Debt is Scary

Nothing but praise for Bank of America

2007-09-19T16:13:00.000-05:00

While all the other bloggers are complaining about Bank of America’s newly raised ATM fees, I have to say I have nothing but good things to say about them (the bank, not the fees). As a Bank of America customer, the new ATM fees don’t affect me, while some of their other policies do. Luckily, they all affect me in a good way.

I love BoA for their high yield money market accounts. The PF community seems to swear by HSBC or ING or even Emigrant Direct, but they all pale in comparison to the yield you can get from the Bank of America accounts. 5.2% or 5.3% doesn’t seem like much more than the 5.05% APY that the others are offering, but it can add up. That $10,000 emergency fund could have an extra $25 interest at the end of the year with those kinds of rates. $25 isn’t a lot of money, but I’ll be happy to treat myself to a night out or a used textbook with it during my upcoming starving grad student days. Even better, being a BoA customer, there’s no holding my money for ransom. If I want to transfer it to my (free) checking account, it appears instantly, helping me avoid overdraft fees while gaining the maximum interest from my money.

The second reason I love BoA is their MyPortfolio tool. Bank of America isn’t afraid to play nice with other financial institutions and understands that they may not fulfill all your financial needs. On the other hand, they recognize that you want everything in one place; there’s a reason Quicken is so popular. Using the MyPortfolio tool, you can track all your accounts; that Roth-IRA at E-trade will show up nicely right alongside your company’s 401k plan, your American Express Rewards card and your account at the local credit union. If you spend the time to quickly register all your financial accounts, you end up with a very accurate depiction of your assets and liabilities, or ultimately your net worth. It’s remarkably easy to track where your money is going when it’s all on one page.

The third reason I love BoA is their shiny, new, high-tech ATMs. There have been too many times that there aren’t any envelopes for deposits, or the ATM has started to make angry noises at me because I’m simply not fast enough getting things ready for deposit. The new ATMs that they’re rolling out (but haven’t reached everywhere yet) eliminate the pesky deposit problems. You can just insert checks directly in the maw of the machine and it scans them and automatically knows how much you’re depositing. If you’re depositing cash, it will take that, too, count it, and ask you to confirm your deposit. Although this system is a little intimidating at first, it saves the people behind me a lot of sighing and tapping of feet.

The final reason for my love affair with a bank highly regarded as evil has to be the convenience. As BoA becomes the massive conglomerate bank of tomorrow it’s appearing in more and more places. Unless you live in Kentucky (like I did) or rural Pennsylvania (like I do until the end of September), a Bank of America ATM is likely on your way to the office, near your grocery store, or a block or two from the gym. This is great for all those Bank of America customers who want easy access to their money, but sad for those of you who will be paying $3 every time you use that nearby ATM.

I’m not saying you should switch to Bank of America or that it will fit your needs, but for some of us, it really works.

In with September

2007-09-03T21:30:00.000-05:00

Being a few days into September, I thought I would post my predictions for the month, although I’m not very confident in them. I’m moving at the end of September, which makes a budget hard to set. I know I’ll be using extra gas and probably eating out while on the road, but will there be miscellaneous expenses that I don’t know about? I plan on getting my prescription filled a few times here to avoid needing the transfer it to another pharmacy, but I don’t know if the pharmacy here will do that. My mother’s birthday is this month, but fear that I might be missing someone else’s. I have to do all my dry cleaning before I move, and may need to do extra cleaning. What am I missing?

Category	Budget
food	$250.00
housing	$450.00
entertainment	$150.00
transport	$150.00
clothing	$65.00
travel	$0.00
health	$175.00
beauty	$10.00
education	$7.00
misc	$200.00

total	$1,457.00

Out with August

2007-09-01T21:29:00.000-05:00

I’m actually quite surprised that August went as well as it did. When there’s no traveling it makes it a lot easier to spend less money. I ate down my kitchen reserves and utilized my library to end up spending substantially less than the $1000 goal. Unfortunately, September is likely to more than make up for my frugality this month.

Category	Budget	Actual	Difference
food	$200.00	$90.91	$109.09
housing	$450.00	$450.00	$0.00
entertainment	$150.00	$68.69	$81.31
transport	$100.00	$31.63	$68.37
clothing	$15.00	$4.00	$11.00
travel	$0.00	$0.00	$0.00
health	$20.00	$0.00	$20.00
beauty	$0.00	$0.00	$0.00
education	$0.00	$0.00	$0.00
misc	$65.00	$34.00	$31.00

total	$1,000.00	$679.23	$320.77

New Credit Cards - the Upsell

2007-08-18T16:30:00.001-05:00

I recently got a few new credit cards in order to increase my credit limit before I apply for educational loans in the spring. I did my research, raised my credit score by becoming an authorized user on my parents' cards and applied for specially selected cards. I was approved for all three, making my combined credit limit something above $12,000. I felt good about myself, very responsible, and don't plan on changing my spending patterns to match my new credit limit. I've never carried a balance or paid a bill late and don't plan on doing it now.

When I received my cards, I proceeded to call the 1-800 numbers on the sticker to activate my cards. With the first card, I read all the enclosures, then made the call and was connected to a call center in India. The man who answered the phone was very difficult to understand, so when he tried to upsell me on credit protection, I had to ask him to repeat himself. Finally understanding, I said no, I was only interested in activating my card. When he tried his second upsell, I cut him off, and reiterated that I only wanted to activate my card and was not interested in anything else. He got upset and hung up.

