Spending Fast

No, I'm not spending money quickly; instead, I am not spending money. Like one of these fasts. It wasn't until today that I had a sort of epiphany. (Warning: it's not as major as it seems.) I haven't spent money for the past two days [GASP!]. Three days ago, I paid my phone bill and applied a few bucks towards my credit card balance (that hardly counts as "spending" as it's more of an obligation, rather than something that's discretionary. "Spending" sounds much more fun to me and, although it's the same thing, I set aside "bill paying" in my head. But I digress...)

My mini-revelation surprised me in two ways. First, I realized - aside from looking at my expense tracker- that I spend quite a bit of money on food. I still long for Panera (it hasn't been a week yet and I'm already dreaming about the next time I'll treat myself to their goodies), I haven't eaten any cheesy goodness from a fast food restaurant (ex. Subway's meatball sub, an organic cheeseburger from Elevation Burger), and no random snacks from my local CVS (I've been thinking a lot about sour gummy worms). I tried the meal planning thing; actually, it wasn't much of a plan. I made a crock-pot meal on Saturday and have been eating it for lunch and dinner all week long. I'm so sick of chicken stew! Chicken stew and rice. Chicken stew on a flour tortilla. Chicken stew and toast. Plain ol' chicken stew. I finished what was left of it tonight for dinner. Luckily, I changed things up a bit with a bowl of imitation Fruit Loops and pizza (that was on sale this past weekend) for dinner last night and lunch today.

My second surprise was that I didn't feel bad for not spending money. There was a bit of awkwardness because I haven't been too many places outside of home and work. As weird as it may seem, spending money has almost become an automatic thing (yikes!). I've always been aware of my spending (as evidenced by my near obsession with expense tracking), but I haven't been so conscious about my non-spending. We'll see if it matters.

Update: I tried bottled water for my coffee and it tasted better! Then again, it was a different type of coffee (Caribou's K-cup vs. the Gloria's Hazelnut that I tried at first). Frankly, the brand of hazelnut is unimpressive (which sucks, because it's my favorite flavor of coffee!). Nevertheless, I will continue to experiment in order to find the perfect cup o' joe. And if things don't work out, I'll sell my new toy for half of what I paid for it on Craigslist and head straight to Panera. Okay, okay, I'm joking....but only a little ;)

My New Toy

In my last post, I talked about using meal planning as a way to adhere to my food budget of $50 per week. I did okay on a trip to the grocery store (I spent $50.60, but $10 of it was for non-grocery items<<paper towel and toilet paper). However, I did not purchase breakfast items. I knew that breakfast is was best at Panera Bread. But when I did the math (at least $3.02/day for at least twenty days each month), I knew that I might be better off (at least a little bit), by putting $60.40/month elsewhere (savings account maybe?). 

So what did I do? I bought one of these...

The machine, additional pods of hazelnut coffee and skim milk set me back $120.22. The cost per cup (excluding the depreciation of the machine) is $0.67 compared to the $1.75 I pay paid at my lovely bakery chain restaurant.

I tried it last night with tea (nothing special there), and this morning with coffee (it doesn't taste like Panera :/). I even made a second cup because I thought the first was a mistake.

The next time I use this machine, I'll use purified water (as recommended). I'll let you know how it turns out.

By the way, why did I purchase an "expensive" single brewer coffee maker? I've had coffee from Keurig (machine and pods) before and it's always delicious. Like, addictive delicious. I figured, why not have the same deliciousness in my home?

I'll do my best to make breakfast at home as pleasurable as breakfast on the go (I'll miss you cinnamon swirl and raisin bagel!). I should remind myself that there was life before carrying out breakfast every morning. But the smell of freshly brewed coffee for a few months has easily overshadowed such memories. At any rate, I'll do my best to "get back to the basics."

P.S. Okay, so maybe I'm being a little dramatic. You would be too, if your coffee wasn't on point!

Is Meal Planning My Ticket?

I've been ashamed of my food spending for the past few months. I budget $50/week for food and have easily blown through more than a quarter of that budget with my work day breakfast purchases, alone.

Shout out to Panera Bread. I love your hazelnut coffee (w/skim milk) and cinnamon swirl and raisin bagels, toasted with no cream cheese or butter.

Any who, I've laid out my spending through the end of the year using my new budget template, noting that I'll be using my new rewards credit card (and maintaining the tradition of paying the balance in full), and trying to plan for upcoming expenses, such as a weekend trip to the Big Apple.

In an effort to restore my ability to "respect the budget", I know I have to do a better job of sticking to my $50/week food budget. And I'm wondering if meal planning is the way to go. Frankly, I have not been a model for eating meals that are nourishing or financially responsible. I won't go into any great detail about the $20+ I spent for lunch at the Cheesecake Factory a week or two ago...or about the beer and banana chips I ate for "dinner" last night, but I know I have to spend a reasonable amount (i.e. not $20+/meal) and it should be good for me (ex. add veggies, protein, and maybe better carbs to my beer).

