Personal Finance Thoughts: October 17

It seems like everyone is talking about and worried about the current economical crisis in America, so I would like to give my thoughts on the matter.

I think that people need to take care of their own personal finances above worrying about the economy or what the next president will do to make your life better. And what I mean by this is to be more concerned about your "minieconomy" of your personal finances over the worlds. Paying off debt, having an emergency fund, and having job security are obviously important things to worry about. What I am concerned about is how many people are simply worried about the stock market over these other factors that are much more important in terms of security.

I think that since the economy seems so bad it will give people a reason to worry about budgeting their finances, which I feel is probably the most important financial goal. Tracking your expenses allows many to spend less money, have short term goals, and have greater peace of mind.If this current crisis brings people to pay off debt, and not spend more than they make in the long term America will be better off.

Personal Finance Thoughts: October 5

My good friend Michael Queller wrote me something which Ive put a bit of thought into. Let me preface this by stating that I dont think he is necessarily wrong as long as he is happy with his situation. He wrote, "I've learned its far more important to focus on making money than spending money. Life is better when you're making more and spending more vs. making less and spending less."

It seems that most people earn money just to spend money to get what they want (or at least what they think they want). The question is, how much is enough? Obviously you
wont work every second of your life making money because then you wont have time to enjoy it. Id rather have 3 months off during the summer than work and make a few thousand. The benefit you receive after a certain point of buying enough things wont be greater than having the time off to enjoy life. For instance I have been tutoring 2 students making $40 an hour, however it takes me about an hour commuting. Id
much rather have 2 extra hours to myself than make $40 and get frustrated with traffic. Also, I think that a lot of people spend money simply to hide other inadequate things about their life, or could replace their time and money with other more worthwhile purposes such as spending quality time with their loved ones (that doesnt need to cost anything to do). So in terms of saying life is better when
your making more and spending more vs making less and spending less I dont think is really true. I think that once you hit a comfortable point working more to spend more doesnt seem to work out.

But to focus on making money verses spending money does sound good. This past year I have been saving 20% of my paycheck, spending about 30% for wants, and 50% for needs. I dont need to count every penny in order to do this. Its also pretty simple. If I focused more on making money I can get my reasonable dreams faster, but I also like where I stand right now too.

Excellent Budgeting spreadsheet

This is a really good spreadsheet, it takes less than 10 minutes to setup and it tracks where your money goes very easily.

https://www.pearbudget.com/spreadsheet

Personal finance thoughts: September 1

So in May I spent less money then any month I could think so in the past 5 years. Without counting debt payments, I lived for $1,330. I ended up paying off a credit card for nearly $2000, and will put this payment into a different card with the highest interest rate.

A few of the ways I was able to do this are as follows...
- I created a budget and stuck to it. This is the most important step in order to have financial freedom. I ended up spending $80 less in gas, $40 less in food, and $30 less in miscellaneous.
- I setup a clear goal of saving at least $1000 this month so I could pay off a credit card. Knowing that I could stop paying interest on one card and placing this into additional debt payments was reason enough to follow this plan.
- I prioritized my expenses in terms of my life goals. In the excellent book, http://www.yourmoneyoryourlife.org, the authors talk about figuring out how much money you make per hour and then relate expenses to how much time you work to get enough money to do so. I find that this is helping me control random purchases that I will not see much use for.


I have continued to set realistic yet difficult goals for the rest of the year and I will save at least $800 a month until 2009.

Doing without in your 20's

Here is a good article on deciding whether to be frugal or splurge away in your 20's

http://blogs.moneycentral.msn.com/smartspending/archive/2008/08/27/doing-without-in-your-20s-by-choice.aspx

Personal Finance Thoughts: August 16

So I ended up paying off a credit card that was $1,800 this month. This frees up $49 a month which will go into my next credit card. I setup my payments my automatically taking out $500 from my paycheck into my money market account and leaving it there until I have $1,500, then paying off a credit card with the lowest balance, while keeping my other cards at the minimum payment. I decided to do it this way because then I sort of have an additional emergency fund for 3 months besides my regular emergency fund of $1,200. If I put the $500 immediately into the credit card I would save about $3 in interest, but I like having that extra safety just in case something big happens.

I recently bought a food processor for $30, and I love it! So far I have diced onions and garlic for a stir fry, ground beef, and made pizza dough from scratch. It is well worth the investment. I also went back to my classroom this week and noticed some of the random food items I had sitting there. It gave me quite a few good cooking ideas. Not counting eating out, I will spend about $200 this month on food (My plan is to average one night out eating a week; that will give me new cooking ideas and time with friends).

I am on pace to spend $1300 this month on living!

I.O.U.S.A.

This looks like a must see.

http://www.apple.com/trailers/independent/iousa/