How do make do with what you have

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How do make do with what you have

Postby Tituba » Mon Dec 29, 2003 7:23 am

Found this article on money: This column is excerpted from "7 Money Mantras for a Richer Life," by Michelle Singletary, published by Random House, copyright 2004 How To Make Do With What You Have The best financial planner I've ever known was my grandmother. Big Mama raised me, my two sisters and my two brothers on a salary that never reached more than $13,000 a year. Every paycheck, Big Mama paid herself first. Each week, she deposited some money in her credit union before paying her bills. It was her rainy-day fund. The reason you need a rainy-day fund, she said, is because there's always rain. Sometimes it's a drizzling rain, such as when the washing machine breaks and you have to replace it. Sometimes it rains so hard you feel as if you're in the middle of a monsoon, such as when you lose your job. I'm here to tell you that living high is costing you too much. Most of us are living the American dream on credit. We're stressed because we spend too much. We spend too much because we're stressed. The way my grandmother handled money taught me that most of us can get by on what we make. She believed in the principle that it's not how much you make that matters, but how you make do with what you have. Big Mama's common-sense lessons about money inspired some of these seven money mantras I want to share with you here; some of the others are mine, some are from financial experts. I use them to stop my spending or inspire me to save more. I fall back on them when I'm not sure what financial decision to make. 1. If it's on your back, it's not an asset. Did you know there are more than 35,000 self-storage facilities in this country? Americans' houses and garages are overflowing with so much stuff that we have to rent space to keep it in. I know someone who rented space in a self-storage facility for her clothes because she ran out of room in her closet. Crazy! I want you to think about all the stuff you have because, ultimately, I want you to determine whether too much of your income is being devoted to serving debt to pay for personal property that depreciates every year. Four types of assets make up your net worth. Three of them don't require you to rent self-storage space and are more likely to put you on the path to financial security. They are called appreciating assets. They include the following: Liquid assets. Cash or other financial assets that can easily and quickly be converted into cash with little or no loss in value. Liquid assets include checking, savings and money-market accounts and certificates of deposit. Investment assets. Assets held for their potential to appreciate, or increase in value. They include stocks, bonds and money in a mutual fund. Real property. Land and the things attached to it (house, garage). This is by far the greatest source of wealth for American families. The second asset category is personal property. This includes your automobiles, furniture, clothing and electronic equipment. Technically, personal property is counted on the asset side of your personal balance sheet. However, once you walk out of the store or drive off the car lot with this type of asset, it loses a great deal of its value. These assets are otherwise known as depreciating assets. How do you begin to accumulate appreciating assets? Reduce the amount of your personal property. And that begins with curtailing your love to consume. Ask yourself this question: Are my only assets the things that are crammed into my house? Is a self-storage facility costing me money? 2. Is this a need or is it a want? If you want to get a handle on your finances, you have to begin to distinguish between wants and needs. Understanding the difference is the first step toward eliminating wasteful spending and putting yourself on the path to successful living. Financial success is a lot about making choices. If you absolutely have to have that expensive cup of coffee every day, then you have to cut out that $1.89 soda you buy at lunch. You can't lavish your children with things, accumulating massive amounts of credit-card debt to do it, and expect to have enough money to send them to college. Take out your credit-card statements and look at the total amount you owe. Now, without looking at the details on the statements, try to remember specifically what you spent the money on. Write down every expense you can recall right down to the penny. Now match your memory with the actual statement totals. Can you remember much? You wouldn't forget a mechanic's bill to fix your car. But can you remember all the dinners, movies, clothes and miscellaneous items that you just casually put on your credit card? If you can't remember what you charged, that's an indication that you are overspending on stuff to fulfill wants. Be honest with yourself, especially if you are deep in debt. Stop confusing wants with needs. 