Budget. To some people, budget is a dirty, ugly, disgusting word. It was the same for me. Iʼve tried using several different budgeting methods in the past using anything from spreadsheets to budget building software. All of them left me frustrated at the end of the month.
Iʼd use them for maybe a month or two and then decide that I didnʼt like it or that the budget didnʼt allow me any flexibility. The biggest problem I had was trying to allocate money to various categories within my budget. At the end of the month, I would get so frustrated because I was
over budget in some categories and under budget in others. Every month, Iʼd make adjustments only to have the same thing happen again.
At the beginning of the year, I decided to switch to a different budgeting method. Iʼve tracked my finances long enough to know what I bring in during the month and approximately how much I spend. Each month, my income minus expenses was ending up at around the same amount; give or take a hundred dollars or so.
I decided to change things up and start budgeting using a set amount of money for the month, instead of trying to budget for different categories. For example, Iʼm currently basing my budget on monthly expenses of $4100. At the end of the month, whatever amount of money left in my checking account is transferred to savings to “zero” out the account. At the beginning of the next month, I transfer another $4100 to cover expenses for that month.
So far, this method is working like a charm. I currently use Quicken to track my income and expenses for the month. To me, using this new budget method makes it so much easier to manage my budget and I can easily see how much money I have available to spend and/or save.
As much as Iʼd like to say this was my own idea, itʼs not. Itʼs actually called “zero-based” budgeting. The premise is very simple. You assign a category to every dollar you receive. Itʼs really easy to get started with this method, if you have a good idea of your monthly income and expenses.
If you are fairly familiar with what comes in each month and what goes out each month, getting started with a zero based budget is pretty simple. The first thing you want to do is find out how much money you bring in each month. Take that number and subtract from it the amount of your monthly expenses. The resulting number should be a positive number; hopefully, itʼs a large positive number. If not, itʼs time to thoroughly review your expenses and find out what you can cut out. Do you really need all of your premium cable channels? Actually, with all of the ways to watch TV for free, do you need to subscribe to cable at all? Do you frequently eat your lunches and dinners out of the house? Finding ways to cut your expenses will probably end up cutting out some of your fun but in the end, it is all worth it.
Are you currently using a zero based budget? Are you happy with it?
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I wrote this post last night while it was fresh on my mind.
I feel like I'm being selfish and I feel like a jerk. I also feel angry and frustrated. I don't know what to do; well I do know what to do but it doesn't feel like it's the right thing to do. This past weekend, I had 2 family members and a good friend ask me for money.
All of three of these people are very close to me and know I am very particular with money. They know I have a good, stable job and they know that I'm a big saver. After all, I am always telling them about how important it is to save for a rainy day. They know that I write a personal finance blog but none of them have ever asked for the address. They know I have money in the bank so when they ask me to borrow money, I feel bad about saying I don't have it or saying no.
Granted, I can afford to help them out but none of them have a track record for making wise financial decisions. I hate to say it but they will continually be broke because of their behavior and the way they handle money. They feel that they will always be broke and struggling financially and just accept it as a fact of life. Not one of them is taking any initiative to improve their finances. Unfortunately, if I were the one that needed help financially, they would not be able to help me.
It would be different if this was the first time I was asked to borrow money. Nope, it actually happens pretty frequently. I don't want to do it anymore. I can't continue to be a financial crutch to my family and friends.
It would be different if this was the first time I was asked to borrow money. Nope, it actually happens pretty frequently. I don't want to do it anymore. I can't continue to be a financial crutch to my family and friends.
It's been quite awhile since I've posted a networth report. I used to post an update every month but decided to quit posting them for awhile. The last report was posted in August 2008.
As of that report, my networth was over $77,000. Due to several factors, it looks like I'm down a little over $20k. Namely, the decrease was caused by decreases in my home values, decreases in my 401k value and small increases in my debt.
As of February 28, 2010, my networth is as follows:
Assets:
- Primary Home - $183,000.00
- Rental Property - $130,000.00
- Car - $17950.00
- Retirement - $34,955.23
- Cash (checking & savings) - $40,703.84
- Total Assets: $406,609.07
Liabilities:
- Primary Home Mortgage - $179,757.53
- Rental Property Mortgage - $143,067.44
- Student Loan - $23,570.51
- Credit Card Debt - $2,914.37
- Total Liabilities: $349,310.05
Total Networth ending February 28, 2010: $57,299.02
Summary:
- Primary Home Value determined by appraisal obtained from my refi in May 2009.
- Rental Property Value determined by neighborhood comps.
- Car value from NADA.
- Credit card debt composed of debt for rental property flooring and new MacBook Pro. Both are at 0%. I will pay both of these off before the promo period expires.
- Yes, I know I have enough in cash to payoff my student loan but I choose not too. I am a cash hoarder and explained the reasons in this post.
- I just started tracking the numbers again last month so I don't have any data for the changes in the prior month. Next month's report will show monthly changes in the numbers.
