Authored by: Stephanie May, NBR Summer 2009 Intern
The first step when starting a workout plan is realizing you need to exercise and actually getting yourself to the gym or the park or wherever you are going to work out. Similarly, when starting a rehab program, the first step to recovery is admitting you have a problem. So here we go. My name is Stephanie and I am a chronically careless spender.
I feel I need to take this step because I don't want you, my readers, to think my biggest money problem is my tendency to buy a few too many Frappuccinos. You should hear my whole story. It's a little scary, so get ready...
When I was little, my grandmother generously put aside some money for my college tuition. She invested it, and for years it has been growing. When it came time to apply for colleges, I was told I could go anywhere I wanted. Money wasn't a problem. Luckily, I decided to go in-state (Go Buffs!!), so my tuition was half of what it would have been had I chosen an out-of-state school.
As I was getting ready to start college, my mom and I sat down to discuss an allowance. Since neither of us was sure how much spending money I would need...she handed me a credit card and said "be good! (Yea right...) At the time, I had no idea how much I was spending each month. I found out later it was in the neighborhood of $2,000. Yes, that's right, $2,000 per month!
After a few months of begging me to cut back, my mom knew things had to change. We were forced to reevaluate the credit card situation. After some yelling and a lot of tears, we decided to set some limits. We figured I would probably need about 500 dollars per month for gas, food, school supplies, everything. That $500 would be added to my debit card. I was only to use the credit card for emergencies.
Three weeks into each month, my debit card would be empty. That qualifies as an emergency, doesn't it? I thought it did. I had a million excuses, and all of them ended with, "I'll be better next month."
My poor mother! She'd keep telling tell me to use the credit card when I needed, but to "be good!" (Apparently, that phrase means nothing to me.)
So for the past three years, I have been spending 500 dollars in allowance and anywhere from a few hundred to a thousand dollars on my credit card each month. Basically, I have been using my college fund as a means to do whatever I want. And I mean WHATEVER I want.
So what is the point of my story? Well...today I'm in sort of a pickle. Because of my excessive spending and because of the dive the stock market has taken, I'm almost out of money. My parents and I have already taken out loans to cover the rest of my education. (Only a year left... thank god!) But I now realize how completely out of control my spending has been and that if I don't get it in check pretty quickly, I'm going to be in a LOT of trouble when I graduate.
To make things worse, I actually don't control any of my finances. I don't even really know what bank my family uses. If I have a check book, I certainly don't know about it. I don't know the amount of my car payments or what tuition costs, and I don't know the first thing about my investments, taxes, or any of that other financial junk.
With one year to go before I'm out in the real world, I don't have much time to get my rear in gear.
Before I continue, I need to a detour to acknowledge the two heroes in this story. First of all, my mother, who lovingly tried to convince me to contain my excessive spending. Second, my Aunt Tracy, financial advisor extraordinaire, who not only has been managing this dwindling college fund, but has also been the referee in an ongoing battle between me and my mom about money. This money makeover is for you!
So, that concludes the true story of my scary spending habits. And, if we're sticking with our metaphorical exercise plan, we've just finished our warm up. Now that we're paying attention to where our money is going, pausing before we swipe, and re-allocating our "fun funds"... it's time to get into some heavier lifting.
We're going to seriously work through this mess we call the economy. We're going to take charge of our financial futures. And we're going to make it fun. After all... excess no longer defines success. As my roommate Suzy said, "Budgeting doesn't mean being poor anymore. It means getting in shape, which means looking good. And who doesn't want to look good?" We're getting fiscally fit. Warm up is over. Time for the real exercise to begin.
Comments
As a fellow college student, I totally understand what you mean. i think your blog is going to be incredibly value to me in future.
Some of us learn from others mistakes...others of us have to learn on our own. But.....better to learn at 21 than much later in life. Some people don't learn until after they have dug themselves such a big hole that it takes years and years to crawl out of it. Great advice....submit it to the CU newspaper...some incoming freshman might learn from you!
Whoops. I actually don't know how to comment because I personally am a great saver. I am generally very thrifty and it pays off in the end. I'm glad that you are fixing this, go you!
