Thursday, February 14, 2008
My current project is going okay and the two guys who work for me are nice enough, but one doesn't have much of a clue, but is very good about being consistent, and the other is smart but a spolit little arrogant Emo kid. I can't be much older than him, but he acts so immature. The funny thing is that he's got no clue what's wrong and too big of blinders to really listen. He has this problem with not bothering to show up to work until 1 and then immediately going to lunch. We have new core hours where people have to be at work from 11 to 3. Lunch goes in the middle there at some point (usually). He said that he doesn't think that it will work with his schedule because he likes to stay up until 4 or 5 in the morning! I was just so galled. Who says that?
Yesterday he managed to make it in at 11:20. It's not perfect, but it's a huge improvement so I was pretty happy. He only works 4 days a week. I like helping people grow so hopefully I can work with him and help him develop into a great programmer. He's a nice enough kid and his heart is in the right place.
Some people ask me how to get into management, because this is a great way to increase your pay rate and more money is a great way to get on track financially. I think that it's both a little bit of luck and a little bit of skill. But what is luck but opportunity meeting preparedness? (I'm not sure who said that initially)
Just like most things, the only way to get a job doing it is to have experience. But, you don't have to have experience because of your job title, but only because of what you have actually accomplished. Take initiative at your current job to pick up extra work a little outside of your job description, but go out of your way to make your boss look good (you don't want to worry your boss that you will take their job). Approch your job and your boss like they are your client. I call this a "service-oriented attitude". Honestly, everyone down the line is there to make the person-above-them's life easier and to make them look good. That's the whole reason you have a job--to help your boss meet his goals so he can help his boss meet her's. Go out of your way to do that and get them what they need no matter how you feel about them personally.
Promotion from within as a direct result of hard work is nice, but getting management-like experience by stepping up to the plate and taking work off your boss's shoulders and then using that to get a better job is always a great idea, too. Google for professional organizations in your career field or one like it (or that you would like to go into). Make business cards for yourself if you don't have any at work so that you can hand them out to new people that you meet. You can buy printable business cards pretty much anywhere that you can buy computer paper. Get the clean line type, not the perforated ones. It's a little bit of an investment, but not too bad and will pay off greatly in the end.
Thursday, February 7, 2008
I personally never ran up any debt, but my hubby came with a lot. 39k to be exactly. At the time we were both only making 35k. As you could imagine he was a bit overloaded. This was between 11k in credit cards, 15k in car loan and 19k in student loans. It took us two and a half years to get from that point to this point. My main concern was not wanting to get married with all this debt hanging over us.
First, I took a contracting job doing software development with TD AmeriTrade. It was in Omaha, but paid very well and made for excellent resume fodder (aka--direct result of my current job by being able to work on the projects I did there). I worked extra hard for the 7 months I had this contract and I paid down our debt, saved for our wedding, and started to put a little more away so that we could have enough for closing costs on a condo.
I hated being away from Pete for that long, but I knew that we needed the extra money to get to a better place. In the meantime, Pete and I decided that we wouldn't be able to get good paying jobs where we were so we decided to move to Chicago to find better jobs. I also supported both of us while he was job hunting. He then supported me after the contract while I was job hunting for something in Chicago. We also traded in the cars to get one cheaper car with better gas mileage (a Honda Fit, which I highly recommend to everyone because it's awesome).
Taking a less desirable job and missing my hubby (fiancee at the time) as well as deciding to move away from all our family and friends was very hard. But, it's why we are no longer overwhelmed by our debt. We actually now have a positive net asset situation. We owe a lot on our mortgage and still have a lot on the car, but for both, we owe much less than they are worth. Unlike the accord which Pete was $1000 upside down on. Pete still has a lot of student loans left, but it's much less than it was and is balanced out by the savings we have started to build.
There were lots of fights over the money situation since I had to work so hard to get him out of debt, debt that I didn't get to have the fun of bringing up. We do still argue about it from time to time, but I'm getting better at not brining it up. I did feel fairly resentful about the whole thing at the time, but we got through it.
