For the past few years, I’ve been playing the denial game with my debt. I’ve been shoving it under the rug and pretending it doesn’t exist. I’ve been paying off my credit cards, then maxing them out. I’ve been ignoring my large medical bill that’s now in the scary hands of a collection agency. I’ve been defaulting on my school loans, putting them in forbearance, and trying not to think too hard that I have a five-figure debt I need to take care of.

I’ve mentioned before that I didn’t grow up in a home that valued money. It feels harsh to say that, but it’s honestly the truth. My dad gambled his paychecks away. My mom tried to support a family of four on a preschool teacher’s salary. I knew about things like bill collectors and evictions long before I should have known about them. I know what it’s like to stress about money, to wonder if your parents can afford groceries or rent or electricity. It’s a scary world and because of that, I was never taught how to use money effectively.

But I’m also 26 years old. I’m an adult and I can’t blame my parents for my money habits anymore. I have to own up to the fact that I never placed a priority on learning proper money management tactics, and that I’m in debt – major debt – and I have to change my money habits now. I have to take action now.

At the end of December, I read the book The Total Money Makeover by Dave Ramsey. I should start off by saying I don’t really like Dave Ramsey. There’s something about him that rubs me the wrong way, possibly because he seems to place being rich over anything else. I’m honestly not looking to become rich. Or a millionaire. Or even living completely debt-free. When thinking about my ideal money life, the key feeling I have is comfort. I want to be comfortable with my money. I want to handle it in a wise, controlled way. I want to be able to pay my bills, save money, and have a decent-sized disposable income to use for entertainment, travel, and shopping. And, of course, I want to be mostly debt-free.

(I say mostly because I am perfectly fine with having a car loan for the time being. I am planning to trade my car in next year for a newer model + better car payment, so I know I’ll have a loan for a while.)

I’ll be honest: I didn’t learn a ton from Dave Ramsey’s book. I found his tone brash and condescending, and it was hard to relate to many of the personal stories that were scattered throughout the book. All that said, there were some key thoughts roaming through my head while I read the book.

First, I need to reevaluate my money habits and change the way I view money.

I don’t spend my money wisely. I make a budget and I don’t stick to it. I eat out way too often and spend money on way too many unnecessary things. I’m living paycheck to paycheck, even though there’s no reason why that should be the case. I have to completely change the way I think about money. I have to build a better budget and get super strict with my spending habits.

Second, I need to begin working towards an emergency savings account ASAP.

I’m not sure if you know how scary it is to have absolutely no savings. Because it’s terrifying. I have no safety net to fall back on if something happens in my life. If I need a car repair. Or I get sick or injured and have to visit the ER. Or, say, I shatter my iPhone screen and need a phone replacement. My ultimate goal is a $10,000 emergency savings fund since Dave Ramsey cautions to have a fund that will pay for three to six months of expenses, erring on the side of six months if you’re single. For me, that would equal $10,000. I figure it will take me a long time to get to a five-figure emergency savings fund since I won’t be working towards it as ferociously as my debts, but it’s an ultimate goal that I’ll be putting a lot of effort into.

And thirdly, I need to get serious about paying off my debts.

As I mentioned at the beginning of this post, I have been in denial that I’m in debt. Probably because I’ve been in “normal” debt. Credit cards! Medical bills! School loans! This idea of “normal debt” is such a fallacy that we let ourselves believe in because it’s just the way most Americans live. It doesn’t have to be this way and I don’t want it to be this way for me anymore.  I want to get super serious and super focused on my debt. I want to put together a payment plan to get me out of debt and into a (mostly) debt-free lifestyle. It’s possible. It will just take commitment, dedication, and giving up some things for a few years. Like traveling. Monthly pedicures. Shopping. And even possibly delaying moving out on my own.

But this post is long enough as it is. I’ll be back on Wednesday to talk more about the nitty-gritty details of my debt and my goals to pay it off.

Okay, this post was filled with not-fun money talk. How about something fun to ponder in the comments? Let’s say you won the lottery. Paying off debts and saving aside, what is the first frivolous thing you’d buy? For me, I think I’d buy a brand-new queen-sized bed. Right now, I have a full-sized bed on a frame from IKEA, but it’s not very sturdy and I covet my mom’s glorious queen-sized bed.

