Coffee heat rising

Budgeting

Making Cash Look Better and Better

by

Way back in last August, I came across a story at CBS Marketwatch predicting the End of the World for Debit Cards. I’ve never used them, myself — to my mind the debit card simply has too many disadvantages. Not only do they present the potential for surprising little fees, but they make it way too easy to blunder into an overdraft. Plus anyone who steals the thing can drain your account to nil and, if you have overdraft “protection,” sink you into debt.

So it was with some interest that I noted my son has quit using his. He always used to pay everything with cash or a debit card, but recently he’s taken to charging everything on a credit card and then paying the balance in full at the end of the month. (The apple doesn’t fall far from the tree, does it? :-D)

Between that habit and the invariably on-time mortgage payments, he had such a staggeringly stellar credit rating that he easily wangled a 0% loan on the car he purchased a month or so ago.

Personally, I’ve started paying for more things with cash dollars — only because I would like not to be paying for this month’s purchases with next month’s income. The end-date for the AMEX billing cycle, which appears to be set in stone, falls on the 20th of the month. Thus it’s always out of synch with my monthly budget, which annoys me no end. So these days I charge purchases made between the first and the 20th and then use a small cash budget to cover expenses that occur in the last ten days of the calendar month.

Debit card? Yeah: I use it to extract said cash from an ATM. But I can’t even imagine using it to make purchases.

So how was Marketwatch’s prediction, from your point of view? Are you using your debit card less?

ha-HAAA! Bank Account Simpification Accomplished!

by

The MAD BUDGETEER has done made budgeting and bill paying one whole lot easier. The bookkeeping simplification I first proposed in a scheme to synch credit-card charge cycles with real-world monthly income cycles worked — I’ve now learned that it’s possible and not at all difficult to use my beloved American Express charge card, with its generous kickbacks and its near universal acceptance, between the first of the month (when my actual budget cycle begins) and the 20th (when American Express’s billing cycle ends and a new cycle begins), and then cover the remaining ten or eleven days with cash dollars.

We have established, in response to commenters’ queries, that for reasons that make no sense to real-world humans, American Express will not change its billing cycle on my credit card to match my personal income-dictated budgeting cycle, which runs from the first to the thirty-first. AMEX’s billing cycle runs from the twenty-first to the twentieth. This means that charges made between about the twentieth of a given month and the first of the following month actually amount to loans against the presumed income of the following month.

And between  you and me, with the Congress we have in office just now, I presume nothing, certainly not where Social Security and investment drawdowns are concerned. I do not want to borrow against next month’s income to pay this month’s costs. Ergo: the strategy of using cash during the ten-day period when AMEX suggests that I take on exactly that kind of loan.

To my mild surprise, it worked. Last month, instead of an $1100 AMEX bill (the amount budgeted for discretionary spending), I ended up with a $950 bill, having paid the difference with pieces of paper dyed green and marked in various symbolic denominations. Paying with a finite amount of cash, surprisingly (considering my profligate habits), worked to limit the amount of spending that happened during that last ten days of the month.

Very nice.

Somewhere in the sporadic discussion of the proposed simplification of my exotic bookkeeping and budgeting habits, Frugal Scholar wondered why I don’t lump all the little “cookie-jar” bank accounts — the one holding money to pay property taxes, car insurance, homeowner’s insurance, Medicare D insurance, and Medigap insurance; the one holding emergency & diddle-it-away savings; the one to pay month-to-month nondiscretionary and routine discretionary costs — into one single no-nonsense account and just stop worrying about whether there was enough, at any given time, to pay the bills. After all, if one ran into the red, one could always pull some more leaves off the money tree over at Fidelity.

Well, thought I: Well, but…but…but?

But why not?

The cookie-jar approach worked well when I had a job and a healthy income was flowing in. Given that healthy income, I inclined to spend pretty much at will. If I really wanted something, what the hell? I’d just buy it! But to be sure enough money was stashed to cover taxes and other crucial bills, I set up an account at the credit union to hold monthly set-asides that would accumulate, over 12 months, enough to pay the property tax, the car tax, the homeowner’s insurance, and the car insurance, all pretty hefty bills. Each month $445 went into that account. To cover surprise bills and whims I couldn’t live without, I opened a second savings account, which collected $200 a month.