3. Sweat the small stuff. Many people are nickel-and-diming themselves into debt. If you want to create wealth, you have to sweat the small stuff. Try this exercise. Look around your house. Make a list of all the things you bought for under $50. Start with the kitchen, then move from room to room, especially the kids' playroom or their toy box. Now think. How often do you use those items? When your co-workers say, "Let's do lunch," your response should be, "Let's not." A $5 lunch every workday comes to almost $1,300 in a year. Save that lunch money every month over your next 15 years on the job and, at a 5 percent rate of return, that's more than $28,000. Can we talk? If you're Joan Rivers, you can afford to talk long-distance. But if you're not, cut out the chitchat. Cut your phone bill by $25 a month and your child, now 5, will have $5,400 for college. Stop eating out. It's one of the biggest busters of average people's budgets. Eliminating one restaurant meal a month for a family of four can save $720 a year. Cut the calories and increase your bottom line. When you do go out to eat, skip the appetizer and dessert. In a year, you can save $676 - and 44,622 calories. Don't pay for access to your own money. On average, most bank customers make four trips to the automated teller machine a week. Use a bank that's not your own and that's as much as $3 a visit. Use your own bank and you could save $48 a month. Sweat the small stuff. 4. Cash is better than credit. Having a credit card will make us act like we have no good sense. Take, for example, an experiment by Massachusetts Institute of Technology marketing professor Drazen Prelec and University of Chicago business school professor Duncan Simester. In a sealed-bid auction for basketball tickets, half the participants were told they had to pay in cash; the other half could use a credit card. Result: The average credit-card bid was about twice the average cash bid. I call this phenomenon the CCC (credit-card craziness) syndrome. Credit has become the modern-day shackles that enslave many people, from Beverly Hills to Boca Raton. Let me walk you through some mind-numbing numbers. Over half the families that earn less than $10,000 a year have over $1,000 in credit-card debt. About 40 percent of people ages 12 to 19 have access to a credit card. I'm astounded at the growing number of teens and college students with credit cards. Why are we giving credit cards to teens? One often-repeated reason: The proper use of credit teaches people to manage their money. Correct me if I'm wrong, but when you use a credit card, whose money are you using? What you are learning to manage is debt. We keep up with the Joneses by borrowing. But, you know one of the problems with keeping up with the Joneses? Says motivational speaker Bonny Wilson: "Just as you catch up to them, they refinance." 5. Keep it simple. Never underestimate the power of simplicity. It is the everyday person's protection. Keeping it simple can be the most sophisticated thing to do with your money. This is perhaps the one mantra that will keep you from being bamboozled, hoodwinked and suckered. Con artists are masters at talking over your head. They dazzle you with details. The moment your head starts spinning, take your money and run. 6. Priorities lead to prosperity. I believe that if you put your values first, you will get in life what you value the most. However, you must have a set of priorities because that sets the stage for how you spend your money. This is about making choices. You don't have to live like a pauper, but you can't have it all, either. So, is it important to you that your children have brand-name clothes or that they graduate from a brand-name college without student-loan debt? It's really your choice. If you truly value a good, paid-for college education for your children, then you can tune out their whining that their friends have a PlayStation 2 or whatever. If you put your priorities first, all the pressure from your kids, their peers and your peers to spend instead of save becomes background noise. 7. Enough is enough The question "When is enough enough?" stopped me cold. Saying to yourself, "Enough is enough" is important because so many of us are working so hard and worrying so much about getting enough money that we can't appreciate what money can't buy - family, friends, spiritual peace. I think all of us need to be reminded to put money and the pursuit of it in perspective. Most of us are not going to be millionaires. So, decide what you value the most and spend your energy and money trying to achieve those goals. I promise you, if you set priorities for your time and money, you will have a prosperous future - and you will have enough [This message has been edited by Tituba (edited December 29, 2003).]
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Postby MoreMagic » Mon Dec 29, 2003 7:31 am

