My stimulus check arrived last night! (And, by the way, seemed to have been mail-forwarded, so...who knows.) I'm way psyched. After much financial turmoil the last couple of months, this check will let me finish my little spurt of moving-in spending and stash some extra cash. I'm splitting it right down the middle: half for saving, half for spending.
Saving: The $300 infusion will bring my Freedom Fund to $8,600--huzzah! I projected out my savings for the rest of this calendar year, and found that if all goes as expected, I'll end up with $10,875, so I'm going to work on trying to find the extra $125 somewhere to make it a round $11,000. Shouldn't be too hard.
Spending: An extra cabinet for the bathroom, tins for spices (I have this awesome DIY spice rack idea revolving around 4-oz. tins, magnets, and the side of my refrigerator), cork pours, a mirror, supplies for my DIY charger station plan, perhaps some sort of non-shoebox filing system idea. And good gin for my housewarming party. Maybe, maybe, if there is money left over, the $30-including-shipping jar of Blenheim apricot jam that I covet from welovejam.com (I'm an apricot-preserve fiend. Like a zombie, but "aaaaapricots!" instead of "braaaaaains!").
Friday, July 11, 2008
Government Cheese: Yummy!
Sunday, March 09, 2008
When It's Worth It
I spent $40 eating out today—nothing particularly interesting, really, not great food, nothing better than I could have had at home (though the Earl Grey at the tea place was very good indeed), but I still thought it was worth it. I had a long, leisurely tea with a few friends, and sat looking out the window at the tides of the rain rising and falling—now a deluge, now a mild drizzle—for a couple of hours. Then I walked from 5th Street to 85th Street with one of the friends, having a chat, getting drenched by a sudden resurgence of rain, just hanging out. And then at the other end of the lengthy walk, called up a friend whose corner I ended up on and we went and had omelets and beer, and sat around for a few more hours, just talking about stuff, just being together.
And was I planning on spending $40 eating out today? No. Not at all. But...whatever, you know? The money's there. I'll adjust for the rest of the week.
I think for awhile there my frugality pendulum had swung a little too far into cheapskatery. I'm working on finding a happy medium. I think I'm getting closer. The thing, I'm learning, is to tone down the rigidity. I know I can get through a week on $40 in grocery money. There's no reason that I need to consistently be striving to spend next to nothing over the course of a weekend—I've got some money to spend. Not a hundred bucks, but I've got some money to spend. And it's fine if I spend it. It's fine if I go out for an unscheduled after-work drink. It's not going to break the bank. I can chill.
Thursday, March 06, 2008
My Savings Projects are Multiplying!
My mom just sent me and K an email saying that she used her frequent flier miles to book us plane tickets to Italy to celebrate her 60th birthday with her! I'm way psyched, and also, of course, really grateful for the plane ticket (and for K too! my mom is awesome).
This intensifies the urgency of my desire to throw her a dinner party for her birthday after she gets back from Italy (she & my dad are spending the whole summer). My own table will be entirely inadequate, so I'll be co-opting my parents' kitchen & dining room, but other than take off for the day to a museum or something, they won't have to do anything. I'd like to invite as many people as their big dining room table will seat (12-14) and do a full menu of hors d'oeuvres, appetizer, entree, and dessert, all full of gorgeous late-summer produce. Maybe a cheese and fruit plate, too. Mmm. My dad will probably want to do the wine (he's bossy about stuff like that), but I don't want him to pay for the rest. I should be able to feed 12-14 people really well on $250-300.
Of course, it would be a little silly to start saving that $300 right now, seeing as it's March and her birthday's in August, but it's #2 on my Things To Save For list, preceded by the one I'm working on now: about $400 in startup cash for my secret internet project (no, I won't tell you what it is yet).
Thursday, February 21, 2008
"I Can't; I Can't Afford It"
So, just last night, I was having some post-work coffee-and-bitching with a dear friend (and colleague! how lucky am I?), when K called to ask if I wanted to go to this event we'd discussed the night before. He'd been invited via Facebook by a friend. Organ music and silent films (concurrently) at St. Bart's. I like organ music and silent films okay, but I like churches a lot, and just the night before that, we'd been talking about how I'd like to relinquish some of my social-planning responsibilities (and he said something along the lines of "Well, sometimes I want to invite you to do something but I know you won't want to spend the money," which, eek!) so the whole thing seemed ideal.
