Learning to think like a frugal person

ForMyGirls

First and foremost - welcome to my diary AliBee16, pantherchick and FrugalFilly (put a big smile on my face to see you had safely arrived in MSE Frugal Filly!)

The posts during the last two days have led to lots of thinking for me - and that’s even before I have had a chance to check out Gillian Riley AliBee! So thanks to you all for sharing your thoughts.

Bigbog - you make such a good point about the shopping at Aldi (etc) not being a temporary measure. I have gotten myself out of debt a few times before in my life but I always slide back in so damn fast and I reckon that the “this is a temporary crisis measure” thinking is a big reason for it.

I realise I haven’t talked much yet about why Beck’s book has the by-line “training your brain to think like a thin person”. She says this great stuff about the fact that thin people aren’t just magically thin. She does acknowledge that there are a very very small number of people who just are thin but that for the vast majority of people who are a healthy weight it is because they are constantly making sound decisions about what to eat and what physical activity to do. Since then I’ve been watching the ‘naturally thin’ people in my life - my Mum is probably my main study - and noticing what goes on and Beck is right - they have small amounts of the high calorie food, they eat food slowly, they walk to the local shops when they have run out of milk etc.

This was for me, incredibly revolutionary - at one level I always knew that it won’t be a free for all when I get to the magical land of weight maintenance - but it had never really occurred to me that what I will be doing there is practicing all the same skills and habits I’m using to lose weight. what I am learning to do now is training for life.

So when I read your post Bigbog I thought that you had absolutely nailed this point in the money management domain. The frugal ways of living and thinking that we will all be developing here are habits for life.

iammumtoone - great work on your cheap day out! I really liked your thinking about the not letting people bail you out. It is really hard when it stuff for your kids though isn’t it? I can (at a pinch) deprive myself but I find it desperately hard to say “ no money” when it is something for my girls. I guess the thing I need to keep remembering is that I am not doing them any favours if I bring them up thinking that there is an endless supply of money - if I involve them in decision-making about which activity is the priority I will set them up early with an understanding of how to deal with money sensibly. (Though it is no guarantee - my parents were (and still are) extremely frugal and it didn’t seem to rub off on me.)

chanie - I loved the story of your relative - my frugal parents do almost all of those things (except for the bandaid) so I shall have to try and emulate them! I think I can offer one even more remarkable than the bandaid though - my brother has a friend who is notorious for being unwilling to spend money on anything he can get for free. Legend has it he was walking down the street one day and saw a toothbrush lying on the ground - picked it up with delight and proclaimed “Great - my one is almost worn out”.

frugal filly - thanks for your comments on the difference between ‘cheapskate’ and ‘frugal’. It helped me unpack a bit more the “I’m not that kind of person” thought. For me ‘cheapskate’ has another dimension to it of people living off others. I had some friends a few years ago who prided themselves on being very frugal by not having a car - but were constantly asking for lifts and never contributing to petrol costs (or other upkeep costs) for the people who drove them around. I think for me there is a blurring between “frugal” and that kind of behaviour - which might be part of why I have balked at becoming a ‘frugal’ person. I think there might be a whole lot of layers to that sabotaging thought!

I also really liked your thinking about the number of times you use something. I am a big believer in buying the good quality item so that you only have to buy it once but I think sometimes this sucks me into spending more money than I need to. It is really helpful to add your thinking about how often something will be used before deciding what quality is required.

ForMyGirls

Day 10 in the Beck book is about setting a realistic goal for weight loss.

She talks about the importance of not setting a goal that is an unrealistically low weight - or that involves trying to lose weight too fast. She also recommends setting step by step goals (ie: have a goal of losing 5 pounds - then when you achieve that set a new goal of losing another 5 etc).

In the weightloss world the "don't try and lose it too fast" has a lot of reasons behind it - the fact that going too fast can shut down your metabolism and that going too fast can be bad for your health. Neither of these have an equivalent (I don't think) in the world of debt reduction. The reason that does equate though, I think, is that if you try to go too fast it will be unsustainable and you will end up falling off the wagon.

