How to get out of debt: Part 4

The bipolar budget:

I am calling this the bipolar budget, because my wife is bipolar, and she blames her lack of financial control on her bipolar. Whether it is the reason or not, it makes a good title. But the truth is this system will work for anyone.

If you are a person who just can’t have money without spending it, then the thing that you need to do is to hide it, or make it inaccessible to yourself.  I found the best way to do this with internet banking.

Internet banking typically has no fees, so you can transfer money between accounts as often as you like. The Dutch ING bank made this popular in North America with the commercials with the “guy with the accent” telling you to “Save your money”, and you know what, he was right!   🙂

The Canadian branch was then bought out by Scotiabank in 2012 and was rebranded Tangerine in 2014, while the US branch by Capital One who rebranded it Capital One 360.  So, why the history lesson? Because I found that the system I setup with them works. There may be other internet banks out there with similar services, and if you know of one, please let everyone know in the comments below, but I will describe why I use Tangerine, and how.

ING had the highest interest rate that I found at the time, and it had no fees, so I did save money, and it grew.  But that is not all. I used its automatic transfer to pay my bills before I have the chance to spend it.  I do have a normal bank as well, but I try to do as little with it as possible to avoid the fees.

So, I set up the following bank accounts:

  1. My internet banking chequing account. It is called a chequing account, but I don’t write cheques on it, I use Interact / Debit, so I will call it a Debit account instead. My paycheque goes in here every second week, and it has automatic transfers to take the money out before I can spend it.
  2. My wife’s internet banking debit account. It is actually our joint chequing account, but that is only so I can transfer money into it, she does all her shopping with it.
  3. My wife’s joint internet banking savings account. I transfer money into it, and it transfers out to her personal, pet and other accounts.   She can’t spend money from here, she has to transfer it to her debit account when she needs it.
  4. My wife’s pet account.   Obviously for pet food, etc.   Again she needs to transfer money out to spend it.
  5. We both have personal internet banking accounts, but currently we don’t put much if anything in them. I have some birthday money in mine, but I have no monthly personal budget.  Whatever is left after my paycheque is divided up I can use for personal, but I try to put into savings.
  6. My internet banking savings grocery account, is used to transfer money to my wife on a weekly & daily basis, so she can’t overspend.  Weekly she gets about $150, and daily about $7 for the little things that come up, like running out of milk.
  7. We also have one old fashioned joint chequing account. My wife’s disability pension goes in here at the end of the month, and I pay the monthly expenses from it.

The down side of the separate accounts is that you need to estimate how much you need before you go to the store, vet, etc. so you can transfer the money.  We do use internet banking on our smartphones, but it takes time to transfer, and the people behind you in line are not always impressed.  But if you only transfer the money before you go to the store, you know that you can’t overspend, and you have to put a few things back if you don’t have enough.

How to get out of debt: Part 1

Stop Impulse Buying….

Stop Impulse Buying….

Easier said than done, eh?  Actually, it is not as hard as it sounds.  I read a book on money management, and 90% of the way through the book, I was still asking the question “Okay, how?”  I won’t do that to you, here are some quick tips to get you on the road to recovery right now.  “Just the facts mam, just the facts!”  😉

A friend is in A.A. and while I don’t know much about the program, I found a few of his tips helpful.

  1. Not Today! My wife and I started using this one way back when.  It is very easy to use, especially when we are together.  I was finding that when we were together it was easier to say, “Sure, why not” when she asked me should we buy this.  As soon as I learned about “Not Today” those joint shopping trips cost a lot less.  It works when you are on your own too, whether you say it out loud or not.  😉  Take each day one at a time, if you don’t need to buy it today, then don’t.
  2. A higher power!
    1. God! Many Christians have heard the concept of treating your money not as your own, but as God’s money.  We are all stewards of his money, therefore we have to think “Would God want me to buy this or not?”  If you believe in God, or another higher power this might work for you, but if not what then?
    2. Your Partner! Another Higher power is your spouse, you pretend that the money is theirs, and they pretend that the money is yours, therefore you still have to ask “Would they want me to buy this or not?”
    3. Your creditors! Who do you owe the money too?  The bank?  Friends?  Family?  If all else fails, every time your reach for that candy bar at the grocery store counter, or want to go out for fast food, picture the person you owe money to standing there asking how you have money to waste on junk food, when you owe them money.  Of course the double edge sword here is that if you suffer from depression already that this depresses you more, and drives you to want more junk food.
  3. Smarter Buys! Try replacing those impulse buys with smarter buys that cost less and last longer.  For example buying healthy food and cooking meals, rather than going out to eat.  Buy carrots and celery sticks instead of candy bars.  Scale back slowly if you have to.  Instead of going and spending $50 to go see a movie with popcorn, buy the movie for $20 on DVD and watch it at home.  Then instead of buying the movie, rent it on Pay per View for $4.  And finally, instead of renting it, wait for it to come out on Netflix or another streaming service with unlimited movies for $8 per month.  That may be twice the price of one Pay per View, but if you watch one per weekend, that’s $16, so Netflix is half the price!  You could then make your own popcorn a nice meal for a stay-in Date Night, and you would still be saving money in the long run!

 

Next:  Part 2:  Priorities