Are you ready for Emergencies?
October 19th, 2006
Life is really unpredictable; you don’t know if you’ll have a job at the end of the day or if you’ll get into a car accident on your way to the office. For the most part these things don’t happen very often but they do happen from time to time. Being monetarily unprepared for emergencies can make these life moments that much more challenging and stressful.
For most people this translates into having savings set aside for the “just in case”. Some people call these an emergency fund; I’ve even been reading a blog (Matt’s Money Blog) that is dedicated to building up such an emergency fund. Personally I don’t have a proper emergency fund or savings set up. I’m in the process of saving for a wedding so if something really pressing comes up I can lean on this money even though it’s not earmarked for that. This money is a start because in the past I was literally going from paycheck to paycheck which would have made any kind of unexpected expenditure rather impossible.
I’ve heard many recommendations on what your savings or emergency fund should be ranging from setting aside 10% of your pay forever more to having 3 months of living expenses always available. Now for some people this isn’t realistic, heck it’s unrealistic for me and I’m no longer scrambling from pay to pay. But I have been setting aside $50 per pay; I’ve now got $1400 set aside. I’ve been putting the money into a mutual fund instead of leaving it in my bank (can’t spend it if I don’t see it in my bank account). It’s a silly little trick but it’s been working.
The benefits of having money saved up in an emergency fund far outweigh having to deal with the curveballs life throws you without it. Don’t be too secure in your position in life to think that something like loosing your job can’t happen to you and that an emergency fund is a waste of time. You have to remember that huge portions of your life are in some way beyond your control. I’m not trying to spread doom and gloom because most of the time everything is alright; but once in a while something comes along that puts additional financial pressure on you, this is where being ready for emergencies comes in.
If you’re ready for life’s little road bumps, something like your car breaking down doesn’t become a serious stress issue.
Tags:Emergency Fund, Savings
Posted in Budgeting and Planning, Saving Ideas | No Comments
Have you started planning for your retirement?
October 18th, 2006
I know for most people the answer is yes, or not really I’ve got X. Being that I’m a Canadian seeing a lot of bloggers write about 401K plans and things of that nature really only does one thing in my mind, it answers the above question with a “Yes”
If you were to ask me that question, the answer would end up being Kind of. And until I looked at that question I didn’t realize that there might be a whole group of people like myself who do have some savings set up for retirement. Typically through work but we really don’t pay much attention to them. Well shame on us! Planning for your retirement gets easier the earlier you start. I guess in reality I don’t have anything planned for my retirement but I do have some money set aside for such purposes.
Now for the next really big question about retirement, what are you intending to do during your retirement? I think that this question is of utmost importance because if you know what standard of living you want to have when you retire then it’ll be a lot easier to plan for it when you have the chance. Most people envision being able to take vacations and lounging around. But the reality for many people is long days of nothing to do or worse yet having to work just to keep the same standard of living.
I haven’t started planning the way that I should, but because I was able to get a decent start ($30K) while at a previous employer I can use that and expand on it to capture the essence of how I want to live my life when I retire.
Posted in Budgeting and Planning, Commentary | No Comments
Wedding Planning
October 17th, 2006
For those of you who are thinking about wedding planning, it’s stressful! We’ve started going through some of the money aspects of our wedding and the costs are staggering. We aren’t planning a large wedding but all of the things that need to be done and made sure of long before the wedding is due is daunting. And yes we’re still at the early planning stages.
I now understand why some people stay engaged for as long as they do; the cost of the wedding. We’re still in the ballpark estimate where we’re not really certain how much certain things will cost and we’re already in the $12,000 range. Neither my fiancé or I have ever spend that much money on a single day. It’s a bit frightening.
But we will persevere and the wedding will go off the way she wants it too.
Posted in Budgeting and Planning | 2 Comments
Consolidating Debt
October 16th, 2006
When you get far into debt like I have and like many people have they will either start contemplating consolidating debt or someone will suggest it for them. Most of us have heard of this but why is it useful? Well it reduces the number of debt payments you have to make and because you’re only carrying one balance that has interest growing it can reduce your overall cost.