Terrific and thought-provoking article, Tituba. I would just add one thing to the assets list, which is one's physical and mental health, another place where investing your money for maintenance or improvement also returns long-run value. I thought the MIT experiement on buying with credit was extremely interesting!!
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Postby Tituba » Mon Dec 29, 2003 7:44 am

Yes, just looking around my house at all I have purchased for under $50 and how often I actually use it.....ug! I have a machine to steam rice that I used ONCE. An ice cream machine, that OK I've used a couple of times. Etc. Etc. Truth is, many many things (mostly clothes) I just wouldn't have purchased had there not been money on my credit card.
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Postby MoreMagic » Mon Dec 29, 2003 8:58 am

I, on the other hand, couldn't live without my rice cooker. I use it at least once a day and sometimes twice if I'm cooking congee. ImageBut I have a pasta machine I used once and have been storing for seven years, more costume jewelry than I can keep track of and so many plain white tee shirts I could change twice a day all summer and never have to do a laundry. It doesn't help that we are so heavily encouraged and enticed to spend - got to keep that economy booming!! The concept of "enough" seems almost unamerican! I also think we buy things to "medicate" ourselves when we are unhappy in other areas of our lives. I know my impulse spending went way down when I changed jobs to one that was far less stressful. (And yet, put me in a department store, even today, and I am irresistably drawn to the plain white tee shirts!!)
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Postby joyous1 » Mon Dec 29, 2003 3:19 pm

Tituba, some good questions and thoughtful stuff. Especially as I'm back at work today and people are discussing the holidays -but really what I'm hearing ALOT of is what they bought in the after Christmas sales! Me, I didn't go shopping at all, but now that I'm hearing what they got, I'm feeling all deprived, when in fact I really don't NEED any of that stuff. Sadly, I was feeling I deserved something because I had to work Christmas day, when in fact I had taken the shift on Christmas to earn extra money to put towards my credit card. Sooooo, I bought myself a bunch of DVDs on the credit card, exactly the same amount as I was going to make working. Crazy! (But at least I did go to the bank and pay that bill the day after). I think adding in "Don't ever go to a store unless you specially need something" would help alot too. If you don't see it, you don't feel a need for it.
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Postby Tituba » Mon Dec 29, 2003 3:28 pm

Start the New Year off right: NOTHING but gas or car repairs goes on ANY charge card. Especially not groceries. When you start paying for food with a credit card....very bad sign. You go to a restaurant, you bring cash. You are NOT allowed to buy any: shampoo, conditioner, moisterizers, makeup or perfume until what you own is completely used up. Put a date on the bottom of all makeup. When it reaches one year old, it gets tossed for health reasons. Especially eye makeup - lots of bacteria in old stuff. Doesn't matter what the sale is. 2 for 1 is NOT a sale if you already have 6 shampoo bottles in your shower. Exactly how many brown eye shadows do you still have? You'll be very surprised how long it actually takes to use up all your stuff. If you buy a piece of clothing (paying cash of course) you must then give away two pieces of clothing to charity within 24 hours of purchase. If you see something you want and you are thinking "yeah, but I don't have the cash but I could use my credit card" - that's your answer. It is NO until you do have the cash. You are a 3-month boycott of purchasing any magazines. No matter who is on the cover. Stand in line and read People - just don't buy it. Saying I want to get out of credit card debt and actually getting out of debt are two very different things. Just like saying you want to lose weight as you finish a pint of ice cream. Actions speak louder than words. And, you pay $15 more than minimum on all credit cards. If you stick to the plan above, you will easily have $15 or more extra a month. See what happens when you do this for next three months. ***************************************** Remember - the more you aren't getting what you REALLY want and NEED - the more you fill that empty space with food, shopping or over work. Let's all find what it is we need in 2004! [This message has been edited by Tituba (edited December 29, 2003).]
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Postby joyous1 » Mon Dec 29, 2003 4:41 pm

