Thursday, January 31, 2008

Better Budget Challenge #4: Budgeting Odds and Ends

Check it out here.
1. Request your credit report.
Check. It's been a few years since I've done this, so I was a little worried about what might be out there. But ours are pretty simple. Our mortgage. Our student loans. Our credit cards. And that's it. And, accurate, as far as I can tell.

The fear that we'll lose our minds some weekend and go way into debt is always at the back of my head. So I've decided I'm going to:
a) Keep only one credit card. And I'm going to lower that credit limit from $10,000 to $2,000. That should be enough to cover any real emergencies.
b) Cancel all of the other cards. There are three more. I'll let you know how that goes. Any tips?
Of course, it's easy enough to request new credit, but this is what I feel like doing right now.

2. How is our budget system working for us?
I do feel like my budgeting system works pretty well for us. Of course, it's always the *sticking to it* that's the problem, more than the actual method of planning and tracking. The cash system has done us well in this area. Our envelopes are looking kind of raggy, though. Wish I hadn't given my Crown Financial envelope system away a few years ago. (Um, the last time we did this, ha.)

3. How do I want to improve our spending habits?
Firstly, I don't want any surprises. We are already saving for next year's Christmas and tax fees and some other stuff that always seemed to catch us off guard and completely ruin our budget. Secondly, I want to stop running out of money before we run out of week/pay period/month. This has a lot to do with self-discipline, which is an area I'm continually working on (and continually falling short of my goals).

I've always had a policy of not stocking up on food. Firstly, clutter is my bitter enemy. Secondly, I like to use up what's in my cupboard because that reduces this week's grocery bill. But I think I need to rethink this policy, because if (ahem, when) we run out of money and food before the week is up, some food in the pantry would be pretty nice. During my last shopping trip, I added an extra jar of spaghetti sauce and 3 pounds of hamburger (at 1.49/pound - woo!) and 4 cans of veggies. I hope to keep doing this so that, little by little, I have a decent back-up system.

Of course my shopping spree should help this out too! :)

10 comments:

Kacie said...

If you're getting rid of credit cards and lowering your credit limit to avoid temptation, that's good, but be warned that your credit score will take a hit.

Since it's affected by your debt to available credit ratio, it will increase when you close accounts.

You could "freeze" your cards, literally, if you don't want to close them for good (if they don't have annual fees or anything).

Put your cards in a zip lock bag or two, put them in a container, put ice cubes on top, and pour water on it and freeze it into a big icy block.

If you need them, you'll just have to thaw them the slow way, since putting them in the microwave will damage it.

Tenille said...

That's a really good point, Kacie. We're looking at getting a new vehicle (the loan portion, after what we've saved/tax return/trade-in should be no more than 2000-4000) soon. Maybe I'll wait until after that, since I have no further plans to get any more credit! :)

Lindsey said...

I agree with keeping your current cards and just not using them. We have a few of those. :)

I also think that living where you live that you really need backup food. Not just for budget emergencies, but for weather emergencies too. I get really nervous in the winter if our cupboards are low on foods and we get a storm....

Tenille said...

Last winter, our power was out for 12 hours once. We couldn't even open cans since we don't have a manual can opener. I SO need to be better prepared!

zdoodlebub said...

I'm trying to pare things down here. I paid off one credit card and then tried to call and close it. And I got the heaviest sales pitch of my life by a guy with a strong accent and I just didn't have the heart to ruin his numbers for the day (I remember the corporate world he lives in all too well) so...

Is writing them a letter to tell them to close the account an option? So you don't have to deal with the sales pitch begging you to keep it open? What? You say I'm too wimpy? I know.

Jennifer said...

No manual can openers?!? So, like, electric can openers only? FAN-cee.! ;)

And that is my valuable contribution today.

(Except, lowering your limit so much might make me a bit nervous for you. $2,000 doesn't go FAR in a real emergency...in a you've-lost-your-job-and-no-money-coming-in kind of emergency...God forbid. You won't go nuts with those cards, don't worry. You just won't.)

Tenille said...

LOL. Y'all crack me up!

Okay, okay, maybe I'll keep the one big card. You act like I wouldn't just decide to go charge $10,000 at Target some weekend. It could happen. They've got that World Market thing now... :)

Kacie said...

OK--I'm revising my original comment.

Your credit score CAN be negatively affected by too many cards open.

So, it's kind of a "who knows?" kind of thing.

It could help or hurt you to close the cards. Nobody knows for sure--the FICO formula is a trade secret.

Kacie said...

P.S. Check this post ( http://www.thesimpledollar.com/2008/02/01/should-you-cancel-your-unused-credit-cards-or-not/#comments ) and comments for more on the debate.

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