Contest Announcement

This blog has been in existence for a while and I have never run a contest in all of that time. I was waiting for there to be a significant and compelling reason for me to run one and I now have one. In last weeks budget post I said that there would be a contest coming and this is that announcement, naturally this announcement has something to do with my weekly budget.

Its time to put my money where my mouth is!

The contest is pretty simple, for the next four weeks I’ll be posting my weekly budget on Sundays and if I don’t meet those numbers I will give away a $25 gift certificate to Amazon. Yep even if I miss any of the categories by so much as a penny I will give away the prize. The goal here is to motivate myself to staying on track with the my budgets.

What happens if I make all of my budgets?

Well this is pretty simple if I make all of my budgets (all 4 weeks) at the end I will take everyone who has entered and give away a $50 gift certificate for Amazon.

How to enter.

There will be two ways to enter this contest:

  1. Leave a comment on this post (for this week) and for the next four Sunday budget posts.
  2. Post a link to this contest on your site.

The contest winner will be selected randomly from all of the entries and announced on Monday of the next week; so this weeks announcement will happen on June 10th.

I am using this contest as a way to motivate myself and not to get people to wish me to fail. Whenever it came to budgets I’ve always struggled stepping out of my comfort zone and actually staying on track and spending less, unless there was a compelling reason. This contest is my compelling reason to stay on budget. Good luck to those who enter this week and even more luck to me. I’ll be posting my weekly budget and explanation for any changes (I’ll be trying to reign the numbers in and not set myself up for failure).

Remember leave a comment on this post (or tomorrows budget) to enter the contest). If you link to the contest kindly let me know so I know.

Cash or Debit?

Do you carry around cash for the week or do you use your debit card for all of your purchases? In the past if I had a wallet full of money it would vanish in the blink of an eye and I wouldn’t know what happened to it. I’m no longer that bad with carrying cash but I still find it difficult to use cash for a week’s worth of spending. One of the commenters, Zeromoney, from my last post suggested taking out money for the week and using that for all of your spending. I have tried that in the past with limited success and I thought that I would write this post as a comparison between the two and how I tend to use them.

Cash

As the saying goes cash is king. The nice thing about paying for everything with cash is that there won’t be any fees or hidden costs associated with it. I just can’t see a store clerk saying: “Oh you’re using a $20 bill today, I’m going to have to charge you an extra 50 cents… is that ok?”. The drawback that I find is that it makes tracking all of your spending a little bit more difficult. You have to rely on remembering to ask for a receipt or to take note of each purchase.

Debit
Most stores and restaurants now allow you to pay for your purchases with debit (at least where I live). This is nice since it means you can have a nice empty wallet and access to your bank account. I find I prefer to use debit for my day to day spending because I’ve got a good handle on what money is in my bank account. On top of getting a reciept the bank keeps a record of every time I used the card. Now using debit does carry some drawbacks, first off not everyone accepts debit and if they do there might be an additional charge for the service. Not to mention the bank will charge you fees if you use it a lot. The bank fees are annoying but they typically don’t amount to very much and having the ability to track my spending is nice.

In conclusion I’ve been using a combination of both so far though with my weekly budgeting it might be interesting to try pulling out spending money for the week and seeing if I’m able to stay within that amount. You can never go wrong with having cash in your wallet other than spending it too quickly.

What experiences have you had with Cash vs Debit?

Weekly Budget – Week 1 (May 26 – June 1)

I’ve been floating along with my finances for way too long and this week I simply decided to get a handle on everything. I reassessed my cashflow which wasn’t nearly as bad as it could have been but that doesn’t mean everything is all happy in the land of Matt’s finances. I’m still spending too much money and the only way to get a hold of that is to simply cut spending. To achieve this end I’m have started tracking my spending daily.

Today is the first week that I’ll be posting my budget for the week. I have kept it fairly high level for the time being which works for me and I’ll see how it plays out. I’ve also kept my bills off of this budget, I know what they are and they’re being addressed they also haven’t changed very much in the past year so getting the spending under control is step on.

