Side projects and Extra Income

Since the last post I have paid $311 on my student loan, of which over $220 was interest. I have also done a few side jobs which should help supplement my income, to the tune of over $300. Which I have yet to decide what I should do with the profits (after I pay taxes). Here are the choices I can do:

  • Throw it into my E Fund - This is actually the most appealing option as I am making efforts to increase the balance. Yet I’m not sure if it’s the most efficient use.
  • Set back for School - I know come December/January I will be needing new books and I want to keep up not taking out a loan. Alternatively I could set it back for my Western expenses. I should be starting in the Fall of 2013, if everything goes the way I want it to.
  • Leave it in my Business – This option would mean I leave the profits in my business as a cushion, for future payments.

The most likely candidates are to set it back for school and as a business cushion. I think I will split it half and half and keep on planing.

On a side note I want to get another one of my goals started, and that is to run several sites for profit, maybe even do an E-book or two. I have a feeling that Western will be more then i can afford and I want to ensure that I can go.

Planning for Big Purchases

As you may know from my earlier articles I am a college student and I was talking about the cost of books in the last post. I have since bought the last text book only to receive my car insurance bill in the mail. Which had me thinking on how I should purchase costly items in the future. Which I consider anything over $150 a costly purchase cause I am paid $500 every month.

Currently when I make a big purchase I look at all my accounts, even my business ones. Then I decide if it’s really worth the cost. Which in most cases I end up paying myself extra to cover the price. Making me wished I didn’t do that or that I would pay myself more. Each time I will get the thought of just being like everyone else and using only what I have personally, only to keep on doing this.

So where I want to be is a point where I have enough money in my (personal) account to cover the purchases I know I will be making. One purchase I know is coming up soon is Christmas gifts, even though there’s still another three months I know now I need to make these changes.

  • Keep to the budget, keep to the budget, keep to the budget – I cannot express how lazy I’ve gotten on budgeting. I used to set one each month but here lately I haven’t set down and actually created one.
  • Have a minimum balance of $100 in my account before I pay myself - I used to have this, until recently. Now by the time I’ve paid myself it seams like half of it is gone since I will delay filling up my tank (~$50/$60) along with funding my E. Fund and other expenses I transfer out. (sometimes $65, other times $25). Which I’m lucky if I have even $20 in my account before payday.
  • Set aside money for fun/gifts - This will be new because I haven’t ever set aside money for gifts. But I have had fun money ($15/mo) but I haven’t had a set amount in months so it back fires now since I no longer track it. So when I see an object I want I just check my accounts like I said above and buy it, without thinking if I have any bills or transfers coming up.
  • Increase my efforts of paying off my Student Loan - This doesn’t fit here but I can’t help but think about it when I see how much interest I have accrued in 2012 that I have yet to pay back. It’s in the $200 range right now, and the last thing I would want is for it to be capitalized.

So these are the things I need to start doing and change to better be ready for big purchases, with a few goals mixed in. I am going to start working extra on projects I subcontract on and divide the differences between the goals I have listed. I figure that having an extra $50 here or $25 there that I can throw at any of the goals will be a start.

When your broke from spending to much

You just got paid from your job, and you feel like you can buy anything you want to (within reason.) Within a few days all your money is gone (from buying junk) and now you have to sit bored waiting till the next pay day. But while you had the money you believed that there was more available, then you checked your balance and you have maybe five dollars till you overdraft. I’ve experienced this in my life, even just recently, just not to that extreme of within a few days.

But for me it was a case of buying more then I should have. Coupled with the fact that I went out of county and took my significant other shopping. But I did enjoy that day which more then made up not being able to do anything for about a week. Now if I hadn’t enjoyed  myself but instead bills pushed me to the edge then I might have been more upset and angry. Even more important was that I wasn’t stressed out, cause I knew I would be getting paid by the company I own soon.

Now that my (good) experience being short term broke is over I do have to look at it through someone else’s eyes, someone who was broke cause of expenses or from overspending on material things with no pay in sight. I would have freaked out and been stressed.

No buffer – This would have been the biggest issue, cause if any unexpected expenses came up (think car being towed) then I would have been worried. Which would have been way out of my comfort zone.

Debt Cycle - I call this where you get in debt to hold yourself over till the next payday, only to pay back the debt and be broke again. Think about it, if you use your credit card to pay all your bills then as soon as you get paid you pay off the credit card. If your not careful you could be broke again since you “lived” off of the credit card, which would start a bad cycle that would be hard to break.

Couldn’t Go Out - This affected my significant other more then me. With no money to freely spend we wasn’t able to get out and I had to remind myself I can’t spend. I ended up putting the debit card inside a drawer until I paid myself. I knew if I went out and just charged the amount I risked placing myself in the Debt Cycle, which I wanted to avoid.

These are the big three for myself that being broke would have limited.

P.S. Happy Fourth of July and try to stay out of debt during this Holiday Season.

The Bare Essentials

In personal finance we may or may not hear of the phrase “The Bare Essentials” but what does it mean and what are the implications of it?

