Financial Fast: All Good Things Must End … or Must They?

Well, here we are—the last day of the 21-Day Financial Fast. I remember writing in my original post that it probably wasn’t going to be “fun,” but I have to admit, I was wrong. I truly enjoyed the Fast and felt all throughout that the benefits far outweighed the challenges. Of course, you might not feel as perky about the Fast at first, if impulse spending is one of your personal hurdles. But I really believe that, as is the case with working out, you’ll feel great after you get it done! Here’s what I see as the upside of doing the 21-Day Financial Fast, now speaking from experience:

  • It’s an exercise in gratitude. As I mentioned last week, my main tactic for avoiding an impulse purchase—like an on-the-go bottle of Fair Trade tea or a take-out meal—was to focus on how lucky I am to have what I do. You can’t help but fully embrace your family, your health, your home, and your life when each day includes a meditation on what you’re grateful for. And, I found, once I count my own blessings, it’s much easier to turn my focus away from any unneeded purchases I was tempted to make. The daily gratitude meditation is a practice I’ll continue, even when I’m not about to buy something.
  • It really does change habits. One of the reasons that I wanted to get Michelle Singletary’s 21-Day Financial Fast into the Green American is that I’ve had success with a type of financial fasting in the past. A few years ago, as part of my spiritual practice, I gave up buying books for 40 days—books being my primary financial vice. In that 40 days, I wanted to figure out a free way to get my new-to-me book fix, so I organized a book swap with a community group, started using PaperbackSwap.com (an online book swapping service), and got reacquainted with my local public library. Since I took that challenge, my book spending improved and stayed that way. I still organize book swaps with friends, continue to trade books via PaperbackSwap.com, and remain a loyal patron of my local library. That said, I do slip up sometimes (as I discussed on this blog), so the Financial Fast was a great way to shift back to my more sustainable habits.
  • It forced me to redo my budget. It’s important to revisit your budget every few years, to see if you can rein in some unnecessary spending, get or stay out of debt, and save more for retirement and other important goals. Part of the 21-Day Financial Fast calls on participants to create or revamp a budget, so I did just that. Without the Fast, I would definitely have kept putting it off, as revamping a budget is about as fun for me as sticking something in my eye. After retooling my way-too-old budget, I found I could put more money into my savings accounts, so I arranged with my online bank to automatically siphon money from my checking account into savings as soon as a paycheck arrives.  I will also celebrate the end of the fast by increasing my contributions to my retirement accounts, as soon as I finish this blog entry.
  • Paying with cash helped me better understand that I was trading “life hours” for my expenses. As Singletary points out, paying with cash instead of credit cards makes spending money more “real.” You can see the number of bills in your wallet dwindling, whereas if you swipe a credit card, it doesn’t look or feel like you’re spending anything—and you’re more likely to spend more than you would otherwise. I did forget sometimes during the Fast and hand over my debit card at the grocery store, but the process still worked for me. To paraphrase Vicki Robin, co-author of Your Money or Your Life, you trade your life hours at work for the cash you’re spending, so it’s a very good idea to make what you buy worth the precious time you spent earning that money–time you could be spending with people and activities that matter to you, if you needed less. Paying with cash helped me visualize this message even more.
  • The Fast even made me rethink my eating habits. When you focus on spending only on the things you need, it requires a certain mindset that doesn’t go away when you enter the grocery store. So when I did my food shopping for the week, I found myself saying no to a lot of my usual snack foods—pretzels or Fair Trade chocolate, for example—because they weren’t necessities. If it wasn’t a super-healthy option or needed to complete a dinner recipe, it didn’t go in my shopping cart.

Singletary herself does the 21-Day Financial Fast each year, to keep her spending in check and  to go over her personal finances, ensuring that she remains in the most financially healthy place she can be. I plan to do the same.

How did the Fast help you? Did something not work for you? Will you do the Fast again next year?

Financial Fast Reflection: Why We Spend

Have you been following or joining in with our 21-Day Financial Fast?

I confessed last week that my financial fast has been messy. And although I have not been as disciplined with the fast as I had hoped, my efforts to think more about and cut back on my spending have made me reflect on my spending habits, hopefully in a way that will help me save money while also cultivating a more fulfilling (and cheaper!) life.

For me, when I started to look closely at what I was spending, the next natural question was : Why? Remember, we’re not talking about essentials here, like healthy food for you and your family, the medicines that you might need, or the spending necessary to keep your house going. But what about all those little extras? What’s behind some of that extra spending?

There’s no doubt that we will all answer that question differently. For me, I’ve discovered that the bulk of my extra spending (which, by the way, is on: coffee, eating out, and little purchases to appease my kids) has one purpose for me: it is a treat.

