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Thursday, August 31, 2006  

August Wrap-Up

Because I had a high spending month in July I decided to buckle down and focus on my savings in August. I'm happy to say I exceeded my goal a bit and at the end of the month I have put $850 into savings. I am cheating on the math a little bit because I bought a plane ticket that will be paid for in September but it just feels better to me to have such a high number this month and a little less the next. Anyway the plane ticket is for Christmas so it feels "fair" not to count it in August's budget.
In retirement news I transferred some of my Roth IRA money into Vanguard's Total International Stock Index Fund. I was feeling uncomfortable with the fact that all my money was in American assets. However because I made this move vanguard won't allow me to purchase more of the index fund I moved money from until October! So I just transferred what would be my roth money into my emigrant account to be moved later. This makes me wonder if I would be better off just putting all my money into emigrant to earn interest then funding my roth once or twice a year- will dollar cost averaging earn me more than 5.15%? I would like to hear other's thoughts on this one.

Tuesday, August 29, 2006  


My boyfriend and I pay our shared household expenses from a joint checking account that we both contribute a standard monthly sum to. The thing is we over-budgeted for it to start with and the monthly total was made with our outrageously expensive winter heating bills in mind. This means that lately this account has a few hundred left over in it at the end every month. In fact the very first month we started it there was enough remaining to pay the hotel bill for our trip to New York. So we decided that in the future we will use the extra funds to save for everyone's favorite joint expense- vacations!
Step one is logging into emigrant to create a new savings account- I funded it with $5 from my existing savings. Simple enough. Then I go to make a transfer from our bank of america shared account to the new vacations savings. I enter the account numbers and everything is going well until I get to a screen that tells me to send in a check so that my request can be processed. We don't have checks from this account! We pay all of our bills electronically and BOA won't give us free checks for it. Even if I did have a check I would have to go buy a stamp and send it in which I consider to be a huge pain in the ass.
So I thought OK I will just transfer our joint money into my checking then transfer the money into our emigrant shared savings- foiled again!! I got a message that these accounts are not linked even though it's how I fund my other emigrant savings account. If I wanted to use the SAME ACCOUNT that emigrant already transfers money from all the time I'd have to send in another check! Frustrating!
So what I have to is make 4 online transfers in order to save this money. Shared checking > my checking > my savings > shared savings. I still live it for the high interest but the process is seriously ridiculous.

Sunday, August 27, 2006  

Freelance biz up and running!

Just wanted to post that I finally got my freelance design website up and running. My goal was to have the site up by the end of August and obtain one client by the end of September, so I am on track so far. I don't really want to link these two sites together so I'm not going to put the link here but feel free to email me if you'd like to see it. I don't think I would be doing myself a great service advertising as a web designer on a site that I'm still using the blogger template for!

Sunday, August 20, 2006  

There's a hole in my budget, dear liza dear liza . . .

Budgeting is a constant process that needs to be tweaked month to month or week to week to figure out what really works for you. I am very aware of my spending and always kind of operate with a general budget in my head, but for the month of august I decided to put one in writing to help me stick my savings goals for the month after I had a very high spending month in July (I took a vacation to new york which included shopping). It's so easy to leave out stuff when you think you've covered everything- for me it was entertainment. I gave myself a shopping category and a food category, thinking that drinks and meals out with friends would go under food and the other fun stuff was shopping. By day 8 I was already getting way to close for comfort to my $200 shopping limit (curious where my money went? dry cleaning bill, foundation from saks, toiletries/prescription from walgreens, and a bunch of office supplies from staples) so I starting being very aware of my spending in that category. Well I ended up going to two film festivals this month and I realized the tickets that I bought had no category. They aren't what I consider "shopping", and aren't food either. So far I've been well under my food budget ($60 per week) so I think I will roll entertainment into that category, which will force me to eat out less when I've spent too much on entertainment.
Of course once again my savings goal has been shot by those large but necessary expenses that seem to rise out of nowhere every month. This month it was my christmas plane ticket ($200), two years of web-hosting for my web design business site ($100) and the bike that I will mostly like buy tomorrow ($150). I guess I should just count myself lucky that even after all that I will have some left over to save, and disasters unforeseen will not be purchasing any more plane tickets for the rest of the year.

