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Acheiving this goal is all about psychology
on May 3, 2011
My wife openly admits that if things went her way ("the way her parents did it", for one), we'd be spending up to our last dollar on car payments, the nicest possible house, etc.
However, reality bounced us on our heads four years ago when we were saddled with a tremendous amount of very unexpected debt. However, it turned out to be a HUGE blessing for us, and I would not trade the experience for the world.
Our head-bounce started with wedding expenses we had to pay at the very last minute (which we were expecting a family member to pay) and the other from an accident one of us had in an uninsured vehicle (DON'T EVER LET YOUR CAR INSURANCE LAPSE!! Mine did while we were on our honeymoon...got in an accident the day after returning to the tune of over ten thousand dollars of damage to both my and his car that I had to put on a credit card.)
Since then, though, while we are not completely out of debt, we have been led to, seen and learned MAGICAL things about ourselves, our respective psychologies and our money, and are now paying off huge chunks of debt every month.
I was very interested in this book because it purported to fix one thing that my wife and I spent a lot of time "working through" (and finally recently solved very satisfactorily), which was her ability to go out and spend, while I was being a money-commando (or "psycho" to hear her tell it) and trying to save and scrimp every last cent to get out of debt. My method is easy for me, because my mind fills with "the bigger picture," but for her, it is difficult to not have anything, ever (her words).
That is why this book that purports to retain the "fabulous" appealed to me...to see if I could either recognize successful things we have done or to perhaps extract another tip here or there of value.
After our wedding, we found (to my great delight) the advice of Dave Ramsey, which I believe completely saved us from slavery or doom of the Average-American path...phoney assets, massive debt and zero true disposable income.
The big challenge (and I will not bore you with much detail) was this: we would give ourselves "blow money" each month, but it wasn't enough. We weren't cooking much (buying convenience foods at the grocery store, which led down a slippery slope to buying convenience foods at fast food joints...to the tune of 300 and 400 a month, some months). The problem was not the beginning of the month, but the end: the blow money would dry up, it was too little for too many things, we'd start getting fast food to plug the holes in our (too scant) grocery purchasing and cooking, and it would lead down a slippery slope of getting used to whipping out that debit card. Pretty soon it was Bye Bye, Benjamins.
We made adjustments to groceries (the best thing I learned was SPEND enough on groceries, and on good enough recipes, that you WANT to eat at home...find delicious recipes that sing to you, immediately discard boredom, go GET the occasional bottle of "truffle oil" or buy all those fresh meats if it makes you CRAVE eating at home...the point is you will save money because you will never be lured to eat out from frustration or being sickened by boring, tasteless soccer-mom food. Our secret weapon is five-star recipes from allrecipes.com...they are a magic money-saver, because they fulfill your "restaurant cravings" and make you WANT to take leftovers to work!) The other things was that INCREASING the "blow money" actually made us spend less...the system never broke down because we always felt reasonably satisfied. This was just our behavior and pattern, yours may be different, but the important bit is that you start to become a scientist of your own tendencies.
We ended up with - like Dave Ramsey - a cash envelope system. First, cash in envelopes is MAGIC. Forget the iPhone apps (we tried them...they "work" but don't WORK), there is NOTHING like pulling paper money out and asking yourself "do I really want this when this is what I have for the month?" right there in front of you.
Conversely, the same question, when the answer is "yes", makes that purchase SO gratifying and SO delightful that it makes up for a hundred too-easy retail-therapy card swipes. Trust me, this was HUGE for us! DO IT... you will never look back. (SECOND HUGE HINT: Happiness with conditions in your life is about QUALITY, not quantity!! Reasonable doses of self-denial can make huge fireworks go off for you...one more bit of psychological magic you can use to pay down debt while feeling HAPPIER with your conditions in life than ever.)
We found using "virtual" envelopes or just seat-of-the-pants allotment (and using our debit cards all the time), we would end up with NO disposable (i.e. debt-paydown) money at the end of the month. It was just more of the same Swipe, Swipe, Swipe the Debit Card habit...more enlightened than the Swipe The Credit Card habit, but not much less wasteful and needless!
By allotting ACTUAL cash in ACTUAL envelopes (we went and got cute little bill-sized accordion folders made of stiff cardstock at Office Depot...$5 and a great purchase), we revolutionized our habits and FINALLY got a grip on our own psychology.
Not only that, but the tension I used to feel purchasing that or eating there or buying that has melted away. I can be a happy husband in the moment (instead of dreading the bill and where it fits in to our ever-shrinking picture "this month"). We have our "breakfast date money" and we go and FULLY enjoy it...the money is there, in black and white....set, budgeted and we know we will still have X-amount at the end of the month. We finally started fully enjoying each other on these outings, which are so important to a relationship (I think).
We accomplished our "perfect" numbers by looking at past habits over a couple of months. We saw we were spending X on dessert dates, Y on dinner dates, Z on hobbies, etc. and split it up accordingly. The difference now is the structure that cash gives leaves us plenty of money left over each month.
Prior to all this, though, my wife has kept a stiff upper lip through our getting-out-of-debt process and she was largely my inspiration for reading this book...namely, could I either recognize any successful thing we had done, or could I extract successful behaviors from this book that applied to her.
This is a bit of a loosey-goosey version of Dave Ramsey (he'd advocate a harder line), but in the context of a marriage of unique people with unique needs (my wife works a stressful job, but having nothing to show for it...not a handbag, gladrag or other bauble, bangle or bead she adores kills her), so we gave her clothing money each month. "Blow" money...for anything: fast food, impulse buys, etc...but when it's gone, it's gone. Then we have a third envelope of "us" money - date nights, pizza nights, etc.
I think this book COULD be useful to some people, although I would certainly start with something more structured like a Total Money Makeover (Dave Ramsey) first...get the "fundamentalist" version, then see if anything in here salves some of it's rougher edges.
For example, the author picking up a $13 dress...big deal, will hurt nothing.
But we kept finding that the "$13 no-harm dress" would be repeated over and over in a given month (even thought it TOTALLY didn't feel like it) and chew up a bunch of money, sadly.
This book gets four stars, because by itself it is no great method. It's a good overlay to a more disciplined system like that of Dave Ramsey or Suze Orman. I also think it could be slightly deleterious to people in bad enough financial shape, because sometimes you really do need to "give up the fabulous." Changing behavior takes a lot of focus and a lot of honesty. Sometimes purging completely is the way to go, at least for a while to stabilize things. So, this is not really a go-to book with a complete system, although it is somewhat entertaining and does have some ways to be reasonable with yourself and your mindset, without slipping back into old ways.
So with a little smarts, a little psychology, a little structure and a little free-reign-with-boundaries ("free-range chicken coop," anyone?), we have perfected our system for paying off debt. Hope this helps someone somewhere.