Search Results for “three-alternatives-to-a-budget/subscribe-by-email/budget4/4-ways-we-keep-wasting-money/contact-me/debt-burnout/living-the-xbox-life-on-an-atari-income”

Living the XBox Life on an Atari Income

: Image via Wikipedia

At some point, everyone has “champagne wishes and caviar dreams.” Over the last 25 years, we’ve even been peddled the “you can have it all” myth from every direction, including the media and the government.

The truth is simple: you cannot have it all. You can have anything, but you can’t have everything. In order to have one thing, you have to give up something else. It’s a law of nature. If you have $5, you can either get a burger or an overpriced cup of coffee, but not both.

“But wait!” you shout, rudely interrupting the narrator, “I have a credit card. I can have both!”

Wrong.

And stop interrupting me.

If you have $5 and borrow $5 to get some coffee to go with your burger, you will eventually have to pay that money back with interest. You will have to give up a future-burger AND a flavor shot in your overpriced coffee.

Everything you buy needs to be paid for, some day.

If you have an Atari income, but insist on living the XBox life, you will wake up one day, buried in bills, forced to live the Commodore-64 life out of sheer desperation.

There is a solution.

Don’t get all XBox-y until you are making XBox money. That way, you’ll never have to worry about going broke tomorrow paying for the fun you had yesterday.

Even when you have an XBox income, ideally you’ll restrict yourself to living a Gamecube life, so you’ll be able to put some money aside to support future-you instead of constantly having to worry about your next paycheck.

Debt Burnout

Finance

You’ve got a budget. You’ve got a debt repayment plan. You’ve been paying off your debt. You’ve even paid off a few of your smaller debts. Now you’re staring down the barrel of your big debts: your mortgage, a $30,000 credit card, maybe a car payment. You’re looking at months of payments with no quick wins; no more watching your debts die every few months. You’re in the middle of a very long slog.

All of the easy milestones have been reached and the next one is a year or more away. This is when debt repayment gets hard. How can you avoid getting burnt out doing the same thing, month after month, with no major visible progress?

1. Keep your eye on the prize. Try focusing on the end result, while ignoring the time it takes to get there. Do you have a reward planned for when you pay off your debt? If not, consider that to be your new shining goal-post. My wife and I plan on taking an Alaskan cruise when our debt is repaid.

2. Ignore the prize. If #1 doesn’t work for you, try focusing on just the current month’s progress. How much did you pay off this month? Was it more than last month?

3. Make micro-goals. Try breaking the long slog into bite-sized pieces. How fast can you pay off the next $1000? How many months will it take to pay off that TV you bought last year? Sometimes, meeting a smaller goal can make the whole works feel like it’s going by faster.

4. Take a snowball vacation. For just one month, take every dollar you would normally apply to your debt–except your required payments–and have some fun with it. Take a weekend trip, have a fancy dinner, or pick up that video game system you’ve been eying. Something. Anything to take your mind off of your repayment plan for a while. Be careful not to make this a habit or you will never get out of debt.

5. Start a blog to share your pain.

A debt snowball is a long, intense process. If you’re not careful, you can burn out and let the whole thing collapse. How do you avoid burnout?

Three Alternatives to a Budget

Finance

the envelope system: day one — Image by J. McPherskesen via Flickr

Budgets aren’t for everyone. For some people, the very idea of trying to track where their money going is painful. And that’s just the idea of tracking the money. It gets far worse when you’ve got $10 budgeted for coffee, $12 for fast food, $66.50 for gas, and $0.75 for entertainment. It’s can be hard to follow a strict budget for long.

If you know you need to track your money, and you also know that a strict, zero-based budget won’t work for you, what can you do? Luckily, there are alternatives.

1. Hope and Pray. This is otherwise known as the “Call my bank everyday and see how close I am to over-drafting” system. To fully embrace this system, you need to not only abandon a written–or even organized–budget, but you should also throw your checkbook register in the garbage. Make sure you’ve got a good overdraft protection account attached to your checking account and let your money take care of itself. This is the ultimate zen of personal finance. Don’t stress or worry, just hope for the best. This system works best if you make more money than Oprah and have modest tastes. For those of us who have to watch our money a bit to make sure the month outlasts our money, this probably isn’t a great plan.

2. The Envelope System. To implement this system, you do need to create a basic budget so know what you are obligated to pay. Once you have that done, take a stack of envelopes and label them for each item you have to pay. Add another envelope for food, another for entertainment, and another for miscellaneous because there is always a miscellaneous. Divide the money among the envelopes. Now for the magic. When you have to spend something, take the money out of the appropriate envelope and spend it. That’s it. If, however, there isn’t enough money in the right envelope, but you still need to spend the money, you have to take it out of a different envelope and spend less on the category that lost money.

3. Percentages. This is the simplest of the non-budget budgets. Take 50% of your money and spend it on necessities, like the mortgage, food, and utilities. The next 30% goes to savings and retirement. The last 20% is for fun or any other thing you want to spend it on. This naturally works best if you are out of debt, but if not, just make sure most of the 20% fun money goes to repaying debt. This system works best if your bills are automated and you will need to set up a basic budget first, so you can make sure your necessities come in under 50% of your income.

