The Saving Challenge
July 18th, 2010
A little while back one of the blogs I read regularly, A Gai Shan Life, ran an interesting challenge trying to save money (and stretch yourself). While at the time I was not ready to participate in this challenge the idea really stuck with me. Revanche challenged herself to save 5K and she asked her readers to participate (in partnership with another bloggers attempt to run a 5K race).
Now that I am focusing more on my finances I have seen quite a few places where I can save some extra money. This money is mostly in discretionary spending and its money that I don’t need to spend. Another thing that I’ve found is that I am not saving nearly as much money as I would like to. When I first started this blog I was not saving anything and now I’m setting aside about $400 a month which is a definite improvement but not perfect. This idea of a challenge that Revanche came up with popped into my head again.
Not only am I focusing on my finances my wife has also been brought into the loop, our finances are not entirely merged but they are definitely very intertwined. When we first got married we had separate accounts and we each contributed to the joint items; now we’re at the stage where almost everything is joint with only a handful of items that are separate. Together we discussed our financial future and a few goals that we both wanted to achieve, the most important one is getting rid of our debt which is followed by our desire to buy a cottage (which we currently can’t afford but will when our daughter leaves daycare).
This discussion of our current financial situation and goal of a cottage led us to our savings. We’re not saving enough nor paying our debt down fast enough. So we decided to test ourselves with a small challenge.
The Savings Challenge : Save $500 per month for 3 months
We both realized we could set aside more money and by doing this for three months we are seeing if we could comfortably do it. This challenge really breaks down to each of us saving an extra $250 per month. For myself I’m going to set aside $125 per pay when the pay first kicks in with the thought that if the money is not in my account I can’t spend it. I’ll know pretty much right away if this is going to work. Additionally I’m going to cut down on my discretionary spending and add that to the pile, hopefully with a little effort I’ll be able blow away the $250 per month.
This post is the added motivator to the equation – I’m announcing it here and I’ll be keeping my results posted. We started this challenge at the beginning of the month so by the end of September we are aiming to have $1500 saved.
If everything goes smoothly for these three months this test of ours will give us a small emergency fund (though we were contemplating paying some debt off with it). If you’re interested in playing along with us set up a goal for yourself starting in August and pass along the details – I’ll post up tallies for anyone participating (assuming you stay on top of it).
This is a small challenge, but even though its a small step it is a step in the right direction and large goals are made up of many small steps. Thanks again Revanche for giving me the idea.
Posted in Budgeting and Planning, Financial Situation | 1 Comment
Taking advantage of Low Interest Rates
May 6th, 2010
One of the things that really amazed me during this recession was the level to which interest rates dropped and I was able to take advantage of the decreased cost of borrowing money. My credit cards have reasonable interest rates (9.15% and 16% respectively) but my lines of credit were able to give me interest rates of 7% so I took the balance from my credit card that had the 16% interest rate and moved it to my line of credit. By doing this I’m able to save on the interest that I’ll be paying the bank while I repay the money. If I keep my payments the same as they were before I’ll pay my credit cards off that much sooner. This simple balance transfer is a great example of taking advantage of the great interest rates around.
Rates are going up
My simple example is just one way that I’ve used the current economic situation to save myself a bit of money on the debt that I’ve been carrying for years. While its never a great thing to carry consumer debt at least this way I’m not paying as much in interest for it. But rates are starting to go back up, at least in Canada they are. If you’re going to take advantage of these unbelievably low rates you might need to do it now before the rates go up too much. If you don’t know if you can do this or what your options are just go to your bank and talk to a financial adviser.
Paying down consumer debt
The whole idea behind moving balances from where I had them into different areas was done for a couple reasons: to decrease the interest I pay on them and to improve my cash flow. I have the consumer debt and there’s not much I can do about it the fact that I have it, but I can optimize how quickly it’s paid down and make sure that I’m not living from paycheck to paycheck. Now that the money moves have been done all I have to do is keep paying the same amount as before and I’ll be able to repay my debt that much faster.
Now that I’m going to be making more money I’ll also start paying more onto the debt as to get rid of it. The idea is to use the low interest rates to my advantage and maybe get rid of my bad debt once and for all.
Posted in Debt, Financial Situation | No Comments
Overspending at Christmas – Now What?