I always find it interesting to see what people deem worthy or not worthy to splurge on. What things are worth the money spent, and what things do we like to save money on? I’ve wanted to write my own post, but have never gotten around to it. Until today! I had a fun time making this list, thinking of what things I love to splurge on, and realizing my money habits when it comes to things I don’t really love spending money on. It was eye-opening for me!

Let’s do this:

What I Splurge On

Professional haircuts and color. For me, going to a professional salon for my haircuts and coloring is worth it. Yes, it’s expensive. No, I can’t really afford it. (I could put the money to much better use, I suppose.) But I go there because I know they use the best ingredients for coloring my hair and my stylist puts so much care and attention to making sure I have a great experience. I’ve tried cheaper salons and I am always disappointed (with both the cut and the service). My hair is just a really important part of my identity (shallow as that may sound) and I’m willing to pay more money for a professional salon cut and color.

Traveling. I don’t travel as much as I want to (both for money reasons and not having a lot of time to take off work). I try to make room in my budget for one big vacation a year (usually, a cruise) and it’s never exactly cheap but always so worth it. Traveling is something I really want to do more of, and I am hopeful with more careful spending and saving, I can.

Eating out. This is a big splurge area for me. It’s also a vice. I am trying to cut down on how often I eat out, but it’s hard, because I just really, really enjoy eating out. Sigh. Maybe one day I will be someone who is satisfied with eating out once a week, but I’m just not there yet.

A large apartment with a washer & dryer. My mom and I definitely splurged on our apartment. It’s big, with a screened-in patio, large living room, three spacious closets, and our own bedrooms and bathrooms. The appliances are updated and the apartment came with a flat-screen HDTV and full-size washer and dryer. (Also, a fireplace which is silly. We’ve never used it.) It’s a splurge, but well worth it. I love our apartment.

Cable and high-speed Internet. This is a very big splurge for us and does not come cheap, but we put both to so much use that it’s hard to imagine life without cable and Internet! We have digital TV, a DVR, and high-speed Internet. This is basically a must-have for me.

What I Save On

Clothes and accessories. I really do not spend all that much money shopping for clothes. I buy most of my clothes from Target, Old Navy, or Marshall’s. Places where I can get pants for $20 and a shirt for $15. That’s my kind of shopping. I don’t really buy into the whole idea that you have to pay a lot of money for quality clothes, because it seems like the clothes I spend the most money on are the ones that fall apart more easily. It’s usually the clothes I don’t spend much money on that last me a while. And I rarely buy accessories (read: scarves, jewelry, purses, etc.). I usually pick up one or two (cheap) scarves during the winter, and I’ll usually get one new Vera Bradley purse (that lasts me forever!) during a big sale, but that’s about it. I never buy jewelry and I’ve had my current sunglasses for 2+ years.

Shoes. Give me a pair of flip-flops, a pair of dark flats and light flats, maybe a nice sandal, and a pair of nude heels and I am set. I don’t need a large selection of shoes and I’ve never really been one to get excited about shoe shopping. If I could wear flip-flops everywhere I went, I would be totally okay with that.

Make-up. My make-up bag consists of BB cream, powder, and mascara. I can get this all for under $20 at Target and it suits me just fine. I actually really hate make-up and I wish I didn’t have to wear it. I’ve never been to Sephora, walk briskly past the make-up counters at any department store, and have been to Ulta once (and have no desire to ever go again). Make-up is just not something I really care about. And it always seems way more expensive than it needs to be.

Using my apartment gym. My apartment has a wonderful gym equipped with one stationary bike, two treadmills, two ellipticals, free weights, and a decent amount of weight equipment. It is fabulous. So long, $60 gym bill! Although I miss being able to take group fitness classes, most especially spin classes, I am more than happy and satisfied with my apartment gym. It generally does not get very full in the mornings, though the afternoons can be a different story. Along with my own set of free weights, an exercise ball, and a Pinterest board of workout ideas, I’m pretty much set when it comes to exercise and have no need for a gym bill.

