I took $20 the other night to the only restaurant I eat at – the one that gives half off everything on Tuesdays – and felt confident I had more than enough to feed my wife and son anything on the menu.
What I didn’t realize was that Mrs. Fay had invited my brother, sister and her husband. They ordered iced teas or Cokes with their meals, and the next thing you know, the tab soared to $40 (plus tip) for a six-person dinner.
That meant I had to go the credit card route to cover the damage, and simmer about it the whole ride home.
The problem here is a familiar one: You have a number in mind when you leave the house, something changes and you resolve the matter by pulling out “pretend money,” which is what a credit card really is.
Although I had set aside $20 for the night, my Visa card allowed me to pretend I really had $50 in my pocket. At the end of the month, the folks at Visa are going to want the $20 that was in my pocket, plus $30 from another pocket or they’ll hit me with a 17 percent interest charge and carry the balance over to the next month.
Overspending Is a Bad Habit
This happens a lot in my house. We go to a grocery store thinking we need about $100 worth of food and end up spending $125. We hand the cashier the Visa card and everybody’s happy, until the credit card statement arrives at the end of the month.
We leave there, go to the local hardware store for a $17 tank of propane gas and repeat the process. One canister for bug spray, a couple of bug-killing potions, gloves, a shovel, two plants we’ll probably kill before they ever get in the ground and the bill is now $68.78 — that’s $51.78 more than we intended to spend.
No worries. Visa makes the problem disappear.
I worry because this happens a lot, and the problem gets worse as you go up the scale. We picked out a new set of appliances last year and paid an extra $400 because someone wanted them all to be stainless steel.
If we were paying cash that day, we’d have new appliances, just not stainless steel. But because we had Visa, we spent $400 for a look that’s already out of date.
That’s why I was simmering on the car ride home. I again realized that if I paid for everything in cash – and only spent as much as I had in my pocket – I’d probably save thousands.
A New Year’s Resolution
That was incentive enough to do something I’ve never done: Make a New Year’s Resolution.
By July 1, I resolve to put the Fay family on a cash-only budget.
This will require me doing something else I’ve never done: Make a budget. However, that could turn out to be a good thing. I want to test the theory that when people pay with cash, they have more respect for how much money they spend.
For the first six months of 2014, we will be strictly credit card people. I will get receipts and enter every dime we spend in one of the online budget programs, which I’m sure will show me how much money we spend on obvious categories like food, gas, electricity, entertainment, etc.
We spent $684 the first week. I don’t know how that compares to any other week, but the Frugal Man in me says that’s a lot because all we did was buy food, gas and a couple of gizmos for home repairs. Still, it’s a start on budgeting, and I’m going to keep up with it through June 30.
On July 1, I will assign a monthly value to each category and set aside money to match the value. I envision envelopes for food, gas, electricity and so on. We’ll see if we can make it through the month on those amounts.
If all goes well, we might actually save enough to afford the Christmas we just charged on our Visa card.
I hope there is a lesson in this for everyone in the family, but I’m pretty sure I already know the lesson Mrs. Fay will teach me: “Put $50 in your pocket when we go out to eat. And stop your simmering!”
Bill “No Pay” Fay has lived a meager financial existence his entire life. He started writing/bragging about it seven years ago, helping birth Debt.org into existence as the site’s original “Frugal Man.” Prior to that, he spent more than 30 years covering college and professional sports, which are the fantasy worlds of finance. His work has been published by the Associated Press, New York Times, Washington Post, Chicago Tribune, Sports Illustrated and Sporting News, among others. His interest in sports has waned some, but his interest in never reaching for his wallet is as passionate as ever. Bill can be reached at email@example.com.
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