Scene: Julie sits at Albie’s computer reading WiseBread, eating a snack, and listening to Roller Derby Queen by Jim Croce. (Julie’s headphones are packed away somewhere due to carpet being installed near her own cubicle). Albie arrives back at his cubicle and shakes his head.

Albie: You’re totally pulling off the hobo lifestyle today. You’re happily eating cold lentil soup right out of the can with a plastic spoon you got from the lunch room and, if I’ve learned anything about you over the last two years, I’m gonna guess that you didn’t buy anything you’re wearing right now. While you use my headphones.
Julie: Which for the record you offered for me to use while you took a late morning constitutional.
Albie: True
Julie: Other than that… yeah that’s pretty darn accurate! Well, I did buy these shoes. (Smiles proudly then looks over her clothing choice for the day) But everything else… Let’s see, hand-me-down sweater and jeans, and these rad heart-covered socks were a gift. I’m also using an actual elastic band for a hair tie.
Albie: Of course you are. I picture you sitting by a camp fire next to a railroad track watching the trains go by and playing your second hand ukulele (p.s. – buying second-hand things – that are in good condition can help you save money and stay on budget!).
Julie: That’s an idea I can get behind.
Albie: And when you get cold you can wear your America’s Badass leather jacket from Goodwill you were sporting yesterday.
Julie: Hell yeah I could!

Many people feel like they don’t have choices when it comes to how much they spend on vital life items (food, clothes, utensils, headphones, things that make them happy). But I have internalized what is important to me and that I can spend money on items equal to their importance.

Do I want decent clothes to wear? YES. Do I dress at an appropriately professional level for my job? You bet! (I’m out in the community all the time representing the company while teaching so there’s definitely a standard I attend to).Do I usually buy clothes at Nordstroms? No!

Did I pay monies for my shoes? Yes! Teaching so much I’m on my feet all the time (plus I dance a lot and my feet are incredibly important to me). I’m okay spending $70 on amazing Clarks because they keep my feet healthy and safe and they’ll last for years.

But here’s the secret to looking professional and establishing a mixture of authority and approachability while teaching (or doing anything). Confidence, a smile, and eye contact. A business partner is not going to remember what I wear, but how I make them feel about our partnership and my ability to deliver quality material. A class participant will remember that they felt comfortable asking questions and know they received a relevant answer. No price tag or pressed pants can compensate for that.

Dressing professionally is important. I didn’t come to work today wearing overalls and a red flannel (although I’m strongly considering that for next week. Pig tails included) But, I know where my power really comes from and I can make spending decisions that accurately reflect how I interpret the relevance of not looking like a hobo. (Plus I do love me some train travel).

If you’re struggling to pay off debt, ACCC can help. Schedule a free credit counseling session with us today. 

Our credit counseling advice is to look within yourself to make spending decisions.

Information and the Focus Deficit

Quantifying how much media and overall information we consume daily is really difficult. Quantifying how much is available feels nearly impossible. In a world of information without borders, humans must adapt to the changing information landscape. When the world is our oyster, we have to actively choose what to focus on because there are no longer any barriers except for our own free will.

It hasn’t always been this way. Recently, I was staying with some close friends in their late 50’s. 25 years ago, as Bob fed baby Katie in the middle of the night, he had only static on NBC to keep him company. No 24 hour news cycle. No late night Comedy Central. Just static and a baby bottle.

Information Over-consumption and Spending

Information Over-consumption disintegrates our ability to make discerning choices expediently. Or ever. Since many of us haven’t developed sufficient filters to protect from information over-consumption, we are susceptible to huge numbers of influences. Currently, the internet pretty much runs on advertising. (Doesn’t it always seem to come back to advertising?) Pop-ups on YouTube, company logos in our peripheral vision on Hulu, sidebar ads on Google and Facebook. All attracting our subconscious attention. Advertising can lead us to spend more, and possibly fall into credit card debt.

But it’s not all about advertising. Our decision making ability becomes weaker in the face of unlimited choices. By becoming more active in deciding what information we allow into our system, the stronger our decisions become and the more authentic our choices become to our true wants and needs.

