The good news
I started using cash to take care of all my discretionary spending. This is my first month of tracking my expenses and I realize that I am not to be trusted with a debit card!
So I took out $40 and told myself that this will be what I have to spend on fast food and friends for the rest of the month.
The bad news:
I spent all but $4 in two days. I ate waaay too much fast food. I spent the weekend in my home town and I drove back to college since I still have one more session of summer school left. I had McDonald's for Breakfast, Burger King for lunch, and I ordered a pizza for dinner because I was waaaaaay too tired to make anything for myself.
I felt worse do to the fact that I spent $150 for books. One of my professors did not put in her requests for books until the very last minute, so I couldn't have ordered from amazon.com or half.com because I needed the book the very next day and the library was out of the books. I could have helped one book though. I ordered all my government books but one, and I thought I would do it later, when I got to it...well I never got to it, and ended up paying $25 extra for it.
Also, I didn't account for a huge amount of spending I didn't plan for. I went to the dermatologist for a skin problem I had, and I had to spend $53 for an eye cream I didn't plan on buying and the $150 extra for books also messed me up. Though, I had a lot of room in my budget, I thought that I wouldn't need the extra money, so I spent it on things that I wanted such as a wallet.
My Silver Lining:
I felt discouraged about all of this, but I'm still learning and I know I am making mistakes, but I will be sure to change my eating habits. I have been trying for years to make myself stop eating fast food, now that I don't have the financial means to, so I will stop this.
As for the books...I will never procrastinate ordering books when I can help it.
Wednesday, July 16, 2008
Saturday, July 12, 2008
Splurge or save?
I am the kind of person who values the quality of products. In the long run I feel it can be cheaper by buying a good quality item rather than replacing it multiple times later. Here's my list of my priorities of what I will pay for:
I never pay full price for:
-Cds: Why buy a new CD, when you can buy it used for a third of the price old? The music quality is still the same. Now that itunes exists, I also don't buy songs I don't like. Saving me a few dollars.
-Book: Same argument as the CDs. You can find almost any book cheaper than the full price.
Applications: I love using computer and palm software to make my life more productive, but I don't pay for it. I use opensource or freeware application that are as good or better than the ones you have to pay for.
I am willing to spend more money on:
Laptop: This is such a crucial thing for college. My whole life is on my computer. I have a macbook, and it was a great investment on my side. Many of my peers have scolded me for getting such an expensive computer, but I have avoided a lot of problems by buying a higher quality computer. The cost of replacing a crappy computer with another crappy computer equals or exceeds the price of a good quality computer.
Wire Headset for my cellphone: I use this often, and it goes everywhere with me. It was $60, but it was well worth the splurge. I drive safer.
A good quality backpack: I spent $45 on a back pack my freshman year of high school and I use the same backpack today as a college junior. It has protected my computer from the rain, while big enough to carry all my books.
Items that I don't compromise quality for, but I get cheap.
Clothes: Generally, I don't like to spend more than $20 on one item, but I don't like to shop at clothes stores that sell junior's clothes for $5. The quality is usually terrible, and it ends up in the garbage or give away pile a few days later. I always go to the sale racks of pricer stores. I have found great stuff at Urban Outfitters and Macy's.
Cell Phones: I value a high quality phone, but with all the offers and deals out there, it would be silly to pay full price for one. I have a smartphone costing $99.
Dishes, Pots, Pans: These things are important to be good quality, but you can find great deals at Department Stores. Through my use of coupons and searching for sale items, I got a $100 12 piece pots and pans set for $28. By waiting for a sale I got cook ware that will last me many years.
Friday, July 11, 2008
The Basics: Investing
This is a more complicated topic. I'm not going to tell you what the "Hot Stocks" are, but I will tell you that you shouldn't try to beat the market. As college students, we are just trying survive, and maybe hope we get into a decent grad school. Here are some tips that I have found:
- Read, read, read, read! I cannot emphasize how much you should read about the content of investing. You don't have to dedicate yourself to buying a ton of books on investing. Use these helpful sources to inform you about Investing: Investopedia and Bankrate.
