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Message
Ok, I want to save some money
Posted on 8/7/09 at 9:43 am
Posted on 8/7/09 at 9:43 am
I need the Dave Ramsey's of td.com to help me out here.
Here is the deal. I'm finally making enough money post college allowing me to pay all of my bills and have a pretty good chunk of change leftover afterwards. However, since discovering this I have been allowing myself to splurge more often. I know this isn't necessarily a bad thing but I am somewhat addicted to shopping--shoes, home decor, pretty clothes, accessories--you name it. I don't buy things that are overly expensive because I love sale shopping. I'm not too sure if these guilty feelings I get after buying new things is actually justified. Perhaps its because I am used to living on a very tight college budget and buying things mostly on a basis of necessity.
After reviewing my bank account this morning, it appears that I spent around $500 on pure recreation in the past week--dining out & shopping. Once I added those numbers up I was floored--I probably didn't spend that much money on recreation during college in a matter of 4 months! I still have plenty enough money leftover to get me to the next paycheck but I really would like to become financially prudent. I want to save and have plenty of money set aside for emergencies or even just to begin to nezzle a little nest egg for myself.
I know life shouldn't be all work and no play, but I really need some sort of guidelines to go by here so that I find a good balance between recreational spending and saving.
I enjoy listening to Dave Ramsey's program, but I am not in that much debt (I probably have about 1K total debt between all my credit cards) and don't think I need to be picking up an extra job at night just for hell of it. I am admitting my lack of knowledge in this department and would really appreciate some tips and advice.
Here is the deal. I'm finally making enough money post college allowing me to pay all of my bills and have a pretty good chunk of change leftover afterwards. However, since discovering this I have been allowing myself to splurge more often. I know this isn't necessarily a bad thing but I am somewhat addicted to shopping--shoes, home decor, pretty clothes, accessories--you name it. I don't buy things that are overly expensive because I love sale shopping. I'm not too sure if these guilty feelings I get after buying new things is actually justified. Perhaps its because I am used to living on a very tight college budget and buying things mostly on a basis of necessity.
After reviewing my bank account this morning, it appears that I spent around $500 on pure recreation in the past week--dining out & shopping. Once I added those numbers up I was floored--I probably didn't spend that much money on recreation during college in a matter of 4 months! I still have plenty enough money leftover to get me to the next paycheck but I really would like to become financially prudent. I want to save and have plenty of money set aside for emergencies or even just to begin to nezzle a little nest egg for myself.
I know life shouldn't be all work and no play, but I really need some sort of guidelines to go by here so that I find a good balance between recreational spending and saving.
I enjoy listening to Dave Ramsey's program, but I am not in that much debt (I probably have about 1K total debt between all my credit cards) and don't think I need to be picking up an extra job at night just for hell of it. I am admitting my lack of knowledge in this department and would really appreciate some tips and advice.
6
Posted on 8/7/09 at 9:49 am to rmc
yep. The first rule of saving is, "pay yourself first." Open a separate bank account, and write a check to it every month/paycheck/whatever. Treat it like just another bill. You will find ways to live on the rest.
Posted on 8/7/09 at 9:58 am to Colonel Hapablap
quote:So perhaps the best way is to go open a new savings account today and put maybe $200-ish/paycheck in it?
yep. The first rule of saving is, "pay yourself first." Open a separate bank account, and write a check to it every month/paycheck/whatever. Treat it like just another bill. You will find ways to live on the rest.
I also want to do a speadsheet type of thing for my bills that way I know where my money is going before I get it at least. I would consider myself to be reasonably responsible with money (ex: I always look for ways to cut costs on most things I do) and I just want to look at exactly where my money is going every month. So if that means I have a section for bills/necessities that says $1200 and then a section for dining, shopping, etc, that allows me to write out what I can spend there I think I'd like that.
Posted on 8/7/09 at 9:58 am to tigerbandpiccolo
What I have encouraged my daughter to do (she is a recent college grad like you and started her professional career this past Monday) is to "pay herself first." If your employer does a direct deposit (like my daughter's does) then in addition to your payday checking account deposit, open a savings account and have 3-6% of your pay direct deposited into it each pay period. It makes savings easier because you don't see it. You are paying yourself first.
Then make a pact with yourself that you will only tap into the savings account for emergencies. (A really fantastic sale at the Mall is NOT an emergency!
)
Next step, open a self-directed brokerage account, such as TDAmeritrade or Charles Schwab. Every six months to a year, transfer half of your savings balance into the brokerage account and purchase a low expense, no-load mutual fund with the money. I prefer equities (stocks) and at your age, I suggest the same, but that is really dependent on your risk tolerances. If you can't sleep at night thinking your brokerage account might lose money the next day, then stocks are NOT for you.
