Controlling Your Spending

0 Comments 06 December 2007 / by

for those who’s curious about my baby’s USG scan… i apologize i won’t be able to post it yet, since i didn’t get my USG scan printout when i visited the doctor last week. i’m going again this weekend for the detail scan, to check every little detail about my baby and make sure that the baby is growing normally and of course, to confirm the gender. i can’t wait… yaay!!

on the other hand, i want to share a bit about debt diet. this term is probably getting its popularity from the oprah show, but it’s something that almost everyone has problem with these days. with the aggressiveness of those credit card offers, sometimes you just flow in and makes you become so consumptive. you buy buy buy.. and forget that by end of the month, you owe so much amount of money that your salary won’t be enough to cover.

some time ago, i posted some tips on how to save money and not become too consumptive with your credit card spending in this forum. as parents-to-be, my husband and i are the perfect example of the target market to become very consumptive, especially with all the stuff we need to buy before the baby is born. though we still need to buy them.. we always need to keep in mind that savings should still be our priority. yeah of course, once a while we can splurge.. especially now during the holiday season (though i don’t celebrate it).. but how much can you splurge without really breaking your bank account or your credit card limit?

here are the 5 tips i posted. i thought it might help. do you have your own tips you want to share?

1. control that shopping urge
this is one of the hardest one i think. cuz you just sometimes cannot help it that you find such a bargain product at a very nice discounted price. it’s another pair of shoes you’ve been eyeing. the tip is, ask yourselves… do you really need another pair of shoes? will you really wear it? will it worth breaking your savings account?. most likely, after you bought it, just like the rest of your shoes collection, it will just lie there inside its box, collecting dust. sometimes, you need to learn to pass on bargain items. i know it’s hard, but once you learn, you’ll end up getting used to it and eventually control your shopping urge.

2. are your spending higher than your earnings?
keep track of your spending. as long as you know that your spending can be covered with your monthly earning, you’re actually fine.. but, ask yourselves after you’ve paid all the bills… do you still have any money left? do you have extra money to buy food, occassionally go to movies, etc?. if the answer is no, then you’re in trouble! it’s not healthy to live your life from one earning to another. depending on your credit card so you can live by. so the tip is to get yourselves used to monitor how much spending you have charged to your credit card, plus all the bills you are liability to pay that month. then you keep track how much it is compared to what you earn. is it 10%, 20%, or 50% of your income that month? if it’s still below what you earn, that go ahead, splurge, but always keep track. once it’s within the limit that you need to stop. stop! again, it takes self-control to do this.. but once you get used to do it.. it’ll be great. check your savings account regularly will also help to notice if your savings makes a difference every month or it is decreasing. so it gives you a warning sign about your spending habit.

3. keep track of your due dates and never pay your bill late!
okay this is purely a tip from me. it may be a bit complicated, but it’s effective for me. you always keep track of your due dates to make payments for everything. loan, rent, bills, everything! so you know you’re in control of your cash flow. this is my example of how to keep track my credit card.

when i was still living in the US, i purposely have no more than 4 credit cards. why only 4? well, because these four had different due dates of payment every month. it spreads that the due dates fell once every week of the month. then, everytime i use it, i monitor that i can only spend not more than $100 per month. so in total, i only have to pay $400 per month for my credit card bills. why $100 per card? well, because i am fully aware that i can only spend $400 per month on credit card payments. if i ended up buying stuff more than $400 that month, it means i’m breaking my savings account or spend less on other stuff that month. because the bill falls at every week, paying that $400 did not feel like a big liability on my part, cuz my salary came every other week, so i could manage to set aside $200 off my salary every other week.. which was only a small percentage of what i earned.

of course, this is just an example. you can always do it your way as long as you can make sure that you won’t end up borrowing money at the end of the day… which means, no balance is due in the credit card. cuz having left some balance there, meaning you’re borrowing money and you’re paying at a very high rate of interest. it’s very important to understand that before you use the card.

4. understand about the finance rate, APR or finance rate on your credit card
understand it, ask about it, request for a lower rate. get yourself involved. if you don’t understand it, you won’t be using it wisely. my tip is always to pay my credit card in full, so i won’t have to worry about this rate. i treat my credit card like a delayed payment of something i have bought. but i never want to put myself in a position where i owe money to the bank. cuz… obviously, they charge very very high!!!

5. pay yourself first!
okay. before you go on to tips no. 1-4… you should do this the first time you get your salary. pay yourself first! meaning set aside some money for yourself. for your retirement, for your savings accounts, unit trust, mutual funds, anything that will bear fruit in the future. agree on a percentage, commit to it and do it every month. the rest of the money that’s left is what you can spend for all the liabilities you have every month. never go on spending before you set aside some money in your savings account. most people do it the other way around, they spend first, and whatever’s left is the amount they put in the savings account. that’s totally wrong!! cuz you might end up saving NOTHING! since you’ve spent them all already. right?

hope my tips help. and remember… it all has to come from you. would you rather splurge on all your earnings or save some for the rainy days? you decide!

:: sLesTa

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a worker by choice, a mother and a wife by nature / owner of / co-founder of the urban mama / the urban muslimah | email: slesta[at]slesta[dot]com

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