Thursday, April 12, 2012

Emergencies Happen...

No matter how careful you are about your spending and regardless of how well you kept to your budget, something always comes up that will throw a wrench into your plans.  Emergencies can come in many forms, but one thing is for sure, it's going to throw your budget into a tail spin. 

Be it a broken appliance, a car problem, a health issue, or any of the other unpredictable, cash sucking issues that can pop up, it's going to cost you money and you probably don't have money to spend on it.  So what do you do when emergencies happen?

Well, first of all, analyze whether or not it's a true emergency.  Ask yourself a series of questions, and determine whether this emergency is a life or death situation.  If you can still live, perhaps it's not an emergency after all.  Perhaps there is a chance you can hold off on fixing or replacing your problem until you can afford it. (NOTE: If your emergency is health related ALWAYS assume it is life or death, and take care of it IMMEDIATELY.  Delaying health issues can only result in MORE health issues down the road.)

Decide how essential the broken thing is to your daily routine.  Is it something you can not function without?  For instance if your shower is broken and you only have one or if your toilet is flooding or your roof is leaking, you probably need to take care of the issue pretty fast.  Is it something that is costing you money by being broken?  Like if your sink is leaking, you're paying for that wasted water, or if your fridge is broken, you're paying for the food that goes bad.  These are things you want to take care of sooner rather than later, because they are just going to keep costing you while you put them off.  Will it being broken effect your job?  For instance, if your car no longer runs and you can't get to work, you can't get paid.  Not a good situation for anyone.

If your issue doesn't fall under one of these categories, consider whether it's really an emergency.  If your dishwasher is broken, could you just do the dishes by hand for a while?  If the washer or dryer is broken, is there somewhere else you could do your laundry?  If you can find another solution and it isn't too inconvenient, then perhaps your emergency is not really an emergency after all.  This might not make your life a lot easier, but it will keep you from having to drop several hundred dollars you don't have.

However, if you can find no other solution, or your issue is truly life or death, then you have no other option than to spend the money you don't have.  So how do you go about doing that?  Well the object is not to put yourself into any more debt than you are already in. 

If something is broken, consider trading for services to fix it.  If you know a neighbor or friend who is in this area of expertise, perhaps offer him a trade.  Make sure your trade is actually reasonable.  For instance, if your neighbor is a mechanic and you've noticed he hates mowing his lawn and pulling weeds, offer him your landscaping skills if he would replace the brakes on your car.  This wont work for everyone, but for some this might be the cheapest and best way to solve your problems.  Just remember, if the person agrees, make sure you hold up your end of the bargain and don't slack off.  Also, if someone is voluntarily doing manual labor for you around your house or car, make sure you offer them a drink or a snack.  Be courteous, they're doing you a favor!

If trading services isn't something that is going to work for you, you're going to have to fix your emergency the old fashion way.  So start by taking money from more flexible parts of your budget.  You might have to completely eliminate your entertainment section of your budget and forgo any nights out for the next month or two, but you'll be glad you gave these up when you realize you saved yourself a lot of hassle.  Try to scrape a few dollars out other areas, like your food budget or your transportation budget.  I'm not saying starve yourself, but perhaps you can pass up your favorite cookies this month, or take your bike to work instead of buying gas for a week.

Next, cash in any 'emergency piggy banks', seeing as this qualifies as an emergency.  For instance, if you've been saving coins in a coin jar for months, this might be the time to use them.  I know you were saving them for a vacation, but your vacation is never going to happen if you just keep piling on more to your debt. 

Next, consider finally selling those things you have laying around the house.  Throw them up on eBay or craigslist and see if you can get a few dollars for them.  Any little bit will help.  Do anything you can to pay for as much of your emergency in cash as possible.  If you can avoid charging your emergency, you've done a good job.  The last resort is to put your emergency on a credit card.  If you can at least pay for half your emergency in cash, you should. 

If you have to charge it, you have to charge it.  But get it paid off as soon as possible.  Unfortunately, debt never disappears.  The faster you pay it off, the less it can haunt you.

