The Bottomless Cookie Jar
Posted by Gail | Filed under Credit Wise, Life Lessons
I have a big pink hippo cookie jar. I’ve been collecting hippos for years, and this is the very first one I got. Once I had kids, I started keeping it filled with cookies so they’d always have a treat at the ready. No matter when the kids opened up the cookie jar, there was always a fresh selection treats ready and waiting to be nibbled.
The problem with the bottomless cookie jar is that eventually you begin to take the cookies for granted. It’s human nature. And so when a couple of weeks passed and none of the cookies had been eaten, I stopped filling the jar. Several weeks later, after the jar had been emptied, washed and put back in place, Alex dipped her fingers into the jar to find it empty. She was very disappointed. The cookies were gone. It was the end of the world.
I laughed at her. I laughed hard. “Your world is a wreck because there are no cookies in the jar?” I asked as the tears rolled down my face. She started to laugh too. (Apparently my laugh is infectious.) She saw how ridicules it was to be that upset over cookies.
I eventually put cookies in the jar again, but I stopped keeping it filled. Sometimes there were a dozen or so cookies, sometimes there were just a couple. And the kids stopped taking the cookies for granted. When they hit a stash of cookies, they beamed. When they scraped the bottom of the cookie jar, they were disappointed, but quickly voiced their choice for what should go into the jar next.
A credit card is kind of like a bottomless cookie jar. With easy access to credit, there’s no reason to wonder when the treats will run out, and you are never disappointed. Want a new outfit? Just stick it on a credit card. Want to have dinner with a bunch of friends? Ka-chunk, ka-chunk. Desperately in need of a sunny vacation to beat off the winter blues? There’s room on the line of credit, and that’s just what it’s for, right?
When credit became a commodity and lenders started hiking limits and offering incentives to take on more cards, people started behaving like greedy children, gobbling cookies without a thought to the ramifications. Everyone believed the shopping frenzy would never end. Economists warned that a slowdown in spending would negatively impact the world economy. And governments actually sent people money to go shopping. Imagine.
And now the jar is empty. Yup. The credit market is in retraction, people are watching as their credit limits shrink, and everyone is bemoaning the fact that they can’t get a consolidation loan because – what a surprise – they’re over-extended.
Articles abound on how to protect your credit score when lenders lower your limits. Even as folks are leaving the cookie jar empty-handed, they still don’t get it.
People, listen closely. Your credit score is only important if you’re planning to borrow more money. Focusing on your credit score is a trick, a distraction from the real issue: You have to learn to live within your means. Credit cards and lines of credit only serve YOU when YOU have the power. Give the power to the creditor and you’re a puppet, jumping and twitching. So, do you want to be some credit card company’s puppet? Like the feeling of twitching when collectors call? No? Okay then, it’s time to retake control and be in charge.
Being in charge means being out of debt. It means paying off your balance in full every single month. It means having only as much credit available as suits YOUR needs.
Do you know that people who make only the minimum payment on their credit cards have a better credit score than those who pay off their balances in full every month? Why? Because they’re more profitable customers, so they score higher. Do you want to be some company’s dream customer, paying gobs of interest and twisting in the wind when the company decides to change the rules of the game? Or do you want to be in charge of your money and your life?
All you have to do is accept that living on credit is dumb. Dumb! Dumb! Dumb! The only way to be financially safe is to owe nobody nuthin’.
Living within your means isn’t as hard as some people think. Yes, it does mean you have to make choices. And yes, you may have to wait a while before you can take that vacation. But when you stop treating your cookie jar like it has no bottom and start living within your means, you’ll be in charge. Sometimes there are cookies, and sometimes not. And if there are no cookies, it doesn’t mean it’s the end of the world.
January 16, 2009 at 6:02 am
This is my number 1 goal this year, to live within my means. It helps that my puppy chewed my visa before Christmas, so that it’s no longer usable ( divine intervention perhaps). I also opened a Christmas savings account and will open my TFSA account this week, all while paying down debt. Love your blog and I love the planner.
I have 1 little suggestion for next years planner. What if you put in the front a year @ a glance calendar ( 6 months of the left page, 6 on the right)? I find that a useful tool in planning my year.
January 16, 2009 at 6:32 am
Great article Gail!! I have to print this one off for my nieces and sister-in-law. They all seem to think that “Daddy” is a bottomless bank.
