if you signed up, the bank credit cards would let you fly for free in no time flat, the at-home calls that offered pre-approved access to more credit. If you were acting intentionally, you would have thought to yourself, “Self, does this fit in with my goal to be debt free.” See my point. If you signed up for every credit card thrown at you, you’d have more temptation than a good soul needs to stray.
Knowing what you should do – my earlier list – is about 20% of the job. Taking ownership and working intentionally towards your goals, that’s the other 80%.
January 15, 2009 at 7:08 am
I never thought the tag team approach would work for my husband and I, since we have separate bank accts, pay for ‘our share’ percentage wise on our own, and pay for our own dumb purchase-mistakes on our own. But I am very happy to report that my husband is finally getting what I’m saying about the debt, no more purchases until it’s gone and taken care of, and all the other doom and gloom I’ve put forward. Okay, fine, he’s been listening to the news to believe the doom and gloom, but it’s a start. Soooo, this week we have decided that neither of us spend 1 red penny until we’ve notified the other about our intent. That includes everything from coffee (never buy it since I have a coffee maker at home, but still, for dramatic affect) to groceries to clothes. Yay! We’re finally on the same page!
*climbing down off high horse of excitement now*
January 15, 2009 at 8:13 am
Great post, Gail!
This is a lesson not just for money management, but for life in general. It is very inspiring to read first thing in the morning.
Good luck to everyone setting their goals and getting to where they want to be!
January 15, 2009 at 8:20 am
Tag-teaming allows me to maintain my sanity (and I think it helps him too!)
SO actually LIKES to do the legwork of researching different policies, different manufacturer options, calling/staying on hold with Rogers, etc. It drives me batty. I’m more than happy to clip coupons, do the legwork of what we’re spending where and where we can cut down, and “get out in the trenches” to do overtime.
January 15, 2009 at 9:42 am
One of my fav sayings is “If you don’t know where you are going, how will you know when you get there?” I plan continuously, from the day’s shopping route (to make the best use of time and driving), to how many days of vacation (camping) we will need meals for – nothing worse than not having what you need to cook with, etc.! Throughout the process of finding this site, relating “my story”, calculating my budget, and setting up the “jars’, I have felt so empowered and hopeful for the future. “I” am the only one who can outline and control where my money goes. People spend a year planning a wedding, why not take the time to plan your financial future? Once it is actually done, the maintenance part is sooooo easy, and as the others state, maintains your sanity! The local dollar store had dual zipper folding pencil cases (instead of the jars) with inner pockets where I put receipts after purchases. I can carry them in my purse, and they are as easy to use as a wallet. Writing down every penny spent a couple times a week in my budget binder not only keeps me honest with myself, but shows where the budget needs to be tweaked, AND records the declining balances on outstanding debt! Gail, I love your down to earth approach to your lessons. I can’t wait to receive my TDDUP planner! Oh, and I went to the library to find “A Woman of Independent Means”, and it was out!! You are reaching us even out here on the prairies. Thank you.
January 15, 2009 at 10:56 am
Great timing on this post! We were shopping for a baby gift at a store we almost never go into. They were promoting their credit card..sign up and get 10% off the purchase. We looked at each other and said ‘No Thanks!’
January 15, 2009 at 12:48 pm
Planning is so vital to my life, I can’t imagine NOT doing that!
Like making lists, I have always played the “what if” game with great joy.
Generally, I plan my future purchases on the assumption that we could (at any time) be down to one income…. that’s why we don’t let ourselves get into payment plans. It’s much tougher now with everything important costing SO much more, and it seems it doesn’t last as long either, what’s with that?
We know one or both of our early-90’s vehicles will be crapping out soon… (the car has almost 300,000K on it and is starting to rust in embarassing and structural places, and the truck is ready to “blow out the bottom end” whatever that means). SO we have been living as though we already have payments for the last 2 years, and have scrimped together almost $9G! This is the essence of our emergency fund, if a car died, it would be an emergency. And having the bargaining power of paying cash would be an absolute dream!
Sure we could blissfully pretend the cars would last forever, or put a vehicle on the line of credit (which has been empty for a while now). But my husband and I agree that paying interest on a rapidly depreciating item that always needs to be maintained, insured and fueled is more money thrown away, we are not comfortable with that. So we are squeezing every last mile out of our old junkers while we look for an excellent deal.