How To Get Stuff For Cheap: Plane Tickets

This isn't going to be a very long post because my strategy for airline tickets is very simple. I sign up for "Net SAAver Alerts" with american airlines and check every single day. This is a feature that american airlines offers "aadvantage" members that displays the fare sales of all your selected cities on the home page. "Aadvantage" is their frequent-flier program and there are no associated charges. I live in Chicago but my boyfriend and I are both from Austin, so we fly there at least twice a year for thanksgiving and christmas. Because I know that I have a constant need for tickets to Austin, I add it to my fare sale alerts list and then go to american's homepage every day. That way as soon as a sale that includes thanksgiving or christmas dates comes up (and believe me they do not like to put these heavy-travel times on sale so the tickets go fast) I can snatch them up right away. I bought our christmas tickets this weekend and our thanksgiving ones about a month and a half ago. I also use this feature for vacations- I have many destinations that I would like to travel to on my list and when a fare sale arises for one I will know about it and be able to plan my trip around the dates that are on sale. This is how we flew to new york for $98 each round trip.
Yes this method isn't very sexy or top-secret, but I like it because I hate going so many different sites looking for plane tickets (expedia, hotwire, travelociy, etc), not knowing which one is giving me the best deals. This way I only have to go to one website, and I know that I will be flying on an airline that is trustworthy. American also has a policy that the lowest ticket prices for their flights will always be displayed on their own site, which I have found to be true. By spending a few minutes a day and planning ahead I save myself money and the stress of spending hours searching for flights before each vacation.

Saturday, August 19, 2006  

Make Some Noise to Save Some Money

I really enjoyed Get Rich Slowly's recent post Make Some Noise to Save Some Money, it's about how to get extras or fees waived just by asking.

I saw a big example of this recently: my boyfriend has been shopping for a new bike and could not decide between two bikes at different price points. He was discussing this with the bike shop and guess what they did? Offered to give him the better model for the price of the lesser one. The savings was huge, several hundred dollars, and he walked away with a great bike at the price of a mid-range one. You never know unless you ask.

Friday, August 18, 2006  

Give yourself a money-saving choice

This is one technique that I use to limit my spending: choose one thing or the other for the day. Two daily spending behaviors that I have are taking the train and not bringing my lunch. So I have decided that every workday I can eat lunch out OR take the train, but not both in the same day. If I ride my bike (my cheaper alternative to taking the train) AND bring my lunch, that's great but sometimes I'm feeling lazy and it doesn't always happen. Giving yourself an option like this is a good way to do a daily check on your spending, and is easier than trying to remember what your behavior for the week has been. (How easy it is to forget on thursday what you did for lunch on monday!) This is also a way to not feel guilty about spending you enjoy- for example if you want to reward yourself with a starbucks run during the day take the bus home that afternoon to make up for it.

Saturday, August 12, 2006  

Festival of Under 30 Finances

Check out the latest Festival of Under 30 Finances hosted by Beachgirl's Budget Blog. My sumbission is under the "paying off debt" category, which I was somewhat surprised by. It's not actually about paying off debt but you should read it anyway if you haven't already!

My picks from this festival:
Is it better to pay down debt or save for a down payment?
The Dead End Road of Conspicuous Consumption (Part 1)

Thursday, August 10, 2006  

Anyone can afford $20 per paycheck

If you know anything at all about personal finance you know about the power of compound interest. When you're young this is a huge advantage that means saving a little bit now will pay off big time later. But for various reasons many of us don't even save that little bit.

I contribute $20 a paycheck to my work 401k. Yes, just $20.

That may sound ridiculously small, and you may feel embarrassed emailing your HR person to tell them to put so little in your account. But get over yourself and just do it. Anyone can afford $20 out of each paycheck, and it's true that when its automatically taken out you don't miss it one bit. I contribute so little to my work 401k because I don't get a match and so I focus on a Roth IRA for my retirement savings. For someone older I might spreading themselves so thin would be a waste of money, but when you're in your 20s it is very wise to put something, anything in an account and give it time to grow. Hopefully I will someday be in a financial situation where I will be making too much to fund a roth, or where my employer offers a match to my 401k, and at that time I will be very glad that I had started a fund to grow from.

Wednesday, August 09, 2006  

Question of the Day

AllFinancialMatters is hosting a Question of the Day Marathon for the month of august. Some of the questions have been more engaging than others but I thought this one garnered some interesting responses: Spending Less Versus Earning More: Which is More Important to Financial Success?

