How to stop overspending & start living

Aw, doesn't that sound like a self-help book title? Maybe I'll write one. One that isn't littered with BS about the stock market and funny little calculations about interest and stuff. I'm sure that stuff has a place in the whole scheme just as calories and fat calories and proper vitamins have a place in weight loss. But really I think, in both of these situations, those fiddly little bits addle the average person so much that the whole business seems Way Too Hard. That feeling keeps us in our old habits and never allows us to break free.

1. Stop buying in order to solve problems. I'm not just talking about retail therapy. I'm talking about the immediate urge to go out and BUY something to solve a problem. Buy a new lawnmower rather than fix the old one. Buy a new piece of furniture because your coat closet is stuffed full rather than cull the contents of the closet. Buy the whole series of Star Wars toys for your kid because they really enjoy playing with the single one they have. Buy more clothes because you hate doing laundry, rather than just doing the laundry more often. Buy books because you feel like you don't have enough time to read.

2. Stop buying in order to "save" money. Our society is so discount-oriented that when we see something on sale, we feel like we need to buy it because if we need it later and it's NOT on sale, we won't be able to afford it. Ergo, we're "saving" $10 by buying it today. Another problem is comparing the previous price with the current price. Yes, a kate spade handbag for only $15 is a great deal over the original $150. But if you don't need it, you're wasting $15 rather than saving $135.

3. Don't base purchasing decisions on justification--base them on how much money you have. Over the weekend I contemplated buying a new camera. My old one is slow, meaning I miss cute moments when I hit the button and it "thinks" before it takes the picture. I'd also like one that's smaller, to fit in my pocket, and also easier to use for my daughter, who loves to take pictures. I found one on sale for $109. It was originally $129. I could also upgrade to a package for $150 that would include an extra battery, case, and memory card. This was a great deal and perfectly justifiable--most of us parent-type folks like to take pictures of kids at the holidays, the price was right, our old camera was more than 5 years old and failing, and getting a new one would enable me to give the old one to my husband (who doesn't mind if it's slow). I only had about $40 in my checking account, however. I considered pulling money from savings or using my credit card. And then I stopped. Just because it wasn't a stupid purchase in general didn't mean I could afford it. I'm asking for a new camera for the holidays instead.

4. Wait. That's all. It's so hard to do! Especially when the "shiny" urge takes over. If you don't need it right now, put the money back in your wallet and don't buy it. Don't buy a whole bunch of books you "intend" to read. Don't buy a new dress because you might have holiday parties to attend. Don't buy things as soon as they take your fancy. Wait until you really need them, then decide.

5. Pay Cash. I didn't like this one at first. Cash ran out much more quickly than credit cards. So I'd always pay cash until it was gone, use my debit card until the account was empty, then use my credit card. After all, I needed those things, and the money wasn't there, so that's what it was for. But the cash thing is more subtle than that. It's not just that you pay cash instead of using your credit card, and keep your buying habits exactly the same. It's that using cash FORCES you to recognize EXACTLY how much money you have, and doesn't permit you to indulge in squishy numbers when figuring up what you're actually spending. If the cash is gone and you "need" something, suddenly you are forced to decide whether or not you really NEED it. Sometimes, yeah. Medicine for the baby, sure. New Stephen King book? Not so much!

When I began Paying In Cash, I used to run out of money really fast. And then I'd scrimp until the next payday, then buy all the things I was holding off on. It was rough. But it was a transition. Slowly, I realized that even when I HAD money in my purse, I was trying to figure out ways to get around buying things. Did I have something already that could suit that purpose? Did a family member or friend have one I could borrow? Could I just do without it?

The Value of Patience

I hate waiting. I can't really say I "have" patience, more that circumstances force me to.

A couple of months ago, I had the idea for a big project. I'm not going to reveal too many details as it is a surprise, and it's possible family members will read this! I went to the craft store to buy the supplies for this project, and spent about $200.

Now, really, for what I was getting, and the fact that it covered 6 Xmas pressies, wasn't really TOO bad. I figured it was worth it to pay "a little extra" to insure I got the supplies I wanted.

Well, life intervened, and as I hadn't yet started the project when the [lack of] money storm hit, I ended up returning all of those supplies for the $200. I figured at some point I'd rebuy them, maybe as each thing went on sale.

Since my aunt works at the craft shop, she gave me a fabulous coupon that gets me 30% off of my ENTIRE purchase, not just the usual one regular price item deal. The best part was that this offer was good on sale priced items too, which most of their coupons are not.

