Well, here we go again, I get to once again pay for the fact that other people refuse to grow up and only spend what they earn. Is anyone else out there angry that we are going to have to bear the burden for the "bailout". I've spent my life doing without, going nowhere, meeting my budget, paying all my bills on time and putting away money for my retirement. You can bet I'll be paying the debt for those that had a wonderful few years living on the fat of the times and ignoring their debt. AIG employees I hope you enjoyed your half million dollar retreat. I've never even been in a spa, but then I never had the federal government bail me out with money either.
And oh yes it makes me angry. The black humor at work has gotten really bad, with the devaluation of our 401k balances most of us are looking at retirement as a joke. Or something we 'may' be able to do around the age of 90. Maybe we wouldn't be so worried if we 25 or 30 but several of the people I work with were hoping to retire within the next year or two. Sorry folks.
So your goal is to only spend what you earn. It sounds so simple. People need to see that magic plastic card as an actual bill. Save those receipts each day and total them up. Better yet switch to debit, when the money is gone you can't spend any more. I was treating myself to a coffee at a coffee shop while I was on vacation; a rare splurge, and the young man in front of me ordered his 'usual' and then had to go through three plastic cards before he found one that wasn't denied. Why on earth are you charging coffee at this point, go home, brew a pot and carry it. In fact, do the same for lunch. You'll eat healthier and save a bunch of money.
If you made that list the other day, it tells you your bills. Now for a month you need to be brutally honest with yourself about where your money goes. If you are charging more than those minimum payments you're making then you are in negative cash flow and it is going to bite you hard in a few months.
Wednesday, October 8, 2008
Wednesday, October 1, 2008
Get Real!
A very dear friend of mine confided that she never balances her checkbook. She has overdraft protection and when things get too far out of hand she stops using her checking account, waits awhile and starts with what the bank says is her balance. All I could say was omigod.
She is a widow, and of course someone else used to handle the finances. She has very little idea what is owed to whom when and gets surprise bills all the time. This is not a time for us to be blindly spending our income.
So what to do? Pick a quiet evening, turn off the TV, the radio, the iPod, pour a glass of wine or beer if you need it and figure out where you stand. Unless you have a commission job you shouldn't have too much trouble figuring out your income. The problem is the outcome :) or the outgo to be more accurate. We're not going to be doing a financial statement here -- more like a cash flow statement.
So one column gets the monthly take home income(not gross paycheck- this is after all those monstrous deductions), the other gets your bills. List your mortgage/rent payment, condo fees, monthly grocery bills, and utility bills (gas, electric, water & telephone -- do not include cell phone or Internet). These are your necessities -- we can argue telephone later. Subtotal these, and subtract from your income. If at this point you don't have as much income as outgo you need to seek help immediately. You are in over your head and there's nothing I can say to help you.
If you still have money left- you now list your car loan if you have one, and all your credit cards- start with minimum amount due on these, and other bills you owe. Subtract from your income, how are you doing? Still money left? So far so good. Except if you are only able to make minimum payments on credit cards you are doing a juggling act. It will only take one small emergency and over you'll go.
How much do you owe those credit card companies? At what rates? With or without a government bailout credit will be tightening up soon and you will find yourself with a lowered credit card limit and higher interest rates. Give up those luxuries now ( and I do consider a latte at Starbucks a luxury) and get those cards paid off.
I saw Suzie Orzman on TV the other day and she was telling about a trip to the grocery store. In front of her was a woman with a basket full of halloween goodies. Suzie looked at the basket, looked at the woman and said -- Are all your credit cards paid in full? If not, put every bit of that back-- they are luxuries.
Start now to separate the necessities from the luxuries and take care of your personal business.
She is a widow, and of course someone else used to handle the finances. She has very little idea what is owed to whom when and gets surprise bills all the time. This is not a time for us to be blindly spending our income.
So what to do? Pick a quiet evening, turn off the TV, the radio, the iPod, pour a glass of wine or beer if you need it and figure out where you stand. Unless you have a commission job you shouldn't have too much trouble figuring out your income. The problem is the outcome :) or the outgo to be more accurate. We're not going to be doing a financial statement here -- more like a cash flow statement.
So one column gets the monthly take home income(not gross paycheck- this is after all those monstrous deductions), the other gets your bills. List your mortgage/rent payment, condo fees, monthly grocery bills, and utility bills (gas, electric, water & telephone -- do not include cell phone or Internet). These are your necessities -- we can argue telephone later. Subtotal these, and subtract from your income. If at this point you don't have as much income as outgo you need to seek help immediately. You are in over your head and there's nothing I can say to help you.
If you still have money left- you now list your car loan if you have one, and all your credit cards- start with minimum amount due on these, and other bills you owe. Subtract from your income, how are you doing? Still money left? So far so good. Except if you are only able to make minimum payments on credit cards you are doing a juggling act. It will only take one small emergency and over you'll go.
How much do you owe those credit card companies? At what rates? With or without a government bailout credit will be tightening up soon and you will find yourself with a lowered credit card limit and higher interest rates. Give up those luxuries now ( and I do consider a latte at Starbucks a luxury) and get those cards paid off.
I saw Suzie Orzman on TV the other day and she was telling about a trip to the grocery store. In front of her was a woman with a basket full of halloween goodies. Suzie looked at the basket, looked at the woman and said -- Are all your credit cards paid in full? If not, put every bit of that back-- they are luxuries.
Start now to separate the necessities from the luxuries and take care of your personal business.
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