Fractured Dreams

I’ve mentioned before how invaluable I’ve found Wesabe in coming to grips with my financial situation. So when I came home from my trip, in particular need of watching my money, I was taken aback to see the notice on the site that Wesabe will be shutting down at the end of this week.

Wesabe was one of the few (free) sites out there for users with non-US dollar accounts, with a level of granularity that I understand other, similar sites haven’t matched.

But although I’ll miss geeking out over its pie charts and bar graphs and tag clouds, using it has put me into good habits that will continue on without the site.

I don’t know why I was ever one of those people who thought I could make extra payments on credit cards with what’s left at the end of the month to clear the balances faster, because let’s face it, there never is. So now I’m an adherent to the pay-yourself-first method of budgeting and I knock off a chunk of my debt on pay day. Although I still try to have something left over to make a small extra payment, it’s ok if I don’t because I’ve already made a dent in it that month.

I have a basic spreadsheet (we’re talking Microsoft Works wizard-generated basic) with three tables — income, fixed expenses and variable expenses. Fixed expenses obviously covers stuff like rent and bills. The variable starts out with a combination of things I expect to be paying out for that month and blank categories that I fill in as I spend, like eating out. That’s been crucial, because I would often check my bank balance and see I had x amount left and feel ok to spend, forgetting that certain bills had yet to leave the account. So now I don’t bother looking at the balance — I check what the spreadsheet says is actually available, which keeps me reined in as it edges lower. It’s a simple thing, but a different way of thinking that makes a big difference to how my finances look each month.

So I’ll miss Wesabe and uploading transactions for tagging, but now that I know my spending habits in detail, I feel like the training wheels are coming off. That won’t stop me from keeping an eye out for the open source version, though, or dropping in on the wesabe groups that will remain active, to keep motivated and pick up tips.

I’ve been doing some housekeeping on the back end of the site, upgrading from the ancient versions of Wordpress and the Now Reading plugin I’ve been running throughout my on-again, off-again relationship with blogging. It feels so shiny and modern back here. (Which is something I suppose, because on the front end I’m still long overdue a layout redesign and blogroll update.)

I have a couple of posts brewing, but in line with my ongoing attempts to get my financial house in order, today I want to talk about the fact that credit card interest rates in the UK have hit a 12-year high.

My main card provider recently quietly jacked up the interest rate on my account to 24.9% — that’s basically 50 times the BofE base rate. But that did me a favour, because it gave me the nudge I needed to transfer the balance from that and my second card to a 0% offer. I was hesitant because I didn’t want to open another credit card account, but not doing so has essentially had me throwing money away in interest on a monthly basis. The banks are reporting multi-billion-pound profits — they don’t need my hard-earned cash.

Coincidently after reading the above-linked piece in the Guardian, I got a call checking a couple of details to approve my application for the new account. (I read that somewhere as a money-saving tip — if you apply online for a credit card with a 0% offer and they say they need more info, give it to them because it doesn’t mean you’re not approved.)

So now my two card balances are being consolidated to one, saving me a few hundred pounds in interest over the coming months. It’ll mean some tweaking of my Wesabe and debt snowball/budget spreadsheet setup, which now won’t be as tidy as I would like in my weird random orderliness, but it shows the whole point of that setup is working — taking control of my finances and identifying ways to pay off my debts faster. Before, I wouldn’t have been paying enough attention to notice that my interest rate had changed; when my previous 0% offers expired I didn’t get around to switching, having the vague idea that I’d pay off the balances so it wouldn’t matter, and yet here we are.

It feels good to be taking charge of the situation and watching the balance fall. I’m so looking forward to pay day next week to tackle another chunk.

*my literal tidiness kick lasted about a week at the of last month…now I’m back to living in my usual clothes-strewn pigsty.

There’s a reason the Ani DiFranco song Lag Time is one of my theme songs — I can be a bit slow on the uptake.

Case in point: In the office the other day we all received letters, which I assumed was some form of confirmation of the recent round of annual appraisals, to the effect that, as the boss joked, we’re “not sacked yet”. I threw it in my bag and carried on with my day. I have a habit of not opening letters when I know what’s in them — bank statements, bills I pay online, direct debits.

It wasn’t until a couple of days later, in the middle of the night when once again I couldn’t sleep, that I remembered the envelope and thought maybe I should open it in case it was something else.

Two lines informed me of a pay rise effective immediately.

That will make dealing with those financial issues easier. It’ll also teach me not to toss aside envelopes unopened.

One of the things I’ve been doing over the last few months instead of blogging is staring at my financial profile on Wesabe. Although the staring doesn’t change the numbers (sadly), it does strengthen my resolve to take action to change them. 2009 was an expensive year for me, what with all the travel and giving money to my mother (whose ongoing unemployment saga gives me a headache). But at the same time I laid a foundation for getting on top of my debt.

An online money management tool like Wesabe works for me because I’m a geek and I love the tagging and bar graphs and pie charts and the novelty never wears off, unlike my brief flirtation with a paper budget book.

Once I started tracking my spending on Wesabe, I set up a simple budget spreadsheet breaking down my fixed and variable monthly expenses that I update throughout the month as money leaves my bank account. That way I can see how much money I really have left until pay day, rather than looking at my balance and ignoring the fact that various bill payments have yet to come out. I also downloaded a credit card snowball calculator spreadsheet to keep me motivated to hit my targets for getting the balances down each month.

Seeing my current account, credit card, and savings balances totalled up was a great motivator, and not only to deal with my debt. My small emergency fund had been sitting in a regular savings account, which had slashed its interest rate to practically zero. But having taken control of my finances, I moved it to an ISA with a better rate (if there is such a thing in these times of historic lows). The transfer took less than 5 minutes and the reward is there each month when I receive pounds rather than pennies in interest.

So one of my goals for 2010 is to continue what I started in 2009. It’s a real challenge this month, with the sales beckoning to treat myself. But the thing with treating yourself again and again is that at some point you have to pay for it. That time is now.