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How I do it

August 18th, 2008 at 11:46 pm

I have actually thought about doing this post several times but never went through with it because I didn;t want to seem a "know it all" but I finally decided that maybe the way I do things would help someone trying to get their financial life together.
First let me say I don't consider myself a financial guru or even consider myself to know all there is to know about financial matters. I have just found something that works for me.
A little more about my situation. When I was in College I fell into the trap of accepting many of the credit card offers available to students. I had worked for a few years in the real world before going to college and I came into school with credit cards as well. While in school I took out the max loans I could and was told by well meaning individuals that college is a once in a lifetime experience and to enjoy it--even if you come out of school with 30-40K in loans its like getting a new car. Needless to say, I didn't live like a college student and came out to school with a degree and massive school loan and credit card debt. I was using my school loan money to pay my credit card monthly bills and racking up more charges along the way.
So, I graduate and get a job. This job barely paid enough to live on, much less pay off debt. I soon found myself in a heap of trouble. For me Bankruptcy was the road I was forced to take. I am so against the ease of credit cards available to students on campus. I feel it is modern day loan sharking---please, why would a college student earning below the poverty line qualify for a platinum card????
Anyway, after bankruptcy things did get easier. I was now able to afford to live and even start saving. Yes, for a while I was at the mercy of having a crappy credit score but luckily things worked out for me.
One of the things I learned it to set up a budget. I recognized that if I had money in the checking account I would spend it. So budget school was in session. I also happen to be lucky enough that I have a job that pays me very will and is allowing me to pay off the debt that I could not bankrupt. A word of caution though--I hate this job with a passion so it not been the silver lining. If you don't want to work at something you despise don't go into debt!
To set up my budget I make a list of all my monthly payments--rent, insurance, groceries, gas, cc, savings, even spending money. I also note when each month the bills are due. I also note when my paydays are. I then go through the list and write down on a spreadsheet type document that I designed and start putting the budget puzzle together. I tend to do about 3-4 months at a time. That allows me to make changes as my situation changes. I can't tell you how much this keeps me on track. I also realize from reading these blogs that one situation or technique does not fit all. I know that I can;t budget down to the last penny. By that I mean, I have a spending money budget but I don't say xx for eating out, xx for entertainment, etc. I have my spending money and I am free to spend it how I want. If I choose to to blow it all at the bead store so be it. But that is what works for me. I even go as far as write down on a piece of paper in my wallet how much is left of my grocery budget, gas budget and spending budget. I even have an attitude adjustment/retail therapy savings account because I know it is something I need to occasionally do and then my budget doesn't get off track.
Its a process that works for me. One thing I see by reading these blogs is that we all took a different path to get where we were/are and we all have to find our own path to where we want to be. I like to fiddle with figuring my money--in fact it borders on obsession at timesSmile Most people don't. I can't budget down to the penny some people have to. I think our individuality give us amazing flexibility to get where we are going
Anyway, that is a little about me and how I have gotten my financial life on track. I still have a long way to go but at least I feel like I have the skills needed to get there.

3 Responses to “How I do it”

  1. Broken Arrow Says:

    Er, I'm sorry if I didn't read everything first. Just wanted to say that I don't think there's anything wrong with sharing what works for you. After all, it may help others.

    I think there is a thin line though, between describing what works for you and may work for others, and telling others that your way is the best way and this is what everybody else should do. There is a reason why personal finance is not named, not universal finance.

    That said, I don't think you've crossed that line. Smile

  2. greengirl Says:

    i use spreadsheets too, i find them a lot easier to use because i can see everything. i don't really 'budget', even though I have one made up, I usually just compare my spending to my 'budget' at the end of the month and see where I may need to cut back on. That said, I do watch what I spend, and I know when I spend too much. One thing I do that is different to you is: I listed every single conceiveable bill I will have for the year (so, electricity, car rego, car insurance, car repairs, roadside assistance, phone bills etc) work out what I will pay for the year and then divide it by 52. then I just deposit this amount every week into a savings account which is solely for 'Bills'. It means I never stress about bills because there is always enough money in there to cover everything - as long as you don't take money out for something else!

  3. creditcardfree Says:

    You're not alone, we don't budget down to the penny either. It's just a little too strict. Thanks for sharing.

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