In about 6.5 months, I will be free of credit card debt for the first time since 1998. Much like Inigo Montoya and the “Revenge Business”, now that it’s over, I don’a know what to do with the rest of my life.

Readers of Consumerism Commentary have proven their wisdom many times over, so I’d like to take that into consideration. Please visit my YayBoo page on the subject and help me prioritize my next steps.

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When it comes to tracking my daily spending, I’m not as diligent as I used to be. That’s due in part to laziness and part to the lack of necessity. Let me explain.

First, this topic was inspired by a recent email I received from a Consumerism Commentary reader. Nat asked: How do you keep track of all minutiae of sending? Do you charge everything on your credit card? All the little daily things. And then review your bill periodically? Or do you keep receipts? Jot it down?

Flashback to the 20th century. I had played with programs like the Microsoft Money free trials before so I was familiar with the notion of tracking spending with the intention of finding opportunities for improving my financial management. I was also familiar with my personal need to do something; I had a job but nothing in the way of savings to show for it. I did, however, have increasing debt.

It wasn’t until 2002 when I was out of work for a short time did I finally knock some sense into myself. Without spare funds to buy Money or Quicken, I downloaded the free (at the time) Moneydance and began tracking my expenses. I didn’t get very far right away, however.

When my monthly reports showed “Cash Withdrawal” as one of my largest expenses, I knew I wasn’t getting the information from the software necessary to make decisions about my finances. I knew what I had to do—I had to track every expenditure, even if I used cash.

I changed my methodology moving forward. I created a tracking account in Moneydance called “Cash.” When I withdrew money at the ATM from my checking account, I recorded it in the software as a transfer rather than an expense. Then when I spent that cash, say at the cafeteria at my new job or at the movies, I could list the transactions as outflows of cash, categorized as “food:convenience” or “entertainment:movies.”

For this to be successful, I had to be very diligent, almost (but not quite) obsessive. It was actually a very simple process. I would ask for receipts for everything and save the receipts in my wallet. At night I would dump my wallet onto the table and enter the day’s expenses, whether paid by cash or credit card, one by one into the software.

I’m saying that this is “not quite” obsessive. If I had been obsessive, I would have written down every purchase for which I could not be provided a receipt. I relied on my memory for many expenses, and I was usually able to do so because I opened Moneydance every evening.

I used the knowledge gained from tracking the minutiae, as well as from discussion boards like The Motley Fool where I learned about cash-back credit cards among other financial tidbits, to make better-informed decisions about spending and saving.

This continued for a while. As the availability of cash back credit cards increase, more and more of my spending was electronic. Eventually, I switched from Moneydance to Microsoft Money and finally Quicken to take advantage of more features, such as the automatic reconciliation of credit card transactions with the bank’s information, but the process remained fairly the same.

As the next few years progressed, I was managing to net anywhere from one thousand to several thousand dollars each month. That’s mainly due to increased income from a variety of sources, but also due to smart spending. I went without anything but the basic cable television for a while, I kept my rent expense low even when I was living alone, and I made sure I had a reliable car that did not guzzle gas and required little maintenance. For much of that time, I had no car and made use of public transportation almost exclusively, and even in New Jersey, that wasn’t easy.

In a few short years, I went from spending more than I was earning to just the opposite. And for the most part, the difference between my income and expense was large enough I wasn’t in any immediate danger of increasing my debt to pay for necessities. At this point, tracking every single cash expense is not worth the effort. I still collect my receipts, particularly for anything that may be a business-related expense, purchases with the possibility of being returned if defective, or large expenses in general. The receipts generally get filed away.

Every few days, I open Quicken to enter transactions. Now I rely on my memory for a large portion of my cash expenditures. I don’t fret over whether I get something exactly correct or if I miss something. I generally round up when figuring my cash expenses, so that pay make up for forgotten transactions.