We walked over there, and found ourselves facing a friendly woman who told us, "It's $10 a ticket." Whoa. Not in the plan. I figured Facebook+no mention of cost=free. I figured wrong! And I'd brought along my friend based on the figuring, too. K saw my face drop, and offered to treat me, which I accepted. I offered to split the cost of my friend's ticket with her, but she turned me down--I felt guilty (though granted, I had just bought her tea).
Now, Krystal was mulling over just these kinds of situations the other day. I agree that sometimes I feel like I'm hinting, "Pay for me, pay for me," which really, I'm not. If I'm not prepared to pay for something, I'm prepared to give up doing it--though obviously, as in this case, I'm willing to accept a gift if it's offered. And the fact that K views my budgetary tightness as a damper on our shared social life is disturbing to me, too--although in this particular case, it wasn't a question of having the money but wanting to go out on Saturday, but was a question of seriously, every penny I have is earmarked for his birthday this weekend.
I'm young and living in New York, and I want to enjoy that. But I also want to be able to have a savings that can be a real cushion for me, something that ultimately makes my life easier. I'm looking forward to loosening up a bit at the end of this year, when presumably I'll have my $10,000 Freedom Fund all saved up, but perhaps I should make some compromises before then, too. Or perhaps I just need to involve K more in my planning, so that I can take into consideration the stuff he'd like us to do. The problem there is that while I like to know what's going on two days in advance or more, he likes to fly by the seat of his pants. Maybe we can make some compromises.
In general, I don't feel like my finances put a big damper on my social life, mostly because most of my friends are in similar financial positions to mine. I didn't feel bad this weekend saying, "I can't; I can't afford it" when some friends (one visiting from out of town) said they were planning on going to a play that night. We'd been hanging out all day, and you don't talk during a play, anyway, so I didn't have a problem bowing out--and actually, they ended up not going, and not because of me, so we got to keep on hanging out. And these past couple of weeks are sort of a special case, because I've been so tight so as to be able to blow a big amount of money for the next few days: fancy dinners, theater tickets, birthday cakes from beloved local bakeries, etc.
Nevertheless, I think this issue needs a bit more thought and attention. I'm going to have my eye on this.
Thursday, February 07, 2008
Boo, Dropping Interest Rates!
I had just gotten my savings in my various ING accounts to be big enough that each month I got a $25 interest payment. Because, as previously mentioned, I have something of a craze for round numbers (in this case, that means numbers ending in 00, 25, 50, or 75), I transfer the interest from each subaccount into my "Freedom Fund" account. Then I round it off--usually, that's been by adding the last couple of dollars to make it to a multiple-of-25 number. But of late, I'd been rounding it off by transferring a few cents of interest out, and into my grad school account (the one account that escapes my round-number mania). That was great. No waiting, and no money needed.
But with the recent interest rate drops, I'm definitely going to be back to having top it off from my checking account. And it looks like I'll be staying there for another $600 or so.
Sigh.
Thursday, January 10, 2008
Get Your ING Sign-Up Bonus Here!
My readership has had a substantial jump, lately--part of it is that WSJ article I was mentioned in, but I think part of it, too, is the increased attention to money management around the New Year--apparently, the most common resolution is to save more money. So though it's often taken for granted in the pf blogosphere, I thought I'd mention the financial staple that is online high-yield savings accounts.
Like many personal finance bloggers (and many non-bloggers!) I keep my savings in ING Direct's high-yield online savings account. It's not the highest rate out there--I think that crown sits atop Emigrant Direct or E*Trade's head at present. Nevertheless, I stick with ING because I like their super-easy interface, great reliability, and, perhaps most of all, the ability to set aside money in sub-accounts for different purposes. And the 4.1% is higher than you'll find at nearly any brick-and-mortar bank. I think I was earning .05% before I found ING. (Yuck.)
