Cold Hard Cash
Tuesday, January 12th, 2010I’m switching to a cash based system of money management. I have to. When spending money is as easy as swiping a debit or credit card, it seems that I can’t tell myself when to stop.
Usually I am good at knowing my limits and when I’ve shopped enough, but the past two weeks have just thrown me for a loop.
It started innocently enough: I wanted to buy some furniture for my apartment. I’m not talking fancy living room/bedroom sets, but stuff you put together yourself. Bookshelves, a chair, small t.v. stand from Target. Somehow it snowballed insanely. One more thing led to another to another. It’s not like I was buying large items. Therein lies the problem. Little things add up quickly. Much more quickly than you realize. I almost had a heart attack when I looked at Mint to see the damage. The month isn’t even half over yet!
Here’s the plan:
Take out a specified amount of cash every week ($40-$50). Use the credit card ONLY for groceries and gas (I get points for those). Once the cash is gone for the week, it’s gone. I can’t spend any more. I should have done this earlier. I know that I don’t spend cash as freely as credit/debit. Even though I do prefer using a card so that I can look at spending patterns at my leisure, it has to be this way for now. Something about physically having the bills in your hand and handing it over to the cashier makes me want to conserve it. When I gain some perspective in a while, then I’ll slowly transition to using a card for most transactions.
Good thing I realized this now, instead of down the road to debt. I always pay the credit card balance each month, but I’m scarily close to not being able to do that this time.
Contract Free Me
Saturday, December 19th, 2009Cell phones, I think, have become the preferred method for today’s relatively young people to keep in touch. They are everywhere and do just about anything a standard computer can do. In school, I couldn’t turn around without seeing someone on their Iphone or other similar uberphone. While I would never disparage someone for being trendy (I do have an Ipod Touch), having the latest phone with all the bells and whistles has never been my thing.
I don’t talk on the phone very much at all, and I really don’t like the limits that text messaging puts on my expression. So I don’t do either. I prefer talking face to face and email. Heck, I even prefer instant messaging, without the inane txtspeak. I also don’t feel the need to be constantly connected to the internet. Actually, I’m already pretty constantly connected. I have internet at home and at work. Where else would I need it? While driving? Grocery shopping?
What that boils down to is that I do not need a uberphone with an uber contract. I had a phone contract for a few years, but when it expired last year, I decided to give it up and use pay as you go.
That decision has totally changed my life! Well maybe not so much, but has had a significant impact on my finances. Before I had a plan that gave me 1500 minutes plus a 400 text message add-on. This cost me about $55 each month. 55 dollars is a lot for any college student, especially when I only used about 200 minutes and 30 text messages in a particularly chatty month.
Now, on my pay as you go plan, I average about 20 bucks a month. I buy minutes in blocks of $50, and the occasional text message is billed at a low rate (10 cents).
I feel like I have so much more freedom. If I want to have a new phone, I don’t have to worry about waiting until I’m eligible for a new one or my contract is over. Even if I bought the phone at full retail price, I’d still come out ahead. Let’s do the math: Let’s say I wanted a smart phone. It probably costs ~$300 (I wouldn’t buy a phone that costs more than that). With a contract, it’ll probably cost ~$100. To get that price, I’d have to have a two year contract at ~$70 per month, including minutes and a data plan. Over two years, that adds up to $1780.
Currently, if I wanted a fancier phone, I could spend $300 for it, and averaging $20 per month, over two years it adds up to $780. A thousand dollar difference is nothing to sneeze at. That’s money I can use for things that I really value.
I’m contract-less and happy about it.
Paycheck to Paycheck
Wednesday, December 2nd, 2009Last week I got my first paycheck from my job. Woo Hoo! It was all good, except that most of the extra went to paying off some of my credit card. (Note: I am NOT living lavishly, buying lots of electronics and things on credit! I had enough money saved up to move into my apartment and live for a couple of months, but my job pays monthly rather than biweekly, so I used my CC to buy food and things like that. I still don’t have a couch, dresser, etc., because I’m waiting to save enough money.)
Anyway, I’ve been thinking a lot about my financial health. For some background, my parents did not model sound money management for me whatsoever, enough said. What triggered this introspection was, of all things, me trying to decide whether or not to get cable. That’s what people do, right? They have cable so they can watch MTV, E!, and all those other networks and shows. But then I thought about what value cable television actually brought to my life in the past. In a word: none. Watching television has killed my productivity. I probably could have graduated with honors from college if I didn’t watch so much tv. But I do miss watching Animal Planet. It’s also expensive. Around here, a cable/internet bundle would cost me $100 per month! I spent $75 each month senior year. While I could afford that on my salary, I have other plans for my money this time around. All of the shows I watch are online anyway. (Internet is FREE at my apt, by the way)
I really want to start my life out right. I was reading a money forum where people were talking about some of the unrealistic expectations people my age have about where they should be in life. Apparently, some people believe they should have the same standard of living that their parents have right out of college, so they spend, spend, spend. They put all this stuff on credit cards and loans, and really mess themselves up for the future. That is not going to happen to me, if I have anything to say about it!
My expenses are pretty low and I have a tiny student loan. I can put a good chunk of my earnings in savings. The only way I can get into trouble is if I buy into the stuffstuffnowgimmegimme mindset that I know plagues so many people these days. I’m confident that I won’t, however, because that’s just not me.
My favorite hobbies are free: going to the library and reading blogs on the internet. When it gets warm, parks and hiking trails are free also. That’s not to say I’m perfect. I have a tendency to go on shopping sprees and spend a lot of money. While I don’t go into debt to do so, it usually leaves me with stuff I don’t need or even really want, and does not help to build anything. More recently, I’ve really been trying to place more value on experiences than on things, as well as to only spend money on the things I value, like food and music.
In the end, I’m not going to buy cable. I’m going to give Netflix a try. ($14 per month for 2 dvds at a time and unlimited streaming)
Also, another feature I intend to add to the blog is on personal finance. I’ve been educating myself on the topic for about two years, and it’s finally time to put all this in practice. I’m still thinking about how it’s going to manifest itself here, but expect to see some money diaries in the future.