The second card connected me to a person who was much easier to understand, but who was also wily about the upsell. She would phrase everything in statements, making it harder to say no. "So I'll just go ahead and sign you up for travel insurance." "No, really, I would prefer not." At least this time, she didn't get upset when I told her no.

The third card had an automated system. I finally thought I would be able to activate the account and hang up. Not so. The recording then proceeded into scary statistics about identity theft and how much it could cost me without their service, ending in a command to press one to enroll or press two otherwise. Pressing 2, it launched into the same spiel about identity theft and tried to sell me the same service again. I listened and pressed 2 again before hanging up.

I wonder how effective credit card companies find this upsell. It just had the ability to annoy me, but really, since when do credit cards not only give you credit, but try to be the first thing you spend your newfound credit on?

Thousand Dollar Month Update

2007-08-14T20:38:00.000-05:00

My thousand dollar month is going o.k., if only because I’ve been able to eat my way through my kitchen. If I hadn’t had the stock of foods, this whole thing might be going differently. I’ve eaten my way through the can of sauerkraut that’s been on my shelf since February and made bread for peanut butter and jelly sandwiches from the two packets of yeast that were hiding on the baking shelf. I made some peanut sauce with the long forgotten curry paste from the fridge, which goes nicely with some frozen mixed veg and rice noodles from who knows where. I ran out of milk a week ago and eggs a few days ago, but have still managed to not go to the grocery store. This is obviously not a sustainable solution. There will be some grocery shopping things weekend, as soon as I run out of bread.

While the food situation has definitely helped keep my spending down, I have managed some other areas pretty well. I haven’t been sending packages every few days and haven’t needed a tank of gas in more than a month. This weekend involved going to the (cheap) county fair one night and hiking the next day. I’m not really feeling deprived at all, even though my expenditures for the weekend were less than $20.

I could probably maintain a budget lower than $1000 most months if I continued to live in my small town, never traveled, and lived a quiet life. On the other hand, I’m only going to be young and single for so long. Am I wasting it?

An August Challenge

2007-08-02T12:25:00.000-05:00

Recently I came to the realization that although I'm doing a good job budgeting and saving, none of it has really been a sacrifice. I still eat out with friends, I still travel and I still send lots of mail. As a result, I've decided to actually stretch my self-restraint for August and set a budget goal I haven't met in my five months of tracking: a $1000 month. Even if I only get close, I'll still be doing great.

With that in mind, my $1000 August budget:

Category	Budget
food	$200.00
housing	$450.00
entertainment	$150.00
transport	$100.00
clothing	$15.00
travel	$0.00
health	$20.00
beauty	$0.00
education	$0.00
misc	$65.00

total	$1,000.00

I predict more frugal eating and very little travel. Should be interesting.

July Results

2007-08-01T12:19:00.000-05:00

July, July! It was less painful than expected, but still not a really sustainable level for the savings I'm trying to attain. The good news is that I've paid for my prerequisite class, meaning that University of Phoenix will be getting no more of my hard earned money. Without the education expense it was actually a pretty good month, but I admit that the significant other has started to pay when we're together, making entertainment and food lower than they probably should be.

Category	Budget	Actual	Difference
food	$300.00	$239.92	$60.08
housing	$500.00	$450.00	$50.00
entertainment	$300.00	$119.82	$180.18
transport	$150.00	$151.97	($1.97)
clothing	$100.00	$10.97	$89.03
travel	$100.00	$37.75	$62.25
health	$100.00	$11.90	$88.10
beauty	$50.00	$0.00	$50.00
education	$1,700.00	$1,557.00	$143.00
misc	$300.00	$190.83	$109.17

total	$3,600.00	$2,770.16	$829.84

Hopefully August will be better to my savings account.

Travel

2007-07-23T18:16:00.000-05:00

I’ve been traveling a lot lately, which explains my silence, but has also made me think about the act of travel as well.

I grew up in a family that traveled progressively more the older I became. It started out with family road trips to visit relatives, all three kids packed in the back seat for 1000 miles. There were occasional trips to other places, like the Disney World trip at 6, but generally travel for the family was restricted to family vacation, once a year, to visit relatives. Then I joined a choir that went on tours, and suddenly began things like trips to Israel and Ireland. These became supplemented with long weekends in New York with my parents or trips to Denver to visit my college-aged sister. Travel wasn’t an everyday occurrence, but it was frequent enough from the age of 12 onwards. After graduating high school, travel got worse, with spending time in Spain, then choosing a college 1800 miles from home. Travel was a normal occurrence, I mean, it didn’t count if it was going home for Christmas or a quick bus trip to New York right? By the time I graduated college, I was a seasoned traveler, which only got worse with my new job in a new location. Now I had to go visit the significant other or college friends out of state. I had to go home for Christmas. I needed to go to headquarters for training. Suddenly, I look back and see that in the last 6 months I’ve done at least 7 trips.

I like to travel, but this is wreaking havoc on my ability to save money. I use travel as an excuse to splurge, go out for expensive meals or go to the bar. I don’t do those things when I’m home, so it must be o.k. to indulge a little while I’m gone. I’ll go back to my strict budget once I get back home. And I do manage to go back to my strict budget when I get back home, but it doesn’t help the fact that I spent $70 last Thursday and another $60 on Sunday. I can eat lentils and rice all week and it still won’t help. Travel is the danger lurking in my financial life.