For example if you had 4 credit cards at say 18% annual interest and 1 with a 11.5% interest then moving all over your balances onto the card with the lower interest will mean you’re paying less to have that much debt and you only have to worry about one bill every month instead of 5.
But consolidating debt doesn’t stop there you can get a line of credit which will often have interest that is far lower than any credit card. You can put all of your debt onto a line of credit again reducing your payments and getting rid of the cards. I’ve done both of these in the past and it has helped bring me from the brink and I’m now able to better manage my debt load.
Now aside from the above there are other means to consolidate your debt, many mortgage companies will allow you to put your debt onto your mortgage by effectively pulling out some of the equity in your home to pay off the debt. I’ve always thought this was an interesting idea but I would only ever do it as a last resort. Your mortgage may be a lower interest than your Line of Credit or Credit cards but interest isn’t amortized over the life of the mortgage (typically 20+ years). If you do this you’ll end up paying more in interest over the run.
Posted in Saving Ideas, Debt | 1 Comment
The Stress of Debt
October 13th, 2006
In yesterday’s post I wrote about how I used to live from paycheck to paycheck and that it caused me stress. So today’s post is about my take on the stress of debt. If I were to ask you if being in debt is stressful most people would respond by saying yes. But the people who have lived the agony of being forced to use one credit card to pay off another not knowing if they’ll have enough money for gas to get to work, their answer would be slightly different. Instead of saying yes I think they would respond by saying ‘You have no idea how stressful that is’. And I would have to agree.
Being in debt is very stressful because you are forced to cater your life to whatever your debt happens to dictate. You have to pay your minimums on your debt before you do anything else just to make sure you don’t start getting collection calls and to make sure your credit rating stays good. When you’re living off of debt, you need a good credit rating just in case you need to bump your limit further to survive.
I know I paint a grim picture but when you live it, the magnitude of your position is magnified that much more. You loose a lot of hope and a lot of faith in yourself. You struggle and fight just to stay afloat. Everything suffers as a result starting with your social life (you can’t go out if you don’t have money), but things like work start to suffer as well because you have to hang onto the job for dear life because you end up gripped with fear about what will happen if you loose that job.
I’ve been there and although I’m not nearly as far in as I once was I’m still quite far in debt. The main difference now is I’m paying down my debt and setting money aside for emergencies. I’ve only got about 1400 in this emergency fund but if absolutely necessary that will get me by for a little while. I’m also thinking about amalgamating some of my debt into a single location to reduce the number of people I owe money too. Being up to your eyeballs in debt is stressful, if there was some way to let young people know just how stressful before they were handed a credit card maybe there wouldn’t be so many people living this way.
Posted in Budgeting and Planning, Commentary, Debt | No Comments
Living Paycheck to Paycheck
October 12th, 2006
So how many of you have spent your whole pay before your next one came in? C’mon be honest here?
I have and I have for a very long time. Once I managed to get myself into debt I was using one pay to pay off the debts and bills that were due in the previous one. And if I was able to spend any money in the mean time I would. I had no compunctions about spending what I made and the money I had made in the upcoming pay. Very quickly I found my credit limit going up. Let me tell you when you’re debt ridden and making decent money credit card companies want to give you more credit.
Why do they do this? Well because if you make a certain amount and can keep paying your minimums they’re sitting on gravy for as long as you’re that far in the hole. A lot of people end up where I did and to some extent still am, living from one pay to the next with absolutely nothing to show for it other than debt.
Living from paycheck to paycheck is fine and dandy if you’re just starting out but I’ve been in the workforce for close to a decade and I’ve got nothing but debt to show for it. The stress this has caused me is considerable and still causes me stress. Then why live paycheck to paycheck? Well once you’re there getting out is a lot harder than it seems. It takes time to get out of that hole you’ve dug yourself. And yes somewhere along the line you learn the tricks of the trade that is know as using debt to pay debt and keeping afloat but that is a post for another day.
Posted in Budgeting and Planning, Debt | No Comments
A delay in Posting
October 12th, 2006
Being sick and too busy at the office has meant I haven’t had as much time to post as I would have liked. There will be a post later on this evening about living from pay check to pay check. My apologies for the delay in getting posts up the past couple days.
