One Million and Beyond

Do you complain about your problems?

July 8th, 2008

The funny thing is that the real answer to that question is yes, we all complain about our problems at one point or another. That doesn’t make us bad people nor does it mean we aren’t good in some way. The real key is what we do after we realize that the problem exists. Do you complain about it or do you do something about it?

Complaining doesn’t get you anything and it doesn’t even help you feel any better. I have noticed lately that I have been complaining a lot more about my monetary situation. The truth is it sucks. I have tried to tighten my belt but it has only worked so far the reality is that I don’t make enough money to cover my bills let alone my all of my expenses. I would have been able to float along in this situation for a few more months before it started having a very negative impact on my life.

Yes I complained about it, I am human, but complaining doesn’t help me at all. I have started controlling my spending more than I ever have which makes for a good starting point but it won’t be enough. Now it’s time to change the scenario before any damage is done. I have started looking for other work which will pay me more. This won’t be a complete fix for my financial situation but it will prevent me from slowly slipping any further.

Some of you might ask: why did it ever get to this point? The truth of the matter is I like the job I’m at unfortunately the financial setup which made sense at the time no longer does and I spent some time trying to delude myself that it did. The problem has been identified and will now be fixed (hopefully without too much pain). When I started this blog I was making $75,000 per year and right now I’m blow half of that so a different job will have an impact.

I have also been looking at the role that my own personal fears have had in getting into this situation. Fear of change, fear of confrontation, fear of the unknown. They’ve all played a part in this and I think its time to finally address all of these ghosts. Ten years ago I wasn’t afraid of my actions I was just financially stupid – now fear controls more than it ever should. I want to write more about these fears later since I think a lot of people get into situations where their fears end up controlling them.

Step 1 - Stop complaining
Step 2 - Identify the problem
Step 3 - Take steps to fix the problem.

I’ll keep you all posted on the progress; in the meantime cutting costs will continue as will most activities that can improve the situation (alas the new Porsche will have to wait).

Posted in Financial Situation | 2 Comments

Making Changes to Meet Your Budget

June 19th, 2008

Realistically making a budget is easy, all you do is put a bunch of numbers on a piece of paper or a spreadsheet. Even making an accurate and well thought out budget isn’t all that difficult. The problems arise when you need to make that budget work. Sticking to a budget can be really hard especially if you’re just starting to budget.

To make a budget work you need to stay within the allotted amounts and sometimes to achieve this you need to make some changes in how you spend your money. Each week will be different with different pressures and needs to spend money. Last week was a perfect example for me (and I apologize if the choice of expense isn’t ideal its to prove a point).

Each week I allocate $25 for spending on smokes (they’re expensive in Canada) and this amounts to three small packs for me which is more than sufficient. Unfortunately not everyone sells them at the low rate I’m used to. Buying them by the office means I’m paying a premium. I ended up buying them twice by the office and I was about to run out again. The crux of the matter came that if I bought my usual pack at the lower rate I’d go over budget for the week.

Rather than spending the extra money (and going $0.61 over budget for that category) I made a change to make sure I met my budget, I bought a discount brand to keep the numbers in line. I changed how I spend my money to make sure that I didn’t go over budget.You need to do this all the time in order to make our finances work, especially if there’s little flexibility in our budgets.

I’m looking forward to the day when I can take that line out of my budget (Smokes) but for the time being trying to reduce the monetary impact is a starting point. I’m trying to do this with each category in my weekly budgets and so far I’m starting to see the impact of planning ahead and adjusting my spending to meet my budget.

Posted in Budgeting and Planning, Financial Situation | 2 Comments

Breaking Bad Financial Habits

June 11th, 2008

We all have a few bad habits, some are worse than others but undoubtedly we’ve got a few that aren’t all that bad that we could get rid of. Some of these bad habits are probably bad financial habits, i know that I have a few of those. Since starting my weekly budget I’ve come realize just how pronounced these bad habits are. Granted they’re not costing me tens of thousands of dollars but they’re still costing me money.

Knowing what your bad habits are is the first step to getting rid of them. Taking a good hard look at your expenses and your spending habits can point out a few obvious bad habits. Bad financial habits range all over the map and can include:

• Paying extra ATM fees for convenience
• Unnecessary bank fees
• Using credit when we don’t need to
• Poor planning and spending to compensate
• Splurge or spontaneous spending
• Paying late fees regularly

Breaking our bad financial habits can be easy. First off start by understanding what they are and when you do them. If you know you’re going to need cash on hand for something plan ahead and make sure you use your own bank for it rather than an ATM that will ding you $2 or $3 for the convenience. Its as simple as that. Most of the time the small extras that we’re paying because we can’t be bothered or don’t even know we’re doing it add up.

