Posted on: June 4, 2009 by Matt
A couple of months ago I pulled most of my cash out of savings and applied it to my credit card debt. While this eliminated the debt it put me back in the position that many Americans today are stuck in: not having an emergency fund. I could always fall back on my credit card in an emergency but I really feel much more comfortable having a little bit of money in savings in case something comes up. One of my goals is to reestablish my starter emergency fund and while thinking about it last night I thought that I would invite any readers trying to get their emergency funds up and running to join me!
The challenge is pretty informal and is geared to help hold me accountable to rebuilding my emergency fund and to help anyone else out there that would like the additional encouragement! To take part feel free to leave a comment, contact me here, or even send me an email to: matt at myfinancialrecovery dot net. Just drop me a line somewhere along the way with a goal you would like to reach by the end of the year. Then send over an update at the end of each month from June – December and I will post updates monthly of my progress and will also post your progress in the process.
My goal is to build back up to the $1,000 starter fund recommended by Dave Ramsey in The Total Money Makeover by the end of the year. My current status is that I have $108 in my online savings account that I have had set aside as an emergency fund. In order to reach my goal of getting it back up to $1,000 I do not want to drastically impact our family budget in any given month. In fact - I would like to reach the goal without any noticeable impact on the family. Here is my plan so far to accomplish my goal:
- Communicate with my girlfriend about where we are at financially: Setting money aside will effect both of us and I find life is a lot better when we are both on the same page. Usually checking in once every week or two works fairly well for us on financial matters.
- Pay attention to my spending: Identify areas that I buy things for myself that I could go without and make a few sacrifices.
- Make small weekly transfers to savings: In stead of trying to make a big monthly payment work on making small weekly ones – $25 per week seems much more manageable than $100 in one shot.
- Keep an eye open for any extra opportunities to save a little bit extra.
- Discuss budgeting based on my base salary with my girlfriend and put a couple months of commissions into the bank.
Based on the math I would have (including June) 7 months to reach this goal and would need to save about $125 per month to do so. At the same time I intend to continue paying off my current debts by making at least minimum payments. I also have one other variable coming up in August when I send my last payment to an ex-girlfriend for the car she lent me money for – which will free up another $400 per month. Overall the goal should be easily attainable based on my current income and expenses and I should have it completed by the end of summer or so.
So now the question is – does anyone else out there want to join me in starting, rebuilding or increasing their emergency fund?
Tags: Banking, Budget, Cash, Expenses, Goals, Personal Finance, Planning, Relationships, Savings Filed Under: Budget, Goals, Planning, Savings
Posted on: June 1, 2009 by Matt
During a recent discussion with my employer I was informed that due to our high deductibles that we have the option to enroll in a health savings account. After giving it some thought I opted to take advantage of setting up the account so that I may be a bit more encouraged to keep up on my proactive health checkups.
Currently my insurance coverage requires the first $2,000 to come out of pocket 100% as a deductible prior to any coverage. Once the deductible is met then the plan will cover 100% of expenses. Overall the HSA appears to be a pretty good deal and should help me take better care of myself (which I largely neglect due to cost). So far the benefits I am aware of include:
- My employer will make a $50 deposit per month provided I have an automated contribution made.
- My contributions are tax deductible up to $3,000.
- Withdrawals from the account are tax free when used for eligible medical expenses.
- The account does not appear to have a “use it or lose it” clause.
- Eligible items include many services and products that I either currently use or have used in the past. So in addition to doctor visits I know there are a few other services I will take advantage of.
For the most part – I do not really see a downside other than a slightly smaller paycheck each pay period. The money does go into an account that will allow me to make doctor and dentist appointments (which my girlfriend regularly reminds me I need to do) without having to account for the cost in my checking account budget. I am fairly excited by the idea of having some money set aside specifically for my health and look forward to seeing how it all works out.
Posted on: May 11, 2009 by Matt
As I have mentioned in the past – my girlfriend pretty much never ceases to amaze me (in a good way). Most recently she has managed to meet one of her financial goals by opening a savings account this month! Needless to say I am once again impressed and excited that she has met her goal (hence the public congratulations!)
So far this month we have both met goals that we have been hoping to accomplish for a while (as I paid off the balance on my credit card) and it feels pretty good. After all for each one of these individual goals that we accomplish we come one step closer to accomplishing some of our larger long term goals (like buying a house).
Additionally – I truly value the level of openness and communication in our relationship. In the past I have been unwilling to discuss finances with anyone and have largely held the attitude of yours and mine. Considering that two of the most commonly cited issues for the downfall of relationships are sex and money I think that the fact we can openly discuss issues is critical. Naturally we do not always see things the same way and the open dialogue allows us to often reach a point we are both happy with.
