Well guys I received my second check and began the second period today. Before we go into this upcoming period I would like to take a quick review of this last period.
I had a budget for the last period of $466.65. My spending during the period breaks down as follows:
Gas : $103.35
Movie date: $21
New Shoes: $56
ATM Fees: $9.25
Food: $204
IN Income tax: $8
(Both groceries and restaurants)
This totals out to $401.60 with $65.05 remaining to go into my emergency fund. Looking at my expenses there are some definite areas where I can do better. The first thing that I need to do is to carry more cash that way I don’t have to use other banks ATMs. This is a simple step that could have saved me $9.25. The second thing that I need to do is to start packing more lunches for work. Even a couple of lunches a week will bring my food costs down immensely. I will be trying to cut about $25 from my food budget over the next period by eating out less and bringing my own food and drinks to work. Although I spend a lot of money on gas there is not much that I can do about it as I have a lengthy drive for both school and work.
This period went pretty well. I kept a rough estimate of where I was at during the period and had no difficulty in keeping under budget. As stated above I plan on cutting out the ATM fees and reducing my food budget by at least $25 dollars by planning my meals better.
As for this coming period I received my check today and it totaled $671.86. I will be breaking it down as follows:
Savings 1/10th: $67.19
Debt 2/10ths: $134.37
Living 7/10ths:$470.30
This should be a good period for me and let me focus on further decreasing my expenses and increasing my emergency fund. As always feel free to comment or ask questions!
Friday, May 29, 2009
Thursday, May 14, 2009
Paycheck 1
Well guys this is the official kick off of my attempt at financial responsibility. This post will have some basic information about me as well as my income and how it will be broken down.
First of all I would like to say that I am very fortunate in my living situation. I am 27 years old and have gone back to school to finish up my Bachelor's Degree in Management. I have been in retail management for the past 5 years selling electronics and cellular phones. In march of 2008 I decided that I no longer wanted to work the 55+ hour weeks for $32,000 a year and that I would head back to school.
I moved back in with my parents and am going to class full time and will be graduating in December of 2009. My parents are great people and are helping me out by not charging me rent while I am continuing my education. This really helps me keep costs down and focus on my studies. I lost my job back in January and just started working again at the end of April, those three months of looking for a job that would work around my school schedule were not easy and I accumulated some credit card debt during that time.
My debt is as follows:
Credit Cards: $2460.07
Student Loans: Around $25500 (It will probably be at about $30000 when I graduate)
As I said before I am ignoring the student loan debt until after I graduate and focusing on eliminating the credit card debt with 2/10Th's of my income.
Here is my income for this period which includes a 2 week paycheck of $581.56 take home (which is what I will be using for calculations) and my state income tax return of $85. For a grand total of $666.56 and will be broken down as follows.
Savings 1/10Th: $66.66
Debt 2/10Th's: $133.31
Living 7/10Th's: $466.59
Because I don't have to pay rent or utilities my living budget is probably much more than I will need, that being the case any left over money at the end of each pay period will be set aside to pay for emergencies like car problems or medical issues. Once this amount that is put aside reaches $500 then any additional monies that is left will be used to further pay down debt.
Please Post any questions or comments and I will try to answer as many as I can.
First of all I would like to say that I am very fortunate in my living situation. I am 27 years old and have gone back to school to finish up my Bachelor's Degree in Management. I have been in retail management for the past 5 years selling electronics and cellular phones. In march of 2008 I decided that I no longer wanted to work the 55+ hour weeks for $32,000 a year and that I would head back to school.
I moved back in with my parents and am going to class full time and will be graduating in December of 2009. My parents are great people and are helping me out by not charging me rent while I am continuing my education. This really helps me keep costs down and focus on my studies. I lost my job back in January and just started working again at the end of April, those three months of looking for a job that would work around my school schedule were not easy and I accumulated some credit card debt during that time.
My debt is as follows:
Credit Cards: $2460.07
Student Loans: Around $25500 (It will probably be at about $30000 when I graduate)
As I said before I am ignoring the student loan debt until after I graduate and focusing on eliminating the credit card debt with 2/10Th's of my income.
Here is my income for this period which includes a 2 week paycheck of $581.56 take home (which is what I will be using for calculations) and my state income tax return of $85. For a grand total of $666.56 and will be broken down as follows.
Savings 1/10Th: $66.66
Debt 2/10Th's: $133.31
Living 7/10Th's: $466.59
Because I don't have to pay rent or utilities my living budget is probably much more than I will need, that being the case any left over money at the end of each pay period will be set aside to pay for emergencies like car problems or medical issues. Once this amount that is put aside reaches $500 then any additional monies that is left will be used to further pay down debt.
Please Post any questions or comments and I will try to answer as many as I can.
Sunday, May 10, 2009
The Rules
The overall principal behind this blog is very simple. I will be following the basic tenets laid out in the book and blogging about how it is going. I will be making public, my debts, income and how I am spending my money. I will try not to go into great detail about every penny that I spend but will keep it in main categories. I'm pretty sure no one cares to know which value meal that I got at Wendy's just that I spent money on food. My plan is to make a post every two weeks when I get paid and to report on how the last two weeks have gone. I will be sharing my struggles as I continue my journey.
I have read a large number of books about finance in the past several years and although most of them are very good they all start the same way. They tell you to live below your means and then they tell you what to do with the extra money that you have saved. Although it is great advice, I believe that most people are like myself in that we don't have a problem finding ways to invest our money, we have problems getting the money to invest. This book outlines some of the basic ways to save money and gives some basic guidelines for investing.