Using the library. In 2012, I spent $350 on books for my Kindle. I could have just about paid for another cruise for that price. After that, I decided it was time to start using the library again. Now, I only buy a Kindle book if I am absolutely sure it is one I want to keep. For the most part, I use the library like crazy now and only buy books every other month or so. (I haven’t counted it up, but I am sure I’ve spent less than $30 on books this year! Woo!)

You tell me: what do you splurge on and save on? Does your list look anything like mine?!

This is the final installment in this little mini-series on how I’m approaching my finances in 2013. It’s a big area of my do the work theme and I’m sick and tired of feeling overwhelmed about my finances and out of control.

My money goals for this year are the following (also found on my resolutions page):

• Put myself on a strict budget and evaluate how I’m doing on a monthly basis. I plan on doing this in great detail the first weekend of every month, but also keeping a log in Google Docs with where my money is going and keeping up-to-date on that. Typically, I can go weeks without looking at my bank account, terrified to see what my balance is. That’s not helping me at all. I also have a budget template I use that breaks down where my money needs to go (i.e., bills, savings, extras, etc.) and I want to take one morning every two weeks (preferably the day I get paid) to get all the bills taken care of.
• Save at least $83 per month to have $1,000 saved by the end of the year. I’m terrible at saving so this is an area I want to work on in 2013. Having $1,000 in savings would just make me feel so much better if anything unexpected pops up. I know it’s really not enough, but it’s a start. In doing so, I have a goal of saving $83 per month which is doable for me right now.
• Pay off my last credit card. This one is being taken care of tomorrow! It has been YEARS since I have had no credit card debt on my conscience so it is going to feel amazing to have this goal done with. By paying this off (and not using it unnecessarily), this gets yet another bill off my plate which is necessary for my future budget.
• Set up a payment plan with the collection agency holding my ER bill. One of my major money goals this year is to get my ER bill completely taken care of. I’m not sure if I can get it all paid off this year, but I definitely want to make major strides with this because it’s been weighing on me for a while now.
• Spend less than $100 on Kindle books. My Kindle habit is out of control and between free book deals I’ve snatched up and a Kindle gift card I have in my possession, I don’t see myself spending any money for a few months at least.
• Buy a car. This is my biggest money goal for 2013. I’ve put this off because of money issues, but it’s apparent I really need to possess my own car, if only to give me more of a feeling of independence in my life. I don’t live in an area with a good public transit system and relying on other people is getting old. I am hoping for a decent tax return so I can put a good amount down and not have too high a car payment. I CAN’T WAIT TO DO THIS, YOU HAVE NO IDEA!

There are some money habits I want to begin this year, too. These will help me with my bigger money resolutions, and I think they’ll help give me more control over my spending.

• A cash budget system. I heard about this idea years ago and have always wanted to utilize this in my own life, but I just never had the motivation to do so. Getting money out of my bank is a pain and requires more steps than simply paying by debit card, but I know it’ll help me keep a handle on my money. My plan is to decide on a certain amount to take out of my bank account every other Friday and use that money for any extra expenses: food, entertainment, shopping, etc. I can use it however I like but once that money is gone, I’m done. If I use it all up in a week, well, I’m out of luck until my next payday. 
  
• Gift cards. Amy originally brought this idea to my attention. Basically, the idea behind this is loading up gift cards with certain amounts to give me a limit I can easily see. Once I use up the gift card, then I’m done. I really, really love this idea and I’m thinking of implementing it. I’m still brainstorming ways I can use this effectively in my life but right now, I’m thinking of setting aside a “gift card envelope”. Any extra cash I didn’t use on my cash budget system during the two weeks goes into the envelope. Whenever I have enough cash to buy a gift card, I can get whatever I want! A Kindle gift card, a Starbucks gift card, an Old Navy gift card (my weakness when it comes to clothes shopping is Old Navy). Or perhaps setting aside $1 every time I work out or hit my healthy goals for the day. I’m still figuring out how best to make this work so any advice is helpful!
• Opening up a new savings account. Currently, I have a savings account with my bank, which requires just a $1.00 minimum, but has no real advantages. It’s also very easy to transfer money out when I need it. I’m trying to decide whether to keep my savings in this account or move it to something that reaps better rewards. (And makes it harder to access!)
• Budget, budget, budget. I adapted a fun little spreadsheet from Jenny Blake of Life After College and since I get paid every other Thursday, my goal is to spend Thursday mornings going through my budget, paying bills, and putting money in savings. I want to keep a running log of how I’m spending my money because last year I could go weeks without even opening my bank account. I didn’t have a good grasp on my finances at all. This will also help in my monthly tracking.

