Why Do I Have So Much Money?

Recently Single Ma wrote a post about how she chooses to live paycheck to paycheck by paying herself first (retirement, savings, 529, etc) and then living off the rest.  I had never thought about it in those terms but I also choose to live paycheck to paycheck, which means that by the end of the month (I get paid once a month) I should be broke. Truthfully, when I compare my cc balances with my checking account balances I’m usually in the red and I’m forced to make budget adjustments for the next month to compensate for overspending. There is one more day in February and OHMYGOSH, I have too much money in my checking account.  That is I have cc balance of $500 and a checking account balance of $1,900 which leaves me with $1,400 of money I haven’t spent.  The old me would simply say cool and go out and buy more stuff but the new me has a designated plan for all of her money so I know I haven’t paid something.  Checking my budget spreadsheet:

All savings account money has been transferred and deposited for the month.

I have one $94 old credit card bill left to pay.  Done. I no longer have ANY old credit card debt.  Yeah!

I haven’t transferred a $320 rent check over to my business account.  Did it

I haven’t paid my tithes from the tax refund or for the month. $650! Pending

I bought $179 worth of clothes from the Gap and charged it on the store credit card.  I need to pay it. Done.

I ordered Maya’s birthday present from Amazon.  $240.  It hasn’t been charged to the cc yet because it hasn’t been shipped.  Pending

$94+$320+$650+$179+$240= $1,483

I feel proud of my budgeting skills.  According the numbers, I’m actually $83 over budget.  But I have a $144 reimbursement check coming so I’m not worried.  I may actually be under budget for the first month ever.  **fingers crossed**

Money in the Bank--Kids and Money

Kids and Money.

My daughter receives an allowance of $30 per month.  When she first started getting the money she’d spend it immediately.  Now she saves and spends smalls amounts on video games or eating out.  In order to save for a $200 PSP system (I pay half she pays half) she accumulated $130 into her savings account.  That amount makes her feel as if she’s rich because she is always volunteering to spend that money:  Auntie, take me home to get my video game and I’ll pay you, I have $128 in the bank;  Granny, we can go to Furr’s I’ll pay I have $128 in the bank;  Momma, I can buy a game I got $128 in the bank.  I think she even volunteered to give her school friends two dollars because she has some money in the bank.  I had to keep reminding her that if she’d spent the money like she wanted then she wouldn’t have any money in the bank.

But I recognized myself in her but where she is nine I was a grown woman.  I’ve just learned that money in the bank does not mean money to spend.  I’ve always paid my bills on time and any other money left over is supposed to be spent not saved, right.  I am thirty and I am just now getting over the concept of money in the bank does not mean you have money to spend.  Slowly but surely my daughter is learning how to save and not spend.  So most definitely it’s good let kids have their own money.

In order to get her out of the habit of volunteering to spend her money, I’m thinking about converting her ING savings account to an ING orange checking account with a debit card and let her see just how fast her money will disappear if she doesn’t think before she spends.

 

How Much Should My Efund Be?

I have a small but growing emergency fund ($1,000) and I know it’s supposed to total 6 to 8 months of my living expenses but I don’t know how much six months of my living expenses are.  I don’t even know how much my monthly living expenses are, which is crazy because I have a budget so you’d think I’d be able to spit those numbers right out. I’ve been putting off calculating my efund total because I know it’s a BIG number and it doesn’t seem as if I’ll ever get there.  I am finally conquering that fear and, according to my budget, my living expenses are at $4,100 per month.  If I subtract my monthly savings it’s $3,600, then if I cut down on fast food and miscellaneous spending, canceled my gym membership, stopped paying extra on student loans, HELOC, and trimmed my tithing I will be at $3,000/month.  $3,000 times 6 months equals $18,000. 

