Budgeting

[John Junk 2.0]

So let's say, just hypothetically, I'm, you know, consumed with personal and educational debt, possibly headed for financial ruin, and desperately need to get my shit in order... should I bother to download a budget management application, etc., or should I just pencil-and-pen it?  Or just use something like Excel, which I already have?  Keep in mind: I have no experience with any of this stuff, so I'm suspecting that I may not be able to take full advantage of the software's advantages.  In other words, I may not appreciate an advanced budgeting application.  I don't know, y'all seem smart, any advice? 

[yesno]

Software schmoftware.  Just don't spend money unnecessarily, and devote 100% of your non-food/rent/bills money to paying down credit card debt first.  Use a pencil and paper to figure out how much you need to spend on necessities (and be realistic).

Plus, stop entering your credit card number into those websites.  You know what I'm talking about.  I don't need to spell out that I'm talking about your balloon porn addiction.  Everyone here already knows about it so there's no need to embarrass you.

[Jennifer]

I think I read that you went to MICA, right? I'm in a similar financial situation (I was there in the early 90s). 

Unless you really respond to spreadsheets (and since you're an artist I'm going to make a broad generalization and guess that you don't), I think pencil and paper is the way to go. Setting up a system on the computer sometimes results in too much time playing around with apps and formulas. I've always heard that before making a budget, you should spend two or three weeks keeping track of absolutely everything that you spend money on, so you have a better idea of what your actual expenses are and can see where to cut back. You might also want to go to a credit union--they can look at your expenses and help you work out a payment plan (and I don't think you automatically have to use their consolidation services, they'll help you regardless. I could be wrong, but it might be worth looking into).

I don't know, it's tough. And if you're having a not-so-great-time in life, it's hard to feel good about "making the best choices for the future" when it's easier to have instant gratification happy purchases. 

[yesno]

One trick is to convince yourself that the "simple life" of not owning anything is what you're actually going for.

That sounds facetious but I'm being serious.  I've been broke before and just going around my house selling/throwing stuff away has helped me get into a more ascetic mindset.

[Bryan]

If you can afford the time, you might want to take 2-3 months, and record all the money you're spending during that time. This will give you a sense of your spending habits, and may open your eyes to the actual amounts you spend on take-out food, gas, whatever.

Once you have a sense of that, you can see what you've been spending too much on, and you can set a realistic budget for yourself.

Or you can just do what we did, and save your receipts in a big bowl for four months, then throw them out because there's too much paper to deal with.

edit: Just saw that Jennifer posted much the same suggestion as me. If you spend too much, it's a good idea. If you just don't have enough money, then budgeting won't help you too much. And also, Sarah's right as usual.

[Sarah]

Who needs software?  Spend money on what you need.  Don't spend money on what you don't need.  And stop kidding yourself that stuff you want is stuff you need.

[John Junk 2.0]

Yeah!  That's right, I went to MICA, but the real kicker is the grad school at the fancy California School.  I've already decided I'm not ever traveling back to the east coast until I can hypothetically pay cash for the plane fare.  Which means I'm not going back to the East Coast for another ten years.  

i"m trying to figure it out using an Excel worksheet, but yeah, I may just end up writing it down or typing it up to keep it simple.  

I've got most of my debt on one, rather high-interest card, but I'm not moving it off that thing.  I've tried to take some off and put it to a lower interest card, but then missed one payment and been back in shitsville in seconds, then had to put it all back onto my old card because they have 0% APR on balance transfers.  I was treading water fine but then car troubles and travel expenses just sent me into a death spiral.  

Also, does anyone actually use an accountant?  At this point I'm thinking the money I'm losing being an idiot about my finances and taxes outweighs the money I'd lose paying an accountant.--- math wizzes dfk and julie please don't tell me that I shouldn't be so dumb about numbers and money.  I wasn't raised to be, uh, good at this stuff.

Also, Sarah, I'd love to think that it's all cause I'm kidding myself about stuff I want being stuff I need, but it's more like stuff I need is stuff I need: a car that runs, FOOD.  I don't actually WANT budgeting software, I was just wondering if it was a good idea.  Although it is true, I did want the big fancy expensive art education and didn't NEED it, but what's done is done.

And I really do need all this balloon porn, people.  Don't judge!

[Sarah]

Sorry, JJ.  I just know a lot of people who are convinced they spend money only on necessities who actually fritter away a great deal of it on luxuries (not big stuff, just everyday things like eating out, movies, music, books, clothes beyond the minimum, etc.).

Have you considered contacting your credit card company and explaining how dire your straits are?  I've also known people who have gotten great payment deals--like ten or twenty-five cents on the dollar--just by talking to someone.  Of course, only a certain kind of person can finagle these kinds of arrangements.  Lord knows I'm not one of them. 