December 27th, 2009
It seems that every year over the holidays I end up spending more money that I was originally intending; maybe I am too generous and give people too many gifts or maybe I should plan better for the holidays (possibly both). This year I had a list and worked from the list but I still managed to overspend a little. I bought my wife a couple gifts that were a bit on the larger side because I know she wanted those items (a camera and some jewelery), now its time to deal with my spending. Have you found yourself in this situation where you spent more money than you were intending and now its time to scramble a little?
I overspent now what?
This year I spent probably 300$ more than I was thinking and this went onto one of my credit cards, now this isn’t a huge amount but I am going to have to adjust my budgeting over the next few weeks to make sure that this doesn’t have a long term effect. An easy way to cover this would be to deposit an extra 100$ per pay onto the credit card to cover the $300 which would mean that by the end of January I would be back to square one. If you can’t cover the extra hundred per pay deposit $50 or whatever you can. You can manage to pay a little more on the credit cards in order to cover the extra spending fairly quickly.
Now if you can’t deposit more then you’ll need to be a bit more creative and adjust your spending more significantly, remember no one put a gun to your head and forced you to spend the money, you did that. If you’re in big trouble after the holidays then what I just suggested above will be more drastic. In the new year you might need to cut down on spending and put more onto your credit cards or you might need to work out some kind of a plan with them. Remember don’t beat yourself up over this, I know that this is something that I did in the past, learn from your mistakes and correct the problem (it will likely take time so you’ll need to be patient). If you need to there are organizations that can help – though if Christmas pushed you this far over the edge you were probably there already. Don’t panic it can be solved (most likely)
Savings Account!
What really saved me this year is the fact that in September I started depositing $50 per pay into a savings account, I knew that Christmas was coming up and I would likely need a bit of extra cash. This really saved me and where in previous years I would be really scrambling for all of January trying to figure out how to pay my bills this year I just have to pay back an extra $300. When you’re in debt its hard to contemplate saving money that could be going to pay down your debt and I’m sure there are people that would disagree with me but always always set aside a little money into a savings account. You never know when you might need that money. All I was doing is saving $50 per pay for a few months and while I don’t have any spare money kicking around after the holidays I am not panicking.
Be concious of your spending and don’t neglect savings.
Posted in Commentary, Debt, Financial Situation | No Comments
The Quiet Financial Blog
October 26th, 2009
Over the past couple months things have really quieted down on the site, I think there’s been a grand total of 2 posts in almost three months. No I haven’t given up on the site though I will admit I really didn’t have much to say for a couple months and it got to the point where I wasn’t even thinking about blogging. In the past couple weeks the thought to jump back on the site and write again has been coming back to mind. Now there won’t be any grand proclamations about what will and won’t happen or how great or badly I’ve been doing.
In some respects things have been great, my daughter turned one at the beginning of the month and she’s been doing awesome. She’s been bringing joy into my life every day since her birth. Yes some days are tougher than others, lets be realistic its parenthood not every day will be perfect. The magic is the fact that when I see her face when I pick her up the smile she gives me and the excitement I get is enough to make it all worth while. Being a parent really has taught me a lot from resposibility to seeing the simplicity and joy in life.
On the financial front things have improved and stayed the same at the same time. Yes I’m still carrying debt (close to three months of quiet isn’t going to erase that much debt), but I have managed to start building my savings. The debt is being maintained and slowly lowered while at the same time I’ve managed to save up a small amount of money (about $1,000). While my successes and general status quo in the financial arena have not been stellar there hasn’t been any regression which is a good sign by itself.
For a while I was torn about the site, I didn’t have anything I wanted to say, and I contemplated shutting it down. But I do like writing about personal finance and my finances. If I can somehow convince one kid or one person not to make the mistakes I made then all the writing would have been a success. So I would like to start writing again, it might take a little while to get topics flowing again but I want to write so I will just like I will continue to make the small steps to improve my financial situation – even a small step in the right direction is a good one.
Posted in Commentary, Financial Situation, News/Misc | No Comments
The Financial Baby Steps Continue
September 22nd, 2009
In my last post a little over a month ago I talked about maintaining focus on debt through baby steps and although I haven’t been posting I have managed to maintain this attitude and approach for the most part. I fell off when it came to the posting because of a great many reasons most of which are not really all that relevant on a Personal Finance blog but what I have managed to do is to keep making the small dents in the debt. Today I updated the little tracker that shows how much credit card debt I have and over the couple months that I’ve had that in place I’ve managed to reduce my debt by $585. While this isn’t a huge amount when compared to the full amount it does show continuous progress.
