Maintaining momentum
Feb. 12th, 2010 08:48 am![[personal profile]](https://www.dreamwidth.org/img/silk/identity/user.png){kind=small}
jamethiel posting in ![[community profile]](https://www.dreamwidth.org/img/silk/identity/community.png){kind=small}
actyourwageI've said it many times before, but personal financial management is as much about psychology as anything else.
One of the things I have is a LOT of goals. There's getting the credit card debt gone. There's saving up for a house deposit. I want to have a yearly public transport ticket. I want a digital SLR. I want my tattoo finished. I want three months wages as a buffer.
The credit card thing is... progressing (60.9% gone!). I've worked out what my payments have to be to get the debt paid off in 6 months time and I meet those with no problems. My tattoo is simply part of my budget. I put the money for it aside and that's no problem. Both of those should be over by the end of this year. (As a note: my priorities may not be yours. My tattoo is important to me and it brings me great joy.)
But then it gets tricky. Technically, the sooner I pay off my credit card the less I pay in interest. I'm at the stage now where switching the balance, even to a card with a zero interest rate isn't worth it. There's no point saving $44 in interest if I have to pay a $59 fee to switch the card.
But having a yearly public transport ticket will also save me money--around $9 a month. I can also take the money that I currently use on public transport and put it towards the credit card. Theoretically I should take the money that I would usually spend on public transport and put it towards next year's ticket, but that money can be doing more useful things right now.
But my budget's pretty tight. I do end up with some money at the end of the month but it is honestly NOT MUCH. And before I was splitting it between a couple of different goals. So I'd save for a couple of months, end up with not much and then something else would come up and it would be the amount I have in savings and I'd think "Well, I'm so far off my goal anyway, I may as well just pay this unexpected expense and start again."
Then something happened. With getting my new savings account, I didn't have the "cloned accounts" setup I had previously. So all of my money was going into the one place. All of a sudden, I was saving up faster. I was in a situation where I could have taken some money from my savings to buy something and I looked at the balance and said "If I keep saving at this rate, I can afford this in 2 months" and I didn't take money out.
Today's thought: if your priorities shift, slow saving may not work for you because progress towards one goal may not happen.
Also, your opinions are sought. In three months time, if I cancel my tattoo sessions for the month I can wipe out my credit card debt completely. This will save me around $21 in interest. I'm strongly leaning towards doing it. Thoughts towards or against?
One of the things I have is a LOT of goals. There's getting the credit card debt gone. There's saving up for a house deposit. I want to have a yearly public transport ticket. I want a digital SLR. I want my tattoo finished. I want three months wages as a buffer.
The credit card thing is... progressing (60.9% gone!). I've worked out what my payments have to be to get the debt paid off in 6 months time and I meet those with no problems. My tattoo is simply part of my budget. I put the money for it aside and that's no problem. Both of those should be over by the end of this year. (As a note: my priorities may not be yours. My tattoo is important to me and it brings me great joy.)
But then it gets tricky. Technically, the sooner I pay off my credit card the less I pay in interest. I'm at the stage now where switching the balance, even to a card with a zero interest rate isn't worth it. There's no point saving $44 in interest if I have to pay a $59 fee to switch the card.
But having a yearly public transport ticket will also save me money--around $9 a month. I can also take the money that I currently use on public transport and put it towards the credit card. Theoretically I should take the money that I would usually spend on public transport and put it towards next year's ticket, but that money can be doing more useful things right now.
But my budget's pretty tight. I do end up with some money at the end of the month but it is honestly NOT MUCH. And before I was splitting it between a couple of different goals. So I'd save for a couple of months, end up with not much and then something else would come up and it would be the amount I have in savings and I'd think "Well, I'm so far off my goal anyway, I may as well just pay this unexpected expense and start again."
Then something happened. With getting my new savings account, I didn't have the "cloned accounts" setup I had previously. So all of my money was going into the one place. All of a sudden, I was saving up faster. I was in a situation where I could have taken some money from my savings to buy something and I looked at the balance and said "If I keep saving at this rate, I can afford this in 2 months" and I didn't take money out.
Today's thought: if your priorities shift, slow saving may not work for you because progress towards one goal may not happen.
Also, your opinions are sought. In three months time, if I cancel my tattoo sessions for the month I can wipe out my credit card debt completely. This will save me around $21 in interest. I'm strongly leaning towards doing it. Thoughts towards or against?
(no subject)
Date: 2010-02-13 08:48 pm (UTC)I'm trying to get on top of that all. We're slowly starting to build our savings up. It's deceptive though. My wife gets her schooling paid through work but they don't pay it all at once, only in small lots of it. So I slip it into the savings and then make a payment to the student loan later. So our savings starts looking nice. It's got $2000NZ in it right now but about $875 is for her school and another $500 is my 1/2 monthly bills in the US. It's still progress but it can get depressing watching the fluctuations. Since my monthly bills in the US (includes my credit cards and student loan) is more than our fortnightly pay, I have tried to start saving on some of the fees by not putting the money across to the US account twice a month and now am trying to slip it into the savings until and make one payment once a month just before the bills are due. It's saving me $25NZ and about $50US each month by doing it just once instead of twice.
For your tattoo, I am going to be the irresponsible one and say I think you should get it. Sometimes when you've been saving up for a long time you need that reward. Your tattoo means a lot to you and it can be a physical reminder that you are on the right track. Saving $21 in interest is something to keep in mind but how long before you'd have to save up again to go for the tattoo? I think you hit it on the nail too about saving being psychological. Will the little kid inside you (the one that tends to encourage our reckless spending) be upset or down about not getting the tattoo, feel let down or like a 'promise' has been broken? It's not logical I know, you're an adult making your own decision but think about the part of you that is motivated to save and spend.
(a caveat: I have had 4 tattoos myself, I am tattoo-positive)
(no subject)
Date: 2010-02-14 11:00 pm (UTC)With the tattoo, it's not finishing it. Not by a long shot. I get work done on it every two weeks and it just goes straight out of my paycheck. I actually pay more on that than I do on my credit card! My thought on getting rid of the credit card debt is that I can keep the money I would have paid for that around until my tattoo appointment. Then if it's a long session, I don't have to worry and if it's not I can transfer the money into my savings. But it'll only take 3 months off my total "time that I'm in debt" so it's not a big deal either way.
And as for the credit card debt and psychology--I've managed to get my head around "getting rid of debt is good!" I've finally gotten over the hump of "paying bills is a chore" and having got rid of half my debt I feel excited at being debt free. So... it's either/or, really.
I think I may just see how I'm feeling when it's closer to the date.