Expenses

This category looks at stuff that we spend money on!

Credit Cards, Bank Accounts and Salaries Part 2

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In this series, I’m looking at our changing attitudes to money, and answer the simple question: are we all credit card slaves now? Part 1 was yesterday: entitled Where did our attitudes to money come from?

Credit Cards, Bank Accounts and Salaries

Suddenly from subsisting from week to week on wages became more challenging as we were all forced to wait four calendar weeks plus some for our paychecks. And wow! Didn’t it feel good having that much cash in your bank account? Didn’t it?

“You bet. And so, you’d splurge a little here and a little there. You’d write a few checks (‘cheques’ to all you Brits!) to buy the groceries, and hope the store didn’t cash them too early, or that the overdraft fee wasn’t too much. You’d be all right because payday was just a few days away anyway!”

When credit cards were first invented, they were primarily intended for luxury consumption for business travelers and ‘wealthy’ travelers, too. American Express, MasterCard, Visa, etc, Classic, Gold, Platinum, Clear cards

All were designed to create the impression of wealth. Unfortunately, the banks’ pursuit of profits above customers hastened the degrading of the higher value lines, while forcing banks to create ever new ‘brands’ at the premium or private finance end of the spectrum. Meanwhile, for ordinary consumers the presence of credit cards in your wallet went from a sign of wealth to a sign of status to a mere sign of credit worthiness.

Thereby, the credit card industry created a whole new language of ‘apparent’ wealth, where terms like independent income were replaced by disposable income; net worth became credit worth; rate of return became APR; and business deals became ‘transaction fees’. The whole language of wealth was corrupted in such a way that on graduation, students are now told to build your credit history, to check your credit ratings, and to manage your credit score successfully. What happened to building your wealth, checking your investments returns and managing your portfolio?

Has credit card ‘wealth’ affected your ability to build real wealth? Did you borrow too much or pay too much interest? I would love to hear your comments on this…

Where did our attitudes to money come from? Part 1

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In 2006, I asked a simple question: Are you Salary Slaves? I have thought about it for quite a while, and I’ve come to the conclusion that many people are indeed salary or wage slaves… In this multi-part post, I’ll be looking at this issue in some depth each day for seven days…

Day #1 – Cash Transforms Our Subsistence

When people lived in agrarian societies, we all were tied in various ways to the land. We would all benefit when there was a surplus, and grow hungry when times were lean. When we were living in traditional societies, we’d live hand-to-mouth, literally. Even in countries that have just industrialized, there is a memory of what it was like to live on a farm, rearing animals, raising crops, picking wild fruit… and in many ways, life was great. Your shopping mall was outside your front door when it was warm, but if it turned cold and snowy, well, like the Ant in the traditional Anansi story, you’d had better have finished your preparations for winter.

However, once we entered the industrial age, many of us still assumed that the hand-to-mouth subsistence type of economy or society still existed. It did. It was called living from “paycheck to paycheck”. The cash we received was the equivalent of the stored value of the produce that we used to have on the farm.

But we’d get the paycheck or ‘wages’ paid on Thursday or Friday. It’d be gone by Monday or Tuesday and we’d be eating bread and drinking water for Wednesday and Thursday. With the coming of the middle class, wages become salaries, and weekly payments in cash became monthly bank transfers.

Do you remember your parents attitudes to money? How did they handle the cash? Were they good at it? Or did they just spend it?

Part 2 is published Sunday at lunchtime, then each day next week.

Seven ways you THROW good money away.

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I was going through the bills received and payments made today and I discovered that I had made a huge error in one bill. I hadn’t recorded the transaction properly, so I couldn’t account for the money (its receipt, its whereabouts, or anything)… And this is despite using Technology to make things ‘easier’.

This set me thinking about some of the mistakes I have made, and how these mistakes can cost unexpected dollars and sense. Since this is post is about money mistakes, and some of the problems that follow, I started listing the ways I have made money mistakes (I don’t even mean the big stuff):

1. late paying bills: I neglected to pay a credit card bill on time, and received a surcharge. Recently, I neglected to pay the electricity bills for the home and business. That netted the power company an extra surcharge of about $25 in late payment fees.

2. losing track of money: there are times when I simply dropped the money in the street or left my money in the ticket machine at the subway machine… I’ve lost over a $75 in the past year this way.

3. assuming receipts and change are correct: I found more than once when I got home that there was a problem. The most difficult problem to solve is overcharging: either incorrect pricing or duplicate items on the receipt.

4. making snap decisions: more than once I’ve made a snap decision to pay something earlier or buy an item that I could have waited for. The result was that I completely blew through my budget… Nightmare.

5. lending money: more than once I’ve been asked to lend money to a friend. This wasn’t always good timing as we had our own financial pressures to deal with, and finding myself short of money to do what I wanted BECAUSE I had agreed to lend money. Worse, the money came back late, short, or never!

6. buying duplicates: often I buy a lot of things for the school or the home or myself. More than once I’ve ended up buying duplicates of items that I already had. Once on Amazon, I bought a duplicate of a Seinfeld DVD that I had bought and watched. I often buy additional pens, books, and other items this way.

7. unexpected events: the unexpected wedding invitation or birthday part. Even a works outing. All of these can trigger additional spending that is unbudgeted, and easily cascades to quite a bit more than you intended.

These mistakes can really add up over the year. And some of them can break your budget leaving you short of cash, especially if you are running a tight budget with little or no room to spare.

What kind of mistakes have you made with your money? I’m not talking about the ‘big stuff’… I’m more interested in the little stuff that comes up daily or regularly! Can you add any to the list? I’m sure you can!