I just wanted to mention this because many of the blogs I read and comment on are dealing with where I was two years ago. I know many of them couldn't take the lifestyle down grade, the time apart or the move to a better job opportunity city, but that was our journey from the bottom. I actually think sticking to a budget and being frugal was much easier when we were paying down all that debt. Verses now where we have extra money and just have to save it up. That's really the point I am at and why I am blogging...to help me with this next phase of our financial lives and to help me stay on track.
Tuesday, February 5, 2008
I really don't like how I get paid every other Friday. Everything else is months based and it's so much easier to budget when your paycheck is too. I think that we are going to keep everything in this month's budget about the same as the normal budget just sans savings. Next month is a three paycheck month and we will put 100% of the first paycheck to our emergency fund since we aren't putting anything into saving in Feb.
We are however, still going to pay over by a grand on the house (which is slightly lower than target) and by $300 on the car, so I'm not being a total slacker. I don't want to cut the decor fund because I have rooms with nothing in them and feel that it's silly to spend all this money to live in a nice place that is empty. Another major expense is that the car insurance for the year is due this month. We pay once a year to make it cheaper.
Today I went out to lunch, but had no Starbucks...so I got it half right. I've been working through lunch almost everyday at work and am new so I don't want them to think that I am anti-social. I'll probably go a couple times a week at least at first to be a part of everyone.
Monday, February 4, 2008
1) Make a general budget.
1a) Take out the list of all expenses
1b) Next to each recurring/fixed expense write down the monthly price. This is the money that you have promised to pay or owe each month (cell phone, mortgage/rent, cable--anything you get a bill for)
1c) Calculate how much you have left.
1d) This is the tough part...figure out what's the least you can reasonably spend on your variable line items. (food, gas, etc) Write that down.
1e) Write down the rest between your paying down debt or savings goals.
2) Review the budget
2a) Look at your savings and debt payments...are they high enough to reach your goals--and be honest, both in how much you can put towards it and how close it is. This needs to be accurate because we are going to remove that amount from our accounts and put it towards their goals BEFORE we pay for anything else. This is paying ourselves first.
2b) If it's not close enough, which it never is, right :), you need to look at ways to save on your variable expenses (for example, eat out less) and to lower your fixed expenses (get rid of cable). This is the step that Stage Orange revolves around.
Each month on First Friday Financial we will go over our general budget and make adjustments for the upcoming month--typically minor. This may include action plans to lower our fixed expenses or ways to save on our variable ones. We will also look at the previous month's budget and see how we got. I will also update my networthIQ graph at the time.
We gave ourselves some variable spending cash as a compromise between P and me. I'm not sure how it will work out or what we get to do if we go over/under . The decor fund should only last a few months--probably until Thanksgiving when it will turn into our Christmas budget. The "Other" line item is there to make the balance come to equal and in case we mess up by a little bit.
P gets paid twice a month. I get paid every other week. We know how much P makes after his 401(k) and our health insurance comes out. I had to guess how much I will have after taxes, but I think it's pretty close. I assumed two paychecks a month for each of us and put the post tax at the bottom. In March and October I will have an extra paycheck and we will put that towards retirement in an IRA. That's not shown in this budget. Also, in two months I'll start having 401(k) coming out. I'll take away the retirement line item at that time.
Hopefully we can stick to it!
|Mortgage Over ||1240|
|Yacht Club (Dues, Events, and Food)||200|
|Day Food L||100|
|Day Food P||100|
Sunday, February 3, 2008
When you create your goals, don't worry about how you are going to do it, just make goals and then we will figure the rest out, including time lines, later.
* Create a larger emergency fund of 10k & put it in an online savings account to get higher interest and also to make it harder to be tempted to access outside of an emergency
* Purchase life insurance
* Pay down debts using Dave Ramsey's Debt Snowball
* Pay off car
* Pay down the condo to get out from under PMI t
* Pay off the CC (only have new table purchase which is same as cash until Jan 2009--which means that if we don't pay it off by Jan 2009 that we have to back pay interest. We will pay it off well before that to avoid problems, but want to keep the $1200 in our savings account to earn interest until probably December...we will put it with our emergency fund so that we don't touch it)
* After emergency fund is created, we would like to start investing, but that's a long way off so we don't know about the specifics.
