This week’s Sunday tip is: Cut back on those white chocolate mochas!

Every since I’ve joined the legions of the corporate world, I’ve been addicted to a new drug: caffiene. I’ve never been the avid coffee drinker, always prefering tea. However, sleeping 7-8 hours on a daily basis was not enough for the mental exhaustion that I faced on a day to day basis and therefore, I needed the daily jolt to the brain.

What did not help was having a coffee shop right inside our building – so the daily coffee would sometimes become the the daily two or three coffees; not forgetting the additional caramel and whip cream that were layered on top of all that foamy goodness. Extra cost and extra calories.

Therefore, the best solution is to cut back so that I only have coffee on Thursdays, and substitute the hot white chocolate mocha with a bland, sugarless and bitter Americano if I decide to have coffee on a different day.

What would you cut back on?

Rule No.1: Never lose money. Rule No.2: Never forget rule No.1. -Warren Buffet

Warren Buffett

One of the most legendary people in the business world is Warren Buffet. His financial wisdom is something I would love to poses! He is THE FRUGAL GURU of our time! I just came across a Time magazine article that puts together a few of his quotes and advice he gives in a recent letter to stockholders. Check out the article here.

Vivienne Westwood

“Stop all this consumerism.” I just tell people, stop buying clothes. Why not protect this gift of life while we have it? I don’t take the attitude that destruction is inevitable. Some of us would like to stop that and help people survive.” -Vivienne Westwood.

Don’t buy clothes?! What? Nooo!

Yes it is outrageous. It’s borderline blasphemy. So what, I don’t buy clothes and look like a hobo?! At the end of one of her February shows, Vivienne Westwood went backstage and stated the quote above. It was reported by a number of outlets, including The Huffington Post. “[H]elp people survive,” she said. She does have a point.

The recession, reports the Daily Mail, has not stopped women from buying clothes. On the contrary, it just made them better liars, hiding their expenses from their spouses. And in a shocking twist of events, the New York Times reported in January that during the recession women bought more .. wait for it… SHOES! The NYT article states:

Gorgeous Louboutins

[T]he cost-per-wear of a pair of shoes is far lower than that of a dress or suit, which can only be donned so many times a week before colleagues snicker. And new shoes spruce up old outfits, a cheaper alternative to buying more clothes.

and…

Among the more curious explanations proffered for the relative strength of shoe sales is that women — who make up the lion’s share of the American shoe market — get an emotional lift from shoe shopping in a way they do not when trying on jeans and cocktail dresses.

So what’s a girl to do?

Budget.

We talked about this in the previous post. It seems ridiculous for any working girl not to buy new clothes to wear to the office and impress everybody with; and yes it is totally forgivable if you spend your entire salary on clothes and shoes. However, being independent and wise with money means curtailing the habit a little.

The best thing about budgets is that you are free to allocate where you want your money to go, just by being a little extra wise. So instead of buying something new every week, cut it back to every month. Learn how to budget wisely and how to dress wisely.

DE-CLUTTER. You can have tons of clothes that you’ve only worn once or twice, or, have never ever worn (and every girl is guilty of that!). De-clutter your closet. Donate the old stuff that you will never wear. There is no point of it just taking up space and crowding your vision. Something is too small? Chuck it out. Too big? Chuck it out. Other than that pair of skinny jeans that you hope you will fit into one day, no other item can be the wrong size! This way it will be easy for you to actually realize what you actually need to buy so that you CAN SUCCESSFULLY pick something at 5am in the morning!

Focus on the classics. Instead of stuffing your closets with items that will soon run out of style, try to focus a little more on classic items that will last through numerous fashion seasons.

Be savvy. Top fashion magazines always show you ways of wearing the latest trends by paying less. If you want to dress like a Gossip Girl, check out the magazines savvy and sassy sections on how to do so without torturing your wallet. Not all your clothes have to be designer. Mix and match high end brands with low end brands.

Don’t go shopping with your girlfriends. Seriously. Shopping with your girlfriends lowers your sense of self control. How can you resist not buying that really expensive but really hot top that your friend – and the shop assistant- are saying makes you look so damn hot? If you really need somebody else’s opinion, pick just ONE friend and explain to her before hand that although you want to go shopping, this is not a spree, but a budgeted shopping trip that requires restraint and skill and lots of self-control.

So you don’t have to stop buying clothes, you just have to shop smart. And, budget, budget, budget!

I think every girl’s relationship and shopping guru, Carrie Bradshaw, sums up how the majority of girls feel when she says, “I like my money right where I can see it… hanging in my closet.”  :) But don’t do that. You want your money right where you cannot see it, ACCUMULATING in YOUR bank account!

Creating spreadsheets helps put your budget into perspective.

