Gratefulness, One Book at a Time

Today I perused my rather large book cases and pulled out 30 books. I then carefully piled these 30 books in a stack. It was like creating a house of cards. I took care to balance them so they won't lean or topple over. I need this stack to stay put for a little bit. Hopefully my dogs won't mess with them and will avoid inducing an avalanche of books from raining down on their little pug heads.

I'm going to leave all of these books in this neat little stack. The books are hard and soft cover, thin and think, big and small and range from histories and biographies to murder mysteries and classic literature. They have just one thing in common.

I haven't read a single one of them yet. They're all good as new.

And therein lies my problem. I love books and every time I go into Barnes & Noble, I pick up a new book, completely forgetting that at the rate I'm going, I won't be done with this reading list until 2012, if I'm lucky.

What does this have to do with becoming a tightwad? I realize that before I buy one more book, I've absolutely got to get through this stack first or at the very least, make some significant headway. I'm declaring a moratorium on book buying. And to visually remind myself, I'm going to leave the pile stacked high.

The New Litmus Test: "Do I need it?"
As with any other type of purchase, the next time I am in a bookstore (assuming I allow myself to even go near one), I will ask myself: do I really need another book or do I just want it? If the answer is the latter, then it's not coming home with me. It's a question I mean to ask myself whenever I'm contemplating another purchase: do I really need or do I just want? Do I need that pair of fantabulous shoes? Do I need that black silk dress? Do I need that second $12 martini? (Heck, did I need the first $12 martini?)

The flip side of the "do I need?" question involves figuratively piling a stack of books and realizing that I already have an abundance. I have more than enough reading material, shoes, clothing, boots, perfume, make-up, etc., etc. (The only example that doesn't really work here is the martini - I don't really have an abundance of vodka or any alcohol for that matter, but I think you get my point.)

Realizing that I have an abudance is going to help me keep it in perspective and bring my spending down. My goal is to actually learn how to spend below my means. But additionally, it will also help me to be thankful for what I already have and learning to be happy with it. It's an attitude I'm looking forward to adopting.

Re-Capping Our Tightwad Tactics To Date

So, thus far we have three tactics we're working on to begin to build wealth:

1. NO USING THE CREDIT CARD -- so important that it's my #1 New Year's Resolution
2. PUT MONEY ASIDE FOR UNEXPECTED EXPENSES
   
3. KNOW WHERE YOU'VE BEEN -- keep a log of your spending so you can identify opportunities for changing behavior

And that's what we're really talking about. Changing behavior not just spending money. It's the same when you want to lose weight. You don't just count calories for counting sake, but to educate yourself about the calories you're consuming and the caloric count of various foods, especially your favorites.

When it comes to changing behavior, I think we can all agree it's not easy. And it takes time. So, I'm learning that it's important to remember to take it one day, one step at a time. Rome was not built in a day. Savings and prosperity are not built overnight. Wealth isn't instantaneously. Unless of course, I win the lottery. But how many times have we heard stories about lottery winners who go bankrupt. And that's because while they lucked out with this unbelievable, instantaneous wealth, they failed to change their behavior or approach to money.

I believe that when it comes to changing behavior, it's important to have a support group. The contestants on the Biggest Loser have Bob and Jillian. You can start your own support group easilty. A good book is worth $1M. I have a great book that I happened to find a couple of months ago and I want to recommend entitled "How to Get Out of Debt, Stay Out Debt, And Live Prosperously." I am working my way through it but will say that it has really helped me to understand that if I plan to live and retire prosperously I need to change behaviors now. And the tactics I've thus far discussed on this blog are validated and discussed in great detail by the author, Jerrold Mundis. So I want to give him his props. I recommend you check out his book.

It's also helpful to tell your family and friends that you're trying to become a tightwad. I have and was pleasantly surprised to learn that a number of my co-workers and friends and family are trying to do the same. So, we're sharing tips and changing behavior together. A colleague of mine at work had brought in her French press. I bring the coffee grinds and we're making our own coffee now and saving $10/week drinking our own brew.

Telling family and friends helps to validate for me that I'm on the right path to change. If you're worried about sharing your goals with a large group, then just seek out one or two folks who you know will be supportive. Trust me, it's a worthy investment.

Knowing Where You've Been

$25 for dinner at a great fondue spot. $56.64 for doggie supplies yesterday. Ouch. Beginning to add up. But on the upside, just $1.95 spent on coffee at work today since I brown-bagged it and that was my only expense. And on Saturday I spent what now seems like an incredibly small amount of money, $15, to fill up my hybrid with gas.

I know what I've spent recently, to the penny, because since October I have been keeping a spending log. I write down every single purchase. Doesn't matter if I'm buying a pack of gum, a cup of coffee, or a plasma TV. After I'm finished with the purchase, I immediately jot it down in one of those handy moleskin notebooks that you can get at a bookstore and takes up no space in your handbag.

I have to remember to do it immediately because who wants to add to the litany of facts and information we're asked in this day and age to keep in our heads. So, I try to dump the information into my notebook as soon as I make a purchase.

After doing this for almost 3 months, I can say that it's fairly well become a habit. And I think the adage is, it takes 21 days for a new habit to be adopted.

Why do I keep such a meticulous record of my spending? Is it that I'm trying to save money by shaving cents off my daily coffee. No, that's not it. Frankly, I'm not sure that saving a few cents here and there is going to help me build wealth.