Continue reading “Financial Fast Reflection: Why We Spend”

Financial Fast: Leave the Credit Cards at Home

Last week, Tracy asked: One of the two rules of the Financial Fast is to pay for every necessity you buy with cash, not credit cards. How has this been going for you? Does counting out dollar bills when you go to the store make you more cognizant of the fact that your purchases are having an impact on your finances?

I’ll make a confession right away: my financial fast has been messy, and we’ve broken some rules. I planned to walk side-by-side with Tracy as we both embarked on the 21-day financial fast, vowing to spend money only on essentials and forgo using credit cards. And  though I was excited to take on this challenge and use it as a jump-start to organize my financial life, the rest of my life has kind of gotten in the way. A series of events in my family has necessitated a certain amount of travel, and my financial fast went largely off track in exchange for ease during a rough few weeks.

But even though I haven’t been hard and true with the fast, my best efforts have definitely taught me about my spending habits, helped me to develop some great alternatives to spending, and start important conversations in our house about budgets. And it’s also taught me about the importance of cash!

I’ve been meaning for a while to tuck away my credit and debit cards and start using cash, and I know I’m not the only one. As we’ve learned through our popular Break Up With Your Mega-Bank campaign, a lot of those credit cards are owned by megabanks that use our fees and interest payments to invest in dirty energy and unfair lending practices. And as I try my best to support local businesses struggling through this recession, handwritten signs they’ve posted on cash registers often reminds me that each credit card purchase means additional fees out of their bottom lines.

And using cash instead of credit cards can make a purchase feel more “real,” and makes it easier to think carefully about the importance of each purchase. So, if using cash keeps money out of the hands of the Mega-Banks and can help me make better financial decisions, let’s go for it!

Continue reading “Financial Fast: Leave the Credit Cards at Home”

Financial Fast: Budgets and Journal Questions

“A budget is your roadmap to prosperity,” says Michelle Singletary in her book, The Power to Prosper: 21 Days to Financial Freedom.

Why would that be the case? Budgets can keep us from spending more than we need, of course, since they set strict limits on unnecessary purchases. They can also help us save more, since the time we spend creating or revamping a budget is also a great time to deeply consider whether we can increase our savings and investments, and decrease the amount we allocate to unnecessary purchases.

Here’s a “quick and dirty” rundown on how to create a budget, without purchasing a new computer program or app.

  • Figure out your net worth (or the difference between your assets and liabilities):
    • List all of your assets, including cash on hand; banking, retirement, and investment accounts; and the market value of your possessions, including your house, automobile, and furniture.
    • List all of your liabilities, or what you owe on your mortgage, student loans, credit card debt, and any other outstanding debt.
    • Subtract your liabilities from your assets, and you have your net worth! Is your net worth low or negative? Don’t despair—taking the Financial Fast is a great first step. It’s time to figure out how to pare down that debt and pick up your savings and investments.
  • Now, let’s look at your cash flow, or the money flowing in and out of your wallet.
    • Track your expenses for one month. Write down everything you pay, from a cup of coffee to your mortgage payment. You can do this the old-fashioned way, by carrying around a small notebook for this purpose, or you can use an app, such as “Mint.com Personal Finance” for the iPhone, iPad, and Android phones, or SplashMoney for iPhones and Mac or Windows desktop computers. Blog commenter Genie recommends The Birdy, as well.
    • At the end of the month, review your spending categories, and make a table (i.e. rent, utilities, groceries, gas, entertainment, dining out, etc.). Include any payments you make to savings or investment accounts, retirement accounts, and credit cards.
    • Now, label your categories as necessary and unnecessary expenses? Necessary expenses are those you must pay, like a student loan or a mortgage.
    • Consider your goals, both short-term and long-term. Do you want to send a child to school, or attend school yourself? Buy a house? Get out of debt? Thinking about your goals will help you take the next step….

Figure out where you can reduce your unnecessary expenses, and put the money you save into a  savings or investment account. Examine your necessary expenses. Could you trim a little more from your monthly grocery bill, or carpool or bike more often to cut down on your gas bill?

NOTE: If you find that your debt is overwhelming or you simply cannot make ends meet, even once your unnecessary spending is down to nearly nothing, then this is also a good time to sit down and consider what you can do to become financially healthy. Can you take on a second, part-time job? Can you sell your car and use public transportation or carpool instead? Could you make space for a roommate, who could pay rent? Have you made all of the affordable improvements to your home’s energy efficiency that you can, to help cut down your energy bill?

It’s been a very long time since I took a look at my budget, so I’ve been ballparking the amount I spend that doesn’t go to necessities. After taking a look at my accounts, I’ve noticed that I’m quite good at ballparking! However, my financial situation has changed since I did my old budget, and it’s likely I could be doing better in some areas of my finances. I’m using the Financial Fast to revisit my old budget and ensure that I’m saving as much as I can.