For example if you pay one late fee a month(say $10) and pay one ATM fee a week($2) can add up to a whopping $276. If you were going to throw that kind of money out in one lump sum you’d notice but the small bad habits we’ve fallen into make us disregard it.

When you’re getting out of your bad habits it helps to set up small goals. In my particular case I have a bad habit of going out for lunch all the time. I know I don’t need to but I enjoy it and most of the time I don’t think about it. Rather than trying to stop all at once which I would notice (because I enjoy getting out of the office for a bit) I cut back. By bringing my lunch even 2 times a week reduces the amount by close to $20 a week (or close to $1040 per year). When I get used to this I’ll increase the amount to only eating out 2 times and then down to 1; the difference will make an impact on my bottom line and breaking the bad habit doesn’t take too much effort.

Most of the bad habits I’ve mentioned so far are a means to cut back on spending and expenses but the same holds true for savings. If we only set money aside once in a while we don’t really take advantage of compound interest nor do we build up an emergency fund quickly. Breaking out of these bad habits can really start showing a huge impact very quickly.

What bad financial habits do you have? What do you do to combat them?

Posted in Budgeting and Planning, Financial Situation | 1 Comment

Weekly Budget - Week 1 (May 26 - June 1)

May 25th, 2008

I’ve been floating along with my finances for way too long and this week I simply decided to get a handle on everything. I reassessed my cashflow which wasn’t nearly as bad as it could have been but that doesn’t mean everything is all happy in the land of Matt’s finances. I’m still spending too much money and the only way to get a hold of that is to simply cut spending. To achieve this end I’m have started tracking my spending daily.

Today is the first week that I’ll be posting my budget for the week. I have kept it fairly high level for the time being which works for me and I’ll see how it plays out. I’ve also kept my bills off of this budget, I know what they are and they’re being addressed they also haven’t changed very much in the past year so getting the spending under control is step on.

Posted in Budgeting and Planning, Monthly Planning, Financial Situation | 3 Comments

Cashflow – My Achilles Heel

May 23rd, 2008

Getting a hold of my ongoing cashflow has been a challenge and I’m not really certain why. Maybe I just like to spend my money too much. As part of getting a hold of my finances I sat down last night and went through the mountain of receipts that I’ve collected over the past couple months and input them into my tracking spreadsheet.

The Result

It wasn’t as bad as I thought it would be. I was worried that my spending was creeping back out of control but it wasn’t nearly that bad. Though I did find I was spending more money than I really should be on a few items such as Food and Alcohol. Unfortunately there are a few holes in the past couple months statements but they’re pretty small (courtesy of purchases without receipts). It’s given me enough to paint a picture of my spending the past few months. I definitely need to watch a few things such as eating out (which I have started doing more of again due to laziness) and how much I spend on food and alcohol (I keep the two separate).

Overall I was happily surprised that there wasn’t anything completely out of whack. Though I was a little surprised how much of a difference in gas prices has made to my cashflow. The amount of driving from month to month the past few months hasn’t changed but the amount I pay has – a very clear indication of how a small difference at the pumps can add up!

Next Steps

Just because I don’t think there are any huge glaring problems that need drastic measures when it comes to my cashflow and ultimately budgeting they both definitely need to be fixed. I need to spend less, while at the same time trying to find ways of making more. I’m going to start tracking my spending on a daily basis though I’m still torn about posting the results on a daily versus weekly basis. For those curious I managed to not spend any money yesterday which I thought was fitting for the day I posted about getting my finances under control.

I need to keep a tight reign on my spending for until I’ve managed to get my general finances under control. I’m going to set weekly goals and track everything daily. Tracking it daily and weekly and posting the results up here will make me more accountable to my readers (hopefully).

Posted in Budgeting and Planning, Financial Situation | 4 Comments

Getting Caught Up Financially

May 22nd, 2008

When I first started writing this blog I was further in debt than I am now and I was spending money all the time. Now a couple years later I’m spending less (and making less) and I’m still in debt though not as much. The reality is that although there has been some improvements, significant ones even, it really isn’t enough. I am still struggling financially.

Now I might be struggling a bit but I also know that I can get caught up financially. I’ve made progress and this post is the beginning of making more progress in the right direction. My frustration with my finances is still there and I’m still not making enough money but I’m also juggling a few things and there’s no point for it all. It’s time to take this blog out of the theoretical and put it into practice.

Figure out where things stand

Before knowing what really needs to be done to adjust spending and get my financial situation caught up I need to make sure I know where I stand.