- Start now! You lose thousands of dollars each year you are not investing in your future. Though this is college time and there isn't a lot of money, but if you find a way to save $500 a year with a rate of return of 10%, by waiting 4 years you could lose $30,422. I used this calculator to help me figure this out.
- Get your parents to help you invest if they have some knowledge. I asked my dad, and I was shocked to find that my dad actually had been investing for me for years. He used a mutual fund for me, which I think is a good start.
III. The Basics: An Emergency Fund
In my last post, I briefly mentioned you should set aside a certain amount into savings. Here I will expand on where savings should go.
One important saving priority is building an Emergency Fund. This is a fund that is easily accessible made up of 3-6 months worth of your living expenses. Though you may barely have enough money to live on for the month, having 3-6 months of money may seem impossible, but you can slowly reach that with consistent saving. Which introduces the principle of paying yourself first, by saving your money before you spend it anywhere you will forget you have that money, and won't come up short at the end of the month to save.
Try an automatic savings plan in a high yield interest bank. I use an ING Direct Account to place my Emergency Fund. The interest rates are high, I can divide my savings accounts up into several categories, and I get a high interest rate. I don't have an automatic savings plan yet since I don't have a real income and I get all my money from my parents, so I have to deal with the pain of taking out a portion of my money I can't use.
II. The Basics: Budget Part I
Do you ever wonder where all your money goes each month and how it gets spent? My parents give me a debit card, and there are times when I have spent $100 in 5 days and I didn't even realize it until I looked at my balance. Budgeting puts the power back in your hands.
It doesn't matter how you create your budget, you can do it anyway you want it: on the computer, paper and pencil, etc. The key is keeping up with it, but you have to find what works for you.
Here's how to start:
Track your expenses
Write down everything you spend your money on for a few days and look over how you spend your money monthly on your bank statements. Make sure you always include the purchases that you consider to be small, like a a cup of coffee from Starbucks because those add up quickly.
Determine how you want to spend your money
Based on your expenses decide how you are going to spend your money. Remember to spend less than you earn. Though it sounds simple, many people do not follow this. Don't take your credit card out to buy something you don't have money for. You may have to pay interest later, which is a waste of money. MSN Money suggests using the 60% rule for your budget. This means that 60% of your budget should go towards your basic living expenses, such as utilities, groceries, and rent. Though this rule may not be practical for a college student since the necessary expenses may take up more than 60%.
General categories and guidelines
Determine your spending by categorizing
Living Expenses: This is an inevitable cost you can't avoid, but you can do somethings to decrease the cost, such as, having a roommate, taking an RA position, or living farther away from campus. Though don't be so determined to cut costs that you live miserably with 6 people in one tiny room.
Transportation: Parking is expensive on or around campus. Consider not having one at all. Here you will save gas money, insurance, and oil changes. Most college towns provide public transportation cheaper than the cost of having a car.
Food: This is one place where many people can go wrong. Groceries should not be more than $150 a month (I spend $50-150). However, there is the problem of eating out all the time. In my town, eating out is the common thing to do when you have nothing else to do. Some places are open 24 hours a day, so people go there when there is nothing else to do. Additionally, fast food purchases add up quickly.
Utilities: This is a partly unavoidable cost. You have to have water, and electricity, but use it when you need to.
Internet: This is also an unavoidable cost, make sure you find the cheapest rate in your city. By shopping around, my internet bill is $15 cheaper.
Other personal expenses: This is a another place where people spend a lot of their money. Such as clothes shopping or impulse buys.
Savings: This is a category that is probably little or non-existent in your money management. This is one of the most important things you can do, so you can reach financial freedom. Be consistent each month by paying yourself first. This means, when you first get your paycheck, automatically put a set amount or percentage into your savings account.
Debt: Many college kids have loans and these need to pay. Make sure you pay the minimum amount so you won't face later penalties.