Monday, April 2, 2012

The Jar: A debt relief reward system

So when my boyfriend and I first bought our house, we had an old pickle jar out on the counter where we threw any coins that we had in our pockets at the end of the day.  Our initial idea was to take the jar down to the bank each month and add what ever 'extra' money we collected to our monthly mortgage check.  I had read somewhere that something as small as adding an extra quarter to your mortgage check each month could potential take years off your loan. 
Our intentions were good, and we did collect about a half a jars worth of coins that first month, but we just never got around to going to the bank with them.  So we said we would keep collecting and go to the bank the next month.  Well that didn't happen either.  Pretty soon we filled our little pickle jar.  As the jar was filled with just pennies, it really didn't seem possible that we had accumulated that much money.  So we decided to just continue collecting.  I brought home one of those 5 gallon water jugs from our break room at work and we set a new goal.  We decided when we fill this jug, we will take the money down to the bank and cash it in.  However, we decided we're going to use whatever money is in there for ourselves instead.  We arnt putting a label on it right now, but we're going to reward ourselves with it.  Maybe we'll use it towards buying a new TV, or towards a little weekend trip away or something.  What ever we use it for, it'll be almost like a free gift, because it's not like we're missing the money that's piling up inside our jug.  We're not painstakingly pinching pennies, we're just tossing our change into the jar, rather than having it float around cars and jacket pockets and purses. 
I can see the question forming in your mind though.  Why not put the 'extra' money towards our debt?  If you don't miss it, it's the best money in the world to put towards the mortgage our your college loan.  But we decided this made more sense.  Why?  The answer is simple.

When you're constantly saving and trying to pay things off, you forgo a lot of things.  I wore broken shoes for two months, simply because I couldn't justify spending the money on myself to get new ones.  We pass up eating out, going to movies, buying our favorite snacks, because they're all things we don't 'need'.  But it's hard to live like that.  It's hard to constantly deny yourself things.  It's especially hard to deny yourself things for long term causes, like paying off debt.  This is harder because you don't see the benefits of your sacrifices right away.  It can seem like you're doing all this going without for no reason, and sometimes this can cause people to give up on their goals.  So this jar is now our reward system.  We wont feel guilty about spending the extra money on ourselves, because we earned it.  We were patient and (hopefully) put a good dent in our debt and we deserve a reward, however we wont be spending money that we'll miss.  It'll be the extra money that in a way, we didn't even know we had. 

If you're trying to free yourself of any kind of debt, be it credit cards, college loans, car loans or mortgages, I suggest setting up a jar system.  If you arnt as patient as me and my boyfriend are, use a smaller jar and use the money to go out to see a movie, or something less expensive that you can earn your way towards more often.  You'll be amazed at how something so small can make an impact on how you feel about your progress towards your debt relief. 

Wednesday, March 28, 2012

So far, so good.

So far our once a month shopping trip has been a success.  Usually, I would be in desperate need to run out the door to buy meat and vegetables for dinners and lunches, but this was a hassle free week.  I have more than enough meat and more than enough vegetables to last me, and though we are running low on a few things, we should be able to stretch them a while longer. 
My next kitchen task is to get a decent pantry going, so that when I find a recipe I want to try, I have plenty of extras and I dot have to run out to the store.  We're a little strained for space in the kitchen itself, so I'm thinking I'm going to set up one of those wire racks down in the basement to dedicate to stock piling canned food and non perishables.  I am on the look out for good coupon sites so that I can stock pile and save at the same time.
I haven't spent any additional money on food since we went shopping just about two weeks ago.  I'm pretty proud. 

Tuesday, March 20, 2012

Monthly Shopping, realizing I'm human and everything in between...

So just recently, and when I say recently I mean yesterday, I realized that I am only human.  I will never be able to banish all my impulses.  I will never be able to walk by string cheese without buying it.  I will never be able to cut certain items out of my budget.  I will still have wants, needs and desires.  No matter how badly I want to believe that I can live without a lot of things, I'm wrong. 

My parents were very good to me.  We were by no means rich, but they gave my brother and I everything they could.  They allowed us to be athletes instead of forcing us to have after school jobs.  They paid for our car insurance, gas, clothes, and other necessities.  They didn't spoil us, forced us to learn hard lessons about wanting and needing, instilled the value of a dollar in us, and still, they didn't deprive us. 

Because of this, I am used to saving my money.  I didn't have the same monthly expenses as some of my friends (car insurance for instance).  This allowed me to put my entire paycheck into my savings account.  I have been saving since I was very young.  So when I left college for the real world, I had saved a pretty decent amount of money.  I lived knowing that double digit number was sitting in my savings account for a rainy day. 