Information Obesity

As Clay Johnson, the author of Information Diet, expresses, when somebody is overweight we don’t blame the chicken wings for flying into a person’s mouth. Similarly, we can’t blame the abundance of information for our poor usage or binging habits. And just as we teach ourselves how to eat the correct proportion of vegetables to protein to grains, we much teach ourselves healthy habits in regards to information consumption.

In Weight Watchers, participants track each morsel of food they eat. As an experiment, track how long you spend on the internet (and which sites/ which tasks) for a few days. Track how much you listen to the radio and how much you watch television. Track how often you check your email. Maybe you actually write it down, or to start out just pay attention and see if you notice patterns. When you start observing yourself rather than passively consuming you can pinpoint habits that you don’t feel make you healthy or happy. From that knowledge you can work towards change.

We talk about wants and needs a lot on this blog, and understanding these factors that contribute to our perception of want and need is a way to refine our mental system to calibrate want/need in a healthier and more authentic way.

If you’re struggling to pay off debt, ACCC can help. Schedule a free credit counseling session with us today. 

For debt management purposes, tracking your spending can be insightful.

Lessons Learned

When I tracked spending I encountered the following barriers:

• Resistance to what feels like tracking my every move
• Forgetfulness
• Anger at my forgetfulness

When I tracked my spending I experienced the following benefits:

• I clearly understood where my money went the first two weeks of the month
• I was able to make VERY useful changes to how I apportion some of my budgeting categories (particularly groceries)
• I am better able to understand how I spend money with guests, which will help me plan out how much money I’ll need for traveling later this year

Practicing What I Preach? Affirmative!

I teach thousands of students of all ages every year. Whenever I suggest tracking spending to ensure an accurate picture of spending, I never suggest tracking spending for a month. We are all busy, and we all have our stuff that we’re working on. (As Havi from the fluentself.com says “We all have our stuff. We’re all working on our stuff. We take responsibility for our stuff. Because without sovereignty and spaciousness, this whole thing falls apart.”) Put all that together, and it’s difficult to expect ourselves to adhere to such a labor and memory intensive task for a full month the first time we give it a try.

My credit counseling recommendation is that periodically throughout the year we should track our spending for 1 week. This catches variations in spending over the weekday and weekend. For a more thorough understanding you can aim for 2 weeks of tracking.

If you don’t complete the whole week THAT’S OK! This is not a zero-sum game. Congratulate yourself for persisting as long as you did, and then try and figure out what made tracking spending hard. Next time you can make changes that will support you in tracking the expenses for the whole week. Tracking spending is a form of habit building. The more times you do something, the more it becomes reinforced and the easier it becomes.

Sound Bites of Wisdom…

Changing habits is hard

Changing habits takes time

Changing habits IS POSSIBLE

Changing habits takes PERSEVERANCE

This is a series following my experience tracking my expenses through January. I’m exploring this cash flow management technique with an eye towards what it feels like to write down every single time I spend money. It’s not that people don’t know how to track their expenses (the nuts and bolts are not particularly difficult), but there are buckets full of internal obstacles that make the practice very difficult.

If you’re struggling to pay off debt, ACCC can help. Schedule a free credit counseling session with us today. 

Our credit counseling advice is to look further than the flashy headline.

After clicking the link it showed numerous cruise options, different lines, number of nights and prices. A 3 night cruise to the Bahamas could cost as little as $169. What!!! I clicked around and looked at the rooms. The room with the portal windows was so cute, and the same price as a normal interior room. Read about the on-ship restaurants, spa treatments… I’ve never been on a cruise and it sounds very relaxing.  But the further I went, the more I realized what was happening.

I was emotionally hooked.

(Here is the email in question)

I’d also spent about 30 minutes clicking through all these links and reading about the cruises. Imagining myself sunbathing on the deck and watching the ocean out of my room’s window. Including plane fare to Miami (where the ship leaves dock) I figured it would cost about $530 total.

I clicked through to the purchase page, credit card ready, now late at night when I was tired and my guard was down.

I blinked… $139 in taxes. Another $159 I didn’t know where it came from. Total cruise price $450. Then I’d still have to buy the plane ticket down to Miami. Because of the short notice it would cost $360.