I've referred a bunch of friends and family to ING, but, as Single Ma pointed out, ING has wiped their referral logs, so I can refer some of my readers. If you use this link to open an Orange Savings account with $250 or more, you get a $25 bonus--that more than equalizes the interest rate issue for most modest savings accounts (based on some quick calculations, it's worth going elsewhere for a 5% interest rate if your account is starting at $2,777 or higher--you may want to do your own math, given that I, uh, majored in English). I get $10, too, which I'd count as non-salary income and put towards grad school. Everybody wins.
Referral #11Referral #12Referral #13Referral #14
Referral #15
Like Trent does, I also use Electric Orange Checking. It's not my primary checking--it's a dedicated account for my grad school application expenses--but I do find it useful and simple. If I ever needed to get cash from that account, there's a very comprehensive network of free ATMs, too (though so far I haven't tried using one).
Anyway, if you're interested in that, give it a shot. Same $25/$10 referral structure. Here it's actually an even better deal, since interest on checking accounts is lower than on savings accounts.
Referral #1
Referral #2
I'm pretty sure you can only get one bonus. Let me know if it turns out otherwise!
Wednesday, January 02, 2008
Income & Savings in 2007
So here's something I thought would be interesting: a report on my savings from my individual income sources. The below attempts to account for every dollar that came into my coffers in 2007 and every dollar that stayed there. There's probably a little margin of error, but this is pretty thorough.
Income sources:
1. My regular salary.
My gross salary income for this year: $31,615.37. Of that, I saved $3,955.57, which is 12.51% of my gross income, in the Freedom Fund, and $2,276.70, or 7.20% of my gross income, in my 401(k), for a total savings of $6,232.27 and 19.71%. Going back through my ING records to add up the deposits to the Freedom Fund was amazing--I could see the momentum taking hold, the deposits growing. I saved $1,751.45 of my salary in the Freedom Fund in the first six months of 2007, and $2,204.12 in the Freedom Fund in the second six months. I also saved $525 in the Travel Fund, which is earmarked for later spending (so it's not in the total).
2. My freelance income.
I grossed $703 through freelance work in 2007, and have 38.24 of that left. The rest was spent on grad school-related stuff (test registration, study materials, &c.) and on my trip to France. The balance is earmarked for future spending on grad school stuff, so I saved 0% of my freelance income.
3. My 401(k) match.
It was $1,500, and, somewhat obviously, I saved 100% of it, because spending it wasn't an option.
4. My parents.
Oh, yes. Aside from the many times they have fed me and taken me to the movies this year, my parents wrote me a check for $6,000 last January. I saved 83.3% of it: $5,000 went to my Roth (topped off '06, maxed out '07), and $1,000 went towards my Travel Fund, which will eventually be spent on an adventure (so I'm not counting it as savings).
5. Windfalls.
I got a $500 gift from my aunt and a $520 tax refund. I saved 100% of each.
6. Interest.
My savings at ING earned $167.65 in 2007, and my CD at Bank of America earned $32.82; 100% of this interest was saved in the Freedom Fund.
7. Dividends.
My 401(k) earned me $29.36 in dividends, 100% of which were reinvested.
8. Pinecone Research surveys.
I made $24; I saved 0%.
All in all, my income this year totals $41,092.20 and my savings this year total 13,982.10, or 34.03% of my total income. That, I think, is a number I can be pretty damn proud of.
Tuesday, October 02, 2007
Freedom Fund: $4,050
I got the big insurance reimbursement check in the mail last night, and immediately (this morning) deposited it and set up the transfer over to the Freedom Fund at ING. This brings the balance up to $4,050.
Exclusive of the CD I rolled into the Freedom Fund, this balance represents 13.1% of my gross pay for the year so far, and at least two months' expenses. It represents the freedom to make decisions for myself, unbeholden to anyone. And the best part is that it's all, every penny of it, money that I earned. Even the aforementioned CD was initially funded with savings from my part-time job at college. The Freedom Fund is truly free, in the sense of independent. There are no strings attached.
Thursday, September 27, 2007
Where Do our Money Personalities Come From?
At times, it just seems like some people are savers and some are spenders. If this is true, I fall pretty squarely in the "saver" camp--at this point in my life. I used to be more freewheeling--like when I was in high school, wielding my dad's credit card with aplomb at bookstores and coffee shops from the Upper East Side to TriBeCa.
