Advice: Saving vs. Spending vs. Eating vs. Avoiding Eviction
I am very excited to report that I am writing this post on my brand new laptop (!!), which is a purchase I have been considering/researching/deciding-and-then-chickening-out-on FOR YEARS. Literally. Every time I would go to visit my parents, it was pretty much guaranteed that I would walk in the door and announce that we were taking a family trip to Best Buy because today I was gonna buy a new laptop. And then we would go and then we would browse and then we would leave and buy Chick-Fil-A instead.
I have a really hard time with big purchases. I’m always convinced that tomorrow might be the day that I’m hit with an unexpected bill for $5,000 and how sad would I be if just yesterday I decided to buy a legitimate laptop and now I have to moonlight as a dishwasher just to survive?
But, Charlene – in that ridiculous and fully unrealistic scenario, wouldn’t you just return the laptop?
It’s not about the laptop.
It’s about trying to be prepared enough for the financially unpredictable now so that I don’t have to worry about it forever. It’s the bank account equivalent of stocking up on toilet paper while it’s on sale so you don’t have to think about it for a while.
But, on some level, I think all of us worry about that stuff. For me, the reality is that I live on my own in Manhattan, and take care of Langston (my dog), and haven’t starved yet or missed rent. I have a really good credit score and the only debt to my name (besides monthly credit card payments) is the student loan I took out to get my MBA. And I also pay that (offensively expensive) bill every month, without running out of cash. I’ve never had to call home because I was boiled-water-for-dinner kind of broke, and I just bought a Lenovo Yoga that I knew, deep down, I could afford. BUT I AM NOT RICH. Ha, omg. Even specifying that is hilarious. But I want to be clear that I AM NOT. Instead, I’m realizing, I’ve just had a successful way of thinking about money over the years. It’s not the traditional rules about what percentage of your income should be going towards rent each month or the mathematical equations about what it means to be living within your means. I’m pretty sure I break all of those rules, to be honest. But what I am doing is working, so I thought I would share a few of my secrets:
Don’t get dumb credit cards. I only believe in credit cards that get me all the perks. AmEx is super legit and backup-insures a lot of the big purchases that I’m scared of making. So, if you buy a TV and it’s all dysfunctional on day three, but the manufacturer won’t take it back, AmEx will refund you, anyways, based on which one of their cards you have. I’m also a huge fan of credit cards that let you earn points that can be redeemed for purchases or cash. Like the Chase Sapphire. I get double points anytime I eat out or use it for travel, each dollar=one point, and then I can use my points for plane tickets/hotels, or use them for cash back at a slightly lower point-to-cash conversion rate. What I’m saying here is I LIKE OPTIONS. These cards give me options.
I use credit for everything, but I treat credit like debit. I may have significantly over-simplified this when I was a mere 21-year-old graduating college with my very first credit card but, to me, the logic was as follows: This $300-limit Master Card sucks. But every card I can get right now sucks because I have no credit history. So I need to buy everything I possibly can (within $300) on this card every month, and then pay it off on time every month, and make these creditors see me for the trustworthy and credit-card deserving human that I am! I did that for less than a year and qualified for an AmEx. The takeaway here, though, as your credit-limit increases, is that you should always, always treat your credit card like a debit card. Unless it’s a truly unexpected/emergency expense, I don’t spend anything I can’t pay off in a month. And then I do pay it off that month. I’ve heard all the same rumors as you about how sometimes it helps your score to take a few months to pay something down, and how debt is good, and blahdy-blah, but interest payments are the worst soooo yeah, I’m paying my bill in its entirety unless I absolutely positively just cannot that month.
I pay everything on time. And by “I” I mean all my magical virtual assistants. I don’t physically write a single check or type my credit card number into a single payment field when things like Internet and electric are due. I don’t even know when they are due. (Just being honest.) But all my virtual helpers know when they’re due, so I have everything set up as some kind of payment rule through my bank or through the biller themselves so I don’t have to try to remember (and for sure forget) to get my payments out before they’re late. Billers and creditors and all humans on earth despise late payments.
I cook. Not to flex my millennial card too hard right now, but I like to use my money for experiences. So, I have a general rule for myself when it comes to food: If I’m doing it with friends, I’ll spend money on it. If it’s just gonna be me, I’m cooking. That doesn’t mean I never order pizza if I just really want pizza, but it does mean I try to heat up DiGiorno and save on the delivery fee if it’s just gonna be me. I ordered takeout constantly when I first got out of college, because it was easy and delicious and didn’t require me to put on shoes. But then I saw how much I spent on takeout and decided it would be cool not to go bankrupt before I was 22, so I started applying the aforementioned rule. It’s helped. A LOT.
I find happy hours. Happy hour is the happiest hour! Nothing is worse than paying $18 for the same buzz you can get at your own house for pennies in comparison (this is NYC, remember). Find happy hours and commit to those happy hours and watch how quickly the bartenders fall in love with you and those half-priced drinks become free-priced drinks.
I create savings rules for my account. I have my checking account setup to transfer the same amount of money to my savings account at the end of each month. AND THEN I DON’T TOUCH IT. If it’s not in my checking account, I consider the funds nonexistent. Savings accounts are for emergencies (shoe sales are not emergencies) and, otherwise, they are for SAVING.
When I buy a laptop, I don’t buy anything else. I am so happy to be typing this on my shiny, glossy, sleek new computer, but it’s also Friday night and I’m not out spending money. I’ll be cooking for a few days and ignoring LOFT 40% off sales because now it’s time to balance everything out again. I’m not gonna fall off the face of the earth and reemerge only once two new paychecks have cleared my account. I’m just not gonna go make it rain anywhere for a while and act all perplexed when my bank sends me an overdraft email.
You’ve got this! You are a bill-paying, credit-building, money machine. Happy saving!