# I can't manage my money. What can I do?



## KarlK (23 Jan 2006)

Hi

I have come to the conclusion that I am totally incapable of managing money. I have had a good salary for the past 8 years and am competent and happy at work but for some reason completely unable to handle domestic finances.  I have no savings, no equity in a house, nothing just what's in my pocket. I don't have any debt only because I inherited some money and paid it off. Now the remainder of the cash is dwindling.

I don't buy expensive things. I have no idea where my money goes, but I guess it is going on a huge number of small expenses like taking a taxi when a bus would do. My friends think I have a drug habit. I don't.  I have tried to budget several times and failed. I tried MABS. I worry about money all the time. I have a wife and child. The wife doesn't work and has less grasp of money even than me. She doesn't have expensive tastes and I give her a fixed amount for household stuff so I can't blame her.

I have cut off any credit facilities I used to have as I don't trust myself.

I want to buy a house for my family. I want to be able to provide for my child.

Is it possible to get someone else to manage my money for me? I would give them my salary and they would pay the bills and give me an allowance. I earned about 90K last year.

I think I have a psychological problem with money. Does anyone have any advice rather than just telling me I'm an idiot which I know already?

thanks


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## ClubMan (23 Jan 2006)

KarlK said:
			
		

> I have come to the conclusion that I am totally incapable of managing money.


 Have you checked the budgeting and debt management resources in the key posts threads linked at the top of this forum? 
I have cut off any credit facilities I used to have as I don't trust myself.


> Is it possible to get someone else to manage my money for me? I would give them my salary and they would pay the bills and give me an allowance. I earned about 90K last year.


 I remember somebody mentioning some crowd who provide this sort of service but they also charged a pretty penny for it. Unfortunately I can't find the thread in question right now.


> I think I have a psychological problem with money. Does anyone have any advice rather than just telling me I'm an idiot which I know already?


 Have you ever tried using a spending diary to log where the money goes and then reviewing this after a few weeks to see what cutbacks can be made? Unless you have significant debts or other unavoidable outgoings or a really lavish lifestyle there is no reason that you should be finding things difficult on an income of €90K in my opinion. I don't think that you're an idiot but I do think that you need to take a hard objective look at where your money is going and what you are doing wrong.

Handing your financial affairs over to some third party might just expose you to the risk of somebody ripping you off so think carefully about pursuing this option.


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## Thrifty (23 Jan 2006)

I think what you may have now is this idea that you can't handle money and you're probably setting yourself up to fail before you even start. Handling money is not a talent its something you learn. Some people are more interested in money, finances and the whole economic system than others but you don't have to have this detailed knowledge or any special skill to handle your own personal finances. What you do need is discipline. Firstly to work out where your money is going and from what you say - you need to keep a spend diary so that you write down every day what you spend and you can see where your money is going. You also need to prepare a budget. - Work out the big things first like your rent, car insurance, car tax, etc divide your two month utility bills by 2 (if monthly) 8 if weekly, work out when the yearly bills are and calculate them in. Set aside depending on how often you are paid the amount to cover these. Then start working out what you need for food each week. Put in everything you know you have to pay and use the diary to work out what you are spending the rest of your money on. MABS have a budget sheet on their web site and information about working out your own budget. Have a look at it again and if you are still struggling i suggest you contact their office again. In the end they can only give you advice - its up to you to implement it. But there is no reason why you shouldn't be able to do it - it can be depressing on a low wage trying to make ends meet but on a good wage you can see loads of possibilities to save and how quickly you can build up a decent fund.


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## Janet (23 Jan 2006)

Have you read through some of the other threads here dealing with people who have/had problems managing money?  That would be a good start if for no other reason than to let you realise that you're not alone in having difficulties.  It's sensible to cut yourself off from credit if you realise you'll misuse it.  The very first step though in learning to manage your money (which I feel it is important to do rather than spending more money paying someone else to do it!) is to keep a money diary for a month.  Every time you put your hand in your pocket to pay for something write it down immediately.  You can then get an idea of what you're spending and how and start making decisions about how you spend your money rather than just letting it get spent any old way.

Does your wife also feel you (as in both of you) have a problem or does she feel you're okay?  

I'd recommend Alvin Hall's book Your Money or Your Life as a simple book to give you some idea of how to go about getting your basic finances under control. 

You might also consider seeing a psychologist to try and get to the bottom of why you have problems with spending - however only you can really decide if this would be a help.  In my case making the decision to start seeing a therapist did help with my spending (only one of my problems!) because I was very conscious of needing to have enough money to pay for it so it forced me to start keeping to a budget.


