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Friday, March 22, 2013

Study Shows SFer's Budgeting Skills Extend Beyond Cheap Beer and Burritos

Posted By on Fri, Mar 22, 2013 at 1:20 PM

That's you in your studio apartment, with your last three dollars
  • That's you in your studio apartment, with your last three dollars

Turns out, all that thrift shopping you've done has paid off -- quite literally.

A new study released today says that San Francisco ranks no. 4 among the nation's best budgeters. In layman's (aka poor man's) terms, it means we know how to live it up in under $20.

And why wouldn't we be financially savvy when we live in a city where any money we do make goes to rent, parking tickets, and (regular) burritos? The only entertainment we can afford is a Friday night BART ride.

Researchers over at Card Hub had a look at cities' debt-to-income ratios, bankruptcy, and foreclosure rates, as well as relative cost of living, to analyze consumer activity across the nation. What they found was that more than half of all consumers don't keep budgets, and 22 percent say they have no clue what they are spending on the basics.

And that's what happens when you let WalMart move to town.

Greg Kato, spokesman at the San Francisco Treasurer's Office, did a quick look at the study and decided our stellar results have more to do with the fact that our home values are relatively stable. "We didn't have a big boom and bust a lot of the other places had," he said.

click to enlarge moneychart.png

Now if you know you are one of those people who will foolishly dish out extra for guacamole on your burrito before payday, then here's some spending and saving advice for you:

  • Feed an Emergency Fund: No, dollar bills you put in strippers' panties are not an emergency. Instead, you should set aside some of that stripper cash (whether you are the one earning it or spending it) every month with the ultimate goal of having about a year's after-tax income in reserve in case of an extended income disruption (aka unemployment). Sounds really unfun, we know.

  • Rank Expenses in Order of Importance: Do you really need that wine club membership? The answer is yes, which means you should probably do away with your Banana Republic card. Card Hub explains that budgeting doesn't mean you have to give up your entire life and live off canned tuna and Muni rides. Rather, it's about cutting expenses that you've grown to view as necessities even though they're really luxuries that are dragging you down further into debt.

  • Use the Island Approach: We're not talking about a trip to a tropical island; we're talking about separating your debt from your everyday expenses (education vs. guacamole). If you do that, you'll quickly amass the best combination of low rates and lucrative rewards possible, pay off what you owe faster, and realize pretty instantly if you're overspending.

  • Treat Debt Payments Like a Snowball: When creating your budget, make sure to account for monthly debt payments. When it comes to doling out those payments, you should pay the minimum on all but the balance with the highest interest rate, while attributing the rest of your monthly allotment to the most expensive debt. Do that until the first balance is gone, and then repeat until completely debt free.

And finally,

  • Eliminate Temptation: Learn the difference between the words "need" and "want." You need to buy a Muni pass to get to work, but you want to stay home and shop online. See the difference?

If all else fails, we give up, cut up your credit cards.

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About The Author

Erin Sherbert

Erin Sherbert

Erin Sherbert was the Online News Editor for SF Weekly from 2010 to 2015. She's a Texas native and has a closet full of cowboy boots to prove it.


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