Thursday, December 30, 2010

Reshaping My Relationship with Money (or: Tori D. is broke!)

There was a crucial learning step that I missed as a child. I never really was taught about using money wisely or balancing a checkbook. I think it was taken for granted that these things were simple enough, and with me being a pretty bright child, there was no reason for me not to grasp that concept. And that thinking was correct to an extent; I can balance my checkbook... It may take a while, after hunting down receipts and stuff, I can do it. The thing is, I'm prone to not doing it. My lack of focus, coupled with personality traits such as disorganization and tendency to find tasks like this uninteresting (I'm an INFP for those of you familiar with the Meyers-Briggs personality types) means that it just does not get done. This has lead to some less than desirable consequences for my bank account.

The thing that most recently sent me into shock occurred on Tuesday. I got a call from my mom saying she figured I needed some money for lunch so she transferred some funds into my account. Blow #1: I felt like a middle school kid again, getting lunch money from mommy. I said thanks, but didn't think I actually needed it. The last time I checked my account, it said there was $30-something dollars in there. I'm good! I go to check how much she put in... I see that she put in over $100 but my account was less than $100. How could this be? It turns out, (blow #2) I was in overdraft. Blow #3: Two transactions that totaled less than $10 caused me to get hit with $70 in NSF fees. Y'all, I cried. Like literally boohooed at work. I felt like such a failure! Here I am trying to prove that I'm a responsible adult and ready to be on my own. And my mom had to come save my butt. Again.

I'm not even sure that she knew I was in that position or not. Usually when she does, she'll say something about it but this time she didn't.

That situation has made me determined to do better with my money. I'm going to have to do something drastic. I'm going to start carrying cash.

I never have cash y'all. Ever. The debit card is just sooo much easier for me. But that ease means it's way too easy to overspend, especially when you don't have to actually see the money. It's like you're not really spending it (at the time). I figure if I only carry cash (no debit OR credit cards unless I'm going to get gas) it will cause me to do several things:

1. force me into seriously thinking about what I'm purchasing and how much I spend
2. create a loose budget for the week/month
3. keep me from buying non-necessities--I have enough stuff in my tiny little space as it is
4. cause me to save more

So on payday, I'll take out a small, pre-determined amount and make it last for the month. If I run out by week two, yanno what that means? I can't buy A THING for two weeks. If I have money left over at next payday (a laughable thought, but I guess it's possible) then that amount goes towards the amount I can spend, which means less coming out of my account.
This is a modified version of something a financial planner presented to us while I was an employee at Blue Cross Blue Shield. In his version, you have a separate envelop for each thing. A cash envelop for bills, cash envelop for clothes, cash envelop for food, etc. That doesn't work for me because there's no way I'm sending cash for my credit card bills, car note, all of that. So my bills are paid at the beginning of the month, and then my account will have to sit inactive for a bit.

The only time I'll allow myself a little splurge is when I make a sale. That commission will be split between my savings, credit card payments, and a little bit to spend. By the way, having my savings come out of my check before I get it was one of the best ideas I've ever had! LOL

Have any of you had to make serious changes to your relationship with money? Did you have a good money management foundation from the start, or did you have to learn as you go? What has been your biggest challenge?

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