All told I ended up rebuying the very same things for the most part, and spent about $80. Less than half of my original expenditure, all for waiting just a couple of months.

I'll call that money in the bank!

An Example of "Life Energy"

Over the weekend, I realized I needed my car washed, I needed the inside vacuumed and cleaned, and I needed my lawn mowed.

A car wash is $5. Having the inside cleaned is $15. I pay my neighbor across the street $20 to mow my lawn. This is a total of $40.

I decided to mow my own lawn and clean and vacuum my own car. It took me approximately 1 hour.

If I had chosen to pay someone else to do those things, I would have had to work approximately 4 hours to earn the money to pay them.

This was my sudden "real life" realization of the appropriate expenditure of life energy, as outlined by Joe Dominguez and Vickie Robin in their book Your Money or Your Life. In one situation, I'm spending 4 hours of my life at my desk in order to "save" myself 1 hour of my life in the yard/driveway. By doing the work myself, I spent only 1 hour of my life energy.

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I used to spend about $100 a month on my cell phone plan, and probably a total of 10 hours a month using the phone for texting, pictures, etc. In other words, a total of 20 hours of life energy OR more than an entire week's worth of work for me (I work 15 hours a week).

Now with my Tracfone, I spend $20 a month, approximately, and perhaps 2 hours a month using it. Therefore, approximately 4 hours of life energy.

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I've found so many times that I make money and spending decisions based on comparison rather than on the actual amount of money I have. $100 a month isn't really a lot of money considering what some people spend on cell phones....ergo, it's probably appropriate for me to spend that much on a cell phone. Um, NO!!!!!

If I find a total steal of a Kate Spade bag for $30, when it usually costs $350, sure it's a great bargain compared to retail price. But that doesn't mean I have $30 to spend on a purse, great deal or not!!!!

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In order to rein in spending, we (the general we) need to examine how much money we actually personally have, not how much we think we have or expect to have or wish we had or feel we should have, how much we ACTUALLY HAVE. And then we need to make our purchasing decisions on real, actual needs and wants---is this worth the hours of my life I'm spending to purchase it? If my boss said "Come in next week and we'll give you this handbag at the end of the week rather than your paycheck" would I take him/her up on it? Not whether our friends have it, or whether it's on sale, or whether we're feeling low or feeling happy. Not based on how long ago we last bought one of these. So what if we haven't had a new coat for 4 years, if our current one is still in good shape, why not wear it and save ourselves the money?

Why indeed. Why is this concept so hard for me and millions of other people? It seems so easy yet it's so hard to internalize.

Oddly Enough....

When you aren't raiding your savings account on a monthly basis to pay off "just one more bill", the money in there adds up rather fast. Who would think?

How Money is Annoying

What bothers me about going from overspending to spending just what we have, is "saving" money doesn't feel like "saving" money.

For example, I was planning to buy a mattress. It was about $250. I got Grandpa's spare bedroom mattress instead. This should, in my eyes, mean I have an extra $250 lying around. But it doesn't! It's just $250 that I didn't have that I didn't spend, so instead of being -$250 I am still at $0.

That's not fair!

Turning the Titanic Around

My friend Jackie says that it only takes one month to get behind on your bills, and 6 months or more to recover from it. She's right.

For 8 years I had been merrily going along using my budgeted money for reliable expenses, and then using my credit card for anything else that I could make a good excuse for "needing" and also for any surprises like car repairs. (Poor cars, they always get the bad rap on budget problems! Sorry Maxxine!). I would then use my savings account to pay off the credit card.

It took 8 whole years, but I finally drained my savings account and was left with a $750 insurance bill, a $3,000 invoice on my new driveway, PLUS all my regular bills.....and not enough money. I guess I honestly thought it wouldn't happen--the savings account frankly seemed bottomless, and damn it we NEEDED all those things!

During that 8 years, I've periodically tried to work within my actual budget rather than my fantasy budget, but every time I've given up, because it seems like the dollars just don't stretch far enough. It took 8 long years and many failed attempts to admit that I need to change the way I SPEND.

The first step was, unfortunately, defining "needs". Although it could be argued no one "needs" a cell phone, I am out and about with a small child a lot of the time, and I feel it's important for my safety and sanity to have one. I did not, however, NEED a $90/month Blackberry. And it took some serious thinking-outside-the-box to realize that just paying the dreaded "early termination fee" only amounted to 1.5 extra months worth of service, while paying out the rest of the contract was going to be 6 times that amount.

