Thursday
Feb182010
Organize Your Money and Save for What You Want
Remember when people had Vacation or Christmas Club Accounts at their local banks, helping them to save for those occasions instead of going into debt each summer and winter?
Budgets and Savings
When did we, as a nation, lose our focus on saving? When did we fall into this black hole of debt? I had a Christmas Club and a Vacation Club Account when I was younger (I'm 45 and I'm talking about 25+ years ago). Every week I'd cash my paycheck and make deposits into my checking, my savings, my Christmas and my Vacation accounts. Things weren't instant way back then. We didn't have ATM machines. We planned our spending. We had budgets (sometimes not on paper, but we knew how much money we could spend). We went to the bank and took out enough money to last for the week (actually, at that time, I only had enough money to last for the week).
The Envelope System
I kept mine in labeled #10 envelopes in the top drawer of my bureau. There was an envelope for groceries, one for eating out, one for misc. entertainment, one for new clothes -- you get the picture. When the envelope was empty, I was done spending until my next paycheck.
That was a great system. I miss the simplicity of it. My envelope system went to "hell in a hand basket" when I got my first credit card and my first ATM card.
Then Came Technology
ATMs, direct deposit, and internet banking don't work well for those of us who are not disciplined. I needed the limits that having to go to the bank (and physically stand there in line) imposed on me. Without them -- I'm toast.
I started spending and not keeping track. There was no savings. Everything was instant, and I became very good at instant gratification. I'd stop at the ATM and take out $20 at a time, and pay the fee associated with the withdraw. When the ATM ran out, I had my VISA. I became a party girl -- a "check picker upper". It was out of control.
Recovery
I took a long time to recover from all of that, but I got organized and married a frugal soul. Two very different events that both helped to get my finances in order.
Most recently I discovered a new tool that helps me save for specific goals, just like my old Christmas and vacation club accounts. It is called SmartyPig and I highly recommend it.
SmartyPig
SmartyPig is for people who want to save for specific goals. Whether it’s a family vacation, the latest electronic gadget, a wedding, or a down payment on a house, SmartyPig’s unique system can help you along. Just tell them how much you want to save and when you want to reach your goal, and they will offer you a number of unique options to help you get there. When you reach your goal you will find that you've accumulated a nice bit of interest, and if you spend your goal money at a participating vendor (Amazon, Travelocity, Sandals, Macy's, Overstock, etc.) you'll get an additional percentage added on to your savings, up to 12%.
Back to Basics
Its all about returning to "pay with cash" lifestyle. A lifestyle where you earn interest instead of paying it. Cut up your credit cards and start saving for what you want. You'll get a lot more bang for your buck in the end.
I love SmartyPig.
Thursday, February 18, 2010 at 9:31PM
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Reader Comments (3)
Christine,
Thanks so much for the shout-out to SmartyPig. We really appreciate it!
Mike Ferrari, SmartyPig co-founder
@mferrari
I will have to check them out. I am sooooo uptight about budgets and spending goals, so this would suit me just find. After crawling myself out of debt, I am paranoid about falling back in and agree with everything you said about how we use to live and the trouble we are in now with so much credit and instant gratification. I have a strict code about spending anymore. I can only buy something if I have twice as much of its cost in savings. If I can afford it twice, I can afford it once and am living within my means. Not always easy, though!! ;)
This is a great idea. We paid off all our debts a few years ago and although we've managed to stay out of debt, we haven't taken that extra step to set money aside for trips, etc. Something I plan to change shortly!