Is saving money a lost art?

Discussion in 'Community' started by jeremy.king, Nov 10, 2004.

  1. jeremy.king macrumors 603

    jeremy.king

    Joined:
    Jul 23, 2002
    Location:
    Fuquay Varina, NC
    #1
    So I have this obsession with always wanting something. I review the classifieds here everyday and check out craigslist occasionally to be reminded of the things I want, and then it dawns on me that I am on a cash only basis (self enforced) for the next 2 years as part of grand debt reduction plan. Of course now if I usually want to buy something I either (a) have to sell something (b) acquire money that I wasn't expecting (Paid mileage or tax refunds, etc) AND get the CFO's approval (which is might hard to do)

    My thought is that until recently I was a terrible saver. If I wanted something, I would just charge it and it kept snowballing on me until I realized I had to change my ways or really pay the consequences. Too often now I am reading posts about people selling their stuff because they "need the money." Granted there are situations that occur that requires us to make money quick (e.g. a very sick cat) and this is usually accomplished by selling something of value...but, I wonder aloud if the real reason people "need the money" is buyer's remorse or too much debt or no savings?

    Has saving money become a lost art? When did we become so frivolous with our hard earned cash? Personally, I was lost when I became of age on how to manage money and how much a good credit history was going to mean to me when I had to make BIG purchases (car, home, powermac ;) ). Like many, I found that all those offers for this card and that card when I was 18 was too much to resist...Almost 10 years later, I know of my mistakes and have a plan in place (for almost one year now) to correct them, but I wonder...how do we teach our youth - and aged for that matter- the importance of money management and more specifically, how to SAVE MONEY and buy things with cash! Is it as simple as public awareness? Do you think that credit card companies should be allowed to issue someone a card with a limit that is greater than their yearly income, as was my case when I was 18? Are they at fault? What kind of money management education did you receive when you were young?

    Just striking up a conversation for those who want to listen.
     
  2. Blue Velvet Moderator emeritus

    Joined:
    Jul 4, 2004
    #2
    One thing that has certainly helped me save is setting up the cheque account so that a certain amount goes straight into savings on payday and at the end of the month, any remaining credit is also 'swept' into the savings account.

    Still paying off my Mac too, so some of these savings are going towards my quad 5ghz G6, the rate things are going... :)
     
  3. *Y* macrumors regular

    Joined:
    Oct 19, 2004
    Location:
    VA
    #3
    In today's society saving up money is one of the hardest things to do, especially with all the products Apple keeps introducing ;). For the majority of people it is not very necessary to buy things with credit when they could have saved up the cash; for others however there is no other option.
     
  4. jxyama macrumors 68040

    jxyama

    Joined:
    Apr 3, 2003
    #4
    i've been very fortunate to not have any college loans or car loans... so ever since around 2nd year in HS, i've been able to save most of what i earn.

    it helped that i went to a grad school in science so that meant while i didn't earn much as an RA, i had my tuition paid for and was earning something every month.

    living like a student (i.e. sharing room/apartments, keeping to modest clothing/dining) even after graduation definitely helps as well.

    there are many things i'd like to have, but i only let myself indulge once in a while, probably once or twice a year. last year, it was my PB and an eMac for my parents. this year, i got a mini and also took a trip abroad...

    gotta keep the plastic in check...

    the other thing is to keep a good spreadsheet of your expense types and overall finances. i have one set up where i can check exactly how much money i have in the bank at any moment and also how much i spent and saved each month. very helpful in controlling your spending habit. you are less likely to spend on extra stuff if you could later recall exactly where those money went. they won't feel like money just dissappeared.
     
  5. emw macrumors G4

    emw

    Joined:
    Aug 2, 2004
    #5
    This is a great post - and is something all of us need to step back and think about. In fact, I was just thinking about it last night. Personally, I have a "forced save" that takes place as an automatic monthly transfer out of my checking account, but it really amounts to a fairly small amount (about 7% of our combined total income), and it seems we need to pull from it more often than I would like for things like property taxes, etc.

    Many of my expenses tend to be home-related (i.e., building a sunroom, adding hardwood floors, etc.), so hopefully I am building equity even while I eliminate my savings. Not a great thing, but better than buying something that immediately loses value.

    So to your question - how do we educate our young/old people on this concept of "saving for a rainy day"? My "money management education" was essentially the "don't buy anything" mantra. My parents were ultimate savers - probably more than they needed to be (and continue to be so), and as a result I tended to be at least somewhat opposite of that.

