I’ve never hidden the fact that I used to completely SUCK with money, but I thought it might be helpful for myself as well as others to revisit the ghosts of my financial past. We’ve come a long way from where we were before, but the journey still isn’t finished. I thought I could do a before and today contrast to see our financial progress and evaluate where I want us to be in the future.
Take Home Pay:
Before- $1,600 per month after taxes
Today- $2,200 per month after taxes and 401k contributions
Before- $1,025 per month
Today- $864 per month (it just went up this month)
Credit Card Usage:
Before- Our credit cards were carrying us from payday to payday and were constantly maxed out and over the limit. We paid tons of money in interest, late payments and over the limit fees. We would use overtime to catch up on payments and lower our balances so that we could continue the vicious cycle.
Today- Credit cards are used for earning rewards (not so much lately) and are paid off right away. We don’t carry balances or pay fees, except for the evil credit card which is just about paid off. All of our other credit cards are paid off. If we can’t afford something, then we wait and save.
Before- We over drafted all the time and didn’t have any reservations about using our debit cards when there wasn’t enough money in the account to cover it.
Today- We don’t pay any overdraft fees because we only spend what we have. If the money isn’t in there, then we go without.
Before- We were paying late fees at least once a month between our bills and rent.
Today- Not a late fee to be had. We pay our bills twice per month, half each paycheck to avoid getting behind and the possibility of any late fees.
Before- We were eating out at least 7 times every week (so at least 28 times a month). It didn’t matter if we could afford it or not, if it sounded good, that’s what we would do.
Today- If we had to average it out, we only eat out 2-3 times every month. If we can’t afford it, then we don’t do it, not matter how yummy it sounds.
Before- We didn’t have car insurance because it was just another expense that we could afford. It’s funny how we could afford to eat out so much but not pay for car insurance. We really got lucky, we never got pulled over or into any accidents, but the paranoia of those things happening was maddening.
Today- We’ve had car insurance for over 2 years now without any lapse. We still drive really careful but don’t have to stress out about getting caught without car insurance. We pay our car insurance in full every 6 months to take advantage of the discount.
Before- I was addicted to Juicy Couture and bought everything I wanted. I grew a respectable collection of Juicy Couture purses, wallets, jewelry and other accessories. Thankfully I was never a big fan of their clothing, aside from the pants that said ‘Juicy’ on the butt. I spent so much money on this addiction and was really excited when I got approved for a Nordstrom credit card.
Today- I have only 3 juicy purses left, 1 wallet, 1 pair of sunglasses and some of my jewelry left. I sold off the rest of the stuff and only get Juicy Couture earrings on my birthday or Christmas now. I can’t even remember the last time I bought a Juicy item, and the Nordstrom credit card has been paid off for a long time now.
Before- Any emotion was an excuse to go out and buy stuff to make me feel better. If I was sad, upset, angry, stressed out, it didn’t matter because I could go buy random stuff and get that rush I needed to feel better. Sure it wasn’t a solution to my problems and didn’t last more than a day, but it was what I did. Most of the times, I never really liked the stuff that much and just ended up shoving the bags of stuff into a closet or bucket.
Today- If I’m not in my normal good mood, then I stay at home. I know what happens when I give in to emotional spending, so I just stay home and find another way to deal with the problem. Even if I need to zone out, staring at the TV, reading a book or magazine or even taking a nice relaxing bath is much more helpful and keeps my spending in check.
Before- We used to go to the casino about once every few months and blow a few hundred bucks each. We also would buy Powerball tickets and scratch tickets all the time. Frequently visiting restaurants with slot machines nearby wasn’t unheard of either, we wasted so much money on gambling and always felt like crap afterwards.
Today- In the last two years, we’ve gone to the casino 3 times. It’s not great, but it’s still an improvement compared to what we were doing before. We only buy Powerball tickets like once every other month and don’t spend any money on scratch tickets. We also avoid going to the restaurants with the slot machines; you can’t give in to the temptation if it’s not there.
Prices and Spending:
Before- We would just buy whatever we wanted and didn’t even look at the price, there was no comparison shopping or thinking involved. We didn’t keep track of what we were spending or how much money we had.
Today- We focus more on buying what we need and spending less on things that we want. I shop around and try to find the best deals on things, use coupons, earn cash-back from online shopping and take advantage of rebates and deals on Amazon. I keep track of our spending each week in my Where Did the Dough Go? posts, use a check register to monitor our account, doing spending reviews and try to get the most for our money. I’m currently using the Padawan budget and hope to begin using the Jedi budget this year.
Price and Quality:
Before- For some reason I used to believe that the more something cost, the higher the quality it was. The most expensive sheets I ever bought were $200 for the set, but that meant they were better. The interesting thing was that they weren’t very soft (which is important to me when it comes to sheets), but that didn’t stop me from buying 3 sets of them. I used this twisted mentality in almost all of my spending decisions and it was expensive.
Today- I’ve finally come to realize that the price of an item doesn’t determine it’s quality. It took a while to get here and I’m sure I still do this with some things without realizing it, but overall I’ve made a lot of progress. I’m also now a fan of free stuff because I know that getting things for free isn’t bad, and most of the time, the quality is the same as the paid version.
Before- Tax refunds were ‘free money’ and we’d sometimes spend them before we even got them. It was our money to upgrade our computers (or buy new ones), upgrade our monitors, get a new cell phone, buy lots of movies and video games, upgrade our mp3 players or just shop until we dropped. We didn’t use our tax refunds to pay off bills or credit cards, save money or for any good financial decisions at all.
Today- The last couple of years, we dramatically shifted our approach to our tax refunds. Last year, we saved almost all of our tax refund and ended up using most of it to take a vacation. This year, I created the RISE plan for our tax refund and found the perfect balance for it. We replaced borrowed money, invested, saved and did a little bit of an experiment. We know this isn’t ‘free money’ and are making better decisions with it, even though we’re still loaning the government free money.
Before- Saving money was just not for us, since we were spending way more money than we brought in, it didn’t seem like the best idea. Our savings accounts were always empty and we didn’t really care, as long as we had the stuff we wanted, nothing else mattered.
Today- I love saving money! I have money transferred daily to a savings account, try to automatically save 50% over our root income and transfer any leftover money to savings the night before payday. I might not always save a lot, but I do what I can and always keep at it.
Before- Who cares about saving for retirement, we’re young. That was the extent of planning for retirement, no IRAs or 401ks for us.
Today- While we aren’t contributing nearly as much as we should, we’ve creating a habit of it. We contribute 8% to our 401k and have been contributing monthly to a Roth IRA.
Before- I went bankrupt and didn’t understand or care what it would do to my credit. I got a car loan at almost 30% interest and didn’t make any efforts at all to build good credit. Having a credit score in the 600’s seemed like a fairy tale I’d never reach.
Today- My bankruptcy finally came off my credit, my last car loan was 6% interest and I paid it off early by sending in extra payments. For the last few years, I’ve made every single payment on time and haven’t gone over my limits. I’ve taken steps to improve my improve my credit, pay off debt and monitor my credit monthly. My credit score is now in the 760’s and I’ve found another great place to check it every month for free. My next credit milestone will be reaching the 800’s.
Have you taken the time to acknowledge your financial progress, no matter how small?