Final Words
I've tried and failed over and over, but now I have started regularly writing down where I spend my money. There are a lot of freeware personal finance softwares you can use. I suggest you try out a few. There were some great reviews of software, I found myself hating it. I use Buddi to create a budget on my computer. I also use a freeware checkbook program on my phone on a palm freeware application I downloaded from the internet.
Sources:
About.com
MSN Money
It doesn't matter how you create your budget, you can do it anyway you want it: on the computer, paper and pencil, etc. The key is keeping up with it, but you have to find what works for you.
Here's how to start:
Track your expenses
Write down everything you spend your money on for a few days and look over how you spend your money monthly on your bank statements. Make sure you always include the purchases that you consider to be small, like a a cup of coffee from Starbucks because those add up quickly.
Determine how you want to spend your money
Based on your expenses decide how you are going to spend your money. Remember to spend less than you earn. Though it sounds simple, many people do not follow this. Don't take your credit card out to buy something you don't have money for. You may have to pay interest later, which is a waste of money. MSN Money suggests using the 60% rule for your budget. This means that 60% of your budget should go towards your basic living expenses, such as utilities, groceries, and rent. Though this rule may not be practical for a college student since the necessary expenses may take up more than 60%.
General categories and guidelines
Determine your spending by categorizing
Living Expenses: This is an inevitable cost you can't avoid, but you can do somethings to decrease the cost, such as, having a roommate, taking an RA position, or living farther away from campus. Though don't be so determined to cut costs that you live miserably with 6 people in one tiny room.
Transportation: Parking is expensive on or around campus. Consider not having one at all. Here you will save gas money, insurance, and oil changes. Most college towns provide public transportation cheaper than the cost of having a car.
Food: This is one place where many people can go wrong. Groceries should not be more than $150 a month (I spend $50-150). However, there is the problem of eating out all the time. In my town, eating out is the common thing to do when you have nothing else to do. Some places are open 24 hours a day, so people go there when there is nothing else to do. Additionally, fast food purchases add up quickly.
Utilities: This is a partly unavoidable cost. You have to have water, and electricity, but use it when you need to.
Internet: This is also an unavoidable cost, make sure you find the cheapest rate in your city. By shopping around, my internet bill is $15 cheaper.
Other personal expenses: This is a another place where people spend a lot of their money. Such as clothes shopping or impulse buys.
Savings: This is a category that is probably little or non-existent in your money management. This is one of the most important things you can do, so you can reach financial freedom. Be consistent each month by paying yourself first. This means, when you first get your paycheck, automatically put a set amount or percentage into your savings account.
Debt: Many college kids have loans and these need to pay. Make sure you pay the minimum amount so you won't face later penalties.
Final Words
I've tried and failed over and over, but now I have started regularly writing down where I spend my money. There are a lot of freeware personal finance softwares you can use. I suggest you try out a few. There were some great reviews of software, I found myself hating it. I use Buddi to create a budget on my computer. I also use a freeware checkbook program on my phone on a palm freeware application I downloaded from the internet.
Sources:
About.com
MSN Money
I. The Basics: Setting Goals
What are your goals? Not just financial goals, but life goals? Do you want to have a big house, live in an expensive neighborhood? Retire young? Where do you want to work and how much do you want to make?
You can't go anywhere unless you have a map. This step is very important because it determine how much you want to save, invest, etc. I suggest you take some time to figure out what you want. Don't leave the computer now, I'm not suggesting you have to know everything you want to do with your life, but making a road map is key.
I'm taking Millionaire Mommy Next Door's advice by creating a roadmap to my own personal happiness.
I don't have my life completely figured out, but this is what I know what I want from my life. In the next five years I expect to:
- Finish my undergraduate school ( I'm in my third year of college, but I plan to stay for a fifth year to get a BA in government with my business degree).
- Get a job working for the government making a modest income for starting salary (I would guess anywhere between $28,000 to $50,000).
In the next ten years:
- My parents will most likely be retired and I want to be close to them and take care of them
- I hope to be married and having one child before I'm 30.
- I hope to get my master's degree in public policy.
- Own a house.
In the next 15 years:
- I want to have adopted a disabled child from a third world country.
