I spend way too much money

[Dinner]

I don't know to many college students who do donate much to charity. I have seen many college kids who did donate time and labor to noble causes though and that is still valuable.

[DanS]

It may not be important to most college students, but I can guess that it's important to JM. You get into a situation where your debts make you desperate and you figure it's either paying off the debts or giving to charity. Charity will lose in that comparison, even though it might win in an MMORPG v. charity comparison.

[Flubber]

Originally posted by Tingkai




I've done the sh!t jobs just to make mucho cash, scraped by living pay check to pay cheque, and now I'm lucky enough to do something I really like making good coin, purely by chance, and still not saving enough.

Ditto here. Things get better but you never seem to save enough.

Originally posted by Tingkai


In the end, and this is just a drunkard talking, do what you love cause things will work out if you have some brains and ambition, and doing what you love is worth a hell of a lot more than working for big bucks just for the sake of big money.

I agree and not a drunkard here--

Jon,
I wouldn't be fussed about not saving, I think its unrealistic to expect someone living on 20K to save much and I assume your prospects are much brighter in years to come. But your tastes are extravagant for your income and it sounds as if you are dragging yourself into a hole.

So set a budget and only allow youself to spend that. You will quickly find out whetehr you prefer expensive booze once or the cheap stuff more frequently. A very simple technique is to take out your booze and eating out money in cash at the beginning of the week and never allow yourself to exceed that

[KrazyHorse]

Originally posted by DanS


That's $4.95 before taxes!

[DanS]

A good trick for saving is to "pay yourself first." Get an account at Buyandhold.com or sharebuilder.com and schedule a monthly (10% of take-home) or twice monthly (5% of take-home) withdrawal from your normal bank account right after your paycheck is deposited. This money will go into a money market fund and is available for a rainy day.

You would be surprised at how much money builds up over time and how little you miss it. For some reason, my mind doesn't even think that this is money that I can spend. This is a non-budgeting home economics trick. I've never been good with budgets, so I don't use one. If I have money in my normal bank account, I spend it. Maybe I'm just profligate. Point being, figure out how your mind works with regard to spending money. Tricks that are useful for one person may be useless to another.

[Flubber]

Originally posted by DanS
I've never been good with budgets, so I don't use one.

I think you do budget even if you didn't sit down and write it up . . . everyone does it a little. AS soon as you start something like a savings fund, you must have looked at least enough to see that your fixed costs do not exceed your income.

In your savings plan, do you put that in a retirement fund? here in Canada, all my "savings" go into retirement savings plan for a current tax deduction and tax free growth (you are taxed on withdrawal). Once those are maxed out, you can put 2000 annually into an education fund and get 400 added from the government . . . no deduction but you do get tax free growth.


I'm a big believer in a budget. It doesn't mean that you have to be that strict either. I stick several hundreds in the miscellaneous category. I don't know what that money will be spent on but it is budgetted. If I don't spend it, great!!

[Flubber]

Originally posted by DanS
A good trick for saving is to "pay yourself first." Get an account at Buyandhold.com or sharebuilder.com and schedule a monthly (10% of take-home) or twice monthly (5% of take-home) withdrawal from your normal bank account right after your paycheck is deposited. This money will go into a money market fund and is available for a rainy day.
.

In essence thats what I do-- I have an automatic withdrawal from my bank account on the day after payday. It does go in a money market type fund and then every 2-3 months I transfer it into stocks. Its savings for my retirement. For the "rainy day" I will admit I rely on my available credit since I wouldn't plan to cash out my funds. IN a pinch I could access the equity in my home through refinancing.

[Jon Miller]

Originally posted by DanS
These kind of spending habits are probably making it much less likely that JM is giving to charity. Something to keep in mind.

I do give to charity, not as much as I would like though

JM

[DanS]

I think you do budget even if you didn't sit down and write it up . . . everyone does it a little.

Perhaps so, but I enjoy a simple life. A budget is way too much work. My mind has trouble keeping anything more than a couple things at the top.

It is better for me to think of the way bigger picture. Like for instance, I need money on rainy days, so I'll allocate an arbitrary %-age of my take-home to that and set up a separate account. Or I need money in retirement, so I'll allocate an arbitrary %-age of my take-home to that and set up a separate account. Or I need money if I want to start a business someday, etc. Also, having all fixed expenses removed from my bank account automatically helps tremendously.

After it's all said and done, in my mind I'm broke. Twice a month.

