A lovely reader Beth wrote to me asking a two-part question:

I was thinking about maybe if I am missing something I spend on or how to motivate myself to NOT blow any savings I have on new makeup (huge problem…most of my money goes to makeup and shipping b/c I belong to one of those swapping communities).

Well my first and brief piece of major advice is that if you KNOW that swapping communities are your sore spot, then quit.

Make your account inactive and stop swapping. That’ll cut the source of your problems right to the core. You will feel pangs of withdrawal but substitute that with other activities.

Later in the post, I am going to get more into coping strategies to stay focused, but I want to answer your second question first.

Maybe your thoughts on me withdrawing cash to spend so I don’t use my debit?

Except the thing is I want to build my credit so still want to use my credit card, which I pay off using my checking attached to my debit, so maybe charge more routine purposes?

I don’t really see a difference between cash, debit and credit cards any longer. The reason being is that in any method I use, the money disappears immediately.

Let me briefly go into the benefits of each and you can figure it out for yourself what works best:

For cash, it’s physical.

You see the money disappearing and you cry a little bit inside.

But it’s also annoying because I can’t track anything with cash unless I make a note in my budget about how much I spent and where.

But a lot of people have switched to cash-only methods with tremendous success.

They usually put how much they’ve budgeted each month into separate envelopes (Groceries, Car/Gas, Entertainment), and they can actually see the money spent with the receipts they put in each envelope and how much is left for the month.

It’s really a good visual method that works for people who want a very simple system without analyzing where they spend their money, and just want to stick to a structure.

Debit is the same as cash to me.

The money disappears right away but you don’t physically see it leave your hands. Just your bank account. You can certainly keep using this method, but without a budget or a way to really go through and analyze your spending, you’re going to run into problems again and again.

Credit. Ahh credit. The much hated and yet beloved option of all three.

I personally ADORE using credit cards because of the points I get. If you don’t get points or any other kind of benefit from using a credit card, then don’t bother using this method. Just stick to cash or debit.

Don’t worry about the credit score thing with credit cards. Contrary to popular belief, you do not need to use your credit card every single day or week to build a great credit score. BF uses his credit card three times a year and he has a perfect 800 score.

Credit scores are based on how much you currently owe in debt (student loans, lines of credit, consumer debt) and how much credit you have left available in your name.

If you have $10,000 available to you in all the forms of credit, and spend $9999 of it, that is a bad credit score, even if you use and pay it off each month. It tells lenders you are risky because you are using 99% of what is available to you which means to them that you are hard up for cash and running out of money to pay the other lenders. Ouch.

If you have $10,000 and spend only $1000 (which you pay off each month), that is a great credit score because you have a LOT of credit available and are clearly sticking within your limits instead of pushing them.

My method for using credit cards goes like this: when I go out and spend $50 on something, I come home with the receipt, enter it into my budget where I track my expenses and immediately log online and pay it off right away.

Just as easy as using cash (the amount is paid immediately from my bank account) and I get the benefits of using that credit card (namely the points I build up towards free groceries).

For more detail on how I use my credit card like cash, see this post here called: Keeping up with your credit card transactions.

That sounds kind of like what you’re doing anyway, so I .. say keep up with it.

I think your problem is more of an instant gratification fix.

You don’t know how to look at your money with the right long-term mindset of where you are going with all of these savings and what you’re doing, when you could be enjoying your newfound goodies NOW.

And that’s okay. It took me a while to get the hang of things too, the key thing is that you are aware of where your Achilles Heel is.

The Bottom Line is…

All three methods work great and it really depends on what you feel comfortable using. If you know credit cards are your downfall because it’s so easy to spend up $300 in one big splurge, then stick to cash or debit.

If you want to use your credit or debit card because it’s easier and you never have cash on you then do it if you are disciplined to pay it off each time you use it.

But none of them will work for you if you don’t have a budget and a way to track what you are spending.

Now on to staying motivated…

Beth’s question got me thinking and I thought I’d write a post that was more general and less reader-specific so that others could benefit.