Okay, good start but... (can you hear my whiny little but voice? Image ) I'm going on a cruise the first week of February. The cruise itself has been paid for by work and I am getting paid to go on the cruise as well, the fear is, I really have no extra money to take along at all and then I also have to exchange it from CDN $ to US $ so it will be cheaper to do it here before I go. (Right, like everyone should have such difficulties - but it will indeed be work!) Plus I'm flying someone in to take care of my pets while I'm gone (already paid cash for that ticket!) and will have to provide them with a few suppers out and stuff. Any suggestions on how to handle stuff that's unexpected or not budgeted for? I'm getting really tired of having credit card debt.
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Postby Tituba » Mon Dec 29, 2003 4:49 pm

You get a part time job for the month of January and put every single cent into what you need for February. You sell some stuff on Ebay. You don't pay for dinners out. Instead, you cook up some meals and put them in your freezer. Homemade is better anyways. You need what - $500 or so. That is very possible. Look at this link for ideas: http://www.barbarasher.com/ubb/Forum3/HTML/000502.html Get creative getting the cash. You are leaving the cards at home before you get on the boat. I know - the cruise. Know what? The Earth isn't changing and wherever you are going is going to still be there the next time you take a cruise. Except, next time you are going to be working from strength (in the black). [This message has been edited by Tituba (edited December 29, 2003).] [This message has been edited by Tituba (edited December 29, 2003).]
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Postby MDG » Mon Dec 29, 2003 4:54 pm

Right on, again, Tituba! I\'ve got some information sources to suggest to you, to see if they fit in your overall plan. Would you care to email me? ... suzie348@shaw.ca Mahara
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Postby catenary » Mon Dec 29, 2003 10:06 pm

And don't get sucked into the whole fashion glamour machine. You don't need the latest designs and colors every year. Some of them are really awful! It's best to avoid the latest fashions 'cause chances are they'll look really outdated next year. Oh, and you don't need nail extensions, tanning salons, french manicures, streaked or permed hair, or the latest lipstick color. If you gotta have it create a budget and stick to it or better yet work on your inner beauty and skip all the high cost gimmicks. And what's with "women's" magazines. We pay for them and yet they're mostly advertisements to sell us a bunch of stuff we didn't even know we needed. Sometimes I think teenage girls are driving the whole U.S. economy. ...maybe I shoulda put this under December rants but it's really about economizing cate
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Postby GiniDee » Tue Dec 30, 2003 2:36 am

Tituba, this whole thread is SOOO much on my wave length! For years I've been aware that almost everyone in urban America could live easily and well on about 10% of all the 'stuff' they own. I have been de-cluttering for years, using Don Aslett's wonderful books as my bibles. My two favorites, Clutter's Last Stand, and Not for Packrats Only live by my bed. I recycle all the clothes and shoes that don't fit or work, either to charity or consignment stores. Books I'm finished with either go on eBay, to the Library, or the local used book stores. Personal things I'm done with go to those who have expressed interest in them, or would love them. Every time my life changes, I look around me to see what has become 'more than enough' and act accordingly to recycle it. Supplies for my art pieces are one thing I keep in excess. I need a lot for each work, and I never know exactly what I will need. But I buy those on sale with cash, not credit. And I buy wholesale wherever I can. It's a never-ending battle Image and I'm never sure if I'm winning. Even though in the last two years I recycled over 250 LARGE boxes of books, clothes, and 'stuff' to charities, hospitals, prison programs and even the Holocaust Museum, I still have too much stuff! I buy very little - nothing I don't actually need (for the last year at least)- and I use what I buy usually within a year. I pay cash for everything except my son's education, and online purchases from places which don't take paypal or cheques. There aren't that many of those. How could I possibly still have too much stuff? I just don't understand! My daughter's theory is that the stuff multiplies and breeds in dark corners whenever we're not looking. I'm inclined to agree. Image Thanks for putting up this post. Lots of great things to think about. At least I do have savings and that rainy-day fund. I found it encouraging despite my present dilemma. Especially the part about enoughness, which is something I'm always working on. Knowing what it is and acknowledging when it's enough is vital, I think! A great start for the new year! All the best - GiniDee Image
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Postby pcmcgreen » Tue Dec 30, 2003 8:32 am

