I Can't Handle Money. Help!

I am finally admitting to myself that I have a problem. This has been going on since I got my first paycheck way back in junior high, three decades ago. I just can’t handle money. It’s been a lifetime of late fees, bounced checks, collection notices, bankruptcy court, etc. I am at my wit’s end. I don’t have any addictions (shopping, gambling, drugs, etc.); I am just not good at making ends meet.

Is there, like, a service or something that I can consult that will help me? I seriously, for realzies, need help.


I think the number one thing–above and beyond anything else–is realizing that managing money is an on going process, like personal grooming. Think of your money as a pet: it’s got needs that have to be met every single day, and you never get to take a break from worrying about it. It doesn’t take a tremendous amount of time, but it takes a little every single day and more on a fairly regular basis.

No system or method or anything else will help you until you get over that barrier.

There is no quick fix. You have to change your way of thinking about money and learn to be more paranoid and conservative about it than you are.

Technology can help however. I highly recommend, www.manilla.com to everyone in the U.S. It gives you a consolidated view of all of your accounts on one page with due dates for bills and bank account balances. It takes a while to set up but you only have to do it once. You need to start looking at it once a day to start to understand your finances. If you can’t make yourself take the time to start using better tools, you aren’t serious enough and may need some general counseling first.

Also, sign-up for www.creditkarma.com. It is easy to set up and gives you very good (free) insite into your credit standing and ways to save money if you have credit card balances.

I don’t know about a service…but do you have a budget? Have you ever tried to have one?

If not: Every time you spend, write it down in a book for a month. Then you can see where your money is going. That’s the start.

I married a woman with a maths degree who is good at details and let her do all the money stuff.

If that’s not an option you may find making a weekly appointment with yourself to look at all outstanding bills and current balances to be a big step towards financial organization. We do this as a family every Friday night. I hate it, it is boring and usually depressing. But just knowing where you stand can make a big difference in spending habits.

I’m not terribly good with money either, and that looks seriously awesome. I’m getting it tonight.

If your finances are complicated you can pay an accountant to help you organize things, or just ask a detail oriented friend. But you will still have to take the steps and pay bills on time and not spend money you don’t have. Avoid any for profit services that advertise this kind of help. They usually want an unjustifiable fee for doing nothing next to nothing.

I’ll echo this, with a caveat. A lot of people try budgeting by simply making a million categories (groceries, gas, shoes, auto, rent, medical, haircuts, pets, etc.) and then recording how much they spent in each one. While that can be good for getting a handle on which activities are the ripest for cutting back (i.e. if most of your discretionary spending comes from eating out, maybe don’t worry as much about pinching pennies at the grocery store), I think it’s very easy to lose the forest for the trees.

I recommend three categories: monthly bills, discretionary needs, everything else. Monthly bills shouldn’t vary much: rent, cable, phone, utilities. Discretionary needs are the things you can’t live without, but which do vary: gas, groceries, etc. Everything else is everything else.

So, in either a notebook or a spreadsheet, make three columns and track them on a daily or near-daily basis. To help with this, try to stop using credit cards: use cash or ideally debit so your spending immediately comes out of your account and you don’t get surprised when the bill comes. As the month goes on, you should start to get a good idea of whether you’ve had more expenses than usual and need to start cutting back on the extras or whether you’re ahead of the game and can afford whatever purchase you’re considering.

This. Budget.

Figure out what you have coming in and going out. Cover all of your fixed expenses each month, then figure out a reasonable, realistic amount for “free spending” each month and stick to it. Put anything left over into some sort of savings account. It doesn’t need to be lot, but be regularly saving something.

Excel is an excellent tool to help with this. I used to have the OP’s exact problem, and I made myself a budget spreadsheet; seeing all of the numbers together, extrapolated several years into the future, is extremely helpful. I know exactly how much I need to have to cover my bills and expenses, and I have an exact record of every dollar I spend. And even better, I know exactly when I’ll have saved enough to afford to buy something; I figured out 2 years ago that I’d need until earlier this summer to buy a car, and 2 months ago I had exactly how much I had predicted. I paid for the car in cash.