Sitting down to set the monthly  budget is one of the most important things that any adult must do. When I ask people I know if they have budgets I get a range of answers. Some say that they don’t have a budget but they make sure to deduct money from their accounts the minute they get paid. Others say they don’t deduct but they don’t spend a lot anyway so they have a good sum left in their accounts at the end of the month. And yet others have told me that they write down everything they spend in an elaborate spreadsheet, everything! With no exceptions!

Why have a budget?

Personally, I want to set a budget for myself. I know that I may not follow it exactly, but I’m going try very hard because it will give me a guideline and help me:

1. Understand how much you can spend and how much you must save. It’s like a weather forecast, it gives you a fair idea of what’s coming up ahead.

Cashbox for Macs is one of the most user friendly applications for creating budget spreadsheets.

Many sites offer free or very cheap products that are meant to help people like myself with their budget making endeavors. Products such as cashbox [an application for mac users] and many others can be found with the click of the button. I found that the best one though, is the one offered with Google Docs, because Docs not only offers a budget spreadsheet, but a saving sheet and a loan calculator.

2. Help save up for short-term goals! Instead of going out to buy whatever luxury my heart is set on, I can figure out how much it costs and how many months I can save up for it to get it. Let’s say I want to buy jewelry. I can get it now, or I can save up for it. The me from a few months ago would have got it the minute it was a whim, but the new me realizes that although I want it now doesn’t mean that I need to get it now! And instead of getting it now and spending 3/4 of my paycheck, or more thanks to credit, I can save up for it and buy it cash and still be comfortable during the current and next month. These goals don’t just need to be material things, they can be holidays and short getaway trips.

3. Gives you options. Just because you may be paying a debt off doesn’t mean that you cannot save! A budget can help you realize the things you don’t need to spend on and eliminate them from your spending habits. Then, that money can be saved, even if that amount is little. At least your saving!

Setting aside a monthly emergency fund is the way to go!

4. Emergency fund. By setting a budget you can set a monthly emergency fund that can either a) be rolled on and merged with the next month, or b) moved to your savings if not used. And nothing can be a life saver as much as an emergency fund! Whether its the car needing new tires or a surprise dentist visit, you can lessen the pain of the emergency by digging deep into the emergency fund than it is to dig deep into your spending money!

With the budgeting you will realize that even if you get a good paycheck at the end of the month, there isn’t much wriggle room, but the point of a budget is not to live cheaply but to live wisely! A lot of us are slaves to our paychecks. We live from paycheck to paycheck, this alone should unleash the grey hairs! But if we want to live a happy life, in which we feel in control of our financial directions, we will have to sit down and create a budget, no matter how painful that is!

*Do you have extra coins laying around all over the place. Collect them and then take them to the bank. Coins are money, they’re not just a nuisance and after a while they can actually add up to a good amount! ~

Benjamin Franklin

“Beware of little expenses; a small leak will sink a great ship.” – Benjamin Franklin

*Cut down on your daily mocha! I started donating that money. Instead of buying a frivolous drink on a daily basis, I decided to instead take a big portion of that amount and pass it on to somebody who looks like they are in need. A lot of people are going to go to bed hungry tonight, and not because their ‘dieting.’ You can do your part!

Tip: If you are anything like myself, you are not good with saving money! So, why not start little by little? Save 1KD a day! by the end of the month you would have saved 30/31KD. Next month save 2KD, and so on ~ That’s saving made easy!! It’s the baby steps that teach us how to run at the end of the day!

Gift giving is one of the best ways to show that you care

March is the black-hole in my financial statements. There are quite a few many occasions in that month, from wedding anniversaries to birthdays. And because there are so many occasions, I’m broke not even mid-way through the month! I’m sure many of you have similar months when you feel like the occasions just seem to pile up and even though you want to be joyful and celebrate along with everybody else, there is a nagging voice in the back of your mind panicking, “WHAT DO I GET?!” and when you get that message on your cell phone from the bank telling you how much money you have left in your account, that voice catapults to take control of your entire brain and screams, “WHY GOD? WHY?”

So here’s are two tips that you can find on any financial blog:

1. Save up for gifts in advance.

In the same way that most financial advisors will ask you to create an emergency fund, it’s also a great idea to start up a ‘Gifts Fund.‘ You can withdraw from this gift fund whenever there is an occasion. This allows you

A)to realize that you have a budget, so if you have X number of occasions and Y dinars saved up, you know how much you can spend.

B) Not have to worry about last minute gifts that come along with out-of-the-blue bridal or baby showers, strategically placed at the end of the month, when you have enough money for only the coming week.

C) Avoid using your credit card on something that is not essential and thinking that you can afford said gift when really you cannot.

2. Recycle gifts.

Many people do this, although they would rather not admit it. This technique, however, works especially well when gifted perfumes. Not only do people’s tastes in perfumes differ, people will always already have perfume bottles, and more than one, for that matter; so if someone gifts you a perfume set, do not open the wrapping. Clean out a drawer and keep your perfume gifts there. You can always recycle these gifts and give them to an acquaintance or someone you work with but are not on friendly terms with.

