7 Big Mistakes
I started shooting Season 6 yesterday. We’re working with a lovely couple… Amy and Paul… and I have high hopes for success.
I’ve got ANOTHER wicked cold and spent most of the day in a snoot-filled haze. I managed to:
a) misplace my Visa card,
b) try to walk out of the drugstore without signing my chit
c) leave set with PJ’s shoes instead of mine.
I called and put a hold on my Visa card, and found it this morning in my car. I was recognized trying to steal from the drugstore by a show fan who promised not to tell. And PJ texted me last night to say I owe her $20 because she couldn’t go on her date wearing rain boots. Hmmm. It’s her own fault, really. She liked my shoes so much, she went out an bought an almost identical pair, and that’s why, in my haze, I picked up her shoes. I take her copying me as a huge complement, actually, since she’s very cool and the fact that she wanted my shoes, well, that says it all, eh?
Lives are funny things. Everyone has a different set of priorities, a different set of needs. And we all have a way of muddling through to get what we want. We also have a tendency to make the same mistakes over and over and over.
PJ’s thing is shoes. She’s got a HUGE shoe fettish. I love books. I spend gobs of money on books, both recorded and the printed versions. For other people it’s technology, clothes, home furnishings, pets. As many things as you can name, people can purchase to excess.
I don’t have a problem with people blowing a whack of cash on whatever their whim is, providing they can afford it. It’s the people who just can’t make ends meet, who refuse to adjust their spending that I scratch my head at.
One of the most interesting things about doing the show is being able to take a look into people’s lives, behaviour and justifications. Each couple has their own story, but over dozens and dozens of shows, I’m seeing some common mistakes. Are you making any of these?
1. Carrying a balance on credit cards. Sadly, many people don’t even know how much they owe. And they don’t know what their interest rate is. John Wayne said, “Life is hard. Life is harder for stupid people.” Hmmm.
2. Letting their expenses get out of control. I routinely cut my couples’ variable expenses by 60%, 70%, 80% and they do it. The live on 20% of what they were spending before. How is that even possible? When I ask, they tell me, “We’re paying attention.” What a concept!
3. Taking payday loans. What the hell are ya thinking? If you can’t afford to live on what you’re making now, how are you going to make it through next week when you have to repay the loan, plus the interest (upwards of 700%, when you include the fees). If you need money that badly, sell something or get another job.
4. Having no emergency fund. You know where this leads. The first time something breaks, it’s back to the credit card or line of credit. If you don’t have a financial safety net, you will fall and break your neck. It’s only a matter of time.
5. Buying a house that’s too expensive. No money down, amortize forever has led people to believe they can afford houses that are more expensive than they can actually manage. If you had to save 20% of a $400,000 house - that $80,000 - you might think twice about buying such an expensive house. I know houses have gone through the roof, but that’s no excuse for strapping your cash flow to the point where you’re living on the edge all the time. That’s a sure way to destroy your relationship.
6. Paying only the minimum amount on debt. So you really don’t want to be out of debt then, right? And you don’t much care how much it costs you. So quit your whining.
7. Using debt to repay debt. That’s balance transfers, cash advances on credit cards to make minimum payments, or using your line of credit to pay your minimum on your credit card. This used to be illegal, but in the name of marketing and selling more credit, the balance transfer (using credit to pay credit) was created and now the line is so blurred that people think it’s fine. It’s not. And it’s going to catch up with you eventually.
April 2nd, 2008 at 9:18 am
I’m glad to see I’m covering basically all of those tips.. although I do feel quite odd at not having a large enough EF (in my mind)… but I know I’m all right. It’s just paranoia talking.
April 2nd, 2008 at 10:23 am
We are guilty of all the 7 MISTAKES and are really trying to stop the insanity!!! It’s tough but we are trying Gail’s wonderful ideas and with a hope and a prayer, we’ll get through to the next pay without PAYDAY ADVANCE. TTFN
April 2nd, 2008 at 11:14 am
Gail you are awesome I am a 35 year mother of two young children 19 months and 3 year old… yes I am crazy!!! I remeber watching you as a young girl on different show I think you use to be featured on global news sometimes. Anyways my Mom loved your advice and thought for once there was someone on TV who had logical common sense advice about money!!! Although both of my parents have passed away I hope to carry on their heritage of spending less then what you earn to my two dear ones. I am trying to develop my work from home business and it is a sacrifice but my hubby and I choose to remain cheerful as we do without and watch others spend recklessly!!! Much more fun to enjoy today with what you we have and save for tomorrow. Love you and take catre of yourself we all need you!!!