This does affect the accuracy of my monthly financial reports, but the purpose of these reports has changed over the past few years. At first, I needed to know with good accuracy where my money was going in order to find ways to chip away at it from different angles. Now, I look at the big picture: how are my investments performing, am I seeing a decline in business income, how big of a vacation will I be able to afford, etc. This information and the decisions based thereon are not affected by the $7.00 I spend at the office cafeteria. I still try to account for everything, but I’m past the point of pseudo-obsession.

Photo credit: PPDIGITAL

Last week, I spent several days in San Diego with family and friends, including my mother and her long-time boyfriend, my brother and his girlfriend, and my girlfriend. One benefit of visiting family for vacation every April is the fact that my mother seems quite willing to spend money to ensure everyone’s enjoyment, at least through this year. (If I continue to earn more money than I expect, that may not be the case for much longer.)

I decided to estimate how much my mother might have spent on our trip to San Diego as an exercise in curiosity. To be fair, I did pay some of these expenses, but only a small portion.

Lodging. A room with double queen beds at the Hyatt Regency Mission Bay may have cost $750 over the course of three nights. We had three rooms for an estimated total of $2,250. I believe she was able to receive one night free, but I’ll stick with estimates based on the full retail value. Add internet access at $10 per room per day and valet service of $20 per day. Add tax. Running total: $2,780.

Travel. The trip from my mother’s home in Orange County, California to the hotel in San Diego was 80 miles. At a rate of 50.5 cents per mile, the round trip in our car “cost” $80. My brother and his girlfriend drove separately, so I would consider than an additional $80. Cab rides throughout the four days added about $120 to the transportation total. Running total: $3,060.

Meals. Tuesday: lunch at a restaurant with an ocean view in La Jolla ($200) and dinner at Osetra ($300). Wednesday: breakfast at the hotel ($150) and dinner at a fondue restaurant in San Diego ($250). Thursday: breakfast at the hotel ($150), lunch by the hotel pool ($50), and dinner on a cruise around the bay ($300). Friday: brunch at a restaurant near the hotel ($200). As I didn’t see any of the bills, these prices are just estimates. Running total: $4,660.

Entertainment. My girlfriend and I visited the San Diego Zoo one day, and the tickets cost a total of $60. Food and souvenirs added an additional $40 to that cost. My brother and his girlfriend attended kayaking lessons, which I’ll estimate at $60. My mother treated herself and the other women to manicures and pedicures at the hotel’s spa. My brother and his girlfriend, only a few days from leaving for the next leg of their band’s country-wide tour, received facials and massages, and I had use of the spa’s shower and steam room. Based on the price list on the hotel’s website, this must have cost over $500 total. Running total: $5,320.

This doesn’t include the money my girlfriend and I spent to fly across the country, about $800. Estimated total: $6,120.

While it’s true that we could have saved thousands of dollars by traveling less over the past week, and I would be happy spending time with my family doing anything, having these yearly vacations gives me something to look forward to every spring. I may be wrong, but I believe my mother would consider this to be money well-spent. I hope to be in a position to provide similar vacation opportunities for my family at some point in the future.

This week, the Internal Revenue Service of the United States will begin sending direct deposits to those who qualify for the economic stimulus tax payment and checks soon after. Everyone who is interested in the tax ramifications of this payment should now know that the money received as a result will not be counted as “income” for federal tax purposes and that the payment is an advance of a new credit introduced for 2008’s income tax calculations.

The way I see it, the question in the minds of many is more immediate: What should we do with our stimulus payment? This deposit of $300, $600, or more is in some ways an unexpected gift. Though some could rightly argue that it is simply more of our own money returned to us, it is unexpected and thus not planned for. Some could also argue that it is wealth redistribution, as some low-income taxpayers may receive a payment larger than their total tax liability for 2007. (Note that the government changed their terminology for this program in March from “rebate” to “payment.”)

Regardless of opinions, here are some of the more popular options for dealing with an unexpected sum, either from the government or from any source.

If you have high-interest credit card debt, consider using your found money to reduce your interest payments. Credit card debt is an unnecessary expense. Unless you have an introductory rate or a special deal, chances are that you cannot earn a higher rate of return in an investment, particularly a liquid investment, than what you are paying in interest. Reduce your total debt and your interest payments by applying the total amount of your stimulus payment towards the balance on your credit card with the highest interest rate.

