Friday, December 4, 2009
Nonprofiteer by day, stripper by night.
"Volunteering, horseback riding, camping, international travel, and telling others what to do. And speaking of saving, splurging, and my need to order everyone else around, I hereby decree that all business-owners of Lawrence, Kansas must read Profs. Annamaria Lusardi and Peter Tufano's article 'Teach Workers About the Perils of Debt' from last month's Harvard Business Review. Lusardi and Tufano offer compelling reasons to add debt literacy to typical menus of employee assistance programming, and Lawrence entrepreneurs and human resource higher-ups need to pay attention. Understanding debt and budgeting will help employees become better 'CFOs of their own lives,' to borrow from the authors, and ensure those workers you promote to decision-making positions have an understanding of money management that won't leave either of you in a preventable lurch."
How do you save money?
"My money management skills were not always exemplary. In fact, my history with money management is downright embarrassing. My parents, both successful entrepreneurs who grew up in poverty, are excellent money managers. Unfortunately, but perhaps predictably, I would have none of their good advice as a teenager. In college, I spent their money and mine with scarcely an ounce of filial piety or common sense.
Indeed, I presented a portrait of ignorance, and that ignorance cost me $10,000 in credit card debt by graduation. And for those of you keeping track at home, no, I had no idea what compound interest was, good or bad.
I lucked out and landed a prestigious job in a legendary East coast city. I celebrated! I thought I had everything in the world, and I did—a walk-in closet full of designer clothes with more in my second closet and storage, the best personal trainer available with an Ivy League PhD at the best gym available, and every Williams Sonoma plaything I could carry out of that store. Even with that level of spending, I could easily afford the minimum payments on my credit card debt. Like a fool, I congratulated myself every night at a different restaurant or social hot-spot for up-and-comers to mark this 'successful' period of my life.
The result? Well, the clothes all had to be dry cleaned, my precious Williams Sonoma blender broke, and that prestigious, big city job? It was gone in mid-December 2008. My life went to hell with the economy, and, like our country, I was drowning in debt.
To make matters worse, no one was hiring. Desperate to keep my beautiful apartment and remain the envy of all my friends, I cried when I realized I could no longer afford my gorgeous pad. So when my best friend offered me free rent in Kansas, I swallowed my East coast pride and moved to the Midwest.
I finally did land a position I felt was worthy of my resume, but had to take another one at night so I could survive comfortably. That night job, of course, could have been retail inventory, serving, or cleaning, though I did pick something spicier and higher-paying.
Several thousand dollars and a few relevant books later, I have definitely absorbed an expensive lesson. I now plan for the future while paying down my debt.
Some tricks I use to stay in control of my budget:
-I put my ATM receipts in plain sight in my room so I can watch the numbers get bigger. This makes me happy and less likely to spend without thoughtful consideration.
-I log into my bank account, credit accounts, and student loan accounts regularly. I follow up on every questionable charge. To date, I've recovered well over $500 in bogus 'fines' and 'fees' just by logging in and getting on the phone a few times.
-When I'm poised to overspend, I follow the advice of author Lois P. Frankel, PhD, and picture myself as an 80-year-old living on fixed income. Total nightmare! I want to be the old lady who worries about nothing, not the old lady at the mercy of Social Security. All the little decisions I make now will build, or devastate, my financial life down the road.
The most important thing is to live beneath your means.
And I stay the hell out of Williams Sonoma."
How do you splurge?
"I used to think that "splurge" meant 'overspend,' but it actually means 'indulge.' I plan in advance to indulge in my hobbies so my special treats remain within budget. For example, riding lessons are cheaper with a group, so I organized some girlfriends to do it with me. The result? I have a great time with a group of pals and each of us only spends $20."