    I think it is important that we provide a good example, but not one that is extreme in either fashion. Just saying to young people that they need to save and here's why falls on deaf ears - especially on those who are just entering the workforce and are finally at the point that they can buy that new iMac or whatever. We are a society of instant gratification which is propagated by the media and by our credit card and retail friends.

    The only way to really fight back is a little at a time - credit card companies aren't going to stop sending out fliers (I get about 4-5 a day) until they don't get a response from the public. For them, a fraction of a percent response justifies the effort. For my kids, when they're older, they'll probably get something along the lines of a debit card account allowance which they'll need to use for personal purchases. Not sure how it will work, and I've got a few years (my oldest isn't yet 4) to get the details ironed out, but I want them to learn to make decisions. I may even set up some sort of Parent Credit Card or something, if I'm not too lazy...
     
  6. Macmaniac macrumors 68040

    Macmaniac

    #6
    My savings has remained healthy. I started with an account when I was in elementary school, so I have been consistently depositing what I earn for the past 12 years. Hopefully the money I have saved will be enough for an emergency. Right now the only money I spend comes right out of my paycheck so I never go into the red.
     
  7. emw macrumors G4

    emw

    Joined:
    Aug 2, 2004
    #7
    Excellent method! I track everything in Quicken, so all expenses are categorized. How much did I spend eating out this month vs. buying groceries and eating at home? How much did I spend on gas? Etc. I love it, although maintenance can be time-consuming.
     
  8. jxyama macrumors 68040

    jxyama

    Joined:
    Apr 3, 2003
    #8
    also, i second the suggestions made earlier where you set up an account where your earnings are deposited and another account from which you take the money for routine spending.

    i think the best method is to have direct deposit to a saving account (so you can earn, however modest, some interest) and transfer as needed to a checking account.

    ideally, the savings account will grow a bit by bit every month. and once you are on a good stable saving plan, you can move a sizable chunk to a CD or mutual funds for longer term savings every few months/years.

    also, i really think it's beneficial to educate kids about the compound interest and the importance of saving consistently, however small. it's in the attitude, i think.
     
  9. stubeeef macrumors 68030

    stubeeef

    Joined:
    Aug 10, 2004
    #9
    great thread!

    I have found that those in debt are basically lying to themselves, no one else, just themselves. They tell themselves that this will be the last one, that they will buckle down tomorrow, etc.... Just like an addiction it continues untill there is an awakining.

    I've been in huge debt 3 times, all three for a reason, with a plan and have gotten the desired result 2 times and am in debt redux mode for the 3rd time now. YOUR CREDIT IS WORTH MORE THAN ANYTHING YOU OWN.

    This last debt rackup was to keep my wife at home the last 7 years to raise our kids, the youngest one started Kindergarten this fall and mom went back to work at the same school as the music teacher. 110% of her paycheck goes to the cards. Yes the credit cards! Why credit cards? because I keep outstanding credit I get 10-20 zero interest transfer offers a week. I have rolled that debt over for the last 4 years on the one after the other and pay little to now interest! Why is that important? Because on nearly 30grand at 10% is $3,000 per year, over 4 years....nearly $12,000 I've saved my self. But it takes discipline! and never, never, never lie to yourself about where you are and what you are doing. The fact is that it is your problem and no one else really cares, so if you lie to yourself about it, then no one will care.

    If cash only works...DO IT. Like jxyama I keep a budget (there is a great one in the old appleworks) and check it EVERY MONTH!

    If you need help get it. But save for yourself every month first. My check is carved multiple ways the day I get it, what ever is left is for me.

    Don't fall into the "keep up with the jones" crap. Most of the people that do can't afford it either. I live in a neighborhood full of wealthy people that do make a lot of money, not me, and I drive an '89 honda crx hf with 260,000 miles on it. It may seem xcentric, but I have 3 children to build a future for, not neighbors to impress.

    I have wanted an ipod for along time, due to the virture of waiting, by the time I get one it will be 1 terabite, 2 ozs, wireless networked, with things that we haven't dreamed of yet on it. That will be this summer.