Another "need" was a new mattress for our guest room. Again, maybe I don't truly NEED a spare bed that only gets slept in once in a while, but I like having it for unexpected guests, or for if one of us is sick. I have a bed frame in there, which was free (took it from my parents house), but was facing at least $200 to purchase a mattress. Having a set-up bed frame without a mattress means I have a "hole" in the room--the linens and the stuff that sits on the bed is scattered throughout the room, and my toddler is having a field day hopping between the rails of the empty frame. Many times I was tempted to just buy the mattress on my credit card, as it was annoying me a lot!

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THEN I REALIZED THAT IS WHERE THE PROBLEM STARTS
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I have a seemingly benign purchase, I don't want to wait, I don't have the money, so I use the credit card and figure the money will appear by the time the bill comes.

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IT DOESN'T
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The only thing that happens is the seemingly benign purchase is now off my mind, forgotten, and before long, another comes along, and makes its way onto the card, and pretty soon I have a $800 bill that I can't pay.

So I got to thinking creatively. I could save up the money for the mattress, but I have other things I want more. I made a list of the things I wanted to purchase. I realized I didn't really want to take any money away from other things to buy the mattress. And simultaneously recalled that there was a twin mattress at grandpa's house not in use. So I asked Mom if I could take it, and she said yes. So the problem was solved, and I didn't have to pay a cent (but I'm going to bring Gramps one of his favorite chicken sandwiches in thanks).

It was here I realized I am really on my way to having this long-standing budget problem truly solved. I ended the Blackberry service, saving myself $70 a month (my new cell phone costs $20/month at the rate I use it, but I am able to cut back also if I need to). I realized I didn't want to pay "real money" for a mattress, a new winter coat, or a score of other things. So I figured out a way to make what I have work.

As simple as it sounds, when I look in my wallet and there isn't money there, the answer isn't "find a different method of payment". The answer is "don't buy."

I don't need to spend....

I don't need to spend $100 or more on a new coat. The one from last year still fits, and now that I've had it cleaned, it looks new again. I'm going to dig through the vintage button box and add some buttons to give it a little pizazz.
Money saved: $97.65 ($100- dry cleaning bill)

I don't need to spend $200 or more on a new Blythe doll. I love Can Can Cat's lovely blue hair, but an etsy seller has great wigs in exactly the same color. My Junie has almost exactly the same makeup as CCC. And I put the black wig on my Jacinta and whoa she looks fabulous!!
Money saved: $180 ($200- blue wig + shipping)

I don't need to spend $100 or more on new shoes this fall. I bought two pairs last fall, and I have a pair from the previous fall that are still in great shape. I have a pair for dressy work and I have a fancy pair for dressy-dress. I have a pair of snow boots, a pair of running shoes for the gym, and a pair of combat boots for crappy weather.
Money saved: $100

I don't need to spend $300 and more on a new Kate Spade handbag. I fixed my own!
Money saved: $300

I don't need to spend $90 a month on my cell phone. I don't need to be that connected! And I certainly don't *need* to be surfing the net all day. I got a Tracfone for only $25 and need to pay, at minimum, $20 every three months.
Money saved over the next 8 months: $475

I don't need a ton of new clothes. Wise, careful buying and the ability to make minor alterations to clothes I have that are too big is giving me a fabulous wardrobe!

Black pants, turquoise ruffle blouse, pink bra: $60 at JCPenney
Dark denim skinny crop pants, sky blue tshirt, purple tshirt: $40 at Target
Black skirt with flared hem, purple shiny blouse: $50 at Kohl's
Gray pants, purple 3/4 sleeve blouse, blue bra: $52.00 at JCPenney
Undies: $26 at Kohl's

So for a total of about $230, I have a great new wardrobe and I feel fab!

I don't need to spend money on manicures. I can learn to do my own nails.
Money saved: $15 every two weeks

I don't need to spend money on pedicures either. I can do my own and E's foot massages are better than theirs.
Money saved: $30 a month

We can still go out for breakfast on Saturday--we just go to McDonald's instead of the local family restaurant. We don't have to tip, we don't have to wait, and Maggie can bounce around a little rather than being stuck in the booth.
Money saved: $16 a week

I don't need to spend money on buying books. What I can't get at the library I can get for just a few bucks from the used bookstore. Plus, I usually have credit there from trading in old books.
Money saved: variable

I don't need to spend a lot on holiday presents this year. I can make them from my fabulous stash!
Money saved: $200 at least

I don't need to spend a lot on entertaining friends. Potluck is fun, and everyone has something to eat that they will like. I don't have to spend half the evening in the kitchen, either.
Money saved: $40 per bash