The other day, some co-workers were discussing a finance article that one of them had read recently. I didn’t catch the title or the details of the article, but what I did catch was this comment:
“Who do these writers think they are, anyway? They don’t have money problems. They don’t make stupid mistakes and overdraw their accounts. They just give advice when they have no idea what it’s really like.”
My first thought was that from what I understand, journalists aren’t exactly making a whole lot of money. Now, this could have been an article from Warren Buffett or Donald Trump (who you could argue understand money problems, just on a different scale), but I bet the author was just like you and me.
And that got me to thinking. Do personal finance bloggers come off that way? Do I come off that way? I’m definitely not perfect.
Admittedly, I have never overdrawn my bank account, but that’s because I use my credit card for everything (save for rent and a small cash withdrawl every month). And while I do pay off that card every month, I have had to wait for a paycheck to clear before making the payments. Sure, I could just pull from savings in that instance, but that’s not the point of savings.
Have I ever maxed out my credit card? Not recently, thankfully. Given the rates on my credit card, it would take a major medical emergency or some really idiotic spending to get me there. But I did max it out. Once. And I will never do it again. I was in college and had a smallish limit on my card. I went to Europe on a school trip, and had set up an automatic payment so that my balance would be cleared and I could continue to use the card. Of course, the payment failed, which meant I reached my limit and suddenly had no way to pay for things. And since I didn’t have my bank account information with me, I couldn’t initiate a new transfer. So I had to call my father (collect, of course) and have him make the transfer for me. I was humiliated. I was 21 years old, in another country, and had to call my dad to bail me out.
After that experience, I never set up automatic credit card payments. I may have bills automatically hit the card (such as the cable bill), but I always submit the online payments manually. Sure, I could just go automatic and watch for the payment (as I do with bills), but I tried that and found myself obsessing over whether or not the payment went through. Easier to just do it manually.
Do I still make stupid purchases? You bet. I’m better about it than I was, but I definitely still do it. I’m a sucker for a good coupon. I also still battle the urge to make impulse purchases, and I’m terrible about stocking up. Just yesterday morning, I was making a cup of tea at work, looking at the two bags of loose tea in my cabinet and thinking “You know, I could run to the tea shop at lunch and buy more tea.” What do I need more tea for? I have two bags! (Not to mention all the regular teabags in the cabinet.) And the odds are good that by the end of the month, there will be a third bag of loose tea in that cabinet.
I guess what I’m saying is that I’m far from perfect, but I’ve definitely learned a lot from both my mistakes and from the mistakes of others. The key is to make your mistakes few and far between, or just try to keep them small. I have a friend who has a budget envelope called “Whoops.” It’s money for when he’s spent just a bit too much in another budget category or for those impulse purchases he probably shouldn’t have made. I think if I knew I had a Whoops fund, I would be more likely to spend because hey, there’s money for it, but different things work for different people.
Megan is a 40-something government employee in the Washington, DC area. She got interested in Personal Finance when she got out of college and realized that her paycheck wasn’t going to go as far as she had hoped. Since starting this blog, she has managed to buy a house and make a solid start on her retirement goals, and hopes to help others do the same. Here is her story:
In 2007, I was a gainfully employed 20-something with no debt but not a lot of knowledge about personal finance. It was a co-worker’s comment about Roth IRAs that sent me to the internet, searching for information. It was then that I realized that I really didn’t know a whole lot about personal finance and that my current financial situation was due a lot to inherent frugal tendencies, generous family members, a fear of debt, and good luck. While that was working for me, clearly I needed a better plan.
While I had no debt, I was also pretty much living paycheck to paycheck and not worrying about going over budget (I say this as if I had a real budget) because I had an emergency fund set aside to cover any overages.
Except that’s not what an emergency fund is for.
So I did a lot of research, read a lot of blogs, and decided that I needed a plan. I needed to budget. I needed to know what I was spending my money on. I needed to prepare for the future.
I decided to create a blog not only to make myself accountable to others but also to share the knowledge that I gained along the way. I’ve learned so much from my fellow bloggers, and I hope that my readers can find something useful in what I have to share as well.