[DanS]

Originally posted by Flubber
In essence thats what I do-- I have an automatic withdrawal from my bank account on the day after payday. It does go in a money market type fund and then every 2-3 months I transfer it into stocks. Its savings for my retirement. For the "rainy day" I will admit I rely on my available credit since I wouldn't plan to cash out my funds. IN a pinch I could access the equity in my home through refinancing.

My employer automatically deducts 401(k) (retirement) from my paycheck in amounts that I specify. I then have an IRA (retirement) account with buyandhold that deducts about $300 a month automatically from my bank account on the 1st of the month. Then I have a rainy day account at buyandhold that deducts automatically on the 15th of the month, etc.

[Flubber]

Originally posted by DanS




It is better for me to think of the way bigger picture. Like for instance, I need money on rainy days, so I'll allocate an arbitrary %-age of my take-home to that and set up a separate account. Or I need money in retirement, so I'll allocate an arbitrary %-age of my take-home to that and set up a separate account. Or I need money if I want to start a business someday, etc. Also, having all fixed expenses removed from my bank account automatically helps tremendously.

After it's all said and done, in my mind I'm broke. Twice a month.

That sounds like budgetting to me. I do something similar except I have two adults spending from the pot. But I get paid into an avccount only I access and then immediately transfer a set amount to the joint account. A number of other automatic things happen and like you, I am left with an amount that I feel free to spend.

Also-- I don't for a second think taht your % allocations are arbitrary. You have a sense of how much you can afford each month and have allocated based on that

Other things I do

1. On getting a raise, I immediately increase things like my mortgage payments and my retirement savings to use up the additional money

2. I NEVER budget for tax refunds, bonuses or other positive things, even if they reoccurr annually. That way, this can truly be "found money" which can go for debt reduction or to buy a treat (like the cruise Mrs F and I are taking in December)

Originally posted by DanS


Perhaps so, but I enjoy a simple life. A budget is way too much work. My mind has trouble keeping anything more than a couple things at the top.

Its not that much work and you have obviously already done it. Just the fact that you know that you will run out of funds (even while some is stashed) shows that you have budgetted

It doesn't have to be that hard at all. 90% of expenses are recurring and merely need some seasonal adjustment ( ie the gas bill goes from 30 bucks to 300). Anything else we just spend out of our available miscelleneous money-- we are actually pretty generous with ourselves

[DanS]

That sounds like budgetting to me.

It might be, but it doesn't feel like budgeting. Maybe that's all part of the very effective mind-game I play with myself, so it's all good!

By the way, anything that's a two-step process just doesn't get done with me. It absolutely must not require any action on my part. I'm both profligate and unreliable, but I know that's the case, so it's all good!

[Flubber]

Originally posted by DanS


My employer automatically deducts 401(k) (retirement) from my paycheck in amounts that I specify. I then have an IRA (retirement) account with buyandhold that deducts about $300 a month automatically from my bank account on the 1st of the month. Then I have a rainy day account at buyandhold that deducts automatically on the 15th of the month, etc.

What is the practical difference between your retirement and rainy day funds? Do you hold the rainy day stuff in more liquid investments?

My system is that every second Friday $500 goes in my retirement fund ( I get paid the day before)

I don't keep a rainy day fund separate and probably wouldn't until all my non-mortage debt is gone (probably 9 months from now)

[Flubber]

Originally posted by DanS


It might be, but it doesn't feel like budgeting. Maybe that's all part of the very effective mind-game I play with myself, so it's all good!

Probably true

Think about this-- if you got a 10% raise tomorrow, would you think to automatically adjust some of the amounts? If you would, you are obviously budgetting, its just that you have it set up that its so automatic that you hardly notice.

Thats the way it is with me. After my last raise, I calculated the difference in my take-home, made one phone call to my banker and then checked my next bank statement. I probably won't do anotehr budgetting type activity for months (other than a 10 minute read through of my bank statements)

[Adalbertus]

DanS, your trick works only if you already can stick to the amount of money you've got available per month.

In fact, Jon, you have to cut your expenses to what you have available. If you can't do it intuitively, make a budget. - I personally hate worrying about money so much that I usually have several 100 € left each month (€25000/year after taxes an social insurances). And yes, when I lived in France, I had a bottle of good wine once or twice a week.

My father once told me always to increase standard of life less than income - it's harder to reduce the standard of life one you get used to the better life. So far it worked.