Suddenly my $169 cruise would cost a total of $810. Yikers! This went over budget very quickly.

Whoa- what just happened?

Why do Airlines and travel companies provide incentives such as frequent flier miles? For one,  it gets people to pay attention when they otherwise wouldn’t.

If I didn’t see “up to 35,000 frequent flier miles” I would have deleted that email immediately. But, I paid attention instead. Then they crafted their message so I became emotionally involved. Since purchasing items, especially non-essentials, is typically an emotional decision this type of marketing can be very very effective. It metamorphisizes a want into a need. I need a vacation. I need to get out of New England’s wet winter weather. I need this for my happiness.

Once I’ve become fixated on this decision, they slip in the real price. And the fact that I would only earn 350 frequent flier miles from booking the cruise. It’s just a small skip and jump to rationalizing why $810 is not unreasonable. Maybe at that point I decide to do a 7 night cruise since I’m spending so much already. Plus I can just pay it off over time with my credit card right?

The Take Away: Awareness

Being aware of how companies are trying to sell us things, and influence our decision making is essential. By understanding a marketing tactic like this email, we can keep its emotional influence in check.

A cruise is not good or bad. But, if we decide to go on a cruise, it should be because we already wanted to and planned to. Not because Norwegian Cruise lines pays a lot of money to twist our emotions.

If you’re struggling to pay off debt, ACCC can help. Schedule a free credit counseling session with us today. 

The first step to debt management is tracking expenses.

January 2, 2012

My first purchase of the New Year was a plane to ticket for my brother’s graduation in May. I sit down, go over flight info and prices, remember my frequent flier number and make the purchase. I then walk out of my room, and luckily remember 5 minutes later that I’m tracking my spending. Oops. Came back into my room to find the pad of paper and write down the purchase.

January 3, 2012

Sometimes a bagel with chive cream cheese is all I need to make my day perfect. This tells me I take pleasure in life’s small joys and that I feel compelled these days to write on this blog about food. Anyhow, I forgot again to write down how much I paid, then I crumpled the receipt and caught it mid-air on its way to the the garbage can (no, I did not have to actually touch any garbage).

I needed the receipt because I had no idea how much I swiped on my credit card. None. This could be bad in 2 ways: if I routinely don’t know how much I spend then I will probably over spend. AND if there was an error on the bill (like an extra two zeroes = $200 bagel rather than $2.00 bagel – my credit counseling advice is to always check your bill!) I would have no idea. I felt ridiculous when I realized this, and wouldn’t have even noticed if I hadn’t gone to write it down at the last minute.

Silver lining- it all worked out in the end. And if you haven’t tried a Black Russian bagel, you should change that situation immediately.

January 10, 2012

It’s only day 10 and I really want to quit doing this. I’ve been taking much more note of small expenses that I don’t usually count as money (change in the meters… who actually counts how many quarters go in?) and other interesting finds. But, I’m bored of this already. I got my brother a gift today and only just now wrote it down, 6 hours later. Not because I didn’t want it to show up on the list. Just because I’m sick of writing everything down. But I’m learning to persevere and therefore will continue on this journey. Doesn’t a habit get reinforced and less difficult after 3 weeks or so? I know I’ve read that somewhere.

Other findings

I spent $96 on groceries one day. (I don’t just shop for the week, plus if you buy something like Worcestershire sauce you pay for an item that will last for a long time.) Writing down $96 for groceries has prompted a budget shift of consciousness. I will now no longer budget weekly grocery money, but rather budget a set amount for the month. It will have the same effect of monitoring where the food money goes, but will smooth out the “Worcestershire sauce aberration.” This change alone makes the tracking spending worth it to me. Hooray.

Stay tuned for the next update. We’re going all month, folks! If you’re struggling to pay off debt, schedule a free credit counseling session with us today. 

I am writing this on January 1, 2012.  I am going to track my spending every day this month.

I am doing this not just to see how much I spend…

Part of debt management is tracking spending.

But to understand how it feels to track my spending.

I’ll go out on a limb and say that most people want to be happy. If something is easy and will make a person happy, they’ll probably do it. “Oh you’re giving me a free piece of delicious, cheesy pizza? Yes, thank you I’d love to eat a piece. You’re super nice.”

