Money

[Sandrilene]

So over the last 6 years I have noticed that while I am VERY good at budgeting money so that I can pay for everything I have to and save for a specific thing pretty well that I am HORRIBLE at saving money beyond that point. And since there are people probably more experienced then I am maybe someone can give me some pointers as to what they do to save and how it works for them. We don't have a lot of money to begin with so I am not just blowing through tons of money or anything but I would like to have more in my bank account at some point then breaking even when my bills are said and done. Penny for your thoughts?

[kavanaru]

a good hint... calculate a percentage of your monthly income, you could be comfortable without it... let's say 10% as an example. Then from every payment you receive, put it aside in a bank account (or investment fond, or just a box under teh bed.. as you prefer) and don't touch it at all.. think of it as money not belonging to you... This would be independent of your saving for buying a specific thing... try to calculate how much money you would need (under the current situation) to have a nice life, similar to what you have now, by the time you are retired and for about 10-15 years afterward (make adjustments as long as you grow up and your life standards and incomes increse!). Divide that amount through the numbers of months you have until your retirement age, and try to get there

This kind of projections help a lot

[Sandrilene]

good plan I like it. The overall goal is to get to the point where my husband and I are both working then his income will cover monthly expenses all of them including fun money and just everything. Then my paychecks will go towards retirement/savings/investments all that fun stuff. It could be awhile before I start to work again though I have other goals to obtain first so we need to save a bit so we aren't screwed if anything big happens in between now and when I am working an emergency fund if you will. But yeah that its not your money thing should help me not touch my paychecks once I start getting them again sometimes its very hard not to and maybe starting off smaller once the emergency fund is cushioned enough with like 10% and increasing it bit by bit will help us get use to putting money away. I find it very challenging to do it especially while working. Been on your feet all day come home to have to do a bunch of dishes and a messy home and have a bunch of cleaning to do and supper to get on top of it... yea sad to say when i was last working most of our money went to take out I just didn`t have it in me to cook but take out is very expensive. That is part of what I need to work out a plan so that doesn`t happen again when I work.

[DelawareJim]

At the end of the year, all the little things you can do to cut costs add up.

I totally understand the frustration of cooking and cleaning after a hard day at work. Just remind yourself why you're making the sacrifice.

here are a bunch of short-term and long-term ideas that have worked for my wife and me.

Pack a lunch. My wife and I cook for 4 and pack the left overs for lunch. At $10 a day for lunch in the cafeteria where I work, I save $2,500 a year packing lunch.

If you have to finance something, look at total cost, not the monthly payment. Heck, car dealers can put you in a Mercedes for $299 a month. The question you have to ask is, “Do I want to spend $100,000 on a $50,000 item and still be making payments on it long after I got rid of it?”

Hang on to “durable goods” like appliances and cars as long as you can. Cars are a great example. My wife and I bought 2 Volvos; one in 1992, and one in 1993. We paid about $50,000 for them both including the financing which was a lot of money then. We still have them and they are still in great shape mechanically and cosmetically. So I figure the purchase price over time was about $1,400 for each car ($25,000 over 17 years and $25,000 over 18 years of ownership). My sister and brother-in-law bought cheaper cars about every 5 years. So they would have bought 6 cars compared to our 2 over the same period of time. If their cars cost $15,000 each, they spent $90,000 plus interest over the same period, or about $1,100 per car per year more than us.

Payroll deduction is magic in itself! My wife and I live by payroll deduction; IRA's, 401K's, savings, all get funded through payroll deduction. That way, you don’t see it and you don’t spend it.

We have our regular checking, savings, and each have a hobby savings account at a local bank. No "Too big to fail" robber barons for us! Go to Move Your Money to learn more. We don’t use an ATM so we don’t get charged for each transaction, we keep the minimum balance so we pay nothing in banking fees, and pay our entire cc balance each month to not get nickeled and dimed to death.

Review your bills. Most people have a better cable and phone plan than they actually use which wastes money.

Read the money section of USA Today and CNN online. In this economy, there are tons of tips and tricks to spending less and saving money.

A great book to read which reinforces Ramon's point is The Richest Man in Babylon which I read for the first time in high school. The book is a series of parables on saving and investing wisely. I can still remember the mantra "One tenth of all I earn is mine to keep". Get it from the library instead of buying it.

Thankfully my wife and I were raised by frugal parents; New Englanders for me and PA Dutch (Swiss-German) for my wife who taught us to live within our means. We learned at an early age restraint and “Want does not equal need”.

