Beating Broke

Personal Finance from the Broke Perspective

Taking Financial Ownership

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I was reading a story somewhere where a person was being interviewed about their debt.  In the interview, the person was speaking about how they had this credit card debt and how they just couldn’t get out from under it because of all the interest, fees, and other ways that the credit card company throws on the heap each month.  They went on to talk about how they were in fear of having their car and house repossessed because they were falling behind.  With each new problem, they were quick to point out the things that were keeping them back and causing their slide into bankruptcy.

Something occurred to me, then.  They were taking no ownership in their finances.  No matter what the financial woe was, it was always someone elses fault.  The credit card companies were tacking on interest and fees.  The bank was adding late charges onto their car loan and mortgages.  Not once did they take any ownership of their situation.  Not once did they say, “we shouldn’t have charged so much on the credit cards”, or “we bought more house than we could afford”. The blame was always on the other guy.

Saving is for wimps! I have a plan for affordable housing.If there’s one thing I’ve learned in my journey towards beating broke, it’s that it’s all my fault.  I signed that credit slip.  I signed that mortgage.  I signed the loan papers.  Yes, some of the credit card companies have interest rates and policies that border on predatory.  Yes, the banks will allow you to borrow right up to a point where you’re living paycheck to paycheck.  But, I signed on the dotted line.  Along the way, I discovered all of that, and I took financial ownership.  And, in doing so, I took control.

Through financial ownership, I have control over where my money goes.  I have control over which debt gets paid off first.  I have control of how tightly the purse-strings are held.  And, most importantly, I have control of my financial future.  A future that I plan to make as financially independent as possible.  Not at the whim and mercy of any bank, but a future where I can plan to buy things, and save money towards retirement.

My journey isn’t over, but I am beating broke.  I’m taking financial ownership and making my future one that is free from broke.

I want you be able to say the same thing.  It’s one of my goals for this site to help you beat broke.  Beating broke is the first step in your financial journey towards a life free from concerns over where next months bills are coming from.  You can do it.  But, you’ve got to take financial ownership.  You got yourself in the situation you’re in, and only you can get yourself out.  Do it today.  Accept that you are the only one that can take ownership of your financial situation, and you are the only one with the power to fix it.  Take that step.

photo credit: woodleywonderworks

Evaluate the True Price of Dining Out to Save Money

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Our culture seems to be one that is centered around dining out.  When you are younger, you meet friends at a restaurant for a night out and to chat.  As you get older and have a family, you may go out to eat because time is short between working, raising a family, helping with homework, and doing housework, among other things.  Some people are extreme and eat out for every meal because they do not like to cook or have not learned to cook.  This is so commonplace in the American culture, that we don’t often question these expenses.  Instead of just assuming that going out to eat or grabbing take out is a necessity, evaluate the cost of your restaurant purchase.

It has been a stressful day, and you would like nothing more than a night off from the kitchen.  You decide to buy take out for your family of 4 and spend $25.  True, you did buy yourself a night out of the kitchen by avoiding cooking and washing the dishes that you would use.  Yet, ask yourself, would you have paid $25 to hire someone to come to your kitchen for an hour that night, make a meal and do the few dishes that you used?  No?  Well, that is essentially what you did by picking up take out.

Riced out.

I use this way of thinking frequently now to save myself from spending money eating out.  My family ate out by habit until I started evaluating the true cost.  I recently quit my job and have been doing freelance work from home.  Several of my smaller jobs each pay $20 a month.  Recently, I wanted to go out for sushi, which is a weakness not only of mine, but of my husband and kids.  When our family of 5 goes out for sushi, it typically runs us $55 to $60.  I asked myself if one meal of sushi was worth doing 3 additional small jobs to recoup the $60?  Although the jobs do not take much time weekly, I would have to do the three jobs for a month to recoup the money spent on sushi.  Was it worth it?  No.  We did not go out that night.

The idea of evaluating life energy for consumption is not new.  It was the subject of the book, Your Money or Your Life by Joe Dominguez and Vicki Robins.  The overall principal is to look at the amount of time and money it would take to recoup an expense.  I try to use this in my life normally, but I find it especially effective when considering the often inflated price of dining out.  Take the sushi dinner for $60—my family’s weekly grocery budget is $100.  Is that one meal worth half a week’s groceries?  Definitely not.

I am not saying we shouldn’t go out.  My family still enjoys going out, but I am suggesting we should stop thinking of dining out as something routine and to be done daily or several times a week.  Instead, think of dining out as a treat and something to be planned and enjoyed.

photo credit: dslrninja

5 Creative Ways to Save

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Piggy BankCommon financial advice is to pay yourself first; set aside your own savings before you pay any bills.  Yet, what happens if you don’t have enough money to pay yourself first?  What if you can’t set aside $100 or more each month?  How can you continue to save for your goals whether they are establishing a $1,000 emergency fund as Dave Ramsey recommends, saving for a replacement car so you can avoid a car loan, saving for a down payment on a home or simply saving for a vacation?

My husband and I are temporarily in a tight financial situation; he is finishing his Ph.D. and I am staying home to take care of our three children while doing freelance work at night.  While I expect our financial situation to improve in a few months when my husband graduates, we are now in the situation where we have little to save, yet we would like to begin to save for a down payment for a house.  We have found unusual, creative ways to save.  Utilizing these methods won’t get us to our 20% home down payment, but they offer a great way to start saving, and we will add to the savings when our income increases.  If you are trying to save more, try some of these strategies:

  1. Save all of the $5 bills that you get.  You are at the grocery store and you buy $33.22 worth of groceries; for your two twenties you give the cashier, you get back one single and one $5 bill.  Put that $5 bill into savings.  My husband and I have been doing this since June 1, and already, in less than three months, we have saved $175.  That is a savings rate of approximately $60 a month.  More importantly, that is $60 we didn’t think we had to save.  Sometimes it is painful to put that money aside, but in the long term, it is worth it.  Of course, this method works best if you routinely pay in cash.
  2. Save all of your change.  This is a similar strategy to the $5 bill strategy, but it is a little less painful because you will be saving less overall.  However, your savings will still add up quickly.  My husband and I used this method a few years ago to save for a weekend vacation.  We saved $300 in a year’s time.
  3. Save one dollar a day.  Another blogger I read was told at her wedding that she and her husband should save one dollar a day.  She and her husband did just that, and at their 10 year wedding anniversary, they had $3,650 saved, which they used on a 4 day second honeymoon.  Talk about a painless way to save, but what a great reward at the end.
  4. Save the money you would have spent on an impulse purchase.  Do you really want a pop when you are checking out at the grocery store, but you resist the urge?  If so, take the $1.59 you would have spent and put it in your savings account.  You would have wasted it on an unhealthy, impulse purchase; why not instead use it to your benefit and put it in your savings account?
  5. Have $5 or 10 automatically withdrawn from your pay check.  Even if money is very tight, you can probably sacrifice $5 a week.  If that is the case, arrange to have the equivalent of $5 a week automatically withdrawn from your paycheck and placed in your savings account.  Over the course of a year, you will have saved between $260 and $520.

Of course, there are many ways to save when on a tight budget; you just need to get creative with how you do it.  Also, don’t worry that the saving method you choose is not adding up quickly enough.  Saving something is much better than saving nothing, and once you become disciplined to save money regularly, as your income increases, you can save more.

photo credit: Carly Jane1