In addition to these small baby steps in repaying my debt I’ve also managed to set aside a little over $500 in a mutual fund account. Again this isn’t quite enough in case something came up and I needed the money it is a baby step in the right direction. For years I’ve managed to save absolutely nothing and now I’ve got a few hundred dollars invested in a mutual fund and this will continue to grow.
Seeing the results of these baby steps over time can be really motiviating (at least it is for me). Less than two months ago I had nothing saved and had more consumer debt than I do now. Just seeing these small successes and seeing them add up makes me realize that yes the debt is fairly large but it can and will be tackled. The best part of these successes is that I didn’t make any huge adjustments to my lifestyle or any sacrifices just a few small changes. Now I’m confident I can make a few more changes to continue the baby steps and speed up the process of saving and debt reduction.
Posted in Debt, Financial Situation | 2 Comments
Maintaining Focus on Debt – remember the baby steps
August 17th, 2009
A few weeks ago I decided to start focusing on my finances and on my debt again. At first I was all full of ideas and wanted to tackle the problem right away. But based on previous experience I was pretty sure that I would hit a wall eventually and rather than jumping in full tilt I decided to start slower by looking at my expenses for a few weeks first. I’ve started to notice my motivation wane a little but because I didn’t try to solve all my financial problems at once I am not burned out by the idea just yet.
For me failure or setbacks aren’t always a bad thing, as long as you learn from them. Because I have encountered issues with keeping my motivation high while trying to achieve a goal I know what to look for when making a second attempt. One of the really big things that I notice that I tend to do is to try doing everything at once. Unfortunately the only thing this accomplishes is to overwhelm me so when tackling a new goal I try to start slow even though I know I can handle more. By noticing the small warning signs that come up you can take steps to push through to eventual success.
Maintaining focus – small steps
Have you ever noticed how many people sign up for gyms only to stop going after a few months? They don’t ease themselves into their routines and when they don’t see results right away they give up. Most of the time they go into denial for a few months until they realize how much they’re paying a month for the gym membership that they never use at which point they quit. Maintaining focus on your debts and your finances isn’t any different. You have to start with small steps and goals.
Just as you see your motivation waning you can stop and realize how many of your small steps you’ve accomplished. This week marks my 2nd month of weekly budgeting and although I was late a few times and I missed a week I have managed to keep my updates going. It’s a small step and I haven’t really done too much but its progress and just seeing this makes me want to take the next small step. Another great small step I took was to start paying myself first and setting aside money – again only a small step at $50 per pay but I’m seeing some small results.
A thousand mile journey starts with the first step.
Whenever I see someone incredibly successful I am amazed by what they have accomplished. What I often forget is all of the small steps that they took to get to where they were. Take Bill Gates, he’s one of the richest men in the world and he was one of the founders of Microsoft. He didn’t wake up one day a billionaire; he fought tooth and nail to make that company a success. A series of small steps. When you’re having trouble staying focused on repaying your debt or growing your investments remember all the successful people around you didn’t have any more than you did (some probably less) they took small steps each one forward until they got to where they were going.
Now whenever I feel that I am starting to loose my motivation and focus I will take small steps but keep taking these steps. Because every step forward is just that a step forward no matter how small it is. Babies learn to walk slowly and one step at a time; sometimes you just need to go back to that mentality.
Posted in Commentary, Financial Situation | 1 Comment
Repaying Credit Card Debt by making Myself Accountable
July 15th, 2009
I accomplished a few things in my twenties though the item with the longest legacy is quite likely my debt; my credit card debt to be specific. A lot of people use their credit cards with abandon not really caring about the consequences of their spending. At least I hope this is the way it used to be. I have never held any missconceptions about my credit card spending I knew that I would need to pay it back. Unfortunately even knowing this fact does not diminish the reality of it.
Paying credit card debt sucks!
Making purchases with credit cards hold lots of risks with it; for example if you don’t pay back the balance of your debt you end up paying a hefty interest on the purchase. Over time this can add up to more than the initial purchase. Secondly you’re not likely to use your credit card to pay back a meaningful purchase just the type you need a bit of cash for. I don’t remember what I spent my money on yet I still have the debt to show for it. Kind of a stupid trade off if you ask me.
Sadly you’re still accountable for the money.