This is where meal planning comes in. I've heard about it here and there, I know that it involves me making a list of stuff I want to eat for the next week, and making sure that my grocery list allows for some flexibility around core items, but frankly, I've never done it. The closest I've come to meal planning is whipping out a grocery store circular and buying only what's on sale. I wouldn't say that peanut butter, cantaloupe and pork chops constitutes a meal, but at least I spent less on such purchases =)

Have you successfully used meal planning to manage your finances and to ensure you eat balanced meals? What has worked best for you? I appreciate your insight!

Too Much Time...

At the beginning of July, I shared a new budget template that I plan to begin using in August. Since then, I've adopted a template from my boyfriend that allows me to view my expenses on an annual basis (with a month to month snapshot).

I've spent an inordinate amount of time trying to reconcile my monthly expense tracker tabs with this new "annual budget" tab. At times, I tell myself that I will only use the annual tab for the upcoming months. Then, I find myself toiling away at the workbook to get the numbers just right. I've spent at least 5 hours in the evening and at work trying to achieve an accurate reflection of my budget for the past six months.

Just a few notes: January, March, April, May, and June are all works in progress; those months with orange backgrounds are really screwed up (at least there's hope for getting May straight by moving around a few things); the plus signs (+) indicate that the information associated with that column/row is correct (as such, you'll see that my REAL problem is figuring out how to track my credit card expenses).

What do you think? 

Should I keep going until I get the past months right or move on?

Updated Budget Template

This week was all about budget templates! (Sounds kind of corny, but whatever). My boyfriend and I discussed our respective expense trackers and a friend of mine asked about the budget template I use. My convo and special request got me to thinking about how I could improve my budget template. Here's the new and improved template with notes on how to use it: http://tinyurl.com/budget4sandyx.

Here are a few tips I shared with my friend:

• The first tab (annual budget) offers a monthly and annual snapshot of your expenses. If you get paid every two weeks and have two "extra" paychecks per year, you can update the formulas accordingly.

• I prefer to track my expenses based on when I receive my paycheck (every two weeks). You can track based on what's easiest for you (by week, every two weeks, or monthly).

• The orange categories capture transactions from my checking account, since this is where the bulk of my expenses come from. The green category captures credit card spending. It's a bit subtle, but you'll notice that this tracker assumes that you pay your credit card balance in full (credit card transactions are combined with checking account transactions; both are deducted from your total income).

• If you use your credit card to make the majority of your transactions (and to earn points, rewards, miles, etc.), you can categorize your credit card spending and change the "credit card transactions" column to "checking account transactions".

• If it's more helpful, you can move the credit card transactions column next to the "cash transactions" column and exclude it from your "total income - total expenses" category. Doing so will make it easier to reconcile your bank statements with your expense tracker (this is the way I use my tracker). See the third tab for an example of this.

• The blue/green column (cash) captures transactions you make using cash. In the [orange] ATM/Cash Back column, you're tracking money that has been withdrawn from your checking account. In the separate blue/green column, you're tracking the use of the aforementioned funds after they've been withdrawn.

• You insert your income (weekly, bi-weekly, or monthly) in the formula for total income minus total expenses. If you have any funds that carried over from the previous pay period, you can add it to this formula (second tab) or as a line item (third tab).

4%

What a pretty vague title for today's post, hunh? It doesn't have anything to do with an APR or an APY. It has everything to do with how much my salary will increase.

Yesterday, I had a performance evaluation, and at the end of it I was informed of my raise. Hooray for more money! I doubt that it would have been an appropriate question to ask, but I'm wondering when it will kick in (likely at the beginning of our fiscal year, i.e. July 1st).

I haven't thought about what exactly I plan to do with the raise (about $80 extra per check, gross, not net pay) but I'm pretty sure that it will go towards a debt repayment and/or savings. After all, I'm okay with my current budget for regular expenses.

UPDATE: I paid the majority of my credit card balance with "car payment" money, instead of savings (like I suggested yesterday). All that remains is a measly $8.35; Capital One won't allow you to pay more than your balance + 10% of the balance. I could have waited until all of my transactions cleared so that the full balance would be reflected, but I've been having an A.D.D. day today.

What a Pleasant Surprise...

I checked my Capital One account this morning to see if my most recent purchase (yet another car repair) was posted. What I saw was that my available credit was different. Way different. Like, $5000 more different. Yup. The folks at Capital One took it upon themselves to increase my credit limit to $7,000 (if only my savings balance could change just as magically....). 

