I can’t stand when writers or marketers take corny words and try to make them sound cool just to support some trend that may or may not be there. In this instance, the NYTimes breaks down where the word “recessionista” came from (I could choke just from typing it), and how some companies are pimping the word to make it seem like it’s OK to spend money on crap during a recession, just so long as it’s not overpriced crap.

Let’s get real, people! There’s nothing new about people trying to shop for bargains and still look nice or have nice things. Why’s now any different, except for the fact that consumers are cutting back and now companies need a way to make them feel better about buying?

Would you buy a product just because it’s packaging says it’s a good value in tight times? Or are you always on the hunt for a bargain no matter what?

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Now for today’s post. Here’s five tips for managing your money during the downturn, from the National Endowment for Financial Education.

1.      Don’t borrow money to continue your current lifestyle. If your income has dropped or you think it is about to, now is the time to rewrite your budget. Income doesn’t match expenditures? Then it’s time to make some cuts and adjust.

2.      Avoid pulling out funds or taking a loan from your 401(k). Even more important, you should continue making contributions into it. If you have to cut back, at least continue to save the amount (or percentage) matched by your employer. Remember, that’s “free” money. If you’re nervous about the ups and downs of the stock market, consider changing your allocation strategy, but stay diversified.

3.      Even if you’re tempted by low interest rates, avoid borrowing against your home equity to fund current expenses. The last thing you need right now is more debt. Another reason to avoid this type of lending is that your home could potentially devalue as a result of the soft housing market.

4.      When the going gets tough, the tough turn to retail therapy and that is not a good philosophy in uncertain economic times. This would be an excellent time to re-evaluate your spending habits and avoid activities that cost money to make you feel better. Before shopping, make a list of only items you need and stick to it. Also, delay purchase decisions on anything other than routine items in your budget for at least 48 hours to be certain you need them. And remember, a diligent shopper is a smart shopper. Be sure to look for alternatives that are low or no cost.

5.      Avoid turning to credit for unexpected expenses while you have savings in the bank. Credit card rates are in the double digits, while interest on savings is in the low single digits. Why would you want to “give away” 15 percent or more of your spendable income to credit card interest? If you have not already done so, now is the ideal time to start to build an emergency savings. You never know when you’ll need it. Hindsight is 20/20, and many Americans wish they had done that.

I spent my week interviewing elderly people about how they’re dealing with the financial crisis. I heard some of the saddest stories, like the man whose health insurance payments have gone from $96 a month to more than $300 a month in just a few years, and the diabetic woman who lives on $600 a month and has to eat canned food instead of fresh fruits and vegetables which would help keep her healthy.

I also heard how angry they are at the government and younger folks for living beyond our means. Most of them lived on only a small percentage of what they made when they were working so they could save for when they’d need the money. It made me think and set a new goal: by next year I want to cover all my expenses on half my after-tax income, and save most, if not all of the rest.

Do you think you could live on only half what you make? If not, what other steps could you take to increase your savings?

A reader emailed me the best example of a spending diary I’ve seen yet. She kept it for a week using Microsoft Excel to track her spending by date, store, what items were purchased, the amount spent and the category of spending. She created drop-down menus to sort each category by the amount spent from highest to lowest or vice versa. Great job.

A couple things stood out. The biggest expense was a $200 tithe (can’t be mad at that), followed by $189.69 at J. Crew for “capris, gold lamé bikini, ballet flats, tissue tee’s, clutch purse” (did you really NEED a bikini right before fall?).

The biggest category was food, but I would have put expenses like a $35.93 trip to Whole foods for groceries in a different category from a $23.83 sushi lunch. One is a necessity, the other, not so much. Another questionable: a $28 eyebrow wax doesn’t ain’t exactly a “health” expense. Not passing judgment on the spending, which I think is reasonable,  but its another example of how by fudging spending categories, we can hide discretionary spending and make it look more necessary.

Total spending for the week came up to $847.24.

This is a great example for anyone trying to get their minds around where their money is going.

Two weeks ago, we started keeping track of everything we spent.

Last week, we tallied all that spending and started to develop categories.

It’s time for the next step: comparing what you spend every week to what you make (hopefully you have a job that pays  you more often than every three weeks). Tally up all the spending you tracked in your diary and subtract it from your take home pay. If there’s money left over, you’re living within your means. If you’re at a negative, you’ve got some work to do.