But as soon as I was really responsible for myself financially, my attitude changed dramatically. My junior and senior years of college, I lived in an off-campus apartment, and while my parents paid my living expenses, they did so by writing me one check at the beginning of the school year based on a reasonable budget that I'd proposed and we'd discussed. I managed that money for the rest of the school year. I guess if it had ever run out, I could have asked them for money, but I made sure it didn't. I had a job on campus, and I saved every penny I made (it wasn't that much).
My money management skillz were honed even sharper when I got my first job, last September, and began making my own way in the world for real. But there are plenty of people who get their first paycheck and go, "Whee!" and blow it at the nearest boutique. What makes the difference between my reaction and that reaction? I wonder if it's not some personality thing, rather than the oft-repeated platitudes about financial education, because I certainly didn't have much of a financial education. All that meant was that I had to go out and get one.
For me, my desire to manage money wisely is intimately connected to a sense of insecurity, a feeling that I'm on a highwire and I need a safety net, a nervousness about my own ability to succeed. It's also connected to a need to achieve: I get a kick out of setting goals and meeting them, and a thrill from being precociously good at things. There's also a certain cautiousness, a hedging-of-bets, that is not unrelated to the other two: it's a fear of failure.
I'm not saying that there are not very good reasons to save money. Obviously, there are. But are those good reasons my real reasons? I'm not sure they are. I'm not sure it's not all a little less rational than that.
Wednesday, September 19, 2007
Impatience
Over at The Simple Dollar, Trent has managed to articulate exactly what I feel about my financial goals.
I'm impatient. I'm so impatient. I'm lucky enough not to have any debt, but I positively champ at the bit about meeting my savings goals. There are so many things I want to save for: right now it's the emergency/freedom fund, and then I'll want to focus on the travel fund, and after that there'll be a down payment fund of (it seems to me) colossal proportions to tackle. Sometimes I feel so jealous of people like Wanda who can put away thousands of dollars a month, rather than hundreds (and not very many hundreds, at that), because I feel like those people must not have to endure the waiting that I do, the plodding and continuing to plod, the putting one leaden $25 foot in front of the other.
What do I do to stave off impatience?
I break down my goals into mini-goals. Stuff like my monthly savings goals keeps me focused on where my priorities are and gives me the satisfaction of setting and achieving a goal more immediately, rather than always having to be looking at the big, "final" number at the end of December.
I engage my financial goals on a daily basis. This helps me remember that every choice I make with money contributes to meeting my savings goals. When I feel actively connected to my goals, rather than like I'm just sort of passively waiting for them to occur, I'm less bothered by the background noise of impatience.
Mostly, though, I push harder. The last few days of a pay period are always a contest between me and myself to see if I can squeeze another $25 into my savings account. Frequently, I can. And the more often I win that battle, the closer my goal gets. This drive has already led me to bump up the goal for my Freedom Fund twice this year.
Monday, August 20, 2007
How to Close a CD
I dropped into the bank (I bank at Bank of America) on Friday to ask about making sure my CD doesn't roll over into a new CD (the interest rate is a measly 3.21%). I'd received a notification from my bank that my CD was about to mature, but its instructions on how to proceed had been pretty vague. So I stopped into a branch to check it out.
Apparently, the deal is like so: you have to wait until the CD matures, and then you have a window of seven days to close the CD, or it will roll over automatically. Frankly, one would think that in this Age of Computing Machines and Interwebs you could specify your preference in advance or address the issue online, but apparently not. Or at least not at Bank of America. So I'll have to stop in again between tomorrow and a week from tomorrow to tell them, "I want to close my CD." They'll close it just like a normal bank account and transfer the money into my checking account.
From there, I'll move it to my ING account, where the interest rate is more than a full point higher.
Wednesday, July 18, 2007
Frugality Cycles
ISPF writes something that rings very true to me--she's talking about the idea of "cycles" of frugality. She does a very nice little graphic of what one could call a "frugality wave"--it's like a sine curve, where the line is one's actual expenditure and the x-axis is one's average expenditure. I feel like I've been in a high, even extreme section of the frugality cycle recently, saving more than 25% of my take-home pay, and now I find myself chafing a little, wanting a little more room, a little more income of which to dispose towards pleasurable ends.
