Wednesday, April 19, 2006

Money: it's a gas

"Most don't know enough about money" ran the headline in last night's paper.

More and more articles, I've noticed, have focused on people's inability to save - and how they are falling deeper into debt. The national savings rate has been in the red for months now.

And hey, with so many credit card and home equity options out there, not to mention an insane consumer-driven market, it's no wonder more and more people are going in to debt.

More than 2 million people. That's how many bankruptcies last year.

The tips for saving, I've been reading, include putting just a little bit away out of each paycheck, keeping a budget, tracking where your money goes, and paying off the bigger credit card debts as soon as possible. Also, avoiding those little Starbucks trips every day can save quite a bit over time (I always think about smokers when this tip crops up).

Also, with the instability of Social Security, the alarm has been sounded about retirement savings - especially with our generation.

I like to think of myself as a savings success story. I remember college, and how much I used my Associates Student Visa card. I paid tuition with student loans. I worked, sure, but it wasn't enough. I survived on debt.

And now most of that debt is with me today. But the difference is now I have money in the bank (sorry - credit union).

Out of each weekly paycheck, I send $100 into my savings, $10 into a Christmas Club (greatest invention ever) and $10 into a Vacation Club, with an extra $25 going into a second savings account that helps me pay off my credit cards.

I also deposit into my 401(k) every week. In fact, I switched to a no-payment health insurance plan and put the money I saved into my retirement account.

I'm lucky. No one really taught me how to do this - it just seemed to make sense to me. I remember feeling so insecure financially in school that I resolved never to feel that way again. And it's worked.

Lately, though, it's come into even sharper focus. I've started to use the Quicken software on my iMac to track my ins and outs. At the end of each month, it gives me two charts: income (yellow) and outgoing (blue). Basically, am I making more money than I'm spending? In the three months that I've tracked, two of the yellow graph bars are bigger than the blue one. So I'm two-and-one since January.

It's taught me to think about purchases before I enter that PIN number, or click "checkout" on a web site. Do I really need this? Can I live without it?

It used to be I could never say no. I felt like I was fueling the retail economy on my own, thanks to my credit card. I think Driver told me I was "a great consumer."

Now my credit cards are in hiding, and only come out when I need to make a giant purchase (my iBook, say) or fix my car. That feels good.

No, that feels better. It's the security I'm after, and in some ways I've achieved it.

I don't know about advice. I still have relapse moments. I usually don't spend any money during the week, but then blow a bunch on weekends (bars, trips, friends, etc.). And - in the middle of all this - I'm taking a huge trip in May that will virtually wipe out my savings.

Sometimes, though, I like to treat myself. I think I've earned it.

I've found that saving even just a bit each week adds up pretty quickly. Save $25 a week, and that equals about $100 a month, which equals about $1,200 a year. You save $1,200 a year and you'll be sitting pretty good. Better than the national average, certainly.

Money - it's a gas. But I'm learning how to keep it all from blowing away.

Now off to eBay...

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