Photo by pshegubj showing a blank expense journal.

Every time I hear of someone cutting back to the “Bare Essentials” I get a visual image of the person cutting every single expense out but what is needed. No cable TV, park the car, etc. But is this the real meaning or do you need to see another meaning? I believe there’s another meaning.

Let me explain, if I was to cut back to the bare essentials then I would cut my eating out way down for starters. But that wouldn’t be the “bare essentials” as I could cut eating out altogether, leaving myself to only eat Peanut Butter and Jelly each day. But your starting to see another meaning. Plus, I’m not sure about you but I wouldn’t like PB&J each day.

Same thing with all of your other expenses, although a few expenses should be cut completely unless it is needed for a job, etc. If your cutting to the bare essentials I’d fully expect you to cut your TV service or downgrade to the cheapest package possible. While others such as fuel are limited in the amount you can cut. Depending upon your job you will not be able to just not come in. Most bosses wouldn’t enjoy that.

So how come when we hear of the “Bare Essentials” we take it to literal vs just almost-extreme expense cutting?

Removing Clutter

As I type this post I sit at a desk with papers covering it. I look across my room and see a table with junk in it. Then past the table is a stack of magazines that’s been there since 2008. Lots of junk that needs to be stored or thrown out. I debated on attaching a picture but felt like we could envision that instead.

Often when one thinks about clutter we visualize just physical clutter. All those receipts in my “to file” box and all those papers and empty containers just laying everywhere. Even my significant other has commented on it. But what about clutter elsewhere in our life? Let me give a few examples:

  • Money Clutter - I consider this to be when your money and financial life isn’t in order and it’s over complicated. I.e. you have no idea where all your money is going or how money flows in and out. Kinda like where you spend a lot and you do not track it and you get a bunch of bills in and they just accumulate.
  • Task Clutter - I have several items on my to do list and it seams crowded. Instead of just setting one project a week to do, I try to fit in several. Which I hardly manage to get just the one done. But had I just set the one project to be done I could have focused all my attention on it and marked it off my list. Else it’s just “cluttering” my list up.
  • Emotional Clutter - We should all have a good idea on what this is. We commonly refer to it as “emotional baggage” or some other term that just means past feelings that were bad or painful for us. This one is a bit harder to get rid of, but never the less it holds us down.

I’m sure you get the where I’m going with this. It is very important that you keep your life uncluttered as much as you can. This week my to do list is to remove some physical clutter and hopefully remove the table that sits in the middle of my room.

Off-topic:

Just an update on the trying to only use $20 cash for the weekend, it failed since I went out to eat with family. But it was less then $40 so at least it wasn’t double.

Making Excuses to Cutting Expenses

I am not sure about yourself but I know that I invent all kinds of excuses instead of taking care of the tasks at hand. One of those tasks is looking at my expenses and seeing which ones to cut.

Before my income went up I would often keep a spreadsheet printed out that I would fill out every time I bought something. I also used to keep cash in envelopes. Well as time went on I stopped using envelops and spreadsheets. Now when I record expenses I just put it into the computer and make sure money is there.

Eating out is one of those expenses I know I have to cut, but I have used excuses like not enough time or no point in avoiding it. I used to use cash and when the cash was gone I would stop spending. But with a debit card it is now easier to over spend then with cash. I also tried to use one account just for eating out, yet when it’s empty I end up just using my other accounts.

There are two options I know of to do

1. Continue on as is This is the easiest and most simplistic. I can keep my own laziness up and not curb the expenses.

2. Try to use cash one month and when it is gone it’s gone this is what I should do, but each time I run into the issue of how much is enough?

I think I’ll try #2, But I do know that at one point $25/mo would be plenty.
But lately I have set $50 and its gone in a week or two. Yet I do know I do not want to go over $100/mo. I will give $100/mo a try and see how it goes. For this weekend I have  $20 in cash, lets see how far I get with it.

What is your suggesting? Just leave a comment and let me know.

Progress on Emergency Fund

If you remember from my 2012 Money Goals article and from the first quarter update I stated that I wanted to start saving back in my Emergency Fund. Since I have posted that I have yet to re-start the “E Fund” as it is labeled. The question I ask myself is why?

Is it because I’m to lazy or because of money issues? Do I not worry about if something bad happens what am I to do? Yes, and no, it is actually a mixture of all these. When I first started the E Fund I would put every little bit of extra money in my account. I had hardly any work to do and time was on my side. When I would go out to eat I would round up all transactions and move the “change” to my E Fund. I would get an extra check for my birthday or etc and I’d go put it into my E Fund. So what happened to the great progress?

At that point over a year ago I got a car, work reached a slow period and I just stopped rounding up and moving the excess. I started to use my extra money to buy myself a new monitor, a new cell phone, and more. I just let the account sit idle not even throwing a single penny into the account since I last touched it. Instead I started to take from the fund to pay my bills, while wasting my real income on unneeded expenses such as going to the movies and eating out.