Not every budget plan will work for everyone, but there are always alternatives that can still help you manage your money.

How do you track your money?

Inadvertent BOGO

Finance

I refuse to buy my kid more expensive video game systems. He’s got a friend who’s got one of each, going back 15 years.

We don’t do that, so he’s spent the last 6 months saving to buy his own XBox 360. After his birthday this month, he finally had enough, so we ordered it a few days ago.

Wednesday was the Great Unboxing.

I was making dinner in the kitchen while the punk and his friend unpacked the box from Amazon.

The squeals were normal. The shouts of “Dad, why did you buy two XBoxes?” were a surprise.

Two?

No.

Actually, yes. There were two of the things in the box. Did I order two? Did I accidentally pay for two?

Nope. The packing slip only listed one, my order history only showed one, and my credit card was only charged for one.

Yet, there were two in the box. Free XBox! Woot!

That means an XBox in the bedroom for Grand Theft Auto and Red Dead Redemption, and an XBox in the basement for Madden and Star Wars. No fighting. No turns to take. And it didn’t cost us an extra $200.

That’s all win.

If there’s nothing on the packing slip, then Amazon didn’t know I had it. Even if they did, I didn’t do anything to make them send it. There was no fraud. Legally, I had no obligation of any kind to do anything other than enjoy my new prize.

Lots of win.

The kids were excited. Everyone gets a turn. Multiplayer games.

The parents were excited. We get a turn. M-rated games.

So much freaking win in that box.

But….

There’s always a but.

We didn’t order it. We didn’t pay for it. It wasn’t ours.

A friend told me to sell it. She knows how hard we’re working to pay off debt.

A coworker said, “Screw them. They’re just a big corporation who’d be happy to screw you first.”

But it wasn’t ours.

I spent 12 hours trying to rationalize a way to keep it that wouldn’t be unethical, make me feel guilty, or–most important–send a horrible message to my kids.

I couldn’t do it.

It wasn’t ours.

I had a talk with my son. It was his money that got this little prize into our house, after all. He wanted to keep it, naturally. He’s got a lot to learn about persuasion. He acknowledged that sending it back was the right thing to do. He agreed that it would suck if the roles were reversed. His only argument in favor of keeping it was “I want it.”

Even he admitted that was completely lame.

It’s going back. I let him think that was his decision.

I talked to Amazon. They apologized for the inconvenience and gave me a UPS label to send it back at no cost. It didn’t cover pickup, but I’ve got a drop box in my office building, so I can deal with that.

My wife was pissed. The customer service rep never bothered to say thank you. She called Amazon to complain to a manager. After reminding him that we had no duty to return the free XBox, he gave us a $25 gift card to say thank you.

I love my wife.

My son, for deciding to to the right thing, gets to spend the gift card. My wife, for being awesome, gets to be with me. I miss my free XBox.

What would you do? Would you keep the free XBox, sell it, or send it back?

4 Ways We Keep Wasting Money

Finance

: Image by Getty Images via @daylife

MSN Money has an article up on common ways money is wasted. Here is my spin.

We(as a species) tend to do a great job of wasting money. Between inertia and the emotional pain of cutting off something we have gotten used to–whether it be Netflix or a 3rd arm–it’s hard to kill wasted costs. As Robert Heinlein said, “Man is not a rational animal, he is a rationalizing animal.”

MSN listed 4 ways to make your money go bye-bye:

1. Credit cards

According to the article, in the US, the average rate of interest is 15% for a total nation-wide debt of $850 billion-with-a-B. That’s insane. I lucked out and quit using my cards before the CARD act forced all the issuers to send their rates to the moon. I’ve opted out of every agreement change since then, while I pay off the remaining balances. 15%! If you buy something for $1000 and pay it off in a year, that’s $1150. What could you do with an extra $150? It’s time to get out the torches and pitchforks and drop by Mr. Debt’s house.

2. Overdraft fees

I set up an overdraft protection account years ago, because it was a heckuva lot cheaper than bouncing checks. It came with a 25% interest rate and a $2 fee per use. A couple of months ago, they boosted the fee to $10 per use. Jerkface, you’re already cashing in on my interest, do you have to touch me like that at the beginning of the date, too? Thankfully, we haven’t used our overdraft protection since we went on our debt-killing crusade in April of 2009. Oh, Mr. Debt! You’re going to have a really bad day when I get to your house. There will be a smoothie à la Otis when I get there. Side note: If you’ve got a dark sense of humor, rent Otis. Not only will you love it, you’ll get the smoothie joke.

3. Unused memberships, gift cards and rebates

Gym memberships are the big example here. People buy a membership because they set some awesome New Year’s resolution, use it for 2 months, then spend 6 months telling themselves they’ll start using it again soon before they finally cancel. At $30 per month, that’s $180 that could have been spent sending me presents. If you must get a gym membership, wait until spring. That’s when people tell themselves they don’t need a membership because it’s so nice out, they can just exercise outside. When people tell themselves that, the gyms cut membership costs to lure people in to start their own 6 months of denial.