Monday, August 07, 2006  

My entry Expanding the Definition of "Professional Development" is up at the Carnival of Personal Finance, hosted by Get rich slowly

My picks from this carnival:
A Review of ING Direct CD Ladders
An interview with someone who has used prosper
Is Home an Investment or a Liability?

Friday, August 04, 2006  

Expecting The Unexpected: Predict Your Emergency Expenses

With interest rates at online banks so much higher than their brick & mortar counterparts, many of us (myself included) choose to store our emergency savings at an online bank. There is of course one huge drawback- doesn't an emergency sometimes mean you need money right away? Most online banks don't give you access to checks or an ATM card so you might have to wait a few days to transfer money from your savings account to your checking account.
One solution to this is just to charge the emergency then immediately pay off your card from your savings account. I think this is the best solution for most people because it allows you to avoid the need to immediately transfer money. But what if you encounter an emergency that needs cash? One that I can think of is having your car towed- it costs around $100 to pick it up and they usually only take cash. If it's not in your checking its time to hope that you have a friend who owes you a favor.
Because of this I think it's important to spend some time thinking about what kind of emergency spending situations you might come across. I know you can't predict the future and some expenses come out of nowhere but I think there are some common financial emergencies that everyone needs to prepare for. If you figure out which ones apply to you, you will have a better idea of how much you need to save and how accessible that money needs to be. By predicting the unpredictable you can get out of the vicious cycle of using credit cards when you come up short on cash.
  • Car Expenses: I feel like this is one of the hugest benefits to not having a car (I don't have one). For most people their #1 emergency expense is car problems. Have some kind of unpredictable problem with you car and all of a sudden you need to come up with $500 (or more!). If you drive a car you are pretty much guaranteed to have some kind of unexpected issue with it, whether it is something minor like a dead battery or something huge like getting your car smashed up in an accident. Either way, it is just smart to expect this and save up for it. Don't count yourself out just because you don't have a car though, if my bike was stolen I would want to buy another one asap.
  • Medical Expenses: I can't even think of a scenario where you would need cash for medical expenses so this one is ok to go in an account that isn't immediately accessible. I recently spent around $125 for a common dental procedure despite the fact that I have dental insurance. Insurance only takes you so far.
  • Home Repair: This one can of course be avoiding by renting! But if you own a home make sure that you have a cushion for repairs and maintenance (this is why it's so important that you get a mortgage payment that isn't draining you of every extra available cent). Ideally you'd want to have at least $1,000 saved for emergency home repairs, but even a few hundred is better than nothing. The more you can write a check for the less you will have to pay interest on if you use a loan or credit card for the cost.

Wednesday, August 02, 2006  

How To Get Stuff For Cheap: Software

I am in a business that requires really really expensive software. I could easily spend 3k on the programs I need to be a designer, not including the computer equipment!
But I have found a way to legally purchase software for a much lower price: the student discount. At my alma mater we actually had a retail location offering software and hardware at deeply discounted student prices. How deeply discounted? You can purchase a copy of Studio 8 that will usually run you $999 for $109 or Production Studio for $365 instead of the normal $1,699. Even if your school isn't big enough to have a store there is probably a discount that you can use, you will just have to dig a little deeper.
You should definitely take advantage of these deals while you are still in school but what if you are a recent grad like me? I just emailed a friend who works at the university (I feel like I should at least plug his band for doing me such a huge favor) and he was more than happy to purchase and mail the software to me. This little secret makes previously unattainable software in the realm of reality, and in my case is helping me launch my freelance business! I am now set with all the hardware and software that I need, so I can only blame myself if I don't see this goal through.

Accidentally Saving Too Much

Am I the only who is dumb enough to do this? When I get paid the first thing I do is put as much as I feel that I can into my savings account. This is generally a good plan except sometimes I get a little overzealous- this month I forget that I hadn't yet paid for the plane ticket I recently bought (see why credit cards are bad?) and forgot to budget in that $200. So because I already transferred so much into my savings I find that I'm left with $50 in cash and $80 in my checking account to last me until next friday. Normally I wouldn't leave myself so short but I'm up for this little challenge - it doesn't hurt things that my parents are coming into town this weekend which means I'll get to do a lot of eating out that I don't pay for. Am I the only personal finance nerd that gets a little carried away with her savings?

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