I’m happy to say that I’m a changed woman. A mere 4 months ago I was shopping all the sales. Buying things just because they were on sale. Telling myself “oh! Its only $12! I neeeed this random silk tank top that I know I will wear like once or twice and it will hang in my closet forgotten”. It happened ALL THE TIME. I was sale shopping once or twice a week. In the end, I was spending close to $800 a month by “saving money on sales”. Doesn’t seem like much of a savings, now that I look back on it.
I’ve spent the better half of the last 4 months reigning in my spending and trying to encourage others who I know have the same problem that I do (and totally in denial about it). At first I thought I was being really helpful, because the complaints about being broke were tiresome, and you know…a budget can help that. But then I realized, you know, some people just don’t care enough to listen. So I leave them be now. I focus on me and helping myself (and any of ya’ll that read these finance posts!). I’ve learned a TON! About Budgeting, Credit reports; see here, here, here and here, plus coming to terms that I really do have a problem. So even though its not quite the end of the year, I think December is going to be my most successful month on my budget yet (I’ve spent so far about $50 out of my clothing budget, and half of my christmas budget-and I’m done shopping!) I wanted to share some things with you that I’ve learned about money. Here’s a little infographic I created using Piktochart! Its a pretty sweet program if you’re not graphically inclined like me!
So lets go into each thing! A graphic is great, but it limits us as to what we can talk about!
1. Establish a budget. I honestly learned that establishing a budget is absolutely crucial to successfully saving and meeting financial goals. You can establish a budget no matter what your income, your pay schedule or circumstances. A budget keeps you on track for meeting your goals and allows for you to work in fun stuff.
2. Contribute to Savings like a Bill. I automatically contribute $200 a month to my savings. Plus my 401K contributions start this month. Its automatically worked into my budget just as if it were a bill. That way I always have the saving incase there’s an emergency.
3. Monitor your Credit Regularly. This is so important. My credit is terrible. There are a lot of mistakes that I have caught in the past, but having a good credit score is so important if you want to buy a house someday.
5. Limit your spending on Credit. Sooo important. I made a HUGE mistake when my credit limit got boosted this past spring. I went CRAZY! I literally maxed it out in a month, just shopping and going out. Now I’m paying it back…with interest. Even though its important to have credit cards or revolving credit on your report, you need to be responsible. Only spend what you can pay off right away. If you can’t afford to pay for it in cash…maybe you shouldn’t be buying it (when it comes to luxury expenses). I’ve always had smaller credit limits (until recently) and would only spend what I had in my bank account. Now I really see the value in that.
6. Pay things off in FULL. If you can of course. After I blew through my credit increase, I realized that I cannot do that. My second credit card is much smaller therefore I pay it off in full every month. Once I pay off my big balance in full this month, going forward it will be the same process. Use, pay in full. When it comes to bills, or collection accounts, ask for a discount if you pay in full!
7. Contribute the MAX to your retirement account that your employer will match (and DO. NOT. Borrow against it!) The first two 401k plans I had I didn’t contribute the max. Which was silly of me, at the end I had a whopping $1000 (after like two years of contributing). Now I’m contributing the max my employer will match to. I also got distributions from the first two instead of transfering them. Such a bad idea. Borrowing against 401k or taking distributions may seem like a good idea if you’re desperate for the money, but ultimately that means you are taking away money from the future. If you are THAT desperate that you need to take a loan against a 401k, maybe its time to re-evaluate spending habits, and other ways to bring in money.
8. Actively find ways to Save:
- Cut coupons. You can save SO much money when you cut coupons. For me, its beneficial when its for things like laundry detergent, paper towels, toilet paper and things like razors, shampoos and basics. Since I shop at Trader Joes, coupons on food goods don’t help me much. But I try to regularly use the Walgreens Balance Rewards because they really add up. Last time I cashed in, I got $30 worth!
- Make your own food. This means so much more than just eating in and cooking food at home. When I stopped buying pre-packaged things like spice mixes, dressings, boxed dinners, pre-shredded cheese and pasta sauces, I saved a ton. I have recipes now for taco seasoning, ranch dressing, tomato sauce, different soups, chilis and I try not to buy shredded cheese.
- Limit your luxury expenses. I know girls who go every two weeks to get mani/peddi. On average a mani/pedi costs $45 with tip. That’s nearly $1200 a year…on manicures. I do my nails at home, and stopped dying my hair. I get it cut every 10-12 weeks rather than every 6 weeks. I cut out cable and just use Hulu and Netflix. I dont need a car, so I’m getting rid of it (will save me about over $125 a month between insurance and gas, plus tickets, registration, permits). And I’m actively working on not going out to lunch more than once a week. #thestruggleisreal
9. Reward Yourself but Set a Limit. So what is the point of working hard to save money and pay off debt if you can’t have a little fun. Reward yourself when you hit a milestone or pay off one you’ve been working on for ages. But give yourself a limit. Don’t spend all that hard work you just did to pay off one thing only to go into debt on another!
I rewarded myself with a trip to Argentina! Well I saved my butt off so I could go!
10. Scrimp and Save NOW so you can have money later. You have to find a balance. While for some it is completely cool to just save save save and never spend on anything but the essentials. While for others they spend like crazy now to only reach a time where they’re like “Shit. What am I going to do now” (I know people on BOTH sides of that spectrum, especially the spend, spend, spend ones). I was a spender before, but now I’m not a 100% saver. I have a balance. I let myself do the fun things and shop and the things I enjoy but I ALWAYS make sure my bills are paid first, before I go buy the pair of shoes I want. At first when I started budgeting it was to pay for my move, and ultimately it still is. But even after the move I want to keep it up, because I want to retire, and to pay for my kid’s college, travel, buy a house, and be able to give my kids all the experiences that I may not have experienced as a kid, plus…Europe ain’t cheap my friends!
The #1 thing I learned about money though?
It’s up to me to be responsible.
I can’t rely on other people to pay my bills, get me out of debt, hope that eventually someone else will figure out the expenses so I can buy a house. No on is going to curtail my shopping addiction but me. I also can’t hope that its just going to work itself out. Because money doesn’t have its own mind and doesn’t have its own motives. Its controlled completely by me. I have to determine where my priorities lay and how I’m going to take care of them. Not my parents, not my boyfriend. Just me. I wanted to pay off my car, so I busted my ass, saved my money and paid it off nearly 7 months before it was due to be paid off. I want to save up 10k by June and pay off my credit card. The credit card comes first, paying that off this month! and then I’m just going to shovel every penny into my savings. I’m going to shrink my shopping budget again and just throw it to my savings.
When I’m in England. I’m going to work, try to generate income through this blog, and doing whatever I can to bring in cash (legally) until I can find full time work. So then I can shovel that money at my loans. If my boyfriend and I do ever decide to come to the States to live…I want to be debt free. Hopefully I can get my $100k in student loans paid down…in less than the 10 year timespan!
Its going to be difficult, its going to be a lot of work and a lot of money, but in the end. It will totally be worth it.