Because I didn’t overspend often, at any given time the diddle-it-away short-term emergency account held $1500 to $2500.

Knowing nothing better at the time I was laid off my job, my solution to the need to cover all the regular bills plus Medigap plus Medicare Part D and to disburse income from coming from not one, not two, not three, but four sources was to open yet another account. Of course! A “pool” account to hold all incoming and from which to disburse monthly allowances for living and annual, semiannual, or quarterly bill-paying.

Now we had…what? checking (1), “pool” (2), tax & insurance (3), emergency savings (4)…yes! FOUR FREAKING BANK ACCOUNTS TO KEEP TRACK OF AND RECONCILE! Plus the monthly American Express bill and the monthly Mastercard bill. And of course the accounts for the S-corp. And the Fidelity statements for the regular IRA and the Roth IRA and the brokerage account and the Vanguard funds. And the statements from Northwestern Mutual for….

To coin a phrase: argh.

The credit-card cycle now adjusted to fit my whim, I finally had time to consider this other craziness. It struck me that, where the credit union is concerned, all that’s really needed is a checking account to hold all incoming cash, from which to disgorge money to pay routine bills, and a savings account to hold funds for small emergencies and indulgences.

So. Today the deed was done.

Because I couldn’t figure out how to actually close close an account at the credit union online, and because one of the four freaking bank accounts was a money market account (effort to maximize “dividends”) — which would incur penalties if its balance dropped below a certain threshold — I took the time to drive to the CU and get an employee to help consolidate accounts and close The Deceased.

Good thing, too: A savings account I thought was the main, root account for the credit union membership was really something else, and the savings account I wanted to close was the actual, real root account. Had I tried to do this on my own, I would’ve made another fine mess of things! Even with the CU’s rep riding herd, moving non-emergency funds into a single account while keeping the emergency finds intact turned into a production.

Naturally.

🙄

Lest you think I’m unique in my craziness, the credit union’s teller remarked that a lot of people set up cookie-jar accounts with names like “tax savings” and “emergency savings” and “new car savings” and “pay off loan.” She said some people have a half-dozen such pokes. Here I thought I’d come up with something original…. 🙂

At any rate, the originality or whatever it was is now gone, and as of today I’ve got two, count-’em, (2) accounts: one to hold all incoming funds and disburse money to pay bills, and one to accrue funds to cover unexpected and short-term emergency expenses. The bottom line in the first account becomes irrelevant, at least until it approaches zero: month-to-month budgets will be tracked exclusively in Excel, with little concern to what’s in the bank.

That’s because what will go into the bank on January 1 will be drawdowns from Fidelity and the S-corp sufficient to cover, when supplemented by Social Security, all routine bills for 2014. Teaching income will also go into that account. In lieu of the $200-a-month stash for extraordinary expenses, that $2400 per annum will stay at Fidelity, and the teaching income — which averages out to $320/month when prorated over a full year — will substitute. This actually gives me about $120 a month more in extra spending money than I have now, while reducing drawdowns from retirement savings.

So. Life is simpler. And life is better. Money-wise, that is.

Shifting the Credit-Card Cycle: An Unexpected Outcome

by

You may recall that along about the first of this month, I came up with the wacky-sounding idea of artificially forcing my American Express billing cycle, which runs from the 21st to the 20th, to coincide with my real-life monthly budget cycle, which runs from the 1st to the 31st. To accomplish this, I used savings to pay off the credit-card charges made during the last ten days of August and reset my personal charge-card budget to begin on the 1st of each month and end on the 20th, resolving to use cash to cover discretionary costs for the last ten days of the month.

This would insure that I never buy things with money that’s not already in the bank account. It would allow the same monthly amount for discretionary spending — $1100 — but simply reduce the portion of that amount allocated to put on the charge card. Instead of putting $1100 on the charge card each month, I would put $745 on the card and pay for the remaining grocery and other discretionary bills with $355 in cash. Or less, depending on how much remained in the budget when I got to the last day of the credit-card cycle.

Well, here we are at the 21st. How did the scheme work?

It actually seems to have packed a little surprise.

