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financial weirdness

My finances are not good.

I'm not entirely sure when they got to the "not good" stage... it started at the beginning of the semester, when tuition was $1200, and I just threw it on my credit card, figuring I'd carry a balance for a month or maybe even two but then be okay, because I hate carrying a credit card balance. When I got my first credit card, my parents looked me straight in the eye and said, "NEVER use this to spend money you don't have. Don't put a single dollar on there unless you have that dollar in the bank." I did a good job of that all through college.

then again, they paid tuition all through college. tuition and insurance and everything else big.

It's not like I'm buying fur coats... sure, I go out. I bought some computer stuff. What's killing me is really the big stuff. My outstanding balance right now is over $2000... I do not have that in the bank. What's worse is that two bad things are due: car insurance, which went up to $650 since I'm a bad driver now (fuckers) and tuition for next semester, a little over $800 (graduate credits are teh evil). It's all got to go on the card. There's no place else for it to go.

Every month, I have a chunk of my paychecks automatically deposited into my "house fund"... a special savings account that I never touch. When I first started working it was the "in case I get laid off" fund, now it's sort of evolved, but I still feel terrible about the idea of dipping into it because I've been irresponsible with the credit cards. I feel like I should disipline myself to get this shit paid off... I should stop going out, stop throwing parties, eat ramen noodles, wear last year's clothes. whatever it takes. If I dip into savings now, what will stop me from just doing that over and over until I have none?

then again, with Christmas coming, this is not a good time to be in "i'm poor" mode.

I used to really hate it when people with above average salaries complained about getting in debt... how the hell did they do it? Now I'm seeing it... it's sort of like in college when you have all this free time, you have to really concentrate on using it properly, you know? I have a regular job and money, and money comes in, and money comes out, and I'm clueless as to what I'm doing here. I suck at money.

if anyone here doesn't suck at it, I'd love some advice.


( 19 comments — Leave a comment )
Nov. 17th, 2005 03:22 am (UTC)
If you don't already have them, you need two things: 1) An accurate budget spreadsheet, and 2) a cash flow spreadsheet to see how well you're doing vis-a-vis #1. They're both simple to make, but extremely powerful.
Nov. 17th, 2005 03:27 am (UTC)
i'd like some advice too.

what has worked for me is to make a budget for each pay period. and sticking to it.

and then at the end of that payperiod, i take everything out of my checking account to bring the balance to $100. i use that left over to pay credit card bills. i budget $200 for credit card payments, twice a month. and $10 for savings, twice a month. i try to live as cheaply as possible to get that debt down.
Nov. 17th, 2005 03:39 am (UTC)
I use a similar system: In a pay period:

1) get paid
2) assess bank balance
3) reduce balance to (monthly rent) + (fixed amount, about 50% more than what I expect to spend)
4) put excess towards credit card debt (long-term disaster recovery), and/or savings account
5) during next two weeks:
-try to hold spending to expected amount.
-transfer money from account to credit card after *every* day containing acredit card purchase.

5a) unexpected windfalls and irregular pay: half to debt/savings and half to account, if I don't live high on the hog in the rest of the pay period, the other half is effectively rolled into debt/savings.

I'm now one pay period away from eradicating a carnivorous albatross of debt accrued when my ex-roommate decided to stop paying rent. And he hasn't paid me back completely yet, so the balance will effectively be windfall income (really, tuition taken care of, but treated as windfall as I take tuition out of my savings account).
Nov. 17th, 2005 04:19 am (UTC)
i just got into debt the past 3 months. go figure, this was all AFTER being debt free and living off savings while being fired and searching for a new job.

but then it was car insurance, in sept which i havent fully paid off.

and then $700 for plane tickets for me and the boy to go home, $50 that my mom asked me to spend for a gift certificate for grammy, christmas presents for mom and 2 ipod nanos (one for dad and one for the boy). mom sent me a honkin check for 1.5 plane tickets, grammy and half the nano for my dad. so really its not that bad. but all i can really spend on it is about another $100 for christmas presents for the kids we know.

hopefully at this rate i can get it paid down to a couple hundred dollars by the time its time for another car insurance payment. then i get to start all over.
Nov. 17th, 2005 03:34 am (UTC)
No advice here, just empathy. My parents also helped me through college, so between them and a fellowship I've remained debt-free... until now. It's awfully tough to live on $8,000 a year, even though I am just a measly grad student without major expenses. It's getting to the point where I will have to start putting things on my credit card that I can't pay off right away, and it's causing me cognitive dissonance because my parents also brought me up with the notion of not charging things that I can't pay for.

