3 Hidden Decisions that Destroys your Budget

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3 Hidden Decisions that Destroy Your Budget

3 Hidden Decisions that Destroy Your Budget
by MONEYNING · 46 COMMENTS

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Growing up, everyone around me thought our family was rich. We drove nice cars, we dressed neatly and never hinted at our money woes. It was strange because we couldn’t be more middle class when it came to our household income but the truth didn’t matter, there was no point denying.

One day, I asked my mom about this, and she told me that though we didn’t have doodles of money, we stretched every dollar like it was noodles that wouldn’t snap. Here were a few of her tricks:

1. Don’t Buy Everything

I forgot where I heard the quote first, but I love the saying of “You can have anything, but you cannot have everything.” We often bought quality goods that lasts for a long time without showing wear, but we were never allowed to buy everything we have our sights set on. We force ourselves to contemplate again and again whether something was really worth our hard earned dollars before we made the purchase. Strangely enough, not taking our wallet out as often made every purchase more special too.

The 30 day rule helps, but just the fact that we didn’t buy everything right on the spot cut down the majority of our spending.

2. Never Spending More for the Same Thing

We just got used to spending the time to look for bargains and see if we can do more with less. If there was another item that costs less but offered comparable benefits, we usually opted for the cheaper version. Not only did it save us money over the long run, the research involved in the whole process also made us more aware of the quality of the items we were buying, helping us narrow down the vast number of choices out there.

It didn’t start off that way though, as we were paying for features we didn’t even want (or know about.) like everybody else. Eventually, looking back at our past purchases helped. Did we really need to spend that much on the TV we bought when something much less would have worked just as well?

3. Don’t Keep Buying the Same Thing Over and Over Again

Buying quality products isn’t enough. You still have to take care of what you purchase if you want it to last. Cherishing what you have also helps reduce the chances that it gets lost and needs to be replaced.

We owned a nice car, but we drove it for 10 years. Let me give you an example of how the math works to illustrate my point. Let’s say you changed a $30,000 car every three years. Usually, the typical car you buy would depreciate to roughly $10,000 – $15,000 after three years. Let’s tilt the numbers to your side and use $15,000. This means that you are still losing $5,000 a year. After 10 years, that’s $50,000, enough to buy a much more luxurious car.

This works for cars, but it pretty much works for everything too. Instead of replacing your computer all the time, why not take care of it by cleaning it up every once in a while? How about your clothes? If you wash them as instructed by the labels, they will last longer and look nicer. Shoes? Take some time to clean out the dirt before it starts chewing into the fabric. The list is goes on and on…

“You can live like a king without the expenses.” Yeah right, or I know the statement is right?
 
Excellent points. I pretty much live that way myself. It does pay off, definitely, to buy quality and keep it as long as possible.
 
I think that the biggest problem of people is that they make money decisions emotionally and they do not think about the consequences
 
Another way to reduce debt or a bloated budget is to use debit cards. Yes, you got it. Debit cards. By activating credit on your debit card, you have two different alternate means. The difference between a debit card and a credit card is that the credit card makes you pay back payment with interest while a debit card doesn't. Debit also gives you the downside that you can't SPEND BEYOND what you have on your pocket. You can tell the bank (whichever you're using) to stop the overdraft over 0.00 to make sure you stay in the black. This forces you to make budgetary cuts, creative thinking, and start thinking about buying cheaper instead of buying expensively for products that look so shiny, glittering, or golden...

Another way is to use a program like Quicken, Moneytree, Mint.com (Online only), or any other budgeting program. By then, you'll have set up every single facet of your budget, making sure what you can cut, what you can't cut, and to see whether you'll be in or out of the hole. It helps wonders and tinkering with the program before finalizing your budgetary assessment for this month pays back great dividends.

One other thing. You can buy safes that can keep your cash, coinage, or any other important material and stash it away. Every time you have surplus cash at the end of the month, you take out what you had this month then stash it into your safe. By the time you've built up your money to the appropriate amount, then start splurging a little.

Making goals do help. For instance, if X wanted to go on a roadtrip but it costs 5,000, he'll need to make sure he can save up as much as he can (NOT all of it since you'll need food, clothes, gas, etc.) and reach that goal. The main problem to face is keeping your hands off and that's where safes comes in. You stash away the safe somewhere where you're not even thinking about it and over time, it'll become second nature. You're saving more money than what is spent in a bank. For some of us, we have problems not only with credit cards BUT debit cards. We treat debit like credit, overspend so much, and then realize, "Oohhh. How did I get so low?"

Better to have more alternatives than just two, three.
 
I agree with a lot of that. We have used Quicken for years and it's very helpful.

I dunno about keeping much money at home in a safe, though. Some people like to keep cash at home in event of emergency; maybe that's a good idea, but I personally don't do that.

The one thing I've done that has made almost everything else possible is save 10% (or more) right off the top of my paycheck. I started out saving around 3%, then increased to 5%, eventually increased to 10%, and kept it there for years and years. During the last few years of my career we saved 20%.

You don't miss what you don't see in your checking account, and it made it painless to save for retirement, new cars, vacations, etc.
 
For some people, it works having a safe at home. For some, cashing the rest of the surplus back into savings. Others simply just keep it in their checking and use it when they need it as additional $$$ to buy anything.

Beach girl said:
The one thing I've done that has made almost everything else possible is save 10% (or more) right off the top of my paycheck. I started out saving around 3%, then increased to 5%, eventually increased to 10%, and kept it there for years and years. During the last few years of my career we saved 20%.

I'm gonna have to keep that in mind since it seems reasonable and your experiences with the percentages in saving your money looks like it's paid you off very well in the later years of your life. :)

Thanks for part of your wisdom, Beach girl!
 
I use my debit card for all purchases. Back in the 90's, I cut up all my credit cards, paid them all off and never applied or used one again.
Being a single parent of 3 isn't easy but I do shop for bargains all the time. And I pay cash for everything. We live simply, enjoy what we have without debt, and don't try to keep up with the "Jones's".....Many of my friends have beautiful decor in their homes, drive new cars every few years, and also are working themselves to death to pay for it....No thanks!...Heck, I'd rather be fishing and not having debt collectors calling or at my door.....

And yes, I do shop Walmart, no shame in that if I can save a buck or two.....and even go to the Bread Store for day-old bread as my boys eat a lot of sandwiches during the summer. Otherwise, I'd be buying bread everyday at the grocery store and spending 2 to 3 times as much as I would pay at the Bread Store.
 
My mom used to shop at the day-old bread store too. (I don't think it was officially called "Bread Store," though. Is that a chain or franchise store of some sort?)

Anyway, it always made sense to me. The day after you've bought bread from the grocery story, it's day-old anyway, so no big difference starting with the whole loaf a day old.

Four kids in my family growing up. We went through a lot of bread, too.
 
It's hard to budget when the costs of bare necessities are more than your take home pay. :( .
 
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