If you’re taking on the debt avalanche (a method mathematically superior to the snowball method), your payment will go far towards reducing your total debt.

If you have a mortgage on your primary home, consider making an extra payment to your principal this month. While it’s unlikely to make a noticeable dent in the short term, even one extra payment will reduce your total spent on mortgage interest significantly over the next few decades. To illustrate, a $500,000 loan over 30 years, starting June 1, 2008, with an interest rate of 7%, will benefit from a $8,400 reduction in total interest paid over the life of the loan if an extra payment of $1,200 is processed on June 1.

If you have no immediate savings, consider depositing the payment in a high-yield savings account. This is an important step to building a tiered emergency plan. While this money may not earn as much return over time as an investment in the stock market might, having funds available in a semi-liquid account allows you not to dip into debt as quickly or sell investments incurring fees and tax consequences.

You can count on an emergency arising at some point, and it’s advisable to be prepared.

If you are debt-free and you have an emergency fund, consider devoting this money to retirement. Saving for the future will increase the possibility of having the ability to stop trading your time and effort for money. In other words, if you’d like to retire from working someday, you’re going to need money to sustain your ability to pay for your expenses. Money invested in the stock market now has a good chance of earning a good rate of return when your time horizon for needing the income is several decades away.

I suggest opening a Roth IRA with Vanguard, invested in VTSMX, the Vanguard Total Stock Market Index Fund. (And no, they don’t pay me for this recommendation.) The fund has a low fee and a low barrier to entry for Roth IRAs.

If you have a Roth IRA, you can invest this money in your 401(k). This option isn’t as straightforward as sending a check to your 401(k) custodian, though. You can’t just deposit money into your 401(k) as you would be able to with another investment account. You’ll have to temporarily increase your 401(k) deferment by the amount of your stimulus payment and then reduce your deferment afterward. Assuming you’re not already maximizing your 401(k) contributions, this is a roundabout method of investing your found money in an tax-deferred account.

If you are set for retirement, consider saving this money for your children or other relatives to help pay for higher education. I haven’t decided whether I am a fan of 529 accounts which only offer tax-free earnings when funds are withdrawn for educational expenses (and in some cases, the rules are strict about which schools’ expenses will qualify), but helping to pay for education—so your children don’t have to work as much during the time they should be concentrating on learning—will be beneficial for their future earning potential.

And if you plan on growing old, your children’s future earning potential may be quite relevant. They may have to help support your health in your later years.

If you have no saving or investing holes to be filled, consider charitable giving. While $300 may not be much to you, there are many organizations who would be happy to receive the money to help fund a program. This is a highly personal decision, so you should find an organization that has personal meaning.

Religious organizations and churches are popular choices, and some people prefer to support scholarships pertaining to a meaningful field of study. Organizations that support social, arts, and athletic programs constantly require funding. If a health condition has affected your family or friends, chances are there is a related organization supporting research towards treatment and a cure.

All out of ideas? Buy something, either for someone else or for yourself. MyMoneyBlog has some tips on where your money will go the farthest, with several stores offering a 10% bonus on your money when purchasing a gift card or a pre-paid credit card. Watch out for these types of benefits. Often, and where not prohibited by law (ie., California), gift cards lose value over time or charge a fee, reducing your bonus (if any). Some of the stores offering a 10% bonus include Kroger Supermarkets, K-Mart, Sears, and Radio Shack.

In some cases, you have to bring your actual stimulus check to the store to receive the bonus. For those of us who are efficient and will receive their payment via direct deposit, we would not qualify.

The stated purpose of this economic stimulus plan, as devised by both the White House and the Congress, is to stimulate the economy by getting money into the hands of who might spend it, particularly on American-made products. The political purpose is deeper yet more superficial: to ensure that both the Democrats and the Republicans appear to care about the economy as the presidential election draws nearer.