If I continue with $500 a month into savings (including Roth contributions) assuming I don’t make any withdrawals (rolls eyes) it would take me three years to save the money.  That’s not bad, but in reality I only contribute $175 to my efund and $125 to Roth (efund back up) and the other amount I spend as needed for car and home repairs.  I probably shouldn’t use my Roth as an efund but in reality I would use that sucker to feed my kids if I lose my job.  So I’m factoring it in.  $18,000/$300 = 5 years.  I thought it would take me at least ten years to fund that sucker. 

New long term goal:  have the combination of my Roth contributions and Efund total $18,000 by September 2013. 

Almost Credit Card Debt Free

CNN.com has an article about the ever increasing credit card debt that Americans have accumulated.  Today I am here to say that I am not one of those millions.  I got my tax refund Friday and I am in the process of paying those suckers off.  I’ll still have a HELOC but that was used to acquire an asset so slowly but surely my guilt over that debt is eroding.  I’m happy to say that I’ve learned a lot over the past few months thanks to PF blogs and the following is a list of things I’m going to do to make sure I stay cc debt free:

1. Have an ever increasing Emergency Fund so when an emergency happens I won’t have to use any credit cards.  I’ve just broke the $1,000 mark on my efund which is very small compared to where it should be.  The concept of saving 6 to 8 months of living expenses seems impossible but there is no deadline. Suze Orman, shows a table extended out to ten years in her free e-book. It would suck to take ten years to build an e-fund money but the point is to have it and make incremental increases.  (FYI, I have separate savings accounts for car, house, etc so my efunds is really at $2,000 but I don’t like including those accounts because I make withdrawals from those accts pretty regularly.
2. Continue to post monthly net worth statements because they tell me where I am in my finances and makes me accountable. 
3. Spend less than I earn!

It’s really not a lot.  In fact, it’s boring and because it’s boring it’s so easy to slide back into debt.  It really is more fun getting out of debt than being debt free but not if I make challenging goals.   Reaching a positive net worth is my next goal and assuming that OKC house values do not fall again, then I believe 2009 will be a pretty good year for me!

 

Dream Vacations--Draft

Yesterday’s post made me want to list all of the things I want to do and all of the places I want to go.  So here it is:

 

Take my son on a train: This summer

Take a cruise perferabely Disney (1 year or 2):

Fly to San Fransisco with Maya:

Go to the Caribean: maybe on the cruise

Canada to see a college friend: 3 yrs.

France: 7 to 8 years

Macchu pichu 10 to 12 years

New York

Japan

Australia

 

How am I going to do this.  I have a plan.  I work for OK state  and we don’t progressively get raises like industry but any raise I get will definetly be designated into a vacations savings account just like retirement.  I’m tempted to put that money out of sight out of mind into the HSBC account. As it is right now I’m luck  I got a rebate this year because of the investment property, expected stimulus check, rewards cards.  Next year I defeitnly won’t get a a significant tax refund  or stimuls check and who knows if I’ll be able to go a whole year without cashing in on my rewards. 

Vacation Plans

I received $192 unexpectedly from Deadbeat Dad #1.  Apparently Child Support Enforcement found his bank account, took the money out and gave it to me.  I feel kinda bad for him.  Oh well.  Half of that money is going into the bank and the other half is gonna take me and my daughter, Maya, to  Wiscon, a feminist speculative fiction convention.  Yes, I am really that dorky.  I should have bought my tickets in December but I wanted to fly to San Fransisco but Maya wants to take a train to Wisconsin.  She is scared to fly.  Since her trip is the cheapest I guess we’ll do her thang.  The train takes forever, though…. But last year we had fun.  I was so proud to take my daughter across state lines.  Soon, I’ll be doing SingleMa’s thang and taking her out of the country. 