I've been trying to declutter and simplify my life for the past few months now.....selling on ebay is costing me more money than I'm making! So its easier said than done. I WANT to get rid of all this extra stuff - and make a few bucks to live on - but I can't get rid of it. In fact, its costing me money to try - money I don't really have but would have if I could sell something! So changing your lifestyle is easier said than done. But I am willing. I've been looking at all my STUFF and realizing I don't need it, never needed it and now don't want it! I'm even trying to sell my furniture in order to create some income AND to simplify my life. No luck there either yet. Today, I've even decided to try to sell all these beautiful dresses/suits I have (but haven't worn in a year because I can't find work to wear them to!).....I don't really need 20 dresses! I've been watching a mini-series about Lillie Langtry and she got along fine for years with just ONE DRESS. Made her stand out in a crowd too. Image Makes ya think...
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Postby Jezicka » Tue Dec 30, 2003 9:21 am

Michelle Singletary rocks! She's just about the only columnist I read faithfully anymore... I gotta tell you living abroad does wonders for your perspective about these things... I got so used to buying 'seconds' of brand names for a couple of bucks in Hong Kong when I lived in Asia that ever since I haven't been able to bear the thought of paying even so-called bargain retail prices for anything. And in Japan the Japanese would throw out perfectly good appliances just because it wasn't the latest model or had gotten 'dirty'! The neighborhood I live in now, since we moved back to the States, is yard sale heaven! I got a couch and love seat for $100, bought a nice wool brand name pant-suit for $6, found two lovely old pieces of furniture on the street, put out for the trash, bought one antique credenza for $5 and another for $30... (I dunno, GiniDee, maybe you have clutter-bunnies in your home that breed... but I know who's doing the naughty in mine[/i}-- it's all those siren temptations of wonderful, cheap [i]perfectly good stuff that's luring me into sin!) I've probably spent a total of $100 in the last 4 years on clothes... Of course if I had my 'druthers, I'd make up for it with wonderful restaurants... but fortunately my husband, being an Old World Czech, gives me the amazed, "Are you absolutely bonkers?" look whenever the whim takes me-- that usually calms me down. Travel is another story, but I can't get enough free time to manage to seriously dent our budget with that! Well, between de-cluttering and an influx of yuppies who think a 'sale' price is half off the outrageous retail price they paid, my garage sale days may be numbered... Image Lately I'm having such a good time doing things that buying them begins to seem more and more like just another annoying distraction from my real life! (And in case I haven't mentioned it recently, thank you thank you all you wonderful posters you! And Happy New Year!)
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Postby Scorpio Moon » Tue Dec 30, 2003 9:31 am

Thanks for starting this thread, Tituba. I've been thinking about it for the past few days. For me, my problem is determining what is really a "need' vs. a "want". As an an example, I will read about a workout video. I'll get really excited about it, believing it's going to be great and that I'll love it, get a lot of use out of it and it will help me emmensely. I'll buy it--usually online with expensive shipping costs added on. Once I get it, I might do it a few times and then put it on the shelf. Initially, it seems like a "need". But, once I get it, it becomes obvious it was only a "want". But the thing is, there have been workout videos I have put to good use. They ended up being something I needed. With the example of workout videos, I have bought used ones on eBay and have traded with others. But recently, I ended up paying $40 (that's $25 for the video and $15 for shipping) for a specialized video not many people have. When I look back, I regret the purchase and I wish I had some sort of need/want "test" I could rely on to keep myself in check. How do you guys handle this sort of thing?
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Postby cc » Tue Dec 30, 2003 9:46 am

Wow! This discussion leaves me breathless! It's so right and to the point. I'm reminded of a scene in the movie "Labyrinth" where a teen is searching for her baby brother and comes upon an old creature carrying huge packs of stuff that belongs to the girl. The creature starts loading her down with all of her favorite stuff and it becomes increasingly obvious that the girl has to make a choice between her stuff and continuing the mission she has chosen.
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