It’s actually really damn hard not to run into a store when you have $200 saved and go: WOW $200! I could buy this, and this.. and some of that…

But this is where you should stop yourself because you’re disciplined like that, and focus on the following strategies (you can choose to use all or just a couple of them, it’s up to you):

NEEDS VS. WANTS

You need food and air. You want to go out to Pastis for lunch everyday.

You need new work shoes. You want Tory Burch ballet flats.

The problem with the needs vs. wants strategy that I had, was that I kept thinking that all my wants were needs.

This is a really soft strategy meant to weed out impulse purchases of yet another tube of Chapstick in a the newest Pina Colada flavour with SPF protection… But it won’t work for big ticket items like clothing or shoes.

I mean, who the heck is going to fault my buying quality products for my skin and body? I’d rather spend $35 on a lotion instead of slathering on a cheap $2 lotion that stinks and doesn’t even work.

Right?

Wrong.

But how do you tell the difference between a real need vs. want, when you take into account quality and other such factors?

Well, sometimes you have to look at the big picture and that’s where the other strategies come into play.

HOW MUCH WILL IT COST ME IN WORKING HOURS?

Let’s picture this: You are in Sephora, picking up a new blush.

It’s $20, but totally reasonable because it’s a water-based blush that mimics an actual flush in your cheeks without clogging your pores, and lasts all day without feeling heavy on your skin.

Plus, Makeup Alley reviewers gave it 5 lippies out of 5. All 200 of them. SCORE!

Before reaching out your hot sweaty paw and grasping that holy grail of all blushes, think about how much you earn (gross) at your job.

How to calculate your gross earnings per hour:

Take your gross salary for the year ($30,000 for example) and divide it by 2000, because 2000 is the magical, average number of how many working hours a person does in a year.

$30,000 / 2000 = $15/hour is approximately how much you earn in gross.

I did it with gross numbers because you’re in the middle of Sephora and not likely able to figure out how much you earn per year after taxes.

But when you get the time, dig out your tax slips and figure out how much you earn NET a year (your salary minus taxes) and divide that number by 2000.

Okay, so now that you know it takes you about an hour and 20 minutes is how long it will take for you to pay off the blush, you have to assess if it’s worth it to you.

I’d suggest putting the blush back, going to work for an hour and 20 minutes and asking yourself after that, if it was worth the cost of a blush. It may or may not be worth it. It’s up to you.

I should remind you that it is never about one blush.

At least for me, it wasn’t.

It’s always one blush, a fragrance, a new lipgloss and maybe some new sunscreen with an SPF factor of 65 that feels like air on your skin.

That always adds up to more than $20 at the Sephora till, and you have to really consider if it’s worth all those hours you are spending at work to pay for what is essentially unnecessary because you probably have a closet full of makeup at home that you haven’t used.

But $20 is a pretty small example to be giving you. Let’s say you wanted an iPod for $300. Ah hah! Now it gets trickier right?

It will now take you 20 full hours of work to pay for that iPod. We’re talking just over 2 full days of WORK to pay for a gadget.

Ouch.

And if THAT doesn’t stop ya (wow, tough one..) you should pull out the big guns and think about your goals.

HOW FAR WILL THIS SET ME BACK IN MY FINANCIAL GOALS?

Don’t have any goals? Make your top 3 goals right now.

It won’t take long because you know what you want to get accomplished. You just haven’t written them down or said them out loud yet.

Some goals can be very numbers-oriented such as calculating how much you owe in debt down to the penny, or wanting to save a certain amount in your retirement fund like $5000 a year. Those are easy to create as goals because the numbers are straight up in your face in black and white.

Other goals, can be more vague such as your dream of visiting London England for a 2-week vacation because you are totally obsessed with going there. (Err.. is that just my dream?)

With these kinds of vague goals, you need to put actual numbers. Figure out the flight ticket to London, the hotel costs, the food, entertainment and shopping you will do. When you have the final number, that’s your new goal now.

Lastly, goals can be even more generalized than that. Maybe you just want to sleep better at night knowing that you are doing something to get out of debt, even if it’s giving up a lipgloss at Sephora and putting that $15 towards your debt instead.

