Hey all. Here are some things my wife (26) and I (27) have learned that have helped us “budgetarily”, so to speak. Let me know what you think. I love you all.
- Spend your tax return on debt.
This might seem arrogant for me to say, but having 1 boy and using our child whater-it-is, we were able to pay off $24,000 in 3 years while we were making about $30,000 a year in total (between us, in Idaho, of all places) using our tax returns and our monthly minimum payments. (2 car loans, a civic hybrid and a 2 wheel drive highlander…, student loan debt, and a maxed out $5000 credit card) We have new debts because we suck, but we’re dealing with it.
- Cancel your subscription services.
Well, I don’t know what to say, other than your local library (especially if you’re in a mid-to-large city) has all the movies and tv shows than you could watch in a year. We live in a town of 1,000 next to a town of 20,000. Maybe try it out. Get rid of the $15, the $6.99, and the $2.99 a month payments if you can. Read books together, do things that are challenging in a way that makes you feel like a person.This applies to all subsciption services. Just get rid of them or lower them if you can.
- Cancel your wi-fi.
This really sounds insane, but we have found that using our phones’ hotspots, we have had no need to pay for wi-fi. If we have big downloads, we go to a coffee shop and use their 50GB download speeds. It is a difference for us of $80 a month, which is not nothing! Otherwise, we get over ourselves and don’t do the thing we want to do. We wait and enjoy life without the internet. This not only includes wi-fi but a whole range of creative frugality. Buy tires from someone with a tire-machine. Find recipes to cook yourself that are cheap, healthy, and tasty. They’re out there. Use what is accesible and figure out ways to reduce your costs, even to the extent that you become weird and subvert the system. It’s fun!
- Don’t become wealthy. Become the kind of person who can become wealthy over time.
This is huge. None of what I am describing is applicable to everybody, but this point is that none of this system is fair, except that it rewards those who already have money and punishes those who don’t. Realize this in the seat of who you are. The difficult balance is finding yourself in the place where you accommodate both the fiduciary responsibility to YOURSELF as well as not violating your conscience. So many people don’t include finances in their estimation of their psyche’s history. It is a massive issue for most when growing up in this world of bad financial advice from school, parents, grandparents, siblings, friends, aunts, uncles, etc. The first thing to do is deal with what others have taught us. Realize what they were saying was stupid (despite continuing to love them): bad or no budgeting, debts, bad priorities, etc, and then only after that, we can deal with our own responses to bad advice or bad education, seen in following the trail of our own money, and taking responsibility for our own financial life. It gets easier once we do this, but hard because of the responsibility. But that is really the only way unless you inherit millions, but then you’ll have to start over. You are the locus of your financial past, present, and future.
My heart goes out to all those who are struggling financially. It fucking sucks, and that’s that. But it does not have to end there. If we continually blame the system (which does have a lot to answer for), we will never be able to take full responsibility for our own decisions as persons who have a financial aspect to our identity. Seek help! It is out there.
This is a thing to throw out there, I hope you all are well and happy. Life’s damn hard, but uit doesn’t have to tank our spirits and progress as people who are growing.
PM me if you want. I love to talk.
Love, littleradio.
use phone hot spots [sic.]
This is not available on all phone plans. My phone can, my wife’s can’t.
Spend your tax return on debt.
I know the way income taxes are withheld, at least at the federal level, have changed. Generally speaking, however, you shouldn’t be getting too big of a refund. Like if you’re getting a few thousand back, that might not be ideal.
Certainly you don’t want to owe any money, since that may lead to potential underpayment penalties. But the conventional wisdom holds that tax refunds are essentially interest-free loans to the government. So while it’s nice to get a lump sum refund, it’s better that you keep your money throughout the year so you can use it to buy groceries, pay off debts, and such.
But, I also understand that savings (or not spending) can sometimes be hard for folks, so sometimes having the govt hold your money “in savings” may be appropriate.
If I can add one thing:
- Always pay yourself first.
Doesn’t matter if it’s $10 a pay period or $100 or something in between or more. If you can, save a little bit of your paycheck. Ideally, if you’re company utilizes direct deposit, direct that portion of your paycheck to another free checking or free savings account at a separate bank from your main bank. This way is best since you’re saving and it’s “out of sight, out of mind.” You never see that portion hit your main checking account. Then don’t even look at the balance that often. Don’t even think about it. Save it for a rainy day. Or something nice down the road.
“let me know what you think”
I think your advice is very obvious and too specific to your situation. The section about what kind of person you should be isn’t relevant.
One useful nugget of information in your post is that your local library may offer services beyond borrowing books.
Sorry, if you have good intentions I appreciate you sharing what you think is helpful. But you asked for comment so I’m explaining the downvotes.
Spend your tax return on debt
Ideally, don’t give the IRS (or whatever your local tax authority is called) an interest free loan and adjust your withholding appropriately.
Cancel your subscription services.
This one can be pretty big. I’ve kept us to two, and I think I’ve convinced my wife to kill them. I ripped all of our DVDs and am working on ripping our Blurays, so now we have our own streaming service. I’ve committed to buying essentially whatever we want to watch, and I’m pretty sure we’ll end up saving money by the end of the year given the current price of things.
Cancel your wi-fi.
I don’t recommend this since it can be used to justify an expensive phone plan. I recommend the opposite: cut your phone plan. We pay ~$25/month combined on our phone plans because we use very little data ($8 at Tello for 1GB, $17 at Mint for 5GB), and we pay $55/month on our Internet service (could be less). If we cut out our Internet service, we’d blow throw data like crazy because my wife and I like playing Steam games, so our mobile plan would balloon to $40-50 each.
This obviously depends a ton on your area and what Internet and mobile plans cost, but I’m guessing more people would be better off with an internet package than a fancier phone plan.
we get over ourselves and don’t do the thing we want to do
There’s frugal, and then there’s cheap. The difference, imo, is that frugal is finding less expensive ways to do the things you want to, cheap is not doing the things you want because it’s too expensive.
You mentioned living on $30k/year in Idaho, that’s really not a lot and sounds like minimum wage to me. I think you’d be better served looking to increase your income than trying to cut your expenses even further.
Then again, maybe I’m reading too much into what you said.
taking responsibility for our own financial life. It gets easier once we do this, but hard because of the responsibility. But that is really the only way unless you inherit millions
I just want to point out that inheriting millions is probably worse than getting bad financial advice as a kid because you really never learn to manage money. Look at statistics for millionaires who go bankrupt, or athletes who lose everything after the career runs out. You’re better off learning these lessons when you’re young than when you’re old, so I think inheriting money could leave you worse off if you don’t know how to manage money properly.
Yes, responsibility and discipline is absolutely key, and good on you for taking responsibility for your finances.
Almost anyone can become a millionaire by the time they reach retirement age. If you can invest $200/month ($2400/year) for 40 years (from 25 to 65) in broad market index funds (S&P 500 fund is fine), you’ll have over $1M. Inflation will make that worth a bit less, but if you double that, you’ll have $1M in today’s dollars after 40 years. Most people should be able to do that, especially if you’re able to pay off debt making just $30k/year.
The critical thing, imo, is taking responsibility (as you rightly said) and planning for the future instead of living only for today. You can certainly live a little today, but you need to know where you’re going and set aside a reasonable amount so you can sustain that lifestyle into old age.
Step three, don’t take financial advice from someone who maxes out credit cards.
That should probably be step 1. Never pay credit card interest, and never take financial advice from someone who does.
