One of the most dangerous tactics of getting by is “The Rollover”, or ‘Gilgul” as is commonly known is Israel. it is a method whereby a person struggling to make ends meet takes a loan from one place in order to by some food, and pay off a loan from the previous lender. This can manifest itself in many ways. Rolling over checks from one bank to the next, from one free loan place to the next, or even on a two day cycle from on money changer to the next.
The problem of course is, you never quite catch up with the outstanding loans. The oly way to get out of this downward spiral is the start paying in cash. AND of course, STOP spending…
I recently had an discussion (argument…) with my sister in law. She is of the opinion that there is nothing wrong with writing postdated checks for groceries. My position was that that is a situation to NEVER get into. Buying food on credit!!!
Well, truth be told, I have often found myself in the exact same situation. Short on cash, at the end of teh month, and voula, the post dated checks start. One point that she made was that if you get to the end of the month and the kids are hungry, you do not have much choice. The trick of course is to somehow try and not get into the situation of having no cash at the end of teh month. Alas, that in Israel is not always possible…
A question I ask myself often is; “How do people get by in this country?”. I usually come up with some sort of rationalization or picture in my my that people actually do. The I ask many people I meet, friends and strangers alike and the most common answers I get are “Its a Nes! ( a Miracle!) or ” They don’t!”
It is this issue I would like to address over the next few posts. If you have any insights, feel free to send them along.
From the Motley Fool
They are the people you ask to calculate what everyone owes when there are more than two of you dining out. They know exactly how much they spent on ATM fees last week, last month, and last quarter. They balance their checking accounts down to the penny. Daily.
The rest of us? Well, we swear that tomorrow, we really are going to sit down and make a budget. It’s not that we don’t mean it — it’s just that we have issues with following through.
The secret to setting up a budget you’ll actually follow
If nothing else, remember this one simple budgeting rule: Spend less money than you make.
Now that you’ve memorized that line, let’s fine-tune that advice. Procrastinators, you can rejoice: There is such a thing as a budget that you can stick to. What’s the secret? Take every shortcut possible.
Since money advice is our full-time jobs, we’ve been through the budgeting process enough to spot the corners that can be cut and the steps that can be skipped. The Fool’s Lazy Budget still requires some prep work (hey, we aren’t miracle workers), but we’ve streamlined the process so that you can start seeing results right away. After all, we don’t want you to set up a budget, only to abandon it a few weeks later.
The purpose of this budget is to come up with a system to govern everyday spending. We’re leaving out housing, insurance, and the all-important savings categories for now.
So let’s start corralling your cash flow, Fools:
Step 1: Take a snapshot of your spending
Every budget starts with sniffing out your spending habits and determining exactly where your money goes on a day-to-day basis. Don’t skip this step: After all, if you don’t know how much you’re spending and on what right now, you can’t decide where you want to spend and on what from now on.
You can do this the hard way — tracking your spending for three months, inputting every expenditure in a 218-category spreadsheet, then spending nights poring over the data — or you can do it the one-step way.
The one-step way it is! For those who do most of your spending on one credit card (paid off in full each month, right?) or with a debit card, review the raw data your bank provides on your monthly statement, and come up with general categories for spending areas in which the amounts you shell out make you shudder. It’s even better if your financial institution provides a year-end spending summary, with your weak spots fully graphed in four-color bar charts.
If most of your spending is done with old-fashioned cash, go about your business as usual for one week — just write down all of your expenditures. Then project the results over four weeks. Now you have a rough idea of where your dough goes. As stated above, pinpoint the big categories where your overspending occurs.
Step 2: Plan your next shopping spree
After you get over the horror of your daily spending, the next step is to go on a virtual shopping spree. Sorry, this trip doesn’t involve a pit stop at the food court; it’s more like a cerebral trip to the mall of your future.
- Grab a piece of paper, a pencil, and a snack.
- Make a list of what you need to buy or do over the next three to six months. These could be physical purchases (like new tires for the car, airfare for the family vacation) or financial plans (such as paying off a credit card, maxing out this year’s IRA or adding to your emergency fund).
- Do the same for planned long-term (one to five years) purchases.