For a nanosecond, I was delighted that my [leveraged] purchasing power increased. What I'm most happy about is that this increased credit limit is helpful for my credit score. I've already decided to spend no more than $2,000/month on the credit card (heck, I've been doing that since I've had the card); so even though I have a higher limit, $2K is stuck in my head. Also, I'm committed to paying off my credit card balance each billing cycle. You already know that- looking at my budget- it is not within my means to charge up to $7K a month (billing cycle), and maintain my commitment. At best, with all of my savings and bills that don't accept credit cards (ex. car insurance, student loan, car note), I could charge just under $1400 (for food, gas, cell phone bill, etc.) and pay it off .

All things being equal, we know that folks who carry a balance under 30% of their available limits fare better than those who carry a balance of 50% or more of their limits (check out the last paragraph of this article). Even if I reverted to my balance carrying ways, this new credit limit increase helps position me in the former group (do the math, $2,000 of $7,000 is just over 28.5%)

A Wonderful Vacation!

Somebody (i.e. me) didn't post for three days. If the picture to the left doesn't make it clear, then hopefully, these words do....I was gearing up for, and later enjoying, a vacation!!!

My dear friend married his college sweetheart on Thursday, April 28th and many guests enjoyed a cruise afterward. The days prior to his wedding were fraught with shopping (What to wear to the wedding!? What to wear on the cruise and for the excursions!?), planning (They want me to pay WHAT for an excursion!? Let me deal directly with the vendor!), and packing (What can I pack in my carry-on (clothes, shoes, toiletries)... What do I have to purchase once I get to Florida (liquor, large sunscreen, liquor)...)

The wedding was beautiful and the ensuing cruise was a blast! I got to spend time with friends, a little more time with my boyfriend, toured Ernest Hemingway's Key West home, parasailed, ate, snorkeled, danced, laughed, ate some more, played cards, snapped a ton of pictures, learned a "fancy" way to play Black Jack, ate again, and napped. My boyfriend ran into an old friend (and his girlfriend) and we shared a few experiences (we're looking forward to hanging out with them).

I hadn't cruised in several years and was anxious to find ways to spend less money where possible. This is how I did it:

• I read the FAQs like my life depended on it an learned that each person could bring 750mL of wine for embarkation day. Considering that cocktails on board started at $7 (plus 15% tip),  I made sure to take advantage of this opportunity: 1 bottle of pinot grigio and 1 bottle of Arbor Mist (my boyfriend likes fruity drinks) cost less than ten bucks at CVS.
• Long before the cruise set sail, my boyfriend and I explored the shore excursions we wanted to participate in. We settled on the Ernest Hemingway museum and parasailing in Key West and snorkeling in Cozumel. Had we booked through the cruise, the per person cost would have been $40, $90, and $60, respectively. I decided those amounts were too high and shopped around. I made online reservations for the Key West activities with local vendors ($11/pp for Hemingway's house and $35/pp + tax for parasailing). Once we arrived to Cozumel, we asked three vendors about their prices and settled on one for $45/pp (in hindsight, we probably could have negotiated with them). Nevertheless, instead of paying $380 (for the both of us), we paid $187.24....for the same exact thing!!!
• I printed coupons. In asking about places to go for our trip, Pancho's Backyard came up. We went to the website and printed out coupons for free lime margaritas. They were DELICIOUS!!!
• We booked early. As soon as my friend set the date, I booked the cruise (March 2010). Since then, I'd been setting aside $100 each month to pay for the cruise (which was paid for by October 2010) and spending money. A few months, I spent the "cruise spending money" on other (i.e. more immediate) fun things, but at the end of it, I still had $400 left.
• It wasn't a "way to spend less" but a financially savvy decision nonetheless...My boyfriend has a rewards credit card that earns points for every dollar spent. We each received a card that granted us entry into our stateroom and allowed us to make purchases on board (a few rum punches and mojitos, room service, coffee, and daily gratuities, for instance). Both of our cards were assigned to his card. So the $202 we collectively spent will translate into points that he can use at a later time.

Despite spending a ginormous amount of money on clothes ($700+), the amount of money we spent during the actual vacation was very reasonable. We had an amazing experience and are looking forward to our next trip! Perhaps next time, I can wear what I bought this time around and really keep the numbers in check!

What Do Your Expenses Say about Your Health?

If you believe that a snapshot of your spending is a good indicator of your health, then I would be among the 2/3rds of Americans who are overweight or obese. Since March 18th, I've spent more than $100 on food. Approximately 70% of it has been on eating out...which wouldn't be so bad if it was healthy. Instead, I've been stuffing my face with french fries, sausage biscuit sandwiches, donuts, and 290+ calorie macadamia coconut mocha drinks. In other words, McDonald's, Dunkin Donuts, and Caribou coffee (and a French bakery,  [cheese] steak shop, Panera Bread, and Subway). 