Step 1

Outstanding Bills:

• Cable/Phone Company: $685 (With the current Bill)
• Car Repairs $TBD (This needs to get done or I can’t renew my plates)
• License Plate Renewal $76 (need to get the car looked at first)
• Car Insurance $233 (Automatic Withdrawal)

Those are the three items that are in arrears and need to be fixed ASAP. The good thing is that I have the money in my account right now to take care of all of that any get caught up on all of my other expenses.

Step 2

The next item for figuring out where things stand is to pull together my cash flow for the past couple months and see where things stand. This exercise will be one for this evening but I have everything in place to actually accomplish it (I have kept virtually every receipt). After getting the cash flow together it’ll be time to pull all of my current bills out of their hiding place and figure out which have been paid and which haven’t.

I’ll need to know what bills are due when so they aren’t missed anymore. I need to start using a calendar and putting this information on it. Right now I’m not making a lot of money compared to what I used to make but I should be able to get the ship righted. Once I have a list of what my spending has been and what bills are due it’s onto the next step of the process: budgeting.

Step 3

Now that I know what my expenses and income are I can make sure that I don’t overspend on anything. It comes down to budget time! I’m notoriously bad for keeping to a budget but In order to spend less than I make I’m going to have to be diligent about it. This blog is going to help me with this – my goals initially will be weekly and I’ll adjust this as needed. My spending will be tracked daily (I’m still debating if these will be posts or not) and an update will be weekly. The goal with only a weekly goal is to correct and ajust to changing situations and to keep everything as tight as possible. Once I’ve managed to get caught up I’ll see about pushing this goal out a little further.

The whole idea behind this step for me is to make myself accountable for getting caught up and balanced. I have always been hesitant about showing my actual income and expenses on this site and I’m not really sure why. Maybe it’s a slight embarrassment of telling the world what I spend my money on. Regardless, its time to stop hemorrhaging money like it was going out of style and get my financial situation on track.

Posted in Uncategorized, Budgeting and Planning, Debt, Financial Situation | 3 Comments

How Liquid are your Assets

May 16th, 2008

Liquid assets are assets that can be converted into cold hard cash quickly and without any significant penalty. By this it means that if you were to take your mutual funds and convert them to cash it would take a day or two tops and you might face a small fee but overall it would mean you get most of the money from them. A house on the other hand might be a very significant asset but one that would take a while to sell and reap any potential cash from.

The reason for this post is I’m currently broke waiting for a bunch of money to clear whatever holds that are placed on it. It made me question the term liquid assets because I am dealing with items that are already considered cash yet I can’t access any of this money until everything clears. Its a frustrating situation to be in because I have virtually no money on hand and a significant amount just sitting in some banks accounts waiting for some magic approval to be placed into mine.

I am currently cash shy but I’m also not in a dire need to have the money right away. If I had an emergency on the other hand I would be in some serious trouble. My liquid assets are not nearly as liquid as I would like them to be. What baffles me the most is why it takes a full 5 days for a check to clear letting me access the funds. Whenever I write a check its out of my bank account within a matter of a day or two - not 5! Its a frustrating situation and its making me question why banks and financial institutions can hold money for so long.

Have any of you encountered situations where your money was held when there was no reason for it?

Posted in Commentary, Financial Situation | 1 Comment

Why a Single Source of Income is a Bad Idea

May 15th, 2008

When it comes to investments everyone says that you need to diversify to protect yourself. If you invest everything into one stock and it crashes all of your investment goes along with it. Having one source of income is very similar. If all of your income comes from one job you’re at much greater financial risk if you happen to lose it or worse it becomes something you loath.

Personally I have worked for companies that have reorganized leaving me without a job and I have worked for companies that simply ran out of money forcing them out of business again leaving me without a job. The reality is when you make all of your money from one source you’re at great risk if you happen to lose it. There is little in the way of security when you only have one source of income.

Companies always try to have as many customers as possible, not only are they trying to ensure they make a profit but they are also ensuring that they stay in business if any one of their customers decides to leave. The reality is you can’t count on one source of income permanently.

The goal is to set up multiple sources of income for yourself to keep yourself protected. This isn’t always an easy thing to set up but even investing money in mutual funds that pay dividends can be turned into having multiple sources of income. Now that I am going to actively try increasing my income rather than just relying on cutting costs multiple income sources will be something that I am going to focus on. In some ways I’m already doing it but at a very small scale.

For most people they’ve only ever known how to make money from one source of income learning to add more to this is crucial to not being tied to your job. There are some simple ways of adding extra sources of income and I’ll start posting some of these ideas and my experiences if I have any with them (yes I’m going to be trying a few of them).