Weekly Budget
May 26-June 1
  Budget Actual
Alcohol $25.00  
Food-Lunch $20.00  
Food $100  
Gas $20.00  
Entertainment $50.00  
Smokes $25.00  
Misc $50.00  
Transportation $10.00  

A bit of explanation on how this is broken down: Alcohol is for things like beer and wine that I purchase during the week. I know that this is a category that if need be could be completely wiped out but I enjoy my wine with dinner. What I’ve dubbed as Food-Lunch is literally that eating out for lunch. Food is groceries and an area that I would like to concentrate some more. Entertainment is for going out and anything related. Next on the list is smoking – I know I shouldn’t smoke but I still do so for the time being I’m tracking it separately.

Transportation and Gas are anything that’s related to driving and getting around. I have about half a tank of gas in at the moment so the $20 is just in case I need to top up. Finally Misc. this is a very loose category that is meant to encompass anything that doesn’t fall into the above categories and it always fluctuates. I still have to get the car looked at and that will probably drive the misc category up – unfortunately I don’t know how much so for the time being I have left it off (but money is set aside for it).

General Comments

Since this is the first time I’m doing this I’ve tried to be generous with the numbers while being realistic. I think this is a bit less than I’m spending at the moment. The goal is to keep myself accountable and because its my first week I wanted to test it out. I’ll be posting this chart on the side nav and update it daily.

Incentive

This week is a trial run, I want to get into the habit of posting this information up and see how it works. Next week I will adjust the budget and post it up again on Sunday, but starting next week I will also be giving myself incentive to achieve my goals with a contest if I don’t meet the numbers. I know it’s a bit of a strange idea but I need to make sure I like a fire under my butt and keep this going. I’ll make the announcement with the details later in the week (probably Sunday)

If anyone has any thoughts and suggestions I’d be curious to hear them!

Cashflow – My Achilles Heel

Getting a hold of my ongoing cashflow has been a challenge and I’m not really certain why. Maybe I just like to spend my money too much. As part of getting a hold of my finances I sat down last night and went through the mountain of receipts that I’ve collected over the past couple months and input them into my tracking spreadsheet.

The Result

It wasn’t as bad as I thought it would be. I was worried that my spending was creeping back out of control but it wasn’t nearly that bad. Though I did find I was spending more money than I really should be on a few items such as Food and Alcohol. Unfortunately there are a few holes in the past couple months statements but they’re pretty small (courtesy of purchases without receipts). It’s given me enough to paint a picture of my spending the past few months. I definitely need to watch a few things such as eating out (which I have started doing more of again due to laziness) and how much I spend on food and alcohol (I keep the two separate).

Overall I was happily surprised that there wasn’t anything completely out of whack. Though I was a little surprised how much of a difference in gas prices has made to my cashflow. The amount of driving from month to month the past few months hasn’t changed but the amount I pay has – a very clear indication of how a small difference at the pumps can add up!

Next Steps

Just because I don’t think there are any huge glaring problems that need drastic measures when it comes to my cashflow and ultimately budgeting they both definitely need to be fixed. I need to spend less, while at the same time trying to find ways of making more. I’m going to start tracking my spending on a daily basis though I’m still torn about posting the results on a daily versus weekly basis. For those curious I managed to not spend any money yesterday which I thought was fitting for the day I posted about getting my finances under control.

I need to keep a tight reign on my spending for until I’ve managed to get my general finances under control. I’m going to set weekly goals and track everything daily. Tracking it daily and weekly and posting the results up here will make me more accountable to my readers (hopefully).

Getting Caught Up Financially

When I first started writing this blog I was further in debt than I am now and I was spending money all the time. Now a couple years later I’m spending less (and making less) and I’m still in debt though not as much. The reality is that although there has been some improvements, significant ones even, it really isn’t enough. I am still struggling financially.

Now I might be struggling a bit but I also know that I can get caught up financially. I’ve made progress and this post is the beginning of making more progress in the right direction. My frustration with my finances is still there and I’m still not making enough money but I’m also juggling a few things and there’s no point for it all. It’s time to take this blog out of the theoretical and put it into practice.

Figure out where things stand

Before knowing what really needs to be done to adjust spending and get my financial situation caught up I need to make sure I know where I stand.

Step 1

Outstanding Bills:

  • Cable/Phone Company: $685 (With the current Bill)
  • Car Repairs $TBD (This needs to get done or I can’t renew my plates)
  • License Plate Renewal $76 (need to get the car looked at first)
  • Car Insurance $233 (Automatic Withdrawal)

Those are the three items that are in arrears and need to be fixed ASAP. The good thing is that I have the money in my account right now to take care of all of that any get caught up on all of my other expenses.