[erika]

I'd vote for following your expenses for a month or two and see how much you spend. It really helps when you write down every thing you spend. I'm working on that now. I have a composition book/notebook with an envelope taped in the inside cover. I try to write stuff down but if I don't have time, I at least stuff the receipt into the envelope.

And never ever ever eat out. Always cook big meals at home. Find someone with a crockpot they don't use and have them lend it to you and make yourself cheap but healthy food. Freeze stuff, whatever. Eating out and eating prepared foods takes away so much of your income. At least it was taking away mine...

I also try to save money just by reviewing store circulars every week. I go shopping at maybe 3 different stores, which is a pain, but if I'm buying stuff on sale (and with a coupon?) then I tend to save like 10 bucks a week.

[Jennifer]

I've got most of my debt on one, rather high-interest card, but I'm not moving it off that thing.  I've tried to take some off and put it to a lower interest card, but then missed one payment and been back in shitsville in seconds, then had to put it all back onto my old card because they have 0% APR on balance transfers.  I was treading water fine but then car troubles and travel expenses just sent me into a death spiral.  

Oh, a missed payment is a one way ticket to shitsville. I had great credit all through college. Then I went through some tough times, missed a couple payments, and became a financial pariah. (I ended up consolidating everything into a loan with a manageable payment. It's not the best solution, but it helped me get back to where I can actually live comfortably and still pay my debts.)

Just don't be ashamed of how you've handled money in the past. It can be daunting, it's not something a lot of us learn, and yet plenty of people will make you feel like a jackass about your finances (that wasn't directed toward anyone here, just in general). It will work out, it's just a matter of getting a handle on it.

And Sarah's right, I have friends who have made all kinds of deals with their credit card companies.

[Bryan]

The only other financial advice I have is to pay your bills first, then work with what you've got remaining. Before internet banking I never paid my credit card bills on time. Now, it's the first thing I do on payday. (Having an above-poverty line income helps, too.)

[John Junk 2.0]

Sorry, JJ.  I just know a lot of people who are convinced they spend money only on necessities who actually fritter away a great deal of it on luxuries (not big stuff, just everyday things like eating out, movies, music, books, clothes beyond the minimum, etc.).

I'm sorry too.  Actually, after posting that reply to you, I realized I was behaving exactly the way you just pointed out (minus the clothes) up until, um, this month when I ran out of money. period. for a week.  I rediscovered the benefits of pb&j real fast.  

Part of that brokeness is having an eleven month working contract.  Luckily I'm back on the job.

I realize now insane things I spent money on in the last year: a Fender Twin amp, 2 Improv classes
and things that weren't insane but were real expensive:  trips back and forth coast-to-coast to visit family and friends.

My credit card company told me they'll lower my interest rate in two months.  I'm gonna get a second job probably.
I'll definitely do that expenses-tracking thing.

I'm probably over-sharing.

[Sarah]

Nah.  What you need to do is simple, but it's a matter of forming a new habit, which is damn hard.  Talking about it can help you figure out precisely what steps you have to take. 

And, remember, given a choice between getting nothing and getting a little, credit card companies will always opt for the latter.  I bet you could get more than a break on your interest rate if you were persistent enough.

P.S.  Glad we made up so quickly.  Don't you just hate it when we fight?

[Andy]

I use Yodlee, which is really convenient if you never carry cash (like me).   It syncs to your credit card/student loan/auto loan/retirement accounts and is sooooo much better than Money or Quicken.  It will let you set up budgets and track against them, which is helpful.  Also, it's free (for now) at yodlee.com

My position is a little different, but I've taken the "live simply" thing a little bit differently than most (I think).  When it comes to STUFF, I try to live simply.  When it comes to not stuff (volunteering, learning, hobbies, work, etc...)  I've been trying to load up.  I find that doing stuff like volunteering my time keeps me from spending money to fill up free time and it makes me feel better (it also makes me crazy)

[ericluxury]

I don't know how much you trust the internet, but there is a website called Mint (http://www.mint.com) that I love. Its free and what makes it better than Excel is that you can set it up to read from your accounts. It will log purchases and assign them a tag for you. You have to do cash yourself. But it allows for budgeting, monitoring spending trends and all sorts of other stuff really easily. I know I sound like an ad but only because I really think its awesome. I've tried keeping a log with a tiny moleskine, saving receipts, keeping a checkbook and using Excel and none of them work because I am too lazy. Since Mint does 80% of the work for me and keeps me from losing the paper, its the only thing thats worked. I've kept it up now for 2 months and whereas my previous record of being organized financially was 2 weeks.
Having it all tracked out and visualized helps see where wasted money is.