2003-07-11 - 2:40 p.m.

Money is the stupidest thing on earth and people who thrive on creativity, who enjoy art and music and literature, who�se primary reason is not to make as much of it as possible and then die, should be allowed to lead a sheltered existence and never ever ever have to think about money, right?

No. Not right. Nobody should obsess over money, but everybody should be responsible with it. I�m no financial wiz, but I�m not doing bad, either. I�d like to share some tips that have worked for me, and I hope they help.

1) Get two bank accounts. Rent and bills are expenses that reoccur monthly. Rent is the big deal at the end of the month (the end of the month being, by the way, the best time to go out on the town if you don�t like crowded bars). Here�s what I do--my rent is $X00 a month, and I have monthly bills that total about $X00. Each week, my direct deposit goes through to my primary bank account. I take about $X00, sometimes more and sometimes less depending on the week, of that money, and I put it into my rent and bills account, and I don�t touch it after that. Any check I have to write comes from that secondary account. I almost never bounce checks anymore, and I�m always prepared for rent. Whatever is left over each week in my primary account is my money, and I know how much I have of it, and I can do whatever I want with it. Having two checking accounts is the smartest thing I�ve ever done with money, and I strongly recommend giving it a whirl.

2) Cut the fat. Sit down with yourself and figure out what you spend your money on each month. Don�t forget the little things, like laundry and transportation, and don�t under-exaggerate what you spend on drinking, restaurants, and other forms of entertainment. If you find that you�re spending as much on clothes as on rent, cut it out. If you have a DVD player, get Netflix instead of renting--you make a big list of movies you want and they send them to you three at a time. When you feel like it, you mail each movie back and they�ll send you another one in the mail. You can watch �em and send �em back immediately and always be watching DVDs, or you can hold on to three movies for a month and not have to worry about late fees. $20 a month. Bargain. Also, do you need cable? Do you need to spend more than a dollar a beer to drink Sam Adams when you can by 30-packs of Bud at $0.75 a beer, or PBR for $0.50 a beer? Hit the dive bars instead of the stupid fancy ones and drink with real people who are far more interesting. Bring your lunch to work. Buy your lunch and bring it back to the office and drink free water rather than two dollar Cokes. Do you need a fancy gym membership when you can go walking or running for free? Use a fan instead of an air conditioner. Buy clothes on sale at the end of the summer for next summer, etc. Avoid cabs like the plague (but don�t accept rides from hammered friends or walk six miles home shitfaced at 2:00 in the morning, either). If you find that all your money is going to hanging out with your friends, explain that you�re going to have to cut back and not attend every expensive social function. If they can�t accept it, they�re not good friends--they�re black holes. Cut the fat--it adds up--all of it.

3) Don�t spend what you don�t have. Seriously. If you can�t afford something--don�t buy it. You don�t need a new digital camera. You don�t need a new guitar. You don�t need to go out for sushi right now. And you certainly don�t need yet another Faberge egg. You can put together a new interview outfit from what you already have, or hit a Goodwill type store and get an Oxford for three bucks. You�ll thank yourself at the end of the month when it comes time to pay rent. And speaking of which...

3a) Rent. If you�re renting and living in the city, your rent is most likely (hopefully) your largest monthly expense, so if you really need more cash, that's the first expense you should consider cutting. If you can be happy in a 3 bedroom apartment with 3 roommates, in a less desirable neighborhood, you might be paying as much as $700 less than someone living alone in a nice part of town. And don�t forget--roommates don�t just split up the rent. They also split the bills with you, and if you have a good relationship with them, you could also save on food money, movie rentals, beer, cleaning supplies, etc. If you share the city of Boston with me and, like me, you cannot list mommy and daddy as a source of income, you're probably going to end up paying more than you can afford no matter where you live. Regardless, finding the best deal that fits your income is worth the effort. If you�re freaking out over rent at the end of each month even though you�re responsible with money, move.