Here are some journal questions for the week. Feel free to reflect on any of them in the comments section below.

  • Have you ever taken the time to track your expenses and create a budget? If not, what’s stopping you? If you have, what benefits did it deliver?
  • If something unthinkable happened to you, would your loved ones know what to do? Would they be taken care of? If you have a spouse or long-term partner, do you know where his/her important financial information is located? Is it time to have these tough conversations?
  • Do you have debt? How has it affected your life? How would it feel to be free of this debt?
  • One of the two rules of the Financial Fast is to pay for every necessity you buy with cash, not credit cards. How has this been going for you? Does counting out dollar bills when you go to the store make you more cognizant of the fact that your purchases are having an impact on your finances?

See you next Monday for Week 3!

Financial Fast Monday: On Self-Improvement and Gratitude

One thing I’ve noticed as we’ve rolled out the idea of the 21-Day Financial Fast to our readers is that we have a lot of our more seasoned sustainability champions responding (often offline) with something like, “Well, I live my life like that every day.”

On the surface, it’s a lovely pick-me-up to think about all of those committed Green Americans out there, taking action together for a robust green economy and world.

When it comes to the Financial Fast, though, is that the healthiest response? Or do all of us have an area of our lives where we could do better? And shouldn’t we be acknowledging and encouraging those readers who aren’t as far along on their journeys to sustainability, by letting them know they’re not alone?

That’s why I confessed my Bad Book Habit last week. I have a lot of good habits—you don’t work at a place like Green America without constantly picking up new green steps nearly every week to bring into your life. But the Fast is a time to figure out where you might not be so perfectly green. Maybe the little we do buy has too much packaging. Maybe we’re not saving enough for the future, if we have income coming in. Maybe we aren’t generous enough with our money. Maybe our savings is still sitting in a mega-bank, where it’s being used to fund endeavors that don’t support our values.  Maybe our investments aren’t socially responsible.

If you’ve got your spending under control, make this the week to make a change to your finances for the better. Break up with your mega-bank. Increase your savings. Shift your investments to socially responsible vehicles. Find a socially responsible financial advisor. If you are struggling with spending habits or with having too little money coming in due to the economic downturn, make this the week to make a budget. I’ll post some suggestions for creating one tomorrow.

No matter where you are on the journey to financial freedom, make this the week to focus on what you already have. As Michelle Singletary noted when we interviewed her about the fast, this exercise is about cultivating an attitude of gratitude. So that’s what I tried to do this week. Every time I thought about buying something I didn’t need, I focused on how blessed I am to have what I have:  an incredible family, a home, a job I love, and, yes, plenty to read.

And you know what? It’s making those few occasions where I’d like to buy something very easy to ignore. This week, I was tempted by an on-the-go bottle of organic tea and a set of movie tickets to take my two little girls to a children’s film. The tea I got over quickly. The movie tickets required a little more creativity, but my daughters and I played board games, attended a free family event in our community, and made puppets out of some old coloring sheets. When the weekend was over, they had completely forgotten about the movie they’d wanted so badly to see.

What are you grateful for in your life? Do you think focusing on gratitude can help strengthen your resolve during the Financial Fast?

Tomorrow, in addition to the budgeting info, I’ll post some new journal questions for the week.

Financial Fast: Ladies and Gentlemen, Start Your Journals!

Happy Day 2, financial fasters!

In our interview with Michelle Singletary about her 21-day financial fast, she suggested journaling to track your progress and to use as a tool to work through your challenges. Below are some suggested topics for this week.

  • Write down all those necessities you buy during the fast, which will help you assess whether they are truly necessities.
  • Make a list of any obstacles that may prevent you from sticking to the fast, and then add ideas on how you can knock them out of your way.
  • Think of one person who could use help financially, suggests Singletary. Could you step in to help somehow? Even if you can’t give cash or goods, could you offer this person additional help, such as free babysitting?
  • Are you giving as much as you can to charity? This week, Singletary advises thinking about whether you could you give more to support causes that are important to you.

I’ll stop there to leave room for days when you just want to reflect in your journal about your personal progress or challenges.  Please feel free to reflect on these questions and more in the comments section, in place of or in addition to your journal!

I’ll start: As I’ve confessed in the Green American in the past, buying books is my budgetary weakness. Number one, I have a lot of friends who are writers and make their living off of royalties, so the thought of supporting authors that I love through my purchases alleviates much of my reluctance to buy a book that’s new. Number two, I love books. I love the crack of a new binding when you open a book for the first time. I love the scent of fresh paper and the promise of a new, exciting story that’s going to keep me up into the wee hours of the morning. After a stressful day, I can often be found seeking relaxation therapy in a bookstore. Annnnnd, I’m often tempted to buy something new before I go.

