Budget Basics

The summer I finished college, I quickly got a part-time job.  Don't misunderstand, though, this was not the kind of part-time job that helped me squeak by - the first few months, as I worked my way into more hours, I was making $300-400 a month.  Talk about being broke.

By the time the winter came, I was more in the realm of $600-800 - enough to keep my car rolling and make the minimum student loan payments when they kicked in while my parents covered everything else in my life.

The next spring, I got a promotion, and started making enough to put me above the poverty line.  I knew it was time to make a budget.

There are a million people and blogs out there that will tell you how to set a budget, and I did a lot of research before making my first budget.  Two years later, my budget has changed to reflect a growing income and changing student loan payments, but the main tenets have remained the same.  A budget is personal, so my budget theory is personal.  I believe a good budget should:

• Focus first on paying for necessities: rent, groceries, utilities, transportation
• Focus second on paying off debt.  NOT minimum payments, but aggressively paying it off.
• Be envelope-based.  This means that you intentionally set aside a certain amount to spend in each category (groceries, gas, clothes, enterntainment, etc) and when you run out of money in that category, you stop spending for the month.
• Think long-term.  If you're paying insurance every six months, calculate the monthly amount and include it in your budget so you aren't spending money you'll need soon.
• Reflect your priorities.  It's more important to me to build up a "romance fund" so I can see my long-distance guy than to buy new clothes, and the amounts I put in each category reflect that.
• Be zero-sum.  The total of your spending categories should equal your income.  Every dollar should go to a category, with no extra.  If you plan out each category and have extra, recalculate.  Give yourself a little breathing room in tight categories, add to your debt pay-down plan, or put the money in your savings every month.
• Hurt a little.  If your budget doesn't pinch a little and make you think twice about purchases, then it is probably not getting you toward your long-term goals (yes, you should have long-term financial goals).

If it's your first time making a budget, it can seem kind of impossible to figure out what categories to create and how much to put in them.  To help get started, I really like Dave Ramsey's Monthly Cash Flow Plan.  It lists more than 50 categories you should think about, and it offers "optimal" percentages to help you see what's reasonable or not.  Again, my percentages don't always line up because some categories are more important than others - I don't always agree with Dave Ramsey - but it helps me be more conscious of where I might be spending too much.

The 52 Week Challenge Ends

This weekend has been awesome for me motivationally, because Friday was the end of the 52 Week Challenge.  After a week of hyper-emotions related to realizing it has been a year since my college graduation, getting to take the money out of my challenge box was just what I needed to feel like I'm making headway.

The Challenge is easy to start, but can be hard to stick to for one simple reason - once you get about halfway through, the amount of money going in your box (and out of your budget) every month gets pretty high, especially if you're not making a whole lot of money to start with.  My celebration on Friday when I went to the bank, though, was so worth it.  Not only am I now set for my best friend's wedding, but I added to my vacation fund AND got to write a check for six months of my student loan payments.  It is the best feeling to knock out so much debt in one fell swoop.

CouponCabin App Review

If any proof of my less-than-hip lifestyle is needed, let it be this – I got my first smartphone about six weeks ago.

And with a brand-new iPhone comes the excitement of wading through the App Store. After downloading a game my friends got me hooked on in college and the Facebook app, my first addition was the app CouponCabin.

I was looking for an app that would help me save money on groceries and every day things, not just one that would get me a coupon code for Macy's or Sears. I searched blogs for app reviews to point me in the right direction, but the ones I found weren't very helpful. I went with CouponCabin because it has a dedicated "grocery coupon" category. 

Well, it may have a dedicated category for grocery coupon category, but that didn't mean it was simple. I ran into a long process with several problems:

1. To open the coupons, you have to email them to yourself. 

2. From the email, you have to follow a link to a website. 

3. Following the link does not take you directly to that specific coupon. You are taken to a general website where you have to search for the coupon you want. 

4. After finding the coupon, you have to print it, but printing requires you to download a driver (after following so many links through places I was entirely familiar, for computer and personal safety, I did not download the driver or try to print any coupons). 

Apart from the grocery coupons, I did have success using the "in-store coupons" at Jo-Ann Fabric, but it wasn't complete success.  When you search for coupons using CouponCabin, you end up with a page like this

Notice how they have the expiration date conveniently listed? Take it from me, they aren't always accurate. I opened one coupon for Jo-Anne that was supposed to be valid until December but actually expired in March, a week before I was going to use it. 

At the end of the day I wouldn't recommend CouponCabin – but I'm not going to delete it until I find something better. For now, I'll just search for in store coupons while I'm waiting in line for bigger purchases. 

If you have a coupon app you love, leave me a comment!

Challenge Check-In

So as I said earlier, I've been working my way through the 52 Week Challenge.  If you have already started the challenge, or if you're still mulling it over, I hope you let this little check-in serve as an inspiration, motivation, or whatever it is you need to take the next step with it.

