Archive for April, 2012

“How We Saved $10,000 in Just One Year” featuring Wealth Watchers

Monday, April 16th, 2012

The conversation took place while we were driving to the mountains for a short ski trip over the kids’ February break two years ago. A part of me knew it was coming — knew it, and dreaded it. For the holidays, my husband, Gordon, and I had surprised our 14-year-old with a fancy (read: expensive) mountain bike and our 12-year old with a long-coveted video game system — plus the usual hoodies, books, iTunes gift cards, and stocking stuffers. We were both struggling with our annual post-indulgence hangover, only this time the feeling was more acute. Although Gordon and I, both self-employed, still had work, it was a leaner-than-normal year, and we were living paycheck to irregular paycheck. We had four years to save for college, 20 or so years to add to our meager retirement accounts. So I wasn’t surprised when Gordon glanced at me glumly and said, “We have to stop spending so much money.”

Our money conversations usually fall somewhere on the spectrum between awkward and acrimonious, which is why we discuss finances about as often as we hash over his prostate health. But that day I knew Gordon’s comment wasn’t an accusation; it was an attempt to reach an amicable accord. “Yeah, you’re right; we’ve been a little out of control lately,” I agreed.

Over the previous five years or so, I had racked up a lot of debt—five figures’ worth—a somewhat stunning amount that had advanced stealthily, like dry rot, while I was distracted with other things: deadlines, the kids’ homework and sports, keeping up with the laundry. I still have no idea where I spent it all. Daily chai lattes at Starbucks? Plane tickets for our annual summer vacation? Clothes? Gifts? Groceries? It’s impossible to identify one culprit. I simply frittered it away, as my mom would say. And I suspected Gordon was similarly saddled with debt.

I wasn’t sure, because we’d always kept our money completely separate, on the theory that our erratic incomes and inherent disorganization would doom any attempt at joint banking. Besides, I’d never wanted him scrutinizing my spending habits any more than he wanted me poking around in his. We’d each taken charge of certain bills — he paid the big stuff, like the mortgage and property taxes, while I handled most of the other monthly expenses, including the majority of the groceries — and we bailed each other out if one of us ran short on cash.

Our arrangement had helped us avoid big money battles, but with no spousal oversight, we’d both been guilty of spending too much and saving too little. “Maybe we should each make a budget,” I said tentatively, a part of me secretly hoping he’d say no.

He looked at me with surprise, like I’d just suggested we pull off to the side of the road for a quickie. “Really? You’d do that?”

“Sure; I guess,” I said.

He already looked more cheerful. “Let’s do it when we get home.”

Even then, our determination might have faded — we’d made big promises before about sitting down and hammering out a budget — had it not been for a curious bit of serendipity. When we got home from our trip, there was a copy of a book in our mailbox, sent by my editor at Good Housekeeping. Called Wealth Watchers: A Simple Program to Help You Spend Less and Save More, it applies the principles of Weight Watchers to finances. The premise is simple: Set a daily spending goal, just like you’d set a daily calorie goal, by determining how much cash you actually have available to spend every day; track your daily spending; and watch the debt (like the pounds) melt away and the savings pile up. Alice Wood, the book’s author, says she and her husband spent $12,000 less the first year they followed the program than they had the year before. I couldn’t imagine cutting even a tenth of that, but I was willing to try.

Still, we dragged our feet before starting, blaming the usual culprits: work, stress, our over-packed schedules. Finally, at the end of April, we resolved to put ourselves on a financial diet. We broke the news to the boys over dinner one night.

Will, the older and more emotionally savvy of the two, said it sounded like a good idea, while Griffin moaned, “Awwwwww, nooooo! Why? We won’t ever be able to do anything!” We assured him that we intended to trim the budget, not machete it — that we just wanted the whole family to become more aware of the difference between wants and needs. Will rolled his eyes, recognizing this new material as part of our ongoing series of Responsible-Behavior Speeches, but Griff brightened. “OK,” he said. “I need to go see Iron Man 2 this weekend.” Clearly, this wasn’t going to be easy.