I opened a brokerage account for my daughter years ago and started putting small amounts (no pain amounts) into a stock fund periodically and her account balance is a low-five figure number. Not bad for a 22 year old starting to work. Now she will take over responsibility for her own rainy day fund.
I hope you find this helpful.
Then make a pact with yourself that you will only tap into the savings account for emergencies. (A really fantastic sale at the Mall is NOT an emergency!
) Next step, open a self-directed brokerage account, such as TDAmeritrade or Charles Schwab. Every six months to a year, transfer half of your savings balance into the brokerage account and purchase a low expense, no-load mutual fund with the money. I prefer equities (stocks) and at your age, I suggest the same, but that is really dependent on your risk tolerances. If you can't sleep at night thinking your brokerage account might lose money the next day, then stocks are NOT for you.
I opened a brokerage account for my daughter years ago and started putting small amounts (no pain amounts) into a stock fund periodically and her account balance is a low-five figure number. Not bad for a 22 year old starting to work. Now she will take over responsibility for her own rainy day fund.
I hope you find this helpful.
Posted on 8/7/09 at 10:04 am to tigerbandpiccolo
something to note on budgeting:
budgeting is NOT simply making a plan and then doing a tally at the end of the month to see if you stuck to it. That's just called monitoring.
budgeting IS making a plan and then holding yourself to that plan. If you give yourself $500 a month for play money, then you don't get to play any more after you've spent $500. You have to track your spending IN PROCESS.
ETA:
Yes.
budgeting is NOT simply making a plan and then doing a tally at the end of the month to see if you stuck to it. That's just called monitoring.
budgeting IS making a plan and then holding yourself to that plan. If you give yourself $500 a month for play money, then you don't get to play any more after you've spent $500. You have to track your spending IN PROCESS.
ETA:
quote:
So perhaps the best way is to go open a new savings account today and put maybe $200-ish/paycheck in it?
Yes.
This post was edited on 8/7/09 at 10:05 am
Posted on 8/7/09 at 10:04 am to Colonel Hapablap
:kige:
ETA: However, Colonel, picc has a genetic defect which will hamper her budget compliance process.
She has an extra X chromosome....
ETA: However, Colonel, picc has a genetic defect which will hamper her budget compliance process.
She has an extra X chromosome....
This post was edited on 8/7/09 at 10:07 am
Posted on 8/7/09 at 10:06 am to LSURussian
Wow, what a very helpful post. Thanks!
The problem herein lies in the fact that I am almost ignorant to money market funds, mutual funds, and stocks. I know my parents have a lot of their savings in these types of things but I never really bothered, nor do I want, to ask them for advice on this issue...but I disgress.
What are the benefits of putting my money in this type of fund and how much is the risk? I realize I could obviously double my money by a stroke of luck, but I think I'd often worry about it a lot since I am not a bazillionaire yet.
The problem herein lies in the fact that I am almost ignorant to money market funds, mutual funds, and stocks. I know my parents have a lot of their savings in these types of things but I never really bothered, nor do I want, to ask them for advice on this issue...but I disgress.
What are the benefits of putting my money in this type of fund and how much is the risk? I realize I could obviously double my money by a stroke of luck, but I think I'd often worry about it a lot since I am not a bazillionaire yet.
quote:BLASPHEMOUS!
(A really fantastic sale at the Mall is NOT an emergency! )
This post was edited on 8/7/09 at 10:10 am
Posted on 8/7/09 at 10:09 am to tigerbandpiccolo
right now, just worry about setting the money aside. While you're doing that you can educate yourself on the markets. The most important thing is that you build the cash basis to actually do something with. WHAT you do with it can come later. This is the easiest time in your life to save money. Take advantage of it.
Posted on 8/7/09 at 10:10 am to tigerbandpiccolo
Hi picc, would you be willing to swap IRL shopping for online shopping ? if so, live and breathe on slickdeals.net .... we got more crap for next to nothing b/c of this site ...
Also, build a nice buffer in your checking acct (like well over $1000)...so if one month you want to spend a little more, you don't even have to think twice ...BUT... the next month you will have to spend even less than you normally do to get that buffer back...it gives you the opportunity....
Also, build a nice buffer in your checking acct (like well over $1000)...so if one month you want to spend a little more, you don't even have to think twice ...BUT... the next month you will have to spend even less than you normally do to get that buffer back...it gives you the opportunity....
This post was edited on 8/7/09 at 10:13 am
Posted on 8/7/09 at 10:24 am to tigerbandpiccolo
quote:I agree with the Colonel. This step comes later. The hard part is saving NOW rather than investing it in commodities, such as cotton and leather products, etc.
I am almost ignorant to money market funds, mutual funds, and stocks. I know my parents have a lot of their savings in these types of things but I never really bothered, nor do I want, to ask them for advice on this issue..