- Provide my children with a good life while spending time with them.
- Still taking care of my parents, and not putting them in a nursing home.
Though this probably will not be what will happen in the next 15 years, but it gives me a place to start to figure out my goals. I know what priorities I have set in my life at least where I can build a foundation and make changes as I go along. Based on my own roadmap, I know I want to have a job in which I spend more time with my kids in the future, meaning I probably shouldn't get a time consuming job like investment banking and I won't plan my income on an investment banker's income.
-
A Series on the Basics
My next couple of articles will be the basics of personal finance for the college age crowd. As I have been reading about personal finance from authors, I realized that a lot of things don't apply to me yet. I don't know what a mortgage is, or even know how to save one, but there are steps I can take now to help myself, and do certain things to inform myself of so I can prepare for the future.
Thursday, July 10, 2008
Eat Fruit over drinking Fruit Drinks for health and Cutting Your Grocery Bill
I've never been too much into fruit drinks, but I wanted to look into it the benefits of fruit because it would be easier for me to get my vegetable nutrients. What I found is that it's actually better to eat a piece of fruit rather than a fruit drink?
Why? I will compare an orange to the an 8 oz Tropicana Orange Juice Carton (Which is one of the better for you brands of orange juice).
Health Benefits:
A 4.6 oz orange (I would say this is a medium sized orange) is:
There is also an increased sugar in fruit drinks. This same orange has 12.2 grams of sugar while the tropicana orange juice has 22 grams of sugar. After a week of drinking orange juice for breakfast rather than simply eating an orange, you are consuming 70 more grams of sugar, which is almost equivalent to 2 cans of cokes (86 grams of sugar for 2).
The sugar also hurts your teeth, causing cavities, which as a broke college student, I want to decrease my cost as much as possible by not having to go in for healthcare problems that I can prevent.
If you follow weight watchers like I do, an orange is considered 0 points while this same tropicana orange juice is 2 points.
Lastly, I feel more fulfilled when I eat a piece of fruit rather than drinking a fruit drink. I don't feel as hungry after I eat the orange rather than when I drink the orange juice.
Though it may be easier to grab the pack of juice, I know while I'm peeling my orange that I doing something better for my health.
Cost:
It's cheaper to buy fruit than cartons of drinks.
*This six pack is 4.99 (about .83 per carton) while one orange can be as low as .30, which comes to 1.80 for six. In a year that could save you about $150.
*Note: I know it may be cheaper to buy a big carton of orange juice, but I have noticed most college kids use the cartons of juice for their purchases of fruit drinks.
Why? I will compare an orange to the an 8 oz Tropicana Orange Juice Carton (Which is one of the better for you brands of orange juice).
Health Benefits:
A 4.6 oz orange (I would say this is a medium sized orange) is:
- 62 Calories
- 3.1 grams of Fiber
- 0.2 grams of Fat
- 110 Calories
- 0 grams of Fiber
- 0 grams of Fat
There is also an increased sugar in fruit drinks. This same orange has 12.2 grams of sugar while the tropicana orange juice has 22 grams of sugar. After a week of drinking orange juice for breakfast rather than simply eating an orange, you are consuming 70 more grams of sugar, which is almost equivalent to 2 cans of cokes (86 grams of sugar for 2).
The sugar also hurts your teeth, causing cavities, which as a broke college student, I want to decrease my cost as much as possible by not having to go in for healthcare problems that I can prevent.
If you follow weight watchers like I do, an orange is considered 0 points while this same tropicana orange juice is 2 points.
Lastly, I feel more fulfilled when I eat a piece of fruit rather than drinking a fruit drink. I don't feel as hungry after I eat the orange rather than when I drink the orange juice.
Though it may be easier to grab the pack of juice, I know while I'm peeling my orange that I doing something better for my health.
Cost:
It's cheaper to buy fruit than cartons of drinks.
*This six pack is 4.99 (about .83 per carton) while one orange can be as low as .30, which comes to 1.80 for six. In a year that could save you about $150.