Having tracked my expenses for the last six months, I see the truth that travel is not healthy for my budget. I love travel and consider it almost necessary considering where I live, but this cannot continue. I am deciding that the travel madness must stop. To that end, I’ve decided to move closer to my friends and significant other beginning in October, which should help. I will still be going home for Christmas and may go home for Thanksgiving, but aside from that I will be attempting to limit my travel. This is going to be a challenge, but I really need to be saving instead of indulging my wanderlust.

Gender and Personal Finance

2007-07-12T21:57:00.000-05:00

Ramit at I Will Teach You To Be Rich is looking at gender and personal finance. To help out, I've created a survey to get some hard data.

Fill out my Wufoo form!
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Thanks!

Chick Lit

2007-07-06T21:06:00.000-05:00

During my recent short vacation, I picked up a few books for the beach. Looking for light and fluffy reading, I wandered the library looking for books with pink covers. Not, romance, but chick lit, it promised easy reading that would focus on protagonists like myself; young, female and fun. Confessions of a Shopaholic, complete with pink cover, seemed to fit the bill.

It didn’t take many pages before I found myself cringing at the main character’s behavior and wanting to put down the book. It went against every bit of personal finance advice I’ve ever seen written. The main character overdrafts her bank account, doesn’t pay off her credit cards, shops emotionally, rewards herself excessively, and altogether does not live within her means. There are scenes of keeping up with the Joneses and certainly no planning for retirement or the future. It’s all a personal finance bloggers’ worst nightmare.

Worse, is that it all works out at the end. A couple hundred pages of fiscal irresponsibility are all undone at the end with the offer of a dream job and the gain of a multi-millionaire boyfriend. The financial meltdown that was the climax of the book is completely forgotten by the protagonist as she suddenly increases her income without really intending to. The lessons being taught to the average reader cannot be very positive. “Get into debt”, the book says, “and something will come along to pull you out.” “Having the perfect outfit is important, since it will get you the right man, so go shopping now”, the book lectures with a smug devil’s advocate smirk on its pages.

I know better than to fall for the book’s tempting take-away. I live within my mean, budget every month and track my spending regularly. I save for the future, never buy things on credit I can’t pay for, and started my 401(k) at 23. Even with my growing knowledge of personal finance, I find myself tempted by the book, wandering through shoe stores, eyeing things I do not need. If I find myself tempted, I wonder, how does the average reader feel? How much do they end up buying once they finish the book?

The best deal in career advancement

2007-07-04T19:57:00.000-05:00

During a conversation with one of the (undergraduate) coops at work, we got to talking about grad school. I'm not out of the closet on going back to school with the people at work because it's well in the future and would adversely affect my career up to the point I decide to leave. Still, when talking, he said he was interested in getting an MBA sometime in the future, and I couldn't help but offer some advice. Graduating next year, I decided to let him in on the best kept secret of MBA admissions:

Apply while you're still in college.

Most college seniors don't really know what they want to do with their lives, which would make many discourage this as a foolhardy pursuit. The GMAT alone costs $250 for one try and could be compounded with multiple testing, or the multitudes of prep courses and books available to "boost your score". Still, I say, save up, study hard, and take the GMAT during the fall before you graduate.

Why?

Many schools waive or reduce their fee for college seniors, meaning that applying to five top-tier schools, which could regularly cost $1000 or more could end up costing less than half. Further, this could help your applications in the future, as many schools will even tell you what your weaknesses are if you're rejected, but only as a college student. For those of you in a non-traditional career, applying as a college senior, then applying again to the same schools a few years later will help show a commitment to business and a clarity of vision. For those of you in a more typical career path, it certainly couldn't hurt. Lastly, if you do get accepted as a college senior, you don't even have to go immediately. Many prominent offices of admission will offer deferred or postponed admission, meaning you could have a few years to find out what you want to do without the risk of not getting into grad school.

All in all, it's a pretty good deal. I wonder why more people don't do it.

July budget

2007-07-02T22:43:00.000-05:00

for July:

Category	Budget
food	$300.00
housing	$500.00
entertainment	$300.00
transport	$150.00
clothing	$100.00
travel	$100.00
health	$100.00
beauty	$50.00
education	$1,700.00
misc	$300.00

total	$3,600.00

I understand that this is substantially higher than I would like, but I need to get my last prerequisite out of the way for grad school. Without that expenditure, I'd be at less than $2,000, even accounting for a few days in Hawaii and 9 days in Boston/NH. I love travel, but I need to cut back and save more.

June Results

2007-07-01T22:32:00.000-05:00

With June over, I have official results:

Category	Budget	Actual	Difference
food	$300.00	$168.80	$131.20
housing	$500.00	$450.00	$50.00
entertainment	$300.00	$142.09	$157.91
transport	$200.00	$149.64	$50.36
clothing	$150.00	$65.00	$85.00
travel	$400.00	$225.18	$174.82
health	$200.00	$181.52	$18.48
beauty	$100.00	$26.76	$73.24
education	$0.00	$0.00	$0.00
misc	$300.00	$217.12	$82.88

total	$2,450.00	$1,626.11	$823.89

Considering how I thought the month was going to go, I feel pretty good. I started out the month with a weekend in Boston, spent a weekend in NYC and finished the month in Hawaii, but still managed to keep my costs under control. My Miscellaneous category was a little high, but there were a number of gifts, with graduations, birthdays, father's day and a wedding. I am especially pleased with my food - dining in category. For less than $70 spent on food, I managed to provide myself with 22 days of food. Close to $3/day is very efficient eating. Other than that, I did actually get my prescription filled, but that only happens every few months, so hopefully things will generally be similar to this in months to come.

