The Dollar Stretcher : Budgeting

Pay My Bills

Gary — Tue, 18 Aug 2009 18:24:00 GMT

Dear Dollar Stretcher,

I really struggle with the discipline aspect of saving money. I have heard of companies who put your money in a trust, pay the bills and give you an allowance to live on. Do you or any of your readers know anything about how these companies work or if anyone has had any bad experiences with these?

Mary

Mary has a problem that's probably more common than we care to admit. She has trouble controlling her spending. And, to her credit, she wants to regain control.

But, I don't recommend that she use a firm to pay her bills. Three reasons why I don't.

First, not all of these firms are legitimate and responsible. Signing up with the wrong company could have disastrous effects. Not only could you lose your money, but your credit rating could be destroyed.

Secondly, why should Mary want to pay someone to do what she can do herself? These firms will work with her to create a budget. Once she has a budget made they'll collect her paycheck and allocate it to her various monthly bills and give her an allowance for incidentals.

She can do that herself. You can find all kinds of budget worksheets by doing a web search for 'making a budget' or look for info here.

She can set up a special checking account to be used for routine bills, like the electric bill. That account will only be used to pay those specific bills. In fact, if she can set it up for online payment and not even have any paper checks, that would be best. Less temptation.

Individual debit cards can be used for things like her groceries and food shopping. One for each category. For instance, she can add the amount that she has allocated for food each pay period to her food debit card. When she's grocery shopping she uses that debit card. Since she can only spend what's on the card, she's effectively stopped when the money is gone.

She'll probably have some incidental expenses that aren't easily put on a debit card. She can set aside a certain amount of cash to cover those expenses each pay period. Again, when the cash is gone the spending must stop.

Anything beyond that goes towards an emergency fund or long-term savings.

Mary may find that her income doesn't cover her expenses. That means that she must reduce her spending or increase her income.

She doesn't say, but past debts might be part of the problem. If she has a large amount (typically $10,000 or more) of credit card debt, she might want to check out a reputable credit counseling agency. She'll want to find a credit counselling agency that's a member of one of the two associations: Association of Independent Consumer Credit Counseling <aiccca.org> or National Foundation for Credit Counseling <nfcc.org>

The third reason that I don't recommend these firms might be the most important. Hiring someone only deals with the symptoms. Unless Mary addresses the root cause of her spending problems she will always struggle with spending issues. That will be true no matter who has control of Mary's charge cards and checkbook.

Mary needs to understand why she's spending money. Often people who have problems controlling their spending are trying to fill emotional needs. For instance they may feel loved or powerful when they buy something. What they're buying is only important to them as it relates to fulfilling that psychological need.

There are a number of clues that could identify that she has that problem. One is if her head says "stop" and she buys anyway. Another is if she feels out of control when she's shopping or enjoys a shopping 'rush'. Perhaps she feels remorse after a purchase or hides her purchases from her spouse.

If Mary has that problem it's good for her to be responsible for paying her bills. Being closer to her financial transactions could help her understand her buying motives. As she pays her bills a good question would be "why did I buy this?"

Mary may find that she can't figure out what's triggering her actions. In that case she'll need to seek out a counselor who can help her work through the emotions.

In any case, Mary should be proud of herself. She's identified a problem and has taken the first step to solving it.

Keep on Stretching those Dollars!

Gary

Real Simple

Gary — Tue, 19 Feb 2008 13:47:00 GMT

I think that those of us who are into frugal living are blessed with a lot of fine resources. Among them is a magazine and website called "Real Simple." Their main focus is on simple living (with a modern interpretation). They had contacted me about an article they were working on awhile back. Just published it the other day. You can find it here

The concept of simple living seems a little strange. Especially when we discuss it in a blog wired to the net. I'm sure that it doesn't mean the same thing that it did years ago. Back then living simply meant a return to a less mechanized, more rural life. Supporters tended to be self-reliant. The live off of the land types.

But like so many things you don't have to go all the way to benefit from the concept. You don't have to leave civilization behind to simplify your life. Depending on your lifestyle it could be something as simple as getting rid of some of the clutter in your home. I suspect that if we did more of that there would be fewer people looking for bigger homes (did you know that the average home is about 50% bigger than it was 30 years ago?).

It might be time for you to simplify your finances. I don't know the statistics, but I bet a lot of people have more than one IRA. That's ok if there's a specific investment reason for each one. But if they're both doing the same thing it would be simpler to only have to monitor one of them.

I remember watching westerns on TV. Occasionally you'd see one that included a wagon train heading west. Often, if they ran into trouble, they'd leave behind the things that they felt that they could live without. Sometimes those things had traveled with them for many, many difficult miles. It must have been hard to do that.

It could be that our lives are a little like that wagon train. Look around your world and see if there aren't some things that are not adding anything to your life. If you find something like that it's time to give serious consideration to leaving it behind. Even if it's been part of your life for years.

In case you'd like to find out more about the simple living lifestyle you might like to check out an email newsletter called Simple Times A good friend of ours, Debi Taylor-Hough, has been sharing great ideas with her readers for years. Might be a good way to get a start on a simple, more fulfilling life.

Keep on stretching those dollars (and other resources!)

Gary

In the Arena

Gary — Mon, 17 Dec 2007 17:59:00 GMT

This seems to be my week for interesting quotes. This one

comes from an email. It was included as the signature line.

"Developing the capability is not the same as occupying the

arena."

It reminds me a little bit of something I heard years ago

about golf tips (btw, I am NOT a golfer - just don't have

enough coordination or patience for the game). This avid

golfer said that he didn't need more golf tips. What he needed

was the ability to follow the ones that he already had heard.

Seems that's true of the quote from the email. We can continue

to collect time and money-saving ideas. We can even organize

and save them. Print them out and put them in a notebook if we

want. But until we put them into practice, they won't save us

any time or money.

Based on the emails I get, most of you are already in the

arena and in the game. I just want to be sure that I'm

alongside you this coming year so that we can celebrate the

victory together!