Tuesday, January 14, 2014

Money is honey.

Granny said it years and years ago, and it was just as *right* then as it is right *now.*
Money is honey.

I know that they say, "Mo' money, mo' problems," but let's be real: LESS MONEY, MORE PROBLEMS.

This past Saturday, I went to a free "Money Matters" seminar with Papa, and learned probably more than I wanted to about the economy (spoiler alert: it sucks), and then a little about personal finance and budgeting.

The speaker was great, and he promoted an app he patented/created, called Liquid. (Right now, it's only available for the iPhone and iPad, but may later be available for Android users)
C/o http://getliquid.com/liquid-app/: "Your real, future situation is the difference between what you have and what you owe. Your bank account balance doesn't know how much you'll be receiving, nor what you'll be spending." (WORD)


Ignorance is bliss, and I know for years, I would stick my head in the sand, swipe my credit card everywhere I went, and then about once a month, wince as I waited for my B of A account info to populate on screen.

While that can be fun for a little while (RIP 2010 - you were a stupid bitch), it's no way to live.

I'm dreading the next birthday of mine, purely because of the number (twenty seven), but I'm glad that in the past few years or so, I've really gotten my shit together and started to think proactively about my money, so that when things come up, I don't go bankrupt.

The Liquid app idea is great, but a little confusing for me.

Here's what I do:
I have an excel sheet, lovingly and simply called "Financials."

We all pretend that money is mysterious and confusing, and there's no way we could possibly have any sort of control over it, but let's be real for a second: every month, you have fixed expenses, and if you're employed, you have at least somewhat of a fixed income.

Go through your checking and credit card accounts, and start plotting out in excel exactly how much and when those fixed expenses (-) and fixed income (+) are going to hit your account every month.

(+) As of a few months ago, I'm up to three jobs (one in advertising, and two on bikes, teaching RPM classes at 3 different locations), so I get to plot out 5 pay checks. I like that.

(-) My rent went up pretty significantly when I moved apartment complexes (but it would have anyway, had I stayed at the shiteous place where I lived for far too long). That always comes out on the first, and it's more or less the same amount, depending on how much my water bill ends up being.

(-) I've consolidated down from 2 credit cards to 1, because I was sick and tired of being hit in the stomach with 2 credit card payments a month. No more of that. Also, when you only have one credit card balance to pay, it's a heck of a lot easier to track your spending (and try and control it!)

(-) TXU (monthly gas bill). To make sure I'm not screwed, I go ahead and plug in the highest number it's ever been so I can be pleasantly surprised when it's less. It's always better to plan for the worst case scenario, when it comes to your money.

(-) Time Warner (internet ONLY, which exists.) I needed to dramatically cut down my outrageous DVR/Cable/Wifi bill, and cutting the cord to just internet helped do the trick. Don't let one of their asshole reps try and con you, saying that there are no internet-only plans. I got him in mega trouble a week later when I called to raise hell, and get my bill lowered.

(-) Monthly car lease payment (never changes)

(-) Monthly car insurance payment (HALLELUJAH, praise the Lord! I finally pay a reasonable, and suspiciously cheap amount for monthly insurance, thanks to a few blemishes that were NOT my fault slipping off my record)


Start right now. Make an Excel sheet, and start plotting out the dates and amounts (especially of the worst case scenarios).

Don't get in over your head in credit card debt, and always, always, always pay off the statement balance, and not just the minimum payment. You don't want to pay a penny of interest.

According to the Money Matters speaker, the Credit Bureaus start to flag you if your credit card statement balance is more than 25% of the credit card limit. I've definitely been guilty of that because the prescriptions I have to pay out-of-pocket until my insurance reimburses me 2 days later are easily $1K a month (can you imagine?), so naturally, I easily rack up a high credit card bill without doing anything fun.

How do you get out of this trap? Start paying off your credit card balance little by little before the statement is due because the bureaus are only looking at the balance at the time of the statement.
The last thing you want to do is screw yourself not only with your credit cards, but generally, with your credit score. And this wasn't just conjecture from the speaker; it's cold hard facts.

You also get a free credit report every year, so after the seminar, I immediately requested mine. You shouldn't have to pay for anything, or have to sign up for an annual service that you turn around and cancel a few days later. That's BS. The government owes you one, or three, if you want one each from Equifax, Transunion, and Experian. Here's the site.

*Note: these sites don't tell you your credit score, but they do let you glance at all of the people who have requested your credit information, either with or without your permission. It's also good to see if there's anything fraudulent or suspicious on there that needs to be reported to the bureau. As we've seen in the past month, our personal data is not safe, and has been compromised at mega retailers like Target and Neiman Marcus, and who knows what's next. Once your credit information is compromised, you could really be screwed when you try and sign yourself up for something legitimately, and discover you're denied because of what some thief has done to your name/credit.

I am fortunate to not have one cent of college loan debt over my head, thanks to my incredible parents, so I can only speak of my finances, and what I'm able to do with my money. But as a rule, really try and throw money at that credit card so that it doesn't run you into trouble.

As the speaker said, before you make a purchase, really think about these things:
  • How many hours would I have to work in order to afford this thing? (He had a complicated equation about thinking about your annual salary, before taxes, divided by the number of hours you work weekly to figure out your "max factor," aka, how much money your time is worth) The Liquid app can help you calculate this, but it's really not that complicated.
  • Will I be able to live without buying this thing? (Or as he phrased it, "What will happen to me if I do not buy this thing?")
  • Most important, can I afford to buy this thing right now?

This year, at least for me, it's not just about getting fit physically, but also about getting super fit fiscally.

If your employer offers a 401K matching program, you should absolutely adjust your contribution to get the maximum match from your company. For me, that's 3%. Otherwise, you're leaving free money on the table. I know it's annoying now, to see a little less in every paycheck, but trust me: after seeing exactly how much long-term healthcare costs, God forbid you suffer a catastrophic stroke, like Granny, it's absolutely crucial to have a nest egg for retirement.

As Papa always likes to remind me, I cannot have a dollar in my pocket. Literally, I never have cash in hand, but also, I tend to be really bad about spending what I have. Not anymore, or for the past 3 years.

With that line of thinking, that 401K is great because it's money that I cannot touch, until I need it.

Take a few minutes to set up your "Financials" spreadsheet, and please, please, please put it in a safe place. The last thing you need is for your personal financial information to get in someone else's hands.

Check yourself before you wreck yourself. There's no mystery to what you'll have in your bank account on a given day, week, or month. And if there is, you're going to be in big, big, big trouble with massive credit card debt. Stop living like a $30K millionaire, and start thinking about your future - or even one week from now, when your credit card is due.

And if you're like me, and need some extra hand-holding, I encourage you to sign up for Mint. It's 100% free, and it helps you set up monthly and annual budgets and track the spending within those budgets. Example: If you set a grocery budget of $150 for a month, and you're over it, you can rethink your spending or essentially pool money from another budget to help you get over the hump

Peace, love, and (newfound) prosperity,
Stel


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