Here's the reason this doesn't worry me: like ISPF, I cycle within a fairly narrow range--for me, the amplitude is no more than $100 or so. I'm never not saving anything at all (we're talking cash here, not retirement--obviously, because that's a paycheck deduction), and I'm certainly never spending more than I make. I also don't think the high point of my spending is excessive, though I may have to keep an eye on that end if the pattern remains the same and my salary increases.
For the moment, though, I'm happy to look at this the way ISPF does: it's just a natural fluctuation, and as long as the extremes aren't too extreme, it's nothing to worry about.
Tuesday, July 17, 2007
Sibling Wedding Take II
K's sister got married in April, and in September, K's brother is following suit (dear readers, do not begin holding your breath for a third K Family wedding announcement). K's parents have just very generously offered to pay for our tickets to Oklahoma City and our hotel room while we're there. I will still need a dress, and probably new shoes as well. This means that I have to stop pouring the money I usually allocate to that sort of thing into savings, which I've been happily doing for the past couple of months.
On the one hand, I'm disappointed; I enjoyed the momentum I was achieving, and I had begun inching my savings goal (originally $4,500 but recently revised up to $5,000) towards $5,500, and I may not be able to hit that if I start spending money on clothes again. On the other hand, I've been sort of pressing the proverbial pedal to the proverbial metal, and I'm starting to get itchy to have a little more (proverbial?) wiggle room, especially as I eagerly anticipate having a social life again within two weeks (GRE on the 30th!). And obviously, the damage is a lot less than it would have been had K's parents not been inclined to be so generous. So I think I'll try to carry through on my July goals for this next paycheck, but after that I'll scale back, chill out a bit, and start thinking about shoes (I've already got a dress mentally picked out).
Friday, May 25, 2007
Freedom Fund Adjustments
I'm bumping the goal for the Freedom Fund up to $5,000, from $4,500. This is partly because I have a round-number fetish. It's also partly because I'm not totally confident that $1,500 per month quite covers expenses.
My current balance is $1,850 in the ING Freedom Fund account, with about $1,030 coming in when my despiséd Bank of America CD matures in August—by the end of this month, it should be $1,950. To be on track to save the extra $500, the balance in the ING account needs to be about $2,335 by the end of August (not counting the CD). I don't think that will be a problem: it means saving about $130 per month during June, July, and August. I've been saving more than that anyway—I've been making at least one extra $50 payment per month lately, and I don't anticipate a problem continuing to do that. If I did that every month through August—contributed $150 a month—I'd have a balance of $2,400, not including interest. Just to set the bar a little higher, I think the goal for the end of August is $2,500.
My hope here is that I can hit the $5,000 mark by the end of the year (again, this assumes that my beloved and generous aunt continues her tradition of $500 checks to her nieces and nephew at Christmas). Then I can let the Freedom Fund percolate while I focus on other savings goals.
Tuesday, April 24, 2007
Savings Projections
By my calculations, I should have 3 months' worth of expenses (which I estimate at $1500/month) in my ING Freedom Fund by the end of this calendar year.
The current balance is $1,300.
I also have a CD at Bank of America, which will be rolled into the Freedom Fund when it matures at the end of August. By then, it will be worth about $1,030. (Running total: $2,330)
I have two "extra paycheck" months still to come. Each will allow me to save $300 above what I usually do, for a total of $600. (Running total: $2,930)
I have 18 paychecks left this year. If I save $50 from each of them in the Freedom Fund, that adds $900. (Running total: $3,830)
Hopefully, my beloved and generous aunt continues the tradition of $500 gifts to her nieces and nephew at Christmas. (Running total: $4,330)
I can definitely find $170 over the course of the year above and beyond my normal savings. I'm pretty sure I can't come up with $670, so if my aunt's gift changes this year, I may fall just short of the mark, but I should be able to make it to $4,000.