If you’re accountable for the money it means that you agreed to whatever terms the card was offering when you spent the money. Simply put you owe the credit card company the cost of your purchase plus interest; you owe them more than the cost of the purchase. Short of bankruptcy there isn’t much that can be done about this fact you have to pay the money back. I know that I need to repay my credit cards and I need to do it fast because I am sick and tired of living in debt.
Using accountability to repay the debt
I owe a lot of money for the purchases I made and since I decided to refocus on my finances I want to make myself accountable for this not only to my lenders but also to my readers. Why would I do something like this? Well its a great motivational tool. First off I don’t want to seem like a moron for not paying down my debt and staying on top of it. Secondly by seeing the progress out in the open I’ll be able to keep myself going and pay it down faster. Finally I have always seen stories of people tackling their debt as a motivator for myself. If I am able to help even one person get through their debt with my experience I’ll be very glad.
The question that I have been asking myself is how do I keep myself accountable while I pay down my credit card debt. The answer is pretty simple I’m going to be transparent about it. I will post my current credit card debt on the side of the blog and update it once a month. A few bloggers have taken this approach and I like it; its simple and paints a picture pretty quickly.
Posted in Debt, Financial Situation | No Comments
Focusing on One Goal – Finances
July 9th, 2009
For most of my adult life I have struggled with my finances, not that I haven’t been able to pay my bills or keep a steady job but more that I have been spending more money than I have made. I have been living way beyond my means! I have managed to get this under control for a bit at a time but it seems that inevitably I get back to the state of simply floating along and living from paycheck to paycheck rarely making any real progress. If you have lived this way you know its not fun and in the long run it is a very defeating way to live.
Recently I have read a few books about finances, business and success philosophy and the net result that I have gleaned from them is that in order to succeed at something you have to be passionate about it. A single driving vision or goal that keeps you going until there is success. I have always had an interest in finances (personal or commercial), which makes me wonder why I struggle so much with my own money, but I have never been truly passionate about my finances or any single goal for that matter.
I have decided that I am going to make my finances my one goal, my passion until they have been cleaned up and organized.
By focusing on my finances and any aspect of them such as debt or investing I will always keep an end goal in mind. My daily actions will be driven by my finances rather than simply floating along like I have been in the past. I am also setting a near term goal for this singular goal of mine and that is to get rid of my debt. While I am not going to ignore growing the meager assets that I do have I am going to make it a priority to get rid of my debt. Currently I am personally sitting with about $35K in consumer based debt; this will be my focus for the time being because it is a known quantifiable debt.
At the same time I am going to make sure that I am living below my means rather than above them; there is no possible way of getting ahead if I am spending more money than I am making. For the next few weeks I am going watch my spending and adjust it to make sure that my spending is under control; once that has been accomplished focus will shift to the debt.
Having a single goal makes decisions a lot easier: the question quickly becomes does it help the goal? if the answer is not yes then it is no. This type of thinking although very stark in nature does help focus on the end goal. I will start chronicling this in more detail on this site in order to share with others like myself as well as to keep myself accountable.
Posted in Budgeting and Planning, Debt, Financial Situation | No Comments
You’re Spending more than you make – now what?
July 8th, 2009
Have you ever found yourself living from paycheck to paycheck wondering where all fo your money went? Than as if all of a sudden you’re deep in debt. Guess what you’re spending more money than you’re making. This is commonly known as living beyond your means. I know that lunch with your buddies is far better than brown bagging it; as is driving that nice shiny new car but the reality is if you can’t afford it how are you paying for it?
What do I know about this subject? Well surprisingly a fair amount considering I have lived beyond my means in the past and its a trap that I fall back into from time to time. The scary thing is the more debt that you collect the easier it becomes to live beyond your means because you all of a sudden have a lot less money to spend on the frills and toys in life. To illustrate this point a little further I have been actively trying to stay on top of my spending for the last couple years. I haven’t made and extravagant purchases and when given the option to splurge spend I have avoided it. But I too am finding myself spending more than I make (unfortunately again).
Now what?
Well the simply answer to living beyond your means and spending more than you make is: Spend Less than you make. Its a pretty simply solution to the overall problem even though each individual situation is different the net result is the same. If you are spending more than you make then you simply need to spend less money. There are a few things I have done in the past to help me get my spending under control:
- Figure out what you’re spending your money on.
- Cut back on the unnecessary spending
- Review and cut back some more
- Test it out
Step 1 – Figure out what you’re spending your money on.