February 2008's Net Worth Statement--My First Networth Increase

 

Assets	January	February		Difference	% change
Checking+Savings	$2,700.00	$3,300.00		$600.00	22.22%
Home	$118,575.00	$124,500.00		$5,925.00	5.00%
Rental	$70,000.00	$70,000.00		$0.00	0.00%
401k	$4,005.33	$3,816.82		-$188.51	-4.71%
529	$97.12	$119.00		$21.88	22.53%
Roth	$0.00	$25.00		$25.00	#DIV/0!
Misc (Car, etc)	$7,000.00	$7,000.00		$0.00	0.00%
Total Assets	$202,377.45	$208,760.82		$6,383.37	3.06%
Liabilities				Difference	% change
CC	$2,395.69	$3,055.00		$659.31	27.52%
Home	$98,712.73	$98,612.00		-$100.73	-0.10%
Rental	$66,911.52	$66,859.00		-$52.52	-0.08%
HELOC	$9,490.18	$9,463.00		-$27.18	-0.29%
Student Loans	$54,688.51	$54,605.49		-$83.02	-0.15%
Total Liabilities	$232,198.63	$232,594.49		$395.86	0.17%
February’s Net Worth	-$23,833.67			$5,987.51	+25.12%

 

Credit Cards: I wasn’t going to post my net worth statement today because some emergencies I had last month made me accumulate more credit card debt.  That is a no no.  The cardinal rule, in my opinion, is not to accumulate more credit card debt, even if the charges are on no interest credit cards.  In my opinion, this rule comes before savings, retirement, and debt payoff.  What is the point in paying off $500 on a HELOC if I just added $500 more of cc debt.  Thou shall not accumulate more debt.  To be fair, I was waiting for the due date to pay for $400 of the add’l charges but the balance is throwing off my net worth statement so I’m going to pay it today.  The rest is from charges for buying tires on a cc that has three months of no interest.  I don’t feel too guilty about carrying a balance for two months on something like safer tires.

HELOC: I’ve paid an add’l $116 on my HELOC on the loan but it hasn’t been processed yet.

Cash:  My renter is up to date on his rent.  WooHoo!

Home:  This is the biggest mover and I’m very suspicious.  The increase in my home value has finally caused me to have a positive change in my net worth but the way the economy is right now, I’m sure it’ll dip again.  So, it’s had for me to be excited about my first networth increase.

Roth:  I’ve finally started a  Roth account!

It doesn’t feel as good to have an increase in my net worth as I thought it would.  I think that’s because of the add’l cc debt.  Hopefully next month, I’ll have an increase no add’l cc debt, and then I’ll be able to celebrate.

 

 

 

I'm On My Way

The $25 for my IngDirect Roth account has finally been drafted from my bank account.  Right now it is only in a money market account since I haven’t decided on a mutual fund yet, but that $25 sure did look good.  I guess I’m just happy because I finally took that first step.  When I was trying to decide on a fund I asked an older, very distinguished friend of mine about Roths and Traditional IRAs.  He told me he didn’t have a Roth, he preferred traditional because of the tax advantages for the present.  Then I was tempted to start a traditional retirement account, but only for a second, because I don’t mind suffering a little bit if I can reap the returns in the future. 

hmmmmm

Off Topic.

I was talking about getting registered to vote today with my sister and we were discussing what exactly a Primary was and in the course of the discussion she said that she wouldn’t vote for Hilary Clinton because the man is supposed to be the head of the family according to the Bible.  Hmmm, of all the reasons not to vote for Hilary I’ve never heard anyone say I wouldn’t vote for Hilary because the Man is supposed to be the Head.  Then I over heard a conversation where an older woman said she didn’t vote for Obama because he was a Muslim.  Things that make you go, hmmmmm.

I've Decided on a Roth... Kinda

I’ve made a decision on my Roth.  Well, kinda.  I’ve atleast decided on what company I’m going through.  I’m pretty much taking the easy route and going through IndDirect and using their mutual funds.  I had originally decided on just buying some stock (like Ches.a.peake and S.t.arb.ucks) and going through Sharebuilder, but they charge $4 per trade.  While IngDirect only has a $10 maintenance fee and a minimum start up of fee $250.   

*Update—I just got an email from Sharebuilder and if I open up a Retirement account I will get 7 free trades.  Hmmmm, so I guess I can go through IngDirect and Sharebuilder.  Now, if I only had some money.