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## Berni (23 Jan 2006)

If getting into the nitty gritty of where every penny goes is too daunting, perhaps starting with something like this approach might be easier
http://moneycentral.msn.com/content/Savinganddebt/Learntobudget/P36153.asp
It basically operates on the principle that you pay yourself first, ie put away your savings when you get paid (preferably by standing order so you don't get cold feet), then whats left is to pay your expenses


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## DoctorEvil (23 Jan 2006)

Firstly - what you need to do is start a savings account.
Organise an amount (say 100 - 200 Euro) to be paid into this every month as soon after your pay cheque hits your account as possible.

Try not to touch this money unless you have to in an emergency.

Now keep a diary of your spending and try to live on the rest of your salary.

The fact that the money is not as readily available will make you more conscious of what you are spending.


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## ClubMan (23 Jan 2006)

Janet said:
			
		

> You might also consider seeing a psychologist to try and get to the bottom of why you have problems with spending - however only you can really decide if this would be a help.


If you do decide that this might be a useful option then I personally would recommend that you at least check out CBT (alone or with a suitably trained _CBT _practitioner/therapist) instead of some of the other more general (and arguably loosely defined/focused) branches of psychology/counselling. In my opinion it's a lot more practical and logical than some of the alternatives. But it does take work on the part of the participant to work. It's a very useful way of uncovering, understanding and changing behaviours and habits that are based on faulty assumptions or perceptions.


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## KarlK (23 Jan 2006)

All of your replies are useful and helpful. So thanks for taking the time. It's helpful to get an outside perspective. From shame and fear, this is something that I wouldn't discuss with anyone other than my wife.



			
				Thrifty said:
			
		

> I think what you may have now is this idea that you can't handle money and you're probably setting yourself up to fail before you even start. Handling money is not a talent its something you learn.


I think this is a very good point.

I've read the archived threads. I'll start a cash diary in the morning and post how I get on.

I had thought that CBT might help but I haven't searched for any practitioner yet. I imagine my problems are the result of bad habits. In psychoanalytic terms, I may be too financially generous with other people in an attempt to make them like me. I don't have much faith in psychoanalysis and I reckon my mental health is very strong apart from this issue. 

I think I see myself as richer than I am. When I was young I never imagined I would earn this much money and I seem to have formed a false image of myself as being well off and without the need to worry about day to day spending.

I may be in the habit of using money as an easy and unimaginative way around life's problems. Why cook when you can order in? Why hang out the clothes when you can use the drier? Why fix when you can buy a new one? This pattern leads to a lower standard of living and also a lack of creativity. 

My wife has no relationship with money very much. She has no interest in making or saving or spending money. She is very supportive but her only suggestion is that I declare myself bankrupt.

I have lived beyond my means since I was a teenager. My working life has been focused around increasing my income so that I would reach a point where I couldn't overspend. This strategy has not worked even when my income was double what it is now a couple of years ago and I was seriously overworked. My wife persuaded me there was no point in working so hard if I was never going to have any money at the end of the day.

I'm aware that for someone struggling on a low income, my problems would seem ludicrous.

Anyhow thanks again.


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## RainyDay (23 Jan 2006)

KarlK said:
			
		

> Why cook when you can order in? Why hang out the clothes when you can use the drier? Why fix when you can buy a new one? This pattern leads to a lower standard of living and also a lack of creativity.


Sounds like you have a reasonably good idea of what is causing your problems. You just need the willpower to make the hard decisons. Try looking your child in the eye and telling her that you frittered away his/her future on takeaways and LCD tellys.


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## markowitzman (23 Jan 2006)

Now that you are debt free I think the best thing that you can do is buy a house and get a mortgage asap. 
A mortgage is a great form of forced saving.
Based on your income you should not have a problem getting one.
You are in a spending comfort zone at present.
You need the discipline of having a mortgage.
Your family's future depends on you being able to manage the mortgage.


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## Diziet (24 Jan 2006)

Approximately seven years ago, I was in a position of making OK money, and spending it all! No savings to speak of, and I had money owing on credit cards, car load, and of course the mortgage. Various attempts to budget were fruitless...

Then the company I worked for went into liquidation and we faced the possibility of not being able to pay the mortgage. We could survive only a couple of months by cutting expenses to the bone.

I found another job. Since then i realised that my lack of budgeting skills was a sorry excuse and that i simply did not want to budget. After the wake up call I have enough savings and investments to pay off the mortgage on a far bigger house, plus savings in addition. I have not paid interest on a credit card since i got the new job. Our standard of living (with 2 kids) is better, not worse. It's amazing how much money can be wasted away. Decide what is important to you, and cut out the rest. For example, I drive an 11 year old car. I do little mileage and the car I have is reliable. I don't intend to change it until I really really have to! Other friends run a car loan almost continuously and update their car every three years. For me, doing this adds nothing to my happiness so it is not a priority. We do, however, as a family spend money on travelling the world. This is important to us and we spend our money (saved money, BTW, not credit) that way. You make your choices...