So, good luck, and I shall remain tuned in to the comments here and hope for some useful tips too.
Nov. 17th, 2005 10:15 pm (UTC)
Have you considered a student loan? They have MUCH lower interest than credit cards.
Nov. 18th, 2005 06:29 pm (UTC)
I'd managed to stay loan-free until now, but I'm beginning to think student loans are a good option for that reason. :)
Nov. 17th, 2005 04:06 am (UTC)
Since you asked for advice...
Mostly it's a matter of how to make your money work better for you.

Dip into your savings to pay off your credit card. You are paying more in interest on the card than you'd earn from the savings. Though you should treat it as a loan and over the next few months pay that back into savings.

Next, get student loans to cover your tuition. In general, the interest rate on your student loans is really low, and usually accounts for little more than inflation. It's a good use of money. And interest on student loans is tax deductible. Also look into whether your company offers some sort of tuition reimbursement program. Usually if they do, they'll make you hang around for a few years to be sure that they see a return on their investment, but if you are planning on staying there that long anyway it's like free money.

Look into a new insurance company. It's highly likely that even with that accident, you can find something for a lot cheaper. If either of your parents was an officer in the military or public health service, you might be eligible for USAA. We are saving over $80 a month on car insurance than what we were paying through State Farm. We're saving on the order of thousands of dollars a year by doing our homeowners through them. There can be a huge disparity among insurance companies for what amounts to the same policy. Check into taking a defensive driving class, you might be able to get your rate reduced by taking one.

Keep track of exactly what you spend. You'll be surprised at how much you spend on things that you don't really need.

Realistically think about how you would do in "poor mode". A lot of people cheat on "poor mode" much the same way that they cheat on diets, they feel like they're sacrificing too much, so they cheat, and in cheating end up spending even more. It might be a wise idea to give yourself a certain amount of set spending money and not touch anything else but that.

Don't buy a lot of drinks when you are out. Drinks are exceptionally expensive. That goes for soda, too. Drink water with a wedge of lemon when you go out to eat and limit yourself to a drink or two when you go out in the evenings.

Also, what kind of fund are you using to save for a house? If it's just a savings account, your money isn't working for you. Figure out what your timetable is and what your goals are. Do you want to be in a house by this time next year or is this a 5 year goal? Different goals and timetables will have different investing strategies. If you don't have one, get an investment advisor. We go through our local Edward Jones rep and have been amazingly happy with him and his staff. S. looked into a whole bunch of different places before we ultimately went with EJ. It's really nice because we get a lot of personal (and attentive) service even though we're small-time investors (and Steve is in the same age range we are, so we don't feel like a dad is advising us and he's really up on good strategies or funds for us because we have a lot of the same goals right now). Go with someone who is going to give you good service, good advice, and a good, realistic plan to get a decent return on your money.
Nov. 17th, 2005 04:22 am (UTC)
Re: Since you asked for advice...
actually that is a great tip about dipping into the savings to pay off the credit card. after you have paid that off, just take what you would spend on credit card payments and transfer them back into savings. i did that this summer to zero balance my credit card right before i got my car insurance... see comment above.
Nov. 17th, 2005 07:54 am (UTC)
Re: Since you asked for advice...
I'll second (or is it third?) the point about using your savings to pay off the credit card. You should still look at it as owing somebody money, and try to be frugal for the next few months to replenish that fund quickly - but crucially, the person you'll owe is you, and you don't charge yourself interest at exorbitant credit card rates. This does require some self-discipline, but I'm confident that someone as smart and tough as you can do it if you try.

The point about student loans is good. If you know you're going to have tuition expenses that you can't cover (or that you can barely cover, because covering them will eat into the emergency 'shit, my car/washing machine/computer/something else expensive broke down' part of your budget), it's far better to get a nice low-interest student loan than to carry a credit card balance for any length of time. Bottom line is that credit cards are teh shyte way to borrow money, and almost anything is better.
Nov. 17th, 2005 05:04 am (UTC)
yeah, i just have a 500 limit on my card.
i'm lame like that.
Nov. 17th, 2005 05:59 am (UTC)
We're somewhat decent about saving money - so far we had socked away $SomeAmount in RRSPs (which in Canada you can withdraw without having to pay capital gains tax when you buy your first house), which was decent. Unfortunately with our wedding in May (where we ended up footing about 1/3rd of the cost), plus the rings, plus a nice honeymoon in Jamaica, we ended up using $MoreThanSomeAmount out of our line of credit. We were paying it off steadily, but then my mother-in-law passed away, and we had to cover the funeral costs until the insurance money arrived. Now that's arriving, and we're paying off those costs PLUS we're putting the rest towards a downpayment on a house.