Posted in Financial Situation, Extra Income | No Comments

Frustration with my Finances

May 13th, 2008

When I first started writing this blog I was in a pretty rough financial situation but things didn’t look all that bad because I was making a pretty good salary at $75K per year. A few months after that I took a 33% pay cut to take a great opportunity which meant I was down to making $50K per year. I have to say that as a result of this the year was a difficult one but I was able to cut down on my expenses and slowly, very slowly, cut down my debt. Since I was let go from that job in February I started my own business and I took a full time contract where I’m responsible for a greater aspect of my money (such as taxes). The good thing in this setup is that I have more flexibility and the potential to pay less in taxes. The unfortunate item is that I’m making less still (Now I’m at $30K plus a great commission structure).

My frustration with my finances extends greatly to myself in that I’ve been making job moves and adjustments based solely on the position at hand and how it would help me. This current position/contract is one that I really like because it exposed me a great deal more to sales from the ground up. I’ve only been doing it for 3 months so my exposure has been limited but I am really starting to get frustrated with never having money for anything and paying my debt very slowly.

The net result is that although I’m still making ends meet I don’t know if I can continue to do this for an extended period of time. Any form of emergency will send me scrambling to find a way to come up with money which isn’t a way to live. I have a microscopic emergency fund which again is something I would like to grow.

I have learned a great deal about personal finance since I started this site and read a great deal about the topic and it boils down to being able to improve your financial situation by two means. The first way to do it is to cut down on expenses and to live as frugally as possible. I have tried this and had some measure of success. I know it’s possible for me to spend even less but the reality is that I don’t want to eat Kraft Dinner 5 days a week or give up having a bottle of wine here and there. I don’t spend nearly as much on food, going out or drinking as I did even a year ago but there is a point where cutting back means completely altering your lifestyle. I would rather not go in this direction if I don’t have to.

Which leads me to the second means of improving your financial situation and that is making more money. Unfortunately I haven’t been doing a very good job of this. My salaries and income have actually been going down over the past couple years and I’ve tried to supplement it a few ways here and there with minimal success (the $3/month that Adsense ads make on this site simply don’t make enough). My side projects are have been slow in getting done because of life and the need for some downtime. I believe that I am now at a point where I need to shift gears from saving even more money to making more money. I have an opportunity to take a salaried job that would bring me back in line with what I should be making but that’s still just an opportunity.

I’m just frustrated with having no money and juggling to save and make ends meet. It’s time to make more money, the opportunities to do this are there (even if we’re in an economic downturn). Ok my rant is now done – thanks for listening and keep reading I’ll start disclosing a bit more about my spending and earnings and how I’m trying to make more money. I’m done with the frustration and trying to get things done by only cutting back.

Posted in Commentary, Financial Situation | 2 Comments

Don’t Be Afraid of your Financial Situation

May 8th, 2008

One of the most common reactions to something we don’t understand is fear. It drives us into many of the stupid decisions we make and thoughtless things we say. I know I don’t speak for every person but too often when we don’t understand something and rather than trying to find information we simply react with fear. What does this have to do with personal finance? Everything! As a society we are uneducated in the ways of personal finance, even at the most basic level, and we react spastically when something comes up.

Don’t be afraid of your financial situation. Understand it.

Before you do any more damage that might take years to fix, stop and take a look around you. If your financial situation is healthy and you’re living well below your means then congratulations, you’re in the minority. But if you’re in debt, living paycheck to paycheck, and wondering how you’re going to pay your bills then take a good look. Are you simply reacting to what’s happening around you or do you really know what’s going on?

You’ll probably have to ask yourself a few questions to get a better understanding of where you stand such as:

• Am I spending too much money? Why?
• Do I know where my money goes?
• Do I buy things because I don’t want to admit I can’t afford it?
• Do I understand how my credit cards and debt work?
• And the list goes on and on.

When I first left university and started working I was making good money which I in turn was spending at an alarming rate. When I ran out of money I simply turned to my credit cards to cover the difference. At first this wasn’t a problem because the credit cards had low limits. But that changed very quickly and before I knew it I was heavily in debt. I was living from paycheck to paycheck and afraid of my finances and how I spend my money.

If at that time I had stopped and understood more I would be in a far better situation today. Not understanding and being afraid of your financial situation can mean that you’ll continue to spend money when you shouldn’t (or don’t have it) to keep appearances up because you don’t want to admit being in debt.

Educate yourself! Understand the consequences of your actions and take some responsibility for them. That doesn’t mean you need to stop all of the fun things in your life that cost you money but you might want to consciously cut back to get a grip of your financial situation rather than reacting because you’re afraid of your financial situation.

Posted in Financial Situation | 4 Comments

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