Wouldn’tcha know it, this month brought two big, unplanned expenses: the pool’s backwash valve handle snapped off — $192 to fix that damn thing — and I bought a new back-saving chair for the TV room, one whose design will force me to sit up straight and not fall asleep in it. The chair cost $600.

I’d figured to pay for the chair out of savings. The two hundred bucks for the pool repair, though, had to come out of the grocery budget, since savings has been raped once too often of late. Yesterday, finding the cupboard running toward bare and the piles of paper on the desk nearly touching the ceiling, I went through all the receipts and bills and entered them in the spreadsheets. Unless I’ve made a mistake (always a possibility), something weird has happened:

When all is said and done, if I can keep purchases over the next nine days down to $180, I should only have to raid about $150 out of savings to pay for everything, including the chair and the pool repair.

There’s enough money in the checking account to cover almost all those expenses, assuming I don’t go berserk in the next week & a half.

How to explain this? Normally outgo matches income each month, right to the penny. But this month, I come up with almost $640 in wriggle room. And yes, that is after projected expenses right up to the 30th.

Could changing the amount budgeted to spend on credit cards make that much difference?

That doesn’t seem to make sense. Thirty days is the same as thirty days, no matter what period the thirty days spans.

I spent about $110 less in Costco this month than over the previous 31-day cycle. Although that doesn’t account for a $640 windfall, it’s an interesting development.

On average, I spend $295 a month at Costco. That covers food, household supplies, personal items, clothing, wine, the annual purchase of chlorine tablets for the pool, and the occasional small appliance. In July/August, I spent $318 there; between August 21 and today, $207.

It occurs to me that shopping at Costco may run up monthly expenses, even though in theory buying in bulk should keep costs down over time. And that’s bizarre: not having to run to the grocery store every time you turn around to buy toilet paper, detergent, and paper towels at inflated prices should save money, not jack up costs.

WTF?

I think the problem may be that Costco is Impulse Buy Central. And it’s that way because of a specific merchandising strategy:

You know that anything you see in that place is likely to be gone the next time you visit. Even things they seem to carry as staples — those wonderful camis, for example, and the incredible Borghese mineral make-up — eventually disappear from the shelves. So if you spot something that you think you’re going to want sometime in the near future, you buy it now, even though you don’t need it now.

You buy things you don’t need immediately because you suspect that in two weeks or so, when you’ll be back, the store will no longer have it.

When you think about that, it’s a brilliant piece of marketing, eh?

Since the start of this budget rejiggering scheme (August 21), I’ve shopped in Costco three times. But between the first and today, I spent only $85 there, hoping to preserve as much cash as possible to cover the last, charge-free ten days of the month. That’s because I’ve restricted purchases to only those things I can’t find anywhere else. Otherwise, I shopped in grocery stores.

Not even Whole Foods has the vast array of impulse-buy temptations presented by Costco. Instead of buying for future needs and grabbing that pair of red Gloria Vanderbilt jeans and snatching the cool little highly portable handy-dandy shop vac, I’ve been buying only what I actually need at any given moment. Even if that costs more than buying staples and household goods in bulk, I spent fewer dollars because when I’m not exposed to things that I don’t really need right now, I don’t buy them.

It still doesn’t account for a $640 windfall — there must have been more money in the account at the end of last month than I realized. However…it’s telling.

I’m thinking that a great deal of money could be saved, month-to-month, simply by staying out of Costco. The store does carry some things I can’t find easily anywhere else, certainly not for the price:

• tomatoes with flavor (those Campari-brand tomatoes actually taste like tomatoes, and they cost a lot less at Costco than cocktail tomatoes at other stores; their flavor is better, too)
• Glorias (jeans that fit grown women)
• chicken and pork for the dog
• dog veggies (frozen vegetable mix with no corn, onions, or artificial flavorings)
• chlorine tablets (vast savings!)
• toilet paper in lifetime supplies
• paper towels in lifetime supplies
• walnuts, pecans, and pine nuts
• cheap wine
• hard liquor in lifetime supplies

Really…that’s not very much stuff.

Maybe buying everything else in smaller quantities at other stores would push monthly costs down, even if the amount paid for certain things (meat and fresh produce, for example) would be higher.

