I’ve been thinking a bit about money lately (OK, I’m actually always thinking about money) and where I want to be in the future with my finances. Over the years I’ve really taken to automating my finances, whether it be bills, savings accounts or even investing in the future (retirement, long-term purchases and goals). The reason I’ve adopted automating the flow of money is because I’ve realized that I have certain weaknesses (i.e. keeping track of paying bills on a regular basis, consistently putting money away for a rainy day, etc) and the best way I’ve found to get around said weaknesses is to automate my finances. (more…)
I’m about a year and a half away from the big 3–oh-no! It’s a bit crazy how quickly time seems to fly isn’t it? That said, I’ve been reflecting a bit on things lately and I feel like now is a good time to talk about the personal finance journey that I’ve experienced thus far and also discuss where I want to find myself in the future. This is going to span at least a couple of posts, so check back soon for the epic conclusion!
I’ve always been a bit of a capitalist. I like to find ways to earn money by providing a service that other people want, or need. The earliest example of this that I can recall isn’t necessarily very ethical, but it is pretty funny to remember. When I was younger I’d get an occasional allowance from my parents after doing chores. My younger brother was pretty good about hanging on to his allowance for more than 30 minutes, unlike me. In fact he’d quite often have cash on hand because even if he did spend some of his money, he wouldn’t spend it all at once. Me on the other hand… it was spent before it even left my parents hands and got into mine.
Kids, don’t try this at home!
My brother used to lose his wallet all of the time, it drove me nuts because he’d usually have cash in it when he lost it. Here I was without any money (and a tummy ache from eating too much candy) and my brother was wasting his money by losing it. It was infuriating! Frustrations aside, he continued to lose it over, and over, and over, and over.
So I came up with a brilliant idea. I’d charge my brother to help him find his wallet. Seems pretty kosher right? Yeah, I guess it would be, if I just helped him find it when he lost it. That’s not what happened though. I needed money to get more candy or basketball cards (who can remember?) but he hadn’t lost his wallet for a few days.
I helped speed the process along.
I’m not proud of this, but I took his wallet and walked it halfway down the street and hid it in a neighbor’s yard. Thinking back now, taking it down the street and leaving it unattended was probably stupid. Oh well, no one stole it 😛
As soon as my brother realized his wallet was missing he figured he had lost it. Then I offered to help him find it, for a fee. He agreed and so after a few minutes of looking around I slowly made my way towards the neighbors house and retrieved the wallet for my brother. He was happy, I was happy. Until I gave myself another stomach ache. Oh well, such is life.
The point of this story is to highlight that I have always been a bit of a spender. Money burns a hole in my pocket. I also want to point out that I started my personal finance journey out on the wrong side of the tracks.
My first job (and my first successful experience with saving money)
My first job was working for a national pizza chain. I started out making the pizzas and eventually took on cash register/phone duties as well. It was around this time that I was really getting into computers and I decided I wanted to get my own. So I started to save a portion of my paycheck. After a few months I had enough to buy the parts to build myself a PC (I did some research and figured I could build one for less than a comparable purchase would cost). This was my first attempt at actually saving some of my money instead of spending it all the second I got it in my grubby little hands.
I learned a valuable lesson that summer: If I want something badly enough I’ll be able to overcome my desire to spend all of my money as quickly as I can make it. If I want something badly enough I’ll be able to have the discipline to save for it. I also learned that it feels really, really good to work hard and save your money until you have enough to buy something you want.
Other jobs and other lessons
Eventually I quit the pizza job. For my second job I found myself working for Krispy Kreme, which was an on again/off again relationship, throughout my sophomore and junior years. I continued to spend most of my money whenever I got paid, but I also found things that I wanted to save for and continued to practice saving money so I could get random crap that I probably didn’t really need.While I learned to save, my goals were always very short-sighted.
I didn’t think much about the future, but then I don’t know if many teenagers do.
I didn’t learn much about personal finance while I was in school. There were no money classes in high school and even if there were I doubt I’d have taken them. I learned some from my parents. They were pretty good about not using credit cards and only buying what they could afford. I remember learning about my Dad’s 401k and I remember being curious about it. That was about the extent of my education though. The really important lessons I learned later on, in my early 20’s.
That’s it for today. Check back tomorrow for part 2! I’d love to hear about your early years and what lessons you learned as well, so please leave your comments below!
Here’s a pretty funny video that was shown to me. I got a total kick out of it.
Disclaimer: there is swearing at the end of the video when the financial advisor drops an f-bomb.
