Tag Archives: saving

Paying Your Bills on Time — Every Time!

Step One: What’s the Damage?

This is a lot easier with a budget (and if you don’t have one, why not make one now?), but go ahead and compile all of your bills as they come in. You can just stash each bill statement in a folder or in an area on a desk, or written out on a piece of paper, or on your computer. If you have a good idea of what the bill will be each month, you don’t even have to wait until you get your statements to do this step. If you’re splitting with roommates or a significant other, go ahead and write down the calculations for each person (Divide the total amount due by the number of people that are paying the bill equally, eg: 1000/4.)

Step Two: What’s Left?
Now that we know how much you owe each month, divide that by 4 to get how much your bills will cost each week.That’s how much you’ll put away each week to pay your bills. Discouraged? Depending on how much money you make each week, that’s how much you’ll have left over to pay for other variables (such as the debt repayments, excess groceries, gifts, hair cuts, etc.) plus savings. So if you make 200 per week, you’ll only have 40 left over for that. 300, you’ll have 140 left over.

Step Three: It’s Pay (everyone else) day!

Now every payday, immediately take your check or cash (after depositing) and use that money to pay your bills or put aside immediately in preparation to pay your bills. Prewrite your checks or schedule online payments so you don’t forget to pay them – and remember, don’t touch that money! One technique I use is the following:

  • Money set aside for bill payments go in checking account, which is used to pay bills online immediately on payday.
  • Money left over for other uses is kept in cash. Gas and grocery money can also go in an envelope so you know how much money to spend on gas or groceries for the week.
  • Any extra money goes over to my savings account. Try to save at minimum 10% of what you earn for emergencies.
Another Technique
Another method to paying your bills is to go on a purely weekly basis instead.
  • Every payday, check out what bills you have to pay for the week ahead. Let’s imagine you got paid $300 and your electric bill is coming up on Wednesday.
  • Immediately write a check or schedule the payment online to pay that bill.
  • Immediately minus that amount from your checkbook or other method of keeping track of how much money you have in your account, or keep the rest as cash.
  • Next payday, see what bill is coming up and repeat the process.
  • For large payments, such as mortgage or rent bills, you should use the weekly method by dividing the payment by 4 and keeping that amount saved where you won’t be tempted to spend it until the payment is due.
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Why You Should Give Up Mobile Surfing, Redbox, and Facebook

Surfing The WebTake a look at everything you either spend money on or time on. What do you see?

 

Does this list reflect your life’s goals or priorities? If not, you need to start an overhaul, or spring cleaning, of life’s worst time-suckers and money-wasters.

Here’s an example of things that I have spent or still do spend money on many times a week. Upon reflection, my life (and yours) could be far better without.

 