Voila! You have a “spending plan” (so much nicer than the word “budget,” don’t you think?). Meaning every time you whip out your wallet, you have a tangible list of money goals to help drive your spending decisions and propel you financially forward. Bonus points to those who make a laminated wallet-sized version of the list for everyone in the family.
Extra credit: If you’ve got time, repeat the same exercise, only focus on the emotional uses of your money: List five uses of your money that will positively affect your life in the near-term and the long-term. Then, list five uses of your money that will add little to your quality of life in a decade or more. This touchy-feely step may seem odd, but thinking about what you really want to do with your money can greatly affect your plans for spending and saving it.
Step 3: Do some simple division
With your money goals in hand, pencil in how much each item on your “wish list” is going to run you on a monthly basis. Simply divide the total amount for those new tires by the number of months until you need them. Magic, no?
Step 4: Set up a no-brainer savings system
With your targeted spending plan in place, it’s time to direct your money towards your goals. If, in the past, you’ve been derailed by daily expenditures or surprise “can’t-live-without” purchases (ahem), here’s an instant fix: Hide your money from yourself.
That’s right: The best way to save your money is to keep your cash out of spending reach by diverting it to a separate savings account — one different from the checking account you use for everyday expenditures. (We can help you figure out the best place to park your short-term cash, too.)
You’ve already figured out the monthly amounts you need to sock away, but, don’t worry — there’s no need to bother remembering to move your money from your checking to your savings account month after month. Tell your bank to do the work for you.
Set up automatic recurring cash transfers from your main checking account into your separate savings account. (Though you can set it and forget it, we do recommend checking in to make things are kosher every once in a while.)
With your savings on autopilot, all that’s left to do is stay out of your own way. Ah, but that can be much easier said than done, which means going into spending triage mode…
Step 5: Stop mindless overspending
Life is full of temptations. (According to the rundown of my annual credit card spending, “merchandise/retail” is my temptress.) You can stay strong, grasshopper, with nothing more than a few envelopes and a ball-point pen.
The “envelope” method of budgeting will instantly structure your everyday spending. It’s simple:
- Come up with a reasonable weekly amount you’ll allow yourself to spend in your biggest categories. (Those are typically “food” (or, depending on your lifestyle, get more specific such as “lunch,” “family dinners out”), “entertainment” (e.g. happy hours, movies, tabloids to pass the time), “transportation” (gas, parking, taxis, public transportation), “apparel/services” (dry cleaning, bangs trim, cute shoes.)
For guidance, consider that the four biggest budget categories for typical American household are housing (34%), transportation (18%), food (13%) and entertainment (4%). Of course we encourage all Fools to be better than average, so if you can spend less of your budget on these big categories, huzzah.
- Create envelopes for each of those categories.
- Put the allotted amount of cash to cover a week’s worth of expenses into each envelope. (You don’t have to carry the entire wad with you every day, but do make sure you don’t cheat with extra visits to the ATM.)
- Once the cash is gone, so is your weekly stipend.
As with all of our lazy budget shortcuts, feel free to add or subtract layers of complexity, depending on how much detail you can stand. But don’t tax yourself too much: Remember that in dollars-and-cents (and sanity) terms, sweating the big stuff before all else will save you the most coin. Plus, it will leave you plenty of time to procrastinate about stuff besides your finances.
With all this talk about poverty, I though it might be a good idea to understand what money is. Is it just paper and metal pressed and printed into colorful and intricate designes? Of course not. So, what is it? Here is the wiki definition:
Money is anything that is generally accepted as payment for goods and services and repayment of debts. The main uses of money are as a medium of exchange, a unit of account, and a store of value. Some authors explicitly require money to be a standard of deferred payment. The dominant form of money is currency.[counterfactual]
The word “money” is believed to originate from a temple of Hera, located on Capitoline, one of Rome’s seven hills. In the ancient world Hera was often associated with money. The temple of Juno Moneta at Rome was the place where the mint of Ancient Rome was located. The name “Juno” may derive from the Etruscan goddess Uni (which means “the one”, “unique”, “unit”, “union”, “united”) and “Moneta” either from the Latin word “monere” (remind, warn, or instruct) or the Greek word “moneres” (alone, unique).
