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actyourwage2012-06-19 07:55 pm
jamethiel) wrote in actyourwage2012-06-19 07:55 pm
Lesson learned: Why you need savings
I haven't been updating the community, but a lot has been happening in my life.
We've had a few new people join. First of all, hi! Come and introduce yourself--tell us anything about your financial situation or goals you'd be comfortable with hearing and feel free to ask questions and make use of the community brain. I'm jame, your friendly community mod.
In my 20s, I got a credit card. Of course, I swore that I'd never use it except when I actually had the money, but gradually that changed--I was running short before the next week, so I'd just do one lot of shopping and put it on the card, which meant it had to be coming from the next week's pay, etc. Gradually my debt built up.
Eventually, I went through some major life changes. In the process, I learned to live within a budget and finally I paid my debt off.
Except then I had to move. And I didn't have savings.
BACK IN DEBT I WENT. And it just kind of hovered there for the next couple of years--I'd get it down and then something would happen and it'd go back up again. So I sat down and looked at my budget and then a light dawned.
All the time, I'd been living on the edge. It was funny because I'd never really adjusted to the fact that I wasn't in my 20s, I was making a decent wage. I just--spent everything I got, or put it on the credit card.
Get Rich Slowly has the precept that BEFORE you start paying down debt, you need a buffer of savings. Previously, I'd waived the idea off. This time, I actually sat down and saw the reasons behind it.
I got all of my bills for the year (including the big once-yearly bills, like insurance and car registration), averaged them to a fortnightly amount. I rounded up, added all of the amounts together, rounded up again, added what I call a "DEAR GOD!" factor of 10% and then added $20 on top. I set up a regular debit so that that money was taken from my bank account and into my savings on the day I got my paycheque. I said to myself "I will not touch this money for anything other than bills."
And it worked. I was no longer taking from my paycheque to pay bills and worried when I got the quarterly gas bill. When I got a bill, the first thing I did was go into my savings account, set up the exact amount of the bill to transfer to my bank account 2 days before, then schedule my bank account to pay the bill the day it was due. Gradually, my "savings" built up.
In addition to that, the fact that I transferred over slightly half my rent out each fortnight finally caught up with me. The best advice I can say is if your pay period is less than your payments due, COUNT YOUR BLESSINGS! There are extra fortnights in the year and so gradually, with just leaving the money alone, I ended up with an entire month's rent spare.
And then stuff happened. Work made the announcement, bless their little cotton socks, that they were switching to monthly pay. Giving us a month's notice.
... yeah. :| was pretty much my face at the announcement too. Co-workers threw justified fits. However, although I'm still indignant that they would do this to us with so little care for how people would manage, I'm actually going to be able to manage ok. Yes, things will be tight. But I think I've got enough savings to see me through. It may be tight and it uses enough of my safety net to leave me feeling actively uncomfortable. But I can do it.
The other thing I can do? Pay off my credit cards in full this month. On Friday, to be exact. Meaning I will be completely out of debt for the first time in... oh, three years.
Lesson learned, universe. This is why you need savings.
We've had a few new people join. First of all, hi! Come and introduce yourself--tell us anything about your financial situation or goals you'd be comfortable with hearing and feel free to ask questions and make use of the community brain. I'm jame, your friendly community mod.
In my 20s, I got a credit card. Of course, I swore that I'd never use it except when I actually had the money, but gradually that changed--I was running short before the next week, so I'd just do one lot of shopping and put it on the card, which meant it had to be coming from the next week's pay, etc. Gradually my debt built up.
Eventually, I went through some major life changes. In the process, I learned to live within a budget and finally I paid my debt off.
Except then I had to move. And I didn't have savings.
BACK IN DEBT I WENT. And it just kind of hovered there for the next couple of years--I'd get it down and then something would happen and it'd go back up again. So I sat down and looked at my budget and then a light dawned.
All the time, I'd been living on the edge. It was funny because I'd never really adjusted to the fact that I wasn't in my 20s, I was making a decent wage. I just--spent everything I got, or put it on the credit card.
Get Rich Slowly has the precept that BEFORE you start paying down debt, you need a buffer of savings. Previously, I'd waived the idea off. This time, I actually sat down and saw the reasons behind it.
I got all of my bills for the year (including the big once-yearly bills, like insurance and car registration), averaged them to a fortnightly amount. I rounded up, added all of the amounts together, rounded up again, added what I call a "DEAR GOD!" factor of 10% and then added $20 on top. I set up a regular debit so that that money was taken from my bank account and into my savings on the day I got my paycheque. I said to myself "I will not touch this money for anything other than bills."
And it worked. I was no longer taking from my paycheque to pay bills and worried when I got the quarterly gas bill. When I got a bill, the first thing I did was go into my savings account, set up the exact amount of the bill to transfer to my bank account 2 days before, then schedule my bank account to pay the bill the day it was due. Gradually, my "savings" built up.
In addition to that, the fact that I transferred over slightly half my rent out each fortnight finally caught up with me. The best advice I can say is if your pay period is less than your payments due, COUNT YOUR BLESSINGS! There are extra fortnights in the year and so gradually, with just leaving the money alone, I ended up with an entire month's rent spare.
And then stuff happened. Work made the announcement, bless their little cotton socks, that they were switching to monthly pay. Giving us a month's notice.
... yeah. :| was pretty much my face at the announcement too. Co-workers threw justified fits. However, although I'm still indignant that they would do this to us with so little care for how people would manage, I'm actually going to be able to manage ok. Yes, things will be tight. But I think I've got enough savings to see me through. It may be tight and it uses enough of my safety net to leave me feeling actively uncomfortable. But I can do it.
The other thing I can do? Pay off my credit cards in full this month. On Friday, to be exact. Meaning I will be completely out of debt for the first time in... oh, three years.
Lesson learned, universe. This is why you need savings.
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