Okay, maybe not so good - now we'll be paying this off for the next 20-25 years. Unfortunately up here in Canadia, the interest on one's mortgage payments is not tax deductable (as I believe it is in the USA). Oh well, that's how it goes. At least we'll have a house that we can improve and live in for the next 10-15 years while the land values keep rising...

Oh, right. Advice... Figure out all your expenses for the month (include your creditcard payments), add a few hundred extra for savings or covering unexpected costs, and then give yourself an entertainment budget that you can spend at your discretion. Take that amount out in cash (or come up with some other way of easily tracking it) and don't spend any more than that during the month. If you want computer stuff, fine, but those cool fluorescent tubes and blingbling shinies could be the equivalent of having a fun night out at the club - it forces you to evaluate what you really want to spend your money on.
Nov. 17th, 2005 07:23 am (UTC)
i probably suck at it more than you. i earn an above-average salary for my demographic here and i'm perpetually broke too. i, too, can't figure out where the heck it goes. earning more money means there's more of it to be responsible for, apparently :-(
Nov. 17th, 2005 08:50 pm (UTC)
I was 16 and working at the grocery store, and the meat cutters (highest paid employees at around 55K/yr) always warned me that when you make more, you spend more. I didn't believe them. A year ago I had an argument with a family member about a shiny new job causing me to "need" expensive new toys like a new car, etc. I swore I would drive my 95 dakota forever. Well, I bought a shiny new car a few days ago. For the first time have a car note, and despite only having one not at fault accident 5 years ago, an insurance payment that is almost as much as the car payment (which is auto deducted from every paycheck cos of who I work for) So now I don't carry a few thousand tools and parts and chemicals in the back for those exciting roadside repairs that happened once or twice every month but Im sort of teathered to this thing for a couple years. If it weren't for the snow on the ground here, I would have a hard time figuring out which situation I liked better.

Nov. 18th, 2005 04:36 am (UTC)
switch that car for a computer and a bigger house and you got my story :-P
Nov. 17th, 2005 08:35 pm (UTC)
Don't buy stuff. Until things happen like there's a hole, in your shoe.

(I only do that because I really can't buy stuff. After all my bills, I don't have money in the bank!)
Nov. 17th, 2005 09:24 pm (UTC)
rollin on a river
I have always found spreadsheets to be more a pain than they are worth. Sure, they are accurate and valuable and you never go wrong using them. But tracking how much money I spend on toilet paper each month seems to fall into the realm of taking myself too seriously. Do you read Vonnegut? Don't drown in the money river.

Here is the simple little system that works for me. I get paid twice monthly. The first check covers essential bills. I use online banking to write the checks out in such a fashion that they all hit the bank the day after the direct deposit goes in. I make minimum payments on everything with this check. The rest is disposable, and hopefully I pay down debts or drop it into savings, but sometimes life is too short to be THAT discliplined...besides I really want a digital SLR camera :D
Money is made to be spent, so give yourself a cushion to fall on, but make sure you have enough cash flow so that you know you work your ass off 10 hours a day for a reason.

About the house fund that you never dip into: You can loan yourself that money. If worse comes to worse you can buy a home for 0 down. Don't kill yourself with credit cards if the bank of spacefem is willing to make you a loan. In my case,I have three credit cards. I paid off and cut up two of them. Interest is like $20 per month. The way I see it, its worth the hour it takes me to earn that per month to pay it down at a comfortable rate rather than go into 'undergrad student' mode and pay it off in a month while eating ramen, turning off the heat/electricity, etc.

Another tip that I havent managed to accomplish yet: Pay for insurance in 6 month increments. Be really angry at those exortionist bastards for about two days. Drink a lot. Then forget about it for 5 months. I hate paying nsurance, it pisses me off every time so psychologically, it would be nice to give them their money and make them stfu for awhile.

Nov. 17th, 2005 10:11 pm (UTC)
I'm not sure what you should do. I understand you not wanting to make a habit of not saving, but I would pay off my credit card. For one thing I hate the idea of the credit card company getting any of my money, and late fees means they do.

Think about your money total. Amount in savings - amount owed = my money. Then that total will go down if you don't pay it off.

Maybe say, you will limit the money you spend when going out to say..one drink. The parties you throw is limited to one every_____. The clothes and accessories are limited to X amount of money every two weeks.

I like solid numbers.

I heard your pain. It seems like Mark and I are always having to worry about not meeting our monthly budget. I was hoping it would get easier when we got 'real' jobs, but maybe not.
(no subject) - mengers - Nov. 19th, 2005 12:21 am (UTC) - Expand
( 19 comments — Leave a comment )

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