Frankly, my spending is more reflective of a recent bout of laziness than my general health status. I haven't been waking up early enough to eat breakfast at home (which doesn't make since, really, once you consider the time it takes to wait in line for someone to take my money and give me something fried and super salty). Moreover, I haven't made any time to pack lunch: mornings are out (see abovementioned excuse) and since I've been getting home considerably late, recently, I focus more on showering and sleeping once I get in the door (no packing lunch here). I know if I keep up with this habit of eating out excessively (without making adjustments to other areas of my spending plan) that I'm setting myself up for financial failure.....and high blood pressure and jiggly body parts. Instead, I'll commit to doing better the next time around =)

Fortunately, I'm a healthy weight for my height and my BMI is less than 20 =) Hooray for exercise!

What would your most recent expenses (let's say, the past two weeks) 

tell us about YOUR health?

Not So Fast....

In January, I wrote "Early Graduation from Graduated Payments?" In it, I asked if I should switch from a graduated repayment plan (incrementally increasing every two years) to a standard repayment plan (one with the same monthly payment). I misunderstood the charts I compared at the time (this one in particular):

I was under the impression that my graduated payments would start in February. So I updated my budget to reflect this change. You can imagine my surprise when I logged on to the Direct Loan Servicing website to discover that my next payment would be the same $229.21 I'd been paying for the past year.

Turns out, I'd have to pull the trigger to make the increased payment happen sooner than later. After talking to a DLS customer service representative (who didn't sound like she cared for her job much; then again I did call after 8PM<<<she probably resented missing "Glee" or something...anyway) I learned that my payment is scheduled to increase in November (exactly two years after I started repaying my loan :>). And when it increases, it won't be the above-mentioned $265.97; it will be $268.91. I decided to forgo initiating the higher payment. I was advised that if I start paying the higher amount (effective March 2011), I would pay $8,770.82 in total interest over the course of the loan term. On the other hand, I would pay $8,917.25 in interest (over the same time period), if I wait for the increase to occur in November. For you math junkies, that's a difference of $146.43.

I asked to keep things as they are and plan to make principal only payments on the higher interest loans in my portfolio of $36.76 (this is the monthly difference between what I thought I was going to have to pay and what I'm currently obligated to pay).

What do you think? Would you make additional principal payments -totaling $367.60- over the course of ten months? Would you go ahead and switch to the higher payment? Or would you sit back and stash the $36.76 each month?

I Spend Less than 75% of My Income

Lately, I've been thinking about how fortunate I am to be able to spend less than 75% of my income on necessities (housing, transportation, food, debt repayment, etc.) In fact, I am currently spending just over 71% of my income (or $1,999.46/month). The $785 left over goes towards the car payment that I obsess over (hooray for principal-only payments!). Later, it will go towards my savings goals. 

I'm happy about these circumstances for a few reasons. First, I've made some updates to my income, and throughout each update, I am able to stay on track with my "financial success plan." Specifically, when I started this blog, my net income was $1,389.01/pay period; later, because of recent and temporary changes to the payroll tax, that amount increased to $1,417.23/pay period; finally, I increased my contributions to my 403(b) thereby reducing my net pay to $1,392.23 each pay period.

Secondly, I am happy about this fraction of spending because it confirms that I can live well within my means. For example, I think a lot about increasing my income and how I would spend it (one of my other 'obsessions' is writing budgets of how I would spend $5,000 and $7,500 of monthly net income). Even with increases in housing expenses (assuming that I'd be a homeowner with thousands more at my disposal) and modest increases in my food, travel and miscellaneous expenses, I'd still be able to pay extra toward my student loan debt, max out the Roth AND max out the 403(b).

Finally, I think about the high percentage of Americans who live "paycheck-to-paycheck." These are folks who spend every cent they earn, leaving very little- if anything at all, for savings or additional debt payments.

Ultimately, my goal is to spend 50% or less of my income. And considering that I aspire to live a comfortable lifestyle (i.e. consistently save at least $10K a year in non-retirement/non-investment accounts, max out individual and employer-sponsored retirement accounts, and travel domestically and internationally every year), I MUST increase my income. I better get started thinking about how to do that....

What percentage of your monthly income do you want to spend? What percentage of your monthly income do you currently spend? What's your plan for achieving your goal?

This Phone Bill Can't Be Right

I am a satisfied customer of AT&T. I don't have a "fancy phone" with internet access and whatnot (at least for now :>). I have a plan with just enough minutes (I have plenty that have "rolled over") and unlimited text messages. The base price for my rate plan is $59.99 ($39.99 for the minutes and $20 for unlimited text messages). I've gotten accustomed to paying just under $70 a month for my phone bill (including taxes, fees, and the occasional usage charge for when I accidentally access the internet<<those data charges suck!) However, I've noticed that my most recent bills have been $71+. 