Cheers.
Jim

[Sandrilene]

That is a good way of looking at cars. Buy a more expensive quality one then one that may fall apart in a few years. Last time we went car shopping the dealer tried to convince us to buy a used model of a car for about the same price it is brand new and my husband was willing to look at it so I cut them short and said I think we'll just take the bus. They make you sign something saying you'll buy it if they can get you the price you want... uh no the amount for financing isn't even covered at this point and I am not watching my husband get another loan with like 23 percent interest. I don't believe in borrowing anyways.

I was raised to be frugal too well at least by one parent the other one is redoing their entire house on credit cards...

I got married at 19 and married into debt. I've been trying to fix that for about 4 years now. Getting pretty close now. I'm not working mainly because of health problems. I can't afford to break my back (literally) for a few lousy dollars that won't cover that bill. I'm spending my time off re evaluating our finances and looking into college (and packing cause we're moving). The automatic deposit thing sounds pretty easy maybe once I have the debt gone I'll set that up.

[Royal]

Write down every penny you spend for a few weeks. You will be shocked at how much you spend on small items. You never realize how these small frivoulous purchases add up. For instance a 0.99 coffee each day equals alomost 30 bucks!

Trust me, after scrutinizing your spending habbits that you may have never realized, you'll be inpsired to try some of the great ideas Ramon and Jim offered.

Good luck, money is an emotional thing. Spending it, saving it, not having enough of it - there are a lot of emotions tied up there. Once we realize how the emotion factor affects us, we can use it to our advantage.

[kavanaru]

and another important thing to keep in mind... if you are not use to save money (for whatever reason, nothaving enough for it, not likikng saving, not not - let's ignore the reason, but go to the fact, you don't save money!) ok, back to my point, if you are not used to save, don't expect or try to save too much from the beginning.. start very low, and increase it slowly too...I said in my first post: calculate the amount of money you can be comfortable without it... check teh advcies from Jim and Royal, in order to have a feeling of which thing you could live without them (make your own lunch for the office, instead of going to the restaurant; drink your coffee at home in the morning, instead of getting it at the CoffeeToGo shop, etc etc etc)... let's say, you calculate 10% of your income, would be something you could renounce to... then do not start saving 10%, start with 5%.... after a period of adaptation, increase it a bit, let's say to 7%, and so on... and stay at the limit where you really feel comfortable...

another idea, which I use very often when managing my projects at work (and now also in my life) is to ask my team (or myself), everytime we want to implement something (or buy it): Is this a "nice to have" or a "must have" item?

examples:

Currently, my partner and I are buying a house/appartment. We would love having a house with a swimming pool (nice to have), but actually, we would use it only during 4-5 months per year, and only during some weekend (not a must have). We decided then for an appartment with a private garden. I would love having a huge greenhouse (nice to have), my partner has no clue about orchids, and proposed a large greenhouse in single glass (high heating costs, but cheap house), I have over 200 orchids, and would need to heat in winter. A good insulated greenhouse is a "must have"... I could afford to buy a 25 square meter house, as I decided I really do not need a car, but I balanced and have made a compromise: smaller greenhouse (15m2), very well insulated, and a small car (not the Prius I wanted to buy)

Making the kitchen... We decided to go for "Induction plates"... I would love to have a gas burner for cooking too (nice to have), but when I asked myself "How often do I cook using the Wok?" (this would be the main reasopn for having a gas burner in the kitchen) it came to be something like once or twice a year (Is that worth enough to increase the price of the kitchen in aroung 1000€?), a gas burner turned out to be a "nice to have" and not a "must have".

I could give you hundreds of examples here.... I think, however, you can get the idea of the exercise with the ones given above...

[DelawareJim]

I hope I didn't come across preaching at first. Good money management is something that I'm pashionate about.

Ramon and Royal have excellent points. Start small and build up and track every penny for a while to see where the money really goes. When I first started doing it, I was stunned at how much went to stupid stuff on impulse buys.

A good place to start saving is if your husband got a cost-of-living increase this year. Put that in the bank. Heck you've lived without it this long, you shouldn't miss it. My employer hasn't given me a real raise in a couple of years, but I get a cost-of-living increase every year that amounts to about $10 a week after taxes. I put that in the bank through direct deposit. Will $10 a week noticably improve my standard of living? I doubt it. Will I notice $520 in savings at the end of the year? Darn right! Will I notice $15,600 in savings at the end of 30 years with my job? Now we're talking!!!

Credit Card debt is the enemy. Ideally it should be zero by paying off the balance each month. If you can't do that, pay the highest interest ones off first. They are the biggest drain on your money. When they are paid off, work on the next highest, and so on.