However, that double digit number became a big fat check for the down payment on our home.  I'm not complaining, I love my house, and I can't imagine a better way to spend my savings, but now it's hard to pull up my savings account and see such a small, measly value.  And I would be lying if I said it doesn't worry me some times.  I used to split my paychecks between my spending money and my savings account.  I could quickly watch my savings multiply.  But now, I split my paycheck between my student loans, credit card payments, mortgage and utilities.  Whatevers left I put towards things for the house and groceries.  I haven't gotten to put any money into my savings account in a long time, and I think that's the biggest motivation behind getting my student loans paid off as fast as possible.  If I could be saving all this money that I'm putting towards my loans, I could be living very comfortably.  I would have a decent savings, and I might be able to treat myself to some of those things that I want so desperately right now. 

I guess it's only human to want things.  I just feel like all I do is want.  Don't get me wrong, I appreciate absolutely everything I have.  I have a good life.  But I don't want to have to choose between one thing and another anymore.  I don't want to have to choose between that extra debt payment or buying a grill for our deck.  I think that's the hardest thing.  I have to rationalize every single purchase I make to myself.  I have to talk myself into buying things I need.  I'm not saying I want to give into all of my impulses, that would be counter productive.  I just want to not feel guilty when I do buy things, like clothes, for myself. 

But anyways, so in an effort to eliminate my impulse shopping, we have decided to try monthly shopping.  So yesterday, my boyfriend and I tried out BJ's for our first real bulk shopping trip.  I had to keep reminding myself that this (in theory) was the only grocery trip we were going to make until the middle of April, so it was okay that we were piling up so much food.  But when that total, that was just about double our weekly spending popped up on the screen I almost passed out. 

This is one of those things that I struggle with.  I was never good at the whole theory that if you spend more now you save in the long run.  It was always hard for me to dish out money all at once.  I always liked spending a little more often than a lot all at once.  So the total of our shopping trip completely threw me off guard.  But then, I forced myself to remember that this was for an entire months worth of grocery shopping.  I spent $240 last night, but I usually spend about a hundred dollars each week at the grocery store.  So, if we can actually make all that food last us until the middle of April, I will have essentially saved about $150.  Did that make writing the $240 check any easier?  No.  And I probably wont even notice that extra $150 in my account.  But it sounds good in theory.  And I think with a little practice and better planing I might actually be able to get the monthly bill down even lower.  I mean, there are only two of us.  It shouldn't be that expensive to feed two people who never eat breakfast for a month.  But we will see.

There are other parts of my spending besides groceries that I need to adjust.  I'm working on it slowly, but like I have recently learned, I'm only human.  There is only so much that I can do, so many places that I can cheat myself.

Thursday, March 15, 2012

The Student Debt Relief Bill

Okay, we need to talk about something that I'm noticing is coming up a lot with my peers.  The Student Debt Relief Bill.  I feel like every social media that I look at there are a hundred kids my age posting about how we have to pass this bill because they can't afford their college loans and what not. 

I need to make something perfectly clear.  This bill would do absolutely nothing for most of you.  It is not a magic wand that is waved over your debt and it all magically goes away.  It would make absolutely no sense for the government to just forgive millions upon millions of dollars in loans.  As awesome as it sounds for us individuals struggling with debt, when you think about the over all effect of something like just doesn't make sense.

Luckily, the people who have written this bill have taken that into account.  They realize that no one is going to magically make their debt go away.  So they have factored this in, in an attempt to make a bill that seems more logical.  This is the part that I know most of you haven't read.  I can tell by the way you are all posting about how we have to pass this right now so that you can quit your second job or afford a new car or something like that.  The relief would only go into effect after you had paid off the equivalent of 10 years worth of payments.  Or 120 months worth of 10% of your income. For a lot of people, especially those with 15 year loans, that's still most of your loan.  Basically, you would still have to pay for your education.  The relief really comes in the interest.

So for all you recent graduates who think that passing this bill (which I don't exactly have high hopes for) will magically make all your money problems go away, you're wrong (and you're also an idiot for not doing some research before you signed your name on the thing).  You still have to work for it.  They aren't just going to reward you for sitting on your ass and missing payments. 

So I wouldn't skip payments assuming that all the online petitions that you're signing are going to take care of your loan debt.  And I don't think you need to keep posting the same petition on your facebook wall over and over and over.  We all know the petition exists, and honestly, if it has 1,000 signatures or a 1,000,000 signatures, I still don't think the bill will pass.  However, I'll join you in being hopeful, because if it does pass, I'm a hell of a lot closer to having my debt relieved than you are!


