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: 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: September 18, 2008 by Matt
So I have decided that in an attempt to save a little bit of extra money that I would use cash only until the end of the month for all purchases except gas (I will still use my debit card at the pump for simplicity and to add to my Upromise account). I have all my bills mailed out for the month and only have one expected additional check to write between now and the 30th.
I have not opted to utilize an envelope system per Dave Ramsey’s method but instead have just taken out $300 from my checking to cover expenses. I am hoping that this will allow me to pay more attention to the areas I spend frivolously. I have also noticed that when paying cash for something I consciously count the cash out and hand it over. Something about watching the money trade hands really makes me pay attention to where the money goes. No more swiping the card and just looking at numbers in a checkbook, it is cold hard cash crossing hands.
To sum it all up I hope to:
- Identify areas where I tend to spend frivolously.
- Reduce these areas therefore saving money.
- Allow my bank account to settle down and all transactions and checks to post. I like to let my bank account settle from always using my bank card every few months as a form of verifying my checkbook reconciles. When transactions get crazy I take a break.
- Be a conscious member of the transaction (It is really hard for me to watch the cash go from my wallet into their drawer).
- Have a little left over in my checking account at the end of the month to pay down debt and / or move to savings.
I hope to have some good news to report with my cash only spending at the beginning of October!