3b) Spend wisely. It�s easy to tell yourself to avoid reckless spending, but sometimes we make purchases we don�t really need, just because we can. Take a look around your room and count all of the CDs you don�t listen to anymore, the DVDs you never watch, the toys you never play with, the clothes you never wear. Add it up--so much of your money has been spent on things that contribute absolutely nothing to the current and future quality of your life. Think before you buy--a $40 sweater that you wear 200 times has more value than a $40 sweater you wear five times ($0.20 a wear vs. $8 a wear). Ask yourself if you�re really going to use it before you buy it. Prioritize your desires as well--for instance, I own a computer that will take me a total of about two years to pay off. But I did a hell of a lot of research before I bought it. More importantly, I sat down and asked myself do I really need this? And the answer was yes--I really do. Having the best computer I can afford is more important to me than having the extra money to spend on other stuff. So I bought it, and I use it all the time, and that�s an example of a good purchase. Spend wisely.

3c) Never charge anything. That $50 dinner you charged is probably going to end up costing you $150 it over the next five years (because of monthly finance charges). Think about it--I�m not shitting you. If you�re starving and cash poor, charge a meal, and that�s it. And don�t even think about applying for a store card to save 10% on your purchase. It�s probably going to end up costing you 40% more unless you pay it off entirely when you get the bill.

4) Take your debt seriously. Ignoring it and hoping it goes away does not work. Get out a credit card statement and a calculator. NOW! OK--take your balance (what you owe). Now multiply the balance by 30 (the average number of days in a month), and then that by the �periodic rate� (which should be a number like 0.07552454 or something similar). Take the resulting number and move the decimal two digits to the left. That�s how much money the credit card company is charging you each month just to pay back what you already owe. That�s perhaps $20-$80 a month of your money that�s doing absolutely nothing for you. Think about it. If you owe $1000 on a credit card, and they�re charging you a $30 finance charge for the month, and you pay off $100 that month, that�s only $70 you�re really paying off. Okay--here�s the good news--the more debt you pay off over time, the less money they�re going to charge you per month. So if you pay off $500 of that $1000 balance, the next month they�re only going to charge you $15, not $30. That�s more money for you and less that you�ll ultimately pay to the credit card company. Trust me, they�re doing fine and won�t have to lay anybody off if you give them less free money. Oh, and that�s why it�s important to make your payments on time--so they don�t raise your rate. That�s why having a primary and secondary bank account works for me--I plan out the payments I make for bills and rent ahead of time so I can make big credit card payments when I can. I�ve stuck to a plan to pay off a $2,200 balance in a year, and I�m probably going to meet my goal. When that debt is over and done with, the $150-$300 I�m paying each month on that debt can go to something else--I can get cable perhaps, I could make bigger student loan payments, or I could even save it up and have down payment money for a house or condo in a few years, and then I�ll be building equity each month rather than paying rent--the holy grail of financial responsibility.

5) Have fun. Being responsible with money is like being on a diet--if you�re too strict with yourself, you�re going to be more likely to relapse. Once you�ve figured out your expenses, cut the fat, and worked out a long-term plan to get your debt down, you�re going to be more aware of your personal finances, which means you�ll know when you can afford to treat yourself and when you can�t. And remember, paying down debt is a one month at a time process. First you stop the bleeding, then you wait for the wound to heal. Don�t be discouraged if you start taking a credit card balance seriously, but then don�t see the big results after a month or so. Trust me, once you get a responsibility streak going when it comes to money, you�ll see the results soon enough, and you can feel much better about yourself.

OK--I think I�ve reached the end of my sermon. Again, it�s not like I�m good with money, but I�m trying to get my shit together and still have a good time. I really hope I didn�t come across as obnoxious or holier than thou--I�ve been in trouble with money and debt before and I know how terrifying it is. I feel absolutely terrible for folks who are in these scary situations, and I hope my tips help. People my age don�t have experience with handling their own finances and sometimes don�t think about money because they�ve never really had to before, and that approach gets folks in trouble. Nothing is worth the chilling stress of being in deep debt (and the feeling of helplessness and self-loathing that comes with it), and a little planning and responsibility now can set a pretty fancy table for later.