“Oh, I can have yummy lemonade by stirring this powder into water? Alright, hooray.” (I’m writing this blog post at 6 pm… I think I may be hungry).

What happens when something will make a person happy, but it’s not fun or easy? Oftentimes, it never happens. Even if we really want it to.

Tracking expenses helps in managing a budget because you get a true and accurate picture of how you spend your money. We make purchases using cash, credit card 1, credit card 2, debit card 1, debit card 2, etc., so it’s hard to have all the expenditures in the same place at the same time. Tracking expenses manually breaks that ignorance barrier.

I need to understand what makes tracking expenses so difficult. What “stuff” comes up? (“Stuff”? Conflict? Yuck!) What do I see that I am not ready to deal with? What will be scary? What if I disappoint myself? What if somebody finds my notebook and reads it and either gets disappointed or angry with me? Is there a possibility that good things will come up as well?

Throughout this month-long adventure, I’m going to let you know how I’m doing. Not every day; that would be a chore for both of us. But periodically. And you can join in, too. Or join in after. I’ll be the pioneer and check out the territory. Then when the crazy flame of “this year’s going to be different and I’m turning into Superman/woman immediately” dies down, you can try out a more solid and thought out adventure (aka “resolution”), like tracking your spending for a month. I’ll do it for January, and you can do it for February.

If you’re gonna choose a month long challenge, choose to do it in February. (Guess why?)

If you’re struggling to pay off debt, ACCC can help. Schedule a free credit counseling session with us today. 

Friends, meet The Lazy Tax.

Follow ACCC’s advice to avoid the lazy tax.

When you pay extra money because you weren’t in the mood to do something small and productive, that’s the Lazy Tax. If you only look at one small fee it doesn’t seem too bad but, when you add up all the little expenses you pony up because of laziness, you might be a bit dismayed with yourself. I know I am. (I am right now shaking my head in shame). Plus, letting the lazy taxes add up is money that you could be using towards paying off debt.

Each person has their own set of lazy taxes they pay, so suggestion number one is my perennial favorite: AWARENESS.

Examples:

• Create pop-up reminders on your calendar when library books are due (2 days before even).

• Figure out how much your monthly bills cost you in total, then divide that number by the number of times you get paid each month. Next, deposit that amount into 1 checking account that’s only used for bills. (That ensures there will always be the right amount to withdraw for bill from that account). And finally SET UP AUTO-PAYMENTS on any amount that doesn’t change each month like student loan or car loan payments.

• Automatically pay the minimum due on your credit cards each month (you can/should be paying more than this, but auto-paying the minimum makes sure that you won’t be hit with late fees and your interest rate won’t spike due to lateness).

• Don’t use third party ATMs because they charge you fees to access your own money. Also,  it’s harder to tell if they’ve been tampered with by an identity thief. Yikers!

If you’re struggling to pay off debt, ACCC can help. Schedule a free credit counseling session with us today.

Am I about to chastise you? Lecture about the ridiculousness of human nature and how you have to conquer your need for a small comfort?

If you’ve read my other blog posts, you’ll probably know the answer is no. Treating yourself isn’t bad.

Prevent credit card debt by treating yourself in a responsible way.

But let’s take an inquisitive look at what’s going on and how to include these purchases in how we look at our cash flow. It’s important to not let treating yourself get you into credit card debt. I found an article in the USA Today on October 3rd called “Shoppers indulge in little luxuries.” The writer, Laura Petrecca, cited statistics such as:

“Nearly 15% of [Halloween] revelers will dress a pet- up 43% from 2010, according to the National Retail Federation. Total spending should reach $6.9 billion, up 18% from last year.”

“Transatlantic Foods’ [a specialty food supplier] sales of Aux Délices des Bois brand truffle butter to grocers grew 23% in the last year. A pound of truffles may cost thousands, while truffle butter retails for $8 to $10 for 3 ounces, says co-owner Thierry Farges.”

“[Nail] products had $14.2 million in department store sales from January through August, up 61% from 2010. Nail salon sales have risen, as well. Caitlin Moldvay [a market researcher] says: ‘Spending on a manicure they can get for a fairly low price is one way to indulge without breaking the bank.’”

