Bills Bills Bills

Rent is due. By July 5th. Boo.

I've taken the liberty to re-vamp/ re-organize my bill payment schedule. This means I need to take a look at and decide if I would like to change:

• Which bills are paid from which paycheck (the 30th or the 15th)
• Make all necessary due date changes to the bills I decide to shift around. In case you didn't know, you can change the due date of most bills. Very convenient.
• Which bills are automatically deducted from my checking account.

I was not looking forward to this exercise. In fact, I was completely loathing the fact that I should do it. But with any major changes such as a new place (with increased expenses) or a change in cash flow (due to a new job or loss of one), I think this is absolutely necessary. I would encourage you to do the same...and maybe even on an annual basis.

Update: Monday June 27th

So at the time of this post I wasn't able to fully explain WHY I'm re-organizing my finances but now since it's official I can tell you all. I got a new job! I'm moving on from my current place of employment. It's a bittersweet feeling because I've learned a ton and fostered some pretty awesome relationships there but I'm so ready to move on to phase 2 of my career. A new apartment, new salary, etc. all led me to a mid year reorganization. Whenever you experience major changes like these, you should take the time out to see if your budget is still representative of your financial situation also.

Trick AND Treat

Yeah, yeah, I know it's Valentine's Day and not Halloween but the title just fit better. Additionally, while I don't consider myself to be a bitter single woman, I don't think of Valentine's Day as some super fantastic addition to my world....mostly because I believe we should be spreading love every single day...not just once a year. But I guess that goes for most holidays...

I digress. Recently, as you all may know, I've been really focused on managing my money correctly since becoming a full time working woman. Since July 2010, I've reduced a lot of my monthly costs in order to allow me to save more money and reduce debt. However, most recently, as in the past few weeks...I've been on this spending frenzy. Well...I'm not sure that's what you'd call it but whatever it is, it ain't good. It hasn't really hurt anything too badly, it has just forced me to slow down on my massive savings revolution...which makes me sad.

I think I'm starting to realize that I have these financial roller coaster rides....where for a few months I'll be doing spectacular (and sometimes I'm not even sure what I'm doing to make the money flow like it does) and then for another few months, I will need to watch what I'm spending like a hawk, as to not overextend myself because I'm thisssss close. I hate those months. They make me nervous. Does anyone else have this problem?

My financial personality, as I'd like to call it, makes me the type of person who always thinks the worst is going to happen..I think they call this pessimistIC. So if I feel like my emergency cushion isn't all there, I'm freaking out when I don't have a really big threshhold for error, which is usually the case in the down months. Sometimes...I just need to check myself.

So while I stumbled upon this video on CNN Money, I was excited to share with you all. Some guy (he didn't say anything about himself) was advising ways to "Trick Yourself Into Saving More." I thought maybe we could all try to implement these and see how it helps or hinders our progress:

1) Put Savings on Autopilot - this includes automatic deposits into your 401k, IRAs and your savings account. I definitely do this now...I cannot count on myself to manually transfer money every month from one account to another. Automatic transfers have become my best friend.

2) Dangle a Carrot - now this was interesting to me because I kind of do this...but I think I need to do it a lot better. hahaha. Dangling a carrot involves setting a savings (or debt payment) plan with a reward once you've achieved the goal. For instance:

Goal: if I can increase my savings by $5,000 by June,
Reward: I'm allowed to purchase a new really expensive bag I've been eying.

I think usually I start here...but at some point, when I'm on my way to the reward, I convince myself I've done well enough to get the reward now...lol. Not to mention, if I want something now (say a new bag, shoes, etc), why would I still want the same thing in June...there will be something new for me to want and it could be completely out of season. So maybe I should try smaller rewards along the way that lead up to a large one? It's like eating 6 small meals a day to effectively diet instead of starving yourself all day and then binging on one huge meal. *just had an a-ha moment*

3) Use a Stick - so this is the opposite of dangling a carrot and I'm not sure would ever work for me but maybe some of you respond better to punishment rather than reward. The idea behind this is to make yourself a commitment contract. If you don't hold up to your end of the bargain, you have to pay a fine (I guess to your savings???) or punish yourself in some sort of way. Yeah...punishment de-motivates me so I'm going to stick with the carrot.

4) Focus on the Big Stuff - in general, when looking for ways to cut costs and save money focus on the big stuff...get a smaller apartment instead of the larger one, buy a used car instead of a new one, etc etc.

I have definitely done this in the past year. I yearn so badly for my own one bedroom in Chicago...but I'm sticking with a roommate for the time being because my costs are greatly reduced and it allows me to save more and pay down more debt. Not to mention that most of the time I absolutely love my roommate. Even still, frequently I scour Craigslist and rental agencies looking at apartments. In the end I'm always forced to remember that I can have that, AFTER I reach my savings goals. I guess this encompasses a little carrot dangling too.

On the car aspect of this...I completely failed.

Next...

New Years Resolution: The 50/30/20 budget

I read an interesting article on MSN Money discussing "how much you should spend on..."

The writer discusses a very simple question I'm sure we all ask ourselves everyday: "How much should I be spending?"

She then suggests the 50/30/20 budget:

• 50% of your take home (after tax but before insurance and 401k deductions) should cover your "must have" expenses which include, rent, utilities, transportation, food, insurance, minimum loan payments, etc. Any purchase that can be delayed for a few months with no serious consequences is not a "must have" expense. Anything you're contractually required to pay is a "must have" expense.
• 30% of your take home pay goes towards your "wants." Vacays, clothes, eating out. The trick here is that some bills may overlap in the "must haves" and "wants" categories. Internet and television is technically a want but if you have a contractual obligation it would go into the "must have" category.
  
• 20% of your take home pay should go towards savings. Remember minimum loan payments go into the "must have" section but any payments you make on loans above the required payment would fit here. Additionally all retirement savings including 401k, IRA and stock investments are included here. Last but not least, your emergency savings fund fits here as well.
  

The writer adds that it takes time to get to these percentages. Starting out she was at about 60% for must haves. It took a year for her to get to 50/30/20.

I quickly computed my ratio as of now and came up with 60/20/20. I'm sure if I take a more in depth look those ratios would become a little less pretty.

Take a look at your ratio starting out 2011. Where can you shift things around? Are you spending more in places you should be spending less? What goals have you set for long term spending and saving? Challenge yourself to achieve a new ratio by 2012.