Living within your means

Ugh, I hate that phrase. But these days, with the way prices are rising and raises at work are becoming a thing of the past, that phrase seems to hold more meaning.

I received an email the other day from a client on a job I hate to do. I mean, I hate every minute of it. And there are a lot of minutes (about 6,000 of them). Last year, I had sworn not to do it this year. 

And yet I stared at this e-mail trying to decide.

Then, while I was on the phone with someone, they were talking about how a good friend of theirs just lost his job. This was a good job. His wife works too and makes a fair buck but nowhere much as he did and they have a couple kids. But this could be a blow to their lifestyle. Now, I didn't ask if they had money in the bank or anything like that, but the fact that it happened made me think (always a dangerous thing :-))

What would happen if one of us lost our jobs (or in my case, a major client)? That thought has crossed my mind more often these days, but I have been fortunate enough to have been thinking about it long before the economy went to hell.

First and foremost is to live within your means. If you make $30,000 a year, you don't spend $30,000 a year. And I would hope this goes without saying, but you don't spend more than $30,000 a year. Credit cards are not an extension of your income! (Though I know there are cases where there necessity is there.)

Second, build a safety cushion. It doesn't have to be big, just something to have around in case of a job loss, a water heater going out or a repair on your car. Experts recommend about six months salary but who are we kidding, I'd be lucky to have a month's salary lying around!

Third, reduce your debt. That's always a tough one, especially if you have no safety cushion. What works for me is to take a portion of what I can afford and put it in a savings account.

So out of say $400 a month that can go toward credit card bills, I take about $50 and put it in a savings account. It slows up the debt reduction but it allows not having to use credit cards in emergencies and lowers the stress level of not having any backup savings. Of course, that's just my opinion.

I don't like debt, and I do everything in my power to not have any. My car got paid off and I continued to make car payments to myself so that when it finally did die about eight years later, I was able to pay cash for a new car.

Living within my means involves a few sacrifices along the way, but I am much better off for it. I used to say that I'd work at McDonald's flipping burgers if that was the only way to pay my bills. I still believe that. No job is bad enough to sacrifice feeding yourself or your kids.

So what did I do about that crappy job? I took it. I'd have been crazy not to.

Saving money is like dieting...

Seriously, what is the difference between pinching pennies and counting calories?

If you keep the pennies off your bill, you're that much richer. If you keep calories out of your food, you're that much thinner, right?

Okay, that is really not my point. The point is that while it is great to save money and great to diet, you cannot take either one to the extreme. 

That seems to happen a lot when dieting, denying yourself indulgences, counting each and every calorie and then getting upset at yourself if you go over by a small amount. It can just make you miserable.

A friend of mine once starting socking away every single penny she could. I mean, she never bought anything she didn't absolutely need, never went out and basically didn't have any life. 

Then she cracked and went on a spending spree. She'd deprived herself so much that she needed to overindulge. 

Same with dieting. If you consume yourself with every calorie, one day you will crack and you will overindulge. It's just a natural thing to do.

So what do you do? Again, saving money is just like dieting. You have to give yourself a break and be a little flexible.

Every once in a while, go out to dinner, hang out with friends, do what makes you happy. You can do it without spending your life's savings. You'll find that you can keep up the savings if you release yourself from the constraints a time or two.

And if I'm sticking with the diet comparison, have a candy bar once in a while or whatever it is you've stricken from your life. 

Bottom line is that you cannot keep denying yourself something, whether it's money or food, for too long of a period or you will crack. And if you crack, you probably will do much worse damage to your pocketbook or scale than you would if you allowed yourself to indulge once in a while.

By the way, that friend spent two years paying off that "splurge" she went on. The credit card fees and interest added up to another 35% over what she spent initially. The plus of it was that she never did anything like that again and I will always remember that happening to her. 

It was a good lesson for me as well, luckily a much less expensive one.

Watch those gift cards

Ever used a gift card only to find out that it's empty? Figured you used the money at some point and just didn't remember? Or maybe you received it as a gift and felt odd going back to the giver?

You'd be surprised at how often gift cards go awry.

Take this for example: I stop by a hair salon to pick up a gift certificate for my mother on Mother's Day. Normally I get the paper ones but on this day, there was a line and a very exhausted saleswoman taking order after order. Apparently a popular gift that year. So I finally get up to the head of the line and they're using these new gift cards, electronic and much easier to track. So I paid for the card, in cash, and proceeded to the family gathering (I was a bit behind that year).

Fast forward about a month later and my mother is at the hair salon and attempts to use said gift card. Only there is nothing on it. Nada. Zilch.

Fortunately, this is my mother, and if I was going to scam her out of a gift, I would have picked up a 99¢ coffee mug at Walgreens, instead of a gift card. After calling me, and me explaining that I paid cash and back and forth with the salespeople, it was finally resolved. But it was resolved in the fact they believed her, not that they found out what happened.

I learned a valuable lesson that day. So did she when a similar incident happened to a "refund card" at a store just last week.

1. Always keep the receipt with the activation or proof you bought one.

2. Use a credit card, it will help with supporting documentation should you need it.

3. Keep a record in your head or a note or whatever works for you. Know if you use only a portion of it and know how much you have left on it.

Gift cards are a great gift, especially for those people that are hard to buy for (yes, Mom, I'm referring to you). But remember that gift cards are essentially money and should be treated as such.