At first, I thought I was accidentally accessing the internet more often than usual. Turns out, one of the miscellaneous fees has increased. Now you might say, "what the heck is your problem? It's just a couple of dollars." Well, I believe it "all adds up." Besides, I'm irritated that my monthly spending plans reflect a $70 expense for something that turns out to be a little bit more. At the current rate (approx. $71/month), I'm spending $12 to $24 more (per year) on my phone than planned!

Okay, so maybe I'm being a bit dramatic. You know what I did? I changed my billing address to my parents home (heck, I have their address on file for other accounts, so what's the big deal?). My hope is that the local fees for their city/county/state will be lower than the local fees for my city/county/state. I'm crossing my fingers I can go back to paying $69.82/month (or less). I'll keep you posted!

Would you change your billing address on an account if it meant paying lower taxes and/or fees? Why or why not?

P.S. I recently signed up for auto-pay on this account. I guess it took me so long because I have a thing with control and desire to move money when I want to. ..and this auto-pay plan doesn't allow you to set the payment date. Most importantly, I wanted to make sure that I'd have the funds available to cover the expense, as I assign certain expenses to the 1st or 2nd pay period of the month. However, I've been bought... there was a $10 incentive to switch to auto-pay or paperless billing (I did this eons ago). So I'm just waiting on my ten bucks! I'll probably ask you what to spend it on ;)

Vacation Spending

I've been looking for a little inspiration for today's post. I've been on vacation for the past several days, so my routine of writing and posting has been thrown off (sorry about that!) But in the midst of my relaxation, I've uncovered the motivation to share today :)

I had been planning this vacation since October/November 2010. In addition to intently reading Trip Advisor reviews and making reservations, planning has included setting aside money for lodging, food, excursions, and even a few souvenirs. Part one of my vacation has ended, and I've gone over budget by $100 because I failed to include transportation in the expenses; otherwise, I would've been right on target. As I think about part two of my vacation, I wonder how realistic my budget will be. Just as I had done with the first part of my trip, I failed to include transportation costs. I am also left to wonder if I will have the benefit of shopping at a local grocer to make purchases that will help with the food portion of the budget (sandwiches and granola bars for lunch, anyone?) 

Fortunately, I have some cushion in my checking account to cover any expenses that go above my budget for the upcoming part of my trip. I should mention that part of this "cushion" will be spent for food and gas when I return to work next week. Luckily, I have a 4-day work week, a tank full of gas, and a plan to pack lunch [everyday next week]; in other words, I won't sweat part two of the vacation too much. I'll keep you posted =)

Early Graduation from Graduated Payments?

In Tuesday's post, I shared my negative net worth statement with you. It forced me to log on to the Direct Loan Servicing website to see the exact amount I owed (up until then, I referred to it as "$30,000+"). Well, it's $30,504.41 (down from the original $32,300). And that's not the only thing I noticed. For the past two years, I've been paying $229.21 a month for my student loans as part of the graduated repayment plan. This amount fit into my $35,000 yearly gross income at the time I began repayment (exactly 6 months after completing grad school...wow, I just had a moment....$35K income AFTER graduate school....:<).

Anywho, the graduated repayment plan allows debtors to pay off their loans in the same amount of time as standard repayment debtors (130 months). Rather than paying the same amount month after month (like the standard repayment plan), the graduated repayment plan allows you to pay a smaller amount for two years, then the amount increases for the next two years, then it increases again for two years, and so on. In fact, here's what my graduated repayment plan looks like:

You'll notice that I'm scheduled to pay an additional $36.76/month beginning February 2011 ($265.97-$229.21 = $36.76).  I've anticipated increasing my student loan payments....once my car note has been paid. Fortunately, the February '11 increase is feasible (by the way, the few bucks extra in my paycheck because of the tax holiday covers the $36.76 and then some). What I've started to think about, however, is if I should hurry into the standard repayment plan (that is, once my car note is paid off). By the way, here's the standard repayment schedule:

I'm thinking that I will "free up" more money to save and invest with the graduated repayment versus the standard repayment. The graduated plan costs $1163.54 more in interest; a "drop in the bucket," relatively speaking, but who wants to throw away money? Then again, my money wouldn't be tied up in a 5.3% loan and I could do more (i.e. earn more) by contributing to my Roth IRA, $10,000 goal and brokerage account.

What would YOU do?

Hooray for Tax Cut Holidays!!!

2011 is right around the corner and with it, our paychecks will have a little something extra. As part of the deal extending the Bush-era tax cuts, a number of employees will receive a 2% reduction in payroll taxes. As of now, this reduction is temporary (it will last only a year). What does this mean for me and likely for you? Mo' money! $40 'extra' per paycheck in my case. I used a nifty calculator at Kiplinger's website to confirm my own calculations.

