In the last year and a half, I have been in one of the most horrible financial situations of my life. It started in January of 2004. I had a pretty good and what I thought was stable job. I had started putting $500 a month into a savings account for rainy days. By March, I was able to put a down payment on a nice car and still had money left. But then on July11th of 04, shit took a drastic change. I got laid off becuase the project that we were on slowed down. No severence pay, no nothing. I got my vacation pay which was only about $1000. When I looked at my savings account, I had about $4000 with my vacation pay added. So, for two months, I would be ok. I didn't want to sit and collect unemployment so I immediately started looking for a job, but couldn't find one immediately. So, I took a job at a temp firm making $10 an hour. This was good, but not enough money cause I only worked 30 per week. By the end of August, my $4000 was almost gone.
I thought, "where the hell did all of my money go?" I added up all of my bills and realized that my monthly expenses added up to about $1800. The problem was then I hadn't included things like gas, food, clubbing, household items, car maintenance, and random things. I had never realized how much money I was spending. And even when I did, I didn't stop spending on frivolous things. So, I used my good credit rating to take out a personal loan for about $6000 so that I coud keep my bills paid. Even though I borrowed money to live on, I still didn't stop spending like a damn fool.
Well in October of 04, I finally found a permanent job. The only bad part was the we only got paid for the days that we worked. Example, if we worked 8 days of the 14 days pay period, we got 8 x "daily rate" (no I am not gonna tell you how much). The first month was good because I had 2 pay periods with 10 days. But then their were issues with the software that we were installing and they put us on hold. I worked a total of 8 days in the month of December, 8 days in the month of January 05, and about 15 days in the month of February. So you know that I was still operating at a deficit. And let me also remind you that in late December of 04, I moved to Chicago, thereby doubling my housing expenses. What the hell was I thinking?
Well things started to pick up in March and we were working like crazy for the next few months were I was getting about 8 days per pay period. And I had also filed my income taxes and had a little change in the bank. But what did I do. Spent more money. I went on a trip to NYC to celebrate My Birthday and spent about $1300 in 2 days. Again, what the hell was I thinking? At the beginning of May, I decided that Chicago wasn't for me and I moved my ass back to Atlanta. Chicago was too expensive and too damn shady (the people at least).
The day after I moved back to Atlanta, a trip got cancelled. So that's 9 x "daily rate" that I was not gonna get. Mind you, I only had about $1000 the bank, so things were tight. But I was glad that I moved back "home." Well June and July were just ok months. I was getting about 6-8 days per pay period which was just enough to get by on. To be about to save money, I need about 9 days per period. Then, it happened. They put us on hold again in the middle o August for a month. I thought that I was gonna die! I knew that that meant that I was gonna miss 2 to 3 paychecks. I had to use every dime that I had to survive and at this point. I had never felt that feeling before. The first time that balanced my checkbook and was down to $2.37 I would feel like I was loosing my mind. But you know what, the bills kept coming in and I was still spending loosely. Needless to say, my credit rating suffered badly. I had to admit it to myself that I was living above my means. And this has been my situation up until now.
It took me all of this time to realize that it's not all about the money that's coming in, but also about what's going out. It took me until 3 weeks ago to realize that I SPEND TOO MUCH DAMN MONEY! At that point, I stopped spending. No more CDs, DVD, Magazines, Clothes, clubbing, Target shopping sprees, name brand this and that, eating out, alcohol, being generous to friends and dates, dry cleaning, car washes. NO MORE FRIVOLOUS SPENDING!!!! And you know what? It worked. I stopped all the spending and now I have money left over when I finish paying bills. It's that simple. I got paid Friday and paid all of my bills, I had $600 left over when I finished. Now I did go to the casino and blow $150, but bad habits are hard to break and I am working on that one. But, I did manage to have money left over. And the way that I have calculated it, out of my next 2 paychecks, I should be able to save about $1000.
Imagine, if I saved $500 per paycheck. By the end of the year, I would be able to pay off both my credit cards and that personal loan that I took out. That would save me about $500 a month alone. Then in another year, I can have my car paid off.
So that is my plan. To stop spending money on things that I don't need. I thought that it would be hard, but it isn't. I went out last weekend 3 nights in a row and didn't spend a dime (Beatmug paid for me to get in the clubs). But next time, I am not even going, it's a house party or nothing. I haven't been to Target. I subscribed to magazines instead of buying them off of the shelf. I listen to the radio instead of CDs. I watch the cable that I pay for instead of buying DVDs. I wash my own car. And last, but certainly not least, I do not eat out unless I am traveling (or someone else is buying). And even then I go to the grocery store and buy food.
So all in all, I have learned my lesson. You have to spend less than you take in. Try it and see what happens.