One of the worst habits that people have when it comes to budgeting is that after they have made a purchase, they assume that the item is free to use.
The truth is that almost everything has a cost associated with its use. This includes the cost of powering the item through such means as electricity and gas, as well as the wear and tear that occurs.
Acknowledging the costs -- including replacement costs -- will allow you to set up a program in which you pay yourself per use (pay to use), so you never again have to pay for an appliance or car with credit.
, but once that's in place, the same concept can be used to set aside the costs for repairs and replacement for all your major purchases.
This saves on the stress of wondering where to get the money to replace expensive appliances, as well as eliminating tens of thousands of dollars in finance charges.
While you can use a pay-to-use system for virtually anything you own, these are some of the more common things for which you should consider implementing a pay-to-use program.
Think about your car as a personal taxi. The actual amount that you pay can be determined in a number of ways depending on what works best for you. You can make it a flat rate like $5 or $10 every time it leaves your driveway, or you can do it on a per mile basis.
Whatever you decide, each time you get into the car, that designated amount goes into your car fund and will help ensure that when your car needs repairs or needs to be replaced, you already have the money set aside for it.
A bonus is that the payment will likely decrease the amount you drive as you cut out driving that doesn't have a specific purpose. This can save you additional money on gas, wear and tear on the car and possibly even on car insurance.
, so you want to make sure that the TV programs you watch are well worth your time.
Set up a system where you have a base number of hours that you can watch TV each day or each week at no cost, then charge a fee for each hour over the allotted time.
This should reduce the number of hours that you sit in front of the TV, as well as free up time for you to do other things that are important to you.
In all likelihood, it will show that you are paying for a lot more TV than you actually need, which can bring down your cable bill.
The money collected can be used for such things as Tivo (so you can skip commercials and spend less time in front of the TV) and movie rentals as well as any hardware purchases that need to be made.
Similar to the way that a lot of time can be wasted in front of the TV, this can also be true with video games.
Set a number of hours that these games can be played for free each week with a charge per hour for any time that goes over that limit.
While a lot of time spent on the computer can have a legitimate purpose, it can also be an easy way to waste time and avoid doing other things that need to get done.
Give yourself a designated number of hours to use the computer for free each week, and charge an hourly fee for any amount of time spent over that. This will ensure that you spend the time on the computer being as productive as possible and if you want to play, you have to pay a bit for the entertainment.
Since computers need to be upgraded every few years, the computer fund will allow you to purchase the next computer without having to place it on credit.
In addition, you may want to charge yourself a small fee for every sheet of paper that you print. This should reduce the amount of printing you do to those documents that truly need to be printed which can save a lot since the main cost of printing is the ink and not the printer.
The washer gives you an opportunity to refine the pay-to-use program in a number of ways.
For example, you can designate a set dollar amount for a normal wash. You can then reduce the amount if you decide to do your wash in cold water instead of hot water since this greatly reduces the cost of the load.
You can also place a surcharge on washing clothes when the washer is not a full. Even if the amounts are minimal, over the lifetime of the washer they will be enough to pay for any repairs and for a new model when it's time to be replaced.
You might want to place the pay-to-use price a bit higher to discourage you from using it if you also have the option to line dry your clothes.
This will cut down on the amount of electricity you use drying your clothes, as well as ensure that you have placed enough money aside for repairs and when the dryer needs to be replaced.
The amount that you set for each of these is completely dependent on you and your current finances.
Amounts should be enough to make you think a little before using each, but not so high that it makes the system impossible to follow, and you will likely need to adjust them over time.
If you are just beginning, make them small at the beginning. Forming the habit is much more important than the amount at the start.
Once the habit has been established, you can raise the charge to a more appropriate level.
Jeffrey Strain has been a freelance personal finance writer for the past 10 years helping people save money and get their finances in order. He currently owns and runs SavingAdvice.com.