So with all that in mind I did some number crunching today. To set the stage - my debts are:

1. A personal loan - balance of $19,133.86. There is a regular fortnightly payment on this of $381.85 - it gets deducted almost instantaneously when my pay arrives!

2. An "almost maxed out" credit card - with a balance of $4,873.04.

3. A no interest debt to my partner of $2059.19 - for my share of the costs of a new fridge that was bought in July and the plane tickets, accommodation and hire car for our family holiday in a couple of weeks.

4. This one has shame attached to it - $650 owed to my kids' savings accounts. No interest - but lots of emotional need to pay it back ASAP!

In my budgeting system the last 3 equate to the "big ugly overspend" that I have spoken of in previous posts. The total "big ugly overspend" is $7,976.92.

After running the numbers I have set a goal of paying off the last 3 debts (and hence reaching a zero balance in the "big ugly overspend") by February 2016. There are a few numbers in there that are on the pessimistic side so if they come in better than expected it might be paid off before Christmas 2015! The personal loan is due to be paid out in April 2016 - I am not sure if I can pay it out early without penalties but I will investigate it when it gets closer to paying off the other debts. In any event I have set my debt free goal date as 1 May 2016 and will do my damnedest to come in early!

I am going to try and minimise credit card interest by putting money into the credit card until it is needed rather than leaving it in my general account (ie: the money that I am putting aside each fortnight so that there will be $ there for the quarterly utilities bill would be better off reducing the balance of my credit card until the bill comes in). I am concious this could get me into strife because it means I won't be able to ahve a "you can't spend anything on the credit card" line in the sand. I am hoping the system of pre-entering my expenditure in my banking system will keep me on track though so that I know whether there is money in the budget or not and the "big ugly overspend" keeps going down. If this doesn't work I will come back and rethink this point.

In terms of short-term goals my first goal is to reduce the "big ugly overspend" to $7,000.

My tracking of this short term goal is going to get a bit complicated though because I will, in the next few months, have some legal bills that I will have to pay by increasing the "big ugly overspend". I may also have to use the credit card, and possibly even call on the kids' savings accounts again to cover them. It will just depend when they land and how that fits iwth the rest of the cash flow. I have accepted though that this will happen - and am being very clear with myself that this is the ONLY circumstance in which I can increase the "big ugly overspend" and the ONLY circumstance in which I can borrow from the kids' accounts again. I tell you all this rather boring detail because I want you, as my coaches, to be a 'no !!!!!!!!' audience. If I had to explain this all to you down the track to justify why I haven't met my goals I would feel like I was making excuses. You might not think I was, but I would - and then it would be harder for my personal !!!!!!!! detector to tell if I really was making excuses at some other point!

So there you go - my goals are set. My budget is set. Payday tomorrow so by the next time I post (other than some credits I will send through in a minute) I will have thrown my first snowball at the big ugly overspend! Can't wait :-)

Day 10 checklist:
1. I read my ARC twice
2. I read other response cards (i.e.: ones I have created in response to sabotaging thoughts I have noticed) as necessary
3. I used my "stop impulse spending" and "savouring strategies - every time? most of the time? some of the time?
4. I used pause, plan, pay - every time? most of the time? some of the time?
5. I gave myself credit for helpful spending behaviours - every time? most of the time? some of the time?
6. I acted in accordance with my spending more wisely / living more cheaply plan - every time? most of the time? some of the time?
7. I set a short-term goal for debt reduction (or savings)?

ForMyGirls

I have produced a lot of text already today so I will try to be brief:

1. I had reason to be in a shopping centre today. This is the first time this has happened since I made "the big decision". I did a good job of noticing how I felt - noticing the habituated checking out everything I saw - noticed the "hey I want that" feelings - reminded myself that there are bigger goals - noticed the mixture of feelings about that - sadness, mild panic, pride in myself for taking these steps to financial security.