Decisions, Decisions

So I have a huge decision to make.  My tax refund is on the way, and I need to decide what to do with it.  Part of me, the busting-my-ass-to-pay-of-the-loan part, wants to put the whole amount directly towards my loan.  This seems logical for a few reasons.  I didn't have this money before, so I wont miss it when it's put towards the loan.  It's a significant amount of money, it could essentially be another 5 months worth of payments.  And finally, I'll end up putting the same amount of money and then some towards the loan, I might as well do it before I think of other ways to spend it.
However, the 22-year-old part of me wants to spend the money on things I want.  I've had my eye on a few camera accessories and a new laptop for a while, and this money could very easily make me a very happy girl.  I mean, this money is extra gift money, why shouldn't I spend it on myself?
The new-home-owner in me thinks that that money would buy an awful lot of much needed stuff for our new house.  There are lots of things (like a new dishwasher) that we're pretty desperate for but just can't afford right now.  Perhaps this is the money that would get us those things.
And then, there's the little Scrooge in me that just wants to put the money in my Savings Account and save it for a rainy day. 

This is such a difficult decision.  I feel like I'm fighting with myself every minute of the day.  I feel like if I haven't made up my mind by the time the money actually hits my account I may impulse spend it on something completely random that I might regret.  A lot of my budgeting has to do with having plans, because one of my biggest down falls is my impulse spending.  I spend a lot of time trying to convince myself not to impulse buy.  I also utilize a lot of the tricks they talk about, like the 30 day rule and the walk away and see if you come back to it rule.  But my biggest impulse spending issues come in to play in the grocery store.  I have to make a list and force myself to stick to it when grocery shopping. 

So my refund should be here soon, and I don't know which side of me is going to win.  It's going to be a fight to the finish, that's for sure...

Thursday, March 8, 2012

A Proud New Member...

Yesterday my boyfriend and I took the leap to becoming BJ's members.  I had always been against the type of store where I have to pay money to spend my money.  How could I be saving money if I paid $50 just to be able to walk through the door?  (I have the same theory on cover charges at bars as well).  However, after a little bit of research and a lot of talking to people who were members, I decided to take the dive.  Spending the $50 hurt a little, but supposedly the rewards will be worth it. 

One of the main reasons we decided to make the switch was because of gas prices.  There happens to be a BJ's on the route that both the BF and I take to work, and the member price for gas there is about 15 to 20 cents cheaper per gallon then all the local gas stations.  Since I drive a giant, gas guzzling pick up truck, I decided that at nearly $4 a gallon, I just couldn't afford to be filling the tank constantly.  But at least if I'm saving money at the pump I can feel a little better about it. 

A question that I've gotten a lot before is:  If you're trying to save money, why do you drive a giant pick up truck that eats gas like it's going out of style?  Well my friends, the answer to that is simple.  I own my pick up truck.  If I were to get a more gas efficient car, I would have to take out yet another loan.  And since the whole point of my money saving is to eliminate the loans I already have, I can't see how adding another loan to all that would be justifiable just to save money on gas.  It's sort of like a devil you do know is better than the devil you don't sort of situation.  My truck is a bit old, but it runs.  It doesn't have any major issues besides guzzling gas, so I can't justify getting rid of it. 

However, I do justify driving the truck another way.  I hardly drive it all Summer, so it's not using very much gas when gas prices are generally the highest.  How do I manage to drive my truck so minimally in the summer?  I drive my motorcycle instead.  Yes, I know, this is totally unexpected.  A young girl like me riding around on a big black Yamaha motorcycle?  But folks, when I tell you that I save so much money on gas and maintenance I am not kidding.  (It's also really fun).  My motorcycle has a gas tank that takes just about 3 gallons of gas.  So, even if my tank was bone dry, it would cost me no more than $12 to fill.  But how far can I really get on 3 gallons of gas, you ask?  You would be amazed.  When I fill my gas tank in the summer, I can usually go 3 or 4 days of constant riding on that one tank.  I mean, there are days that we've gone on lengthy, lengthy rides where I've had to fill up more often, but on average I can ride for much longer, on much less.  And when you factor in that Monday through Friday the only real time I'll be riding is my commute to and from work, well I can probably go the whole week on just the one tank.

Think about it.  When was the last time you went a whole week on $12 worth of gas?  And no, you can't count that week you had the flu and didn't leave the house for 5 days.  My motorcycle (which I bought used and got a really good deal on) was probably the best investment I could have made.  I would recommend buying one to anyone who wants to save a little money on gas and have fun doing it.  The best part?  Motorcycles are also very cheap to maintain. 

But, I digress.  This weekend will be my first trip to BJ's to hopefully save a significant amount of money on my grocery shopping.  I am hoping that I can slash my spending on meat and paper goods, and I will most likely fill my gas tank while I'm there. 

We'll see how it goes!