Naturally, the first thing I did was update my 2011 spending plan to reflect this anticipated increase (too soon?). Then I started thinking about what I would do with an extra $80 a month. It isn't much, but it kinda is (with the price of gasoline going up, I think these few bucks will definitely come in handy!). At any rate, I'd like to plan how I would spend it. Here are my ideas:

• Add to my car payments
• Use for travel (particularly airfare to see the beau; I haven't budgeted for this for the first quarter of 2011 and I need to purchase airfare for February and March).
• Add to my savings (I did say I want to save $10,000 in 12 months, didn't I?)
• Add to my Roth (I also said I wanted to max out the ol' IRA...)
• Go shopping...a little

The last idea is inspired by my long-held desire to dress more stylishly. Undoubtedly, this is also what is expected of us, as this tax cut is labeled a sort of "stimulus package."

What are your plans for the few bucks additional to your 2011 paychecks?

Financial Goals for 2011

In my most recent post, I shared that I'd been organizing my finances (reconciling savings plans, debt reduction plans and budgets). Naturally, the next thing for me to do was to think about what my goals are for the upcoming year and what I need to do to make sure these goals are achieved. Below, you will find my goals and the steps I intend to take to make them a reality:

• Zero credit card balance: My goal is to end every credit card billing cycle without a balance. This is one way to ensure that I don't spend above my income. I can make regular purchases, such as gasoline and groceries, with my credit card. In fact, I've been considering a rewards card to earn points for ___________ (<<that means I don't know, yet >). This year, I paid $68.21 in interest charges.  That's enough money for gas (and then some), a nice dinner with my boyfriend, an outfit, or a small contribution to my savings plan (after all, it all adds up!).
• Max out my Roth IRA: You already know that I've been kind of obsessed about paying off my car note. As such, I don't have much money left over to max out my IRA. With a projected payoff date of April 28, 2011, I have May 2011 through April 15, 2012 to contribute $5,000 to my individual retirement account. What do I have to do to make this happen? Contribute $454.55 each month to the account. With two "extra" paychecks in 2011, I may have the flexibility to reduce the monthly amount, but this requires that I'm diligent about redirecting a sufficient amount of those checks to the IRA. Knowing me, I'd like to set a few bucks aside for fun =)
• Pay off my car note: Originally, I planned to pay off my car note by June 2012, that is, until I ran the numbers on my beau's proposition of significantly increasing the principal payment amount. Currently, I am on track to achieve this goal by the end of April 2011, especially if my assumptions about my anticipated tax refund are correct. If they are less than I estimate, I may have to postpone the due date for this goal (which, undoubtedly will effect the savings goals). Let's keep our fingers crossed and hope I am at least right :)
• Generate at least $250/ month in extra revenue: Before I took the job that I currently hold, I had a steady goal of generating $3,000 in net income each month. With my deductions for my defined contribution plan, I am short of this goal by $222 each month. For the past few years, I've been toying around with a business idea that promotes personal finance. My goal for next year is to get serious about a web design and marketing plan so I can realize some income. $250/month of income to be exact. To be clear, I'm not looking to pocket all income; undoubtedly, I will reinvest into the business, but having the income will definitely provide some peace of mind.
• Accumlate $10,000 in non-retirement savings accounts by 05/31/2012: These funds would be available for immediate access and as part of my emergency savings. Why $10,000? Frankly, it's an arbitrary amount, but it's definitely a "stretch goal." There are a number of factors at play. Let's start with the not so good possibilities: what if I don't pay off my car by the end of April? What if I don't generate enough additional income? Well, my $10K goal within 12 months will be postponed (by the way, I'd redirect my "car payment" money to this goal). For me to achieve this goal, I need to set aside $833.34/month.  

If you recall, I have $1255 available as discretionary money each month. I'm comfortable spending $200 of this amount for fun stuff. So $1055 - $454.55 (Roth)-$833.34($10K goal)= $-232.89. A girl MUST increase her income to make these goals come true. Even if I sacrificed fun stuff every month (i.e. the previously mentioned $200/month), I'd still be a few bucks short! 

At any rate, these are my financial goals for 2011. What are your financial goals for 2011, if any? How do you intend to achieve them?

Budgets, Holiday Stuff and Revisiting Financial Goals

...and I'm back! I sincerely apologize for being absent last week, but I'm back now =)

So, what's been going on? The usual, the not-so-usual and some more of the usual. Let's get started with the usual.