Note: When you gift someone, make sure you spend the same amount that they did on the gifts they gave you. There is no point in gifting people really expensive gifts if they’re not going to gift you at least half that amount. This should be a rule of thumb. Plus, it can be nerve wracking for people to receive really expensive gifts when they know that:

They cant spend the same amount you did because they cant afford

or

They wont spend the same amount

When buying a gift it has to be something that the other person will enjoy, especially if its a loved one. Most people buy gifts that they like or they think the receiver will like, however, the art of gift giving entails that you pay particular attention to what the other person wants, and according to your budget, you can make that come true. The recent trend in gift giving is the Gift of Experience, which experts are raving about. Instead of buying something that may or may not be used, you can buy a ski lesson, or a pottery class session, depending on the interests of the receiver. That way, you know you’re gift will be received with enthusiasm and a major part of it was a learning and fun experience that created memories that will last and last.

The Frugal Reader:

1. 7 Amazing Lessons from Peak Performance Coach Tony Robbins: “There’s no sense in re-creating the wheel. Find someone who’s succeeding and do what they did. If it worked for them, it will work for you.”

2. How to Choose an Accountant for Your Small Business: “A good accountant is invaluable if you are seeking capital. He can help you evaluate various options available for business financing. He can read your financial statements and tell you exactly what your lenders are looking for.”

3. 8 Effective Ways to Raise Frugal Kids:  ”While electronics don’t necessarily advertise to kids, they do have an impact on their attention spans.  In addition, overuse may adversely affect their relationships with other human beings and their ability to enjoy other forms of activity, especially quality physical activity.”

* Financial tips will be posted every Sunday, so keep a look out!

*What are you gift-giving tips? Do you have a gift fund? If not, start one NOW!

- Thomas Fuller

Debt can be a heavy load, not just on your bank account, but also on your psychology and relationships.

I have never been one to rack on the resolutions; in fact, I dont think I’ve ever made resolutions in my life. However, at the end of 2009, I took a glance at where I have been and where I’m going in life, and even though I’ve had a pretty set idea of what’s happening, things change (and sometimes drastically), at the most inopportune moments.

At 25 years old, and after six years of working, I have no savings and some debt. A part of the debt was inaviodable, but the rest (credit card debt) was unnecessary. And I’m tired of feeling chained to my debts. So 2010 is the year to DESTROY THE DEBT.

The aim for this year is to target the credit card debt and eliminate it. The best way to do this is to:

1. Calculate the amount of debt I have.

Calculating your debts and interest rates allows you to focus on what debts you can focus on and eliminate first.

2. Understand my spending methods. The best way to do this would be to start an excel sheet that tracks down EVERY expenditure. By doing this, it allows you to see exactly where your money is going and when. This way, you better understand yourself as a consumer.

3. Cut down on trivial spending and focus more money on paying the debt. The more you can live without the better. Also, the more you don’t view this as a chore or punishment the better. No need to feel depressed. On the other hand, you can view this in a positive light, as you are consciously building a better, debt-free life for yourself.

4. Pay the debt. If you take out a specific amount every month to repay your credit cards, try doubling the amount paid (and not using it later on during the month). Stick to your outlined budget

Many of us do not know how to live according to our means. In fact, the majority of us live above them, however, to live a comfortable and debt free life, you have to live under your means.

5. Reward yourself. I have a very bad habit. I like being rewarded for good deeds. I like knowing that would I do will be reciprocated. I am not ashamed of this fact and neither should anybody out there. And because setting a budget and repaying debt can be unrewarding because you are cutting back on so much, every time you make that extra payment, reward yourself! It cannot be something extravagant, of course. You can buy yourself a cup of your favorite coffee, or a few flowers, or your favorite chocolate. And make sure you tell yourself that you are rewarding yourself! This could be hard for people who tend to give and not take, but it will feel good!

The Frugal Reader:

1. Man vs. Debt: Paying Off A Decade of Debt: A Reader Success Story & Quick Interview “To me, it is legalized slavery. You think you work at your job… you don’t! You work for your debtor (and that is a slave no matter which way you cut it).  Not only that, it’s probably one of the most freeing things anyone can do for themselves OR their family.”

2. 8 Tips to Help Your Teenager Become Credit Smart “If you do not have the money in your pocket or in your bank account, don’t buy it!”

3. Financial IQ Test: How healthy is your budget? “Budgeting is one of the hardest things for any of us to do well — and stick to. It requires discipline, attention to detail, and persistence. But it doesn’t have to be impossible; and effective budgeting can actually be quite empowering.”

—

* This month, I will start working on my credit card debt. I still have to think of how to reward myself. Do you know what reward you will use? Are you planning on eliminating your debt starting today?