Cents and sensibility

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Ahhh money. We can't live with it, but then we can't live without it either! The 'Let's Talk about Money' survey done in the UK in 2007 found that almost 1/3 of interviewees thought that talking about money was a definite 'no, no'; that it showed a lack of good manners and was downright rude. But let me share some statistics with you from last year

• The average personal debt in the UK is £9731.51 (excluding mortgages) 
• One person in 10 is struggling to manage their debts
• The hidden debt mountain in the UK is £55 billion
• One in 5 consumers is hiding their debt from their partner
• One in 3 consumers is keeping the full scale of their financial problems from their family

Are you shocked? Here are some more..........

• 43% of people in debt complain of loss of sleep
• 21% suffered with mood swings
• 12% admitted that they drank more alcohol as a result
• 12% said they could no longer do their job properly

So when should we start talking about money then? Methinks the time is NOW.

But I have to be honest with you. I enjoy spending money. After all there are so many nice things in the world. And I work hard. So I deserve it don't it? I must admit that in my marriage, my dear husband is the thrifty one. I like to treat myself and I also like him to treat me. He says that money burns a hole in my pocket. And maybe he is right. As India Knight said when interviewed

"I understand and dearly love the thrilling kick of pleasure that comes from buying a lovely dress, or indeed a lovely holiday, and I am not into self flagellation or wearing hideous clothes, no matter how worthy (preach it sister, preach it!). But there, it slowly dawned on me, something gross about wanting something and buying it, just like that- thank you Amex and sod the consequences."

But who is to blame for this high level of personal debt? Do we blame the greedy banks and bankers who were reckless and gambled away 'our' money? Do we blame the governments for ensuring that so much of our economy is based on consumerism which led to a 'buy now, pay later' consumer culture? Or do we blame ourselves, as we enjoyed the times of easy credit which encouraged us to live lifestyles similar to the celebrities we try to emulate? Personally I don't think we should focus on the blame game. What we should do is focus on changing our behaviour so that we follow two simple facts (based on this excellent article, how to think and become rich). 

1. Spend less than you make.
2. Make more than you spend. 

As you can see this is not rocket science or brain surgery. It is soooooooooooooooo obvious! Let me expand

Spend less than you make

This is one of the first things my parents taught me when I first got pocket money. Yet many people ignore it completely (including the last UK government). I put very few transactions on my credit card. I use it mainly for airfare. However credit is really just debt so if I buy something on my credit card I try hard to pay it off in its entirety before the final payment is due. I NEVER ever pay the minimum payment only. I would also suggest that you AVOID USING STORE CARDS. The interest on them is deadly. The hard truth is that if you can only buy something on a store card, you cannot afford it. So leave it well alone!

This becomes harder if you are already in a significant amount of debt. Of course one would have to pay the rent or mortgage, utilities, food and travel to work/school etc. I would suggest that you really try to put anything left over into paying off your credit cards. Shopaholly has a great series on fixing your finances here. 

Make more than you spend

Duh! Again, so obvious. The hub article recommends that you work more hours (for example I went back on the on call rota), make more per hour or take a second job. It also suggests that if there is no extra work then you create something for yourself and become self employed. I know this is much easier said than done but start building on your skills, for example can you tutor math or teach a musical instrument, can you do simple accounting or craft? If you blog it may be time to monetize. If you really think you have no skills then it is time for you to learn something new. If you are lucky and have no debt then it is time to start saving. DH and I decided to set up individual saving accounts last year. Of course it was his idea. But I readily agreed. All of my standing orders go out on the 30th or 1st of the month (so soon after I get paid). That way I never actually see my full salary in my main account and I can treat myself guilt free.

Ok so this has become a rather long post so I will have to stop now. I will continue this theme in the next post. Please note that I am not trying to be patronising in any way. However I am aware that I post frequently about my purchases. So I guess I just wanted to make it clear that I DO NOT LIVE BEYOND MY MEANS and I would never encourage anyone to spend unwisely so that they got themselves into debt. As usual please share your thoughts about money in the comments. Are you a spender or a saver? It would also be really helpful if you shared tips about how you save or links to any useful blogs and articles so that we can all benefit.

I feel another revolution starting soon!

Enjoy your day lovelies! 

P.S. Please see the follow up post More Money, More Problems and a no shopping challenge here.