You and your wife need to sit down and ask yourself the hypothetical question : If I lose my job, then what? The other suggestions were good, but as you correctly say you should change your mindset too. www.fool.co.uk has an excellent 'Dealing with Debt' board (look in the discussion boards area). Have a look at the stories there, and try using the SOA (statement of affairs) calculator, which is a very handy budgeting tool even if you are not in dire straights.

good luck,
Diziet


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## Janet (24 Jan 2006)

KarlK said:
			
		

> I had thought that CBT might help but I haven't searched for any practitioner yet. I imagine my problems are the result of bad habits. In psychoanalytic terms, I may be too financially generous with other people in an attempt to make them like me. I don't have much faith in psychoanalysis and I reckon my mental health is very strong apart from this issue.



That's a bit like saying apart from this broken leg I'm really fit.  Doesn't matter how fit you are, with a broken leg you can't live the way you want to.  If you're open to it then talking to someone would probably help however you really need to be prepared to accept that you do have a problem.  I think there are diffierent levels of acceptance and even by posting here you've accepted your problem to some extent.  Now you need to move on to the next step.



			
				KarlK said:
			
		

> I think I see myself as richer than I am. When I was young I never imagined I would earn this much money and I seem to have formed a false image of myself as being well off and without the need to worry about day to day spending.
> 
> I may be in the habit of using money as an easy and unimaginative way around life's problems. Why cook when you can order in? Why hang out the clothes when you can use the drier? Why fix when you can buy a new one? This pattern leads to a lower standard of living and also a lack of creativity.



Been there, done that!  Except on a much lower salary than you so as you can imagine, I'm still paying off a huge loan to cover those few years of being careless.



			
				KarlK said:
			
		

> My wife has no relationship with money very much. She has no interest in making or saving or spending money. She is very supportive but her only suggestion is that I declare myself bankrupt.



Do you live in Ireland?  Personal bankruptcy isn't possible here as far as I'm aware.  I don't actually see the point of it anyway if you've no debts at the moment.  What could you possibly gain?  



			
				KarlK said:
			
		

> I have lived beyond my means since I was a teenager. My working life has been focused around increasing my income so that I would reach a point where I couldn't overspend. This strategy has not worked even when my income was double what it is now a couple of years ago and I was seriously overworked.



It's a strategy that'll never work but it's good you know that now.  If your spending has always expanded to meet your income you need to "reduce" your income by diverting some of it before you can get your hands on it.  As was suggested above, set up a standing order to move money into a savings account the same day you get paid.  Make it a savings account with limited access so you can't get at the money too easily.


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## Philip2005 (24 Jan 2006)

I've read you post and other peoples replies. 
The first thing you need to do is buy or rent a book on personal finance from the libary. I have read the money docter by john lowe...

http://www.moneydoctor.ie/   and use the internet to find out more.

If you can earned €90k a year than getting to grips with money shouldn't be too hard compared to your job. Maybe you are burned out from working too hard.If you can cut back abit you will feel more about to get a handle on your finances.
Start a spending diary or use something like microsoft money.
Yourself and your wife need to learn about your fiances.
Two heads are better than one.


I read that you are giving people money to feel liked. Forget that.Real friends will like you more for not giving them anything.
You also don't need someone else looking after your money , remember no one will look after your money aswell as you.

So first educate yourself about personal finance.
Then start saving, then find out about buying a house.


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## ClubMan (24 Jan 2006)

_KarlK _- maybe if you posted a summary of your income and outgoings (if you know what they are yet) here people could make suggestions? If you don't know your outgoings in detail then you will definitely need to use a spending diary/log. Are you renting at the moment - i.e. you don't own your own home?


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## mimi rogers (24 Jan 2006)

I think you should contact MABS. They should be able to help you. From what I hear they are excellent.

Mimi


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## ClubMan (24 Jan 2006)

mimi rogers said:
			
		

> I think you should contact MABS. They should be able to help you. From what I hear they are excellent.
> 
> Mimi


 You mean try _MABS _- *again*! I agree.


			
				KarlK said:
			
		

> I have tried to budget several times and failed. I tried MABS.


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## mimi rogers (24 Jan 2006)

Yes. Even try another office.

Mimi


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## KarlK (24 Jan 2006)

ClubMan said:
			
		

> _KarlK _- maybe if you posted a summary of your income and outgoings (if you know what they are yet) here people could make suggestions? If you don't know your outgoings in detail then you will definitely need to use a spending diary/log.


I don't know my outgoings so I'm making a log which I'll post in a few weeks in this thread.





> Are you renting at the moment - i.e. you don't own your own home?


