Day#19: Quit an expensive habit.

This is Day #19 of “25 Days to Healthier Finances”, a series of blog posts where Frugal Pinoy readers and myself work on 1 task a day to make our financial lives better. Please stay tuned for the next installment of this series, which will be up tomorrow. Here’s today’s installment:

Today’s Task: Quit an expensive habit.

We all have habits. Some of them are healthy while others can be destructive if we do them mindlessly. The truth is that some habits have negative consequences on our finances. While we can live with most of these consequences, there are some cases where we can’t afford them. Here are some examples:

• That (almost) daily morning coffee.
• Smoking.
• Going shopping as therapy.
• Sending forwarded text messages to your entire contact list multiple times a day.
• Dining out with family or friends during payday.
• Buying lunch from fast food chains rather than bringing your own lunch.

But how do you quit a habit? The first thing you should try is to figure out how much it’s costing you. How much do you spend on that habit per week? Per month? Per year?

After doing the math, find out if your income allows for this kind of expense. For example, when I was still a student, I noticed that I bought bottled water and other drinks each day during lunch. This cost me P30 per day, and since I was usually at school 6 times a week, this seemingly minor daily expense cost me at least P700/month. At that time I was probably earning only P9,000/month since I was just starting out as a freelance writer. I was also the breadwinner, which meant that the P700/month was more than I could afford for something as simple as water. Realizing this, I just brought my own bottle to school every day and refilled it at the water fountain.

If your expensive habit is something you can’t give up completely, then consider simply cutting back. Instead of the daily cup of coffee, why not reduce it to three times a week? Even this simple change can give you a lot of “extra” money which you can funnel into your savings, emergency fund, or an item that matters more to you.

What expensive habits do you have? Can you afford to have them?

Image by vivekchugh from sxc.hu

Day#17: Know the things you don’t care to spend on.

This is Day #17 of “25 Days to Healthier Finances”, a series of blog posts where Frugal Pinoy readers and myself work on 1 task a day to make our financial lives better. Please stay tuned for the next installment of this series, which will be up tomorrow. Here’s today’s installment:

When it comes to time and money, we usually focus on the things we have to do. Paying the bills, finishing up that report, cleaning the house. While these things are important, we should be equally mindful of the things we shouldn’t do.

Today’s Task: Know the things that you don’t care to spend on.

It’s simple. Just jot down the expenses that really don’t matter to you. Here’s a short list of some things that don’t matter to me:

• Dining out
• Watching most films in the cinema
• Clothes and accessories (as a side effect of rarely going out)
• Cable TV
  

Things that matter to me:

• Books
• Good quality of food
• Maintaining a solid but beautiful house
• Hobbies such as woodworking and gardening

What does this mean? By making the list of the things that don’t matter to you, you’ll know what expense traps to avoid. For example, why would I spend P500 to try out a new restaurant when I can use that money to buy high-quality ingredients for a home cooked meal? Or, why would I spend P200 to watch a movie in a mall dahil wala lang akong magawa, when I can usually buy 5 books with that at my favorite used books store? It’s like building a list of “not-priorities”.

You can also do this exercise for a major purchase so that you won’t be distracted. When buying a new car, this may be your list of not-priorities:

• Color
• Exterior design
• Quality of speakers

By making this list before you look at cars to buy, you won’t be distracted by the bells and whistles that don’t matter to you. You won’t go “Shit, panget pala gas mileage nito, nadistract ako sa sleek, chromed-up design.” Conversely, if the exterior design matters to you the most, you won’t be distracted by sales pitches about payment terms or storage space.

When we have limited resources, we need to know the things we can “sacrifice”, and the things we don’t care about should be the first to go. That way, we know that we’re left with the things that matter.

Image by doctor-a from sxc.hu

Day#15: Carry only one credit card in your wallet.

This is Day #15 of “25 Days to Healthier Finances”, a series of blog posts where Frugal Pinoy readers and myself work on 1 task a day to make our financial lives better. Please stay tuned for the next installment of this series, which will be up tomorrow. Here’s today’s installment:

Impulsive spending is one of the more common reasons why some can’t seem to take hold of their finances. I only have to look at the blogs and Facebook/Twitter updates of my peers to see how impulsive spending is a common problem, especially among young people:

“Sweldo na naman! Kaso maauubos ko lang pambayad credit card “

“Hirap magtipid! Hirap magipon! Dapat di nauso yang credit card na yan e!”

If these sentiments sound familiar to you, read on. If you’re one of those people without credit card debt, then congratulations! You don’t have to worry about this:

Today’s Task: Carry only one credit card in your wallet.

But it’s even better if you don’t carry one at all.

So that’s it, remove all your excess credit cards from your wallet and hide them under a drawer. Or cut them up. It all depends on how deep in debt you are and how desperate you are to get out of it. Don’t just do this for today, do it for as long as you can.

Here’s a bonus task: on your credit card, stick a post-it note that reminds you to use your card less. It could be any of the following:

• A reminder of what you’re saving up for, whether it’s a house, car, or even a “want” such as a gadget or a trip.
• A motivational quote that will discourage your from using your card impulsively. Some examples:
  • “Too many people spend money they haven’t earned, to buy things they don’t want, to impress people they don’t like.” – Will Smith
  • “Every time you spend on a short term want, you lose part of a long term dream.” (I can’t remember where I got this.)
• Or just the word “Don’t” or “No!”.

This task may sound too simple or even cheesy, but if you find that it works for you, then it’s worth it. Personally, I don’t have a credit card - but I know myself well enough to predict that if I had one, I wouldn’t be as financially stable as I am today.

Image by LotusHead from sxc.hu

Next Page »