I had a lot of bad boyfriends before I got married. Then I had a couple after I got divorced and before I got married again. This is not news; it's pretty much my thing, sadly, and it makes no Freudian sense, because my dad is a really great guy.
Regardless, they say every bad relationship has its good points, and I have to say that my absolute worst boyfriend -- the one who wasted the most years of my life -- was also the source of my absolute best financial advice.
It's entirely possible that if someone else had told me what he told me, I'd never have been led down his garden path (in this case, "garden" meaning "bucket of never-ending crap," but you get the idea).
I hate the idea of learning about money from a man, and one who was terrible to me, no less. I hope all women have the privilege of learning to be responsible with their funds from people (and websites!) with their best interests at heart. That wasn't the case for me, but at least I learned what I did.
One of the reasons he was so compelling to me was that he was entirely self-made, self-taught and reinvented, while I felt like I'd timidly tiptoed along in my life. He'd taken himself from government cheese welfare projects to art school, a college scholarship and an art director position at a national magazine; I'd been helped along from middle-class high school to respectable women's college to a bottom-rung staff writer job, also at a national magazine. Not that that was chopped liver, but as I neared 30, I wondered why I still felt like an extended adolescent, living in the same post-college apartment, when this guy my age had already bought his own house. So let me share his expertise and how-to's with you.
1. How to Budget
This is a skill so basic that it's almost insane that I didn't know how to do it already, but somehow I had never sat down with my monthly income and figured out how to save. I was so relieved to be out from under my parents' uber-thrifty "you-don't-need-that" thumb that I felt entitled to buy everything I wanted. All the pink frilly tutus that my mom had thought were stupid (hey, it was the '90s!), all the cute handbags and neato kitchen accoutrements -- buying them gave me a charge (literally!) and made me feel like I was buying a gift for a long-ago version of myself.
The result was that no matter how much I made, I lived check to check and recoiled in real fear if someone suggested this was dumb. But it was.
- Write down my monthly rent and utilities.
- Write down my getting-to-work expenses -- Metrocard, gas money, parking.
- Write down the stuff that changes month to month, but is still a necessity, like groceries.
- Figure out a daily budget, and from that, come up with a weekly amount to give myself as an allowance. (I came up with $20 a day including lunch and going out. It seems draconian, but averaged over a week really isn't so bad.)
- Subtract the above from my total monthly take-home income.
When I looked at it this way, I could see the tremendous amount I was wasting on intangibles that gave me nothing to show for my money. I was able to give myself a clothing budget and still have enough to put away in two savings accounts. More on that later.
Of course, a few months later he harangued me, in public, about an amount that he wanted me to account for. I was too thrown off guard by his angry attack to remember that the amount in question was accounted for in savings. Oh, red flags, why am I so oddly colorblind to you?
2. How to Annoy Salespeople (and Get Your Price)
Bad Boyfriend also taught me to arrive at a store for a big purchase with printouts in hand. For instance, when it was time to get a new couch, I went to the website of the furniture store and printed out my top three choices, with prices. When I showed up with this printout, the first salesman just walked away, because he was hoping for someone he could talk into a bigger sale. I didn't want to be that person; I had a budget in mind and was going to stick to it. Scaring away manipulative salespeople was a skill I needed to learn, and learn it I did.
3. How to Calculate a Car Price
When it was time to buy a car, Bad Boyfriend had me figure out the best car for my budget, which turned out to be a two-door Honda Civic. Then he suggested I email all the local dealerships and tell them what I was looking for, down to the trim and mileage I would prefer. "Let them come to you," he said, and come they did, competing with each other to find me the best deal and make that sale. I got the price I wanted, easily, and walked into the dealership to make the final sale armed with pages of info from Edmunds.com. Of course, then Bad Boyfriend decided I had to have these ridiculous racing tires and drove me nuts having them put on.
I could have done without that part of the lesson.
When I bought my current car with my husband, he watched me shoot down the extra warranty, undercarriage treatment and other last-minute price additions. He said, "I really hope I never have to get divorced from you."
I took it as a compliment.
4. Pay Yourself First
Before you even look at your automatic deposit, shunt a specific amount (10-25%) into long-term savings. Do it first. If you don't see it and can't spend it, you won't. If that seems too hard, it's not. In the past three years, my household income was slashed in half by a layoff, then steadily dwindled even further down. We have made it work and each time, we look back at our previous income and say, "Where was all that going?" Believe me, you won't miss it if you don't see it.
5. How to Splurge
I bet you thought this was all about saving. It is, but there was one thing Bad Boyfriend understood: You can't go total austerity and expect success. It's not human nature. It won't work with a diet, and it won't work with saving, especially long-term. You have to identify what you'll want to spend on, whether it's a Coach bag (which really does last years longer than those pieces of crap you spend $30 on in Loehmann's) or a Jamaican vacation. Don't shoot for rock-bottom all the way; budget the trip by doing research on travel sites (here's a comparison of which travel search sites are better, like Orbitz vs. Kayak; you can see more stories about saving on travel here) and finding a deal that will leave you feeling like you got what you wanted.
This is what the second savings account is for: short-term savings, or smaller goals that give you a reward for saving for the big goals (a down-payment, for instance).
This was something I had never learned at home. My parents act like every penny they spend has to be individually retrieved from their behinds. God forbid they should take a cab anywhere; it's a moral issue. Which is why every time I spend an unnecessary penny, I inwardly cackle as if I'm sneaking out the window to drink Pabst with the bad kids at the quarry.
I don't even know what a quarry is or where to find one. It's like Bruce Springsteen has written my concept of misbehaving, and I'm too old to be allowing long-past-its-expiration teenage rebellion to rule my life in any way.
Which is why finally mastering my money feels so "adult" -- even if the guy who led me to that place, well, wasn't.
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