I called Wood to see what she advised to help us stay the course. She suggested we ask another family to try the program, too — the theory being that behavior change is easier if you have other people offering support and encouragement. There’s the Weight Watchers influence again. We enlisted the help of our friends Susan and Charlie, who’d lost their longtime, lucrative jobs — she was in commercial real estate, he was a menswear designer — within two weeks of each other 10 months before and had only piecemeal work since then. Because they didn’t have any debt aside from their mortgage and had wisely set aside a solid year’s worth of living expenses, they’d been able to stay afloat without making drastic changes like raiding their retirement accounts or selling their home. They’d already cut out most discretionary spending — yard maintenance, expensive haircuts, clothes shopping, gifts. But with no real job prospects on the horizon and two kids around the same ages as ours, we knew they were motivated to pinch pennies — and would be inspiring role models for Gordon and me. Still, I wondered: After 17 years of haphazard spending, could we really trim our budget and get our finances under control?

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MSN featuring the Good Housekeeping story about Wealth Watchers

Monday, April 16th, 2012

The Wealth Watchers plan requires you to write down every single thing you spend every single day. Will wants $5 for lunch? I dig through my purse, find the notebook included with the book, and write it down. I’ve spent $9.74 for a new razor, or $3.26 for a latte? Down it goes in the notebook. It’s a massive pain in the butt, because it’s yet another chore in my already demand-filled day, but Susan, who can always be counted on to see the bright side, points out the big plus.

“It forces you to have a ‘think-before-you spend moment,'” she says, quoting Wood. “When I realize I’m going to be held accountable for what I buy, it’s easier for me to say no to things I don’t need.” I see what she means, and yet already I’ve succumbed to the siren song of unnecessary stuff. I know enough to stay away from Nordstrom and Anthropologie when I’m trying to save money, but one afternoon I stroll into my favorite consignment store — used equals cheap, right? — where I find racks of trendy summer shirts. I already own enough shirts to clothe a small village, but I pull a few out and try them on anyway. They all fit perfectly. Together they come to $72, not much below my daily spending allowance. With regret, I start to put them back. Then the saleswoman says, “Did I mention that today only, all shirts are 15 percent off?” My credit card is out of my wallet and on the counter before I can think, What would Wealth Watchers say? The total, including our 9 percent sales tax, is $66.70. “What a great deal!” the saleswoman chirps.

But when I log the purchase in my notebook, I can hear my own lecturing-the-kids voice ask, Now, Ginny, tell me: Was that a want or a need?

What I need — far more than another top — is help getting my several-hundred-dollars-a-month clothing habit under control, so I call Sally Palaian, Ph.D., a psychologist and money coach in Detroit. When I describe my dizzyingly fast splurge, she says, “There are certain words, like ‘sale,’ that can trigger spending. You need to build in a buffer period — time to think about every purchase before you buy it. Next time you want something, wait a day, or call a friend and run it by her. Another thing that’s helpful is to tape a note to your credit card that says, ‘Do I really need this?'” The note strategy works well, I find, when it comes to sweet treats. When I ask myself, Do you really need a coffee drink or a cupcake — expensive and caloric? the answer is always no. But clothing is harder for me to resist. Susan, who’s put herself on a strict no-shopping regimen, has been having old clothes altered so they seem new and is particularly happy with an old below-the-knee-length skirt that’s now more of a mini. “But I miss getting new things,” she admits.

Wood suggests I try to treat my closet more like a store. “When you want to buy something, go home and look through your closet first to see what you already have that’s similar,” she says. “It’s amazing how often the thing you want is almost the same as something you already have.”

I think guiltily of the 40 pairs of jeans that are spilling out of my closet and realize she has a point. Clearly I need all the help I can get, so I also decide to try a wacky strategy I heard a friend mention not long ago: I put my credit cards in the freezer — a symbolic move that will, hopefully, put a chill on my shopping.

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