Even better, when I looked at how much I've spent over the last 4 months (since I started tracking my spending) and compared it to my net income, it came out to 44%. This is in addition to the 6% of pretax income going into my 401k, and the donations to my HSA. I'm feeling pretty good about my saving.

Short Term Goal (Mostly) Accomplished!

2007-06-15T16:35:00.000-05:00

With my May 31^st pay check, I accomplished my goal of accumulating $10,000 to be transferred into a one year CD. Unfortunately, I was traveling and didn’t really have time to deal with it at that moment. When I got back the next week and called the bank to close the account, I was informed that it would take 3-5 business days to receive the check. Yesterday I got the check and placed it in my checking account for the short term so that I can open my CD with one nice $10,000 check and start looking for a new savings or money market account. As soon as the check clears, I’m going to find the highest yield 1-year CD I can find.

In the meantime, with my short term goal completed, I need to start thinking about another short term goal. I have some major travel scheduled for the end of this month and need to take another (expensive) class, probably in August, meaning my rate of saving is going to take a hit for a little while. Perhaps a good financial goal would be saving $750 a month from now through December, but I’ll have to think about that.

In an effort to control how much money I make, I do have a couple of career goals for the short term. Over the next month I plan to determine where my next assignment will be. The current front runners are Manchester, NH and Tepotzotlán, Mexico. I think I could be happy either place, so for now, I’m just trying to manage the process and see whether Mexico even is a viable option. In addition to managing my next assignment, I also have the goal to update my résumé, compile a list of dream companies and send an e-mail to career services at my future school to see if I might use them to obtain an internship next summer. Hopefully I’ll get this done this week, but I definitely need to get it done before my mini-vacation.

The Side Effects of Being Frugal

2007-06-12T21:02:00.000-05:00

I’m trying to live a mostly frugal life, when travel isn’t distracting me. So far I’m three months in to having a budget and tracking every penny I spend. I get a little thrill at the end of the day when I enter my expenses and see my organized life laid out in a spreadsheet, but over the past few months I’ve noticed certain things that I would call side effects to my recent frugality.

I get more physical activity. I’ve already bought the gym membership (for a whopping $6/month), so now I feel the need to use it daily. I try to walk more places to save gas, but in the process get more activity.
I drive more evenly. In town I try to drive slowly and coast when possible. I’m certain I’m annoying all the other people trying to get to work on time, but stop and go driving can really take a toll on my gas mileage. If I’m making a longer trip, I try to use cruise control and I certainly don’t speed a lot, because the last thing I need is a budget-breaking ticket.
I plan better. If I’m actually going to use my car to run errands, I plan out several errands to be in one trip. I plan my meals, only buy what I need, and eat all of what I buy.
I generally eat healthier. I would not consider most junk food to be meal-worthy, so any junk food I buy is in addition to the more meal-like groceries. It’s obviously an extra expense and something that can be cut. It turns out that healthy meals like lentils and rice and very budget efficient.

I’m sure there are other unintentional benefits, but these are the ones I can think of off-hand. In addition to more money in my saving account, that is.

Being frugal is kinda fun.

June budget

2007-06-02T21:03:00.000-05:00

My June budget:

Category	Budget
food	$300.00
housing	$500.00
entertainment	$300.00
transport	$200.00
clothing	$150.00
travel	$400.00
health	$200.00
beauty	$100.00
education	$0.00
misc	$300.00

total	$2,450.00

I'm hoping I don't spend that whole amount in June, considering it's close to my entire take home pay for the month, but I do have a round trip to NYC on my car to see my parents this month, and end the month in Hawaii, which surely won't be cheap. I have a slightly higher than average clothing budget (even though I haven't come close to using it in past months) because the Hawaii trip is for a wedding, and weddings involve looking pretty. I might actually use some of the beauty budget for that reason, too. Aside from those abnormal expenses, June also involves Father's Day and my brother's birthday. We'll see if I can keep within the miscellaneous budget with those and a wedding present.

May Results

2007-06-01T21:30:00.000-05:00

I did a little better in May.

Category	Budget	Actual	Difference
food	$300.00	$303.63	($3.63)
housing	$500.00	$450.00	$50.00
entertainment	$250.00	$112.69	$137.31
transport	$200.00	$145.11	$54.89
clothing	$100.00	$6.00	$94.00
travel	$200.00	$20.25	$179.75
health	$200.00	$0.00	$200.00
beauty	$100.00	$16.97	$83.03
education	$0.00	$0.00	$0.00
misc	$600.00	$445.22	$154.78

total	$2,450.00	$1,499.87	$950.13

The estimates, at least, were more accurate, even if there was drastically more spending in certain categories, like the mischievous miscellaneous category. On the other hand, I didn't end up getting my (expensive) prescription filled once again, and i delayed such expenses as new running shoes, the boyfriend's graduation present, and getting a hair cut. These things are just going to catch up with me and my budget later.

On to June!

Category 10: Miscellaneous

2007-05-17T19:12:00.000-05:00

The Miscellaneous category is probably one I should eliminate. You can’t buy a miscellaneous, so how can you spend money on it every month? That said, I find it incredibly convenient to have a catch-all category. It varies widely from month to month and is something I should do a better job of regulating.

