Living In the Present With Your Finances

I’ve always aspired to “live in the present” since reading Eckhart Tolle’s The Power of Now. The basic premise is that one should not dwell on the past or the future but simply enjoy the present moment without worry or anxious anticipation of what is to come.  The concept that  stood out to me the most was that one should only concentrate on the problems that can be dealt with at that very moment.  Money-related issues are just as applicable as anything else to these principles.  Here’s my take on the past, the future, and how those impact decisions made in the present.

Learn from the past

We’ve all done things we regret.  That’s perfectly fine, just do your best not to repeat.  My initial thought (and maybe yours, too): where do I begin?!  I’ve made some foolish money-earning decisions in the past.  One summer, during college, I was unemployed and broke.  It was the worst summer I can remember (even worse than when I worked 6 days a week, starting at 5:30 am).  But I learned this from it: I always need to have “work” to do, not just for income, but also to keep motivated and feeling as though I have a purpose.

I’ve gone through credit card debt problems, but I’ve vowed never to go down that road again. I’m actually glad that this happened earlier in life.  I learned quickly how frustrating and difficult dealing with credit card debt can be. Now that I know what it’s like, I’m much more careful with how I manage and use credit.

But definitely repeat the good decisions you’ve made.  Buying a used car (apologies for writing about cars so much lately) tops my list.  It’s been cheaper to own, and my quality of life hasn’t suffered one bit versus buying a new car.  I’m also thankful that I avoided loan debt through college, and I hope to stay out of debt of all kinds whenever I reasonably can.

Look to (but don’t live in) the future

Live on what’s in your bank account, not what you’re expecting to be there. Be cautious with credit cards and spending money you haven’t been paid yet. While I do not carry a balance on my credit cards month-to-month, I’ve run into times where I spend on my credit card before I receive my direct deposit.  This is the wrong approach.  I should be making the money first and then spending it.  Fortunately, I receive a salary for my job, so there’s never any doubt of if I will get paid or not. But it’s definitely a tough cycle to break.

Don’t spend based on future fortunes you think you’re going to make.  This is an easy pitfall for anyone but especially those still in college.  The attitude is “I’ll live it up now and pay for it when I make that fat paycheck later.”  There’s a few problems with this.  First off, you don’t make the big bucks yet.  You can dream all you want, but until you are actually pulling in that amount of money, you shouldn’t be spending it.  Secondly, paying back the debt won’t be fun.  With crazy high interest rates, your debt will increase at a rapid pace.  While you may look back on that time of spending fondly, you’ll surely wish at some point that you hadn’t racked up all that debt.

But do save for the days to come.  This goes with the last point.  It’s actually the exact opposite.  Instead of spending more than what you have at the present moment, you should be spending less than what you have and saving for the future.  The last point involves living in the future, which I don’t condone.  But smart planning is always okay.  You should be prepared for the unexpected with emergency funds and for retirement with investment accounts that are funded regularly and adequately.

There are a lot of emotions tied to our past experiences of money and our anticipation of a better financial future. But the most importance lies in the decisions that we make right now, in the present, since those are the only decisions that can truly shape our future.

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photo by: iamliam

Five Financial Resolutions For (the Rest of) 2011

With nearly one month of 2011 already gone, I’ve rethought my resolutions (already). I’m not huge on New Years’ resolutions, and it always seemed like an activity that everyone simply does because everyone else is doing it (not really my style).  But I still think resolutions can be useful (if you’re committed to them), so I’ve jotted down some financial goals for myself.  Here’s my initial resolution list, along with comments one month into 2011:

1) Track spending more closely. I started doing this back in September 2010 because 1) I get paid a less-than-minimum-wage stipend each month for doing full-time national service and 2) I wasn’t sure where most of my money was spent even when I had higher incomes.  Like many, I’m sure, I get frustrated when I’m left wondering where my last paycheck went.

My money tracking experiment has been a success so far.  I found a great budget template on GoogleDocs (I use the “Personal Monthly Budget” with a few modifications).  Using GoogleDocs has allowed me to make updates to the spreadsheet at home, work, or anywhere with internet, so there’s really never an excuse for not entering my latest spending.  Since I’ve aggregated several months of spending data now, I’m more easily able to create a budget for the following month.  While I’m excited about the progress so far, I still think I can do better, partially due to resolution #2.

2011 so far: My tracking is going well. I’m still using GoogleDocs, and I would still encourage anyone else to do so. I may not be capturing 100% of spending, but I’m satisfied with how I’m doing.

2) Use credit wisely. I think credit cards can be a huge convenience while providing protection and rewards, among other benefits.  However, credit cards are only make sense financially if used properly.  This means avoiding finance charges and late fees.  While I’ve carried balances on my credit card before, I’ve vowed never to let that happen again.

I wasn’t wildly irresponsible with credit cards in 2010, but I would like to keep better track on my credit balances as I move through the month.  I’m diligent about checking my recent credit activity online (I do this a few times a week), but sometimes charges don’t show up for several days.  By the time I’ve realized or remembered purchases that I’ve made (I’m a bit forgetful), I may have already made additional purchases.  This situation is most responsible for derailing my monthly budget, so I’d like to be sure to stay on top of this and keep my monthly budget spreadsheet updated.

2011 so far:  I’m doing great with this so far.  I’ve also decided to periodically send payments to my credit card in order to prevent large balances at the end of each billing period.