Posted in News/Misc | No Comments
Deciding to Save
October 10th, 2006
When you decide that you’re going to start saving for something do you set aside a little bit of money or do you jump at it saving every penny that you have? Well in the past I’ve tried to set aside a little bit of money in the efforts of slowly building up some money. This has worked to some extent and I do have a little emergency fund (currently about $1300). Over the weekend my fiancé and I were discussing our wedding and it became clear that we would need a significant amount of money to get this taken care of. What also became clear is that saving a little bit at a time is part of the reason that I’m still as far in debt as I am. I set aside $50 a pay into my emergency fund but I should be setting aside a lot more. And then to top everything off I’ll still spend almost as much as I make if not more. The net result is that I’m floating along without any real direction.
This site to a greater or lesser extent was intended to help give me some direction as to where I am going financially and to learn what I need to learn to become financially literate. Have I gotten the direction down yet? Honestly the answer is no, but every time I sit down to write on this site it’s a reminder to get myself into gear. This weekend was a bit of a wake-up call in this respect; there is no half way about saving money and getting out of debt. Especially with a very fixed goal (such as a wedding); I’m going to leave this months goals as they are but I will update my quarterly goal to be more aggressive with saving and getting out of debt.
Tags: Liabilities, Money, Goals, Budgeting, Debt
Posted in Budgeting and Planning, Saving Ideas, Monthly Planning | 1 Comment
October Goals
October 5th, 2006
Last month I wanted to keep the goals pretty simple and I managed to hit all of them. This month because everything has been quite busy for me I’m going to do the same thing. But to change things up a little bit I’m going to aim to drop my credit card debt to a dollar figure rather than say I’m going to pay X$. I figure this will be more of a challenge because there are interest payments that get included and if I aim for a $ figure the interest cuts into what I paid.
Without further adieu here are my goals for the month:
- Get my credit card debt below $8,500 (currently at $9,093)
- Deposit $150 into my Mutual Funds
- Finish the quarterly goal
- No credit card usage (and if used then the amount has to be paid promptly)
- Find out what is happening with my Pension money
- Find out what the status of my existing shares is, ensure I have control over the account.
The goals are again pretty simple and I am going to keep a pretty simple approach until I am able to get rid of some of this debt. Once the debt is down or gone then I will be able to start focusing my energies more towards investment
Tags: Liabilities, Money, Goals, Assets, Budgeting, Debt
Posted in Budgeting and Planning, Monthly Planning | 2 Comments
The September Assessment
October 4th, 2006
In this post shortly after starting the site I came up with some goals to reach in September, here is my assessment of what happened.
The Goals:
- No Credit Card usage.
- Pay $550 onto my Credit Cards (Thus decreasing my debt a bit)
- Deposit $125 into my Mutual Funds
- Figure out where my Locked in Pension funds are and what control over them I have (longer term detail that needs to be addressed)
- Come up with a quarterly goal.
The Results:
- No Credit Card usage
- Paid $550 onto the credit cards
- Deposited $125 onto the Mutual Funds
- Did not figure out what to do with my locked in pension
- Started Quarterly Goal, but not finished.
The Notes:
I know this is still not a proper net worth statement but I did manage to accomplish some of my goals. The one goal that was flat out not accomplished is one that unfortunately can wait since there is little changing with the pension fund at the moment.
But here’s a rough breakdown of my net worth at the end of September
| Liabilites | |
| Credit Card #1 | $ 4,781.05 |
| Credit Card #2 | $ 4,312.86 |
| Car Loan | $15,038.31 |
| Line of Credit | $14,997.01 |
| Overdraft | $743.11 |
| Total | $39,872.34 |
| Assets | |
| Mutual Funds | $1,339.66 |
| RSP | $249.80 |
| Total | $1,589.46 |
I do have a pension plan worth about 30K that would put the assets total a lot higher but I have no access to this money and therefore I’m not including it. So my current net worth is - $38,282.88. This isn’t a good thing. But at least it’s a starting point for getting out of debt.
Posted in Budgeting and Planning, Commentary | 4 Comments