I don't rent or own. I have an odd temporary arrangement where an expat friend has lent me a house in repayment for an old favour and won't accept rent. She says she'd like to move back to this house in about a year. I share a car with my wife with total running costs of about 5k/year.


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## annR (24 Jan 2006)

Karlk

It sounds like you have got some ideas about what's behind your spending habits and that it is pyschological.

You seem to have thought a lot about it.  For instance

>>Why cook when you can order in? Why hang out the clothes when you can use the drier? Why fix when you can buy a new one? <<

Try practising reversing this to

>>Why order in when you can cook? Why use the drier when you can hang out the clothes? Why buy a new one when you can fix? <<

That's a major change in attitude and in your daily activities too.  It'd be interesting to see whether you find yourself able to do this day to day or if it still proves really hard to change your mindset.  If you are really struggling and feel that your mindset is crippling all budgeting attempts you may want to have a few couselling sessions to help get to the root of it.


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## SarahMc (24 Jan 2006)

WOW, 90K, no rent or childcare costs.  I would LOVE to manage your money for you!!  Ann's comments about the change of mindset is good   Why order in when you can cook? Why use the drier when you can hang out the clothes? Why buy a new one when you can fix?  Think about things from an environmental persective rather that monetary.  Eco aware people become frugal as a consequence.


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## doberden (24 Jan 2006)

1. Buy "the richest man in babylon" by George Clason.  An easy to read story about managing money.  It's an excellent book.

2. Organise your bank accounts better so you can track where your money is going:

a). Savings account - no matter what save at least 10 to 15% of your take home pay every month.  This is the first bill you pay every month

b). Transfer the money for bills, food, petrol etc in a separate account

c). Leave enough money in your account for personal stuff - that's your spending money, you do what you want with this.

With a seperate account for bills etc you'll see where you money is going.

d). don't spend on your credit card, get rid of any store cards and get rid of your large car loan!

If you want to learn a bit about property investment go to one of the ICES Property Investment meetings.  It cost 20 euro but you'll learn loads (no, I don't have any affiliation with them!):

http://www.theicesgroup.com/


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## markowitzman (24 Jan 2006)

Based on your income you do not need a credit card. Burn it.
Pay yourself first (savings).
Clear the car loan.
In future only take out good debt (for asset purchase).


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## extopia (24 Jan 2006)

The Millionaire Next Door is also a good read - widely available. Teaches you that high income does not equate to wealth, and that a low income does not preclude you from wealth.


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## Guest127 (24 Jan 2006)

I suspect that you are probably lavish at Christmas with friends/family and at weddings, etc. If so this is an area you can definitely cut down on and don't be put off by the thought that you won't be as 'popular' at Christmas etc by reducing or cutting out unnecessary/unwanted presents. You will be. maybe even more so as you wont be puttiing others under pressure. Just shows that even on €90k that money can be a problem if not managed. Good Luck


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## paddyodoors (26 Jan 2006)

Totally agree with earlier comments re the savings plan, your spending rises to meet your salary - therefore reduce the money available to spend and get a portion auto deducted by direct debit into a savings account. Do it on the day you receive the cash, or close to it if the day fluctuates,  - if you are with AIB use their online savings account - where you can transfer up to 1000 pm.

Also suggest you start this savings plan asap and save the amount that it would cost you to rent equivalent accomodation.

Have you elected for joint assesment for tax purposes, ensuring you receive the transferable allowance from your spouse?


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## Gordanus (26 Jan 2006)

If as you say the problem is psychological, the only question you need ask yourself is "What is stopping me managing my money?"    Is it the tediousness of it (of keeping spending logs and working out all your outgoings), is it something to do with how you want other people to see you, is it feeling that counting the pennies is just plain mean?   What's your family and childhood experience with money.

Also, I saw in a post above you mentioned a psychoanalytic approach.  This is very different to a CBT approach, which Clubman mentioned.  There's an introduction to what CBT is about on www.eabct.com, which might be worth looking at.  Also, if you do go looking for a therapist DON'T take their word for their training - there's no statutory regulation for psychologists/psychotherapists/counsellors like there is for dentists, doctors, nurses, and opticians.   PM me if you want any information regardiing proper accreditation.


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## Thrifty (27 Jan 2006)

The fact you have got a house rent free for a year is a wonderful incentive to start saving money for the deposit, legal costs etc to buy your own. Think of it like this - if you are spending all your money now with no rent to pay do you really want to be in the situation in a years time where you are paying out for rent and possibly at that time deciding you want to buy. Start putting aside now at least what you are going to have to pay in rent in a years time - get used to not having that amount anyway otherwise it will be a nasty shock.


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## maura (29 Jan 2006)

Join a library and get all the books mentioned there for free.  Its a start.


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