Posted on Tuesday, 29th December 2009 by Catherine
Photo by: The Truth About…
As we wind down 2009 and look to the New Year you may be getting a bit “stressed” about your holiday bills. They will start coming in here in a few weeks. I am so happy to say that I don’t have any holiday bills. Yes you read that right – no extra bills to pay from Christmas. That is not to say that I am happy with my current financial situation however I can safely say that paying for Christmas this year was done with the money we had on hand.
One of the biggest sources of stress for many of us are financially based. Believe me, I could tell you some stories about financial struggles. We have a child with cancer who has been through nearly 5 years of treatment. My husband is self-employed and has some significant slowing in his business. Our insurance premium alone rivals most peoples mortgage payment. The co-pays and prescription costs are enough to deplete any extra money we have at the end of the month.
I certainly realize that I am not in a position to dish out money management advice. I have however, learned a few things along this journey about how to live on less. Tips that can help you no matter what your financial picture looks like. I believe the key to coping with financial stress is to stop using credit cards. It is a HUGE step but a very important one. We have forced ourselves to only use money we have in our bank account and have been successful for over 2 years. If we don’t have the money, we don’t buy the item. It is that simple. You may be wondering HOW on earth this works?
I keep a spreadsheet on my computer with simple columns – money in/money out and a running balance. I keep my receipts and every couple of days I enter in the amount taken from our bank account. I keep track of every penny. I pay our bills (online) and then allocate the rest of the money according to our needs that month.
We are not in a position to save much money each month but at least we are not spending more than we earn. If you “save” money but spend that much or more on a credit card you are really not doing as much “saving” as you might think.
I realize that in order to buy homes and cars you need to have credit established so never using a credit card in your life is not what I am referencing here. What I am talking about is each month buying a few more things on credit because you can’t afford to pay for them outright. All of the sudden you have several thousand dollars on your credit card and a new “monthly” bill to figure out how to pay. It is a vicious cycle that is so easy to fall into.
So for January I challenge all of my readers who want to save money to leave your credit cards at home or better yet get rid of them (if you can). Only spend money you have in your bank account.
You will probably find that you are not nearly as interested in buying that new item when the money is being taken directly out of your bank account.
This idea is working for me and it could work for you. I will be wearing my “thrifty” shoes at least once a month and plan to share more about how I cut costs and live on less.
This post is part of the WFMW (Works for me Wednesday) over at We are That Family
December 30th, 2009 at 5:29 am
I cut the credit years ago!!! If we don't have the cash we don't get it. It's amazing what it can do for your life…. so much stress GONE!
December 30th, 2009 at 3:03 pm
Excellent point! We cut our credit cards up in 2004 and haven't looked back. We do keep one on hand for emergencies, and to this point it's got an amazingly low balance. Giving up the credit is hard, especially when it's so EASY, but once it's gone and you're using YOUR money to buy the new item, as you stated, the new item is not nearly as interesting. Thanks for the perspective, Catherine.
December 30th, 2009 at 3:33 pm
Great advice Catherine.
December 30th, 2009 at 7:00 pm
When Bruce lost his job for 6 months – that was an eye opener and taught not only us – but our kids on the lessons of paying with cash – and paying your bills – and NEED vs. WANT. We only have one card and like your orther reader – Emergencies only….
December 31st, 2009 at 3:16 am
This post comes at a perfect time for me. I just spent the day looking over our financial situation. It occurs to me that we are $30,000 in debt (not including mortgage and medical bills) and no happier than we were 10 years ago when we had no debt. Sure, we have more things, but it hasnt really enriched our lives. I would, in fact, prefer to go back to those times. I was happier then.
I need to spend 2010 reducing our debt and medical bills, correcting an escrow account mistake made 5 years ago that is now doubling our mortgage payment, and cutting back on all expenses to do so. My biggest difficulty is my husband who doesnt cut back when everyone else does… as if the money he spends doesnt have an effect on the rest of the family. He would rather come up with a way to make extra money than to do without… and that leaves me feeling cheated and makes it easier for me to cheat on my own resolutions to cut back.
How do I stay strong and do it without his help?
December 30th, 2009 at 10:28 pm
Anny –
I am not sure that I have any great advice for you but I can say I have been where you are. It is impossible to “make” someone else desire to cut back and save money. Especially when that person is your husband. He is going to have to come around to the idea himself and sometimes it takes a bit of a financial “scare” to do so.
Maybe if you could find just one area where he could cut back so that he can still have most of the things he wants but is making a small sacrifice (small is better than none) then you would not feel so cheated.
It is so hard to manage money jointly with someone else and even more so when you are not quite on the same page. Good luck and thanks for the comment!
December 31st, 2009 at 8:30 pm
Great post Cath and GREAT info for all of us to consider and really take to heart as our economy and markets are still in the shape they are in. We ALL got ourselves here and we are ALL going to have to do some sacrificing and taking a different and sometimes difficult look at things to get ourselves and our economy back in better shape. We are like you and many others and have been for years now…no credit card usage unless there is an emergency or a specific plan to pay it off within the month to avoid any finance charges…thus we are still keeping our card somewhat active. Both my hubby and I have had our own individual credit debt in the past and we have no desire to ever go back there again. So much of what we "over buy" is unnecessary anyway. And when you start tracking things even a little bit you really begin to see where all your money is going and that in and of itself can help many people stop the needless spending. My hubby is a fabulous money manager and although I do not tell him enough, I am very thankful for his great financial sense.
January 4th, 2010 at 9:58 pm
You're absolutely right that using credit cards to buy things you can't afford is a bad idea! But the problem is not the credit cards; it's the excessive spending. A spreadsheet like yours, or some other method of keeping track of spending, can be used to count the money as "spent" when you make the purchase on credit, and then when the bill comes in you'll have enough money to pay it. Click my name for more about this and other ways to use credit cards sensibly.
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