Today is the first payday of the rest of my life.

February 28, 2008 9:06 PM

I am bad with money. Help me get better.

I've got a maxxed credit card, I'm constantly out of cash, and my bank account is always hovering on the brink of empty. I just craigslisted myself out of a tight spot and I'm fed up with living constantly broke. Point me towards some reading that will help me get my act together.

posted by tylermoody to work & money (19 comments total)

http://getrichslowly.org/blog/
posted by asuprenant at 9:10 PM on February 28, 2008

Actually having and controlling data about what you're doing (as opposed to putting your head in the sand) goes a long way toward helping you break bad habits. Lots of people like wesabe.com for this.
posted by tractorfeed at 9:13 PM on February 28, 2008

31 Days to Fix Your Finances is a good place to start.
posted by streetdreams at 9:31 PM on February 28, 2008

It's no mystery.

Earn more than you spend

Prioritize debt= Shelter/Food/Power then everything else

Work hard at paying off your credit card[s], at least within the interest free period

No need to be a skinflint, but pay attention to what you spend your money on
posted by mattoxic at 9:34 PM on February 28, 2008

Total Money Makeover. Dave Ramsey changed my life. Do what he says, and you'll be fine. It's very easy to implement, sound advice.
posted by Pater Aletheias at 9:40 PM on February 28, 2008 [1 favorite has favorites]

Like probably everyone else, money was tight after I graduated from college, moved to a new city and started a new job. I had much the same feeling as you, after paying all my bills and having just a few bucks to last me until the next payday. I worked hard, had some good luck and was fortunate enough to get ahead within a year or two, but I've never forgotten what it felt like.

There are really only two main things you can do: cut expenses and increase your income. I'll be more specific — here's what I could have told my just-graduated self, if I had a time machine:

• Pay attention to where your money goes. A couple of bucks here and there adds up quickly over time
• Avoid unnecessary charges. Use your own bank's ATM, return videos on time, etc.
• Be frugal. Take your lunch instead of eating out, use coupons, get books from the library instead of the bookstore and so on. At least where I live, you can save a lot by buying produce at the farmer's market instead of the grocery, plus it's usually better quality too.
• Eschew the monthly fee: cancel your cable service, cell phone, gym membership, muffin of the month club or whatever.
• Shop around. Any expense you cannot remove should be as low as possible. Try to find a better rate on car insurance, long distance service, internet service, etc. Before switching providers, call your current one and see if they'll beat what the new company is offering.
• Save, save, save. Take a fixed amount from each paycheck and put it in savings. Do this before paying any other bill. Maybe you can only afford $5 a week for now. That's OK, you can do more later. Just get in the habit of saving each month. Write yourself a bill if that's what it takes. Put your money in a high yield account like ING Direct. It will be there for emergencies and still earning interest.
• Avoid impulse purchases. If you see something you just have to have, write it down and wait a week. If you still think you have to have it, buy it, but chances are that you won't
• Pay more than the minimum monthly payment on your credit card. The minimums aren't low because the credit card company is doing you a favor, they're designed to keep you paying for a long time.
• Make some extra money. Get an extra part-time job or do some extra work on the side until you get caught up. Walk dogs, mow lawns, whatever it takes.
• Dedicate yourself to being debt free. Any extra money that comes along should be put towards your debts. Once their paid, put it in savings. Most of all, don't ever forget how you feel right now or you'll risk getting in this position again

I really don't read personal finance blogs much, except for The Simple Dollar.

Good luck!
posted by tomwheeler at 9:51 PM on February 28, 2008 [3 favorites has favorites]

Personal finance blogs. If you like reading the internet, bookmark a bunch and just "open all in tabs" or set up an RSS feed or something. Once upon a time I kinda sucked with money too. Once I started reading personal finance blogs it turned around easily. It was like hanging out with a group of money whizzes. You know, people don't talk about money much, so you don't learn much even if your friends are great with money. But with these blogs you not only learn a lot but you get yourself some peer pressure to do the right thing. I posted a list of the ones I really like here.
posted by salvia at 10:06 PM on February 28, 2008

Reading books and blogs is all well and good, but you have to actually implement what they suggest as well. The first thing you need to do is understanding your entire financial situation- where the money is coming from, where it's going and where it's not going. Budgeting and tracking your expenses is vital and I've found that Expensr is a simple but excellent way to doing so.
posted by Nelsormensch at 10:13 PM on February 28, 2008

One simple thing: don't buy stuff you cannot afford
posted by jaimev at 11:15 PM on February 28, 2008

Seconding Dave Ramsey. Again.
posted by cdmwebs at 11:36 PM on February 28, 2008

Direct deposit? Maybe not applicable, my 401K, car/home/medical/dental insurance and food is all taken out before I even get the check. I pay phone, gas, electric, water, rent, random trivial things... everything major is paid before I see the $$ in my account.