* Start a travel fund so that we can visit Europe in 3 years
* Save money for retirement--> P is already doing his 401(k) at 3% salary, which is his company's max match...I won't have mine start until mid March after my probitionary period is up. I would like for us both to have 4 or 5%, but we have to look closer at our budget for that.
* Consider buying more organic food, if it is in the budget. See what other food expenses to cut to make this possible. Also, eat less frozen/prepared food in order to cut down on the salt content. I would like to make a food budget, but P is not on board with this idea. More to come about that later.
Saturday, February 2, 2008
The reason why we picked the First Friday of the month to go over all this is because all the bills have been paid and all the pay checks have come in. As good of an idea as I think it is (and I'm just biased because I came up with it and it has cool alliteration), we typically don't make time to do it. However, we have resolved to do it every month in 2008 and last night was the First Friday for February.
Before I say the number, I wanted to point out that most of the charges were from the first part of the month, before I had resolved to get my money under control. This was really my main "Stage Pink" day of looking at how I was spending. I guess it gives me a good point to go from.
I was shocked to discover that we had spent $4000 this month--not counting the new dining room table or the mortgage! I just don't understand where it all went. I mean, we looked at everything so I see it, but I still don't understand how easily two people can blow through 4 grand! Admittedly, about a quarter of that went to decorate our Great Room, which I think looks really nice. I also bought some stuff for my office (new desk) and a few random things for P's office. Also, it's a big month for birthdays in my family. So i know where it went and most of it was "one offs" so it's not like I would normally spend all that. But still...we didn't eat out hardly at all for the 2nd half of the month and I drastically cut back on the Starbucks habit so the figure is hard to look at and makes me wish that I had started this whole getting money under control thing at the start of the month rather than the middle of it :-P.
Don't get me wrong, it's within our means. Or would have been if I hadn't lost my job. I had a week gap between jobs where I wasn't working. We are post paid by two weeks so I'll get a half paycheck mid-month. The end of next month I will start getting my new normal size paycheck. With the increase in pay, the three week's worth will actually equal out to only a little under what I used to get at my old job.
It's just sad because we ended up having to use $600 from savings to cover our differences, but that's exactly what we have a buffer for. I guess it just goes to show you why we need an emergency reserve. If the job thing hadn't have happened, we would have been putting money into savings instead of taking it out which does make me feel a little better.
Maybe I should just look on the bright side. At least my paycheck didn't bounce, which I was a little worried about! :-P
I'll talk about the goals that P and I set up when we talk about general goals tomorrow.
Friday, February 1, 2008
So my motivations are:
Family (humans and my dog)
Some of my motivations may encourage me to spend money that contradict my other motivations (I want to travel, but I also want to help provide for my family) so I just have to balance it, which we will learn about later.
First we need to think about why our motivations are important so we can best fulfill those needs. I want you to take out your list of motivations and write down why your motivations are important to you and what you want for the motivation. Here's mine:
For Family--I want to have kids one day, but I want to bring them into a world where I can provide for them. Also, if anything happens to me, I want my hubby to be okay. I also want to be present in the lives my my nieces and nephew and the rest of my extended family.
For Career--I want to make sure that I continue to learn and develop myself professionally and make a good impression at work. I want to have an influence on other people and make a difference in the world through my daily work.
For Adventure/Travel--I want to make sure that I explore my world. I want to make sure I experience what life has to offer. I guess you could say, I want to live life like it is an adventure and explore my options.
For Health--I want to live a full and healthy life. I want to be able to stay active for a long time and put things into my body that will keep it running well.
For Comfort--This is similar to adventure/travel in the motivation that I want to experience what there is to experience. However, I don't just want this for now, but I want to make sure I can afford to be comfortable for the rest of my life. I want to have a nice retirement one day and not have to stress or worry about how I will make it.
Thursday, January 31, 2008
You know who you are inside, but until it's on paper, it's sometimes easy to forget in the moment. Not that you don't know it anymore, but a lapse of judgment is so much easier when you have committed thoughts to paper. Heck, it's easy even when you have committed it to paper! But when you write it down, it's just harder to hide from.