“Living within your means” gives a whole other meaning to “keeping up with the Joneses”. Living life without debt is so liberating. When I was growning up, my mother would say put aside 10% of every cent I earned. Did I want to do that? NO…but so happy I did. When I needed my down payment for my home, it was there. When I wanted a vacation, it was there. And when I needed to purchase my car, the money was there. NO BANK, NO CREDIT CARD…just my 10%. Sure sometime I would squirrel away more but minimum 10% always.
I’m only 2 years away from paying off my home. I will have only had a 5-year mortgage and the house is mine. I can’t begin to tell you how much interest I’ve saved.
My cookie jar is MY MONEY.. no one else’s.
Excellent post.
January 16, 2009 at 7:00 am
..Oh and did I mention that I’m only 42 years old…
Keep up the great blogs.
January 16, 2009 at 7:21 am
Gail,
As a Nortel employee awaiting my fate (impending layoff without severance), I’m proud to say that I’m financially ready. I’ve been living within my means since I started working. My house was paid off last summer! I have about 2 years worth of expenses saved. Now I just have to wrap my head around the mental/emotional aspects of unemployment…that might be that hardest part.
January 16, 2009 at 8:48 am
Soon-to-be-ex-nortel
I feel for you! Living in Ottawa, I know how devastating the closing of Nortel is.
Good on you for having saved, when my husband was laid off from DELL almost two years ago we were financially dumb!
Keep your head up, and start applying for jobs now! Other companies are scooping up soon-to-be-ex-Nortel employees!
Good luck!
January 16, 2009 at 9:03 am
What a great post, Gail. I hope that these tough financial times will teach us to appreciate when there is a cookie in the jar. We’ve been eating so many cookies we don’t even enjoy them anymore. Live without for a while and then when a cookie is there we’ll be happier than we were during the time of bottomless mounds of cookies.
If there were no rainy days or winter days we wouldn’t take such joy from sunny warm ones.
Thanks for your writing Gail.
January 16, 2009 at 9:06 am
Thanks for posting this article Gail! It came right on time for us. My family is going to Florida next month, and my parents are paying for everyone to go and have a big family reunion vacation. A few nights ago, when some hotel reservations were falling through, my husband and I priced out what the vacation would cost us if we paid for hotel, meals, etc. on our own. Then we started trying to justify to ourselves spending a few thousand dollars that we don’t have, on a vacation we don’t need to pay for, just for “convenience”. Well, Gail, your voice was in our heads, and we started imagining what you would be saying (such as, “You are being dickwads! You can’t afford this, it’s just SCHTUFF! SCHTUFF you don’t need!”). So now, instead of spending tons of money we don’t have and don’t need to spend, we’re planning our days in Florida and saving up for our ultimate vacation… 5 years down the road.
Cheers!
January 16, 2009 at 9:12 am
Speaking of Nortel, Gail was mentioned several times yesterday on CBC Metro Morning by a couple who were on one of her early shows. They were buying Nortel on credit (buy low!). Apparently, against their own desires, Gail was adamant that they sell the shares that they couldn’t afford to own and start work on paying off their debt. Boy were they ever singing Gail’s praises to the roof.
My husband shouted down to me – “Your favourite person’s name keeps getting mentioned on the radio.”
I’ve recommended your website to my financial advisor who is adding it to his email updates to all of his clients. Great posts.
January 16, 2009 at 9:57 am
…about the fact that your credit rating is higher if you do not pay your credit card in full…well, someone mentioned that to my husband who can be financially – well – you can guess, so he refused to listen to me when I said that was the dumbest thing I had ever heard. So, of course, he listened to them and not me as it is much easier to NOT pay in full (duh), so now he has 2 cards…to make a long story short, he hides the balance of one of them from me (makes me absolutely wild…) and we continuously pay on the other one. But he gets offers in the mail all the time now…I cringe when I see them! I’m having a tough time getting through to him, I get a little here and there though
.
And to Elizabeth – you go girl!!
January 16, 2009 at 12:05 pm
Wow! Your post hit hard on that vacation mention. My fiancee and I have a regular savings account for vacations but no savings account for car repairs. And guess what expense is coming up soon? I suggested we take the money for the car repair out of our vacation account but my heart sure wasn’t in it. After reading Gail’s blog, I know that it’s the right thing to do. Why is everything that is difficult, the right thing to do?
