A blogger I know recently hit a run of bum luck, including but not limited to car repairs, house issues, a utility rate hike and medical bills.
Depressing, right? Except that Christina, who writes the Northern Cheapskate website, decided to take a different look at the situation. Specifically, she looked at recent bank statements and her annual credit report.
The sight of paid-off debt and gradually rising balances cheered her and her husband considerably.
“Even though we felt stuck, we were moving – albeit ever so slowly – in the right direction,” she wrote in a post called “The importance of seeing your hard work pay off.”
I strongly recommend running the numbers, for two reasons:
- To see where you need to make adjustments/get creative, and
- To discern and celebrate any improvement, no matter how small.
Recently I ran my own numbers – and I liked what I saw.
That new contracting job is paying me well above what I’d been bringing in lately. In fact, the total amount will be more than I’ve made in the last six months.
I won’t actually get all those dollars, mind you. The funds will go to Word Matters LLC, my writing company. But I’ll be able to pay myself a full salary this quarter and also take a distribution at the end of the year.
Some of the distribution will go into savings rather than into my Roth IRA, which I’m purposely neglecting for a while. I also plan to gift some to my daughter, because why make her wait until I die 150 years* from now? This way she can contribute a little extra to her own retirement.
Accentuate the positive
Or plump up her husband’s dental implants fund. Or put it toward a home repair project. Or just spend it all renewing the pop-culture grab bag called LootCrate, if that’s what they feel like doing. Once it’s their money, it’s theirs to spend (or save) any way they like.
What’s more likely is that they’ll find good homes for those dollars. Abby and Tim have sub-accounts for things like “dental implants,” “next car,” “vacation” and “holidays,” in addition to the usual pay-the-bills account and an emergency fund.
They run the numbers regularly. Even when stuff happens – and, sadly, it often does – seeing the finances neatly arranged into categories is reassuring. Money taken out of savings to pay a particularly gnarly bill? It’ll be replaced when the overtime pay comes in next month. Or they calculate how extra expenditures, such as their their beloved cat needing to be put down, will eventually be made up.
Thus even when they’re lip-deep and sinking for a time, they have a clear idea of how and when their budget will re-establish its equilibrium.
Eyes on the prize
A positive attitude is crucial to a frugal mindset, especially when things aren’t going your way:
- Up to your molars in debt? You can almost always pay it off, with help from agencies like the National Foundation for Credit Counseling and various money/frugality blogs and personal finance books.
- In your 40s or 50s and haven’t begun financing your retirement? It’s not too late to start. You might not catch up to your peers, but it’ll be heaps better than nothing.
- Haven’t got even a few dollars in savings, let alone an emergency fund? Look for creative ways to salt away some cash and get going.
This above all else: If you do nothing, then nothing will change. Your debt will grow. You’ll get ever closer to an underfunded retirement. Should an emergency pop up you’ll have to put it on plastic.
Seeing progress – any progress – makes a difference. Christina recommends a visual reminder.
“Write your progress with a dry-erase marker on your bathroom mirror. Leave yourself a sticky note with a reminder of your goals or how much debt you’ve paid off,” she writes.
“Use those reminders to keep pushing forward.”
Sometimes you do feel stuck. You may even stay that way for a while. Being proactive about your money, however, can keep you sliding backward.
Readers: How often do you check your numbers?
*That’s her estimate of when I’ll shuffle off this mortal coil. Not sure I agree with her, but I do hope to stick around as long as things are interesting.
Related reading:
I sit down every week on payday and see where the money is heading. I charge just about everything and pay it off monthly. I love the cash back rewards and it makes the bookkeeping really easy to see where it goes. I spend about 1/2 hour every month to make sure that I am going in the right direction with all other accounts. I do a yearly meeting with the insurance rep & my financial advisory as well.
Smart.
And I’m with you on the rewards: They’re paying for most of my holiday shopping this year, and also allowed me to eat French toast bagels for free at Panera Bread while I was in Charlotte for the Financial Blogger Conference.