Join a credit union in your area and shop around for a lower interest rate. When we bought our cars, interest was almost 10% and we initially financed them through the car company. About the same time, I joined the credit union at work and got a loan at half the interest rate which I used to pay off the car loan. It saved me thousands in interest.

If you have any specific questions, PM me and I might be able to provide some additional help.

Cheers.
Jim

[Paul]

Of course in a case like Ramon's oven choice, one may also wish to consider which is more expensive to run gas or electric. In some places, gas is significantly cheaper than electric.

Back to meals ... in addition to avoiding eating out often, stay away from the premade frozen dinners (what used to be referred to as tv dinners). For what you get, they aren't cheap. I know what it's like coming home from work and being so pooped that cooking is not something I want to do. So instead, I always aim to do a lot of cooking on my days off. I own two crockpots (slow cookers)and do use them both on big cooling days. (Cheap crockpots can often be found at a Goodwill or Salvation Army store.) While the crockpot(s)are doing their thing, I can then use the stove/oven to make something else. Most of what I make gets put in containers with each container sufficient to provide me with one or two meals. The rest gets put in containers in the refridgerator. Because I have made a variety of dishes, I don't wind up eating the same thing day after day to the point where you get tired of eating it. The following weekend, I'll make a bunch of other foods. This provides me my lunches for work and dinners to reheat after a long exhausting day.

The "want" vs "need" philosophy others have mentioned is also important. I have a couple friends -- both of whom have good paying jobs -- who would often complain about their bills. The problem is they don't know how to wait. If they see something they want (not "need") they generally would just buy it instead of stopping to consider: How much they really want it? How much will they use it? And if they REALLY want it, how about trying something novel and saving up for it?

For example, she used to work at a camera shop. She wasn't making huge amounts of money, but she still bought herself a good Nikkon camera and several lenses. She truly didn't need them but would rationalize it that she really wanted one, and she'd get an employee's discount, so .... In contrast, I have "wanted" a good digital camera for sometime now (literally years). However, I know I don't "need" one. So I have been saving up and watching prices fall. Still don't know when I'll finally take the plunge and buy one, but I know I still "want" one & so at some point will probably get one.

[Sandrilene]

Yeah I think that starting very small and working towards saving larger amount and really making sure I am comfortable with the amount I am putting away will make all the difference. Trying the other way just really didn't work for me. Right now I'm stressed enough just with what I've decided to stick myself with for goals for debt repayment but it's worth the stress and figuring out how to pay everything down to the nickles and dimes just to get rid of it. Once it's done though it will be an extra 400 dollars in our pockets a month (no we don't have huge crazy loans or something I am just stubborn and am paying twice the minimum payments on them cause I want them gone!). Ultimate goal is still to save my paychecks once I get to that point though.

As far as extra spending is concerned right now we MIGHT eat out 2 times a month at a 25 dollar budget (for them combined). Other then that we don't go out. Staying inside your house is a good way to avoid spending money So there is no money wasted on drinks or food or whatever that we could have lived without. No bad habits that cost money either we don`t smoke or drink or anything like that. My husband and I always pack lunches for work too. I normally spend the day cooking on my day off too for the week... the only problems arise when my husband decides the food that was supose to be supper is lunch for work and then I get home and nothing is ready and the dishes are all dirty and I'm tired and cranky to begin with... that ends up with take out. Once I'm working again that's going to be even more challenging since we are going to have a roommate soon too.

The only thing I have really splurged on in the last 6 months or so is Orchids but all the ones I bought were on crazy sales and they were really healthy looking and I really loved the flower coloration in the ones I chose. My new Orchids are my Valentine's Day present. Usually if I really want something really badly if it's at all expensive or will strain our budget I will think about it for awhile and if I still want it that badly I'll get it and count it as a present for an upcoming holiday or birthday or something.

I am a planner. If I know there's something I'm going to have to do soon I have to know everything I can about it and have a plan so I can just follow through with it and know what I am doing. So I am worrying about saving now so when we have that debt paid I can jump in and start right away without wasting time trying to decide what to do. Any suggestions as to where I should put my saved money as in like some bank has a good rate on savings accounts or as far as that goes? Interest that is getting paid to me is something I consider a good thing.

Also like the raise idea too put the excess into savings cause you won't even notice it being gone cause you never had it. Some great ideas As to anyone worrying about preaching - don't. I asked you to. Money is something you have strong feelings about and beliefs as to what to do about it because it's what keep you sheltered and clothed and feed so of course it is important.