My miscellaneous category covers the subcategories of mail, gifts, charity, and house wares to date. More subcategories will likely be added as I spend more times budgeting. I do mail a lot of letters and packages, often going to the post office a few times a week, making the mail category much more than a few stamps. Charity is not something I contribute to every month, but on a yearly basis I try to give ~5% of my gross income to non-profits. This year I’m planning on $2000 is my undergrad institution (with a matching grant from my employer!), and will be finding other smaller causes to donate to as well (such as my brother’s bike ride for cancer, or the Boston AIDS walk). Even though I’m trying to save money, I need to give to charity. Gifts are also not insubstantial, but need to be reduced a bit. I like being able to give “extravagant” gifts to loved ones, or send someone something that reminded me of them. I should instead remind myself of how I’ll be able to buy people things after grad school, when I have a real salary. The last subcategory, house wares, is not something I spend a lot of money on, it was just that I needed a juicer last month for a diet I was trying. I like house wares, but I try to resist them as much as possible.

Everything in my miscellaneous category is stuff I like to spend money on. I should really be careful not to abuse this category.

Category 9: Education

2007-05-16T16:05:00.000-05:00

Education is not a category that I really want to spend money in right now. Sadly, there are occasional expenditures in this category. With the admission letter to grad school, there was also a request that I take a few classes before getting there, just to have a little background. I managed to take one of these classes in April and plan to take the other class in August, both from University of Phoenix online. I did fine in my first class, but found myself severely annoyed with the cost. $1700 for one, five-week-long class? For that price, I would almost expect one-on-one tutoring and a gold-plated textbook. I’m not really looking forward to going through the process again, but I will pay for my class, I will take my class, I will submit my transcript to the awesome grad school and be done with it.

The education category is fairly simple. There’s tuition, covering the cost of each specific class, there’s fees, covering things like the registration fee, and there’s books, which covers the grammar and style guide they force me to buy. I’ll probably be reselling the still-shrink-wrapped book on ebay.

I obviously believe in education, since I’m willing to put myself into so much debt for it, but I really wish it was less expensive.

Category 8: Beauty

2007-05-15T19:32:00.000-05:00

Beauty seems like one of the most superfluous categories. I never really need new makeup, or even to wear makeup at all, so perhaps it should be cut, but it does cover other things which I consider to be pseudo-necessities, like shampoo, conditioner, face wash and soap. If I were more frugal (or less vain), I might cut back on these items, too.

The beauty category is divided into three subcategories, hair, face and body. These seem pretty self explanatory to me. Hair covers things like shampoo and conditioner, in addition to hair spray or pomades (not something I use), hair dye (something I don’t do anymore, hair cuts (something I do very infrequently, now) and hair ties or bobbles. Face covers things like face wash and makeup of all varieties. Body covers soap and deodorant, lotions, shaving supplies and other sundry body things.

Calling this category beauty makes me realize how unnecessary most of these things are and gives me a wonderful guilt complex about putting anything in it. It tends to be pretty sparse.

Category 7: Health

2007-05-15T16:05:00.000-05:00

I am a generally healthy person. I’ve never had a cavity in my life and have no prescriptions that would be classified as life-saving. There have been no surgeries in my past and hopefully won’t be any in my future for a long time. That said, I still budget some money to health because I can’t always count on being healthy. I do have an HSA to cover these expenses, but I admit that I’m generally not using it because I’d like to save it for my more lean grad school years to come. Aside from the HSA, I have fairly good insurance coverage as well.

My health expenses are broken down into 5 subcategories, prescription, non-prescription, doctor’s appointment, vision appointment, and dentist appointment. My prescription category covers my current elective prescription and my glasses. Non-prescription is for things like over-the-counter cold medicine or a bottle of Tylenol. The other three categories cover all expenses related to an appointment with a medical professional.

I could decide to quit taking my current prescription, but I think the benefits outweigh the cost. Other than that, I’m happy and healthy.

Category 6: Travel

2007-05-14T20:26:00.000-05:00

Oh, Travel. We have such a love/hate relationship, but it’s definitely worth it. I love you because you let me see all those people I’ve left to live in this small town in the middle of nowhere, but you hate me by being much more expensive than every day living. You break my budget, but I will continue to use you as my excuse to splurge.

Travel actually is a difficult category for me. I do live in a very small town, very in the middle of nowhere. My family all live 1000+ miles away, my boyfriend is about 500 miles away, and I really miss city life. All of these factors come together to create incredibly high travel expenses.

Currently, I break travel into three subcategories, lodging, transport, and banking. Other related travel expenses, such as food and entertainment, stay in their original categories; I would have to eat whether or not I was traveling. Lodging is self-explanatory and something that I generally minimize due to usually visiting other people. Transport is only the cost of transport that doesn’t happen in my car. If I drive to Boston, it doesn’t fall in this category, but if I fly it does. It could also include train tickets or taxi rides. Banking is a subcategory that doesn’t get utilized that often, but occurs occasionally when I’m away from my home bank. If I’m traveling internationally, it accounts for conversion commissions, while if it’s more domestic, it’s the ATM fees I generally try to avoid.

This category does vary wildly from month to month and is something I should really work on, perhaps budgeting a small amount each month into a travel account, then only traveling when I have the funds built up. I don’t know that I’m disciplined enough to actually deny myself travel, but it’s something to consider.