Step 2

The next item for figuring out where things stand is to pull together my cash flow for the past couple months and see where things stand. This exercise will be one for this evening but I have everything in place to actually accomplish it (I have kept virtually every receipt). After getting the cash flow together it’ll be time to pull all of my current bills out of their hiding place and figure out which have been paid and which haven’t.

I’ll need to know what bills are due when so they aren’t missed anymore. I need to start using a calendar and putting this information on it. Right now I’m not making a lot of money compared to what I used to make but I should be able to get the ship righted. Once I have a list of what my spending has been and what bills are due it’s onto the next step of the process: budgeting.

Step 3

Now that I know what my expenses and income are I can make sure that I don’t overspend on anything. It comes down to budget time! I’m notoriously bad for keeping to a budget but In order to spend less than I make I’m going to have to be diligent about it. This blog is going to help me with this – my goals initially will be weekly and I’ll adjust this as needed. My spending will be tracked daily (I’m still debating if these will be posts or not) and an update will be weekly. The goal with only a weekly goal is to correct and ajust to changing situations and to keep everything as tight as possible. Once I’ve managed to get caught up I’ll see about pushing this goal out a little further.

The whole idea behind this step for me is to make myself accountable for getting caught up and balanced. I have always been hesitant about showing my actual income and expenses on this site and I’m not really sure why. Maybe it’s a slight embarrassment of telling the world what I spend my money on. Regardless, its time to stop hemorrhaging money like it was going out of style and get my financial situation on track.

Hacked!

I discovered today by coincidence that my site had been hacked. Someone put in code to place a bunch of invisible links in my footer file. I have fixed the problem but its very frustrating to see something like that on one of my sites. It also explains the fact that this site has been penalized by Google and given a PR of 0 (which I noticed on Friday).

I wanted to apologize to my readers, especially if any of you have noticed this. This type of malicious behavior is very frustrating and so pointless since it probably didn’t drive any traffic to whoever was doing this.

Convenience VS Price

The eternal question: Save money or time? The price of convenience can be costly but it can also be a very reasonable trade off. If you’re trying to save as much money as possible you will definitely inconvenience yourself a little for the sake of your goal. But on the other hand if you’re trying to maximize your time spending a few extra dollars simply makes sense.

The dilemma is a trade off between getting what you want in a more convenient fashion even if you spend a little more for it rather than trying to save a couple bucks and going out of your way. Most of the time this dilemma is on the smaller scale; for example I shop at a more expensive grocery store because its across the street and it saves me lots of time and effort. Would I save more money by going to the cheaper store? Of course I would but not enough for me to spend the extra 20 or so minutes to reap a $5 savings. If I was going to save $50 then it would be a big difference and if I was saving $500 there would be no question, I would inconvenience myself. The trade off is personal and it depends on what our needs are at any given moment.

When it comes down to convenience versus price the choice is personal an unique. Each and every one of us has a unique situation and needs. For some of us the time is more valuable where for others that extra dollar or two means more. I think most of us would trade a bit of money for the convenience of having things done faster and easier.

If the economy were to get worse and a deep recession set in I believe that more and more people would start opting for saving money versus the convenience factor. I would be interested to see just how this would play out (even at a personal level for myself). We all have our limits and a poor economy would (and has) change that for many people.

How Liquid are your Assets

Liquid assets are assets that can be converted into cold hard cash quickly and without any significant penalty. By this it means that if you were to take your mutual funds and convert them to cash it would take a day or two tops and you might face a small fee but overall it would mean you get most of the money from them. A house on the other hand might be a very significant asset but one that would take a while to sell and reap any potential cash from.

The reason for this post is I’m currently broke waiting for a bunch of money to clear whatever holds that are placed on it. It made me question the term liquid assets because I am dealing with items that are already considered cash yet I can’t access any of this money until everything clears. Its a frustrating situation to be in because I have virtually no money on hand and a significant amount just sitting in some banks accounts waiting for some magic approval to be placed into mine.