If you are looking for some extra cash to add to your savings accounts or if you're in need of money for an unexpected bill, believe it or not, there's a pretty easy way to come up with the cash. Really, the only things you need are an internet connection, a computer and a digital camera. If you have these things, you can list a few items on Craigslist and make some quick cash. This is a good way to make money without having to take on an a second job and you don't have to pay taxes on it!!
Stop for a second and take a look around your home. I'm absolutely SURE there is something that you don't use anymore and it's sitting in the corner gathering dust. Like the old saying goes, one man's trash is another man's treasure.
Image Courtesy: Orin Zebest
I recently sold a laptop and a TV stand on Craigslist. The laptop was just sitting around not being used since I bought a new MacBook. The TV stand was out in the garage taking up the precious bit of space I have left. In fact, if I wasn't paying attention when I got out of the car, I would sometimes bump into it with the door of the car or my knees. If you want to sell your item quickly and for top dollar, remember these tips:
Description. Give a good, clear and accurate description of the item; including the item condition. For electronics, make sure you list the model number and specs of the item. For example, if you are selling a digital camera, make sure you tell how many megapixels it has and what the zoom is. If you are selling an item of furniture, make sure you include measurements. You don't want a potential buyer to get to your home and not buy the item because it was not the size they were expecting. Make sure your item title is specific and eye-catching. Make sure your buyers know how to contact you. If you are going to list your email address, you should probably create a secondary email so you aren't giving your primary email address out to total strangers (think spam).
Pictures. Take good, clear photos of your item. I personally would not buy anything if there was no picture of the item. Putting up a stock photo is better than nothing but a photo of the actual item is preferable.
Condition. Take a few moments to cleanup the item you are selling. My TV stand was all dusty and dirty and it didn't look good at all in that condition. I took a little time to clean and dust it and it looked good as new. I would much rather buy an item that is clean and in good condition instead of one that may be in good condition but needs cleaning.
Price. This is very important if you want your item to move quickly. I'm not saying you should give the item away but it does need to be priced accordingly. If a new item is selling for $50, you don't want to list your used item for $55. If you aren't sure how to price your item, do an internet search and see what other similar used items are selling for.
Using the tips above, I was able to get rid of 2 items I was no longer using and bring in about $500 in additional cash. I need to take some time to go through my closets and find more stuff to put up for sale. Not only can I declutter my home; I can make extra cash doing it.
Have you recently used Craigslist to make a little extra cash?
Historically, February has always been a good month for me, financially speaking. This is the month that I usually receive my tax refunds, the rest of my bonus from the prior year and the month my pay increase goes into effect.
This month was no different and was actually a better month than the one's prior.
Interest: All interest paid on my bank accounts. Not very impressive and I'll be so happy when interest rates go back up on savings accounts. My credit union is currently paying .75% APR on checking and 1.50% APR on my money market account.
Other Income: This category includes rental income and any other miscellaneous income that comes in during the month.
Salary: I received an additional bonus of $500 this month which bumped my salary up a little bit.
Not included in this amount is my Georgia state tax refund of $2489 which went into my rental property savings account since my tenants lease ends in a few months and I'm not sure if she will be renewing the lease. I want to be sure my rental income is covered in case it takes me a little while to find a new tenant. I also received $500 from a family member towards repayment for a loan I made them last year.
Here's where the money went:
The chart above only shows my top 5 spending categories.
Mortgage: This is the total mortgage payment on my primary home and my rental property. This amount also includes additional principal payments of $25 to each mortgage.
Utilities: Normally, my expenses run less than $400 a month but thanks to the cold winter, my gas bill is a but higher than usual.
Loan: This includes payments for my student loan.
Food: Total amount includes dining out and groceries. My eating habits are weird since I don't usually eat dinner. The majority of the food amount comes from dining out for lunch during the week.
Other: Monthly HOA dues of $173, Misc of $151.33, $50 cash and $18.33 insurance co-payment.
Summary:
February Income: $5434.52
February Expenses: $3894.75
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Total Amount Saved in February: $1539.80
How'd your budget do in February?
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Do you ever remember playing a game as a kid and someone messed up? The way the kids in my neighborhood played was that if someone didn't quite understand the rules of the game, you were able to get a "do-over".
It was simple back then. If you didn't quite understand the rules of the game, you simply got a "do-over" and everything was good. No harm, no foul. Screwing up back then didn't mean getting stuck with a car you couldn't afford or mean you bought too much house for your income. As a kid, you could simply start the game over again.
Image Courtesy: John Morga
Although it's not easy, you can give yourself financial "do-over". If you find it hard to make ends meet, look for ways to cut your spending or find ways to increase your income. If you have a mountain of debt over your head, reallocate your extra income towards paying it down as soon as possible. If your credit score is low, work on making it better by paying your bills on time and keeping your credit usage below 30% of your credit limit.
There's a few financial mistakes I've made in the past that I wish I could "do-over". I wish I didn't buy new cars every 2 years, increasing my negative equity time. I wish I didn't take out the maximum amount of financial aid I was given each year; or at least I wish I had saved some of it. I wish I didn't have a huge weakness when it comes to electronic gadgets. That one is still getting me in trouble to this day. Did I tell you I bought a MacBook Pro a few weeks ago?
What financial nightmares do you wish you could do over??
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