So starting today I am going to change that, I just signed up for automated transfers on the 15th and end of the month. I will start out with just $10 each time. I would like to eventually increase this amount, but for now this is better then nothing. I am also setting one up for $15/mo just as a start for a place to live.

Which reminds me, I should start working more to increase my income which will let me bump it up. Which I have a week and a half before my summer classes start. Lets see where I stand in the next few weeks.

Moving Forward

I’m sure that several of you may have wondered when I would start posting articles again. The answer is this week. As you know from my last post I needed to take time off and during this time I have learned several lessons.

One of the very first things I learned is you can never have a big enough emergency fund. When this event happened my parents was able to pay in full for the funeral. They wasn’t limited by money. This helped enormously. I cannot imagine having to sacrifice during a time like that.

I also learned that you need to keep your family close. When this happened we had our yard full of people and  it was one of the larger funerals in the town. It made it a lot easier to have people with whom you can rely on.

Third, I learned that an understanding boss is a blessing. If I had been working somewhere else, there is no guarantee that I could have missed so much work as I did. To top it off one of my contracting clients even paid me a partial bit since they understood I still had expenses.

Which brings me to another thing, you shouldn’t over do eating out. By the end of it I felt physically sick from all the fast food and junk I have been eating. I normally packed my lunch and eating out as much as I did or having people bring fast food to us only made me physically worst.

On Friday I plan to publish a rough time line of topics for the next coming week. With summer session right around the corner along with the 2nd quarter being half over with these next few weeks will only fly.

Make sure to stay organized

I hope everyone has had a good weekend, I spent a good part of mine searching for documents. I eventually found them right on my desk after shuffling them in with other papers.

One thing that has helped me a bit on my path is to stay organized. I remember when I was younger and I had a savings account how I would loose the statements. I would be in a panic much like I was this weekend. Frantically searching for the paper until after midnight.

What being organized to me means:

  • Have a “to file” box. Right when I walk in my door I have a box I put all my mail, receipts, paperwork, etc. It all ends up there. Once every few days I will go through this pile and sort it and one by one record and file away as needed. Although I do on occasion forget to place a receipt there and then I forget what I spent it on.
  • Have a spot for everything. I have an old UPS box that I keep all my old statement in, as soon as I reconcile my checkbook I place it in this box ASAP. To many times have I forgotten only to have the statement reprinted since I lost it. I also have a file cabinet for my business and I keep everything of important, from letters to permits and everything else you can imagine.
  • Don’t just leave “stuff” out. This is exactly what I did. When I did the article the other day for how much I’ve made thus far I left it on my desk and worked on a paper and it was mixed in with those paper. So when I went to search for it when I was doing book work I couldn’t find it.
  • Use a calendar or reminder system. I can not speak enough good words for Google Calendar. I have it setup to text me a few days in advanced and the morning of all appointments. Before I would use a paper, but it would get lost or torn.
  • Don’t carry your documents around loosely. I have someone I do work for that does this. Instead of having a nice spot to place it, they carry it around with them. When they go home, go out of state, etc. it’s there with them. As you can imagine they lost a few items. Before I got a clip board and a bag to carry around I would loose paper and lucky it wasn’t anything major, but the other person would loose receipts and the likes.

These are just a few of the numerous ways to help keep organized. I invite you to share your method? Is it the simple Shoe Box or do you have an elaborate file system?

Ideas for Staying out of Debt 6 – Track your money

In Ideas for Staying out of Debt I plan to cover my ideas/plans on how to stay out of debt.

If you often spend money and by the end of the month your asking yourself “what did I spend my money on?” then this is for you. You got to make sure that your tracking your Expenses vs. Income. When I first tried this I would often just give up for months at a time. It was hard to make sure I entered every transaction into GnuCash and one year I just completely stopped, since I was becoming lazy.

Here’s what you need to do in order to keep track of your money

  • record purchases as soon as you buy an item
  • keep all receipts until you enter them
  • if no receipt, then make note, for me I use my cell phone
  • sit down once a week to do all your bills
  • every so often reconcile with your bank’s online banking
  • make sure you plan for big purchases

The first three are all related, make sure that when you purchase even a meal that you sit down and record the purchases. I was/am horrible about this and I would often forget to and ended up forgetting what I even bough. Now I try my best to record it within a day or two.

You need to set a day aside each week to pay all your bills. This way you can open the checkbook once and be done. Plus you can start to get a better view of your finances. I know when I do that I end up thinking is it really worth the cost I paying.

This is one thing I do every couple of days. I just give my bank’s online banking a quick visit and ensure that nothing unusual is going on. I will also make sure that the purchases match up and wasn’t over charged.

Finally, make sure to plan for big purchases. Case in point I knew I’ld be building a computer and for three months I prepared for it. Now in my case I started to buy individual parts for it bits at a time, but I could have just the same saved back the money. Just a little bit here and their can go far. Often times a big purchase I want I spend a long time planning before I actually make the final decision to buy.