Archive for December, 2008
Spending is often what we do best. However, knowing how to spend, and when to spend, is critical. What must we have? What can we live without? And how do we know which is which? There are not a lot of role models out there for women to follow. What is out there is a ton of external pressure to spend, spend, and spend. Consumer products companies spend billions telling us which products we need and why. Retail stores devote a great deal of time, money and effort to make their store windows stop us in our tracks. Movies, television shows, fashion magazines and the media’s relentless coverage of who wore what all send a message about how much we need to spend, and what we need to spend it on in order to look and feel good. Even the federal government overspends and as an all too predictable result, sends us into an economic crisis.
Can we stop the madness? How do we know what to buy and where to spend? Confused priorities can wreck your budget. Three months’ rent or a Cartier Tank watch? How do you choose? Start by revisiting your budget. If you can afford the watch – go ahead and buy it. If your budget indicates that you can’t, don’t despair. You could make it a dream or a goal to save for, or you could pay your rent and shop a notch or two (or three) down, or not at all.
Priorities are different for everyone. How do you know what yours are? Let’s start with the basics of needs and wants. What’s the difference between the two? A need is something you simply can’t do without. It is something you have to have, to survive in a reasonably comfortable way. Needs are the basic building blocks of life. Wants are desires. A want is something that, no matter how much you may crave it, you can live just fine without. You want the Cartier tank watch; you need to know what time it is. You want the black stilettos beckoning from the window; you have to have your feet covered but you probably don’t need that particular pair of shoes.
By using your budget to review how and where you are spending your money, you will be able to spot and fix potentially problematic trends and fix them before they get out of hand. You might have to make some hard decisions about what it is you need and what you merely want. Only you can sort out which is which, along with what you are willing to give up. And you must stay committed to the rule that only if you have a surplus of funds at the end of every month can you can start to purchase things you want, in addition to the things you need.
December 22nd, 2008
In this time of austerity, black is the new black. It fits the mood, makes you look thinner and taller, and can save you money…I’m going to guess you already own more than a few things in black and won’t have to add very many items to your wardrobe to be in style.
Fashionista Fact:
“____ is the new black” started with the legendary Vogue editor Diana Vreeland in 1962, when she observed that “shocking pink is the navy blue of India.” Vreeland was commenting on the copious use of pink as the base color for much of the attire in India, much like navy blue at that time the core color of most outfits in New York City. In the late 1970’s the expression changed to “X is the new neutral” which morphed in the 1980’s to “X is the new black.”
December 11th, 2008
Money can be like those mornings when you stand, staring into your closet, and can’t figure out what to wear. So you stand there and think, “I have nothing to wear” until eventually your eyes seize on those pants, the ones you always feel fantastic wearing and which make your rear look incredible. You grab them, realizing they will look perfect with a little t-shirt, those cute flats, and a shoulder bag. Lo and behold you’re dressed and looking fabulous! All it took was a place to start. Money is like those mornings. It can seem very daunting when all you need is a place to start. After all, how do you know how much you can spend if you don’t even know what you have? Where do you start? You make a budget.
Begin with your income. You receive an allowance or a paycheck from a job (we’ll talk about the taxes which are deducted out of your paycheck later). Write down what you receive each month, from wherever you get it. This amount should be what your checks and cash add up to after items like taxes are taken out. Next write down how much you spend and what you spend it on. Now, add up and total the money you bring in, and add up and total the money you spend. Subtract the money you spend from the money you bring in. Now, multiply by 12. Since you only used one month of income and expenses you’ll want to multiply by 12 so you have a budget for a whole year. That’s it. You just made your first budget and just figured out something really essential: Whether or not you have extra money, which is the number one indicator of whether or not you are over-spending.
December 9th, 2008
I haven’t yet discussed living within your means. Living within your means is much more important than the amount of money you have. Whoever you are, no matter how much money you make, more than likely, you’ll never have quite enough. Why? Because as your income goes up, so do your expenses. We all want more than we can afford. With more money, your tastes upgrade – it’s inevitable and normal. You’ll want Manolo Blahnik not Designer Shoe Warehouse, you’ll want Champaign not Two Buck Chuck, and you’ll want a bigger place to live rather than a smaller one.
How do you know what your means are? You make a budget. Budgets sound harder to make than they really are. First, add up and total the money you bring in, then add up and total the money you spend. Subtract the money you spend from the money you bring in:
• Money I bring in
• Less money I spend
• Equals money I have left over – or don’t have left over.
The beauty of budgeting is it tells you what your means are – and they’re different for everyone. It helps you plan what you can and, quite frankly, what you can’t do.
If you don’t know what you spend keep your receipts and bills – all of them for one month. Even your receipts for your morning coffee. Then add them all up. The total won’t be perfect reflection of what you spend every month but it’s a great start.
December 8th, 2008
Per yesterday’s post, sung to the twelve days of Christmas…
On the twelfth day of Christmas proper spending meant to me:
Twelve affordable gifts purchased
Eleven charities helped
Ten happy friends
Nine happy family
No unpaid bills
Nothing for myself
No more gifts to buy
Nothing for my pets
No forgotten friends
Lot’s of happy calls
Plenty of good-will
and a debt free hol-i-day…
December 3rd, 2008
Sung to the twelve nights of Christmas
On the twelfth day of Christmas over-spending meant to me:
Twelve new credit card applications
Eleven outstanding bills
Ten gifts I couldn’t afford
Nine things for myself
Eight things for my family
Seven things for my friends
Six different interest rates
Five more gifts to buy…
Four thank you calls
Three thank you notes
Two forgotten friends
and a debt filled hol-i-day…
December 3rd, 2008
The best gift you could give yourself this holiday season is to get though December without incurring additional debt. Believe it or not, your friends love you for you – not for the gifts you give them. If they don’t, get new friends.
Not paying your credit card bill in full every month is one of the worst things you can do for your finances, except in emergencies. Unless you can pay your bill in full every month, use a debit card instead of a credit card. If you are unable to pay your bill in full when you receive it, pay off as much of it as you possibly can. Do not use the card again until you have completely paid your bill and have a zero balance. The reason you want to pay as much as you can possibly can is the more you pay now, the lower your outstanding balance (what you owe the credit card company) and the less interest you will owe on the balance. Remember, interest is calculated on the amount outstanding. If you pay only the minimum required, you will pay the credit card company a lot of interest.
There are lots of ways to give without spending a fortune: Many websites and magazines have gift lists in various price ranges – use the range that you can comfortably afford. Diets aside, don’t over look home baking. Fattening deserts are always a crowd pleaser. Parties are good too. Arrange a pot-luck so everyone shares the cost and each others company. A heartfelt phone call wishing them a happy holiday and letting them know you are thinking about them is often better than any gift. Last but not least, since today is global AIDS awareness day, don’t forget charities. Making a donation in a friends name is a great way to honor them – and to help others in need at the same time.
December 1st, 2008