Watch it? Good. For those who don’t mind thinking a little today, (I know, I know it’s Monday, but bear with me here) I just wanted to have a short discussion about the video, so keep on reading!
Spoiler alert for those who have not watched the video yet (what are you waiting for?)
The client lies about having children because she doesn’t think the financial advisor needs to know such a thing. She has unrealistic expectations for retirement, especially considering that she wants to pull a fifth of what she has in her 401k out to buy herself a new car. On top of all of that she insists on investing in things like gold and possibly using some of her 401k money to help pay for her kid’s college as well. This may or may not be a realistic portrayal of one client, but I guarantee a financial advisor will run into each of these situations individually every single day. By the end of the video it’s obvious that she really only wants advice from the advisor if it coincides with what she wants to do. She won’t be swayed. Of course, she also won’t be retiring in 5 years.
I’m all about saving money. Since I’ve taken on my new job with a smaller paycheck my wife and I took a closer look at our expenses and decided to try and cut out some fat. So we paid off some student loans, tightened up our spending habits and now have switched to a prepaid phone plan. This is a bit of an experiment for us, as we’ve never done a prepaid plan before. Since our engagement basically we have had a family plan with multiple carriers over the years. I am curious if any one of you have tried, or do, the same thing and what your experiences have been.
Our reasoning for the change
We’ve had a family plan with the least amount of minutes we could get for years now. Every single month we had leftover minutes. Hundreds of them. Usually about half of what was available at the beginning of the month. Also we’ve been paying for unlimited SMS, but probably using less than 1,000 between the both of us in a month (likely even half of that). I have a smartphone and was paying for unlimited data, of which I maybe used 500mb a month on average. Considering all of these things we decided that the plan we had was WAY more than we needed.We could cut features, but that would only save us about $20 a month. So what else could we do?
I researched prepaid mobile
It turns out that in situations such as the one we find ourselves in prepaid cellular can be a pretty sweet deal. We paid about $65 to get our plan started, which should give us enough data, text messages and minutes to last us the entire month. Assuming we have some left over before the month is up we can roll over any remaining balances by keeping our prepaid mobile plan “paid up.” Worst case scenario though I’m figuring we’ll usually be fine with about $60 dollars or so a month to cover all the minutes, texts and data we’ll need. If we can save a decent amount of minutes, text messages and data we can probably keep it even lower than $50 a month!
Sacrifices will have to be made
There’s not usually a reward without some sort of sacrifice. This is no different. The prepaid plan we went with isn’t offered in the family variety, so we no longer share minutes or texts. That also means we have two phone bills every month, instead of one. A slight nuisance, but nothing I can’t live with. I can automate it after all. Another sacrifice is that, at least to get things started, we’ll have to be careful and watch our minutes, watch our texting, and for me, watch my data usage. As I said earlier this is a bit of an experiment. One that I am confident we can make work and if it does we’ll have cut our phone bill in half, if not more.
Here’s a bit of Labor Day history for you. The first Labor Day holiday was celebrated on Tuesday, September 5, 1882, in New York City. Before the turn of the 20th century the entirety of the United States had adopted Labor Day as an official holiday; to be celebrated on the first Monday of every September. The point of the holiday is to celebrate the social and economic achievements of the American worker. How appropriate. Think about that statement with me for just a moment. “The social and economic achievements of the American worker.”
While the United States isn’t perfect it’s amazing to really think about how much good we have collectively done in the world. It’s true there are stains in our history, but the accomplishments of the citizens of the U.S. – the American worker – are awesome.
That said right now is a tough time for a lot of people who are out of work. The unemployment rate for August stood at around 9.1% (a national average). Maybe your state fares a little better, or maybe it’s worse off. Either way people all around the country who need jobs are unfortunately unemployed. I’m of the opinion that thinking positive thoughts will yield positive results. I have no scientific data to back it up, but my life seems to be working out since I’ve adopted said approach. That said I’m hopeful that the unemployment rate will continue to drop and we can get the American working man back to work.
Are you lucky enough to be employed at the moment (whether self-employed or otherwise)? Leave your comments below, whether you’re working or not. I’d love to hear from you.
When I started this blog in October of 2007 I didn’t know where it would eventually end up. I still don’t. The personal finance blog by Debit versus Credit has had its ups and its downs, but through it all it’s still here. That’s my biggest accomplishment so far; that’s what I’m most proud of. All of that said I am not anywhere near being truly satisfied with Debit versus Credit. I envision Debit versus Credit being a place that means business, but doesn’t take itself too seriously. I’ve built a blog, but I haven’t been nearly as successful at building a community, and for that part I need your help. (more…)