This is the first time that me and my generation have seen the economy take such a drastic downturn. We have always lived in a world of easy credit and markets that continue to climb. These have led us to ignore our savings and to live beyond our means. It's time to get back to basics and with the blog I hope that I will be able to illustrate how to do so.
Because this book was written in the 1920's and is set in Ancient Babylon there are a few issues that it doesn't directly address and with the next few paragraphs I will be adressing these issues and how I will deal with them using the spirit that the book was written in.
The first thing that I wil adress is exactly what my basic strategy will be for the next year. I will be using a 7/2/1 strategy that is advocated in the book. Where 7/10's of my takehome income will be used to cover my expenses. This includes food, rent, gas and all of the other things that come up in my life. The 2/10's will be used to pay down debt. This includes credit cards and once I finish school it will include students loans as well. The final 1/10th will go into savings. This is money that is used for investing or to put a down payment on a house. If you read the book these ratios are explained in greater detail than I will go into here, just know that this covers almost every monetary scenario that I will be facing.
Student Loans are an issue that didn't exist when this book was written and I will be dealing with them as follows: I will be taking out loans in amounts to cover only my tuition and not any additional expenses. I will also not be paying on my loans until after graduation which should be in December of '09. The reason that I am addressing students loans in this manner is that without them very few people would be able to complete college and although I know that some of you have completed college without loans or help from anyone else I don't think thsoe situations apply to the majority. Once I have graduated student loans will be factored in to the 20% of my income that is being used to pay down debt.
Another situation that I think is highly probable is an emergency expense such as a breakdown of my old car. I will be addressing this in a couple of ways, any money that I have left of my 7/10's for expenses will be set aside for such an emergency. Although this will probably be a slow process with a little luck I will be able to cover all but the most costly of emergencies. The second option is for situations where I cannot cover the expense with my regular 7/10's or any additional that I have put aside. This will be to use my credit cardto finance it. I will only be using this option when I have no other choice and for situations that are essential, such as my car so that I can keep getting to work and school or for a medical emergency. This will not be used to cover things like my tv breaking. I will then use any left over money that I have from my 7/10's to pay this debt down as fast as I can above and beyond my usual 2/10's.
This is the formula that I will be using as we begin our journey. I have been out of work for the past several months and will be recieving my first paycheck this week. This will mark the first day of the program and I will be giving a snapshot of my financial information and what my usual expenses are. In the forthcoming blogs I will be reporting how I did in the previous two weeks and giving updates on to what my financial situation looks like, a breakdown of my expenses and an update on my life.
I have read a large number of books about finance in the past several years and although most of them are very good they all start the same way. They tell you to live below your means and then they tell you what to do with the extra money that you have saved. Although it is great advice, I believe that most people are like myself in that we don't have a problem finding ways to invest our money, we have problems getting the money to invest. This book outlines some of the basic ways to save money and gives some basic guidelines for investing.
This is the first time that me and my generation have seen the economy take such a drastic downturn. We have always lived in a world of easy credit and markets that continue to climb. These have led us to ignore our savings and to live beyond our means. It's time to get back to basics and with the blog I hope that I will be able to illustrate how to do so.
Because this book was written in the 1920's and is set in Ancient Babylon there are a few issues that it doesn't directly address and with the next few paragraphs I will be adressing these issues and how I will deal with them using the spirit that the book was written in.
The first thing that I wil adress is exactly what my basic strategy will be for the next year. I will be using a 7/2/1 strategy that is advocated in the book. Where 7/10's of my takehome income will be used to cover my expenses. This includes food, rent, gas and all of the other things that come up in my life. The 2/10's will be used to pay down debt. This includes credit cards and once I finish school it will include students loans as well. The final 1/10th will go into savings. This is money that is used for investing or to put a down payment on a house. If you read the book these ratios are explained in greater detail than I will go into here, just know that this covers almost every monetary scenario that I will be facing.
Student Loans are an issue that didn't exist when this book was written and I will be dealing with them as follows: I will be taking out loans in amounts to cover only my tuition and not any additional expenses. I will also not be paying on my loans until after graduation which should be in December of '09. The reason that I am addressing students loans in this manner is that without them very few people would be able to complete college and although I know that some of you have completed college without loans or help from anyone else I don't think thsoe situations apply to the majority. Once I have graduated student loans will be factored in to the 20% of my income that is being used to pay down debt.
Another situation that I think is highly probable is an emergency expense such as a breakdown of my old car. I will be addressing this in a couple of ways, any money that I have left of my 7/10's for expenses will be set aside for such an emergency. Although this will probably be a slow process with a little luck I will be able to cover all but the most costly of emergencies. The second option is for situations where I cannot cover the expense with my regular 7/10's or any additional that I have put aside. This will be to use my credit cardto finance it. I will only be using this option when I have no other choice and for situations that are essential, such as my car so that I can keep getting to work and school or for a medical emergency. This will not be used to cover things like my tv breaking. I will then use any left over money that I have from my 7/10's to pay this debt down as fast as I can above and beyond my usual 2/10's.
This is the formula that I will be using as we begin our journey. I have been out of work for the past several months and will be recieving my first paycheck this week. This will mark the first day of the program and I will be giving a snapshot of my financial information and what my usual expenses are. In the forthcoming blogs I will be reporting how I did in the previous two weeks and giving updates on to what my financial situation looks like, a breakdown of my expenses and an update on my life.
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