2. Got hit for a subscription fee today for an App I never use. Put a note on the to do list to cancel the subscription. (I am pretty good at following to do lists so this will happen!) Only about $5 a quarter - but it meant my "play money" went into the red and that just ain't OK with me!

Credit to me for being honest /present with myself and not accepting even a little bit of financial wastage.

AlsioHx

Arrived a bit late to this ...but can't you adapt your Day 3 to sitting down from time to time to assess spend to budget, checking investment rates etc I find it useful to set aside time at certain points in the month to do this related to when bills fall due to pay and money needs transferring between accounts. More frequently, i take time to enter receipts into the budget system and enter spend, particularly supermaket spend to different budget heads when returning from a shopping trip.

Chardonnay

Hello, I haven't had chance to read the whole thread yet, but this looks really interesting as my two main priorities in 2014 will be to pay off my debt and lose weight!

Anyway, I've subscribed and will have a good read through later, when I have more time!

Mrs_Cheshire

FMG, I would be annoyed too by the subscription fee, glad you found out and are cancelling future payments!

chanie

FMG - sounds like you are doing really well. I haven't had a chance to read your updates properly, but I will look over them when I can.

I did have a bit of a fall of the wagon. I spent about £10 that was unaccounted for - I bought a couple of gifts (this is my problem, spending money because things are cheap/on offer). I get paid tomorrow and plan on starting properly. I also want to 'pay' back the money I spent, so will be making efforts to cut back.



TWO DAYS WORTH OF CREDITS

Typed up my ARC and stuck it in my diary for easy referencing.










Returning two unwanted gifts I received for Xmas this year and buying some stocking fillers for next Xmas (gifts cost £13, but I bought stuff which would have cost £23).

Made lunch for work, which I enjoyed eating - it used up the last of the lettuce I had (which would have gone to waste).

frugalfilly

FMG, it looks like these legal costs may put a crimp in your plans to continue towards being debt free. How will you deal with that? 1) do you have money put aside for those costs since you know they are pending? 2) will this cause more than a ripple effect (possibly an earthquake?) in the rest of your financial plan? 3) how do you feel that may impact you as you are developing these new skills? Just words for thought.

This past weekend my DH and I went shopping. We had planned to use a gift card given to us by his parents for Christmas to cover half of our purchases and we expected to pay the other half out of our own pocket. We were so involved in each purchase, discussing every single thing that we put into our cart, that when a couple approached us asking for money, we were really caught off guard. Now, we have been struggling both with reduced income as well as an increasing mountain of debt for several years. However, since we do believe in practicing charity we do from time to time give financial assistance when we have a little extra. We did help this couple. They needed money for a night's lodging. They were homeless.

However, rather than feeling good about doing this, I will say that for one of the first times in my life, I wondered if I had done the right thing. I did rationalize that we have a warm dry home to come home to (although we struggle to meet our own monthly expenses) and they did not (it was cold and raining) but, as my DH said, "Why me/us?" It seems like we have homeless people approaching us frequently. My DH has even been standing at a urinal and a homeless man said "You don't understand what it is like to be out in the cold night after night."

Do any of you here have a place in your personal budgets, in spite of what it might or might not be, for such spontaneous acts of charity? After all, if I can afford to enjoy a meal out can I not also extend that pleasure to another fellow human being who may not be able to do so? I have been extravagant in the past and I remind myself that I have been fortunate that, in spite, of my obvious inability to manage my "blessings", I have been able to still bob my head to the top, even if I am bobbing up and down.

Filly....