    KEEP UP THE SAVINGS PLAN, YOU ARE AMONG THE TOP 10% OF AMERICANS TODAY. AND THANKYOU FOR BEING RESPONSIBLE ENOUGH THAT I DON'T HAVE TO BE TAXED MORE TO BALE YOU OUT. :p
     
  10. wdlove macrumors P6

    wdlove

    Joined:
    Oct 20, 2002
    #10
    I also use Quicken to track everything. Sadly I'm like other Baby Boomer, the need for instant gratification. Through prayer I try to overcome to the best of my ability. I do have a Savings Account that I add to monthly. The majority is for future spending. My wife likes to spend money, so it causes friction. Our society is on of spending. The tax system penalizes those that save, you are taxed on income and then taxed on the interest. :( :eek:
     
  11. stubeeef macrumors 68030

    stubeeef

    Joined:
    Aug 10, 2004
    #11
    wdlove, use the tax system to your advantage, 401k, ira, roth.....

    buy a rent house, take the deductions, pay it off in 15 years and rake the rent every month after.

    You can do it, you can do it, you can.....
     
  12. saabmp3 macrumors 6502a

    Joined:
    Jul 22, 2002
    Location:
    Tacoma, WA
    #12
    I'm a college student, on a paid internship program, but I have always had very good spending habits. I do have a car loan, but currently have enough cash in the bank to pay it back ASAP if need be. I use credit cards, but pay them off monthly (which reminds me, AMEX is due soon). I live in an apartment that costs about a third of what I can really afford with my current job and try to turn the heat down and keep the lights off as much as possible.

    Alot of people I know complain cause I have lots of good stuff with basically no real debt. Good choices in even the smallest of things can add up pretty quick. With my good sense, I do indulge on occasion (computers, car, iPod, big screen TV, stereo's, furniture, cooking utensils). I've found that if you buy the best it cost less in the end. Just don't go out and buy frivolous things.

    BEN
     
  13. Hoef macrumors 6502a

    Hoef

    Joined:
    Jul 11, 2004
    Location:
    Houston, TX..... (keep walking)
    #13
    Funny that most money related threads attract "rich dad poor dad" real estate advice. Could the next real estate guru be a little more specific with concrete examples please ... Tx!

    Good topic though!
     
  14. stubeeef macrumors 68030

    stubeeef

    Joined:
    Aug 10, 2004
    #14
    I have one house paid off. No scheme, just slow money at work.
    put 10% down and get the best rate you can on a 30 year loan. Then pay extra each month like it was a 15 or 12 year loan. But the house goes up in value and the loan is reduced so the difference is what is yours.
    Call the house a savings account. Wouldn't you want someone putting in 500-1000 $ a month in your savings account?
    The problem is that it is like an annuity. You cant go spend your equity in it and still have the account. You MUST be both patient and disiplined. Once the loan is paid for the money is all yours (minus repairs, taxes, and insurance).
     
  15. atszyman macrumors 68020

    atszyman

    Joined:
    Sep 16, 2003
    Location:
    The Dallas 'burbs
    #15
    1. Definitely keep track of your spending in a spreadsheet or Quicken. It really helps when you can see your credit card bill go up with every purchase and have an idea of what the balance is at any given time.

    2. Never make a purchase that you could not pay for if the bill were to come due tomorrow, except for house and possibly car.

    3. For existing debt figure out a minimum payment that you will make every month no matter what and factor that into your budget. If you have a month you can pay more, do it.

    4. Not all credit cards are bad. My wife and I play the zero percent interest game at least once a year. My Powerbook and our nursery were financed via a Discover deal that gives us zero percent for the lifetime of the balance transfer as long as we use the card 2 x a month (no minimum, I could charge 2 different $.50 trips to the grocery store for the requirement). Of course we also live by rule 2.

    5. Open a bank account or an investment account that is not tied to your normal checking/savings accounts and have part of your paycheck direct deposited there or at least have a monthly withdrawal from your normal account. Since it is not tied in with the normal checking/savings it will begin to slip your mind and grow with the deposits/interest.

    6. I have taken to placing every check we receive that is not a paycheck into savings. Birthday checks, anytime we run to a store for friends/family and get paid by check. For gift checks we spend the equivalent out of checking and put the check into savings. Our checking account pays a slight price for this but our savings keeps growing.

    7. Max out 401k or simple IRA plans. You will see deposits bigger than what your paycheck shrinks by which is nice.

    That's about all I can think of right now.
     
  16. stubeeef macrumors 68030

    stubeeef

    Joined:
    Aug 10, 2004
    #16
    Since a lot of people get their pay raise in January, do what I do, put the entire amount to the mortgage ( or what ever) I lived without it all year, why can't I next year too!
     
  17. PlaceofDis macrumors Core

    Joined:
    Jan 6, 2004
    #17
    im horrible, i know it, but im trying my best to turn things around as quickly as i can, and i know that this point is a good time for me to do so because of the relationship i just ended not that long ago, helps me get a new perspective and a new start

    i dont have quicken, but does anyone have any help on how i can set up a spreadsheet for myself? i dont use excel all that much, more of a word guru and powerpoint/keynote user

    how is quickbooks, i think that came with my powerbook....
     