I tried posting this earlier this week, but a ton of readers told me they couldn’t see the entire post for technical reasons. So I’m re-posting today:

Today’s post is courtesy of the ING Foundation, which did a survey about black women and money. Among the top findings were that  47 percent of Black women say it is difficult to have their desired lifestyle because of financial obligations to their immediate family;  71 percent say it’s “very important” to give money to their place of worship; more than half have loaned $500 or more to family or friends over the last year; and  68 percent of Black women buy what they want – in a good or bad economy.

Here are the eight tips they gave to black women on handling their own cash:

Saving Over Time Can Help Secure Your Financial Future

Black women’s sense of obligation to community and family is extraordinary and commendable. But when you’re pulled in so many directions financially, someone or something has to pay the price. It’s impossible to financially support your family and community over the long term if you’re not financially secure, so make sure every week you put some money away for yourself. 

Resist Impulse Purchases

One way to find money is to spend less on “nice-to-haves” like electronics, clothing and accessories, eating out and even those addictive coffee drinks. Being more mindful and thinking twice before making a discretionary spend can make a big difference in your wallet over time. By making deliberate and thoughtful choices about how you spend and save money, you truly can make your money work harder for you.

Use Credit Cards Sparingly

Leave your credit cards at home so you’re not tempted to use them on impulse purchases. Save your credit cards for major purchases that you’ve taken the time to consider.

Use an Automatic Saving Plan

Automatic saving plans make saving an effortless, seamless process because a set amount is deducted from each paycheck and put into a savings or mutual fund account of your choice.

Start With a Workplace Retirement Plan

With tax-advantaged workplace retirement plans, you can put money away for retirement and reduce your current taxable income at the same time. And many companies offer an employer match, which is essentially “free money”. 

Create a Financial Plan

Our research shows that a financial plan — even a simple one — strongly correlates to feelings of financial empowerment. The journey to financial security begins with a road map. Creating a financial plan focuses you on where you want to go and, just as importantly, what you need to do to get there.

Don’t Be Afraid to Ask for Help

Our research shows that Black women who use a professional financial advisor are more likely to have created a financial plan and feel more financially secure. To find a financial professional, ask family, friends and co-workers for references or go online. Then interview three to five potential candidates to determine which one is the best fit for you. Don’t be afraid to ask lots of questions and be sure to follow-up on their references.

Learn by Doing/Join an Investing Club for Women

Not comfortable engaging a financial professional but not quite comfortable to go it alone? Find an investment club in your community — many are women only — that’s compatible with your investment knowledge and experience. These can be a lot of fun — and a great way to learn the ins and outs of investing without feeling overwhelmed.

Summer’s over and Wall Street has gone entirely to hell. Only one thing to do to keep from getting too depressed about work and your 401(k): go on vacation. So here’s some helpful tips to make sure you can afford that getaway you desperately need;

• Take the bus. That’s right, I said the bus. Airfare these days is way too high and who wants the security line? Besides, gone are the days when the Dirty Dog is the only option for bus travel and the competition has made prices and service better. On the East Coast, for example, bus companies like Fung Wah make trips between New York and Boston’s Chinatowns for as little as $15 each way. Greyhound has been forced to match the prices. Another company called Limoliner costs more for a trip between the two cities, but it’s busses are plush, with enormous leg room, free wi-fi, desks, a fridge and even food service. In the Midwest, people, including me, are using MegaBus for trips that cost as little as $1 (if you book early enough) between Cleveland, Cincinnati, Chicago, Indianapolis and Milwaukee. If you’re looking for a weekend trip, search around for a bus ticket and save yourself the gas money.
• Look for hotel deals. Retailers aren’t the only ones worried about the economy this holiday season. Business for hotels usually drops off after summer, and this year that could be worse with money tight for many families. And when hotels are empty, they start serving up deals. That means you might get a steal on a room. Start setting up your Expedia alerts now for hotel deals in your favorite cities.
• And speaking of Expedia, use the web. I can’t tell you how often I still see people actually picking up the phone to call for hotel, flight and rental car arrangements. Not only is the web usually the best place to find and book deals, you can often find discount coupons and codes just by Googling the name of your favorite airline hotel. I did the same thing just now and found all these discounts for the Marriott hotel chain.

Use those tips and you should be on your way to a great affordable getaway.

Last week I asked readers to start keeping spending diaries, tallying every dollar you’ve spent over the past week as a way to start tracking your spending habits. I’m glad to say that a lot of you have apparently been participating, at least judging by some of the emails and texts I’ve gotten. So today’s the next step: pull out that spending diary and start putting everything into categories.

