Wednesday, September 19, 2007

Money Behavior & Vocabulary

Today I was listening to the Dave Ramsey Show, and a lady called in with $150,000 in debt, not including her house. When asked what the debt was she said, "$30,000 is credit card debt, and $120 is a home equity loan." Then when Dave asked her about what the home equity loan was for the dumb woman said, "We used it for some remodeling on our house and we bought a car outright." She bought a car outright??! Dave of course let her know that indeed she had not bought a car outright, but rather put her house at risk by borrowing against it for a vehicle.
This call stirred my thoughts about the subject of behavior as it relates to money. Dave says all the time that winning with money is 80% behavior and 20% math. When your money behaviors change, you realize how ridiculous it sounds when a lady says she bought a car "outright" with a HELOC. You take on proper vocabulary as well when speaking about money.
Some may look at my new money behaviors as idiosyncratic. I take every dollar we make in a week spend it on paper (which is really not a paper at all, but an Excel spreadsheet,) and withdraw most of it in cash every Friday. We often ask for an odd dollar amount (i.e. ___hundred and eighty four dollars, with the last eighty four dollars broken down in bills smaller than twenty, all the way down to ones.) Then we put the dollar amount from our budget into the corresponding envelope.
Some probably think it's silly that I REFUSE to move money around between envelopes without first having an Emergency Budget Committee Meeting; the budget committee consisting of Hegazelle and me. I will not take a single dollar from "household goods" to buy lunch when the office is ordering lunch out. If it's in food, sure I'll spend it. Otherwise I'll have to join in next week.
I force myself not to deviate at all because I believe it is so important to the cause of correcting my money behaviors.
So when I buy my next car and tell you "I bought my car outright" you'll know that does not mean I took a HELOC out on my home, but rather that I paid CASH.