*Note: I know it may be cheaper to buy a big carton of orange juice, but I have noticed most college kids use the cartons of juice for their purchases of fruit drinks.
Saturday, July 5, 2008
Three Great Shopping Tips for Holiday Weekends
It's the forth of the July weekend, and that means lots and lots of sales, but be careful about what you are buying.
Remember What You in your Purchases: While I walked through the mall today, I noticed that many stores have signs with 60%, 70% off, but when I actually walked in there were maybe 2-3 things that I actually liked. There was a store that had the entire store on sale, but I had to really pull myself away from buying anything that was cheap. I almost bought pants today that did not reflect who I was fashion wise and I probably would have hated the way I looked in them later.
Make sure that you check your labels: I found a pair of bermuda shorts that I LOVED, but I had to put them down even though they were only $20. They are dry clean only. Just because the pants are cheap now does not mean they will be cheap later. Dry Clean only is a bad sign for clothes because it costs so much to get clothes cleaned for $8 a pop. Also, I went to buy a DVD player that I had researched online, I didn't quite understand what one word meant on the labe, but when I went to the store I spent about 30 minutes reading through the boxes to find out what everything was and low and behold I found out the word that I didn't know had a feature that I wanted in my dvd player missing. I ended up paying $60-$70 more, but I saved myself the trouble of coming back another time to replace my DVD player.
Check Online First: I wanted to buy a wireless mouse and I was going to shell out thirty bucks for a good quality brand name one, but by researching the deals at slickdeals.com, I found a wireless mouse with the same great brand name I wanted for $10.
Happy Shopping!
Remember What You in your Purchases: While I walked through the mall today, I noticed that many stores have signs with 60%, 70% off, but when I actually walked in there were maybe 2-3 things that I actually liked. There was a store that had the entire store on sale, but I had to really pull myself away from buying anything that was cheap. I almost bought pants today that did not reflect who I was fashion wise and I probably would have hated the way I looked in them later.
Make sure that you check your labels: I found a pair of bermuda shorts that I LOVED, but I had to put them down even though they were only $20. They are dry clean only. Just because the pants are cheap now does not mean they will be cheap later. Dry Clean only is a bad sign for clothes because it costs so much to get clothes cleaned for $8 a pop. Also, I went to buy a DVD player that I had researched online, I didn't quite understand what one word meant on the labe, but when I went to the store I spent about 30 minutes reading through the boxes to find out what everything was and low and behold I found out the word that I didn't know had a feature that I wanted in my dvd player missing. I ended up paying $60-$70 more, but I saved myself the trouble of coming back another time to replace my DVD player.
Check Online First: I wanted to buy a wireless mouse and I was going to shell out thirty bucks for a good quality brand name one, but by researching the deals at slickdeals.com, I found a wireless mouse with the same great brand name I wanted for $10.
Happy Shopping!
A thought on Renting Movies
Yesterday I wrote about how you can get rentals free, in truth I never rent at all. I just buy the DVD. I never go and see the movie, but I usually buy the DVD on half.com or amazon.com. I don't see the point of going to see a movie for $10 and then buying the DVD, or renting the movie for $4, when you can pay $4 more dollars and own the movie.
Is this a correct thought?
Is this a correct thought?
Friday, July 4, 2008
Four Days into my budget...
Well my budget is going...okay
I've spent a lot of money on food in the last three days. I have eaten out once on Tuesday and Wednesday and I ate out twice on Thursday.
Here's what my eating has been like this week:
Monday: Ate at home
Tuesday: 5.51-Lunch
Wednesday: 6.48-Weekly Pizza
Thursday: Lunch with friend, 3.50 Dinner, on the way home, 5.62
I used to think these little purchases were not a big deal, but I didn't realize how three days casual eating turned into over $20 of purchases.
Lesson: I need to spend less on fast food.
I've spent a lot of money on food in the last three days. I have eaten out once on Tuesday and Wednesday and I ate out twice on Thursday.
