In the continued vein of honesty and transparency, I'd like to discuss another sticky topic: spending habits.
Most of you know that I love shopping. I enjoy sharing my finds here and on social media. I do tend to make purchases on a regular basis, so maybe some of you have wondered "How does she afford all of this?" Maybe some of you have even thrown a little side eye at my expenditures. I wouldn't really blame you; there can be a fine line between sharing about a good deal and coming across as bragging, but I assure you that the latter has never been my intention.
I've actually never had a lot of money to work with when it comes to shopping. I'd consider myself something of a bargainista. I never pay full price for anything and believe in getting a lot for my money. I also love the thrill of the bargain hunt!
I've loved shopping since I was a little girl but I didn't get to do it as much as I would like because my family was low income. It did instill a few habits in me, such as an inherent disgust for overpriced items and the ability to find treasures amongst all the trash at thrift stores and flea markets. I certainly know how to compare prices at the grocery store, find a nice pair of shoes for $3, and take advantage of sale and coupon combos, but somehow along the way I never managed to learn other important financial skills such as making a budget or not getting into debt. Nor have I bothered to learn them now.
I find myself in something of a feast or famine cycle as an adult; when I don't have extra money I can control my spending if I have to and only get the necessities but feel deprived.Therefore when I do have some disposable income to work with I tend to spend, spend, spend. I try to only get things I think are a "good deal," but a lot of little purchases add up to a big amount. Even if it doesn't cause a problem financially, I inevitably end up feeling guilty about it and am stuck in this cycle of the rush of buying something I want followed by the anxiety of spending when it would be best to save.
My husband and I would ultimately love to save up for a down payment on a home of our own, but I can't say that we've done well in the saving process. There have been times that we have been growing a decent savings and some expenses always seem to come up that depletes it. In the last several months we've been feeling rather discouraged financially and haven't been making much of an effort to save.
The other main issue we have is debt. Basically everything nice we have is purchased on credit: our car, our electronics, basically everything that we wouldn't be able to afford without it. I've heard warnings over and over again: don't get deep into debt and don't run up credit cards, but it's definitely easier said than done. To be fair, none of the credit cards are in my name and while I do have access to them, I would say 70-80% of the debt was not my doing. Some of the cards and debt were my husband's before we were even married and while we have actually paid off a card in full on at least 3 separate occasions, they inevitably get run back up again. I have suggested storing the ones we paid off away, or even closing them and cutting them up, but hubby doesn't care for that idea. He seems to believe that closing a line of credit can actually hurt your credit and that we also need to keep them in case of "emergencies." While there have been some legitimate emergencies it's been handy to have a credit card for, more often than not it ends up being just wants that we may not have the cash on hand for. Several smaller credit card payments can really add up to be a big chunk of the paycheck and make it more difficult for everyday living and to save for long terms goals.
I guess what I'd like to do is set some small but manageable goals to evaluate our spending, get a handle on our monthly expenses and consistently put some money away for the future. Unfortunately I really haven't a clue how to go about this. I haven't really asked for advice from family or fringe because money discussions can be so tricky and I don't want to feel judged as irresponsible. Plus I don't really know anyone I would consider an authority on the subject; most of our immediate family is in the same boat as us.
I don't have any idea of how to go about contacting a financial professional or what costs may be included in those services, so that concerns me.
The DIY approach through books and online resources appeals to me most, but I worry that I would not be self motivated and disciplined enough to stick with a financial plan or even get one started. I have pinned several links about budgeting tips and haven't ventured to open a single one of them. I honestly fear opening the whole can of worms, and then even if I do suggest some ideas I'd have to get my hubby on the same page. The mere thought of all the work that would go into getting a solid financial plan in place really stresses me out. So here I sit, blogging and procrastinating about instead.
The one thing I have decided to do is not make any unnecessary purchases is January. I am hoping this will give me the opportunity to evaluate my financial priorities and finally gain some traction.
The first week of my no buy has gone well; I will be discussing that in a later post.