Overall – I believe that while in a relationship or marriage that communication and support of each other in all areas of life really sets you up for success. I know I struggle with it but find it invaluable when the two of us discuss our financial lives openly. So far I have discovered that we have (or at least I have) been able to use each other for:
- Setting goals together, both individual and as a couple.
- Assisting with reaching goals: I know she has supported me with reaching goals and hope that I have reciprocated adequately.
- Looking at problems from other angles: Sometimes getting advise from somebody that has not been caught up in a mess is very helpful. I have found on a couple of occasions that I simply did not look at all alternatives (cause I didn’t think of them) or that I had not analyzed something through all that well – talking it out has helped.
Posted on: April 28, 2009 by Matt
Originally uploaded by Gnerk
Shortly after my 18th birthday my mother passed away. I had plans to head off to college about a month later and intended to go just to get away from all the old memories lingering around where I grew up. I had very little in my bank account and all of it was probably going to be needed for books and other expenses related to college.
Later that semester I received notification that I was due to inherit my share from my mother’s estate which amounted to about $11,000. To date this was easily the largest sum of money I have received in one lump sum. I had no idea what to do with the money and was still grief stricken and in shock from the loss of my mother (I really had trouble coping with her death). I did what most college boys probably would have done: deposited the money in my checking account and spent frivolously. Of course the nice lady at the bank attempted to give me some advise but I wanted nothing to do with saving money or planning long term. I more or less told her to just give me the money and shut up.
For the most part I do not remember what I spent the money on. From what I can recollect now I can recall buying:
- Lots and lots of booze on a regular basis: I developed an even bigger drinking problem in college that I carried with me until a little over a year ago. At this point in my life I have come to realize and accept that I am an alcoholic and can not drink. I have been sober now for about 16 months.
- A PlayStation2 that I had to have: I was a guy and in college – of course I needed the newest video game console.
- A beat up car from my girlfriend’s (at the time) brother: This was my first car. I did not get my license until I was 19. It was a little beat up but ran well and I managed to get quite a bit of mileage out of it.
Needless to say – I spent every last dime within a year or so. I do not regret spending it but do think that I made some poor choices. I suppose that if I had to start all over again today I would probably look to start out by:
- Learning how to manage money: Not just large sums but also general personal finance. I was fairly clueless, nobody had taught me anything about money management and I had not taken the initiative to learn on my own.
- Parking the money in a CD where it is locked for 3 to 6 months: Actually – I probably would have opened a few of them that would mature at different lengths of time. Maybe break it into quarters and put 25% in each 3, 6, 9 and 12 months. I was in no emotional state to make any financial decisions and knew little to nothing about handling money.
- If I needed money, get a job: I had limited to no income the first three years of college. I cited having to focus on my studies as the reason for not working but the real reason was I was too busy drinking and generally slacking off. I could have easily worked a part time job.
I do not regret spending the money or wish to change the past but do try to learn from my mistakes. In this case I learned that having a large sum of money float into your life requires that you press a pause button and do some planning and possibly some healing. When the inheritance arrived in my hand I was still grieving (at a point where I maybe should have put college off a semester or two) and was not clear headed. Parking the money and forgetting it existed would have given me some time to work on healing myself. Once I was in a better place emotionally I could have moved forward with learning how to manage money and planning. My lesson did not have to be learned the hard way – I could have listened to the nice folks at the bank but I chose not to. So I guess there is also a general life lesson here as well: Listen to the advise of people who specialize in a field you know little or nothing about.
Tags: Banking, Budget, Budgeting, Cash, Family, Financial Team, Frugal Friday, Future, Health, Personal Economy, Personal Finance, Planning, Relationships, Savings, Spending Filed Under: Banking, Budget, Health, Lessons Learned The Hard Way, Planning, Savings
Posted on: March 5, 2009 by Matt
I have been hearing more and more stories lately about people being affected by crimes of some sort. The stories have ranged from car break ins to robberies to identity theft. Living in a small New England town I generally have not heard much going on in the past but lately it seems to be on the rise. I am guessing that these scary economic times are largely to blame and people are getting desperate but my observations are purely speculation.
Anyway – I suppose that it does not matter what the root cause is, the fact remains I have heard a lot of people noting problems. I have not actually heard or seen any statistics on an increase in crime but I still think it wise to be cautious. In order to make sure that I do not end up losing out I plan to:
- Keep a close eye on all my statements: Both for bank accounts and credit cards.
- Grab my annual copy of my credit report: Everyone gets one copy of their credit report per year. It is a good way to check for accounts opened in your name that you did not open.
- Continue checking my online banking items daily. I generally keep an eye on my primary accounts on a daily basis to make sure there are no additional charges or items pending that I did not authorize. I will keep up on this.
Has anyone else heard more crime stories recently? Are you taking any steps to protect yourself just in case?
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