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On money

To rein in spending, track plastic patterns

By HELEN HUNTLEY
Published July 31, 2005

Do your credit card statements make you laugh or cry?

Amy Borkowsky has inspired an entire book, Statements: True Tales of Life, Love and Credit Card Bills (Roadside Amusements, Penguin Group, $19.95).

Twelve years' worth of American Express statements became comic material in her hands, one of the more impressive recycling ideas I've ever encountered. But then this is the woman who also made her mother's answering machine messages into a book and a couple of CDs.

Chances are you and I will not be able turn our old credit card statements into a marketable book, especially since Borkowsky beat us to it. However, going through those old statements stashed in the closet might turn out to be more instructive than you imagine.

Tracking everyday spending patterns is one of the first things financial planners recommend to people who want to get a grip on their finances. Cash has a way of disappearing and leaving us clueless about where it went. But if you use plastic everywhere you go, as Borkowsky apparently does, you've got a record to go on. If you're willing to put in a little effort, you can review statements for patterns of spending behavior. The purpose is to find changes you could make to bring your spending in line with your overall financial priorities.

Here's a sampling of what the statements might tell you:

*Looking good costs a fortune. Borkowsky charted her spending on cosmetics and haircuts. Would you have the courage to add up what you've spent on your appearance? Was it worth it?

*Your gift-giving is getting out of line. Borkowsky figured it out when she went through the charges for gifts she bought her married friends' newborn babies. "The baby announcement is the best investment out there today," she decided.

*You're an emotional spender. Do you rely on retail therapy as stress relief? Is it a way to fulfill childhood longings? Look through your charges and ask yourself what triggered the flurry of purchases at the mall or online. Borkowsky once bought herself an Easy Bake Oven.

*Eating out costs a fortune. Even modest meals at modest restaurants add up when you eat out day after day. Are you just pressured for time? Or has eating out evolved into your favorite way to socialize? Borkowsky detected a pattern - she and a platonic male friend ate out a lot when he didn't have a girlfriend.

*You're working too hard - or not hard enough. Lots of bills for Chinese takeout were Borkowsky's evidence that she was putting in late nights at her old advertising job. Do you have canceled vacation trips with nonrefundable deposits or airfares? No vacations at all? Or are you spending more than you'd like cruising and sightseeing?

Maybe your search will unearth an expense or two that will make you laugh. If not, it may be time to buy yourself a hula hoop, as Borkowsky did, for $3.87. The point isn't to take all the fun out of life, but to find ways to save to reach your most important goals, whatever they happen to be.

My annuity company has started charging me $5 for each of the monthly withdrawals I take to cover living expenses. The annuity has been performing well lately, but I don't like paying all those fees. What do you suggest?

I suggest taking one large withdrawal per year and putting it in a high-yielding money-market account. (You can find some good options in the high yields chart in today's business section.) Then you can write a monthly check against the money-market account.

Note to readers: Did you file for an extension on your income tax return in April? If so, your tax filing deadline is just around the corner. Extensions expire Aug. 15. An additional two-month extension is available, but only for hardship reasons.

Helen Huntley writes about investing and markets for the Times. If you have a question about investments or personal finance, send it to On Money. We'll try to answer those we think are of greatest reader interest. All questions must be submitted in writing, but readers' names will not be published. Send questions to huntley@sptimes.com or Helen Huntley, Times, P.O. Box 1121, St. Petersburg, FL 33731.

[Last modified August 19, 2005, 16:44:14]