Category 5: Clothing

2007-05-14T17:43:00.000-05:00

Clothing is one of my more frugal categories. It’s not that I don’t like clothing; it’s that with my current job and life, I just don’t feel that buying new clothes is practical. No one is going to appreciate them and they’ll just get dirty or torn. Moreover, when the only clothing store in town is Walmart, it tends to limit your options a little more than you would like.

I do have several subcategories under clothing, but I usually only use one of them. The maintenance category, covering the cost of doing laundry or getting things dry cleaned, does get used a couple times a month, but even that is used frugally. I feel like my apartment and the Laundromat charge a little too much for laundry, but without any other options, I do what I need to in order to wear clean clothes to work. I try to hang my clothes up around the house to dry them instead of paying for a drying cycle and can often go weeks between loads. Dry cleaning is also kept to a minimum.

The other categories have to do with acquiring new or new-to-me clothing items. Since I began to track my expenses in March, I can honestly say I haven’t acquired anything. I don’t know how much longer I can keep this up considering that my work shoes are threatening to fall apart and my trainers are so worn as to cause blisters, but I’m delaying purchases as long as possible. Everything that I don’t buy now I can save for a grad school wardrobe.

Category 4: Transportation

2007-05-11T22:53:00.000-05:00

Transportation is a mixed category for me. Some of the categories are fairly easy to track. I put all my gas purchases on one credit card, for instance. Others are more nebulous, like how many tolls I paid during my last 8 hour road trip. I can’t exactly pull over and whip out my laptop on the side of the road to record that immediately and by the time I’ve reached my destination the tolls all blend together in my head. Still, I’ve tried to subdivide this category into Car-Normal, Car-Maintenance, Public Transport, Special Transport, Tolls and Parking.

Car-Normal is just gas purchases. It doesn’t matter if the gas is just for getting to work or for driving two and a half hours to the airport for a trip. If I never really traveled, this would be a very small expense. I live 1.4 miles from work, the animal shelter I volunteer at is ~3 miles from home, the gym is 1 mile and the Walmart is ~4. The town ends after the Walmart. With the weather getting nicer, I’m trying to walk to the gym more and will take up walking to work when the mornings are less chilly. I try to only go grocery shopping once a week and generally only go to volunteer once a week. As a reference, since I got gas a week ago, I’ve driven less than 30 miles. If I never had to leave town, I could probably go for more than 2 months on one tank of gas. Unfortunately, this is not the case, so I do spend more than that on gas. Last month included a trip from my Western PA town to Boston, while this month will involve a drive to the Pittsburg airport and a road trip to DC. All told, I usually spend less than $120 on gas, but that could change with rising prices.

Car-Maintenance is intended to cover normal maintenance cost. Last month I got an oil change. This month I got my once yearly carwash to scour the bottom of my car for road salt. It will probably include a good vacuum in the future, and perhaps some touch-up paint. This would probably also include tune ups, but I still have 1500 miles until my 75000 mile maintenance and there’s no Mitsubishi dealership in the area.

Public Transportation is a category that doesn’t always get used. There is no public transportation to speak of in my little town unless you are old. When traveling, I do try to take advantage of public transportation when it makes sense.

Special Transportation would likely include airport shuttles or rental cars, but I’ve never had to use it.

Tolls, are, as expected, but are sometimes estimates.

Parking is something I try to avoid paying for, but sometimes it’s much easier to just pay and park then take public transport everywhere. It feels like such a rip-off…

That’s more or less and overview of my Transportation category. You’ll notice that there is no category for car payments, insurance, or Car-Repair. I bought my car used 2 years ago and paid for it in full, so I have no car payments. Insurance is through my parents due to my residency status and is something I generally pay for all at once in January. This year it was $500, and when I have to pay it again, it will likely get its own category. Car repair is obviously something that I try to avoid and have been good at so far. I’ll only add this category if I absolutely have to.

Aside from traveling less, I feel like this category is fairly in control.

Category 3: Entertainment

2007-05-10T22:16:00.000-05:00

Entertainment is a difficult category for me to both define and track. Many entertainment expenses are paid in cash and don’t involve a receipt, so after a hard night of drinking it’s difficult to remember how much a bloody mary cost at that dive bar or how much I tipped the cute bartender. Still, I try, and my entertainment category is divided into 3 subcategories, home entertainment, entertainment while out that involved drinking, and general entertainment out.

My home entertainment has lately consisted of my cable internet bill. I don’t own a television and rent all of my books and DVDs from the small library in my town. My gym membership is prepaid, but even if it weren’t, it’s subsidized by work to be a mere $6/month, so it likely wouldn’t break the budget. I do include my home beer and wine purchases in this category, but they are only for when I have visitors, which is rare. I go for a lot of walks and just don’t really have a lot of entertainment expenses when I’m at home.

Entertainment with drinking is something that I only do with other people, and thus really only do while traveling. I’m not a heavy drinker, but there are occasional binge nights. It’s hard to account for these nights because, as mentioned above, they are mostly cash transactions, there are no receipts, and I was obviously drinking at the time. These nights can get expensive, so I’m trying to watch my money more carefully this month, but luckily (for my budget) these nights are few and far between. I really separate out this category just to see how much I could save by not drinking, but I have no plans to quit.

Entertainment without drinking is another category that I really only do while traveling and usually do with people. It can include things like museum tickets, kayak rentals, or fair admission. It’s usually a little easier to track than drinking, but also not a category I use a lot.

Overall the Entertainment category is very difficult for me to predict, but hopefully with a little more time patterns will emerge. It’s obviously tied to my travel and visitor schedule, but other than that, I’m at a loss. I should probably aim to spend less than $200 a month, because $2500 in a year is a lot of entertainment.

