My Father Said (an early lesson in budgets):

Ron and Ginger
My Dad was born during the Depression and lived through the wartime rationing of WWII. You either had to make do, or do without.

One of my childhood memories is of Dad sitting on the edge of his bed sorting out his ‘accounts’. This consisted of going through a big old drawer and throwing out bills and invoices more than 12 months old and during the course of the year he would record his fixed costs in a big old ledger.

One page per month, with a column to describe the expense, a column for this year and one more for last year. He would record the bills that came around regularly each year, so the council rates, water rates, phone bills, health insurance, all those sorts of expenses. Each month would be tallied up, and then at the end of the year he would add the total cost for the year, and then divide by the number of pay days. This set amount would be put aside into a separate account to handle the expenses as they fell due.

With the advent of credit cards the need to put money aside for these fixed expenses has largely disappeared from our lives… but this is a big mistake unless you are in the habit of clearing your card monthly. For many clients that I see for the first time this is not a common practice, and people get into a lot of bother with paying high interest on a steadily accruing debt.

You see, credit cards are someone elses money… in your mind it doesnt really exist, so the impulse buys are easy.

So here is the lesson in this post… do track your expenses, and do put a fixed amount aside each month or fortnight to cover them. What is left over is then yours to cover your day to day living expenses, so the food, petrol, clothing, handouts for the kids and so on. If you must have a credit card then keep the limit extremely low so that it will never be more than you can pay off in a single cycle.

The Frequent Flyer points are not worth the price of this debt!