The Usual

I've been diligently tracking my expenses in my tracker housed on Google Docs. I've exceeded my allocated amount for food and car expenses: footing the bill for my sister's birthday dinner; being a bit impulsive (eating out, mostly); increasing gas prices (is anyone else paying around $3/gallon?); and regular car maintenance (the coupon for my oil change this time around wasn't $19.99 + tax :<).

The Unusual

Holiday stuff. You know, buying gifts and bringing in whatever you signed up for for the holiday party at work. Actually, the work stuff was easy. We had a cookie swap and I brought a non-cookie item to swap: brownies. Had I not been distracted by the massive amounts of sugar tempting my waistline, I would've repackaged the cookies and sold them for income =) The not so easy stuff is holiday shopping. To cover the expense of Christmas gifts without regretting it in January (i.e. financing all purchases with my credit card with no clear way of paying it off), I decided to decrease the amount of my car payment this month to $356.98 (I know, it's a weird amount). At any rate, doing so allowed me to spend $705 of "car payment" money on gifts for my parents, sisters, boyfriend, best friend and godson. Sadly, I've spent $690 and some change and I still have a few items to pick up. Fortunately, I have a few bucks in my "immediate access" savings account (this is NOT my emergency savings account) that I'm comfortable using to cover these items.

More of the Usual

Revisiting goals and planning. I spent quite a bit of time today updating my savings plan [another Google spreadsheet I use to track the balances of my savings account linked to my checking account (see "immediate  access" savings account above), my ING Direct account (emergency savings), my Roth IRA, regular brokerage account and 403(b)] and reconciling it with my 2011 budget. It feels SO DARN GOOD to account for every single penny. Did you get that? EVERY. SINGLE. PENNY. I know where it came from or where it went and for what purpose. Moments like these help me feel in control of my finances, and not vice versa...something that I occasionally freak out about. Nevertheless, I am on track to enjoy my boyfriend's birthday (I've planned a surprise trip for him), my girlfriend's birthday (we're going to be "Bahama Mamas"), a winter weekend getaway in the Poconos with a gaggle of friends, my 2nd year anniversary with the beau, paying off my car note, and my friend's wedding. And all of these things are happening in the first half of the year! To be fair, I am making assumptions about my anticipated tax refund, the bulk of which will go towards principal reduction on the note. Everything else is accounted for (i.e. planned to come from my regular income).

As I prepare for 2011 (and the end of my car note, hooray!), I'm considering the opportunities to save more, invest more, and to be better equipped to pay for travel and entertainment expenses that inevitably have a habit of "popping up." My post later this week will focus on financial goals [and concomitant action plans] for 2011.

How have you been handling expenses related to the holiday season? Did you set up a budget? Are you "winging it?" Have you started to plan for 2011 financially? Have/will you do a "2010 Year in Review" for your finances?

Money Fears

I struggled a bit with what to discuss today. I sought a little inspiration from the Financial Planning Association's blog and a few of my favorites. Then I got distracted....I stared thinking (again) about how much my car is gonna cost me. If you've read my previous posts, you know that I am working diligently to pay off my car note. I've got just over $8400 more to go. Not bad, considering that I've owned the car for 15 months and the original balance was $13,275. Nevertheless, my "service engine soon" light came on Friday. Wistfully, I hoped that it would turn off just as quick as it came on. Not so much. Instead, on Saturday and Sunday, my engine has been "getting jiggy with it" and shaking a bit.

I drove my sister's car to work yesterday and today to reduce the likelihood of me getting stranded somewhere along the 40 miles between our home and my job, yet I'm still reluctant to take it in for servicing. Well, I'm not SO crazy, and I realize that machines are machines and they often need fixing. I'll drop my car off tonight so it can get serviced some time tomorrow (based on my conversation with the car shop dude, it may need a tune up). It doesn't tickle my fancy to drop another hundred (or two hundred) dollars on the car. Especially considering that since September, I've spent just over $780 on maintenance and repairs. 

I've decided that the real root of my concern is not having enough money to pay for subsequent emergencies. I've got just over ten hundred bucks in my emergency savings account and I worry that [yet] another car repair (or some other unexpected expense) will place me closer to being financial unstable. It's frightening. In fact, I get ill at the thought of using my credit card to pay for unexpected expenses (I've been there and done that; trust me, digging out of debt is no fun). I think of the restrictive feelings associated with being obligated to paying off a loan, rather than using the money to do what I want (like, treating my friends to an occasional lunch, or buying a nice outfit).

At any rate, this is one of the costs of being an adult. I know that I have to TCB because no one else will. 

Do you have any money fears? What are they?

Too Soon?