That's why I want you to make a list of your own. I want you to make a list of a handful of things that are important to you and central in the way you want to live your life. These are our Motivations. These are what we want to use the tool that is money to fulfill. You can almost look at these as the opposite of the old reasons that we spent money.
No one can tell you how you ought to live. No one can tell you what your motivations should be or what things you should skimp on verses splurge on. All lifestyles cost something, which is fine. As I've said--money is a tool to get what we want. Before we can get what we want, we need to know the underlying motivations that determine what we want.
You just have to leverage your money to spend it on things, ideals, and values that are important to you. That includes saving it for future spending (such as a house, kid's college, or retirement)
Here's my list of what's important to me and what motivates me:
What's on your list? Try to keep it to 4 to 7 motivators. Just remember, these aren't goals, these are just correct reasons to spend money. On the next blog we will learn how to align our money goals to these values/ideals.
Wednesday, January 30, 2008
If you are in bad debt, ask yourself why you kept purchasing stuff you couldn't afford? If you aren't in bad debt, but always seem to be living paycheck to paycheck, you need to figure out why you don't want to save. What does "Retail Therapy" give you that you couldn't get somewhere else? I know for me after a bad day a pretty skirt or some shinny new shoes make me forget all of my troubles. Sometimes I think it has to do with the ability to make a choice and have it DO something (it's a time when us Chicks can say "I want that" and no one thinks we are being bossy).
The entirety of our personal experiences with money has taught us "money myths". Everyone has their own set. These could be memories, personal vows, or experiences. Maybe you feel like you have to treat yourself to make yourself feel better. Maybe you are trying to fill a void. Maybe you feel like you NEED some item to get through through a difficult day. Maybe you just don't know the difference between a need (dinner) and a want (take-out). Just think about it and think about what exactly we are working with when it comes to why you think you need what you think you need.
Everyone has heard of the phrase "Money is the root of all evil." In popular culture we see all the troubles of the prosta-tots, and Hollywood people. Rich Scrooges without friends or loved ones dominate many children's books. In contrast, the Waltons seem so happy. Unfortunately, many people failed to take home the correct point (you don't need money to be happy) and absorbed the reverse (money makes you unhappy).
Try to think back to your earliest experiences with money. In our culture, money is a taboo topic. Money becomes a dirty thing. Our family didn't talk about it because we were taught that money is an emotional topic and something that you don't talk about. I was pretty lucky that they made us start a savings account and encouraged us to save our allowance for bigger ticket items. But I never heard them talk about their money or budget and was taught to not ask.
What about your experiences? Did your parents ever talk about money? Did they ever fight about it? What did they spend their money on? What did you want to spend your money on? Have your feelings about money changed over the years or do you still feel pretty well the same?
What does money mean to you? Make an effort to notice how you interact with money and what emotions and attitudes you have tied to money.
Tuesday, January 29, 2008
Think about it. You didn't wake up one day and suddenly make loads of financial decisions and then realize the next day that you messed up. It's a gradual process. Knowing where we are at with our money is more than just knowing how much you make, but it's also about knowing how you interact with it and why you do.
To me, many savings and get out of debt programs are like perfume. They give you all these ideas and tools, but mask the underlying problem. Everything smells just fine on the surface but all the same problems are still there. Figuring out the why behind what you spend will greatly increase your chances of long-term success because you'll be able to stop...or at least have an easier time.
Actually, a better comparison might be weight. Eating too much is like spending too much. Being inactive is like never saving. And just like money, it's usually not really about the food, it's about how it makes us feel. I know that every now and then I need a good strong dose of "Retail Therapy"! But just like a food binge, all the happiness goes away when I see how little I managed to save over the month.
Money is an emotional topic. Not because we get all choked up about the pretty shinny quarters and the neat little water mark on the $20. It's an emotional topic because of what it represents and what it can get us and fear over where the lack of it could land us.
Fessing up to the issues that give us the urge to splurge can be scary, but dealing with them is the only way to figure out why you are in the situation and the only way to figure out how to get out of it. If you are always trying to pay off a purchase you made a long time ago and probably hardly remember anymore, or if you are always spending everything you make, how are you going to reach your goals for the future? And if you want to reach those goals, what's getting in your way?
