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My Money, My Choices

Gail Vaz-Oxlade is a personal finance writer, television host and radio broadcaster. Every Wednesday, she arms Metro readers with tips to keep spending in check.

'Magic Jars' help ease people out of money jam

One of the biggest surprises to come out of Til Debt Do Us Part was the number of people who put themselves on The Magic Jars as a way of managing their money. Determined to do something differently, they saw the jars as a way of taking control of their money. Some people, however, seem to have difficulty figuring out where the money for the jars comes from. It’s as if they think this is extra money, not money they would have been spending all along.

The money that goes into the jars is the money that you would have been spending on things like gas, food, clothes, entertainment and medical costs — all your variable expenses. It’s not extra money.

While the jars make the whole money management thing very concrete, the place to start changing your money management is not with the jars. It’s with a balanced budget. You can’t actually make the jars work for you if you don’t start by making a budget that balances.

Head of over to my website at and find the Interactive Budget and the instructions, Gail’s Guide to Building a Budget. Follow the instructions and make a budget that balances. You can’t have a negative number at the bottom. The budget has to balance.

If you can’t make it balance, either your expenses are too high or your income is too low. Start by cutting out everything that isn’t essential to keeping body and soul together.

Cable, cell phone and telephone bills are one place to look. Turn down your thermostat and put on a sweater to save on heating costs. Get rid of a car you simply can’t afford to keep. If that’s not enough, then you’re going to have to find a way to make more money.

OK, now we come to the jars. The Interactive Budget Worksheet will tell you how much should be going into each of the jars. This money is your variable spending. Assuming you’ve balanced your budget, you now know how much to pull from your bank account each week for the jars. If you’re deeply in debt and must commit a significant portion of your income to debt repayment, some jars, like “clothing and gifts” may remain empty until you’re back in the black.

All the rest of your money stays in your bank account to be used to pay your bills. Your mortgage or rent is a fixed expense. Ditto your car payment, insurance, childcare.

Two more things: First, if you can’t figure out how much you should be putting toward debt repayment, use the Own Up to Your Debt Worksheet on the website as a quick way to determine how much should be going toward your debt repayment. If your hole is deep, you may have to allocate 30, 35 or 40 per cent of your income to debt repayment; whatever it takes to get you out of the red within three years or less. If it looks like it’s going to take longer, or your debt repayments are throwing your budget off kilter, you only option will be to make more money.

Second, you can’t sacrifice savings in the name of paying your debt off faster. Sorry, that’s cheating. You have to set aside a little sumthin’ sumthin’ each month for emergency and retirement savings so that you’re working with a balanced plan.

I know there are those who believe you should pay off all your debt before you start to save. I don’t agree. If you don’t start the habit of long-term savings today, you may not ever start. Ever heard of inertia? That’s the thing that keeps a body that’s at rest, at rest until something acts upon it. It also keeps a body in motion, in motion. If you aren’t saving today, you’re a body at rest.

Lots of people all over the world are using the jars. I’m really surprised that such a simple and really old idea has caught on in such a big way. Perhaps it’s because the jars really work. I haven’t given them to a single family that hasn’t had money left in the jars at the end of my time with them, despite my having dramatically cut their budgets.

Determination is a big part of success. If you’re at all wishy-washy about what it’ll take to get you out of debt and live within your means, if you just can’t work up the guts to do things differently, it won’t be the jars that failed.

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