That's pretty serious savings, actually. $3,000 (the amount I'd be saving out of this year's earned income) is about 9.7% of my projected pre-tax W-2 income for this year. Disregarding my Roth (which, in this scenario we should, since it's mostly money I didn't earn and it's all money I didn't earn this year), consider that I also save 8% of my (pre-tax) salary in my 401(k). A 17.7% savings rate? I'm no slouch.
My newfound enthusiasm for the Freedom Fund leaves me neglecting my travel fund, though. Its current allotment of $25 per pay period will bring it to $1,500 at the end of the year, substantially short of the $2,000 goal. I'll either have to resign myself to prioritizing the Freedom Fund to the detriment of the travel fund, or find some way to step it up a little.
Monday, April 16, 2007
Frugal Challenge: $5/day
So, I sent an extra $50 to my Freedom Fund the other day, leaving me about $15 to live on until Thursday, when I get paid. I've actually got more than $1,000 in my checking account, so the stakes are low if I need to go over that a little, but I've only got (about) $15 budgeted to live on until Thursday. I don't anticipate that being too hard--I'll have to buy lunch today, since I spent last night at my parents' (it was pouring) and didn't get to pack anything, but other than drinks to go with packed lunches tomorrow and Wednesday, I don't anticipate any further expenses. I have food in the house (two mangoes, a couple of bananas, peanut butter, some canned soup, some pasta and turkey meatballs...that should do it), a Metrocard in my wallet, and no expensive outings planned.
I'm glad to be getting a move on towards my savings goals--I've put $150 above and beyond my automated transactions into this account over the past month--but it does always feel a little pinched when I do it like this. Luckily, my deadline's not far away.
Tuesday, March 27, 2007
The Emergency Fund, Reconsidered
So, after receiving my most recent paycheck, I transfered $60 above and beyond my normal savings allocation into the ING account that holds the Mini-E, my little emergency fund, to bring the total balance to $1,000. Saving this $1,000 was not a goal I initially had for this year, but recently, it's become pretty important to me--I think I'm reevaluating my thinking on the emergency fund (I see that Wanda's been doing some thinking on the same topic, which is part of what led me to verbalize that reevaluation).
See, it's the emergency part that seems unlikely to me. I have health insurance. I'm employable. I'm totally lacking any financial dependents (including cars). The likelihood that there would be an actual emergency that would exceed my current financial preparation is pretty small--I talked about that in the earlier post on this subject.
Two things, though, present good arguments for fleshing out my emergency fund anyway:
1) I really, really don't want to increase my reliance on my parents, even temporarily. I like having my own life.
2) While I am unlikely to experience a financially demanding emergency, I am extremely likely to experience a financially demanding life change.
Number two is the important one here. I don't really know what I'm doing with my life. I regularly think about leaving New York in favor of the small city in which I went to college. Grad school, of course, is a big (and expensive) likelihood. The point is, though, that I want to have the freedom to pick up and go wherever it is I decide to go, or do whatever it is that I decide to do, or both. I don't want to have to ask my parents' permission. I don't really want to have to ask anyone's permission.
So I think I may be amping up my goals for this savings pot (more dicussion to follow on that, probably), but changing its stated purpose: it's not so much the Emergency Fund as the Freedom Fund.
Wednesday, March 21, 2007
Losing Interest, Keeping a Cushion
The balance in my checking account is $802.47. Why is that remarkable? Well, because tomorrow is payday, and instead of being broke as the proverbial joke, I have very nearly the equivalent of my full, biweekly take-home pay in my checking account.
Where does it come from? Well, mostly it comes from "envelopes" of money that aren't used on a weekly basis, but rather in large spurts, notably the envelopes for clothing and haircuts. Half of the money I'll need to pay my rent is there, too, plus some money for household bills (though those have just come in, actually).
It feels sort of silly to be losing the interest on that much money, but at the same time, I like having a cushion in my checking account (not so much because I'm afraid of overdrafts as that it's nice to have a sort of transient emergency fund). I like being able to buy shoes (as I did yesterday on my way home from work--just $20 cheapies at Payless, but I'm hoping they might match my dress for K's sister's wedding) without having to transfer money from one account to another, and waiting for it to clear, and all that slow, irritating jazz. So I guess I've decided by default that it's worth it to me. I can't really justify it logically, though, other than with the "do what works for you" maxim.