April 2nd, 2008 at 11:27 am
I LOVE my emergency fund. I began buidling it even though I have student loans and what a RELIEF it is to have when something at work makes you scared that your job may be on the line. There was also the scare of a strike and many were panicking because of money, bills, etc. I hope that they put their retro-active pay in safe keeping…
Someone else’s comment on Gail’s show: She is not saying anything special, just don’t spend more than you make!
April 2nd, 2008 at 1:04 pm
Debt is something that scares me…. knot in the pit of my stomach fear! and my mom and sister would always laugh at me, “You can afford the monthly payments! Why not get it?!” they would say. But it doesn’t feel RIGHT to me! Sure I could afford the payments now, but what if me or my hubby can’t work, or what if an emergency comes up, what-if, what-if, what-if! And if the purchase is to replace something that still works, or just to spoil myself then I REALLY feel rebellious. The good news is that I listen to that little voice in my head more that anybody’s pressure. Incidentally it is no surprise that my mother has been bankrupt twice, and is always on the edge, and my sister was bankrupt before she turned 25!
Sheesh!
April 2nd, 2008 at 2:07 pm
It always amazes me how many mistakes my wife and I made before we participated in the show. Gail is not explaining rocket science but it’s amazing how much we just didn’t understand before Gail come into our lives. People - go to her seminars, apply to be on the show. Do everything short of stalking to get as much info as you can from Gail. She saved our lives.
April 2nd, 2008 at 2:41 pm
Oh my gosh! I love your show. It is so wonderful because I so lack the smarts when it comes to finance.
In one of your previous shows, (though you do suggest this often), you advised a couple to call to lower their interest rate on their credit card. I thought that is a bunch of caw caw and that companies won’t do that.
I watch that show I do believe over a year ago and have been himming and hawing at the thought.
Well today I said enough. I called the credit card company and they lowered my interest rate by 4%!! For me that was great! I was so pleased! Doing this is going to get me on the right track. Because of your advise Gail last year I went to see a financial advisor at my bank who was so wonderful. She helped me out and got me focused.
I still have issues with money. I need to save more but I do believe I am on the right track. My next steps are to 1. go through my accounts for the last 6 mths and then 2. try to use cash only for 1 mth. I just love when you advise couples to do that. Though I am single, I feel you are advising me of concepts that aren’t hard per se they just need to become habits. When I become committed to a relationship, my finances will not be the issue (if their are issues on his end, i’ll take my money and run! LOL!)
Thank you so much getting this advise out there!
Best regards,
Andie Thompson
April 2nd, 2008 at 5:53 pm
Many years ago I used one credit card to pay off the balance to the other credit card. I thought that although I would still be in debt but at least my credit score would not be affected. My parents bailed me out and I was so ever thankful! Because once you started paying off your credit cards like that, it would be very difficult to stop!
For last few years, I keep one credit card only. I cut up the other cards and closed the accounts for good.
I also love my emergency funds! It feels so much better to borrow from myself than to borrow from others!
April 3rd, 2008 at 11:09 pm
All I can say is … Thank heavens for emergency funds! Shortly after becoming a new mom (which is a fabulous job but doesn’t pay the bills) my hubbie got laid off for 4 months! So you just never know when you’ll need that safety net. Now that I’m back to full-time work we are saving every penny and tracking our spending. I don’t EVER want to go through that financial stress again!
April 3rd, 2008 at 11:59 pm
I am guilty of 1, 2, 4 and 6. However 2 weeks ago my husband and I found your website and started the plan. We have shocked ourselves with the amount of money we don’t spend while using the jars! I used to eat out everyday for lunch costing close to $15/day. What a waste. it was due to pure laziness! I carry a balance on 4 credit cards - Ugh - and i always have a bad feeling in my stomach but recently with your budgeting plan I have already started to pay off a lot of debt!! WE WILL STICK TO IT!
I love your show and your website - i hope you come back to Nanaimo again