I love this post from Retire at 30. It’s a great way to start the weekend.
Spend as much on crap as you can afford. Just don’t spend more. Shocking as it may seem, you can be financially responsible and splurge on stupid things.
This fits in perfectly with the stackbacks budget system. Go ahead, blow your living expenses on fancy dinners, spend your big ticket savings on a BMW, just don’t spend more than that.
Coupons are a great way to save money, however they aren’t always convenient. This week I’m offering three easy tips to help you start utilizing them.
#1 Keep a few impulse coupons at hand
I carry a shoulder bag, so I keep a few coupons in an envelope. You can also just throw them in your wallet. What coupons do I keep in there? Coupons I might want to use on impulse. What’s in there now?
That’s an easy $25 right there.
Steve Pavlina has a great post on his blog about feeble exuses. He recommends taking excuses and exposing the truth behind them.
The truth behind “I don’t know how” is “I’m unwilling to learn.” In other words, you have to admit that you’re lazy.
I really like this outlook and it can easily be applied to budgeting. If you are reading this blog, it is likely that you want to setup a budget. You may have been unsuccessful in the past and used excuses like I have, “I can’t make a budget work”.
Instead of using these excuses, rewire them. Next time you are procrastinating, don’t succumb to your own bullshit. Let yourself know “I am unwilling to budget my money.” Either accept it and don’t budget, or confront it and get to work on controlling your finances.
It is easy to see the difference between planned items and living expenses. Planned expenses are mortgages and cable bills. Living expenses are dining out and gasoline. What about new TVs, computers, or down payments on beach houses? Items that are more costly get a separate savings account.
Start by creating a new savings account and naming it your big ticket account. Then, schedule a new scheduled transfer from your planned expense account. All you have to do is live within your means and over time you’ll have a lump of money to spend with no guilt. When you have enough saved up you are ready to start shopping.
Making the big purchases
1. Use a credit card.
You get the benefit of the credit card (cashback / miles) and it gets consolidated into one place. Projects like refurnishing a bedroom or new home theatre setup require may require multiple purchases, so it’s nice to have it on a card to consolidate the project into one bill. This is the best option if you can control your spending and will power to accumulate the cash beforehand.
2. Transfer to your living expenses
This account is generally used for purchases that are not necessities. Your big ticket item is most likely a present to yourself, so it fits well in this category. Just transfer the amount into your living expenses and spend away.
Why you shouldn’t use your planned expense account
You could transfer the money to your planned expenses account and use it there. You’ve been planning on this purchase, you’ve been saving for it, and it’s a onetime shot. However, when you do this you are using your planned account like a living expense account. This makes it harder to budget your big ticket items and run the risk of over spending. The accounting work and risks increase if is a project that entails many smaller purchases.
Paying your big ticket credit card
1. Link the card to your savings
Link your credit card to your savings account and setup an auto payment for the full amount. However, some banks won’t allow you to setup a savings account as your funding source for your credit card bills, so you may need option 2.
2. Link the card to your planned expenses
Link your credit card to your planned expenses account. When you make the purchases, transfer the amount you owe into your planned account. I don’t recommend setting up auto pay out of your planned expense account, because this requires you manually transfer the money from your savings first. Make sure you pay your bill. This isn’t a credit card bill you’re paying every month, so you have to be mindful.
Young and broke has a great post about how banks process debit card transactions.
Common belief seems to be that when you use your debit card at the grocery store, gas station, minimart, etc. the money comes directly, and immediately, out of your checking account.
…A good number of banks will hold the transactions to the end of the day to process them, and then process them from largest to smallest, leaving you vulnerable to extra fees.
What to do? Call your bank and ask them how they handle debit card transactions. While you’re at it, turn on overdraft protection. It’s better to lose a few cents in interest then $25 a pop in overdraft fees.