Knowing the reasons why we overspend or under-save will help us define our goals in Stage Blue by letting us know why we treat money in a certain way. Once we figure that out, we will have a much easier time deciding what our true values are and how to reach goals and make choices aligned with those values.
Money (or a lack of it) doesn't determine who you are! Money is just a tool to get stuff. And at the end of the day, stuff is just stuff. Through out this blog, I am going to keep going back to that point--Money is a Tool To Get What You Want. And we are going to work on using to get what we really want.
When we start dealing with Phase Blue, we will talk more about figuring out what it is that you want. Once you know what you want, you wont feel like you need the high you get from purchasing things, and you'll find it easier to stop buying items you don't really need, but for now, over the next couple of days, each time you buy something, ask yourself why you bought it. Do you really need it? If not, what does it represent? Do you need that latte or do you like the tactile feel of the cup in your hand and the joy of ordering that "Triple Venti Vanilla NonFat Sugar-Free Latte" (my personal favorite).
There's nothing wrong with the occasional splurge, of course, and that's not what I'm saying. Treating ourselves can be very nice every now and then. We just have to limit it. Impulsive is different from Compulsive. If you buy something impulsively you get it because you want it--and this is much easier to stop. If you buy it compulsively you get it because you can't help yourself. Which type are you? Think about what makes you buy impulsively and compulsively.
Monday, January 28, 2008
It's not good.
Seems that us Chicks have a bad rap when it comes to money! People think we blow it all on clothes and makeup. They think we are flighty and don't know how to make informed money choices. Some even think that we just don't care.
Personally, I think that's total crap.
Many of my friends are concerned about money. Maybe we don't state is as directly as some guys. Maybe we are shyer about discussing it, but we definitely care about it! And maybe we like buying clothes and makeup, but I know lots of guys with crazy quantities of techo-gear that they don't need. Techno-gear is way more expensive than makeup. Point being: I don't care what your gender is, you blow money on stuff that you don't need and you have the potential to make both good and poor money decisions.
Fortunately, there is a trend towards incorporating more women into financial management and personal financial planning. The uninformed stereotypes seem to be declining, but all the advice out there for women seems to be mostly trite and trivial. Oprah tells us to stash away $10 each day for a rainy day. Cosmo and other magazines have the occasional article with basic info. If you look at the information geared towards men, it's much more robust and detailed. Their men's magazines talk about mutual funds and investments. One major exception to that is, Ms. Money, a website that I highly recommend to all you Chicks out there. But, seriously, that's about the only high quality women-centric money website.
I understand where the misinformed stereotypes come from. Back in the day women would get married and focus on the home and family while the guy would focus on the job and money. Well, Chicks, it's the 21st century and we are starting careers. Many large cities actually are starting to see young women earing more than young men as a result of our increase in education and drive. Chicks today need to understand as much about their cash as their male colleges and classmates.
According to Mary Farrell, managing director of Paine Webber and author of Mary Farrell's Beyond the Basics,80% of women will be responsible for their own finances at some point in their lives. So obviously, we need to know how to do it!
Come on, Chicks! Let's get to it!
Saturday, January 26, 2008
For payments that you know for the month like your rent or cell phone, multiply by 12. For expensive things that you buy every couple years (new laptop or cell phone or big vacations, for example) divide by the number of years the item is replaced. Some of it is going to be hard because you might not know how much you actually spend. Don't worry. Just come up with an educated guess. Some things like makeup and clothes are going to be hard to fess up to. Others might require a bit of digging (electricity, for example).
Once you have these values calculated, add them all up. This is how much you spend in a given year. How do those numbers make you feel?
Now go find your most recent pay stub and multiply by how many pay stubs you get (typically either 12, 24 or 25). Is your yearly take-home higher or lower than your expenses? Are you surprised? Shocked? Happy?
If your expenses are higher than your paycheck you are living above your means. If it's only a little below, you are living right at your means. If your expenses are 10% below your take home pay, give yourself a pat on the back. There should be about 10% difference and you should save this 10%.