Geez. If I could recover even $200 or $300 a month out of the budget — to say nothing of $640! — my life would be so much better! I could actually DO some things, rather than just getting by from day to day. Imagine being able to afford to go to shows, buy some decent clothes (new, not second-hand!), and go out to a restaurant without feeling guilty. Maybe afford the gas to drive up to Prescott or over to Bisbee now and again.

Imagine that.

What I Most Don’t Like about Credit Cards: Betting on the Come

by

Craps_table_layoutWhen it comes to finances, I have two exceptionally bad habits. One is to overcomplicate things (which you surely have observed if you’ve been around this blog any length of time). And the other is to just let things go if the status quo sort of works. In the credit card department, there’s something I’ve been letting go for years, a status quo that I’ve always disliked, that I managed to break free of once about 20 years ago (the first time I figured to be camping under the Seventh Avenue Overpass), and that I allowed back into my life after I got a job with a steady salary.

To wit: If a credit card’s billing cycle doesn’t happen to coincide with your budget cycle (which it never does), then at least a portion of each month’s charges amounts to a loan against next month’s income. In effect, every time you charge something during a certain part of the billing cycle, you’re betting on the come: that the income you expect actually will materialize.

And you know…that’s not necessarily a sure thing. Even when you pay off your credit-card bill every month, this hiatus puts you at some risk of one day not being able to do so.

All the time I was working for the Great Desert University, I thought betting on the come pretty much was a sure thing. Even when a layoff loomed, the university owed me so much money that I had little concern about making the transition from paychecks to (too-goddamn-early) Social Security. So I didn’t do anything about the fact that the credit-card billing cycle ran from the 21st of any given month to the 20th of the following month, while, because of the way Social Security and adjunct teaching income were paid, my actual budget ran from the first of a month to the last day of said month.

As a consequence, everything that is charged from, for example, August 21 to August 31st is paid with September income — because the August-September credit-card bill shows up along about the end of September.

While it’s not untenable — it’s been working fine ever since I was canned at the end of 2009 — still, it makes me itch.

Because, being the wacko paranoid that I am, between you and me and the lamppost I don’t think there’s any guarantee that those Social Security payments, which cover all my discretionary budget, are a sure thing.

Come the end of Obama’s second term — which before you know it will be upon us — the crazy Tea-Baggers will go all-out to get more of their avatars voted into office. Even if they fail to get one of their colleagues into the White House, they very well could win enough seats in Congress to tie up the business of government even worse than they already have done. Which is quite enough, thank you.

As we’ve seen, this set feels no compunction about shutting down the federal government to get its way. Matter of fact, shutting down the government is, according to their utterances, what some of them covet. That veterans, seniors, retired government workers, disabled people, the unemployed, and the poor depend on benefits emanating from said government is of little or no concern to them.

So even though I don’t expect my Social Security check not to show up, neither do I think that eventuality is impossible. And that is what makes me itch every time I charge something on the AMEX card between the 21st of a month and the 1st of the next month.

I’ve asked American Express if we could please adjust the billing cycle so it runs from the first to the thirty-first. No way, said their CSR. So I resigned myself to the disjunct and each month have been paying 10 days worth of expenses out of the following month’s income. Even though I hate that.

This policy is probably deliberate. Think about it: a credit-card billing cycle that opens a few days before the start of a normal month-to-month household budget cycle predisposes customers to disconnect from their budgets, leading them to spend more than they can afford. Et voilà: interest payments. Highly profitable for the credit-card issuer.

Recently, while contemplating a scheme to use cash to avoid small, junk credit-card charges, it occurred to me that I could kill off the disjunct annoyance…simply by using cash only between the 21st of a given month and the first of the following month. In other words, discretionary costs would be charged on AMEX if they occur between the first and the 21st. But those that occur during the ten days that AMEX wants me to bet on the come (from the 21st or 22nd to the last day of the month) would be paid for in cash.

Thus I would never borrow against next month’s income to pay this month’s bills.

I like it.

The goal: Stop borrowing against next month’s income for the last 10 days of this month’s purchases.