I also love the PBS Masterpiece Classic series Downton Abbey–and I’m not a big TV watcher. Now that Downton Abbey is over until next year, I’m dying to read this book about Lady Almina, a countess who lived in Highclere Castle (Downton Abbey’s real-life setting) during the Edwardian period and beyond. Since the waiting list at my local library is quite long for this book, its very tempting to just buy it new.

Now, however, I cannot. And that is a good thing. I will not be financially supporting the author (who is a countess and likely doesn’t need the 25 cents she’d likely earn), but I will be supporting my desire to increase my savings accounts and indulge in less impulse spending. I will also be doing my part to save forests, since most paper books are published on virgin pulp. (Sigh.)

I’m not proud of this habit, but I’m confessing all because many of us with extra cash may have a bad habit or two to break. The fast is about changing habits like these, and about fostering gratitude for what you do have. Every time I don’t buy this book that I want, I think about how much I already have and how blessed I am to have it. To be truthful, that mindfulness has been making my “challenge” not so challenging. (More on that next week.)

What about you? What are your challenges in taking the fast, and how do you plan to overcome them? Do you have any thoughts on the other questions I’ve posted above? 

I’ll be waiting in the comments section, and come back next Monday for more Financial Fast inspiration/commiseration.

The 21-Day Financial Fast Begins!

Could you go 21 days without buying ANYTHING? (Other than food and other true necessities, of course.) Could you that long go without using your credit cards at all?

That’s the question that Washington Post columnist Michelle Singletary posed in her book The Power to Prosper: 21 Days to Financial Freedom.

As we noted in our interview with Singletary in the January/February 2012 issue of the Green American, there are multiple benefits to taking what she calls “the 21-day Financial Fast”:

  • You’ll shift spending patterns that have become automatic—like buying an expensive latte every morning—for the better
  • You’ll save more, because you’ll be spending far less!
  • You’ll focus more on the things that are important to you, like family time, artistic pursuits, etc.
  • You’ll be able to take a closer look at whether you’re really putting your money where your values are.
  • You’ll have the chance to examine whether you’re being generous with your money, and using it to do good in the world—whether by helping out a friend in need or donating to a charity you care about.

When Green America senior writer Sarah Tarver-Wahlquist and I first talked about doing the fast with our readers, we both felt like we’d be starting the fast in a good place, since we feel we’re pretty good with our money. (I hope that doesn’t sound smug, but we do research and write about using our money mindfully on a daily basis, so it’d be sick and wrong if we didn’t walk our talk!) We have retirement accounts and college savings accounts for our children, invested in socially responsible vehicles. We have emergency funds and socially responsible credit cards. We both try to be mindful about our spending, buying used and bartering for what we need whenever possible.

But when I gave my spending habits some more thought, I realized that I do have some weaknesses: I could be putting more money into savings. I also hate cooking with the white-hot fiery passion of a thousand suns, so I have a tendency to opt for restaurant meals more often than I should. And I love books; having an iPad—and several writer friends who depend on royalties from new book sales to make a living—has made it all too easy to download an interesting novel or nonfiction tome from the Internet.

Here’s another confession: I don’t have a current budget. (I’m sure all you Green American members are mentally pelting me with copies of our Guide to Socially Responsible Investing right now….) I have a set amount I put into my various savings accounts, but I tend to guesstimate how much I can spend, rather than setting hard limits, which would likely help me in my goal to save more.

So here I go … I’m going to go 21 days without buying things–even electronic things. If if I can bump up my savings accounts a bit—and get my husband and myself cooking healthy meals at home more often, I’ll consider it all worth it. And yes, perhaps I’ll actually do that pesky budget.

If you’d like to join me, there are two rules:

1) Do not buy anything you don’t absolutely need, like toothpaste or healthy food.

2) Pay for everything in cash, since it’s much easier to picture your hard-earned money going away with every purchase, instead of using the “magic money” of credit cards.

C’mon–it’ll be fun! Okay, maybe not fun, but I do think it’ll be rewarding in the end!

If you went 21 days without buying anything, what would be your biggest challenges? What spending habits do you think a 21-day financial fast would help you improve? And if anyone has any kid-friendly, quick-and-easy meal ideas they’d love to share, I’m all ears!

Tomorrow, I’ll post some questions for reflection for this week from Singletary’s book. Remember: You don’t have to have the book to participate in the fast.

P.S. Singletary’s book is written from a Christian perspective, which makes it a great choice for a church book club. Out of respect for all of our members, who come from a wide variety of spiritual traditions or may choose not to have one, we’ll be keeping the faith element optional and to a minimum in our challenge here on the Green America blog.