If you are super cool and at or above 10%, congrats! That's fantastic! You'll still want to do Stage Blue (to set your goals) and advanced parts of Stage Green (building your portfolio).
If you aren't at the 10%, don't worry. Mostly everybody is very far from that. This is what we are going to work on.
This is where my biggest trouble is and the part that I am most looking forward to tackling in Stage Orange. We don't overspend, but we definitely under-save.
Friday, January 25, 2008
I know it's scary, but we need to figure out what we have to work with. Let's just rip the band-aid off and figure out where we are at. First we are just going to look at what we spend our money on. We'll worry about how much money we spend later on.
Take out a sheet of paper and list every expense that you have in a given year. Don't worry about putting numbers next to it yet. Just write down everything that you spend money on. Here's what I had:
Gas (for car)
Household Items and Decor
Maybe you have more or less than me. Don't try to do this all at once. Start the list and then hang it up on your fridge. Each time you think of something new, put it up there. Maybe you spend enough on something that it needs it's own category, like my Starbucks category. Trust me, I drink alot of Starbucks.
Thursday, January 24, 2008
Stage Pink: Where am I? (or figureing out my situation)
Stage Blue: Where do I want to go? (or what are my goals)
Stage Orange: What can I change? (or evaluating my budget)
Stage Green: What can I do to reach my goals? (or setting up for the future)
At first I numbered these stages, but I don't think these stages are the sorts of things that go step by step. I think that stages must be revisited on a regular basis.
Maybe once or twice a year you need to hit up Stage Pink to reevaluate where you are at financially and personally. Also, as life changes, so do goals--so Stage Blue will need to be hit up from time to time as well. A budget needs to have to pull and give so Stage Orange will probably be on my mind frequently. Also, as goals change what needs to occur to reach them will change. Stage Green also might be considered more and more as a portfolio grows.
ChickCents will work these Stages and will give a plan to obtain your personal financial needs. I am going to approch these stages as levels on a spiral going towards financial freedom. Depending on your situation, you might work through the steps in each Stage faster or slower than me. Take your time and have fun!
Wednesday, January 23, 2008
Who's the Chick Behind ChickCents?
My name is Lauren. I'm 25, married and living in Chicago's Andersonville neighborhood.
I am the Director of IT for a smallish company that deals with asset management of Cisco products for Fortune 1000 companies. Actually, my first day for that job is Monday. Between the new job and the new year, I want to get my finances on track.
My husband and I split financial duties. He does the monthly bill payment and I do the long term planning. That being said, we do try to share. We both have a financial software background, but unfortunately the business domain didn't fully hit home :-P. That being said, we both do have a decent understanding of what we ought to do. Now I just want to start following it. (Neither of us work in the financial sector anymore.)
This blog will explore common personal finance issues for young women from my perspective. I'm going to create a plan to get my finances under control. I have researched and spoken with many people to gather advice that I will post here. I hope that seeing me go through the steps will encourage others to do so too.
What's Lauren's status?
For our age, I think that we are a little behind what's recommended, but doing okay. We just bought a condo, but paid 0% down. In the past six months we have managed to pay over and almost have 3% paid off. In December we paid off all our credit cards, but have about $4k left on the car. My hubby has 17k in student loans. I was lucky enough to have a scholarship and live close enough to school so I had zero debt when we met.
I had a week between jobs because the e-commerce company I was working for got hit hard with the low Christmas sales. Luckily I saw the signs and was already looking when my team was let go and managed to get a better job for more money. Things could have gone much worse for me! That made us realize that our goals of aggressively paying down the house and other debts left us in a vulnerable spot with very little in savings (about 5k). We bought a dining room table and have decided to keep the 5k cash cushion so now have a new 1.3k in credit card debt.
We paid for much of our wedding and all of our honeymoon, along with all the closing costs on buying the new place and a move to Chicago (and that whole job loss thing)--all within this past year so I'm not too worried about where we are at, but we need to get a better handle on our finances. With this blog I will go over my general rules that I have been trying to follow, learn some new ones, and start preparing myself for my future.