Take a look at your other recurring costs, too. Do you use the cable package you have, or could you be just as happy with the next one down? Do you need the donkeys-and-kneesocks-around-the-world channel? You’ve gotten your 10 CDs for a penny, can you tell Columbia House where to go with their $20 per CD commitment?

4. Airline fees

This one is easy. Forget the 3 hour lines, fees for showing up, Pervo-Scan™, and minimum-wage molestation agents masquerading as cops. Drive whenever possible. If it’s not possible, show up in a kilt, regimental-style(assuming you are a guy!). Don’t check a bag, just ship if overnight to your hotel. Most of the time, that’s cheaper than $50 per bag, anyway. Avoid the fees as much as possible.

What other ways have you wasted money?

Saturday Roundup – No More Car

Misc

: Image via Wikipedia

…err, no more car loan. I paid off my car this week, a year early! Now I’m down to 2 debts: a credit card with an embarrassingly high balance and my mortgage. We’re rocking the debt snowball!

Free Money Tip

INGDirect is having a sweet promotion. Open a checking account, use it three times in 45 days, and get $50 free. Free money is the best kind. I love my ING account and keep all of my savings there. If you don’t have an account there, yet, now is a great time to open one.

30 Day Project Update

This month, I am trying to establish the Slow Carb Diet as a habit. At the end of the month, I’ll see what the results were and decide if it’s worth continuing. For those who don’t know, the Slow Carb Diet involves cutting out potatoes, rice, flour, sugar, and dairy in all their forms. My meals consist of 40% proteins, 30% vegetables, and 30% legumes(beans or lentils). There is no calorie counting, just some specific rules, accompanied by a timed supplement regimen and some timed exercises to manipulate my metabolism. The supplements are NOT effedrin-based diet pills, or, in fact, uppers of any kind. There is also a weekly cheat day, to cut the impulse to cheat and to avoid letting my body go into famine mode.

I’m measuring two metrics, my weight and the total inches of my waist , hips, biceps, and thighs. Between the two, I should have an accurate assessment of my progress.

Weight: I have lost 17 pounds since January 2nd. That’s 6 pounds since last week. I cheated this week and had a slice of toast and 6 croutons with my grilled chicken-but-no-cheese salad.

Total Inches: I have lost 9 inches in the same time frame, down 3.5 since last week.

Naturally, the first week is the most dramatic. That’s when my body was flushing most of the garbage I’d been eating, including holiday feasts. I’ll have a hard time complaining about 6 pounds in a week. My guess is that I drop another 10-15 pounds by the end of the month, bringing the average to about 1 pound per day. Over time, that will drop as my base caloric burn drops to match my new weight.

Best Posts

Realized Returns is giving away a Kindle. I would greatly appreciate it if you didn’t enter, because I’d love to get a Kindle.

Maximizing Money has put together a stellar list of financial blogs. If I’m not enough to keep you going, take a look at that list.

Mystery shopping sounds like it could be such a sweet deal for some people. Always try to make money doing what you love.

Here is another list of sites that can make you some money. I love side hustles.

And finally, here is Lifehacker, showing you how to make better cocoa.

LRN Timewarp

This is where I review the posts I wrote one year ago.

I wrote a post on saving money while cooking. This post has easily withstood the test of time. We keep getting better at stretching our budget. Over the last year, we’ve actually reduced our food budget by an additional $50 per month, while the quality of our meals has gone up.

This was the first week I posted a 30 Day Project update. My first goal was to start waking up at 5AM. That worked well for almost the entire year, but I’ve let that slack off over the last few months. On the weekends, I don’t set an alarm or try to get up early, but I’m still up by 7:30, usually. During the week, my alarm goes off at 5:10, but I let myself snooze it. I’ve discovered that I do better at attending to my personal projects(like blogging) late at night instead of early in the morning. So, I’m going with what works, instead of trying to force what doesn’t.

I also reviewed the bills I pay that aren’t paid monthly in my third budget lesson.

Carnivals I’ve Rocked and Guest Posts I’ve Rolled

First 3 Things to Do in the New Year was included in Crystal’s rockin’ new Total Money Carnival.

4 Ways We Keep Wasting Money was included in the Festival of Frugality.

Living the XBox Life on an Atari Income was included in the Carnival of Personal Finance.

Swamp Finance was hosted by Squirrelers.

I ran the guest post, The Best Financial Advice I Ever Received for Saving Money Today.

Thank you! If I missed anyone, please let me know.

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That’s all for today. Have a great weekend!

Search Results for: three-alternatives-to-a-budget/subscribe-by-email/budget4/4-ways-we-keep-wasting-money/contact-me/debt-burnout/living-the-xbox-life-on-an-atari-income

1. Credit cards

2. Overdraft fees

3. Unused memberships, gift cards and rebates

4. Airline fees

Free Money Tip

30 Day Project Update

Best Posts

LRN Timewarp

Carnivals I’ve Rocked and Guest Posts I’ve Rolled

Get More Out of Live Real, Now