What’s also very helpful is, after figuring out my “free spending” amount, I take that amount out in cash (my monthly free spending budget is $200), and only pay cash whenever possible. If there’s some left over, I either put it in savings or roll it over to next month’s spending money.

Both of these posts are very good advice to start getting a handle on where your money is going. Knowing is the first step - then you can start looking at tweaks and fixes.

Once you’ve monitored your income and outgo for a couple of months, you’ll probably have a few things that jump out at you and make you go, “Whoa! How the hell am I spending $500 a month on COFFEES?!?” Those are usually the clue for where to start with budgeting. :slight_smile:

Another note on budgeting - budgeting is supposed to arrange what you actually are spending, not a fairytale idea of what you should be spending (although as I said, you’ll probably want to tweak some money leaks). Sometimes just timing your expenses and paycheques will take you most of the way there - I pay the VISA bill with this cheque, and the utilities on the next paycheque kind of thing.

I’m a fan of the “cash” method of budgeting. Starting with giraffe’s idea, I also have 3 basic divisions. Monthly Bills, Must Buys, and Discretionary Spending.

Monthly Bills are just that. I pay them in full every month.

Must Buys are things that I can’t really “cut back” on. Gas for the car, repairs, that sort of thing. I don’t really go crazy trying to control them, but they are budgeted for, and not a huge part of my overall spending. If I need one of these, I buy it.

Discretionary is everything else. Groceries, entertainment, clothes, dining, gifts. This I budget weekly. I happen to buy groceries weekly, so I subtract that from my weekly budget, and take the rest out as cash. I only spend the cash, if I don’t have enough cash I don’t buy it. Want to buy something big, put money in an envelope, or a jar, until you save enough.

I like this because I don’t have to track it. Tracking is annoying, time consuming, and you can spend way too much time trying to figure out where that last $10 went before you find it in your pants pocket.

You do need to have a handle on your spending, understand where your money is going, so this wouldn’t be the first step in your road to financial stability. Once you track your spending, know what you spend money on, and budget a realistic amount for your discretionary, cash can help you stick to it.

I know an older couple who still use the envelope method they’ve used since they got married over 50 years ago. When checks come in, they go to the bank and cash them. They have an envelope for every bill and expensive. They take the cash and start filling the envelopes. When there’s enough money in an envelope, they use it pay the bill. When the bills are paid they take whatever’s in the grocery envelope and use that. When all the envelopes have been filled and then paid out, anything left is theirs to spend any way they want. I don’t use credit cards anymore, and all my monthly bills get paid automatically from bank accounts now, but I sure wish I’d stuck to something like that when I was younger and had a lot of bills to pay.

Give it all to me. I’ll take care of it for you.

Is it that you get bills and don’t have enough money to pay them, or that you get bills and just don’t bother to pay them until it’s too late? One is a money/budgeting issue, and the other is more of an organizational issue.

If you don’t have enough money to pay your bills, you need to figure out where it is going. The best way to do that is to write down your spending – I mean all of your spending. I can tell you the exact date I last bought toothpaste and how much it cost. Until you know where your money is going, you can’t change your spending habits. In trying to get my finances under control, I read a lot of books and websites. One of the most helpful was Elizabeth Warren’s book All Your Worth, which became the basis for my very simple budget plan.

If your problem is more organizational, you need to come up with a system for keeping track of bills. I’m still a hard copy person, but as others in the thread have mentioned, today there are plenty of applications that can help keep you organized. There are also autopayment options that you can use once you have a budget that ensures that you have enough money in your account.

Good luck! Recognizing the problem is the first step. I have been at this for almost 2 years now, and people are starting to come to me for financial advice. :eek:

As a general rule, if you are spending 45% or more of your income on things that need to be paid, you are in financial trouble.

Rent, car payment, electricity, water, other utilities, insurance, gas to get to work, food for your kids, basic maintenance on car or house, etc. If 45% of your income is being spent on things that you MUST pay, you are in the danger zone. This is the way banks look at your situation when you ask for a loan.

