Personal Finances: A New Approach

I've mentioned before I am working on my personal finances. Though I have never been a big spender, I am much more of a saver, I have been watching what I buy even more carefully and am working on new ways of managing of my money. In this particular part of my life, I feel like I am making a new tower of marble works like I did when I was a kid. There were all these pieces you could put together in different ways that guided the marbles through things like pegs, wheels, grooves, slides, all kinds of things. I would make it really tall and then dump a lot of marbles in at once to see them all go down. It was dreadfully noisy, one of my favorite toys.

I am now back with all those pieces in my hands, learning about them, trying them out in different combinations, preparing the tower bit by bit, level by level. So far, I've talked to both banks I have accounts at and learned exactly what those accounts are and the limits that go along with them. Between business and personal, I have eight accounts in all so the discussions were lengthy. After school is out, I am going back to both banks to discuss investments with their financial advisers. That is a step I am taking down the road but hopefully pretty soon.

One of the first steps I am taking now is to put most of my smaller purchases on my credit card every month. This includes gas, if I go out to eat (which is not that often), groceries if they take credit cards, and my recent airline ticket purchase to Milwaukee. Then, at some point in the month, usually just a few weeks, I go online and transfer the money from my checking to the credit card balance. I really don't like having that balance out there so I always have it back to 0 well before they send any bill. At first reading, I bet you're shouting at me to stop doing this immediately, to not rack up credit card debt. First, I would like to say it is a system I am trying out. Secondly, I am so adverse to owing anybody money, including credit card debt, that I am in no way concerned I will not pay it off even before the money is due. It is precisely my practice of saving up for something before I buy it that I am using my credit card. I've only had them for two years. I got them so I could build up a credit history which is why I am using them now, so there is history of me paying things off if I ever want an auto loan or mortgage. The other reason I've been using this method is to make it easier for me to keep track of how much is in my checking account. I haven't been good about keeping track of that for years so this way, I have less to keep track of at first. It's a good step. I would NOT advise anyone who does not completely trust themselves with a credit card to use this method. But even just in the short time I've been using it, it's been working for me. I just need to get on a regular schedule of checking it and paying it off every month.

After I get a better idea of what I do spend money on, I am going to create a new budget and use some form of the envelope method. I am still figuring all this out. So far, I am taking it piece by piece, adding a bit here and there, thinking about my immediate and long term goals. Some systems works for me and some I have found just haven't. Or maybe the system is a good idea but needs to be implemented differently. These are the things I am working on.

(Thanks go to Adria and the U-Turn Challenge participants for giving me the example of posting about your personal finances on a blog. )

365-09 #144

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Walking the Sea: Personal Finances: A New Approach

Sunday, May 24, 2009

Personal Finances: A New Approach

I've mentioned before I am working on my personal finances. Though I have never been a big spender, I am much more of a saver, I have been watching what I buy even more carefully and am working on new ways of managing of my money. In this particular part of my life, I feel like I am making a new tower of marble works like I did when I was a kid. There were all these pieces you could put together in different ways that guided the marbles through things like pegs, wheels, grooves, slides, all kinds of things. I would make it really tall and then dump a lot of marbles in at once to see them all go down. It was dreadfully noisy, one of my favorite toys.

I am now back with all those pieces in my hands, learning about them, trying them out in different combinations, preparing the tower bit by bit, level by level. So far, I've talked to both banks I have accounts at and learned exactly what those accounts are and the limits that go along with them. Between business and personal, I have eight accounts in all so the discussions were lengthy. After school is out, I am going back to both banks to discuss investments with their financial advisers. That is a step I am taking down the road but hopefully pretty soon.

One of the first steps I am taking now is to put most of my smaller purchases on my credit card every month. This includes gas, if I go out to eat (which is not that often), groceries if they take credit cards, and my recent airline ticket purchase to Milwaukee. Then, at some point in the month, usually just a few weeks, I go online and transfer the money from my checking to the credit card balance. I really don't like having that balance out there so I always have it back to 0 well before they send any bill. At first reading, I bet you're shouting at me to stop doing this immediately, to not rack up credit card debt. First, I would like to say it is a system I am trying out. Secondly, I am so adverse to owing anybody money, including credit card debt, that I am in no way concerned I will not pay it off even before the money is due. It is precisely my practice of saving up for something before I buy it that I am using my credit card. I've only had them for two years. I got them so I could build up a credit history which is why I am using them now, so there is history of me paying things off if I ever want an auto loan or mortgage. The other reason I've been using this method is to make it easier for me to keep track of how much is in my checking account. I haven't been good about keeping track of that for years so this way, I have less to keep track of at first. It's a good step. I would NOT advise anyone who does not completely trust themselves with a credit card to use this method. But even just in the short time I've been using it, it's been working for me. I just need to get on a regular schedule of checking it and paying it off every month.

After I get a better idea of what I do spend money on, I am going to create a new budget and use some form of the envelope method. I am still figuring all this out. So far, I am taking it piece by piece, adding a bit here and there, thinking about my immediate and long term goals. Some systems works for me and some I have found just haven't. Or maybe the system is a good idea but needs to be implemented differently. These are the things I am working on.

(Thanks go to Adria and the U-Turn Challenge participants for giving me the example of posting about your personal finances on a blog. )

365-09 #144

Labels: , ,

3 Comments:

At May 25, 2009 at 11:59 AM , Blogger Tom Smith said...

Have you considered a Debit" card. Our bank issues an ATM/Debit card that acts just like a credit card for "external" purposes but withdraws automatically from the checking account. Our bank provides this service without cost to us, but I do know some banks charge for this service.

I keep track by utilizing on-line banking. Usually when I make a charge, by the time I get home and check the withdrawal has been made. The online banking provides an up-to-the-minute display of account charges and balances.

I applaud your efforts at looking at your personal finances and appreciate your openness about a topic that is often overlooked in "community" bu is one that is essential to understanding comunity.

 
At May 25, 2009 at 12:32 PM , Anonymous Vail Palmer said...

I am going back to both banks to discuss investments with their financial advisers.

Alarm bells rang for me when I read that sentence. Before you consult a financial adviser, I strongly recommend that you talk with Izzy (who is quite savvy on investments!)and/or start watching Suze Orman on CNBC (channel 46 in most local areas), Saturdays 6 to 7 PM. Suze is very leery of financial advisers-- at the very least, find out if they charge a fee or if they get commissions on any purchases/sales you make through them. If they get commissions, avoid them like the plague, as they are tempted to advise what gives them the best commission, rather than what is best for you!

Vail

 
At May 31, 2009 at 10:28 AM , Blogger Sarah Katreen Hoggatt said...

I do have a debit card but I like using the credit card better as I then have an easier time keeping track of what is in my checking account, besides the fact I build up my credit history. I also have online banking but am working on keeping a more written record.

Vail, I thought about that and will keep it in mind when I talk to them. However, I will certainly be asking Izzy some questions when I come visit. Thanks!

 

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