At some point, swallow some pride and ask your dad what he suggests. The worst thing that can happen is that he wastes 15 minutes of your life and you can ignore his advice. (I have a great deal of experience with that from my daughter.) But he just MIGHT be helpful.
quote:The benefits? Growth of wealth. Risk? You lose money. The amount of risk varies with what you invest in. Like the Colonel says, you have time to study up on investing.
What are the benefits of putting my money in this type of fund and how much is the risk?
quote:Or lose half your money.....or more. That's why I wrote earlier you have to do what allows you to sleep at night. If you go into it with the attitude that you are going to "double my money" in a short period of time, you are going to be constantly disappointed. Shoot for doubling your money every 8 years (approximately 9% annual return compounded) and you will have an aggressive but attainable goal.
I realize I could obviously double my money by a stroke of luck,
This post was edited on 8/8/09 at 12:34 pm
Posted on 8/7/09 at 10:27 am to LSURussian
also, you have to realize that "doubling your money" right now means an extra $200. Wait until you have an asset base before you start worrying about returns. Right now you're "doubling your money" every time you make another deposit.
Posted on 8/7/09 at 10:33 am to Colonel Hapablap
quote:true
Right now you're "doubling your money" every time you make another deposit.
Posted on 8/7/09 at 10:40 am to tigerbandpiccolo
Are you contributing to a retirement plan at work,and, if so, do you get an employer match? If so, I would attempt to contribute up to the match limit, then put dollars into emergency savings, then budget the rest as you need for expenses and attempt to save at a higher rate over time.
New graduates should read up the lack of savings of many middle age people in this country due to lack of budgeting and saving from day 1, their retirements are going to be dismal. Good luck.
New graduates should read up the lack of savings of many middle age people in this country due to lack of budgeting and saving from day 1, their retirements are going to be dismal. Good luck.
Posted on 8/7/09 at 10:41 am to tirebiter
Thanks. I have the option of a 401K but I'm not really doing anything with it at the moment. I was planning on waiting until after my first year or so of work and law school to begin that. Hopefully I will have a raise by then.
Posted on 8/7/09 at 10:47 am to tigerbandpiccolo
quote:
Thanks. I have the option of a 401K but I'm not really doing anything with it at the moment. I was planning on waiting until after my first year or so of work and law school to begin that. Hopefully I will have a raise by then.
What percentage do they match? Assuming you have a few months' salary saved away, you should definitely contribute the match for two reasons. The first is that contribution will be tax deductible, the second is that they are giving you free money. Just because your money is in a 401k doesn't mean it has to be invested in risky ventures.
Posted on 8/7/09 at 10:58 am to LSUtoOmaha
quote:Actually, it's tax deferred.....for now. :holdingbreathwithDemocratscontrollingcongress:
The first is that contribution will be tax deductible
Posted on 8/7/09 at 11:41 am to tigerbandpiccolo
There's good advice in here but the most important one is what Colonel Hapablap mentioned about sticking to your budget. Paying yourself first really = paying the bank if it's only going to cause you to bounce checks and pay NSF fees. Get a program like quicken or even just an Excel spreadsheet and every day write down every purchase you make. That way you won't be surprised at the end of the week when you've blown $500, you'll catch yourself around the $200 level and realize you've already had more than a weeks worth of fun.
Posted on 8/7/09 at 11:10 pm to LSUtoOmaha
start contributing, it sounds like you have the money to spare now why wait? it's that much harder to catch up if you keep waiting. you'll thank yourself in a few years if you do.
Posted on 8/8/09 at 2:15 pm to tigerbandpiccolo
You have received a lot of good advice so far. But, assuming you're a woman, you may have some "shopping for stimulation" issues.
Can you tell me something about your relationship with your mom as a kid? Did she shop with you like dad's play ball with sons?
Do you ever buy clothes on sale and then realize you never wear them?
Do you ever feel the need to keep up with the other girls in terms of clothes, purses, shoes, etc?
Can you tell me something about your relationship with your mom as a kid? Did she shop with you like dad's play ball with sons?
Do you ever buy clothes on sale and then realize you never wear them?
Do you ever feel the need to keep up with the other girls in terms of clothes, purses, shoes, etc?
Posted on 8/9/09 at 9:06 pm to Zach
quote:oh yes
"shopping for stimulation" issues.
quote:YES and we even hid stuff in the closets so dad didn't know about it. :)
Did she shop with you like dad's play ball with sons?
quote:EVERY now and then but its rare if I don't wear it at all.
Do you ever buy clothes on sale and then realize you never wear them?
quote:I don't feel the need to keep up with the other ladies, but I do enjoy having nice and beautiful things. I just enjoy looking fabulous. Thats all.
Do you ever feel the need to keep up with the other girls in terms of clothes, purses, shoes, etc?
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