The economy is often a matter of psychology rather than pure financial statistics, so it’s unclear whether these payments will have any measurable effect on the economy. If economic sentiment changes from negative to positive, it’s unlikely that one could prove that the stimulus package would be the cause.

How do you plan to invest or spend your stimulus payment?

Jonathan Clements, a columnist for the Wall Street Journal, is leaving journalism. He published his last article on Wednesday, a reflection on fourteen years at the Journal and 26 years writing professionally about money.

In the article, he looks at the essence of saving and investing. Why bother? A number of visitors touched on these points on yesterday’s post on Consumerism Commentary about frugality and compromises. Here’s what Jonathan Clements has to offer for his final word to readers.

If you have money, you don’t have to worry about it. You don’t have to worry about it, but many people do. Growing your money requires paying attention to your finances, and when you’re aware of problems, you’re more likely to worry about it. But if you’re earning enough from your pay check or investments to cover your expenses, save, and invest for the future, then you have the flexibility to turn your attention to other things.

Money can give you the freedom to pursue your passions. This is what inspires me to continue being vigilant about my own finances. There have always been a number of things I’ve passionate about, including music, technology, building communities, and inspiring other people whenever possible. For a long time I was able to combine these passions, but the real world was calling and I needed to stop going deeper into debt. Once I’m financially independent, no longer needing to trade my time to earn a living, I can pursue these activities further.

Money can buy you time with friends and family. For most people, this probably falls under the “passions” category. Jonathan writes about the ability to spend when socializing with people who make you happy, but even those who are struggling financially can find happiness through making time for those who are important. It doesn’t take expensive dinners and traveling to find happiness.

Clements ends his final article with a reminder that a rich life isn’t always about the money.

I’ve cited Jonathan Clements’ articles a number of times on Consumerism Commentary, and I’ve almost always agreed with his points of view. Thanks for the excellent articles over the years.

If you’re a Type A credit card user, chances are you know it whether or not you are willing to admit it. If you can answer yes to these questions, then a lifestyle change is in order.

• Do you pay interest fees when you send in your credit card payment?
• Have you ever paid your credit card late because you didn’t have the money for the payment?
• Do you use your credit card when you don’t have enough cash?
• When your issuer raises your credit limit, do you spend more because you can?

Type A credit card users are loved by the issuers. They pay interest and late fees. Between that income and the interchange fee the cards charge the merchants for each transaction, the card issuers’ business plan is to get Type A credit card users to spend more.

On the other hand, Type B users, who don’t pay interest or fees, are shifted to cards with higher interchange fees. For example, Citi switched me from a Dividend Platinum MasterCard to a Dividend World MasterCard. The main difference between the two cards is the RFID chip that allows transactions without physical contact, but the hidden difference is the higher charge merchants pay to accept the card. (Also, like the larger trend in the credit card industry, the cash back rewards have been reduced.)

If you’re a Type A user, then it would be in your best financial interest to stop using your credit card, to budget your income, and use cash. While some people can take that advice and get it done, others have built up a psychological dependency on credit cards. Here are 10 steps to break the cycle of dependency.

1. Look at your spending carefully.

Deep down, some know that they are spending more than they are earning and wasting money on interest fees. This fact is ignored at the conscious level; ignorance is bliss. Use software like Quicken, Microsoft Money, Excel, or even a pen and paper to track all your spending for a month, even the quick daily cafe mocha at Starbucks.

Use your credit card statements to compare with what you have recorded. Did you track everything?

This might reveal incredible, depressing detail about your spending. $100 a month at Starbucks or $400 for dining out are not out of the ordinary when looking at these numbers for the first time.

If you continue this for more than a month, you might see your bottom line, or net worth, declining each month. This is not a good sign, and it may be enough to encourage you to change your behavior for a better chance of financials success.

2. Understand marketing.

Society doesn’t want you to curb your spending. Products and advertising are designed to make you believe you need something when you don’t. Even the government encourages spending, especially when trying to boost the economy. President Bush would be ecstatic if everyone took their economic stimulus payment and loaded up on American-made goods.