Category 2: Housing

2007-05-10T19:22:00.000-05:00

Housing is an easy category. I rent a small apartment in a subdivided house. For a mere $450 a month, I get my apartment with electricity, gas, water, sewage and garbage collection included. I’m probably paying too much for this apartment considering where I live, but I didn’t really have many other options, either. In addition to rent, there are very few other expenses related to housing. I include a little extra in the budget that can fall between two other subcategories, maintenance and improvement. I’m not really doing any major remodeling or handiwork around the apartment, instead these cover things like cleaning supplies (maintenance) and hanging pictures (improvement). This category is as basic as it can be.

Category 1: Food

2007-05-09T21:35:00.000-05:00

The Food category is divided into 3 sub-categories, dining in, dining out and baking.

The dining in category is fairly self explanatory; it covers groceries intended for my own consumptions, breakfasts at home, lunches brought to work, dinners cooked at home and snacks. I try to be fairly frugal and bring lunch to work daily, but on occasion I get convinced to join the coworkers for lunch out. I rarely snack and even more rarely buy snack food. Living alone means most dinners are fairly modest and leftovers can last me for days.

Dining out is a subcategory that has the ability to break my budget. Most of my dining out happens when I’m traveling, as I find it harder to resist the plethora or food options I just can’t get in my small town and the social experiences of dining with people I rarely get to see. It’s a bit difficult to separate dining out from entertainment in these circumstances. This is also a category where I let generosity get in the way; I hate feeling petty about money and will often put things on my credit card, telling people that we can work things out later. We rarely do. I also feel a bit of the motherly instinct which wants to take care of people, meaning that if I earn the larger paycheck then I will often insist on taking someone out so they won’t need to worry about money. I pay for birthday dinners. These aren’t very frugal things to do.

Baking is a category we’re working on. I bake a lot, but I don’t really enjoy eating much of what I bake. Instead, I bake things to send or take to others, making it more of a gift than a consumable. In the past I’ve been fairly lazy about accurately recording this category because it involves breaking down my grocery receipts, but I’m working on being a little more diligent this month in order to get an accurate view of how much my little habit is costing me. It may be one of the categories to get slashed if I need to find extra money.

All told, I budget between $300 and $400 a month between these three categories, which doesn’t look bad on its own, but over the course of a year adds up to ~$4000. If I cut out going out, my monthly cost would drop to less than $150. If I decided to live extremely frugally, it would probably drop below $75. I could definitely be more frugal in this category.

Breakdown of my Finances

2007-05-09T18:24:00.000-05:00

After reading other blogs which broke down their finances, I decided that it would be a good exercise for me. I admit that my system is rather new to me and not exactly perfect, but for the remainder of this year I’m trying to keep a consistent system. Perhaps next year I will upgrade to something beyond a basic spreadsheet or change my categories or start more of an income-based budget, but for the moment this system is working for me.

My budget is currently divided into 10 categories, Food, Housing, Entertainment, Transport, Clothing, Travel, Health, Beauty, Education and Miscellaneous. The order is completely random, but may say something about my priorities, I really love to eat while beautifying myself does seem rather superfluous. Some of these categories are fairly stable from month to month, like Housing, while others can vary by thousands, like Education or Travel. Perhaps I should be working on control, but for now, just and overview.

Five Cent Nickel and Saving

2007-05-04T21:33:00.000-05:00

The personal finance blog Five Cent Nickel is running a give away this week. In return for writing a review or responding to a previous post and linking to his website, people are entered for a plethora of prizes. I have been considering getting an ipod and I've been flirting with becoming a more serious PF blogger, so this could do both of those while also providing publicity to an excellent site. Very shrewd way to increase readership, too, I might add.

Anyways, a while back, Nickel posted about where people should focus to save money, large purchases or small purchases. He came down on the side of saving a small amount on numerous small purchases, but the topic is rather difficult. Since I've started to track where all my money is going on a daily basis, I've found plenty of ways to painlessly cut back on spending. Eating lentils a few more times a week instead of fresh vegetables lowered my grocery bill. Soda, a normal beverage when eating out, not only raised the cost of my meals out while adding nothing substantial, but also gave me empty calories. These and other eliminations were all low hanging fruit. I barely notice they're gone.

To me, larger purchases are harder to say no to. I have a friend getting married in Hawaii. I'm not in the wedding, but I couldn't bear to say no when she was so excited, so now I find myself "needing" to pay for a plane ticket, hotel, food, and transport in Hawaii. For the month of May my miscellaneous spending category is huge because I can't say no when my siblings ask to go in together on an extravagant Mother's/Father's Day gift. I have the money and feel miserly saying that I was meaning to save that money instead.

Although the denials in the small spending category and acceptances in the large spending category seem unrelated, they are both sides of the same guilt coin. Depriving myself is perfectly acceptable while disappointing others is much more difficult. Small spending purchases rarely seem to affect others, while larger outlays much more often involve to feelings or perceptions of others. In this case, it makes sense for me to save in the everyday situations in order to hopefully allow the larger financial decisions to be less guilt-ridden. For other people, the reverse may be true; turning down lunch with coworkers may be much harder than putting the kids' riding lessons on hold.

Through it all, what really matters is that people are trying to save in one of the categories, and not blowing it completely in the other. The only way to save is to cut consumption somewhere, as unfun as it may be.

Visit Five Cent Nickel. He inspires me.