ForMyGirls

Hello coaches,

I will come back later in the day and share my thoughts on the interesting things you have been saying since last I posted - but I just wanted to share on the fly a whole bunch of credits for my morning - because while they are small in action they are huge in attitude and I am very proud of myself. In fact, I kid you not, I am a little teary about it. So here goes:

1. I did my banking this morning as yesterday was payday. My big ugly overspend was reduced by $247.84 - more than the budget because it is school holidays and so there is no after school care bill this fortnight.
2. While doing my banking I noticed that I had received the princely sum of 2c interest in my bank account. 2 weeks ago I would have said "whacko - free money - and added it to my spending". Today I used it to reduce my big ugly overspend. Any "free money" is money against debt.
3. A weightloss buddy recommended a really good sounding book. I didn't buy it and am going to hunt for it in the library. 2 weeks ago I would have fallen for the sabotaging thought "but this will promote my well being" and taken it out of my "medical expenses" budget, which would then mean it would be short when my prescription needed renewing, which would then result in me taking out debt to do that.
4. I also noticed that I had been charged a 8c fee for that subscription I hadn't cancelled. 2 weeks ago I would have said "not my fault - whack it on the debt" - today I took it out of my play money. I also emailed the company to cancel the subscription. And while I was at it I emailed another company where I had a subscription I think I cancelled but I want to be sure.
5. I unsubscribed from another marketing email.
6. I remembered I had a coin purse for parking meters in the car that hadn't been included in my reconciliation. Almost fell for the free money thought and added it to my play money - but remembered just in time so that is another $3.20 against the big ugly overspend.
7. In my budgeting this morning I made sure there is enough cash flow for all the direct debits that will come out between now and my next payday. I also made sure there was enough cash flow for the spending money for the first 3 days of my family holiday in a couple of weeks (payday is half way through it). Fortunately I get something called "leave loading" which means I get a bit of extra pay when I am on leave (though peculiarly it arrives at the end of my period on leave!) I set the budget for spending money a few days ago - half the leave loading will be spending money - half will be for debt reduction.

All of these are huge steps for me. They are a seismic shift away from the old approach of any unexpected cash can be spent and any unexpected expense can be added to the debt! End point of it all is that my big ugly overspend has now been reduced from $7976.92 to $7705.92.

ForMyGirls

Welcome to my diary chardonnay and AlsioHX!

AlsioHX - thanks for your ideas about recording spending and reviewing it against budgets. I think you are absolutely right that this is really important. A bit later in the diet book there are steps about learning to record everything you eat (or when translated into the world of finance about recording everything you spend). I reckon I will be coming back to your thoughts then. I am really grateful for your sharing your thoughts - I am very much feeling my way through this as I go so like hearing other people’s thinking.

chanie - you are going great guns. Well done for packing a lunch and getting next years christmas shopping done when there are bargains - I have always been a bit in awe of people who can plan ahead like that, rather than buying at the last minute when everything is at it’s highest price.

frugalfilly - your thoughts about charity left me with a bit of thinking to do. At the moment I don’t give to any charities and when I stop and think about that it doesn’t feel OK. I have rationalised that on the basis that I ‘can’t afford it’ but that really isn’t true - as you so aptly put it - if I can afford to go out to dinner sometimes then I can afford to help someone who can’t afford to have dinner at home. At some level I think I am held back by the fear of the open floodgates - if I open up to the possibility of helping those less fortunate than me then where does it stop because there is infinitely more need out in the world than I have the capacity to meet. So I like your idea of a budget for charity. In fact the more I think about it the more I think it wise to have a budget for charity while paying off debt - if what I am trying to create are lifelong financial habits then I should be including now the habits I want for life. I think there shall be some budget and goal adjusting tomorrow!

Separately - thanks for your questions / thoughts about how to handle the legal fees. To answer them: 1) no - I don’t have any $ set aside to cover the fees - paying them is going to involve a certain amount of creative money shuffling (the old - “get an extension for a bill”, “pay the minimum payment on the credit card and then max it straight back out again” shuffle - totally unsustainable but what will be required to sustain the cash flow); 2) it undoubtedly will create an earthquake in my new budgeting system and I am very conscious that I am going to need to be very careful that my motivation and positivity do not get buried in the rubble and 3) it is going to make it harder to develop these skills because I won’t be able to draw clear lines in the sand in the way that I would like but I think (hope?) I will be able to get through it. I think the key thing is for me to be very clear about the boundaries - i.e.: these fees are an expense for which I can break the usual rules - but having broken the rules is not an invitation to keep breaking them for other things!