Finances are an area of my life I know I can gain control over with a few easy steps. It’s not going to take a complete overhaul of my life like losing weight will. All it’s going to take is a tighter budget and less unnecessary spending. It’ll take me a while to get used to not spending as much (I’m already counting down the days until February and I can have Starbucks again!) but it’s completely doable and  I’m interested to see how it will affect my overall life.

Do you have any money goals for this year? 

Last week, I began my little mini-series on one of my “Do the Work” goals for 2013: finances. I feel out-of-control with my spending habits and I knew I wanted to use this year to tackle all those money goals that I’ve put off in years past.

At the end of 2012, I decided I needed to create a strict budget. Come February (hopefully), I will have to figure out a way to include a car payment, car insurance, and weekly gas money in my budget. I also knew I had to create a budget that worked for me and would help me feel in control and on top of my finances, but also allow room for fun and experiences.

The first step in doing this was to sit down with my bank and credit card statements from 2012 and figure out where each and every penny of my money went in 2012. In order for me to create a realistic budget, I had to figure out where my money was going. Aside from bills and paying my mom (for rent/utilities/food), I was able to nail down the major spending categories for me:

• Target. It’s not a surprise that I love Target (who doesn’t?) and I went a little crazy on my spending when my mom and I moved to our new apartment and I had to buy new things for my bathroom and bedroom. Generally, I would hit up Target a few times a month spending anywhere from $30 to $100.
• Amazon – Kindle books. On average, I spent $54 per month on Kindle books. My Kindle habit is a bit out of control and I am actively working on ways to cut down on my spending, such as using the library more and snatching up those free Kindle books when I can. I used to be a library fiend but now that I have a Kindle, I haven’t been in one in probably two years. My library card still works (and I still have my number memorized…) so I just have to be strict with myself! (I do use the library to rent Kindle books, but the selection isn’t fantastic and the waiting lists for popular books are long, long, long!)
• Starbucks. I am not a huge coffee drinker and I never typically crave Starbucks but it is right on my way to work, the line is quick, and it’s just one of those treats I love having. It’s one of those unnecessary expenditures, really, so my plan is to only hit up Starbucks once a month to make it a special treat. My waistline will thank me.
• Salon and spa appointments. This includes monthly pedicures, monthly eyebrow waxes, and bimonthly hair appointments. I have decided to completely cut out pedicures and eyebrow waxes, as both are things I can do at home for cheap. But I just could not give up my hair appointments. I am cutting down on how often I go, but my stylist does amazing things with my hair and I just can’t give this up!
• Weekday lunches. I knew this was one area of my budget I wanted to get in control and I wasn’t shocked to see how much I spent over the year on weekday lunches. I averaged around $70 a month and I’m hoping to cut that average in half this year.
• Clothes and accessories. This is mainly clothes, but also includes money spent at IKEA where I bought a new bed and odds-and-ends for the new apartment in September. I really want to work on this area of my life. For someone who talks about loving minimalism, it isn’t exactly ringing true if I’m spending vast amounts of money on clothes I don’t actually need. I’m also hoping Project 333 will be a great experience in consumerism and understanding how to minimalize my closet.
• Credit card payments. This is absolutely unnecessary. I actually spent twice as much money with my monthly payments to my credit cards than is the balance on both! That is crazy to me. I am very close to the balance on my last credit card (yay!) and my plan is to cut up my Target credit card and only use my bank credit card for emergencies.
• Vacations. Completely necessary expense! 🙂 I went on three vacations last year: two cruises and a long weekend in Atlanta. For this year, I am planning a fun trip to Washington D.C. in the summer (with bloggers! And you should come! Yes! You! Email me?) and a cruise in the fall and that’s about it for my travel plans. I really want to work on saving and paying off my debt right now, so while I absolutely adore traveling, I need to be smart about what I can afford and keep my priorities in line.