January 16, 2009 at 12:07 pm
@soon-to-be-ex Nortel and @Elizabeth – good work, both of you – you should be very proud of yourselves!!
@sam – so cute about the puppy-chew-up-the-visa… makes a good financial strategy eh?
@Julie – I remember that couple! Were they in a better financial position now? I felt sorry for them at the time…
@Michelle – how frustrating… hope it “clicks” for him one of these days!
January 16, 2009 at 12:51 pm
I learned that tidbit about people paying off their credit in full every month having lower scores from your show. And I decided I didn’t care. Because, like you said, living within your means is more important than being a ‘good consumer.’
January 16, 2009 at 12:57 pm
(USA reader over from Get Rich Slowly – been ODing on your blog archives.)
What a cool analogy! I occasionally let loose a rant about credit scores. It’s free to check your credit report for accuracy once a year (and smart, and good practice) but it costs money to pull your score. So… since I have no plans for any sort of additional borrowing for the next few years I can’t figure out why I should care. I’ve pulled my score once, found it was in the high 700s, and promptly began ignoring it. I pay everything on time (and recently, the card in full, 0 balance) so I figure it may actually have slipped a little but not into the range where, should be lovely little ‘96 car die on me, I wouldn’t be able to get a car loan. But my car savings account is doing pretty well so hopefully even that won’t be necessary.
January 16, 2009 at 12:59 pm
@Amber – I agree with you 100%. I learned that tidbit from the show too. It made me sick.
January 16, 2009 at 1:47 pm
Great post Gail! I decided I didn’t care if my card companies had problems with me paying in full every month…so be it.
@soon-to-be-ex-Nortel ~ so sorry to hear about your job. You must be proud of your financial safety net! Way to go!
@keep trying with dh Michele!
January 16, 2009 at 2:07 pm
FACT: I can buy MORE stuff when I spend within my means than if I put it on a credit card and pay them interest!
Why isn’t there a separate line for interest accumulated on loans or credit cards? It seems VERY efficient on the show when you highlight how much of the budget must go towards that expense and it would make people look it up. How much are you wasting every month?
Remember that the interest accrued on a credit card is an expense! I prefer using the money to buy stuff!
Let me argue Gail’s budget worksheet
January 16, 2009 at 3:25 pm
Thanks for the votes of support!!! I do keep trying, and I’m hoping that by example he’ll eventually get on board with me…
January 16, 2009 at 3:42 pm
@ Saver Queen, do you apply to all those sampler things? I just signed up for one…I really enjoyed your blog.
January 17, 2009 at 12:06 am
@michelle – thank you for visiting and commenting on my blog!! do you mean the P&G samplers that i listed at my blog? it’s kind of cool, if you like that kind of thing – you get a bunch of samples for filling out a quick survey. it’s fun and easy. I usually save mine and take them with me on trips – they are handy!
January 17, 2009 at 2:30 am
Gail,
You’re fantastic and always a pleasure seeing your show! After claiming bankruptcy two years ago and quickly obtaining a secured credit card to establish my credit, a few weeks back, I just recently canceled the card and happily waiting for my deposit back. I canceled because I was using it as a gift card each month. I can’t tell you the lovely liberal feeling I get from not having a credit card.
When I was reading the first few words of your recent blog, I thought for a second you were referring to piggy bank jars. I’m recently starting to fill one up. What’s your perspective on them? Thanks ever so much.
Respectfully,
Josef
January 17, 2009 at 2:21 pm
Sam: That’s one smart puppy you have there!
Elizabeth: You rock! Good for you – you’re setting a wonderful example for others in your life.
So-to-Be-Ex-Nortel: I wish you the best of success in your search for new employment. Sounds like you have your priorities in order with your home paid off & TWO YEARS worth of income saved – that’s amazing to me!
Cassandra: Sounds like Gail is the little angel of conscience on your shoulder.
Josef: Good for you for walking away from the CCard. Saving up for what you want will make you feel so good.
I’m working hard to keep my focus on living within our means this year. I really don’t want to go any farther into debt than we have already unless there is an emergency. I’m working on an emergency fund and paying off the debt. One day at a time. This blog and all your comments really helps me stay focused – thanks everyone.