Instead, I'm keeping this record because like anything else, I believe a little bit of history can go a long way. And when you're trying to become a tightwad, it's helpful to know where you've been. Have you ever had that experience of going to an ATM, getting a wad of cash out that you think will last a week only to find that hours later you're asking yourself "Where did my money go?" If you're answer is "yes", you might want to consider starting your own spending log.

It's fairly simple as it only takes three pieces of data:

• the date
• the item you're purchasing
• the dollar amount

That's it. And then once a week, I transfer the entries in my notebook onto an Excel spreadsheet. So, now I've got a big picture understanding of where my money is going and where I have opportunities to cut back on my spending or to change my habits and lifestyle. For example, I realized just how much money I was spending eating out and have since tried to change my lifestyle sot that I'm cooking my own meals at home. Not only am I saving money, but I'm eating healthier.

You're probably thinking, "Wow, keeping a spending log sounds a bit manic" or "You're way too detailed". It's certainly possible that both of these statements are correct, but keeping a log is not as cumbersome as it sounds. And the moment I started to write down my spending, I felt an almost serene sense of control. My money does not just disappear from my wallet. I am after all actively spending it and now I know exactly what I'm doing with it.

Now when I'm out and about, before I buy something I notice I'm asking myself "Do I really need that? Or is it something I want, but don't need?" If I want but don't really need it and since I'm more aware of what I've recently spent, I then ask myself, "Can my budget handle it right now?" When the answer is no, I find that I simply don't make a purchase.

If you would like to see for yourself what having a greater sense of control over your spending feels like, I encourage you to try it for a week. Just try keeping a spending log for seven days. That's it. If you don't like it, then you don't have to continue. Try it on for size. What have you got to lose? Certainly not more money.

Setting Myself Up To Be Successful

Yesterday's post focused on stopping the madness--end the cycle of credit card debt by leaving the card at home.

But now the question becomes. Ok, how do I do that? How do I pay cash for the things I need? I need a haircut at my fab salon (fab = expensive, but so worth it). I need to take the hybrid in for servicing. I want to go skiing. Dare I say, I need to go skiing and lift tickets are not cheap.

It's definitely a challenge. One that I'm just beginning to figure out esp since it's not been my habit to pay up front.

The way I'm attacking this challenge is, I pay myself first. That is, I set aside funds for those out of the ordinary expenses. Day-to-day expenses like food, gas, commuting fares, a movie, dinner with friends, dry cleaning are not what I consider out of the ordinary. I've always planned and set aside for these events. But now, I'm also setting aside for the car service, or the pugs need a grooming or a visit to the vet. And, of course, the fab hair appointment or yes, I want to go skiing or see West Side Story this spring or go to an ultra nice restaurant. (I certainly don't believe in depriving myself!)

I'm advocating what some might call "paying yourself" first. Whether its $25 or $50 or more, I know I've got to be disciplined about this. But I want to be clear that this money is short-term savings set aside for these extras. I'm not talking about longer-term savings.

Have to ask myself, how am I doing? So far this year, so good. I've been able to set some short-term cash aside and my plan is to make sure I've always got some monies in a bank account I set up just for this purpose. I know I'm going to tap into it this account. But that's ok. Because I'd rather tap into this money, than use that credit card! I'm stopping the madness.

New Year's Resolution #1

The most important resolution I have made for 2009 is to get rid of that credit card debt once and for all. Credit card debt is the debt that will rob you of any chance of achieving financial independence. Unlike a mortgage or a student loan, the only value credit card debt provides is a high interest rate. It's not like I can sell the Uggs I just brought or the Coach bag. There's no re-sale market for my purchases.

So, this is the year I'm getting rid of my credit card debt. I've made a number of resolutions and they're all important to me. But this is the one, that if all else fails, I'm absolutely committing too.

How am I going to do it? That is, how am I going to get rid of the debt?

Well, obviously there's paying down the debt I already have. And if you read Suze Orman or almost any other resource on getting debt free, you probably already know a number of strategies for attacking debt. One is to pay off the credit card with the highest interest rate first and make the minimum payments on other cards while you attack the high interest rate card.

But I want to focus on a strategy that few talk about. And that's getting rid of your credit cards altogether. That's right: cut them up so that you can't walk into the mall and pull it out when you see a pair of shoes you like.

Seems drastic? It is. I don't even advocate having a card for emergency purposes. (I'll write about emergencies in another post.)

Now, if that's too drastic for you and you're not ready to just get rid of them, then I recommend taking them out of you wallet. All of them! And putting them in a safe place--a sock in your drawer or a box in your closet. If you have a safe in your home, stick them in there. Anything that gets them out of your hands. Try it for a week, or just a day and see how it feels. I think you'll realize that you can survive without them.

Why am I advocating leaving the cards at home or getting rid of them altogether? Because you can't get rid of your debt if you're still accumulating debt. What does it matter if you pay 200% of your monthly credit card bill if you're still spending on that card.

For me, the first step is to stop the madness altogether. I'm achieving my #1 New Year's Resolution by first paying for everything in cash. If I don't have the cash, then I can't buy it. I don't carry any credit cards. The only card I have in my wallet is a debit card which draws the funds immediately out of my checking account.

It was difficult to adopt this new approach. I'd first considered this strategy in October of last year, but wasn't ready to embrace it. And so the holidays came, and I charged away. The New Year has brought a new sobering reality, however. So, I'm taking this on not only as a challenge but it truly feels good to have discipline about my spending. I feel more in control.

I don't care if your credit card debt is $20K, $10K, $1000 or $50. Any credit card debt is bad debt. The only way to truly get rid of it is to cease and desist all credit card use.

It's day 10 of my resolution and I haven't fallen off the wagon yet.