I came across this quote from Aristotle on another blog today and it really resonated with me:
We are what we repeatedly do. Excellence, then, is not an act, but a habit.
A few months ago we realized that our spending habits were not doing us any good. We are lucky to have a good, steady income from G’s full time job, but we also have side projects and money from them can be sporadic. After a few good months last spring, we let ourselves develop some dirty little spending habits like picking up sushi at least one night a week which we justified with our busy schedules (G would be getting home from work as I was leaving to go tutoring). Add on top of that some other habits that we had developed long before:
- we paid for EVERYTHING with our debit/credit cards
- we sometimes carried a balance on our credit cards
- we (mis)used overdraft on our chequing account
- although we never missed a payment (who needs to when you have overdraft?), we didn’t really have a good idea of what bills were coming and when
and worst of all:
- we did not have a budget.
Now that’s not to say we were being completely irresponsible. We were trying to make good decisions (one older car / no flashy tv, etc.), but we didn’t really know what we were doing and we didn’t recognize some of our habits as being counterproductive. I even spent the occasional evening “budgeting”, but I didn’t really understand what a budget is. My idea of budgeting was printing off old bank statements, working out how much we had spent in various categories, comparing that to income and predicting where we should be in the future. While this was better than nothing and did give us ideas on how we could cut back (we spent how much at Starbucks???), it isn’t what I would now consider a budget. It did not tell us how much we could spend, it just predicted how much we would spend.
On a parenting forum I sometimes visit I had seen several people comment on just how much some Dave Ramsey guy had helped them. Several people posted saying he had turned their lives around. I found this a little dramatic, but was intrigued so I had a peek at his website. My first response was that his advice might work for some people, but it wasn’t for us. (Right here I’m going to make a disclaimer: although I might reference Dave here and there because we are loosely following his plan of learning to live on cash, saving a starter emergency fund of $1000 for surprise expenses like car repairs, and paying off our debts, I have never actually READ his book. There is enough info out there on the web, that you can find for free). Anyhow, so I read a bit but wasn’t convinced.
So we continued with our habits.
I can’t remember exactly how or why it happened, but in October I realized that we just seemed to be treading the financial waters. We weren’t exactly sinking, but we weren’t getting anywhere either. So I started doing some research and found that a lot of the beginner financial info out there centered around the importance of having a budget and I started learning a bit more about what a budget is. I read stories of people who were developing new, healthier habits and grew a desire to nurture healthier habits of our own.
One of the biggest habits we chose to make was to learn to live on cash. I had seen this used as a budgeting tool before – Dave Ramsey is a big advocate of this and I had seen it on Till Debt Do Us Part. It had never seemed like an option for us before, it was just so opposite to what we had always done, but we decided to give it a try.
We have been living on cash now for 3 months and we love it! It has been a tremendous help with our budgeting and despite what we originally feared, it has actually been fun and very freeing. As part of the budget, we each get a weekly allowance, our “throw away” money which does not need to be accounted for. This money can go to whatever we want so there is no guilt in spending it. Before, when I’d go out for coffee I’d feel guilty that I was spending money we couldn’t afford. Now I just enjoy my coffee, knowing it is “in the budget”. In fact, I write very little down. We take our weekly allotment from the bank each Sunday and divide it up in to the jars. (I think Dave uses envelopes, but we use jars – they don’t get worn out like envelopes and provide a daily visual reminder of what we are accomplishing as they sit neatly on our kitchen counter). When I go grocery shopping, along with my cloth bags and coupons, I grab our grocery jar. After I pay, I throw the change back in the jar and put it back in its place on the counter when I put away the groceries. Easy – and I don’t have to file the receipt or enter it in a spreadsheet. If there is money left in the jar at the end of the week, it rolls over to the next week. If this were to happen consistently, I would revisit the amount alloted for that category in the weekly budget, but so far this hasn’t been a problem.
Ok, I could keep going on about our budget and my sparkly little jars. They really do make me smile. I’m proud of what we’re doing, even if it’s slow going. There’s more, but it can wait for another post. Here are my jars (for you, Val!):
Hi
This is all very useful advice. Especially the part about budgeting. Everyone should have a proper budget and financial plan (whether rich or poor) but few people do.
Of course if few people have a budget then even fewer will actually stick to it! I think the advice about living on cash is excellent. If you don’t it is so easy to lie to yourself and break your budget.
Neil
Thanks so much for commenting on my post and directing me back to yours – it’s so wonderful to know that others have struggled with not really knowing what they are doing with their money. I love the idea of jars but not sure that it would work for us…we use a weekly method of paying the bills…but I AM LOVING
Loving the grocery jar – and the rollover!! Good Luck with your budget!