Step 3 – Being Honest With Yourself…
This week’s step is the hardest yet it is one ANY financial program has – where is my money going?
The opening starts out with a reality check. “Throw away a three-dollar magazine you never got around to reading – easy. Toss in the garbage five dollars’ worth of food that’s good bad – a possible cringe. But rip up a five dollar bill and throw it away. ..not so easy.
The story she uses to illustrate this step, I really relate to. As a person in control of our money. I keep a lot from my husband (which I’m working on and making great steps of improvement). Not just the money spent on me or the kids but what our bills are. This isn’t a reflection on my parents but my control freak side. My husband gladly turned the money over to me when we were first married which I pounced on quicker than a hawk on a bunny. But to say “hey, we’re broke,” would be to say…”hey, I can’t handle this – it’s out of my control.”
Per Ms. Orman – Most of us believe, or deceive ourselves into believing, that we need about 1,000 to 1,500 a month less to live as we are. To get a ‘reality check’ on your spending and income, Suze Orman suggests going through two years of expenses – yikes! That’s a lot of paper and to be honest…I don’t keep those types of records. And I have to wonder how many people that are facing major money issues do keep track of expenses like that. So most I’ve read tell you track ALL expenses for a couple of months and go from there…factoring in things you know will be only year expenses (taxes, insurance, club renewals, etc). Make to include those ‘small’ expenses – the example given is Friday Night Movies…$20 for tickets and popcorn over the course of the year is $1040. Proof the small things add up.
Then of course comes the where can we cut? I’ve been amazed how much I have cut our food bill and eliminated waste buy going from family to two people cooking. This has taken some adjustments, meals that were once money saving are now a waste, most soups I made. Unless I have a family to give a most of it, we end up dumping it. Things like lasagna, I still make only in small individual loaf pans which are frozen and eaten over the course of the following month. Foods once too expensive are now sensible. For example, pork chop hearts served with potato is cheaper than chicken noodle soup. Unrealistic budget cuts, like unrealistic diets, never work, the author reminds us. To say you’re going to eat nothing but boiled turnips isn’t the solution to your weight issue nor is planning on never spending money on clothes or entertainment.
One way to curve the aimless spending is to use ‘real’ money. Doing this often makes you think ‘do I want to spend money on this?’ Instead of blindly throwing it in the cart and ‘swiping’ for it. Now there will be things you have to spend money on that you don’t want to – i.e. a new roof. I didn’t want to spend $3,100 on a new roof but since our old one leaked, I had to.
Another thing don’t let the line between have to and want to blur. This is line that waves and curves at times for most people.
Also be realistic and schedule money for replacement things like bath towels. My husband and I received towels for a wedding gift…13 years later and we were still using the same towels. When I broke down and purchased new ones we were amazed – they actually dried us instead of just chasing the water around.
Spend this week working on a realistic budget. Covering the small, hidden, and unexpected costs. Remember keep it real no boiled turnips for every meal.
Next week we start the ‘how to manage your money and create more’ steps.
