Blog post by Melissa Killeen, MSOD
“Do not wait until the conditions are perfect to begin. Beginning makes the conditions perfect.” — Alan Cohen
It is a fact that financial difficulties and incompatibility in money matters are one of the leading causes for tension, divorce, and the breakup of many families. Even for those of us who are single, it’s an acute cause of stress, over indulgence in substances or behavioral acting out.
At this particular time of the year, many of us are smarting because it’s time to pay the piper (IRS). In addition, we are receiving the inevitable notices of fees for everything from mortgages to insurances and homeowners taxes. It’s a great time to grab the bull by the horns and get serious about your budget.
There is help available for this on the internet and the office supply stores sell many different versions of budgeting books or software you can buy. If you want to be thrifty, design your own sheets and make a year’s worth of copies to keep in a folder. I learned everything I needed to know by going to a regional Debtors Anonymous (DA) convention ( http://www.debtorsanonymous.org/ ). On the advice of local DA’s I developed a spending plan.
Recognizing your spending numbers and developing a spending plan:
Total the amounts you paid out for last year’s bills in every category (including all expenses necessary for your survival: annual or bi-annual bills, monthly bills such as the rent, cell phones, utilities, gasoline, commuting costs, various insurances, taxes, co-payments to doctors and dentists, estimated car repairs, etc.), divide them by twelve, and the resulting sum will be the amount you have to save each month in order to have the funds available when those items come due. Then write down how much you spent this year on clothes, dry cleaning, Net-Flix, vacations, hair cuts, Starbucks and lunch. Divide this amount by 12 months, and then by four weeks. In doing this you will know what you can spend each week, then break it down to how much you can spend per day, and hold yourself accountable! Software developed for this purpose, like Quicken creates a report like this at the click of a button.
It is a good idea to deposit this “must have” money in a savings account or an interest bearing checking account that you do not carry around the debit card attached to it. As you save each month the sum will grow and leaving it in a debit card/checking account may tempt you to believe that you have more spendable income then you really do. This can be arranged with your employer’s payroll department very simply. To add this new account to your electronic deposit option requires one form requesting a voided check or the bank routing number, the account number and the amount you want deposited into that account on each pay day.
Is this an addiction?
Traversing the slippery slope of frequent credit card use and over spending can be equated to the dopamine/adrenaline surge from an addiction or hi-risk behavior. Some of the good excuses you may use are that you use credit cards for all financial transactions because you don’t like to carry a checkbook (my partner) or you like receiving those bonus points periodically, for a free airplane trip (like me). Whatever the reason, you may also be among those who hold their breath or even wait a few days, before opening the bill with the bad news.
Have you ever heard yourself exclaim any of the following…
• Holy s–t! Where did this come from? (Denial)
• How did this get away from me again? (Shame)
• How can I keep this from my spouse (or partner)? (Guilt)
What can I do?
You know that overcharging is easy, yet it causes some serious stress. Just about this time of year, you probably have had enough of it; here are some excellent motivational tools to finally put an end to it:
• Consider an electronic bank account with on line bill paying and ensure the account has options which can merge with a Quicken or similar accounting software package. Most older, more established accounts can be transferred to this electronic option. An electronic bank account makes it easy to check your banking account daily, just like checking your emails. Bookmark this checking account in your favorites, next to Linked In or Facebook. Electronic accounts also have options to send you emails to notify you if your balance is low, or when your pay checks have been deposited.
• If you are not comfortable with a web based checking account, do it the old fashioned way: on a simple notepad or in an Excel spreadsheet. Microsoft has home accounting software in the new Office 2010 version. Write down the amount of every charge on the same day that you make it. Keep a running subtotal for the entire month. (Make sure you subtotal each new charge, which is the main point here!) Check your bank account daily. Now, whenever you start out the door to go shopping, you will know exactly how much you have left to spend on necessities (groceries and gas), and after the final total you will know what’s left for the little splurges we all like to treat ourselves to.
• Do not trust yourself to keep your totals in your head without writing it down! Memory is a tricky thing and easily influenced to escape reality (in other words when you are filled by a strong desire for some tempting purchase). It is easy to fool yourself into thinking you have got more money to spend than you do. A friend keeps her credit card in a little envelope or sleeve. Attached to that sleeve she has a post-it, on which she jots down the transaction or stuffs the the receipt into the sleeve.
• Use a debit card, instead of a credit card, transactions are immediately withdrawn and tallied on your statement. Remove credit cards from your wallet, and store them in a safe place at home.
• Pay attention to your fees:
- Credit card Interest charges, look at how much this costs you a month, vow to reduce it by 10% each month.
- Bank Fees, bounced checks, stop payments etc, again, vow to reduce these every month by 10%.
In one year this practice will pay off big time, in two years you can really see your growth in lowering your fees and debt, in three years you will probably think that you will never return to your old ways.
So, to stop the stress, since you are going through your annual spending this month, re-read this blog a few times. Take small steps. Maybe a Debtors Anonymous meeting is a good place to start; veteran DA members join with newcomers to help establish a spending plan with them. Pick one thing on this blog and do it this week, next week select another and so on. Be responsible, get out of your denial, check your bank account daily and keep it honest!
Melissa Killeen is an executive coach that blends the powerful forces of recovery with guiding and leading entrepreneurs to achieve their highest goals. This blog was influenced by Heidi Grant Halvorson’s Peeling the Onion blog from December 2010.
Melissa can be contacted at: firstname.lastname@example.org
Please visit her web site: http://www.mkrecoverycoaching.com/