Don’t knock it. Financial security can be a very liberating feeling for many people. Knowing how much you owe and that you have a plan and are working towards it, can do wonders.

It’s whatever works for you.

For me, it was just knowing I had all of this debt. When I threw a pity party about starting my life off with such a huge gorilla on my debt, I got out all of my frustrations and jealousies.

I was jealous of knowing that my friends all left school with $0 in debt because they had money saved from their parents, or they got full scholarships that paid for everything including room and board.

I was frustrated with having to think about putting what I thought was a good salary ($65,000) into something that was essentially already spent (my education in business school and living in college), and feeling like I had a noose around my neck on my spending and life. Like I would never get ahead.

But after the pity party died down and the brownies had long disappeared from my plate, I got up and made a simple resolution:

I WANT TO BE OUT OF DEBT AS SOON AS POSSIBLE.

From there, I started a budget, tracked my expenses and started cutting back on my spending bit by bit, trying to find ways to cut corners on my lifestyle, save money, not feel deprived and to find a balance in my life without blowing up at the people around me.

It wasn’t easy and I’m pretty sure I scared a lot of people with how crazy I was about getting out of debt. I even sent $0.10 at a time to my debt when I had saved $0.10 in other areas. No kidding!

But all I had in my mind was to be out of debt as soon as possible, and that overriding goal was all I needed in stores when I was tempted by shiny, pretty things.

I did cave in a lot of times, but it was only after I had done careful calculations and made the decision to buy a new laptop because I needed one. Or a new pair of ballet flats because my other ones had my toe almost sticking out of them.

I still spent money on “unnecessary” items like makeup and clothing, but instead of continuing to blindly spend on whatever my little heart desired, I made choices.

It was actually harder to make a choice to buy a higher quality pair of shoes even though I knew it was worth it, because all I could think about was the fact that I was spending $50 more, and that $50 could go towards my debt.

But I got over that, and bought the better pair of shoes, because sometimes you just can’t scrimp on necessary wants.

Even for little items like makeup or toiletries, I totally depleted my inventory before I even considered buying a new shampoo or blush. I made sure I really squeezed out everything I could out of every tube before I purchased a new one.

Each purchase was thought through carefully, no matter how little or large the amount of it was.
This made each purchase, even for the most mundane items like a chocolate bar, such a treat that I began to appreciate all the things I used to mindlessly toss into my Shoppers Drug Mart basket.

Like headbands, toothpaste, lotions, potions, vitamin pills…. LOL!

For example, I figured out that spending $23 on a new blush was expensive, but I was making good progress on my debt, and it would take me X amount of hours to earn it back.

I also just stopped at the blush (which I had run out of) and avoided packing some extra fun items into my basket before I left.

All I could think was: Stick to the necessary wants and remember that every penny counts towards getting out of debt.

A penny saved is really a penny earned.

I read somewhere that for every dollar you saved, it was actually $2 in your gross salary after taxes and other expenses.

Isn’t that nuts? That really stuck with me for a long time, that actually saving money was keeping what you were owed instead of putting it into what people irresponsibly call “investments” like a new car or a stereo sound system.

There is no easy way out. There’s only discipline and focusing on your goals. If you slip here and there (occasionally, mind you)… don’t fret about it. It happens.

Just learn from the slip up and make a strong, mental note not to do it again.

Heck, even today, I’ve even slipped up a couple of times buying things I shouldn’t have.. but now my new mantra is to be more of a minimalist and to stop buying items that will just clutter my closet, home and life.

So now, instead of purchasing random lotions or even things I MAY actually use but don’t really need or can find a substitute for, I end up saving money indirectly because of my growing minimalist streak.

I just don’t want to see it in my suitcase when I move, or have to deal with it just because I bought it on an impulse.

It’s a different philosophy, but it works just as well (maybe better) than when I was getting out of debt.

However, it only works if you really are becoming a minimalist, so I cannot really recommend it to everyone as a strategy of staying focused on your goals.

That’s all I’ve got, Beth! I hope it helps and I hope other readers can chime in with their opinions.