It’s hard to maintain control when the rest of the world is against you. The sooner you understand that it takes effort to defy the prevailing trend, the closer you will be to being above the influence of marketing.

Being completely above the influence is impossible unless you disassociate yourself from “civilized” society. Accept the fact that powerful forces in the world are trying to manipulate your behavior, and accept the fact that with extensive research they are mostly successful. With this realization comes enough power to resist a portion of those marketing efforts.

3. Commit yourself to change.

You can only change your behavior if you want to change your behavior. A smoker can be told repeatedly that there’s a good chance her lifespan will be shortened and may face halth consequences like emphysema or cancer, but unless she’s ready to quit, all the words in the world would have no effect. Logic and reason often play small roles in human decision-making.

For those with debt accumulation, the problem isn’t the credit card. Credit cards are just tools, but they enable people to spend money they don’t have. If you’re ready to break the credit card habit, understand that there’s a deeper problem to solve. Without credit cards, the most accessible facility for overspending will be removed, and that can be the first step to solving the deeper problem of overspending. That is, of course, if you’re ready to admit there’s a problem and commit to changing it.

Steps 1 and 2 above may help you get to the point at which you’re ready to commit to changing your behavior. Committing to this change means spending less than you earn. You should be familiar with the details behind your income an expenses and have the knowledge to determine where there are opportunities for cutting back your spending and increasing your income.

If you use the credit card for spending more than you have, then you will need to cut back immediately.

4. Consolidate your balances onto one or two cards.

Gather the latest statements for the cards containing balances. Choose one or two with the lowest interest rates and consolidate your balances onto these cards. By calling the credit card company, you can provide the information for your other cards with balances and they will initiate a balance transfer. Ask for a transfer fee waiver. If they aren’t willing to waive the balance transfer fee, consder using a different card to consolidate your balance.

5. Enact a cash-only policy.

Once you consolidate your balances onto one or two cards, you cannot use those cards for spending. You have two options for spending from this point forward: cash or debit. I suggest cash because spending with a debit card can be psychologically similar to spending with a credit card. In order to kick the overspending habit, changing the way you think about financial transactions is important.

While there is a logical difference between spending with credit cards and with debit cards—debit cards are linked to your checking account so you can only spend what you have—if humans were logical they wouldn’t be in debt.

Actually, now many banks allow you to overspend (overdraw your account) with your debit card. Additionally, they charge a somtimes hefty fee for this “priviledge.” If you want to change your behavior, cash-only is the best policy. An empty wallet is a great spending barrier.

6. Destroy your credit cards except for one or two.

Forget all the talk that says closing your credit cards will damage your credit score. Overspending is a larger problem than getting a more favorable rate on your next mortgage. I would suggest canceling almost all of your credit cards. Why not all? While some people might have good results with the “cold turkey” approach, I don’t believe it should be a universal recommendation.

Here’s the proper way to destroy your cards. First, get your free credit report from annualcreditreport.com, the official site that will provide you with your three free reports each year. Inspect the report carefully taking note of every credit card listed. See some unfamiliar cards? Chances are your report contains information on cards you didn’t know you had.

If that’s true, first confirm that these cards are in fact yours. If someone is using your identity to open credit cards, this must be resolves as soon as possible. There’s also the possibility that the credit reporing agency has bad information. Clear any errors quickly by contacting the company that provided you with the credit report, like Experian, Transunion, or Equifax, and disputing the incorrect information.

Next, call the credit card companies for which you do not have your card and cancel your accounts with them. If you don’t have the card, you didn’t even know you were a customer. There’s no sense in keeping a credit line open if you didn’t know you had one and if you’ve survived thus far without needing it. The plan is to reduce your spending, so the simple solution is simply canceling the cards you haven’t been using.

If you consolidated your balances as suggested in step 4, you should have one or two cards with balances and more without. Here’s the dirty secret about consolidation. Now that your your balance is all on one or to cards, your combined minimum payment is probably lower than it was before. Don’t forget to pay at least the minimum to each card, but we’ll tackle paying down the balance aggressively at a later point.