This one is pretty elementary in my opinion because if you don’t know where your money is going how could you possibly start spending less than you make. For example if you are spending $50 a day eating out for lunch but only make $200 a week then you’ve got a serious problem. The example is extreme but it shows that if you are not concious of your activities you might not realize you’re spending more than you make.
To figure out how much I am spending I like to collect my recipts and tabulate everything. Once I have about a months worth of information I can start seeing my weekly and daily patterns. Whatever works for you is fine but be meticulous about this. Then compare it to how much money you’re making if you’re spending more than you’re making then you’ve got a problem.
Step 2 – Cut back on the unnecessary spending
Now that you have this glorious list of your expenses you need to remove items from it. That daily lunch with Fred for $50 can probably go. If you’ve never done this exercise before start with the items that irritate you, you know the ones where you are left wondering why did you spend that money. A few examples of these are: expensive daily lunches, going out drinking with the boys, CDs, DVDs, and unfortunately I can keep going.
Step 3 – Review and cut back some more
Now that you’ve removed some of the items that you really don’t need to be spending your money on, look at what your expenses would be. Are you still likely to spend more than you’re making? If it looks like you’re going to spend less than you make you can skip this step. If you’re still spending more than you make you need to go back to the list and chop out some more. Be ruthless and really cut back on the things you don’t need. I am spending more than I make and a couple of the items that I spend money on that I could cut out and will probably is smoking and drinking alcohol. I enjoy one and want to quit the other but this is a money pit for me.
Keep at this list until you spend less than you make. If you’re having difficulties ask someone for help; swallow your pride and just get some help. Have a friend review your list, or your wife or a parent. Don’t pick someone who will berate you for your spending just someone to help you reduce it.
Step 4 – Test it out
The final step, putting your new budget to the test. You have to cut back on the spending that you were intending to cut back on – this is probably the hardest part of the whole process. This post isn’t about the psychology of spending your money just some of my experiences about spending less and living within your own means. Remember the beginning where answered the problem of spending more than you make by spending less? This is where you do it. You have to actually stop spending your and your banks money.
Once you’ve tried it out for a week or two you should start getting a sense of what does and doesn’t work. Adjust as necessary – remember not every week will be the same and the reality is that shit happens. If you blow a tire on the highway you’re going to have to replace it; there isn’t anything you can do about that. Don’t get hung up on the things you can’t control.
Now that I’ve given you my long winded version of living within your means its time for me to start applying my own rules again. My short term goal will be to spend no more than I am making right now and hopefully less. You can still live paycheck to paycheck without getting ahead but that’s a different topic at least you won’t be digging yourself further into debt.
Posted in Budgeting and Planning, Commentary, Financial Situation | 1 Comment
Refocusing on Finances
July 3rd, 2009
Life is a journey that we’re all on; we make decisions that send us down various paths. Sometimes we get incredibly busy with one thing or another and neglect most of the other things in our lives. For example if you’re a workaholic then you might not pay nearly as much attention to your family or your friends as you should. If you keep this up for a long time you will loose touch with your friends and family. Each of the paths that we take is different and unique and there is nothing wrong with being very focused on only one part of our lives.
Remembering to stop and refocus your priorities is important in order keep balance in your life. We have all had times when we became incredibly busy with one aspect of our lives. Sometimes its more than one thing pulling at our attention but you can’t loose sight of the things that aren’t getting attention that are truly important (like family). Recently for me I haven’t been posting on this site and to take it a step further I haven’t been focusing on my money as much as I have in the past. It doesn’t mean that because I was focusing my energies elsewhere that my finances went away.
Did I stop paying my bills when my focus was elsewhere? No – they still got paid. Did I splurge on expenses? No – though I’m sure I spent a bit more than I would have normally. If everything is going alright with one aspect of our lives like money and we pay less attention to them there’s a good chance nothing bad will happen. But there’s an equally good chance that nothing good will happen. I believe that its time for me to pause and refocus on my finances for a little bit.
My wife and I had decided to focus on reducing our debt with minimal success though the debts have creeped down a bit with our payments. By refocusing on my finances I’ll be able to put some effort back into this goal.
So rather than simply saying that I’ll be refocusing my efforts on my finances this weekend I plan to:
- Review all of my spending for the past couple months
- Set up a budget for the upcoming week (and post it)
- Get a lay of the land with my debts and assets
- Finally see what next steps need to be taken
Stay tuned!
Posted in Financial Situation, Uncategorized | No Comments