What does frgality have to do with poverty? ALOT! Frugality can prevent many from getting into poverty. So what does wiki say about frugality and the effects of frugality? Here you go:
Common strategies of frugality include the reduction of waste, curbing costly habits, suppressing instant gratification by means of fiscal self-restraint, seeking efficiency, avoiding traps, defying expensive social norms, embracing free (as in gratis) options, using barter, and staying well-informed about local circumstances and both market and product/service realities. Read the rest here.
Its so refreshing to see true Torah thought and ACTION… Here’s a piece from L.A.’s Jewish Journal
Seeking to accentuate Jewish traditions that place a premium on ethical integrity, Los Angeles Orthodox rabbis are encouraging local businesses to sign up for a new seal of certification that ensures employers are treating workers fairly and humanely.
The move comes in response to allegations over the past year that the nation’s largest kosher slaughterhouse, Agriprocessors in Postville, Iowa, routinely violated the rights of its employees, many of them undocumented workers and many of them underage.
“We have always considered ourselves to be a light onto the nations — we’re the ones who are supposed to be a paradigm and example and role model for the rest of the world of what it means to be an ethical, moral, Godly person,” said Rabbi Daniel Korobkin, leader of Kehillat Yavneh in Hancock Park. “If the world or if the media is looking askance, for whatever reason, at the Orthodox community, then it behooves us to address the issues.” Read the rest here.
Here’s a great overview of what Jewish Charity (Tzedakah) is all about from the Judaism 101 site.
Once in a comedy message board, we were listing oxymorons like “jumbo shrimp,” “military intelligence” and “athletic scholarship.” Somebody posted “Jewish charity” on the list. Normally, I have a pretty good sense of humor when it comes to jokes about cheap Jews, but that one bothered me, because charity is a fundamental part of the Jewish way of life.
Traditional Jews give at least ten percent of their income to charity. Traditional Jewish homes commonly have a pushke, a box for collecting coins for the poor, and coins are routinely placed in the box. Jewish youths are continually going from door to door collecting for various worthy causes. A standard mourner’s prayer includes a statement that the mourner will make a donation to charity in memory of the deceased. In many ways, charitable donation has taken the place of animal sacrifice in Jewish life: giving to charity is an almost instinctive Jewish response to express thanks to G-d, to ask forgiveness from G-d, or to request a favor from G-d. According to Jewish tradition, the spiritual benefit of giving to the poor is so great that a beggar actually does the giver a favor by giving a person the opportunity to perform tzedakah. Read the rest here.
A big part of moving society to the point where poverty and the things that perpetuate it is simply to not accept backwards practices. This article from the Canadian Jewish News is very enlightening and refreshing. A true Torah perspective.
Rabbi Benjamin (Benny) Lau, a leading voice of modern Orthodoxy in Israel, believes in “evolution, not revolution.”
When it comes to human rights, women’s rights, treatment of animals and other issues not necessarily considered in the religious realm, Rabbi Lau – the 47-year-old director of the Center for Judaism and Society as well as the Institute for Social Justice, which he founded at Beit Morasha of Jerusalem – is at the forefront precisely because of his religious convictions, he said in a phone interview from Israel.
“It’s a big mistake in the Jewish world when rabbis feel their business is [only] the relationship between man and God,” he said. “It’s completely wrong. It’s a Jewish statement that to be a religious Jew means to care about your community and your state. We read the newspapers to see the real needs, and ask ourselves what the Torah has to say about them.” Read the rest here.
A great idea from the Israelity blog. I have seen these certificates before but never really spent the time or effort to rad what its says. Here’s the post to understand.
Created in 2004, Tav Chevrati (social seal) is the creation of Bema’aglei Tzedek (in the circles of justice), an organization of young social activists who wanted to do something to help improve socioeconomic conditions in Israel. The certificate is just one of their projects, but one of the best-known. It’s free, and has been awarded to 350 restaurants, cafes and wedding halls throughout Israel that abide by certain guidelines regarding workers’ rights. Read the rest here.
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