I am currently cash shy but I’m also not in a dire need to have the money right away. If I had an emergency on the other hand I would be in some serious trouble. My liquid assets are not nearly as liquid as I would like them to be. What baffles me the most is why it takes a full 5 days for a check to clear letting me access the funds. Whenever I write a check its out of my bank account within a matter of a day or two – not 5! Its a frustrating situation and its making me question why banks and financial institutions can hold money for so long.

Have any of you encountered situations where your money was held when there was no reason for it?

Why a Single Source of Income is a Bad Idea

When it comes to investments everyone says that you need to diversify to protect yourself. If you invest everything into one stock and it crashes all of your investment goes along with it. Having one source of income is very similar. If all of your income comes from one job you’re at much greater financial risk if you happen to lose it or worse it becomes something you loath.

Personally I have worked for companies that have reorganized leaving me without a job and I have worked for companies that simply ran out of money forcing them out of business again leaving me without a job. The reality is when you make all of your money from one source you’re at great risk if you happen to lose it. There is little in the way of security when you only have one source of income.

Companies always try to have as many customers as possible, not only are they trying to ensure they make a profit but they are also ensuring that they stay in business if any one of their customers decides to leave. The reality is you can’t count on one source of income permanently.

The goal is to set up multiple sources of income for yourself to keep yourself protected. This isn’t always an easy thing to set up but even investing money in mutual funds that pay dividends can be turned into having multiple sources of income. Now that I am going to actively try increasing my income rather than just relying on cutting costs multiple income sources will be something that I am going to focus on. In some ways I’m already doing it but at a very small scale.

For most people they’ve only ever known how to make money from one source of income learning to add more to this is crucial to not being tied to your job. There are some simple ways of adding extra sources of income and I’ll start posting some of these ideas and my experiences if I have any with them (yes I’m going to be trying a few of them).

Frustration with my Finances

When I first started writing this blog I was in a pretty rough financial situation but things didn’t look all that bad because I was making a pretty good salary at $75K per year. A few months after that I took a 33% pay cut to take a great opportunity which meant I was down to making $50K per year. I have to say that as a result of this the year was a difficult one but I was able to cut down on my expenses and slowly, very slowly, cut down my debt. Since I was let go from that job in February I started my own business and I took a full time contract where I’m responsible for a greater aspect of my money (such as taxes). The good thing in this setup is that I have more flexibility and the potential to pay less in taxes. The unfortunate item is that I’m making less still (Now I’m at $30K plus a great commission structure).

My frustration with my finances extends greatly to myself in that I’ve been making job moves and adjustments based solely on the position at hand and how it would help me. This current position/contract is one that I really like because it exposed me a great deal more to sales from the ground up. I’ve only been doing it for 3 months so my exposure has been limited but I am really starting to get frustrated with never having money for anything and paying my debt very slowly.

The net result is that although I’m still making ends meet I don’t know if I can continue to do this for an extended period of time. Any form of emergency will send me scrambling to find a way to come up with money which isn’t a way to live. I have a microscopic emergency fund which again is something I would like to grow.

I have learned a great deal about personal finance since I started this site and read a great deal about the topic and it boils down to being able to improve your financial situation by two means. The first way to do it is to cut down on expenses and to live as frugally as possible. I have tried this and had some measure of success. I know it’s possible for me to spend even less but the reality is that I don’t want to eat Kraft Dinner 5 days a week or give up having a bottle of wine here and there. I don’t spend nearly as much on food, going out or drinking as I did even a year ago but there is a point where cutting back means completely altering your lifestyle. I would rather not go in this direction if I don’t have to.

Which leads me to the second means of improving your financial situation and that is making more money. Unfortunately I haven’t been doing a very good job of this. My salaries and income have actually been going down over the past couple years and I’ve tried to supplement it a few ways here and there with minimal success (the $3/month that Adsense ads make on this site simply don’t make enough). My side projects are have been slow in getting done because of life and the need for some downtime. I believe that I am now at a point where I need to shift gears from saving even more money to making more money. I have an opportunity to take a salaried job that would bring me back in line with what I should be making but that’s still just an opportunity.

I’m just frustrated with having no money and juggling to save and make ends meet. It’s time to make more money, the opportunities to do this are there (even if we’re in an economic downturn). Ok my rant is now done – thanks for listening and keep reading I’ll start disclosing a bit more about my spending and earnings and how I’m trying to make more money. I’m done with the frustration and trying to get things done by only cutting back.