3) Increase cash flow. As J.D. at Get Rich Slowly (one of my favorite blogs to read) points out, cash flow only increases by either increasing what you earn or decreasing what you spend.  I can very comfortably say that my spending has basically bottomed out, so I have to increase my earnings.  There are various ways to do this, but I am somewhat limited by my current position in national service (for starters, I’m not allowed to get a second job). One of the steps to increasing cash flow I have taken is to start this blog.  I’m not entirely sure where this blog will lead yet, but I’ve set my sights high.

Once my national service ends in August 2011, I’ll have a much easier time increasing my income.  I’m not entirely sure where I’ll end up yet in terms of jobs or careers, but will continue this business and blog for the long term.

2011 so far:  I started out the year with a bang by selling a few things on eBay, netting me a few hundred dollars. I also sold a gift card on Plastic Jungle that I knew I wouldn’t use.  I probably won’t be able to keep up this level of cash inflow, but I’m working on other sources, too.

New goals added during 2011:

4) Start an emergency fund. So I can’t afford to save a full-fledged emergency fund of 3-6 months right now, but I’ve been recently convinced that starting any type of an emergency fund is important.  While I’ve been fortunate enough not to have any major emergencies so far in my life, I realize crises are inevitable and often expensive.  One of the main sources of money-related stress for me (and I’m assuming you, too) is unexpected costs like car repairs and medical expenses. Based on the advice of others, creating an emergency fund of any size is the best way to avert panic in the future.

5) Develop my online business.  This is my most important goal for the year.  Doing this will have the greatest impact on my finances and on my life.  I’m looking forward to a great year at Money Spruce, and I hope that you’ll be here to join me!

Those are my main financial goals, in short.  I’ll be sure to keep many more smaller and informal financial objectives in place, too (like bringing a lunch to work each day instead of eating out).  I’ll check in with progress on these goals from time to time in future posts.

Do you have similar or differing goals of your own? Add your comments below.

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Photo by rahego

6 Ways to Get Impulse Buying Out of Your Life Right Now!

As a recovering impulse buyer, I’d had to say this can be one tough habit to kick. With modern conveniences like credit cards and online shopping, it’s certainly a battle for me. It can be so bad that I’ve made purchases before allowing any sort of buying rationalization takes place in my mind.

There are many ways that you can get rid of impulse buys from your life: The Simple Dollar has a great article (10 Simple Ways to Beat Impulse Buying).  With inspiration from this article, here are some of my personal favorites:

1. Get rid of credit cards. If you’ve got a serious problem, this is definitely the most effective solution. Credit cards go hand in hand with impulse buying; you don’t even need to figure out if you have the money to purchase something, you just pull out the card.  Online shopping is borderline impossible without a credit card, so if you tend to buy online a lot, removing credit cards from the equation will definitely cut down or eliminate these purchases.

You don’t have to close your credit accounts to make this work.  Leave the credit card at home when shopping in a store and don’t save credit card information in your account on sites like

2. Avoid abusing free shipping deals or subscriptions. My biggest downfall was my Amazon Prime subscription. I  paid $70 a year for the privilege of free two-day shipping on anything from My approach to this quickly turned into getting onto Amazon as fast as I could after thinking of something I “needed”. After two years of Amazon Prime, I dropped the $70 service and my purchases on the site fell dramatically.

3. Require a mandatory waiting period for any large purchases. While I’m not convinced this works in the gun control world, it’s saved me from impulse buy casualties many times. My simple rule: if something costs more than $50, I have to wait at 2 days to buy it. This inevitably forces me to think more about the consequences of the purchase and often results in not buying at all. Considering that the idea to purchase just occurred probably means that I don’t need it right away and can just as easily purchase it a few days from now. I haven’t kept any stats on this, but I would say more than half the time I don’t end up making a large purchase that goes through my waiting period.

4. Research the purchase first. This prevents a lot of in-store impulse buys for me, as I’ve become a customer review junkie and review products rating before virtually any purchase I make. The idea that I may not be selecting the item of the best price, quality, and value is enough to stop me in my tracks. While this does not always stop me from buying in the end, I automatically revert to tip #3.

5. Don’t make emotional buys. In Your Money or Your Life, the authors point out the urge of many people is to buy something to cheer them up when they’re down. Yet we also buy to reward ourselves for a hard week of work or finishing a semester of classes. We even just buy things when we’re bored. It seems that virtually any mood can result in buying for one reason or another. I would also add “don’t make purchases under the influence of alcohol” here, too. All purchases should be made with a clear mind and free from outside influence.

6. Think about how you will feel about your new purchase when it isn’t “new” anymore. The allure of simply owning something shiny and new may be what drives a lot of purchases. I remember this succinctly when I purchased a new car at age 17. Wow! It was great to have a shiny new car! It was clearly a big improvement over my old beater. It was hard to find anything I didn’t like about it for the first several weeks. But after a few months, it wasn’t “my new car” anymore. It was just “my car”, complete with hefty monthly payments, higher insurance, and increased taxes. I  could’ve settled for less of a car and been happier without having to make payments.

One final note: I would recommend that the larger the purchase, the more seriously these tips should be taken and the more scrutiny is needed before buying.

The idea isn’t “never buy anything.” It’s about buying slower and smarter and realizing that purchasing with care can go along way to keeping spending down.