And therein lays the keystone for these otherwise strange, upwardly moving numbers. I say in my seminars that each person I talk to works hard at their job, looking for a job, or studying in school. These days, people are not struggling because they lack the effort. It’s tough out there. So we have to figure out how to spend our money in ways that make us feel alive, while not racking up [more] debt. Treating yourself must be done strategically.

Setting aside a preset amount of money for treating yourself is important. Let’s say within your budget you can set aside $20 of play money a week. Maybe you love getting a manicure. Or buying some OPI polish and giving yourself that mani-pedi. Maybe you save up 2 week’s worth of your fun money because you’re going to dress Fluffy up like a shark for Halloween, because who doesn’t love shark week?

The key is to NOT spend more than you’ve allotted yourself. This helps you in responsibly treating yourself. I like to take my fun money out in cash so I know when I’m out. Some people spend on a debit card that does not allow spending past the limit. (Ask your bank if there have been any debit card fee changes, btw).

If you’re struggling to pay off debt, ACCC can help. Schedule a free credit counseling session with us today. 

We at American Consumer Credit Counseling are big gardening fans!

By sharing what we grow in our gardens, it not only lowers our grocery bills but also sets us up for the winter. The gravy I make will be enough to share, as well as stock my freezer. The jellies and jams will be holiday gifts from the heart, as well as the baklava. One of my friends always makes enough zucchini bread to go around for all of us to freeze… and the list goes on.

By going back and reviewing John’s post on planting to save money from this spring, I’m hoping that our gardening readers had a good planting season, and that they think about not only sharing their bounty but also what they can make out of their harvest to last for winter (canning and jarring etc.) Also, what they can give as gifts from it for the holidays. Nothing shows love to your friends as a home-cooked or home-made gift (smile) and it costs a whole lot less then buying something impersonal.

Just food for thought!

If you’re struggling to pay off debt, ACCC can help. Schedule a free credit counseling session with us today. 

But you have the power RIGHT NOW to change how difficult it is to plan for one expense.

To avoid credit card debt, save for periodic expenses ahead of time.

BACK TO SCHOOL SHOPPING

Because you just did it or you’re doing it right now!

Sure, when thinking about New Year’s resolutions during the middle of December (and right between planning for Christmas/Chanukah dinner which happens around the same time this year) you’ll think: “I would like to control my money better.” But when will you really find or make the time to go back through your bank statements and credit card statements or receipts to determine exactly how much you spent on back to school shopping?

And that’s just ONE of many periodic expenses we come across.

First, a definition: A periodic expense is something that you have to spend money on every year, but it’s an expense that doesn’t happen regularly. A few more examples are paying taxes, doing your car emissions test, or twice a year dental cleanings if you don’t have dental insurance. Being unprepared for expenses can lead to credit card debt.

If you have kids or you’re going to school, you just made purchases for the new school year.

• How much did you spend on school supplies?
• How about new clothes or new uniforms?
• Did you have to buy a parking pass?
• How about club dues?

Now you can go back through your receipts or bank statements and list out the basic categories in which you spent money. List these out somewhere that you’ll remember. I suggest starting a folder on your desktop named something like: Budgeting is Awesome! (but you can choose something that makes you smile if that doesn’t do it for you). Then create a document for your “new school year expenses.” Also, I really like using excel for these lists because you can manipulate the data in different ways and add new years by using the tabs along the bottom.

Then, whenever you encounter an expense like this you can start a new tab in excel to keep track of how much you spend on these periodic expenses. Then in the future, you know to save ahead of time instead of being surprised by this periodic expense again.

I really like to do this for winter heating as well. When you know how much you spend this coming winter you’ll be able to plan for it even better for next year. Another option for not letting heating bills make your eyes cross is to ask your energy provider about “balanced billing.”

But that’s a nugget that will lead to another post down the road.

Happy new school year everybody! Do me a favor and bring your teacher an apple- it always made mine smile and a good teacher is something to be super grateful for.

If you’re struggling to pay off debt, ACCC can help. Schedule a free credit counseling session with us today.