This is such valuable advice and insight. It's so great to know that other college students are trying to budget themselves too. It's so easy to think all your friends are just spending without limits and it's great to know that I'm not alone in budgeting myself (finally!) this summer. I think those of us in college having to finally begin to pay bills and keep track of money instead of just having fun money will really benefit from this downturn. We're realizing money isn't endless and we need to make wise choices. Keep up the good work!
step one to getting fiscally fit . . . get rid of the "emergency" credit card and try financing this year on just your debit card! gooood luck.
Thank you for being so open about your story, it makes me feel about about my careless spending. I'm sure that with practice you will improve your spending habits.
Stephanie, Your blog has reached a new level with the disclosure of your financial history. It must have taken a lot of courage to go on record in this way. It's a first step to admit when you've made mistakes and you did it! Your blog has me thinking all the time about my own spending habits and at times they are out of control. As an adult, that can happen when emergencies arise but we have to have reserves to take care of them and that's what leads to debt. I intend to keep working on my own finances and look forward to hearing about your progress.
You have a real cute way with words, Stephanie; I think your style and of course your topic, is really meaningful to young people; who isn't being affected by financial problems?
Keep up the good work!
It takes courage to admit to your financial mistakes. It is better to learn now and have a safety net than when people your age are out in the world and build up thousands of dollars of debt without much to show for it. I wonder how all the parents are coping with having to suffer through their children's learning curve. I guess it is part of being a parent to do with a little less and work a little harder so our kids can make these mistakes now. Rick
Why thank you for referencing me in your refreshing blog stephanie! I had a similar situation where I did not know how to handle credit cards and racked up debt by spending money i didn't have. But at the same time my logic was: if I have 5 credit cards and keep using them then I'll have great credit and get a loan for a house when the time comes. So sure enough I have great credit, but ever since the recession hit, my credit limits have been cut in half, interest rates gone up, and monthly minimum payments high because I was stupid and thought it was a good idea to go on massive shopping sprees in Scotland. Basically credit cards are a thorn in my side and im sure im not alone. hi my name is suzy and i abuse credit cards.
Hi Stephanie
Money 101 is pretty simple. It is called, COMMON SENSE. You cannot spend somthing you don't have. (Tell that to the politicions).
Sounds like collage has already taught you a good life lesson. Good luck.
Cousin Wayne and Vera
Hi Stephanie,
I love your honesty! I was at Starbucks the other day and realized both sizes of the house coffee's are around two dollars.I don't need the sugar, chocolate and whipped cream anyway, and I have to tell you I thought of you. It's almost like we are becoming an online support group. I also am becoming more aware of my spending habits as well as earning potential that could easily be tapped. Like maybe have a garage sale first instead of hauling everything down to Savers. Or maybe hire a local teenager to run my sale for me and give them a commission. But really, it seems just being more aware and reflective in making more prudent choices regarding spending splurges does seem to be helping. The other night instead of going out to dinner after a movie with the family (and dinner would have been a least $70.00) we came home and sat around our outdoor Bar-B-Que fire pit and roasted ham slices and marshmallows and made some ores. The kids had a great time as it started to rain for a few minutes and we sat around the fire under umbrellas. But think about the memories me made, all for just a few dollars! They would not remember going out for Chinese food but will remember sitting under umbrellas roasting ham slices and marshmallows. So acquiring value does not always equate with how much money did it cost. Sometimes being on a budget requires a little more creativity and resourcefulness.Keep me posted when you start the workouts!
Aloha, Teresa
Lots of the best stuff is free. It's free to ride your bike to work instead of taking a car or cab or even public transportation, for example, and you feel better and get stronger. It also feels pretty good to get those paychecks, even from a part-time job. Money is basically stored work and the trick is to make work fun!
This was a rude awakening! But Thank goodness it happened earlier than later! I'm glad you were able to face it and go forward in correcting the situation. I think tha'ts the most important thing. The hardest part is getting started. Good job!
Your finances, health, and happiness are all important and interconnected. I lost the health and happiness chasing after finances. To extend your metaphor, don't become a fitness buff with two worn out knees and stretch marks from muscle bulge.
Finding things you enjoy that don't cost you big money is more important than just trying to cut back spending, I think. I've found that the best things in life are rarely the most expensive ones.
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