I have to say, I really love the feeling of saving this way.  Typically, I "save" by depositing a portion of my check directly into my savings account, and I never see the money, which is probably what the majority of people do.  We are not the generation of hiding money under the mattress or burying it in cans in the backyard, but for the Challenge, my "challenge buddy" Ellie and I both decided to keep the money in secret places in our homes - there is something so satisfying about being able to pull out that wad of cash and count it!

I am just past the 40-week mark, and that's stretching my budget tight.  Through a series of unfortunate events, I'm still working part-time at minimum-wage.  The chunk of my check the Challenge takes up can be daunting, especially when I am staring down needing to replace my laptop, get new tires on my car, and just subsist.  At just about three months to go, I'm finding inspiration in what the Challenge will accomplish for me.

When I'm done, I'm breaking my $1,378 into three equal parts:

1. $459.33 to pay for being in, traveling to, and gifts for my best friend's wedding this summer (with coupons, sales, and ride-sharing, this should pretty much cover everything I need for the wedding).
2. $459.33 into my "love fund" for the next time my long-distance guy and I are in the same zip code (more than enough to cover a hotel).
3. $459.33 to use as a bonus loan payment, which will get me about six months ahead on one of my loans (because I'll use it as a lump sum rather than breaking it up among my loans).

Just stick with it!  The Challenge is going to take so many burdens off my mind, and I hope it does the same for you.

Student Loan Control

May graduates hit a trap.  And that trap is in the form of "your first loan payments are due RIGHT before Christmas."

So while we all take a moment to feel sorry for ourselves and freak out that there is absolutely no way we've been out of school for over six months already, I'm going to share something that will make you feel less like one of the poor people on the Titanic.

The point of the website I've shared (click the hyperlink, people, I made it easy) is largely to help you estimate how much your loan payments will be.  Yes, I know, your loan servicers are doing that for you, but hang with me for a second.

The bottom half of the loan calculator (which looks like this, for those who still haven't been convinced to click the link)

has a section where you can experiment with what will happen if you pay more than the minimum, whether it be once, once a year, or monthly.

Now most of us who are buried under student loans ($51k - I know what I'm talking about) feel like the minimum payments are a stretch, and the little extra we could maybe eke out every month isn't going to change much.  But read on and take heart!

One of my (many) loans has a calculated monthly payment of about $39, but the contract I signed mandates I pay at least $50 a month.  So, in essence, I am paying an extra $11 a month.  By adding that $11, I will pay off this particular loan 51 months early.  That's over four years of my life without payments, all for the cost of a restaurant pizza.

Gather up your loan info, click the link, and get yourself in control of your debt.  If one less night of half-price apps with your friends or one less bottle of wine a month can give you a few loan-less years, it's so worth it.  Calculate and recalculate until you find what's going to make an impact on your life!

The 52 Week Challenge

An addiction to Pinterest occasionally reveals a very useful idea.  About two months ago, I discovered "The 52 Week Challenge," which seems to have become a bit of an internet sensation.  Now, I have no idea where or how the Challenge got started, but as a broke girl who is budgeting like crazy, I decided to give it a shot.

The 52 Week Challenge works like this.  Each week, you stash money into a jar, box, savings account, safe, or other holding place where for the duration of the challenge (one year), you will not touch it.  The first week, you put in $1, the second week, $2, and so on up to week 52, where you add $52 dollars to the kitty.

Starting with a dollar seemed a little ridiculous to me, and working up to $52 still seems a daunting task as I haven't gotten up to full-time hours at work yet, so I have been a little leery about the task.  But, as you can see from the chart below, if I can stick to it, it will be worth it.

Almost $1400 stashed away?  Who wouldn't love that?

One of the best parts of this growing way of saving is that by week 3, the money you have saved is already double what you're putting in for the week.  I'm only at week 5 at this point, so it's still pretty easy to put that small amount away.  However, I know it's going to get a lot more difficult, so here are my tips if you want to try the Challenge.

1. Decide beforehand what you're going to use the $1378 for, and whether you'll divide it or spend it all on one idea.  For example, you could put all the money toward a vacation, or you could split it in half and use $689 to pay off debt and the other $689 to buy a new TV or whatever it is you're desiring.
2. Write down what you will use the money for at the end.  No joke.  If you write down the goal and put it somewhere you will see, you're much more likely to actually follow through.  Plus, with it written down, you'll feel very guilty if you break your plan to pay off debt and instead go for a whirlwind shopping spree.
3. Find someone to do it with you.  Especially as the amounts climb, it'll be very easy to cheat and not put money in or take money out.  Having a friend do the Challenge alongside you will keep you both accountable.
4. Write the dates in your calendar, and cross off the weeks as you put the money in.  Otherwise you'll forget.  Obvious, but simple.