My questions to anyone that may be reading this are these: do you have a budget, savings, or any other financial plan in place that works for you? Any advice or links to resources you might have would be much appreciated! If you have similar difficulties as me, I'd love to commiserate about that too. Thanks for taking the time to read!
We do not have a budget but bills *always* come first for us. We've been in a situation something yours, not budgeting or saving, and running the card way up. When you mentioned paying off your cards and then running them up again I was nodding like 'Yup yup, been there.'
ReplyDeleteAt one point we were making a home loan payment, equity loan payment, car payment, and credit card payment. We've had the card paid way down low many times but just turned around and ran it back up. We finally decided we were getting nowhere and made great efforts to attack these debts one at a time. We now only have the home loan payment and whatever little amount goes on the card each month (hubby's gas and cigarettes, usually). It feels so freakin' awesome to be free of all that debt and we can now FINALLY start putting extra on the home loan payments and FINALLY get this house paid for!
We never got financial help or anything like that. It was just frustration and determination to turn things around. We never declared bankruptcy either. And we didn't really pinch pennies either. We just started slowing down on things we bought and made sure to always put extra on our payments.
My first suggestion to you is to get rid of all but one credit card. It's easier to just make one payment, and it might help remind you how much debt you have if you're looking at one larger bill instead of maybe three smaller ones. Know what I mean?
Good luck!
~Deb
Another great post, Amanda. I am enjoying your "Real Talk" blog series. I really wish that money was a subject that was okay to talk about, simply because I think people could glean so much more knowledge from having this dialogue with each other. I guess that's what all the frugal-living blogs are for--to discuss $ issues and ideas that aren't normally talked about. We do not have a budget in the sense of "each month we only have X amount to spend on groceries, X amount to spend on gasoline," etc. However, my husband plugs what we have spent in certain categories into a spreadsheet so that we can have a visual of our spending from month to month. It is easier to track our expenses this way. I will say that my husband and I are both very frugal and REALLY good with money. We are super aggressive savers. I hope that doesn't sound like bragging--I just think it is important (for me and my husband) that we are on the same page financially. For the first time in our marriage, we have a balance on a credit card, from purchasing our solar panels. However, we decided to get the solar panels immediately rather than wait to buy them when we had the cash, because the cost savings with PG & E would give us an immediate return on our investment. Plus, we would see a benefit during tax season for getting them in 2016. Here are some financial things I've learned along the way, in no particular order if you are interested (most of them relate to home-buying):
ReplyDelete-Set a strict price limit on a home (we bought less than what we would have been loan approved for). Don't let a realtor or anyone else sway you into going above your set price limit!
-Try to put 20% down. That way, you won't have to pay PMI, which really adds up. It doesn't sound like much on paper, but it totally is. Think of PMI like interest on a credit card. http://www.bankrate.com/finance/mortgages/the-basics-of-private-mortgage-insurance-pmi.aspx
-On a home loan, pay extra each month if you can. The more you chip away at the principal, the less interest you will have to pay over the life of the loan.
-Hold off on major money-draining cosmetic improvements on the house until the loan is paid down.
-Like the above commenter said, I also suggest getting rid of all but one or at the most two credit cards.
-I also suggest building up an emergency fund, perhaps as a separate savings account, so that you kind of "forget" about it and only draw upon it in a true emergency.
http://www.daveramsey.com/blog/quick-guide-to-your-emergency-fund
Gosh, I hope that the above suggestions don't sound bossy or braggy or condescending, that's totally not my intention. I just really love to talk financial matters and I love sharing what I've learned. Lastly, I think that as a society, we are falsely led to believe by the media, the credit card companies, lending institutions, etc. that debt is just part of the American way of life, and I 100% disagree with that! -Alyssa
I agree with Alyssa about 'debt is just part of the American way' being untrue. My mother has never had a credit card and only buys what she needs, when she has money for it. Since we've gotten the rest of our debt beaten down we are very much more 'cash on the barrel' now, buying only if that money is available in the checking account and not automatically whipping out that credit card.
Delete~Deb