Cancel all the cards not containing balances. As I mentioned above, this is not the savviest approach if you are concerned about your credit score. If you have an overspending habit enabled by easy access to credit, you are not concerned with your credit score. Keep your oldest card if you expect to be applying for a mortgage in the near future, but otherwise, stick with the lowest interest rate.

To cancel your accounts, you have to call the companies. The representative on the phone will try to keep you as customer by offering you lower rates and higher limits. Don’t bother negotiating, even if they offer a lower rate than the card you are saving. The idea here is to simplify, so don’t play any games.

Shred all the now-unused plastic. If you don’t have a shredder that handles credit cards, use a pair of scissors to slice the cards into several pieces. I would even discard of the pieces in different locations.

7. Lock away your remaining credit card.

Now that you have one credit card left, realize that you will not be using this card for everyday spending; for now, cash is king. Put your remaining credit card out of sight. Lock it away. I’ve even heard of some people who put their credit card into a cup of water in the freezer. The extra step of breaking a block of ice to get to your credit may be an extra demotivator.

This final credit card can be used in extreme emergencies until the next step is complete.

8. Build an emerency fund.

This step will take some time. If you have an overspending habit, you’re spending more than you earn. That creates a situation that prevents saving. In step 1 you evaluated your spening. Perhaps you cae across some options for cutting back, allowing you to put money into a short-term savings account.

Open up a high-yield savings account. Many, like ING Direct, allow you to set up direct deposit or an automatic investment plan. Choose one or the other, which ever is the best for you. It’s simpler if you already have a pay check deposited somewhere else to go with the automatic investment plan.

The goal is to save 3 to 6 months of your expenses in this savings account. This could take a long time if your expenses apprach or exceed your income. You’ll have to be creative. If skipping this year’s vacation would help you achieve this goal, then you have a decision to make.

Remember: an emergency fund is to be used in true emergencies only. This doesn’t take the place of your credit card. Te purpose of the emergency fund is to remain untouched for regular expenses but accesible when major spending is required. Some examples might be the loss of a job or a significant medical expense.

For more details, see Five Components of an Emergency Plan, but ignore component number four.

9. Pay down your balances.

While you’re building your emergency fund and paying cash for all your expenses, don’t forget to spend money every month to your consolidated credit card balance. In order to get out of debt, you’ll probably have to pay more than the minimum. There are several theories prescribing the best way to divert all available funds to paying down your debt.

A popular financial guru, Dave Ramsey, suggests what he calls the “Snowball Method.” He suggests ordering your balances (you should only have two at the most at this point) from highest to lowest. To the card with the highest balance, pay the minimum each month. To the card with the lowest balance, send the minimum payment plus any additional funds you have available. Dave believes this will allow you to see success (paying off the first card) sooner, providing a psychological boost, encouraging you to continue.

While psychology plays a large part in terms of money, I believe Dave’s reasoning is faulty. If you put the most money towards the card with the highest interest rate, you might not get the psychological boost of paying off a card sooner, and the time difference may be negligible. You will have a psychological boost from knowing that you will be paying less interest.

For more information, read about the Debt Avalanche, a better snowball method.

10. Check your progress monthly.

If you use financial software mentioned above, you’ll have a straightforward way of measuring your progress. You should see your expenses decreasing each month and your credit card balances decreasing. These monthly reports can be excellent motivation to continue. Your habit is clear in graph form; visuals are powerful. Each month, recommit to spending only what you have.

When changing a behavioral pattern like overspending, don’t expect immediate success. Our society encourages consumerism, and breaking from that trend, like swimming against the current, is going to be difficult. We often do not see the consequences of overspending. We hear about the government bailing out banks for making bad lending decisions and creating laws to protect consumers who purchased houses too expensive.

Don’t let this distract you. In most cases, the consequences a pattern of overspending can be difficult on relationships as well as personal finances. Once you’re ready to change, make the commitment and follow the steps above. Success will come through sticking to the plan.

