Where does all the cash go? -- Week 2

As per usual, I got my $40 walking-around cash for the week. Here's how I spent it:

Monday, January 7, 2008 -- A pedicure at my local nail place. The cost was $17; I tipped $3, for a total of $20.

Friday, January 11, 2008 -- We took the late ferry home, and since I had already read the paper, I was unexpectedly short on reading material. So I hit Book Passage and bought myself a copy of Domino magazine. Yes, I am aware that I bought an item ... with a cover line promising to help me banish clutter. It's still in my bag as emergency back-up reading for the month, and it cost me $3.80.

So I spent $23.80 last week, and I have $16.20 left.

What I noticed is how much cash I had been frittering on impulse food buys. I keep a box of cereal at work and brown-bag my lunch every day, but I was still popping out a few times a week for a bag of nuts or some Kettle Chips as a 3 p.m. pick-me-up. Eating only what I brought to work kept the money in my pocket -- even if it meant me tearing through the front door and lunging into the refrigerator immediately upon getting home from work.

Another thing to consider: my cash demands are relatively light because we typically charge all our expenses to the credit card that gives us frequent flyer miles, then pay the balance monthly. Although I keep an eye on what we're paying for gas, groceries or dry cleaning, I do wonder about the "out of sight, out of mind" nature of using a credit card for financial transactions when compared to opening your wallet and counting out the bills. Those of you who are on the same system as we are -- how do you stay mindful when swiping the JetBlue AmEx in line at Safeway?

Comments

[Jecca]

We're on that exact system -- I just used the Southwest Visa to purchase the Jack in the Box chicken club salad sitting on the desk in front of me. (We were out of town this weekend and I had no plan for lunch from home today.) We keep a spreadsheet with separate categories for dining out (any food eaten away from home -- SBUX, lunch, dinner) and groceries.

My cash for the week:
$10 - lunch money for my stepson ($5/day -- sometimes I give it to him, sometimes my husband does; wish I could get him to bring a lunch, but I am picking my battles with the teenager)
$0.50 - chips from vending machine at work
$6.45 - McDonald's
$1.50 - coffee
$0.50 - tip for barista
$0.25 - meter outside coffee shop

[Jecca]

To be a little clearer: I use the spreadsheet to stay mindful. If I'm updating every night (or absolute minimum, once a week), it works. If not, it doesn't.

[Kate]

Part of my response to your Fiscal fitness thing is that I'm actually trying to avoid putting my purchases on my credit card at all and paying cash for the rest. While I get reward for using the credit card, I don't think that they justify the interest that I had to deal with to cover a couple expensive purchases several months ago (new computer after my dissertation-bearing laptop stopped working entirely, extensive car bill from some lady opening her door into me) I was just returned a fair bit of money from having somebody else cover part of my grad school costs, so I paid off my bill, which had reached a point that I was not comfortable with it, and am now only putting on things that make my life significantly more convenient (I do include gas in that category). I bought a tiny, attractively colorful notebook from Borders to record how the cash goes out. It's got an elastic band so I can just slip receipts in if I don't have time to record purchases then and there. We'll see if attractively colorful is enough to keep me taking careful notes.

I used to use Quicken, but at some point just stopped updating it.

[Polly]

For a while there I was sticking the cash my sister pays me into the bank, and then using the credit cards so that I get rewards. But then the balances started to go up, and I really felt like things were running away from me, so now I'm using the credit cards only when I really have to.

In fact, instead of putting cash in the bank like I thought I'd try last week, I decided instead to pay cash for gas, since it's cheaper that way and it soaks up cash I might otherwise spend on frivolities.

I started out the week with $5 cash left over and $100 cash for babysitting. I spent:

$10 on gas
$55.83 on groceries
$10.22 on cold medicine and toiletries
$22.93 on fast food/takeout
$3.40 on vending-machine junk at work (I'm feeling better, so spending on that and on cold medication should go down)

For a total of $102.38.

[Becky]

I do wonder about the "out of sight, out of mind" nature of using a credit card for financial transactions when compared to opening your wallet and counting out the bills. Those of you who are on the same system as we are -- how do you stay mindful when swiping the JetBlue AmEx in line at Safeway?

At least once a week -- more during tight months -- I look at my credit card activity online and look at the money left in the checking account. I treat the credit card balance as money that must come out of the checking account (we don't carry a balance on the credit card), so then I see how much is left to spend for the month.

I'm very careful at tracking what I buy with a credit card, but cash in my pocket just disappears. It's not in the checking account anymore, so it's like free money. I use cash to pay for things like lunches out, drinks out, movies, and other small, fun non-essentials. But when I'm considering a big, impulse purchase, I'm much more careful if I'm putting it on a credit card than if I'm paying cash for it. And I definitely have strict limits on how much cash per month I can take out of the ATM. I'm not sure why my brain works like that, but there you have it.

I've been following this financial series carefully -- my husband and I are recovering from 4 months of a two-household situation, and we're trying to adjust to California prices on some of our staples. So right now we're working on cutting back expenses, and next month we'll decide on a number that goes into savings each month. (Not only do we have to get back into the swing of putting money into savings, but we dipped into it a bit over the past four months, ugh. I guess that's what it's there for.)