(There's also the peril of getting too attached to that money--I do kind of dread what it'll do to my net worth when I decide I need a haircut and a new spring wardrobe, immediately.)
Friday, March 09, 2007
Cashflow Commentary
It's been a pretty quiet week for me, financially speaking (other than the raise, but that doesn't kick in until my next paycheck). Most of my time has been spent doing things that don't cost money (both of my volunteer projects began in full force this week, which partially explains the slow posting schedule). Tomorrow, however, is going to be one of those dammit-I-spent-$50 kinds of days: I have a brunch date and will be joining a friend at a bar to celebrate his birthday. At least dinner parties are free (when you're not the one throwing them and already have a bottle of wine you can bring). I'm just hoping that I can talk myself into the laborious Village-to-East Harlem subway journey late at night after a few drinks and save (well, forego spending) $20 that way.
Anyway, I really liked this post that NCN did about the details of his money management over the course of a month, and I thought I'd share my own strategy.
I budget on a biweekly basis, so, the night before my paycheck direct deposits in my checking account, I enter a pay in Budget, which distributes the alloted amounts amongst the "envelopes" that represent my various budget items. That's how I keep track of how much money I have available in various categories. I have my automated transfers to ING accounts set a couple of days early, so the debits usually hit the day my paycheck is deposited: $20 goes to my gift fund (which I just tapped for the first time this year to buy K's sister's wedding present), and $25 goes to my mini-E fund. The only monthly bill I pay (other than rent) is the one for our Netflix account; it debits my checking account monthly, and when it does, I deduct that $26 from the corresponding envelope in Budget.
I enter my expenses into Budget on a daily basis. I usually round up to the nearest dollar, for simplicity's sake.
About halfway through the two-week pay period, I check in with how I'm doing. If it looks like I'm coming in safely under budget, I'll generally try to find an extra $25 or $50 to push over to my mini-E fund. I'll skim this amount out of various envelopes in small increments, and make the transfer. Other than this skimming, I let money accumulate in the envelopes I don't spend from on a weekly basis, like my clothing and haircut envelopes. I don't earn interest on this money (about $400 right now), but it does serve as a big cushion in my checking account, and it saves me the hassle of transfering things in and out constantly. Because of this cushion, I guess you could say that I don't "live paycheck to paycheck," even though it feels like I do when I'm trying to stretch my budgeted amounts in particular categories until the end of the pay period.
If, at the end of the pay period, I have extra money lying around (or I feel like skimming more out of the less-active envelopes), I send it to my mini-E fund. (Soon I'll begin splitting my transfers between the mini-E and my travel fund.)
Lather, rinse, repeat.
How do you manage your cashflow?
Sunday, March 04, 2007
Developing Savings Momentum
Here's a counterintuitive-but-true thing about my savings habits: I save faster when I'm closer to my goal. Getting my tax refund direct deposited to my "Mini-E" savings account at ING put me at $733.08, a scant $276.92 from the $1,000 goal, and I've been throwing money at it ever since. Last pay period, I found an extra $41.92 (in addition to my normal $25 automatic deposit). This pay period, the account has already gobbled up an extra $48.04 (the amounts are odd because I like round numbers, and I always deposit an amount that brings the total account balance to a multiple of $25—I know, it's a little Rain Man, but it works for me). And just today, I set up another extra transfer, for $25. It's sort of like the impulse to buy, this impulse to save—it really has remarkably little to do with my desire to attain the actual goals I'm saving for (because "have $1,000 to keep around in case of emergency in addition to the $1,000 I already keep in a CD in case of emergency," frankly, isn't a particularly exciting goal in the sense of actually attaining it), and lots to do with my desire to beat the system I've set up for myself—to move on to the next savings goal and get going on that. When the goal is close, I get itchy about the possibility of meeting it, and soon.
What this makes me wonder, of course, is should I be setting goals in smaller increments? I think of my savings goals in "units" of $1,000. I say I'll save $1,000 for emergencies, $1,000 for travel, $1,000 for investing...et cetera. If I thought of my goals in units of, say, $500, would that momentum kick in faster?