In other words, if you’ve spent $100 in the last week at McDonald’s and on lunch at work, create a category for “eating out.” If you spend another $100 at the supermarket, keep that separate under “groceries.” Try to create no more than five or six categories in order to keep things simple and distinguish between necessary spending like bills and discretionary spending like clothes. My categories are: “rent, utilities, debt payments (credit card, student loans), groceries, eating out, clothing and entertainment/miscellaneous.” I have to be careful with the miscellaneous category because it’s easy to start hiding expenses in there. You’ll notice I don’t list savings here, but that’s because I have my savings and investments come out automatically every month without seeing that money. If that’s not the case for you, you should include a category for savings and investments, whether you have any or not.  It’s important to see if you have a ZERO in that column at the end of every month.

The point of this whole exercise is to get everyone on the path to better finances, and tracking your expenses is the first step toward creating a budget that you can live with. Once you’ve tracked and categorized your spending for about a month, you start to really see where your money’s going. Compare that list to your take-home pay and now you know if you’re overspending and where to make adjustments.  You’re off to a good start…keep it going and remember, NO CHEATING!

Lastly, I know you’re wondering where my money went last week so I’ll tell you: $850 to rent, $181 to utilities, $400 to debt payments $120 to clothing, $400 to eating out/miscellaneous. I didn’t make it to the grocery store this week, which is why the eating out tab was high. Miscellaneous expenses also included the hotel fee and travel to the wedding I’m headed to this weekend, which I’m paying for with cash instead of charging. The clothing bill was a misnomer: I didn’t shop but did have to take a lot of stuff to the cleaners and laundromat. I’m looking to cut that bill soon by investing in a washer/dryer.

Anyone else who wants to share their spending diary experience, feel free to do so in the comments. Have a great weekend!

Meaning for me and everyone else who got a direct deposit this week, it’s time to figure out what to do with the cash. I already know I have bills to pay, but if you’re like me, it’s that discretionary spending afterward that can bust your budget.

So I’m going to issue a challenge: if you’re reading this, for the next week, write down every dollar you spend. Carry a notepad with you to make it easier. Don’t cheat. Every pack of gum, every latte and every time you swipe a credit or debit card, write it down. Next Thursday, tally it all up and see how much you’re really spending that you didn’t need to. I’ll keep my own diary and update everybody next week. Hopefully this will be a good exercise for a lot of people and the first step toward taming overspending.

Today another reader needs help figuring out how to get rid of her debt quickly:

 ”I’m going to try to get rid of my debt in 18 months. I have $6,688.21 in debt that I’m paying (I have another loan that counts against my net worth that I took out for a family member, but she is paying that — however, I still need to keep enough money in my accounts monthly just in case she lapses on a payment).

So I got my payment plan from the CNN calculator you suggested. Doable. Hard, but doable. And I’ll be calling AMEX in a few months to see if they can lower my interest rates (which would helpl immensely). But here’s the thing — I want to build up my savings at the same time. I had a good chunk of change in my savings account, but emergencies, some vacations and some car work have whittled it down to just under $600. Hardly a nest egg.

 

How can I go about paying off my debt, while still saving money to get up to the three month (or six months) worth of salary that everyone suggests? Right now, I have my check direct deposited and have $75 taken directly out of the checking account and put into savings on my payday.

 

Any suggestions on what I should be doing? I just got inspired and really want to get my financial life in order — I am about to be 25 after all.” –TB

First, TB, it’s great that you’re trying to get your financial house in order early. Second, I wish I could’ve gotten to you first before you took that loan on behalf of the family member — it’s good to help family out, but somehow these things always end up being harder on the person who borrowed the money than on the person who’s supposed to pay it back.

As far as your debt, the most sensible thing is to put yourself on a longer-term debt diet since you have several goals want to achieve at once. The important thing is to get it paid off, quickly if you can, but ultimately just to get it paid off. If you try to pay it off too fast, you can put yourself in a bad situation with short-term cash flow by overextending yourself on debt payments.

I’ve been in that position: spending so much on debt payments that I was nearly short on bills. Not a good look.

The point is to pay your debt off quickly, but comfortably. Since your money’s divided in multiple places, you need to figure out a realistic budget under which you can make more than the minimum monthly payments to your credit cards and be saving say, at least $50 a paycheck. You should also be contributing to your 401(k), at least to the maximum percentage of your salary that your company will match. After that,  calculate how much more than the minimum monthly payment you can afford to devote to your credit card balance, then you can figure out how long it’ll take you to pay off.

Remember to budget for ll of your monthly living expenses, for stashing away money in your rainy day fund and to keep just a little bit of cash on hand for emergencies or to have fun with, so you don’t get too stressed out.

Good luck, and I hope that helps.