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So I received my annual Social Security Statement & I'm appalled that I've made as much money as I have & I have NOTHING to show for it.
Quick background:
28 - turning 29 in two months. I rent. I have ZERO savings. A college degree & 30k in student loans that I've kept in deferment because I can't afford the payments right at this moment, as well as about 10k on my CCs/misc debt.
I have made about 500k in the ten years I've been working.
How can I have nothing in my savings, invested, 401k etc. I've never bought a home. I've always rented. I own a 2008 Versa - very humble car IMO.
I get that I've obviously had bills .. but to have nothing to show for that? It makes me very sad. And I've been irresponsible with my money & I would like to change that.
I make 48k a year gross, which doesn't include another $800-$2500 gross in commission monthly.
My bills:
Rent $1175.
Car $330
Insurance $100 a month.
Phone $60
Netflix $10
Carwash membership $40
That's only $1715 in monthly bills (very little in non essentials)
Despite my few bills, I owe $2000 in taxes, and sit here trying to stretch it until payday and am constantly BROKE!
Please, please give me any advice, tips, suggestions etc. I'm turning 29, thirty is right around the corner & I would really like to take control over my financial future.
Quick and dirty and easy?
Live on your salary alone and don't charge anymore. Bank your commissions in a Roth IRA. Download a free budget template from Google, fill it out and STICK to it as best you can.
Others will come along to give you much more much-needed advice.
I have nothing to do with that website, but I d/l the ebook and passed it out at work to all the people who say they're not in control of their finances
Hey MollieSue.
You can't change the past but you can learn from it and use it to map a better future for yourself.
Don't beat yourself up. You are making a great first step which is to seek resources so that you can make a roadmap from here. If you don't map your destination how on Earth are you supposed to wind up where you want to be? OK...enough philosophizing.
First: Do a WRITTEN monthly budget which includes an amount for an emergency cash fund, your credit card bill, your student loan and a 401K contibution, in that order. Pay ALL of your "bills", which includes these four items, as soon as you are paid. Whatever is left will be used for food, clothing and entertaiment. YOu have to have an emergency fund. It is INSANE to live from paycheck to paycheck when you make the money you make.
Second: Get a notebook and write down EVERY SINGLE DOLLAR/DIME you spend for an entire month. You've got to see where you are hemorraging money. It is going somewhere and you have to understand where before you can stem the tide and get with the new budgeting program you set.
Third: Go to the library and check out the following books: Your Money or Your LIfe by Joe Dominguez (old but really, really worth reading) and one of the Suze Orman books...I think there is one specifically for women in their 30s. Once you read these books and principles, it will be like a light bulb going off. You won't feel nearly as "deprived" as you shift from consumerism to savings when you see you have a clear and better goal for yourself. YOu have to equip yourself with the right tools for the job of excavating yourself from debt and preparing to build wealth.
Fourth: If you aren't married and don't have kids, get a second job or do something on the side for some extra cash. You have the ultimate flexibility to whittle down your debt much faster by taking a second job. Even if you do it only temporarily for something special you want to buy, it will help. Also, you can make it (kind of) fun! If you like animals, look for a part-time job related to animals. If you like crafts, make something and go to craft fairs. Make your part-time work about something you are passionate. It might surprise you and pay off more than you thought!
I keep our family budget in Excel and my husband and I revisit it regularly to see where we are with it. When you don't have control of your finances, you give over control of your life choices. If you can take control of your $$ and redirect your purchase power for your future security, you will find a new freedom in life that will be transforming. YOU CAN DO THIS!!! You just have to make it a priority in your life. Good luck and keep us posted!
You should be appalled. The good news is that you are turning 29 instead of 69. If you were 69 and just had this epiphany, you could expect to be eating ALPO for the rest of your life.
Learning to live on less than you make takes a budget and sticking to the budget. You need to start every month telling the money where it is going instead of it just dwiddling away on you. Here's what I would do:
1. Sell the car (even if you are upside down) and buy a used car with cash. Oh, Never ever have a car payment again. This will help you save on insurance too.
2. Give up Netflix and the carwash membership, until your are out of debt. You are not allowed to have a life until then.