Lately, I've been obsessing over what my budget will look like once I pay off my car. Assuming that I remain on track, this new budget will take effect May 2011. Nevertheless, I've plotted out what to do with the $1055 I would NOT be spending on a car note. So far, I've come up with a combination of the following expenses:

• Increase the amount I pay on my student loan from $230 to $350 (the standard repayment amount; currently, I am on a graduated payment plan) .
• Increase my student loan payment to $400
• Increase my student loan payment to $500

• Set aside $810 in my ING Direct account. In addition to the $25 I set aside in my Bank of America savings account, a total of $835 towards savings accounts will yield  $6680 by the end of 2011, and $10,020 over the course of 12 months. One of the goals I've set for myself includes having $10,000 in emergency savings.

• Set aside $625/month (from May to December) to max out Roth.
• Set aside $200/month for Roth.

• Set aside$200/month to travel.
• Set aside $100/month to travel

• Set aside $258/month for miscellaneous expenses which may include Roth, fun stuff, additional savings, additional principal payments for student loans, and who knows what else.

I'm sure it would be helpful to see the variety of scenarios I've plotted out, but I assure you that that's an exercise in futility. You see, I've drafted more than 15 of the various budget scenarios, some in my handy-dandy composition notebook, others on index cards, backs of envelopes, and other random pieces of paper. The recurring themes, however, are that I set aside a hefty chunk for savings (especially since I haven't been doing so while eliminating this car note) and paying more than the $230 currently requested of me to pay my student loan. By the way, I my current payoff amount is $30,801.65. Yikes!

What would you do with the "new" budget?

This is What I Do

For as long as I can remember, PF geeks/fans/experts have encouraged the use of a budget. In helping people understand how to create a budget, much of their advice directs folks to track their expenses (i.e. categorize and write down everything you spend) for a month, and then use such numbers as a basis for your budget (i.e. the month to month plan for spending your money). My major beef with this technique is that one month of expenses (and income) doesn't look like every other month of the year. Sure, I have fixed expenses and variable expenses to look forward to every month, but how do I accurately plan for the miscellaneous expenses? And how do I remind myself of my progress (i.e. spending within my income and setting aside funds for goals)? 

I track ALL the time. Yup. That's what I do. Moreover, I take a summary of my expenses and average it with previous pay periods (that's how I break down my expense tracking; as per my regular paycheck). Next year, I look forward to tracking on a monthly basis. To give you an idea of how this budget/tracker tool works, I've included a blank copy here. I encourage you to use it if 1) you're not currently tracking your expenses/budget or 2) what you're using isn't working for you. I'd love to hear your feedback. But before we get started, here are a few assumptions:

• You have a bank checking account that you regularly use for transactions.
• You have stable income (i.e. you know how much you get paid for each month)

Okay, here's your guide:

1st Tab, Annual Budget: In general, this is what your month-to-month expenses look like. Simply insert the monthly expense and the spreadsheet will calculate your annual expense for said category. Your total annual expense should be equal to or less than your regular annual income. For the folks who work on commission and have widely varying income, you could estimate the lower end of your anticipated income...or use a tool that's better suited for you.

2nd Tab, "Insert Month Here": This is where you will track your expenses. Feel free to change the name of the tab for the month that you will be tracking expenses. Enter your regular monthly income in cell M3 (it has a little orange ticker in the cell for a comment box). The reason this is here is so your expenses can be deducted from it to show you what you have available to spend. I often check this number against my bank statements. If you have additional income during a specific month, you can add it to your regular income; remember to add a note about the amount and source of those extra funds (ex: tax refund, $3269.11; overtime, $563.97).

For the "date" column, type in the date that you make a purchase (ex: 11/04). For the "Description" column, type in what you purchased and any details you'd like (ex: Publix (groceries), PetSmart (toys), TGIFs (+$10 tip). If you run out of space for the details you deem critical, simply "insert a comment" to add additional notes. Now, enter the amount that you spent at the respective store/on the respective item in the appropriate column. For example, if I spent $56.93 at Publix, I would enter that dollar amount in the food column. Likewise, if I spent $46.36 at TGIF, I would enter that dollar amount in the food column. Now, if I used my credit card to make a purchase at TGIF, I would not enter it into the food column, I'd enter the amount spent in the "CC Transactions" column. Similarly, if you use cash, track all of your cash transactions in the appropriate columns. If my categories of spending don't work for you, change them!

3rd Tab, Summary of Expenses: This is pretty straightforward. Enter the total spending per category per month in the appropriate line. Put another way, copy the amounts from row 4 of your "Month" sheet to the corresponding month in the summary sheet. This last sheet will average out what you spend per category of spending (ex. food, entertainment, bills, etc.). You can then compare these amounts to your annual budget to explore opportunities for improvement.

Since using this budget tracker - about 2 years, now - I've gained an incredible sense of control over my finances. I can project where I will pull money from to make up for other expenses, keep an eye on how much I'm spending, and remain mindful about credit card transactions. I hope it is equally helpful for you!