Yes! Run the numbers, and run them again! The biggest mistake that Past Self made was living in vagueness about what was coming in, what was coming out, and what was owed. That led to overspending, and also overworking at times!
When I decided I didn’t want to stay at my full-time job anymore, we ran the numbers to make sure that leaving wouldn’t throw us into crisis (it didn’t). A month later, when Mr Vega realized he wanted to leave HIS full-time job…. we ran the numbers to find out that he could, too.
I check in with our finances daily, to make sure everything is going where it should, and being categorized correctly. We have a monthly budget-planning meeting (usually the last Friday of the month, followed by cocktails and celebrating), as well as a shorter sit-down any time unexpected expenses– or windfalls–come up (2-3 times a month, no cocktails afterward). It doesn’t take any longer than fretting over the unpaid bills used to, and it brings tremendous peace of mind and harmony to our marriage.
Congratulations on the new contracting gig… it’s nice to get an infusion like that every once in a while!
Yes! Let’s hear it for the money date!
http://donnafreedman.com/2014/06/11/you-know-whats-hot-a-money-date/
Congratulations on your dual reinvention.
I don’t understand why you’re neglecting your IRA– the reasons you stated in the previous post seem to be about needing more liquidity. But in this post you say you’ve got more income. So you should be able to get the same amount of liquidity now AND put some into the IRA.
It’s more emotional than rational. To me, money in the Roth can be withdrawn if needed but its value may go down if there’s another recession. I also simply like the idea of having money at the credit union that I could get in a few minutes’ notice.
Twice in my life I’ve had to pack up and go due to serious family issues, so being able to lay my hands on the money right away is important to me. In the “Why I’m neglecting my Roth IRA” piece I noted that sometimes money decisions don’t make sense on paper but they do to the person doing the deciding; quoted Carmen Wong Ulrich on that as well.
Besides, the income increase is based on a temporary contractor job. It isn’t permanent.
Thanks for being such a consistent reader and commenter.
First of all, the title of this post should be “Run the numbers (and check out my daughter’s site!” But I always appreciate the nods.
Second, 150 years isn’t an estimate. It’s something we agreed on. I expect you to hold up your end of the bargain, dammit!
Will do — and won’t the pension fund managers be irritated???
Monthly is good for me now! It used to be daily and weekly when the finances were very tight but happily, a monthly check in is sufficient to confirm we are only spending what’s expected. Of course when I deviate from plans at all, like deciding to attend a certain conference next year, I pop into the accounts just to be sure. And no matter what the cause for the stress, going over the numbers just soothes my soul.
Hubby runs the numbers when he feels anxious about the budget. It usually calms him down because he’s a prodigious saver. I read an autobiography once where one of the writers reached 100 and had to prove to the NYC school authorities that she was still alive (she was a retired teacher) before they would continue her pension checks! (The book, Having Our Say, was very interesting.)
I read that book, and also saw a two-hander based on the Delany sisters’ story.
And I, too, look at savings et al. when I’m feeling anxious. Calms me down, too.
What is a two-hander?
A play with just two actors.
I check my finances weekly so I never really take my hands off the helm. It’s also easier for me because I know wages are coming in every two weeks.
I also like checking accounts and liquid assets. When money is tied up in certificates it’s like the money is not really mine. If I have to pay penalties if I need the money, in my opinion it’s not my money.
I get paid monthly so that’s how often I check financial numbers. I spend a couple hours on a weekend morning paying the bills due for the coming month, checking the final expenses against the budget from the month just finishing, and making any needed adjustments going forward. Every three months I update my net worth spreadsheet, which is when I get the most satisfaction seeing decreases in debt (liabilities) and increases in savings/investments (assets). Most times the quarterly update is an enjoyable project. When the market takes a dive – like recently – it’s sobering but still informative.
It was great reading about your successes. It is wonderful that you can make such a gift to your daughter. I sometimes get a little discouraged when I see the amount of mortgage remaining but you are right. It is good to take stock and look at how much I have achieved.