3. The rent seems a tad high. I would shop it and see if you can find a cheaper place to live.
4. I'm sure there are other areas where your money is slipping away from you. How about eating out?
5. You make enough money, you just need to learn to manage it wisely. There are people making a bunch more than you and they are in much worse shape than you. It's not about the money, it is all about your behavior and how you manage it.
Start building an emergency fund of $1-$2K. Once you have that, kill the debt, all of the debt. Then take that money that you used to kill the debt, and start to build up your emergency fund to 6-9 months of expenses. At this point, you should start to have a life again, which means you can go out to eat if you want or sign back up with Netflix. Good Luck.
Location: Chapel Hill, NC, formerly NoVA and Phila
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I think Tinabean gave great advice. I also like to make one of my spending categories "savings" and I put a few hundred dollars toward it each month. I think of it as a monthly expense. It's a line item on my budget. Some people say this is called "paying yourself first." Since this is a must have line-item in my budget then it doesn't get spent. After 3 years, of putting $300 away monthly you would have over $10,000. Just like debt adds up quickly, so can savings.
In addition to what everyone else has said, I'd suggest starting up with an online budgeting tool - we use www.mint.com and love it! It has a nice interface, and it pulls all our accounts into one place so it's easy to track where our money is going. I think my favorite part of it is a section called "Trends", which shows graphs of your spending over time, debt over time, etc. It's such a great feeling to see our debt get smaller and smaller over the past few months - it's a HUGE motivator.
We have a budget done up in Google documents, where we track all our bills and then we have the budget in Mint for miscellaneous expenses (groceries, eating out etc). We also use a debt reduction planner, which has been instrumental in us aggressively paying down our debt.
My rent is actually cheat for where I live & it includes utilites, cable, water/gabage etc.
I actually owned a 2004 Toyota Corolla OUTRIGHT up until a year ago. I sold it with the theory of using the 10k to pay off all CC debt & then having a small car payment. I probably did pay off some of the debt but it's obviously back again
I'm going to do my best to stretch it until next payday (which is when I get a 2k bonus) and I'll have some nice cashflow again & should be able to start a budget & catch up on some bills.
And you're right - I need to find out where my money is going. I don't cook so I'm sure plenty of it is spent eating out etc. I know I spend probably $20 a day at the cafe at work. Coffee $3.60 snack, sandwich etc etc.
All I know is that in January I had 7k saved & was doing great and I've been on a downhill spiral since that I can't seem to gain control over. I think starting an IRA is a GREAT idea & I will talk to my HR rep today.
It's sad when I get a check for $1600 - my only bill out of that one is rent $1175 & I'm here, eight days after payday with seven to go and I just paid for something in quarters & have ZERO dollars in my bank account. I spent over $400 in just eight days on God knows what.
I've gotten a little better on impuse purchases - when I'm at the store & I see Coffee for $12 I tell myself I can get it here for $2.50 etc etc. I buy $5 shampoo instead of the $50 bottle. I do my own haircuts & pedicures so I am getting better .. but not there yet.
I'm going to read some of the books you've mentioned & download/look into the budget sheets.
And you're right - I need to find out where my money is going. I don't cook so I'm sure plenty of it is spent eating out etc. I know I spend probably $20 a day at the cafe at work. Coffee $3.60 snack, sandwich etc etc.
Thats probaly a very big chunk of your cash. I use to eat out a good 10-15 meals a week and was in the same posistion as you -I even made more money. Since my pay has been cut by a pretty decent chunk so I try to cook most meals and bag a lunch. Well surprisingly Im able to live off a lower salary and still save a bit more doing this. I would start by bagging a lunch to work 2-3 days a week and go up from there.
First - cash only. It makes you conscious of what you are spending. Second - record all your purchases- even a pack of gum in a handy dandy pocket journal. Of course you need a budget - but it has to be realistic - not a pipe dream- so you have to account for all you spend. Before considering something a need - take time and ensure you really do "need" it. I suspect - shopping for satisfaction/appeasement may be your downfall. So for a while - no clothes, jewelry, shoes, bags, accessories. No home decorations or anything other than necessities. Take up walking, volunteering - something - -other than spending money. Kudos to you for recognizing and moving to solve it!
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