  • Web surfing on a smartphone. Do you have an iPhone, Android, or other smartphone that has web capabilities? Do you realize how much battery life this sucks out? Not to mention the additional monthly fee you spend just because you couldn’t wait to search on Google or watch a video on Youtube. Is your mobile web really worth missing out on the real social interactions you get from being outside of your home? It seriously pisses me off when I see people’s heads down at a club or a party, constantly looking on Facebook or texting other people. There’s real people to talk to right here!
  • Daily ice cream treat. I love ice cream, seriously. I love it so much that I have cravings for it everyday. Which is exactly why I need to quit this habit. A small treat here and there is totally fine, but if you’re constantly filling a huge bowl, grabbing seconds, or ordering the large cones, it’s time to quit cold turkey. A bad habit could turn into an addiction very quickly, especially if it’s delicious, creamy, and on sale 2/$5 at Stop & Shop.
  • Ordering french fries and soda. Eating out is something that should be on the quit list entirely, but mostly the real killer is not the main meal – they are a) the side and b) what you drink.  French fries are nothing but processed, fat-laden garbage that also tastes pretty decent. When you really pay attention to the taste, fry by fry, however, you’ll discover that it is more the tongue-numbing salt that is doing its job of making you shovel those faux potatos in your mouth. Ever take a bite out of an unsalted fry, and thought, this is pretty bland? That is because they are — and should be completely eliminated. Especially because all of that salt (in addition to your sandwich or burger) makes you thirsty like hell. The absolute worst thing to drink when you’re thirsty is caffeine, because it just makes you more dehydrated. Soda contains caffeine and sugar. So not only are you making yourself bloated, dehydrated, and fat, you’re also adding in completely empty calories, which is the nutrition equivalent of throwing money out the window.
  • Redbox. I like this movie renting box so much, I usually never pass an opportunity to go take a look at what’s inside, but it operates on the same principle of dollar stores and Ebay. They all lure you in with really cheap prices (usually a $1) so you’re only thinking, “Wow, only one dollar! I can’t pass this up!” But while you’re ordering more and more stuff, you’re brain is still excited about the sticker shock (in this case, the shock of a great deal), so it’s not mentally keeping track of how much stuff you’re buying. And pretty soon that $1 movie ends up being three $1 movies that you don’t return until Friday, which ends up being about $9 for three nights. I’ve seen a couple very good movies from Redbox, but compared to how many I’ve rented, that’s a very small percentage (maybe 5%). Most of them I end up getting mad at, so it’s still a dollar that I wasted (and 1-2 hours). And usually every time I go bring a movie back I will look for more, so pretty soon I’m steadily buying at least one $1 movie every night. Do this for a month, and that’s $30 spent on mostly crappy movies. Small amounts really do add up fast (what would you do with over $300 extra a year? Definitely not rent bad movies).
  • Obsessive Facebook and email checking. Ever been so bored online that you constantly keep going back to your inbox or Facebook (or other social networking site) every like, 10 minutes? It rips you out of whatever else you were doing, or should have been doing (college students, I’m talking about you. I know, I do it too). And once you change gears, it takes a while to re-focus and bring yourself back to what you were doing. If you find your motivation waning that much, it is best to take a real break – get off the computer and eat a snack, or go to bed, depending on the time. Take a quick stretch break if you’re in the midst of studying, and get some real social interaction for a couple of minutes (maybe you can even get new ideas). Next time you find yourself absentmindedly surfing, it’s best to catch yourself as soon as you can and just close the laptop and reserve doing these things once a day or even once a week, if you can allow yourself to do that.
  • Spontaneous bar outings. These are serious money-wasters. It’s fine to have fun every now and then, and to take advantage of specials like free ladies night or $2 tuesdays. But going out more than once or twice a week (or month), can burn a serious hole into your wallet. On an especially fun night, I’ll end up spending about $50. On a single night. Every week, that amounts to an extra $200 that I could better spend on paring down my recurring credit card balances or put into my savings for emergencies. I know many people that go out as much as 4 times per week, and can’t imagine the money they waste on drinks and cover prices, not to mention gas. Going out that frequently also takes a toll on your health (sugary alcoholic drinks, hangovers, and usually inhaling greasy bar or diner food at odd hours, is not healthy). It is best to reserve club nights and bar nights to maybe once or twice a month, and/or have a strict budget in mind, like only bringing $20 in cash and leaving your card at home. Also, do most of your drinking during the pregame (it’s cheaper), and choose venues that offer specials or discounts.
  • Casual mall-going or retail shopping. I’m a girl, so I’m no stranger to the magic powers of retail therapy. It’s how most girls spend their free time and communicate serious topics with their friends. Plus, buying stuff brings about a certain power, like, “I can afford to buy this,” especially if it’s well-desired (like an iPhone) or expensive (like an iPhone). Unfortunately, this is where most of my money seems to disappear. If I don’t have a concrete need to buy something, like an urgent need to buy a new shirt because my favorite one hit the dust, then it’s best not to go at all. Or at least leave your cash and cards at home. Charging is even worse, because you forget all about having to pay for it until well after shopper’s regret comes and goes, plus you have to pay interest, which is like throwing money away.
Are there any things I forgot? What small things do you waste money, time, or both, either regularly or unintentionally?
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Pay Yourself First Part II: How to Save Money and Keep a Budget

Save Money So in Pay Yourself First Part I we discussed how to make a budget. Now we’re getting to the juicy stuff, how to actually keep that budget and save money, which is the point of all budgets. If you haven’t read part one yet, go there now. It opens in a new window, so I’ll be waiting for you. It outlines how to make the budget which we’ll be working with today.

Let’s review before we continue, okay?

-you made a budget which outlines your income and your bills
-you included variables and their estimated monthly amounts, such as for gas or shopping
-you probably have little money left over

I’ll show you my budget, which will help in two major ways. First, it forces myself to make a budget, which is beneficial to myself, and second, it helps me illustrate to you what a budget looks like visually. Click on the thumbnail to view a screenshot image of a simple budget worksheet I made. You can mimic this style, too, by downloading the document and inputting your own information.

Since it is a table, you can add new rows and columns as you please. Note: in the variables section, I used three estimates of the three previous months to see my spending pattern, and then the far right column is the amount to stick to, or the budget amount. You can see that all the rows on the far right add up to my income total, which is $1,000.

The savings section is the one we’ll add in today. I broke my savings into two categories.