Because there will always be food, clothing, shoes, entertainment, school suppplies, cable TV, internet, beer, emergency expenses, that will also be paid. You are going to live your life and pay for these things first, it’s just being human. No body is going to crawl under a rock and not spend money. The cost of normal life is much larger than what you estimate it to be. And you are going to spend the money.

So doing a basic budget should tell you what amount of money you must spend to stay afloat. If it is approaching half of your income, changes must be made.

If you think that 55% of your income is too much to reserve for ‘discretionary income’ you are wrong. Unexpected things happen and you are going to spend that money.

Not realizing this is how people get into money trouble.

I had a hard time with managing my income for years and years. One of the biggest things that helped me was direct deposit. The money goes straight into the account. I also have a percentage of my money going to 401Ks and a savings account. So before I even touch my money some of it is already siphoned into various places.

The account at the savings bank, I have a card to access it but I promptly forgot the PIN. So I need to get money I need to park my car and go inside and request it. After all this time, habits are fierce, so I don’t even think about that money, but it’s another roadblock.

Other than that, I literally don’t spend money, most days. This is also something that has to be cultivated - you aren’t just born with money management skills. Well, maybe some people are, but I am not. First things first, you MUST know where your money is going. If it’s all just fun stuff, it’s a much easier fix than if it’s important, vital bills.

A few people beat me to the cash in envelopes method.

For a while I used to leave just enough money in my checking account to cover all my autopays and withdrew everything else each payday. I had one envelope for rent(which I pad in cash) and one “cash on hand” envelope. Each payday I would take what I had left and put it in my savings account before withdrawing for the next two week period.

If you can’t handle staying on top of autopays or waiting for checks to clear then use money orders until you can.

For more specific questions Clark Howard has a free consumer hotline aside from his radio show so you don’t have to worry about being on air.

I’m somewhat forgetful, to the point of once having been notified that the city was about to sell my house at auction for not having paid last year’s property taxes.

Here’s the current system:

  1. Direct deposit of pay.

  2. When a bill comes in (either a physical bill in the mail or an e-mail notification of an electronic bill), I *immediately *go to my banking Web site and schedule the payment. I try to schedule the payment after the next pay-day, but before the bill’s due date.

  3. My credit cards have a fixed monthly payment. For instance, the gym uses my Visa card for the gym fee every month (say, 25$). On the banking Web site, I’ve programmed a payment of 25$ to Visa to occur at a fixed date each month. If I buy something else using my Visa, I’ll see it on the statement and just schedule a separate payment for that. Should I forget to do this, the 25$ will at least cover the minimum payment for my Visa and the card won’t get frozen or anything.

  4. Based on my past banking statements, I’ve chosen a banking-fee package that lets me do what I need to do each month for a fixed price.

  5. Important bills such as property taxes are handled the same way as the others. The city allows multiple installments without interest, so I just schedule the payments to occur at appropriate dates.

Granted, this works because I make enough money to not worry about meeting my expenses.

I do keep track of everything in Quicken, but I’m not sure it’s really needed.

I agree with what was said above about the need to track your expenses, and also for a basic budget. If your bank fees aren’t too steep, try to pay everything using a debit or credit card (no cash); that way, your bank statement can give you hints of where you’ve spent your money. Track your real expenses for a month or two and then analyse the numbers and make up a budget. There are many Web sites with recipes for making a budget, just google it.

The envelope method rocks for the quick fix. Figure out how much money you need to pay bills, put that in the bank. Put half of the rest in the bank too. Take the rest in cash.

Don’t use a debt or credit card, just the cash, to do everything…buy groceries, hang with friends, buy clothes, buy gas. Put money into envelopes for the gas and groceries because if you run out of money, you still need gas and groceries.

If you need to dig into that excess you stuck away, it’s there…but really try not to (which may mean having very little fun for a few months). Get it built up to be able to handle emergencies, then start using it to pay down bills.

Good luck