I went off sick last week for the first time in absolutely ages. It’s something I didn’t think about when I was in school; I just wasn’t ill very often. Then I became a parent and suddenly I couldn’t be off sick because I would still have to look after my son. I’ve had all of about five days off sick in total since then – three of which were in the first year.
So while I was stuck in bed, head spinning, I got paid (as normal), and realised something. I have no plan to get out of my overdraft. This is a terrifying realisation to make, even if we’re only talking about £500. You’d think I wouldn’t have a problem making that back over time, but somehow in all of the last few months I’ve managed to get to the end of my money before the end of my month.
It’s a story repeated all over the place – we’re taught how to earn money, but not how to spend it. We’re given access to credit but not the education to use it wisely. I’ve been in debt since I was twenty. Now twenty-five, that might not sound like such a big problem, but I am making slightly more than the minimum payment on three credit cards and I can’t get out of my overdraft. If I don’t figure out how to spend less and earn more, I’m going to be in trouble should any sudden expense occur.
I’ve also left off the single biggest issue with my current circumstances, which is also the reason behind my wanting a different job: cash flow. I have to purchase things for the company, then claim the expense back. This severely affects my cash flow. It has also resulted in my spending more money on my credit cards to keep going.
Step One is more difficult than it sounds: don’t spend money. I will have to curtail all non-essential spending until I have a small cushion to get me through the month. This leads nicely into Step Two.
Step Two is: get organised. It’s a lot easier to do something when you have a plan. That means preparing lunch so I don’t buy it, not snacking, and *sob* no buying books. Replacing essentials is going to be the most I can do. What happens when I mess up? Next step.
Step Three is nice and easy: don’t kick myself for failure. It’s going to happen, but sticking as closely to the plan as possible is how I’m going to succeed. I shouldn’t try to be perfect; this process is not only about getting myself out of debt, it’s also about instilling good financial habits.
Step Four should help with that: allowing myself set rewards. At predefined milestones, I will allow set nonessential, totally sanctioned spending. This will vary in scale and type, and will hopefully provide enough motivation to keep me on the straight and narrow.
The plan (which will get an operation name as soon as I come up with one), will be managed by a spreadsheet and will get a funky logo and everything.
Step Five: Identification. Money I spend for work, which will be reimbursed, will be spent on the prepaid card I have. The initial float is my own money; subsequent top-ups will be effectively the company’s. This way, I should be able to avoid laying out my own cash.
Step Six: Minimisation. Where I do have to spend money, I need to account for it. Not necessarily with the military-style precision of accounting software (with which I am very familiar), but at least on a spreadsheet. This will be kept constantly up-to-date, so that I can glance at it at any point in the month and know where I am financially.