SNL's Answer to Debt

Because it's been harder than I realized to find the energy and motivation to post as often as I should after working full time and taking care of a house and kids; I decided to post some comic relief.

This skit from Saturday Night Live sums it all up!



The second post on how to budget will arrive soon!

How to create a budget - Post #1

I realized that I’ve posted several times and referred to your budget. But some folks may not know the mechanics of starting a budget. So with the new year approaching, I thought I'd post a series on the steps for creating and working with a budget.

Step 1: Determine what time-frame you’re going to use for your budget. The typical time-frame is monthly, but if you get paid on a different frequency and prefer to budget bi-weekly or bi-monthly, that works too. Just choose what works best for you, after all, it is your budget.

Step 2: Determine how much income you make during your budget time-frame. Please see this earlier post about converting your pay frequency to monthly (if you want to budget monthly); and how decide how much income you should budget if you aren’t paid on salaried basis.

Step 3: Figure out how much you’ve actually been spending. This is where your eyes can really be opened to where and how you’re spending your money. If you use software to track your checkbook, you should be able to run reports that will give you this information. If you don’t currently track your spending, you may have to start tracking it for a couple of months before you can really create your budget.

Please check back for the next post that details the next steps in the mechanics of creating a budget.

Can you have ANY fun with your money?!

During these times when everyone is feeling the pinch of the economy, we all hear advice that we have to be very careful with our money and watch every penny that we spend. I agree with that advice, but not to the same extent that I hear in some recommendations.


I agree that it is very important to make a budget and to understand where your money is going. But part of that budget should include some "fun" money. We all need to be able to spend money on things that we enjoy from time to time. You may not have enough money to spend much on fun activities, but you can probably include a little in your budget and set it aside each time you get paid. After you've saved for a little while you'll have enough for that small vacation, the trip to the amusement park, or whatever activity you and your family really enjoy.

I agree that it's important to be fiscally responsible, but you should be able to live life and have fun at the same time.

Cash only Christmas

With the holiday season upon us, the money spending frenzy is now beginning. Going into unmanageable debt so that you can buy gifts for everyone on your holiday list is not what the season is about. I'm not going to assume that I know what the season does mean to you, but I know that the people who really love you don't want you to put yourself in financial trouble just so they can have a shiny new gift.

I save money each month for Christmas shopping, so that I'm on a cash-only basis with my holiday shopping. If you haven't been saving for holiday shopping all year, you can still work to have a cash-only Christmas. Make this holiday less elaborate, and then start saving in January for next Christmas. If you're one of the lucky few still getting a year-end bonus from work, you could use that to pay cash for your gifts. Or you can get creative with your gift giving. Between families, friends, co-workers, children's teachers, etc.; the bill can really add up. This might a good year to give hand-made gifts. My mom always gives my grandmothers calendars with pictures of the family. They aren't terribly expensive, but they are very treasured.

If you work to get yourself on a cash-basis during the holiday, you give yourself a big financial advantage for the rest of the year.

Why it's always been dangerous to be in debt

We're getting a good reminder these days of why it's not so good to be in debt. Businesses are struggling and failing because they've over leveraged themselves. Individuals are losing their houses because they can't make their payments. Our government is borrowing money to solve all of these problems so we don't experience a more drastic economic collapse.

But there were times when the consequences for debt were even more severe. Charles Dickens wrote many semi-autobiographical novels in which he talked about the consequences of debt. His own father spent time in debtor's prison. Yes, you used to go prison (and a very unpleasant prison at that) if you managed to get in debt and then couldn't pay the money back. How anyone ever thought they'd get the money back if they threw the debtor in prison is beyond me, I guess they expected the families to pay them back to get their loved ones out of prison.

Professor Robert Douglas-Fairhurst has written about the comparisons between our current economic crisis and the one in 19Th century England that inspired much of Dickens's work. I don't know about you, but I'm pretty grateful that our economic crisis likely won't result in the same level of social issues.

How to manage your money when you don't make much

When you're not bringing home much money, you have to be even more creative about managing your money. Especially now in this time when we're facing extraordinary inflation on the essential items that we all have to buy. Here are a few things to think about if you have to manage a very small budget with shrinking buying power:

Are you spending money on non-essential items? If so, this is probably a good time to reduce that as much as possible, and make sure you're saving up before buying any big items.

Are you shopping at the least expensive grocery store in your area? I wouldn't travel too far away to find the cheapest price since that could waste gas or mean a larger bus fare, but most communities have more than one store choice fairly close. And make sure to look for the generic brands with the same ingredients, but a smaller price tag.

Have you shopped around for insurance and found the best price? Check with your benefits department at work to see if they have negotiated any group rates on home or auto insurance; or check with your insurance agent to make sure you've got everything bundled and are getting the best rates.

Have you adjusted your thermostat? If you turn it down a few degrees this time of year and wear a sweater inside, it can save money on your utility bill, and research shows you sleep better in cooler temps. Also, make sure to check with your local utility company to see if they have any assistance for your income level.

Do you turn the water off when you're not using it? I'm pretty good about doing this, but my kids aren't. So I try to remind them when they're brushing their teeth to shut the faucet off. This won't save a ton of money, but it will save some, and every penny helps these days.

Do you shop at thrift or second-hand stores for clothing? If you have kids (who seem to grow an inch a week sometimes!), this is an especially money-saving way to shop. Many of the clothes are in very good condition because another child outgrew them before they could ruin them.

Do you walk or ride your bike when it's reasonable? It saves on gas if you don't start up the car to make a trip 2 blocks over.

As an added bonus, some of these tips are better for the environment and your health (and being healthy can also save money)!

Why Money Management is More Important Than Ever

Given the current economic situation, successfully managing your money has become more important than ever. One of the big worries that has the government scrambling to get a bail-out bill passed is the effect on the ability of individuals and small businesses to get a loan. The government is very worried about banks and other lenders becoming more reluctant to offer credit. One could argue that might be the right road to take long-term, but it would certainly continue to slow the economy in the short-term.

So how do you ensure that you always have the credit you need? By managing your money and maintaining a strong credit score. If you look like a safe bet, you'll likely still be able to borrow money when you need to. But if lenders look at your credit history and have concerns about recouping their money, you may be one of those on "Main Street" feeling the effects of the economic crisis on "Wall Street".