Financial Confessions

An everyday system, TM, is a simple, commonsense solution to an everyday problem, grounded by a pun or metaphor. Propose/discuss new systems here.
Post Reply
User avatar
reinhard
Site Admin
Posts: 5921
Joined: Tue Apr 12, 2005 7:38 pm
Location: Cambridge, MA
Contact:

Financial Confessions

Post by reinhard » Fri May 18, 2007 1:57 pm

Here's a system I've been practicing pretty successfully for a few months.

Problem: spending too much money on luxuries.

Solution: look at your expenses and decide which categories of spending you want to reduce. Every time you buy something in that category, write it down.

Rationale: keeping track of stuff is painful. It's also embarrassing. By making yourself "confess" generally undesirable kinds of expenses, you will create a pressure to reduce them. This is the same principle behind negative tracking.

Example and caveats: you want to limit your confessions to really discretionary expenses. Confess necessary stuff and it becomes a meaningless pain -- you waste more time tracking and lose its deterrent power. Here are my categories: eating out, booze, gifts, (I tend to be more generous than I can afford), books/media, "luxury" groceries. Note that I accept and understand that I will and should continue to spend *some* money in these categories: I just want to spend less, to keep it in line. Knowing that I'll have to "confess" does this.

Results: my monthly credit card bills have been about 20-25% lower since I started this. Granted, it hasn't been a lot of time (I'll report back later after a full year or so), but I'm optimistic.

Implementational detail: I write my "confessions" as they happen on the back of my daily punch card. Once a month I transfer them to an excel spread sheet (titillatingly called confessions.xls).

Reinhard

jessdr
Posts: 46
Joined: Tue Aug 26, 2008 9:27 pm
Location: Somerville, MA

Post by jessdr » Thu Sep 04, 2008 4:40 pm

Perfect! I made a stab at Your Money or Your Life earlier this year. I learned a lot and made a major attitude shift, but tracking every single cent I spent on ANYTHING got to be too much (analogous to calorie counting). This, on the other hand, is manageable. Will report back after I've given it a shot.

User avatar
reinhard
Site Admin
Posts: 5921
Joined: Tue Apr 12, 2005 7:38 pm
Location: Cambridge, MA
Contact:

Post by reinhard » Fri Sep 05, 2008 2:24 pm

Glad you like it! I've actually stopped explicitly doing this -- partly because I internalized it to a large degree, partly just because I got lazy.

May pick it up again, though, now that we're down to one income...

Reinhard

User avatar
reinhard
Site Admin
Posts: 5921
Joined: Tue Apr 12, 2005 7:38 pm
Location: Cambridge, MA
Contact:

Post by reinhard » Fri Nov 14, 2008 4:44 pm

I recently started practicing this again (Depression II has been wonderfully inspirational!).

But now I'm tracking it in a box on my "big picture" instead of on the back of my daily cards.

This is a helpful change for two reasons:

1) I've explicitly spelled out the criteria for what constitutes a confessable expense: booze, restaurants, clothing, gifts, media. ("luxury groceries" involved too much head scratching -- I want to focus on the no brainers)

2) because I carry around each big picture for a week, it gives me a bit more context for budgeting. Most days, I don't have anything to confess, so it isn't really helpful to budget on that level. But I haven't gone a whole week yet without having had several. Pretty soon I expect to have a very precise sense of how much discretionary spending actually takes place on a weekly basis -- and how much more thrifty I can realistically expect to become.

Reinhard

Post Reply