I am not too proud to drive an old car, wear 2nd hand or make do with older appliances, BUT I am too proud to go into debt UNLESS I have to!Then I am very happy it is available!!!! (Like my mortgage… grumble, grumble, banks, grumble, grumble)
January 15, 2009 at 1:54 pm
Funny that my post on saverqueen.com today had some interesting similarities to this one. Taking responsibility and getting organized can be tough if it scares you, but taking it one step at a time to acknowledge and accept that you are in control opens the door to financial enlightenment. very important post – thanks, Gail!
Suzanne, how wonderful to hear of your progress. And I love the pencil case idea – that’s a great one!
January 15, 2009 at 5:10 pm
Great post Gail! (as usual).
Michelle, Sounds like you and your DH are on the right track!
Suzanne, I like the idea of using one of those little bi-folding cases in place of the jars. They are very handy!
AM, good job saying no.
Pol, your donig great! I’m also saving for our next car. It sure gives me peace of mind knowing I’ll be able to buy my next car outright instead of a monthy finance payment.
Saver Queen – I’m off to read your blog next!
January 15, 2009 at 5:38 pm
I would just add one more item: Don’t beat yourself up when you are following all the rules and something comes along that is out of your control. I was a single mom of two little ones, working part time and on welfare 15 years ago, with no debt and a small $500 emergency savings account when I took my 5 year old to the orthodontist and discovered she would require $15K worth of dental work over the next 10 years. I cried myself to sleep that night and many nights afterwards. It took me the full 10 years to pay off the debt, even though my income increased dramatically after a couple years of post secondary education (requiring a little more debt). This was not cosmetic orthodontic work by the way, she was born missing 4 front teeth that would never grow in so, I did not have a choice on this expense. The point is.. I stuck to Gail’s rules long before I had ever heard of Gail and with a generous no-interest payment plan from the orthodontist was able to honour my debt and become debt free eventually.
January 15, 2009 at 5:52 pm
Saver Queen…I loved your post. It is so important to do things for yourself. I was pregnant for a long time (2 babies in a row), and had a lot of financial difficulties along the way, so I didn’t think I deserved anything! I have since changed that way of thinking, I went to the gym for the first time in a WHILE (for free as someone gave me 5 free passes), went out for dessert with friends (cost a few dollars but worth it), and plan to get a haircut!! Woohoo, exciting huh!?? ha ha…But I feel like a different person these days. It has a lot to do with this site though. I feel so empowered having control over my money, so thanks again everyone!!
January 15, 2009 at 6:02 pm
I finally have a financial goal, for the first time ever. I want to pay off my mortgage. Having something to aim for really does help. But it is only part of it, you’re right.
Thanks for the kick in the pants.
January 15, 2009 at 9:15 pm
I just read about a TV/online/newspaper celebrity money guru in the UK who has just filed for bankruptcy. From a website she writes for giving advice to hard-up families: “Make a budget and stick to it. Putting the numbers down on paper will show you just where all the money is going. Set a limit on how much you are going to spend — and stick to it.”
She obviously wasn’t using the jars!
But her story brings it home how important it is to manage your money wisely and plan your spending.
January 16, 2009 at 11:58 am
Hi,
I have a question, hopefully someone will be able to help me. My mortgage is up for renewal this March. My husbandand I have approxmately 4.5 years left. We also have a small line of credit. We are thinking of raising our line of credit to include whats left on our mortgage, keeping the payments for our mortgage and LOC the same and including some extra payments on a monthly basis to help pay it off faster. The intrest rate is 3.5%. right now on our LOC. Has anybody else done this? Is this a good way to things off faster?
January 16, 2009 at 2:36 pm
Catherine, I’m no expert but I would say that whichever way has less interest will save you money…and I’m pretty sure that as long as you make your regular payments on time the interest rate on the loc should not change too much, but I would call the bank and inquire about the interest, because I think that would be the biggest thing. Another thing to think about maybe would be is do you have any insurance on either loan. As long as all your bases are covered – save as much money as possible! Ask questions.
Hope that helped…
January 16, 2009 at 2:48 pm
Catherine:
LOC: Is it a variable interest rate? If so, can you handle an increase in the rate?