Why are you broke? Why does money slip through your fingers? Why do you work like a dog, day in, day out, and yet still have nothing to show for it? Read on...
Steps
- Write down everything you spend. Get a little notebook, and itemise where your money is going. EVERYTHING from the 50 cent newspaper, to the $300 boots. It works straight away: just as writing down what you eat makes you eat a bit less, writing down what you spend makes you spend a bit less.
- Get angry and start minding very much about small, pointless expenditure. The parking ticket you got because you lost track of time. Cigarettes. The £12 late payment charge just because you've not organised yourself to pay online or go to the bank or set up a direct debit. The monthly gym subscription you don’t use. The taxi fare that you spent because you were running late and are a disorganised person. Get annoyed when you spend needlessly.
- Use your anger to change your attitude to consumer goods. Stop reading fashion and style magazines that make you feel bad. That camera, that step machine, that latest mobile phone that can make you feel happier — when you know that the purchase is just driving you deeper into debt? Do you seriously believe that anyone notices what shampoo you use, so long as your hair is clean? On the other hand, don’t flaunt your thrift rashly. “Lulu Guinness?” asked someone at a very grand party once, pointing to my handbag. “Shepherds Bush market, two quid,” I answered without thinking, and all of a sudden, it looked it.
- Become Jamie Oliver trying to feed 800 kids on 37 pence a day. Many middle-class people have no idea what they spend on food. You think you despise convenience foods, but a long, hard look at your trolley may tell another story. Buy loose, buy big and buy late in the day. Keep the fridge well stocked with ingredients for things that you know you can cook from scratch when you come home late, hungry and a bit drunk. Build up a repertoire of cheap recipes that everyone loves.
- Now, and only now, you are ready to set your budget. (Don't gp off the rails by setting budgets that are hopelessly unrealistic). Earmark a lump of monthly income for real debt reduction (not just paying off interest). Work out your monthly fixed expenses and include set-asides for annual or predictable expenses — car services, holidays. Divide what’s left by 31 to see how much you have to spend each day.
- Forget about juggling credit cards. It’s not big and it’s not clever to give yourself a false sense of financial prudence, when in fact you are sliding deeper into debt. Instead, play the sniper: pick your cards off, one by one. Your target: one bank account and one credit card for emergencies that does not live in your wallet, but in the freezer.
- Steer clear of temptation and danger zones. Motorway services, garages, cinema foyers. Only £800 million of Britain’s £2 billion cinema industry’s takings are in box-office sales — the rest is spent on £5 tubs of air, wrapped in popcorn. Thames Water charges me £400 a year for water; I’m darned if I’m paying for extra bottles of it at the supermarket. Mail order catalogues go straight into the recycling bag, unopened. If you must walk past Jigsaw and Karen Millen, walk fast.
- Be prepared. Take snacks and bottles of tap water everywhere for the children. Have change ready for parking meters, spare tights in your bag. Never again buy something because you left your other one at home. And, speaking of children, what’s wrong with “No” for an answer?
- Rather than yearn for stuff you don’t have, look at what you already have. If you don’t like it, take it to Oxfam or put it on eBay if it might sell.
- Don’t become enamoured of “money-saving” wheezes that take up more time and trouble than they’re worth. I’ve tried all the duds: the home sewing, the bargain hunters’ newsletters, the Sodastream. And be cautious of sale items: a bargain saves even more money if you don’t buy it at all.
- Aim to have a few no-spend days a month. After a while, it becomes a game: how can I run my life today without writing anything down in my little blue book? How ingenious can I be? Put off replacing broken things for a little bit longer.
- You cannot afford to be Lady Bountiful (for the time being), but where you can be generous, be generous — with time, with support, with friendship; with a spare bed for children’s friends, with a lift for an elderly neighbour, with tomatoes from your garden. Thrift can so easily morph unpleasantly into meanness.
- As you claw your way out of debt, you may notice a strange thing. Money that you actually possess feels completely different from money you owe. When contemplating spending money that is sitting solidly in your account, as opposed to spending putative money whose miraculous elasticity is there only to encourage you to pay interest, the prospect of splashing it on a pair of shoes almost identical to two pairs you already possess strangely seems to pall.
- So you drive a harder bargain. You become a tougher customer. In short, you begin to behave like someone who is genuinely rich — not like someone just playing the part.
Warnings
- Don't go overboard, or be unrealistic with a budget... if you don't stick to it (just like a diet) you'll only feel worse.
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