This is a guest post, written for Consumerism Commentary by Single Ma. Single Ma is the author of Fabulous Financials, a blog presenting a chronicle of a 30-something single mother’s pursuit of financial independence.

I’m paid bi-weekly, which is typically twice per month. Every now and then, there’s a month or two sprinkled throughout the year when I’m paid three times per month. But regardless of how often payday arrives, most of my salary is already spent before I see a dime. Why? Because, excluding taxes, there are several transactions that process automatically through payroll allotment:

• $574 goes to 401k
• $185 goes to IRA
• $150 goes to emergency fund
• $74 goes to my daughter’s 529 account
• $38 goes to FSA

• $Big Chunk goes to employer benefits (health, life, pension, etc.)

  By the time I receive my “real” paycheck, it’s less than half of what I actually earned, which is ok with me. All of my financial priorities are accounted for, so I have fewer things to worry about. Automation also locks in the funds to make sure I achieve my financial goals (e.g. max out 401k, IRA, and tax deductible college savings).

  However, the challenge is being able to control expenses and live on the remaining ~45%. And baby, please believe, this is a challenge indeed! Just to give you an idea of what I’m working with, here are my major monthly expenses:

• $1,825 Rent (an entire paycheck + some)
• $1,600 Mortgage (always in reserve but paid by tenants)
• $300 Utilities
• $300 Food & Essentials

• $170 Transportation

  None of this includes discretionary spending, such as donations, doctor’s visits, personal grooming, pet expenses, dining out, entertainment, and the occasional fabulous shoe shopping excursion. So if something out of the ordinary happens, such this month when I need new tires, I find myself strapped for cash—or dare I say BROKE—before the month is over. Because incurring debt is NEVER an option, I have to make hard and fast choices about how I will manage the rest of my cash flow. A few things I’ve done so far:

• Forgo ALL shopping until things are back to normal.
• Skip a bi-weekly salon visit and wash & set my own hair.
• Brown bag and invite friends to my office for lunch.

• Choose between the wine festival and the banging concert of the year.

  You’re probably thinking, “I work HARD for my money and I DESERVE…” but that mentality will cripple you financially. We can never have it all. I guess if I really wanted to, I could opt to change anything that causes me to be short on cash. Am I willing to reduce my retirement contributions? NO! Reduce my emergency or college fund savings? I don’t think so! Move to a cheaper apartment in a less desirable neighborhood and settle for a less than desirable school district. Absolutely not! Instead, by prioritizing my needs and being selective about my wants, I am able to strike a balance to live a fabulous lifestyle AND achieve my financial goals.

  There was a time in my life when I lived paycheck to paycheck because I had to, but now, I do it on purpose. And I like it!

  If you enjoyed this article, please visit Single Ma’s blog, Fabulous Financials, and consider subscribing to the Fabulous Financials RSS feed.

I’m glad everyone is excited about receiving checks from the government in June or July, but there seems to be a misunderstanding amongst people I talk to. While President Bush and a contingent of the legistlative branch have agreed on the propsed details, the bill still has to pass the House and the Senate. None of the details have been finalized, and no voting will take place until next week.

It’s possible Congress will pass the bill straight away, but I doubt it. The politicians will use this bill as an opportunity to propose other laws which would be added to the economic stimulus. One proposal that may be raised in the Senate is was the idea of offering the rebates for some through food stamps—a much quicker way to get “money” into the hands of the people who will directly stimulate the domestic economy.

In 2001, when $300 or $600 checks were sent out to taxpayers to stimulate the economy, a majority of the funds that wasn’t saved or directed towards debt was spent on clothing. When most clothing is manufactured overseas, spending of this type had little effect on the domestic economy.

By the time the checks arrived in 2001, the economy was already halfway towards recovery. That could happen again this year, particularly if checks are delayed until the end of tax filing season by the IRS.

Before you start planning what you’ll do with this money, wait for the bill to pass the Senate and for the President to sign it into law. Celebrating now is premature.

Economic stimulus package puts President Bush, House leaders on same page [Chicago Tribune]
Lessons from the 2001 Tax Rebates [NPR]