My Expenses for First half of the Year

Well the midway point of the year is creeping up and I wanted to check to see how much I am spending, and how much i can typically live on for a whole year. All of the numbers stated were what I have spent so far multiplied by 2. (I dont see many expenses really changing too much, besides rent going down since I moved and miscellaneous gifts and travel for Christmas). I did not include internet and electricity because it is included in my rent. Gas is tough to say, I factored a little higher due to higher prices.

Rent = $7,090
Car Insurance = $960
Car Loan = $2,040
Cell Phone = $840
Food = $3,850
Gas = $4,026
Miscellaneous = $6,876

Total = $25,682

I did not include my credit card payments and extra debt paid off which are still expenses and costs of living. However, since I have not used a credit card once in 2008 I simply wanted to see how much it costs to live on my current (and not past) lifestyle.

Some things of note:
- My car is paid off however I extracted out the payments for the rest of the year, obviously I will live on $170/month less.
- My miscellaneous category is too broad, I should make other categories such as clothes, gifts, and entertainment. It is also too high for my liking. It is $573 a month right now, even just lowering that $100 a month will be good for my financial outlook. I think it should go down because Ill probably not have to go out on dates nearly as much. One right women is better than many not so right ones.
- Gas costs more than food! And if I can tutor 6-8 clients a week Ill be spending even more there. Gas is wierd, the more I work the more I spend there with no way around it.. Unless I were like the Simons with their super gas saving cars!
- The rent category is quite a bit more then it will be, since I am living for $400 a month. Before I was living for $700 a month, and I had to pay a reletting fee and double rent for most of January.

So I am essentially living for $2,100 a month. My teacher pay will be about $2,700 a month, which gives $600 a month into credit cards. I am planning on building my tutoring business, which will cost a few hundred dollars but should pay back about $1000 a month. I also might deliver pizzas one day a week if the tutoring doesnt work out as planned. I will put $150/month into my Roth IRA, and the rest goes into debt.


P.S. I have a blank worksheet you can use to write down your expenses and budget. Email lancekaminsky@gmail.com for a free copy (its copywrited by me... just kidding, I didnt copywrite anything.)

P.P.S. There’s nothing inherently wrong with purchasing things that bring you joy. But problems come when you finance these purchases with debt. If you’re meeting your other financial goals and have money left over, it’s good to indulge your interests and passions. I need to remember this.

Im on a Low Budget

...and its a pretty good solo in the beginning.



Low budget sure keeps me on my toes
I count every penny and I watch where it goes
Were all on our uppers were all going skint
I used to smoke cigars but now I suck polo mints

Investing in Index Funds: Keep Expenses Low!

I feel that most investors can end up doing just fine with index funds. Index funds track a benchmark of stocks, and since they simply track the benchmark they are not actively managed.
Many studies have shown that most professionals in stock selecting do not even beat this benchmark consistently.

The reason why most index funds are so good is that their expenses are much lower than actively managed funds. Many index funds will charge between 3-5% of your upfront deposit. This means that if you buy $1000 of a mutual fund with a 5% charge, you are really only investing $950. Lets say that this mutual fund along with the index both earn 10% in a year. Your actively managed mutual fund will be worth $950 times .1 = $1,045 while the index fund, since it did not charge the initial 5% fee, would be worth $1000 times .1 = $1,100. This makes a BIG difference over time.

For people who want to make investing as easy as possible, I would recommend investing a percentage of their age into a bond index fund, and the rest in a stock index fund, possibly with international index funds as well. For instance, I am 27 years old, I should invest 27% in a bond index fund and 73% in a stock index fund.

Vanguard and TRowe price are 2 companies I highly recommend. If you have over $1000 to invest at once vanguard's Total Stock Market Index (VTSMX) with an expense ratio of .15% is the way to go. If you need to start slower, TRowe Price allows you to invest as little as $50/month with nothing to start. POMIX is TRowe Prices total stock index, which has an expense ratio of .4%.

In conclusion, automatically investing each month in a Roth IRA, and investing in index funds is a simple and effective way to invest.

Little expenses add up

It seems that everyone has something that they cant live without. Whether its a cup of coffee at Starbucks, cigarettes and alcohol, or going out to eat, many times these "wants" are not necessary and can hinder your future finances.

David Bach wrote an excellent book titled The Automatic Millionaire. You can find more information at the link below

http://www.amazon.com/exec/obidos/ASIN/0767923820

What David Bach states is that once you find your "Latte Factor" and eliminate this product or service, many times you can find enough money to save each month.

Dont think that $5 a day doesnt add up? $5 a day is $150 a month, and if you save this in a total stock market index for 30 years this amount is $275,403.43.

Little expenses add up.