Advantages

• No more betting on the come against next month’s income.
• Whatever day the new billing cycle occurs no longer matters! (American Express vacillates unpredictably between closing its billing cycle on the 20th or the 21st. By the 20th, I’m typically out of food and need to go to Costco or at least a grocery store. Indeed, last month I assumed the new cycle would begin on the 21st and had planned a full day of errands spanning the Valley from Scottsdale to the near Westside. Luckily, moments before flying out of the house, I called and was informed by a CSR that the July/August cycle ended at 11:30 p.m. that night! In-flicking-FURIATING.)
• Chances of overspending are reduced to almost nil.

Disadvantages

• The estimate of discretionary spending in the last 10 days of the month will have to be accurate.
• The AMEX budget will have to be much smaller.
• Records of AMEX & MasterCard charges will have to be more accurate than they have been.
• Online purchases will be verboten during the last 10 days of the month.
• This scheme will reduce the annual AMEX kickback.

The Strategy

1. Calculate the amount needed between the 21st and the 1st.
2. Subtract that amount from the total discretionary budget.
3. Charge all discretionary items between the 1st and the 21st.
4. Pay cash for all discretionary purchases, except extraordinary costs paid from a different kitty, between the 21st and the 1st.

But…how on earth to make it happen? The bet-on-the-come pattern has been going on so long hereabouts that it’s come institutionalized. And my budget is calculated to the penny: I don’t happen to have an extra $350 (discretionary spending prorated over ten days) sitting in the checking account. The short-term emergency fund has been drawn down to barely a thousand bucks — way too low — by the usual array of harassments that invariably occur during the summer, when routine costs hit the stratosphere. So making the transition from the enforced AMEX budget cycle to my budget cycle presented a challenge.

Thanks to the billing/budget cycle overlap, I’ve already spent $363 of my discretionary budget this month, and as I write this, today is only the first. (You see what I mean about betting on the come? It’s only the 1st, and a third of September’s discretionary budget is gone!) The figure is a little high — the budget averages out to $35.48 a day during a 31-day month, and so during the ten days between August 22 and August 31, I should theoretically have spent only $355. But being out of food and everything else, I made a Costco run on the 22nd, and then made an unplanned $80 purchase a day or two ago.

Only two choices presented themselves:

1. Try to charge nothing for 10 days at the end of September, getting by on only $180 in cash for that period.

…or…

2. Pay off the $363 from savings and reset the discretionary budget ($1100) starting on September 1.

The first option called for another spate of asceticism, a habit of life that has become, shall we say, tiresome. It meant all food and gasoline would have to be purchased before the 21st, and just one emergency bill could break the bank. It also delayed the escape from AMEX’s dictatorship a full month.

However, short-term emergency savings (in weak moments called “diddle-it-away savings…”) isn’t the only emergency savings fund I happen to have. 😉

A much larger fund, set aside for middling dire circumstances, contains several thousand dollars; it has gone untouched for years.

This made option 2 look pretty darned attractive. And because September is a short month (only 30 days), I’d have a pretty good chance at pulling the scheme off.

So, I transferred $365 from long-term emergency savings to checking and used it to pay off the amount I charged on AMEX in the last 10 days of August. The $1100 discretionary budget now comprises two sub-budgets:

$745, for charges only (on AMEX and MasterCard), covering the 1st to the 20th
$355, to be disbursed in cash during the last 10 days of the month.

In this scenario, I’ll never charge anything between the 21st and the end of any month (unless it’s some truly huge emergency). Discretionary costs during the last week and a half of the month will be paid in cash. If any money is left over from the cash disbursed to cover costs during this period, it will be transferred to short-term emergency savings. Once I’ve repaid the $365 to long-term emergency savings, that is.

CreditCardBudgeting

So, say I took out $355 on January 21 and only spent $250 between then and January 31: the $105 difference would go to short-term emergency/indulgences savings. This habit plus the monthly $200 contribution to that fund would plump up that little savings fund pretty quickly.

While it doesn’t allow me to use cash to eliminate the ditzy little credit-card transactions that I hate keeping track of, it will have the effect of reducing the total number of transactions. And since I usually exercise a great deal of restraint during the last week or so of the month, probably a fair amount of the cash budget will end up back in savings. And — mirabilis! — it will bring a stop to borrowing against next month’s Social Security check to pay this month’s bills.