I actually have very firm goals for each of these categories, for how much I am allowing myself to spend over the course of the year and I plan on checking in on myself on a monthly basis to rehash how I’m spending and what changes I need to make.

What this helped me to see was what areas I struggle with the most when it comes to spending money. I don’t have an issue with paying my bills, I have an issue with overspending on what’s left over. I think it’s a natural problem to have, especially for someone just grabbing hold of her financial independence but it’s one I want to nip in the bud quickly. I was able to pinpoint my areas of weakness, and also create a budget around this. I can’t exactly say I am never going to buy a Kindle book or shop at Target or spend money on clothes. I know I’m going to do that, but I want to do it in a more responsible way. By figuring out where I tend to spend the most of my fun money, I was able to create a budget around it that would allow me to pay my bills, save, and still have my own money to play with.

Next week, I’ll break down my budget and show you the fun little spreadsheet I use to calculate everything!

What category do you think you spend the most in?

My theme for 2013 is “do the work” as I talked about last week. I came upon this mantra after discovering what I wanted my biggest priorities in the new year to be:

• Health: Losing weight, engaging in healthier eating habits, and leading a more active lifestyle
• Social: Reconnecting with friends, being more open to social situations, and finding a core group of girlfriends
• Finances: Buying a car, spending less and saving more, and paying off my medical bills

For today, I want to talk about finances. I will be talking at length over the next few weeks about my personal finances, my goals for getting on track, and my priorities when it comes to spending and saving.

So, confession time? I don’t have the best relationship with money. I’m not terrible at maintaining my budget. I pay my bills on time and while I do live at home, I help my mom out with rent, utilities, food, etc. There are times when I do the whole “I’ll pay you back when I get paid!” when we’re out and about, but it’s not something I make a habit of. But then there’s money left over. And it’s not going to savings. It’s not going to paying off my school loans. It’s not going to my credit cards. It’s not going to paying off my $2,500 medical bill from 2010. It’s going to fun stuff, like pedicures and clothes and vacations. It’s going to weekday lunches out and frivolous items I don’t really need.

I could point fingers at my parents, blaming them for not teaching me proper money management skills. And I know my past and how much we struggled with money growing up has an effect on how I am today. Today, I am not struggling with money and it’s such a difference from how I spent the first 21-22 years of my life. So I know that plays a part in the decisions I make with my money now. But I also know I am an adult and using my past as an excuse isn’t going to fly with me. The past is behind me. I am in charge of my present and my future.

Last year, I wasn’t smart with my money. I didn’t keep a strict budget and once bills were paid, I was off and running with extra money for whatever I wanted. I tried saving, but then ended up moving the money back to my banking account when I needed it. One of my resolutions was to pay off my last two remaining credit cards and never keep a balance month-to-month but it wasn’t until December that I had even one of them paid off.

This year, I want to feel more in control of my finances. I have to find room in my budget for a car payment, car insurance, and gas. I have to find room in my budget to start forking over a large amount to my medical bills. And I definitely have to find room in my budget for savings.

Blogging about finances can be pretty dull and boring, I know, but I wanted to really hone in on what my spending habits look like so I could create a budget that fits my needs. I didn’t want to create a budget out of thin air, with impossible money targets to hit that weren’t in line with my needs. There’s a science to this, a finesse. I wanted to spend a lot of time discovering my patterns and finding out just where all my money in 2012 went.

The journey was an interesting one, as I poured over my bank and credit card statements and started listing all the different places my money went over the course of the year. Patterns emerged and my eyes were opened at just how much I spent on frivolous items. It was rather astounding to see how much I spent on silly things. I need more control.

It was a process, for sure, and I’m excited to share the journey of how I arrived at a “Perfect For Me” budget that allows me to pay bills, save, and still have money left over for me. I know I’ll learn a lot along the way as I spend less and save more, and I can’t wait to see what else my eyes are open to.

Next week, I’ll be unraveling my spending habits of 2012. It’s not pretty, but it was necessary for me to sit down and map out what areas I spent the most to paint the most accurate picture of my money habits, and how to gain more control.

What kind of relationship do you have with money? Any money goals for 2013?