1001 Ways to Improve Your Personal Finances: Tip #2—The Starbucks Challenge

I have two friends.

Okay, I have more than two friends. But for the purposes of this post, I have two friends.

They are real people, not imaginary friends.

The first paid off his house, goes on occasional vacations, and recently bought a second property as a form of investment. He and his family throw fun parties. I like their strawberry rhubarb pie. Maybe you are like my first friend (if so, I might visit you soon for pie.)

My second friend has a second mortgage on his first house, goes on occasional vacations, and often throws huge, fun parties for family occasions. He recently got a big surprise. One day he went outside to get into his car, but the car was gone. While he and his family were sleeping, the car had been stolen away. Not by thieves, but by a repossession company.

I have another friend. This might not count. He's my dad. He helps people like my second friend repossess their financial security. It's not an easy task of course. People have to want it.

Maybe you are like my first friend. If so, good. You probably already take advantage of little known financial savings opportunities like duct-tape wart removal. Maybe you are ready to start a business, and you have everything you need (almost) to Get Rich Click.

Maybe you are like my second friend. Or maybe you are somewhere along the middle of the spectrum. Wherever you're at, if you are worried about the sustainability of your financial practices, my dad has a list of things you can do (he forgot to mention homemade pie-making, so I am going to just stick that in here right now. Did you know it is a lot cheaper to make your own pie than buy it?).

For argument's sake, let's say you followed at least part of Alexa von Tobel's 5 Must-Follow Principles for Personal Finance. Let's say you are not spending more than 50% of your income on housing and other non-negotiables (unfortunately, pie is negotiable).

However, you're in credit card debt over a whole host of negotiables, which is affecting your ability to make your car and house payments on time (this is what happened to my second friend). And somebody wants the money back sometime (or your car in lieu of it, or worse, your house).

It is time to pay that baby down (and, no, you may not throw huge parties in the meantime). Best approach?

1001 Ways to Improve Your Personal Finances: Tip #2

Make 3 lifestyle changes that can reduce your negotiable costs. Give up Starbucks. Borrow books from the library instead of buying them. Turn your heat down a few degrees (or your air conditioner up a few). Whatever it takes to reduce your costs.

That's it.

I know, we didn't say a word about the credit card in this tip. That's because you have to start by freeing up a little money from somewhere. Even if it's only ten dollars a month. Preferably $25. A hundred dollars? Oh, that'd be grand.

When you have decided how you are going to free up some money—preferably at least the amount of your minimum payment on your lowest-balance credit card—you'll be ready for the next step: Paying down those credit cards.

But for today, just sit down and make a list of everything you spend money on and decide on 3 lifestyle changes. Let everything else remain equal for now, but commit to those 3 changes.

You can do this. It's only 3 things.


BONUS (completely free of charge)...


Today's personal finances confession:

I still didn't buy the pink duct tape, though we actually saw some in the grocery store and my daughter wanted it because of the pink duct tape post. However, I did buy a book for a friend the other day. She probably didn't need the book, but I wanted to buy it for her. It was a small splurge, but it was in the budget. And I like the author well enough; he's smart and funny, and he seems like the type who might eat pie.

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1001 Ways to Improve Your Personal FInances: Tip #1 Pink Duct Tape