800px-Craps

Images:

Dice used in craps: Roland Scheicher. Public domain.
Craps layout: Betzaar. Creative Commons Attribution-Share Alike 3.0 Unported license.

Cash or Credit?

by

DebitCardA while back, Mrs. Planting Our Pennies posted an article with an entertaining short video ruminating on the eerie quality of cash to disappear without a trace as one goes about one’s daily life. The video actually plugs Dan Ariela’s Coursera course on financial irrationality, echoing Dave Ramsey’s theory that most of us spend less if we use cash than if we buy everything with credit cards.

Mrs. PoP goes on to reflect that she and Mr. PoP have the opposite experience: cash disappears without a trace, whereas the paper trail created by credit-card receipts and statements makes it easier to keep a grip on spending because it’s easy to see where the money went and when. I was delighted to learn that someone else in the world has a similar experience to mine — not only the PoPs but many of their readers who commented. I thought I was some sort of strange outlier! Cash flows through my fingers like water — a walletful in the morning can be empty in the evening, and I have no idea where the money went. Something about the extra hassle factor of pulling out a credit card and having to fool with signing for it slows me down enough that I don’t buy just any pointless thing that strikes my well-honed whim.

It may be “painful,” as Ramsey suggests, to spend cash; but evidently some of us find it more painful to do without whatever doodad we happen to crave at any given moment.

As you may recall, late last spring, as part of an overall decomplicating strategy, I decided to use cash for small purchases. The idea was that I would withdraw a couple hundred bucks at the beginning of the month and use that to cover things that cost $30 or less. The initial idea was to make it $50 or less, but at that rate four purchases would consume $200.

This scheme actually did work, on two fronts: it cut the number of transactions that I have to keep track of in reconciling accounts, and, weirdly, I did spend less in the first month of the experiment.

This month, alas, I never did make it to the credit union to pull out some cash. My credit union doesn’t scatter ATMs across the city, and although customers can use other ATMs (I think), there’s a gouge for the privilege that I refuse to pay. I live about eight miles from the nearest branch of my credit union — that’s a 16-mile round trip, or, in the Dog Chariot, almost a gallon’s worth of gas — and there’s nothing up in that direction for me except a Home Depot and, much further up the road, a Costco. Since I try to limit visits to those worthy retailers, if I have no specific reason to go to one or the other of them, a jaunt to the CU through homicidal traffic is a nuisance that costs me about $3.35. This month it was a week or ten days past the August 1st before I hit Costco, and because I also needed some things from stores that are closer to a different outlet in a different part of town, I never did make it out west to the credit union.

And interestingly, what should I discover but that this month I’m already $87 in the hole on the credit-card budget, whose cycle doesn’t end until the 21st. Last month, when I used $120 worth of cash, I came in $143 in the black!

Naturally, the red ink on the AMEX budget comes in a month when power and water bills hit astronomical levels. And I had to pay Gerardo the Wonder-Lawn-Dude an extra $50 for some outrageously hard work he did in gawdawful heat.

And strangely, no single huge purchase jumps out from this month’s AMEX charges. Instead, I spent a bunch of money on small, separate bead-crafting expenses for the pieces I’m planning to donate to the choir’s silent auction this file ($135.76); $50 on propane and a new propane tank from Costco (not unreasonable); and a staggering $388.72 on a dozen trips to grocery stores. I did manage to stay out of Costco pretty well — hence all the grocery-store runs — however, in the two Costco runs I did make, I spent an equally staggering $378.73

Some of that $378 covered a couple pair of bluejeans to adorn the now much-slenderized body. None of my pants or shorts will stay up, so I really did need those. And the cost was nominal: Costco blue jeans run about $18 or $20 a pair.

You’d think that shifting to a mostly vegetarian diet — meat shows up on my table about twice a week now — would cut grocery costs. But in fact, fresh veggies and fruits are not cheap, and you have to eat them or else watch them spoil. Salad greens don’t lend themselves to freezing. That means I’m racing off to Sprouts or Trader Joe’s every time I turn around. Also, I visited Whole Foods, where I bought some (gorgeous!) wild-caught fish and two whole organic untrammeled chickens (on sale!) and splurged on too much sushi and a bottle of pricey craft beer.

