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HomeSpending & SavingWhy money makes me nervous, and what I’m doing about it

Why money makes me nervous, and what I’m doing about it

I’m going to talk about something no one enjoys talking about: money.

benjamin franklin one hundred dollar bill(Source: US News Article)

One of my resolutions for 2012 was to get a better handle on our personal finances. Since Alex and I have been married, I have always managed our money. About 90% of the time, I’m okay with this role. But the other 10% of the time… I hate it.

I hate it for various reasons, but the main reason is it’s more than just “managing our money.” It’s a lot of responsibility and it can be a lot of pressure.

And that pressure is not good for someone like me who freezes up at nearly every major financial decision we have to make. When large amounts of money are involved, or there are multiple options of what to do with money, I completely blank out and have no idea what the best decision is to make. I’ll share with you one of my most embarassing money blunders to illustrate this:

After coming back from our honeymoon in December 2007, Alex and I had so much fun opening all the wedding presents that had been brought to our apartment after the reception. Among those presents were a lot of monetary gifts, which totaled somewhere in the neighborhood of $10,000. We were so blessed and stunned to have been on the receiving end of such generosity from our family and friends.

I immediately jumped into the role of accountant and money manager and the wedding money was deposited into our checking account. I sat for months on that money, unsure of what to do with it. Do you know what happened to it? Life happened. Over time, we slowly but surely chipped away at it. It went to groceries, gas money, shopping, movies, iTunes – you name it, we probably spent the money on it. And the worst part of this story? We were sitting on credit card and student loan debt that we continued to pay the minimum monthly payments on.

Today, I look back on that and see someone who was completely clueless. I should have put the money towards debt, or in a savings account, a money market account, heck, even a CD would have been a better choice than our checking account. But I didn’t know any better. And while it doesn’t do any good to kick myself in the pants over it, it definitely serves as a wake up call as to how I approach money and on things I should work on when approaching money.

piggy bank with change(Source)

Back in January, I visited the library and picked up several books on personal finance and getting out of debt. It’s shameful for me to admit, but this problem of not knowing how or where to spend money has not only resulted in us having little to no savings but basically the same amount of credit card debt that we had when we first were married. When I take a hard look at our statements for our credit cards, I am still paying for purchases made two years ago. It’s really sad and really embarassing, but it’s where we are right now.

I figure the first step in dealing with how I deal with money is to learn more healthy, productive ways of dealing with money. This is why my number one resolution for 2012 has been to get on top of our finances. And when I say “on top of,” this is what I mean:

  • Be debt free by 2013 – this means all credit card and student loan debt completely gone. I don’t know how realistic it is to declare the student loan debt will be gone (we have more of that than credit cards) but sometimes you’ve just got to dream big.
  • Pay cash for everything – we don’t actually use our credit cards at all so this isn’t about shifting that; it’s about withdrawing or marking a set amount of cash to use each week and sticking to that. I would like to get away from using our debit cards altogether, not because they’re bad but because they can leave you open to spend more than you would since you have access to all of your money at once.
  • Rebuild our savings account – We have less than $1,000 in our savings currently which stinks but, honestly, I’m just thankful we have managed to save anything at all. I would love to see this significantly grow, but I’ll keep the goal modest by aiming for only $8,000 which is what we had at the start of 2010. This goal also encompasses examining other savings options that may be more profitable, such as money markets or short term CDs.
  • Learn what a Roth IRA, 401(k), etc… are and do something with that knowledge – Alex currently contributes to a 401(k) through his workplace but I don’t know what that means. I actually have a Roth IRA but I don’t do anything with it. We have other similar accounts but we have no clue what they are or what they do. I get the statements in the mail and file them away in our financial binder and never give them another glance. This is pretty dumb of us.
It’s not a long list, but if Alex and I meet every goal on that list we will be in a much better place.
So why am I sharing these details? For two reasons:
  • To keep myself accountable – It has really helped to have Project: Food Budget to work on every week in keeping myself accountable for cooking at home and sticking with a food budget. I recently added tracking my coffeehouse spending to PFB posts and in this week alone I can already see a huge difference. Apparently, I work better when I have to check in a lot. So, it only makes sense that by talking about this I’ll begin to make some real changes.
  • To let others know who may be in our same position that you are not alone – There is nothing worse than laying awake at night with your own worries and fears. I really hope that by my talking about this, maybe others will feel encouraged to do the same. It is embarrassing to find yourself in a less-than-ideal financial situation but, honestly, it is not the end of the world. It is not a reflection on you as a person. And it does not mean you are failing at life. It just means there is room for improvement and there is no better time to begin that improvement than right now.
I’ll share my progress with you as Alex and I work through these goals. I don’t have a snappy name for this particular resolution but maybe I’ll come up with one later.
If you’d like to join me in this journey, that’s great! To get started, I am currently reading The Smart Cookies’ Guide to Making More Dough. I actually started to read this book last January, haha! I’m looking forward to actually putting it into practice this time 🙂
Please comment if you have made 2012 resolutions for your financial life, or if you’d like to volunteer to join me in mine. I’d love to hear from you!

 

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