Another Tranfer down

2007-05-04T21:26:00.000-05:00

I have another transfer pending from my checking account to my money market account where I'm collecting my grad school CD money. I ended up deciding to transfer only $1700, rather than the originally expected $2000. Although $300 may not seem like a lot of money, I get uncomfortable when my checking account is less than $500. It's stupid to keep a lot of money in a low interest account, but sometime piece of mind is worth the financial stupidity.

$8719 down and two more paychecks expected in May.

May budget outlook

2007-05-03T22:02:00.000-05:00

This is my current May budget:

Category	Budget
food	$300.00
housing	$500.00
entertainment	$250.00
transport	$200.00
clothing	$100.00
travel	$200.00
health	$200.00
beauty	$100.00
education	$0.00
misc	$600.00
total	$2,450.00

While most categories are in line with pervious months, I have to admit the miscellaneous category is way out of line. This particular month, that includes both a Mother's and Father's Day (combined) present, a graduation present (TBD) for the boyfriend, a donation for the AIDS Walk Boston, and a rather hefty donation for my brother's cross-country cancer bike ride. Travel for the month includes a trip to Boston for the aforementioned graduation, a trip to DC for Memorial Day weekend (because I can't handle living in a small town), and ends with another trip to Boston for work starting the 30th. These should very well eat the food and entertainment category. Not my most frugal month, but I do get three paychecks and hope to have the full $10,000 saved by the end of it.

April Results

2007-05-01T18:54:00.000-05:00

With April officially over, I closed out my budget. It looked like this:

Category	Budget	Actual	Difference
food	$350.00	$385.97	($35.97)
housing	$550.00	$450.00	$100.00
entertainment	$200.00	$102.69	$97.31
transport	$200.00	$144.03	$55.97
clothing	$100.00	$6.50	$93.50
travel	$1,000.00	$797.47	$202.53
health	$300.00	$5.18	$294.82
beauty	$50.00	$4.42	$45.58
education	$0.00	$0.00	$0.00
misc	$300.00	$211.36	$88.64
total	$3,050.00	$2,107.62	$942.38

I did rather poorly on food. There are a number of reasons for this, visiting the boyfriend for his birthday, taking a friend out to dinner for her birthday, spending a weekend at Penn State, etc, but those are just really excuses. I should be better about this in the future, but I also need to work out some way to merge food and entertainment. Sometimes dinner isn't just dinner. Aside from being bad with food, I did go ahead and buy both a plane ticket to Hawaii for the July wedding and a ticket to Boston for graduation, which made the travel category high. There was also a donation back to my college's alumni gift contributing to the miscellaneous category, but my charitable giving is just going to get worse before it gets better.

At least I did manage to put some more money into my grad school savings this month.

A general note on my budget: I set my budget at the beginning of the month based on what I think I will spend, not my net pay. Everything is then tracked and entered as soon as possible after purchase. All purchases are recorded on a cash basis, meaning that if I paid for it in a given month, it's in my budget for that month, hence the plane tickets. I do try to be frugal, but I also try to budget for things I know I'm going to do.

Transfer

2007-04-28T18:47:00.000-05:00

I made a transfer to my Money Market account, meaning that I now have $7,000 in that account. Next pay day, I plan to transfer in another $1500+.

The Goals

2007-04-24T18:19:00.000-05:00

I don’t earn a lot of money, but considering the cost of living where I am, I can certainly save. My short-term goal is to open a one-year CD in August with a minimum deposit of $10,000. This is a fairly attainable goal, given that I already have $4,000 in savings and another $3,000 in my checking waiting to be transferred to savings. If I’m really optimistic, I might be able to open it by June 1^st, but I would rather play it safe with my first goal. My longer term goal is to have at least $20,000 by the end of May 2008, when I plan on quitting my current job.

In addition to the monetary goals, I'm also working on keeping track of my spending and setting a budget. I've managed to do this pretty well for the last few months, so I just need to keep it up and pare back the categories, like food, where most of the spending happens. I should raise my credit score, but it will have to wait until I've had my current credit card for a few more months. Lastly, I'm going to educate myself on debt, savings and finance. I'm going to have to go into debt, but I can at least be smart about it.

The Debt

2007-04-19T18:16:00.000-05:00

A quick profile of the expected debt:

Tuition	$41,900
Health Services Fee	$1,426
Insurance	$1,362
Program Fee	$4,050
Room & Utilities	$12,654
Board & Personal	$11,908
TOTAL	$73,000

These expenses are for the 2007-2008 academic year, which means they could increase, are only for 9 months in the case of room and board, and only cover one year of the two year program. I understand that there are scholarships, grants, and fellowships out there to reduce this debt and that living frugally can lessen some of the numbers, but it's still more than I make in a year.

All told, I’m facing $150,000 in debt.

Debt is Scary

2007-04-19T18:15:00.000-05:00

Debt is scary.

There, I’ve said it. As someone who’s planning on attending a very expensive graduate school program next year, I’m starting to face the reality. Debt is scary, and it’s about to be something I’m intimately familiar with. There is no way to completely avoid this debt, but with some effort, I hope to minimize it.

The first step in minimizing debt, everyone says, is acknowledging it, which I’ve already take care of. The next steps are a little more vague. There needs to be a good dose of spending less than I earn, some managing savings and a little working on the credit score. A scholarship search is also probably not a bad idea. Lastly, a little accountability goes a long way, hence this blog.

We’ll see how it goes.