But…the diet was under way when I started this experiment, so in theory grocery bills should have been no higher this month than they were then. The Mac ate the Excel spreadsheet I use to track the monthly budget (never have the same  DropBox file open on two computers at the same time! :roll:), so I can’t confirm that comparison. But it’s safe to assume grocery bills must have been about the same, with the possible exception of the Whole Foods episode — which, after all, put about a month’s worth of meat servings in the freezer.

In the “never” department, also never go into grocery stores when you’re hungry.

It looks like what happened is I lost track of how much I was spending on groceries and on beading goods and tools. At one point I got ripped off by Bead World — a saleslady sold me a pair of wire cutters that she knew would not work on the wire I had in my hand at the time, and they won’t take returns (they won’t get a return, either: a return customer). Then I bought a pair at Michael’s, but wouldn’tcha know: you get what you pay for! So I had to order up a decent pair, for twice the cost, at Fire Mountain.

So this month, in fact I did spend a lot more in using the credit card to cover everything (there’s a $3.06 charge in here, for godsake!) than I did when I used cash for small purchases. The “under $30” category amounts to a kind of Dave Ramsey-style “envelope,” and in fact when I ran out of the cash dedicated to discretionary spending that month, I consolidated shopping trips and limited purchases to real necessities, cutting back on the number and hence the amount of small expenditures.

Since it costs upwards of $3.35 to drive to the credit union, it probably would be cost-effective to get a debit card and pay the gouge to withdraw money from an ATM.

Just what I need: another card to help me spend money! 😀

Cash Worked! Is This a Sea Change?

by

You may recall that a month or so ago I decided to try to cut the number of credit-card transactions per billing cycle by withdrawing a wad of cash from the credit union and using that to cover transactions of $30 or less. The idea was to have fewer ditzy receipts to keep track of and fewer transactions to have to verify and reconcile.

So, I took out $120, the cycle having already begun, reducing the amount budgeted for credit-card spending from $1100 to $980. The plan was to try to make the cash last till the end of the month, and should it fail before month-end, to economize and reduce the number of credit-card purchases as much as possible.

This was a daring experiment for me. Problem is, money washes through my fingers like sand. The reason I charge everything is that the extra hassle involved in making a credit-card transaction and then knowing I’ll have to ditz with reconciling it against a month-end statement gives me enough pause that I don’t just buy everything my little heart desires. Weirdly, the charge card makes me spend less, and I like having a paper trail for every expenditure.

On the other hand…why? Does anyone really care that they bought a package of disposable razors at the Walgreen’s?

Well, I did run out of cash about 10 days before the end of the month. However, the AMEX billing cycle goes from the 21st to the 21st, so once the pocketbook was emptied, a whole new charge-card budget kicked in. This meant that I had to make two or three charges under $30 between the 21st and the 30th, but because I was determined to keep that stuff to a minimum, I hardly ever went into my favorite food emporia during the last week or so of June.

But it seems to have worked. At the end of the month, the bank account was $145 to the good, and that was in spite of a $200 palm-tree-trimming bill, a $108 water bill, and a $135 power bill.

A hundred and forty-five dollah to spare is pretty good! Usually I just break even, especially as the summer heats up.

There were still plenty of charges to enter and reconcile, but not as many as before. And because I really felt motivated to stay out of stores toward the end of the month, overall spending was really cut. The final AMEX bill: only $837!

Compare that with the usual AMEX budget of $1100.

Now of course, that $1100 was reduced last month by $120, to $980, but I still spent $143 less than that.

It’ll be interesting to see what happens this month. We get our highest power bills in July and August. And the AC has been pounding away in the 118-degree heat. Today is cooler — only around 112 — but it’s getting a bit muggy out there. I figure next month’s electric bill will come in at around $225. The DE filter on the pool needs to be cleaned — that’s a $100 hit. And pretty soon I should get a nuisance notice from the Department of Motor Vehicles, announcing the annual soaking for the car’s air pollution test and registration: another couple hundred bucks down the drain.

So, this month and next month: Stay out of stores! Don’t drive the car!!