  • One is for a specific goal that you’re working for financially, such as getting an apartment or paying off a loan. If you don’t need this, save all money into the emergency fund, which should be a savings account and relatively hard to take money from (such as not linked with your checking account).
  • The other is one everyone should have: emergency fund. It is recommended that everyone have 1-2 months of income saved at all times to guard against emergencies, like car repairs or injuries, or other necessities. It also protects when one loses a job or hours. Even if you can only put in $10-50 a month, do it. Over a year you can either have $120-600, or nothing.
So, how do you set aside money in your budget? You can do this two ways, depending on your priorities and situation.
  • You can fill your money with set expenses first, variables next, and savings last (whatever’s left over goes straight into savings.)
  • You can start with how much money you’d like to save each month, and take that away first. Then fill in the set expenses section, and divvy up whatever’s left into your variables.
Either way is up to you. You may also find another method that works better. If so, go right ahead – nothing is set in stone here. Your budget should work for you, and it should be simple and easy to read. I completely estimated my numbers so they end in zeros and fives. You can be more exact than me, or you can keep it simple. It really depends on your personality.
Now that we have set up a cool budget and a plan to save money, the obvious next step is to put that plan into action.
  • Follow your budget. See how it works in practice now, not just theory. Test out your numbers and see if you can live with the changes. It might be hard not to party 2 times a week for you at first, and you might have something huge pop up unexpectedly that takes up a large chunk of money. It’s okay. Budgets are meant to be flexible.
  • Try out your budget for at least a month, and reflect on how it worked for you.
  • If you need to make some changes, cross out the numbers and edit.
  • The point is to keep finding a plan that works without feeling like you need to survive on ramen noodles and beans.
  • When you have racked up a comfy amount in your savings or you have met your financial goal, make a new one. Living in a rental but really want to own? Start putting away for that down payment. When you start putting away money for things that matter, saving won’t feel like work. It will truly feel like you are paying yourself, especially when that savings gets you that cool digital SLR camera you’ve been saving up for 3 months.
  • If you ever have to dip into your emergency savings, remember to work on building it up as soon as you are back on your feet. You’ll never know what else may happen, so it’s safest to be prepared.
  • An easy method to get used to budgeting for different categories is to put the exact cash amount you decided in your budget into different envelopes marked with the category, such as “food” or “clothes.” When you run out, that’s it. Combine this with online bill paying, and you’ll keep your two different types of expenses separate  (the fixed from the variable) and avoid the urge to use bill-paying money for new shoes or what-have-you. Paying bills online, especially automatically, is a great way to avoid late fees!
I hope you learned something on my first two-part series! I hope to do many more series, maybe even a week-long one. Happy saving!
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Pay Yourself First: How to Create a Budget

BillsSince the age of 16 when I got my first minimum wage job as a line cook, I have been exchanging money for other things. Material things, like a cell phone, new American Eagle jeans, an iPod. Part of the fun (and point) of working those 20 plus hours per week was to do just that — sometimes I would go to the mall immediately after and end up spending the entire paycheck in one day. Now that I’m older I have (for the most part) controlled those impulses for instant gratification and new gadget toys, but those checks still disappear almost as fast as I get them. Now that I have entered adulthood (or young adulthood), most of my money is exchanged for recurring bills. Phone plans, cable, credit cards, car insurance, Netflix. Most of the time I barely end up with more than $10 by the time my next paycheck comes. How did I end up this way, and how can I get out?

The problem was that I did not have a plan. I had no inhibition about what to do with my money, or how to organize my bills properly. I also did not keep track of my money. Once I noticed this, I decided to write down my income versus bills and see precisely why I ended up in debt or close to it every month:

INCOME $1000 per month
restaurant job, 30 hrs per week: $250/wk (estimated. sometimes I work more, sometimes less.)

BILLS $920+
3 credit card payments  approx. $250+
car insurance $110
cell phone $60
gas approx. $100+
food approx. $300+
misc expenses (bars, liquor, shopping) $100+

Once you write everything down, it is easy to see where your money goes most of the time.

  • My bills, including variable expenses, only added up to $920 per month in theory, but I said before that I barely end up with more than $10 by each week’s end. Obviously there is a spending problem.
  • I notice that I do not allot set amounts for the variable items I’m spending money on (such as gas and food and going out), and therefore I end up overspending. I also need to figure out exactly what “misc” consists of. An easy way to do this is to put all your money on your debit card and then look at the online statements from your bank. They will list each transaction and most banks even categorize it for you automatically based on the store you bought it from, e.g., they can easily tell that Stop & Shop is a grocery store.
  • Some banking websites have even gone a step further and created pie charts and other visuals detailing your spending habits. Take advantage of these tools to see how you spend your money, and you will see what types of purchases are sucking money.

When you begin to set certain amounts for types of purchases, that becomes your budget.

  • First, write down set expenses that are the same per month, such as your rent or mortgage, utilities, car payment or insurance, or your cell phone (having the right plan can prevent monthly bill surprises for your phone bill). If you typically pay your credit card companies the same or similar amount each month, you can put that as a set expense, too. Don’t forget to include smaller payments, such as a gym membership or Netflix account.
  • Next, write down a detailed list of all the things you spend money on outside of these set bills. This list can include: clothes, groceries, eating out, bars/liquor, movies, cigarettes (or other vices), gas, even magazines. Keeping track of your habits with your debit card (or saving every receipt) will help you decide the right categories.
  • Add up the amount of your total monthly income (after taxes), and find the difference of that from the total of your set bills from the first bullet. This is the amount you have left for everything else, such as the items in the second bullet.
  • Divy up the amount you got into the categories you made based on previous activity and importance. Do you know you need a certain amount of gas every month for commuting? Write that number down next to the “gas” category. Have a severe habit of cigarettes that are nonnegotiable? Don’t forget to add in your vices. Going out to drinks or the club counts too (don’t forget parking fees and cover charges in addition to your drinks). Be strict here, you do not need to go out every weekend. Nor do you need to eat pizza three times per week. Keep writing down numbers to ensure each category has enough money for what you need or want for the month. But save some money. We’re not done yet. We have to add the most important part of a budget: paying yourself! 
Stay tuned for Part II: How to Save Money and Keep a Budget.
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