Here's what my eating has been like this week:
Monday: Ate at home
Tuesday: 5.51-Lunch
Wednesday: 6.48-Weekly Pizza
Thursday: Lunch with friend, 3.50 Dinner, on the way home, 5.62
I used to think these little purchases were not a big deal, but I didn't realize how three days casual eating turned into over $20 of purchases.
Lesson: I need to spend less on fast food.
Not having Cable...Not so bad?
I've recently decided to not go with having cable in my apartment to save some extra money. Right now I am struggling to get used to this adjustment because I have been watching cable all my life, especially the Disney Channel. I don't even have a DVD player yet.
But I have had some great perks from not having cable.
-I spent a one time sunk cost of $10 for an antenna rather than the $60 a month to pay for cable.
-Time I got back: I've spent more time reading since I stopped having cable
-I still get to watch the shows I love. I only keep up with two: Gossip Girl and Grey's Anatomy, I have the CW and ABC, so I get what I need.
-I spend more time watching the news and keeping myself informed of the world happenings, something I didn't think I had time for before.
Try to challenge yourself with not having cable, you will have a fatter wallet and more time for yourself.
But I have had some great perks from not having cable.
-I spent a one time sunk cost of $10 for an antenna rather than the $60 a month to pay for cable.
-Time I got back: I've spent more time reading since I stopped having cable
-I still get to watch the shows I love. I only keep up with two: Gossip Girl and Grey's Anatomy, I have the CW and ABC, so I get what I need.
-I spend more time watching the news and keeping myself informed of the world happenings, something I didn't think I had time for before.
Try to challenge yourself with not having cable, you will have a fatter wallet and more time for yourself.
DVD Rentals FOR FREE!
I just discovered at my school library we have a great selection of movies!
At my University, I found these movies:
Devil Wears Prada
Enchanted
The Illusionist
I Now Pronounce you Chuck and Larry
And there were thousands more in the collection.
Don't expect your school to have the most updated selection, but it's a great source for keeping yourself entertained. My school has an option where you can suggest titles for them to buy and they actually put your input into consideration and buy it! This is especially great for people like me who do not have cable in order to cut costs. There are older movies that I would never have watched before if I didn't have the opportunity to see them.
So take a chance and check out your school library!
At my University, I found these movies:
Devil Wears Prada
Enchanted
The Illusionist
I Now Pronounce you Chuck and Larry
And there were thousands more in the collection.
Don't expect your school to have the most updated selection, but it's a great source for keeping yourself entertained. My school has an option where you can suggest titles for them to buy and they actually put your input into consideration and buy it! This is especially great for people like me who do not have cable in order to cut costs. There are older movies that I would never have watched before if I didn't have the opportunity to see them.
So take a chance and check out your school library!
Thursday, July 3, 2008
Bank of America Checking Account
I just recently switch from my local bank to a well establish national Bank, Bank of America. I got the student account and I think it's pretty fabulous. Some of the perks I enjoy:
Mobile Banking
Instant Online Banking
Keep the Change Fund
The Drive in Banking
My biggest love of this account is the Keep the Change Fund. Bank of America rounds up to the nearest dollar the amount you spend and puts it in your savings account. For the first three months Bank of America will give you 100% of your money and then yearly you will get 5% back. Many people think this idea is stupid, but I think it is great; it's a way for me to get money without having to lift a finger more than I have to. I plan on waiting a year after I get the 5% back and then putting the savings into my ING account since Bank of America only gives a 2% interest rate on savings while I get a much higher yield from ING.
So all in all, I am satisfied by this bank.
Mobile Banking
Instant Online Banking
Keep the Change Fund
The Drive in Banking
My biggest love of this account is the Keep the Change Fund. Bank of America rounds up to the nearest dollar the amount you spend and puts it in your savings account. For the first three months Bank of America will give you 100% of your money and then yearly you will get 5% back. Many people think this idea is stupid, but I think it is great; it's a way for me to get money without having to lift a finger more than I have to. I plan on waiting a year after I get the 5% back and then putting the savings into my ING account since Bank of America only gives a 2% interest rate on savings while I get a much higher yield from ING.
So all in all, I am satisfied by this bank.
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