Might be a possibility, get the important stuff automagickaly paid before you see the $$ in your account, then what's left is *woot*.
posted by zengargoyle at 11:48 PM on February 28, 2008

All Your Worth is a very useful, straightforward money management approach (without having to keep track of every pack of gum you buy) that basically apportions your finances this way: essentials should cost no more than 50% of your income, leaving 30% for non-essentials and 20% for savings.

Shortfalls usually come from having one of those portions severely out-of-whack (for example, your essentials may be way too high because you live alone but don't really earn enough to afford it, or you're making payments on a car that's too expensive for you; your non-essentials may be too high because of habitual shopping/dining out/fancy gym membership, etc.; or you don't have anything in savings for emergencies, vacations, etc., so you have to rely on your credit card).

And speaking of carrying all that debt on your credit card: the first rule of getting out of a hole is to stop digging. Cut up your credit card so that you can't max it out again once you've made a few payments. It will force you to start living within your means.
posted by scody at 12:27 AM on February 29, 2008

Oh, and good luck! You can do it -- I was in the exact same financial place in my own life once, so I know how frustrating it is to be in the position you're in. It takes time and diligence, but it is possible to turn things around.
posted by scody at 12:32 AM on February 29, 2008

Point me towards some reading that will help me get my act together.

↓↓↓



STOP SPENDING YOU FUCKING MONEY.

1. Cut out any unnecessary recurring expenses. NO CABLE. NO INTERNET. NO CELL PHONE. NO MORNING COFFEE. Get a library card. Drink water. There's your entertainment. Dissatisfied with that kind of lifestyle? Get a better-paying job. Until then, SUFFER.


2. Do you live on your own? GET A ROOMMATE. Better yet, GET TWO. Better still, MOVE IN WITH MOM AND DAD.


3. Heating bills killing you? WEAR A SWEATER. Never turn on your heat unless you absolutely must. Turn off your lights when you go out.


4. Eat rice and pasta. Lots and LOTS of rice and pasta. Ramen noodles are a luxury item for you.


5. No SMOKING and no DRINKING. See point #1 about recurring costs... you can't afford five bucks a day for smokes or twenty a weekend for beers. Go for a run instead. It's free, with the side-benefit that you'll look and feel better about your otherwise-miserly existance.

It's quite simple. If you're really serious about "getting your act together," you'll ACT LIKE IT.
posted by Civil_Disobedient at 12:47 AM on February 29, 2008 [4 favorites has favorites]

s / YOU / YOUR
dammit.
posted by Civil_Disobedient at 12:48 AM on February 29, 2008

What I did was open a new bank account. Once a month I put $100 in that account. That's my spending money for the month. Everything else goes to debt.

I have also been selling all of those things that I own that are cool to have but I never use/don't need.

It's working, and it's working fast.

Financial discipline is the answer to your problem.
posted by davey_darling at 5:56 AM on February 29, 2008

I'm not very good with the discipline I felt like so many budgets required so years agoI went to a cash only scheme.

I figured out what my fixed monthly expenses were and subtracted that from my monthly income. This included rent, phone, internet, groceries, and credit card payments that were much more than the minimum. I then subtracted $50 for the start of some savings. I divided the remainder into 4 weeks. That left me with about $80/week. I took that out from the ATM on Friday. All things not accounted for in the fixed expenses had to be bought with cash. When it was out, that was it. It's easy to pass up that not so necessary purchase when you look in your wallet and see that you have $7 until Friday.

I got out of debt and even managed to cut my allowance to $60. Life's a lot different now that I'm not making those debt payments, I'm making more money, and I'm married, but I still only allow myself $60 a week.
posted by advicepig at 8:17 AM on February 29, 2008 [1 favorite has favorites]

Yes, it all sounds so dreary that you want to get a Starbucks extramocha, double caramel humongo latte with 3 shots ($12.50) to drown your sorrows in.

Lower your needs radically. Look at Hadjiboy's thread. When you feel like you 'need' new shoes, or that top-shelf drink, or a new car, or whatever is not actually affordable, remember that need is relative, and buy not what you can afford, but a bit less. Refine your attitude so that buying at Goodwill is your treat.

Refine your attitude to recognize that living debt-free is fantastic, and you deserve to get the credit card monkey off your back. Try to avoid advertising; it makes you want stuff that you really don't need.

Civil_Dis is absolutely right about reducing your spending. But it's just not awful. Water tastes great, and nearly every person in the US and the EU has safe tap water that tastes great. Home-made food is really good. After a while, you realize that a lot of prepared food is only appealing because it's so full of salt, corn syrup and fat. I liked living with roommates; we had fun. Walking instead of using ga$ helps you stay fit, and the exercise improves your mental health, too.

Just remember: You deserve the peace of mind you get from living within your means.
posted by theora55 at 1:50 PM on February 29, 2008

I, too, have used Dave Ramsey's Total Money Makeover plan successfully. Buy the book or borrow it from the library. It's worth the money to buy.

Email me if you'd like a copy of the spreadsheet I made for budgeting. This goes for anyone who would like a copy. I'll share.
posted by kc0dxh at 4:54 PM on February 29, 2008