  18. stubeeef macrumors 68030

    stubeeef

    Joined:
    Aug 10, 2004
    #18
    there used to be a good template in appleworks for a budget, do you have that?
    Get some graph paper and a pencil!
    I applaud your determination, now SET A GOAL! without it you can easily stray.
    You can do this faster than you think. You will see that you are only limited by your own choices.
     
  19. PlaceofDis macrumors Core

    Joined:
    Jan 6, 2004
    #19
    thank you for your positive encouragement, it helps, and my goals are go get debt free as soon as possible, ie finish paying my parents for the computer and get down to a zero balance on my cc

    i dont have appleworks, just office, i dont need anything fancy, i only have one cc, one checking account, and bills to pay

    how hard is quickbooks to learn? i suppose i could always go that route
     
  20. stubeeef macrumors 68030

    stubeeef

    Joined:
    Aug 10, 2004
    #20
    Go into office, then in the left window of the project gallery under groups choose home essentials, then home budget, it might work for ya. Good luck.
     
  21. PlaceofDis macrumors Core

    Joined:
    Jan 6, 2004
    #21
    ill have to give that a try tomorrow night, if not ill be working on my own spreadsheet, im sure ill be able to figure it out, but yeah, saving is hard when you have such a low paying job too, and hours that change each week, some consistency would help, but not much i can do about that right now
     
  22. 18thTomorrow macrumors 6502

    Joined:
    Apr 5, 2004
    Location:
    The Alpha Quadrant
    #22
    I think one of the keys to good savings/spending habits is starting early. From the time I first started getting an allowance at age 8, ($1/week until I started babysitting around age 13 and didn't need it anymore...) I was encouraged to save my money. First it was for small stuff like Barbie dolls, gradually the stuff I saved for got bigger and bigger. But it taught me two great lessons--
    1) If it's worth having, it's worth working for
    2) The art of saving with a goal in mind

    Until I started college this year I paid for everything strictly in cash. I believe that helped me live frugally--it's a lot harder to break a twenty than it is to hand over the plastic for those "little" purchases--and really know where my money was going. I worked 20 hrs/week (babysitting, doing web design, and teaching violin lessons) all through high school and when I graduated this year had several thousand dollars in the bank from my frugal spending habits.

    I am SO GLAD and thankful for the habits my parents instilled in me as a young'un. While my hoard is currently dwindling, it allowed me to get a good start in life. I was able to purchase an iBook for college (I can't imagine life without it), attend school this whole year debt-free (with help from academic scholarships and living in my parents' basement) and just three weeks ago I bought the car of my dreams--a 1998 VW Beetle.
     
  23. jeremy.king thread starter macrumors 603

    jeremy.king

    Joined:
    Jul 23, 2002
    Location:
    Fuquay Varina, NC
    #23
    You can get a credit card in high school? I know some students are 18, but usually this is a small percentage.

    Anyways, thanks for the compliments, and I am curious what others think. Not so much about how great or bad you are at saving, but rather how can we collectively change our habits and influence others to not abuse credit.

    Keep em coming, I love great conversation.
     
  24. Mechcozmo macrumors 603

    Mechcozmo

    Joined:
    Jul 17, 2004
    #24
    I worked by converting VHS tapes to DVDs. I also saved birthday money. I saved for 2+ years and now I am typing this on my 12" PowerBook.

    I hope I am well prepared when I graduate (2 more years!) and I will definitely save this thread for reference. Thanks all of ya!
     
  25. AmigoMac macrumors 68020

    AmigoMac

    Joined:
    Aug 5, 2003
    Location:
    l'Allemagne
    #25
    Saving money is pretty difficult, nowadays, society pushes you and pulls your money really easy, the main thing is stopping once in a while to think what you want and what you need, I try to do it (See guilty pleasure thread ;) ) there are some people who started a live having some big help from someone (Normally parents) but other just start from 0, Null, Nada and that makes things in both cases difficult,
    -one may not know what hard work is and think everything comes from the easy way.

    -one has worked hard but need to set up a life and some wishes (Huge investment)

    but if one has started a life and saved from the beginning, some pleasures on the middle of the road are not that hard.

    But, what do I know? I used to work for my self since I was 13-14 and with 19 I left home, just took my clothes and got married, and now it's still difficult since we had been traveling and moving around since then.
     

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