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actyourwage2012-01-06 10:01 am
jamethiel) wrote in actyourwage2012-01-06 10:01 am
Getting back on the money management thing
Hi guys. It's been a while since you heard from me, huh? I thought I'd give you a quick update.
I am still in debt. Ugh, yes, I know. There was christmas, and just... I don't know.
BUT. I did this once before, I can do it again. The key for me, I think, is tracking my finances. If I spend five minutes a day updating my budget spreadsheet, I know where I am financially and what I can spend (I genuinely do live pretty frugally, but I honestly believe that allowing yourself little indulgences saves you from snapping and spending money you don't have. Far better to allow yourself a DVD once a month/fortnight than go insane and buy Everything Ever).
I have good news on the credit card front. One credit card will be wiped out in a month, and the other is below $1000. Financially, it makes more sense to pay down the one that is just under $1000--the interest is $17 a month or so. There are two reasons I'm not doing this.
1. I need the psychological boost from wiping out one credit card.
2. I got the second credit card on a balance transfer, and that deal ends in two months time. After that the interest goes up.
3. I'm paying well over the minimum on the $1000 credit card. It's just not as much as I pay on the Balance transfer credit card, and once I wipe that out, I should be able to turn ALL of my financial resources to wiping out that debt. Assuming I don't have any horrendous unexpected expenses, that debt should be gone in a month and a half once I get rid of the first card.
After that, I'm sort of faced with the question of "Well, where do I go from here?" I've never been successful at saving. So I thought about it. The first thing that comes to mind is goal-setting.
OK, I can do that. I know what I want.
1. Three months savings of all living expenses
2. A car service (probably be $1000, but save up $2000 just in case)
3. A new computer. Unfortunately, this is probably getting increasingly urgent. I want a Mac, but may have to take what I can get with what I have saved. Worst case scenario, I may need to either put it on my credit card or get a loan. Ugh. it's a necessity for me.
I think Savings can be divided into two categories. There is "Living savings" (bills, etc), and then there is "saving towards a goal".
The ONE thing that has worked for me is Automatic debits. I get paid fortnightly, and my rent comes out monthly. Now, I have a little bit above half the rent amount automatically taken out of my bank account and put into my savings account fortnightly. The rent itself is deposited automatically back into my bank account monthly, in time for it to be taken out.
I don't touch this bank account. At all, ever. Because I deposit the rent money into it regularly, and a month is slightly longer than a fortnight, I actually have more than half of my monthly rent sitting there as a buffer. If I let it sit there, doing its thing, I will actually have a buffer of an entire month's rent by the end of April.
This got me thinking. I've proven I can do the "put money on a bank account and not touch it." I've been living in my current place for a couple of years. I have a pretty good idea of what the bills are going to be.
I'm going to try a new approach. I'm going to work out what my bills are for a year. Then I'm going to divide that by 26. I'll add a fudge factor, to allow for bigger bills than expected/price rises, and a small amount of extra money besides. Then I will put that into an account labelled "bills". The only time I will touch that account is when I have a bill, and then I will schedule the transfer to my bank account for the day before the bill is due, for the exact amount, schedule the payment from my bank account and forget about it. Eventually, it will do what my rent does--build up over and above what my projected expenses are, and gradually accumulate a buffer.
I'm not quite sure how to get over the psychological hurdle of saving towards a goal. I guess I can start with budgeted amounts and then see what happens. I'm not entirely sure how to get over the thing of looking at my savings and going "Oooh! I have money!" and spending it. Anyone got any ideas?
I am still in debt. Ugh, yes, I know. There was christmas, and just... I don't know.
BUT. I did this once before, I can do it again. The key for me, I think, is tracking my finances. If I spend five minutes a day updating my budget spreadsheet, I know where I am financially and what I can spend (I genuinely do live pretty frugally, but I honestly believe that allowing yourself little indulgences saves you from snapping and spending money you don't have. Far better to allow yourself a DVD once a month/fortnight than go insane and buy Everything Ever).
I have good news on the credit card front. One credit card will be wiped out in a month, and the other is below $1000. Financially, it makes more sense to pay down the one that is just under $1000--the interest is $17 a month or so. There are two reasons I'm not doing this.
1. I need the psychological boost from wiping out one credit card.
2. I got the second credit card on a balance transfer, and that deal ends in two months time. After that the interest goes up.
3. I'm paying well over the minimum on the $1000 credit card. It's just not as much as I pay on the Balance transfer credit card, and once I wipe that out, I should be able to turn ALL of my financial resources to wiping out that debt. Assuming I don't have any horrendous unexpected expenses, that debt should be gone in a month and a half once I get rid of the first card.
After that, I'm sort of faced with the question of "Well, where do I go from here?" I've never been successful at saving. So I thought about it. The first thing that comes to mind is goal-setting.
OK, I can do that. I know what I want.
1. Three months savings of all living expenses
2. A car service (probably be $1000, but save up $2000 just in case)
3. A new computer. Unfortunately, this is probably getting increasingly urgent. I want a Mac, but may have to take what I can get with what I have saved. Worst case scenario, I may need to either put it on my credit card or get a loan. Ugh. it's a necessity for me.
I think Savings can be divided into two categories. There is "Living savings" (bills, etc), and then there is "saving towards a goal".
The ONE thing that has worked for me is Automatic debits. I get paid fortnightly, and my rent comes out monthly. Now, I have a little bit above half the rent amount automatically taken out of my bank account and put into my savings account fortnightly. The rent itself is deposited automatically back into my bank account monthly, in time for it to be taken out.
I don't touch this bank account. At all, ever. Because I deposit the rent money into it regularly, and a month is slightly longer than a fortnight, I actually have more than half of my monthly rent sitting there as a buffer. If I let it sit there, doing its thing, I will actually have a buffer of an entire month's rent by the end of April.
This got me thinking. I've proven I can do the "put money on a bank account and not touch it." I've been living in my current place for a couple of years. I have a pretty good idea of what the bills are going to be.
I'm going to try a new approach. I'm going to work out what my bills are for a year. Then I'm going to divide that by 26. I'll add a fudge factor, to allow for bigger bills than expected/price rises, and a small amount of extra money besides. Then I will put that into an account labelled "bills". The only time I will touch that account is when I have a bill, and then I will schedule the transfer to my bank account for the day before the bill is due, for the exact amount, schedule the payment from my bank account and forget about it. Eventually, it will do what my rent does--build up over and above what my projected expenses are, and gradually accumulate a buffer.
I'm not quite sure how to get over the psychological hurdle of saving towards a goal. I guess I can start with budgeted amounts and then see what happens. I'm not entirely sure how to get over the thing of looking at my savings and going "Oooh! I have money!" and spending it. Anyone got any ideas?
no subject
I'm not brilliant at that at the moment, because my everyday account always has a buffer in it. But if it's a skill you can master it's fantastically useful.
no subject
it works pretty well. I think I need more buckets, though, so I'm not borrowing from Peter to pay Paul.