[Stephanie]

Tally of all spending for this week:

$ 12.65 eating out
$ 35.47 groceries
$224.49 new LCD monitor

The eating out covered In-n-Out one night and frozen yogurt w/ a friend another. I could have skipped the In-n-Out. That was sheer laziness. Only $4 worth of laziness, but still.

The grocery expense is high this week because it includes food used to prep dinner for a homeless shelter.

The new monitor was a birthday gift to myself. Sort of an expensive gift, but I have been considering a new monitor for a long time. I've been using a monitor that I snagged from work for free when they were updating their equipment. 6 years ago.

As for what keeps me mindful when I use the credit card? At the moment, knowing that I'll be reporting my spending here. :)

I'm almost always just naturally careful with my spending. I was getting a little loose about things in the last year or so. Just little things - convenience food, eating out because I was too lazy to cook rather than for social reasons, buying brain candy books instead of getting them from the library, etc. It's a good exercise for me to occasionally sit down and track things more carefully. It generally kicks me back into mindful spending mode.

Another thing that keeps my spending in check is having a financial goal. I was a miser until I paid off my student loans. I was great at controlling my spending while I built up an emergency fund. I started getting loose because I had no new goal and there was no financial pinch. I had given up on aiming for owning property since it seemed there was no sense in having an impossible goal. But this year I have put that back on the table. It's a stretch. A big one. And one I probably won't meet this year. Or next. Unless I leave the Bay Area. But it's back on the horizon. So now I have a reason to watch my spending.

[Rebecca]

Last week I took out $40 and it was gone before Tuesday. $5 was for movies Sunday night, $10 was for my entrance fee into the weight loss challenge we're doing at work, $20 was repayment to someone for my share of a group Christmas present, and $5 was for used books and magazines I bought from the book sale at work. By Wednesday, I was digging through pockets and change bowls to scrounge up enough to get a latte on the way to work. I could have used my debit card to pay for it, but I don't use it for purchases under $10 - too many service fees.

Other things I spent on: groceries were $76, which is a lot higher than normal because I had to buy a few big things which I don't need to get every week (like a jug of laundry detergent and kitty litter - I get the expensive, environmentally-friendly stuff). Also, there was the $40 at the drug store, also for things I don't need that often, like shampoo, hand and body lotion and... ehem... girly stuff.

I rarely use my credit cards, except for emergencies or special occasions, such as big-ticket items. However, your question would apply to my debit card, which I use frequently: so how do I stay mindful? Since it's coming directly out of my bank account, I try to keep in mind how much I want to spend in a week, and how close to the total (or how much over it) is this putting me?

[Erin]

I started out the week with $10.00 and managed to not have to stop and get more. Here's how it broke down:

$3.50 - Bottled Water (we were out of water in the office, and I just can't stomach Los Angeles County tap water
$1.25 - M-n-Ms
$5.00 - Tip for the pizza guy
$0.25 - Ashtray in the car

We tend to use our check card for the majority of our purchases (instead of using cash). My 2007 NY resolution was to keep up on the Quicken tracking, and I'm happy to say, that is one of the very few resolutions that made it to 2008. :) The nice thing with Quicken is that I can easily see where the majority of our expendable cash is going (dining out).

[julia]

Oh man, I was bad this week with spending. Hopefully disclosing my spending habits to you guys will make me be better!

It was a crazy work week, so we had three takeout dinners and I bought lunch three times. I spent $109 on takeout and only $85 on groceries, plus $88 on gas (most of which will be reimbursed) and $250 on bills. Geoff also decided he couldn't live another day without a humidifier, so we spent $85 on that.

To your question about tracking debit spending, I check in online a couple of times a week to make sure there is enough money in the right places. I am not as mindful as I could be when shopping, but I find that going to the store with a list is the best way to get exactly what I know I need and will use. Meal planning ahead of time = choosing what to buy based on our schedules = having everything I need to make dinner = better quality food that's cheaper and healthier. It breaks my heart to throw away a $6 package of organic chicken breasts because I couldn't get it together to make tacos. Shopping with a list (okay, it's on my Blackberry because I am a nerd) helps prevent that.

[SP]

My husband and I are on a mostly-plastic system and we keep the costs in check with a budget on Excel; I actually don't track the specifics at all, but I know exactly how much we have for each category every month to stay inside the amount we deposited. I do a budget for the year at the end of the preceding year, with the set expenses (mortgage, student loans, utilities), and I give us a number for groceries and miscellaneous that seems reasonable, and set a budget for savings, retirement funds, and home equity loan payments (new garage). I can, if necessary, adjust the savings total for the month down some in order to pay an unexpected expense -- but I have to adjust the other months up, to make sure we still end up with the same totals at the end of the year.

This works better for me -- lots and lots of information for every single expense would be meaningless, and as long as I know I only have $150 for the month in personal spending money, I just adjust over the course of the month.

[molly]

We are on the same system as you. We have become more aware of what we buy using credit due to a single grocery store event. About two years ago we bought a $5 tomato at WF, which made us very aware of credit card purchases. We have separate credit cards that we sit down and go over each month. We pay off our cards every month. We no longer use Quicken or other software programs because we live well below our means so we no longer need to track spending to the penny.

[Amanda]

This week was too nuts to track -- we ate out constantly, I took in no lunches and our house was a mess -- we were both so slammed at work including some late work nights so... this week will be more regimented! (I also had an $800 heating oil bill to pay -- oy!)