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Thread: Budgets and Getting Your Finances in Order

  1. #1
    Cyburbian rcgplanner's avatar
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    Budgets and Getting Your Finances in Order

    Maybe because it is a day after my 29th birthday but this morning I woke up determined get my financial house in order. I have made a plan to pay off my credit cards by the end of 2013. I am not in bad shape financially and live fairly frugaly, I am just realizing I have very little savings and I would like to have a family and buy a house sometime in the next 5 - 7 years.

    Any other budget tips anyone is willing to share I would be grateful. I have heard people raving about Dave Ramsey and I know other people swear by using the snowball method to paying down debt, smallest to largest. Do you use a budget or some other way to tame your finances. Has anyone ever used a financial coach?

  2. #2
    Super Moderator kjel's avatar
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    We use Credit Smart as part of our financial education program. http://www.freddiemac.com/creditsmar..._training.html

    It's free and you can do it online.

    Also the myfico.com forums are an excellent resource for all things credit related. They will try and sell you a subscription for credit monitoring but the forum is free.

    I am not sure where you live, but if you are at or below 80% AMI for household size the Federal Home Loan Bank offers a matched savings program called First Home Club. They vary from region to region, Federal Home Loan Bank of NY offers a 4:1 match, so I have clients that will save about $1800 over the course of 9-18 months and receive $7500 in matching funds for a downpayment on a house. Every Federal Home Loan Bank offers the program, click here http://www.fhlbanks.com/ to select the one serving your region.
    "He defended the cause of the poor and needy, and so all went well. Is that not what it means to know me?" Jeremiah 22:16

  3. #3
    OH....IO Hink's avatar
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    Quote Originally posted by rcgplanner View post
    Maybe because it is a day after my 29th birthday but this morning I woke up determined get my financial house in order. I have made a plan to pay off my credit cards by the end of 2013. I am not in bad shape financially and live fairly frugaly, I am just realizing I have very little savings and I would like to have a family and buy a house sometime in the next 5 - 7 years.

    Any other budget tips anyone is willing to share I would be grateful. I have heard people raving about Dave Ramsey and I know other people swear by using the snowball method to paying down debt, smallest to largest. Do you use a budget or some other way to tame your finances. Has anyone ever used a financial coach?
    I am somewhat of an obsessive budgeter. I don't like Ramsey, for a lot of reasons, but really because he is selling common sense. I think the magic to paying down debt or stocking away an emergency fund (which are both really important), or saving for retirement (which should be your primary goal once you get the credit cards paid off), is to automate it. Don't give yourself the opportunity to use the money otherwise.

    If you look in your bank account and you see $1,000 you think it is available, even if you have ear marked it for something. If you create separate accounts, or do auto-bill pay, the money comes out without you having to think about it. My credit union allows me to open separate accounts under my primary account. This means that I can have an Emergency Fund be automatically sent money every month.

    I think you really just need to prioritize what you want to get accomplished. Debt lowered, cushion widened, and retirement started.

    That or marry a rich women
    A common mistake people make when trying to design something completely foolproof is to underestimate the ingenuity of complete fools. -Douglas Adams

  4. #4
    Cyburbian WSU MUP Student's avatar
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    Back when I had racked up a bit more debt than I was comfortable with, I found the snowball method to work very well (although I've never heard it called that until now). Even if I was paying off $160 debt that was at 5.8% interest while just making minimum payments on a $5,000 debt at 12%, it seemed like more progress psychologically and probably helped to keep me focused.

    I've never used a financial coach or put much credence into people like Dave Ramsey or Suze Orman - I don't know if I trust people who sell financial advice. If you are a member of a credit union, you may want to check out what free financial services they offer. One of the ones I belong to has some great resources and when my wife and I were considering them for a mortgage we were able to sit down with one of the VPs a few times and get some great advice and information for no charge.
    "Where free unions and collective bargaining are forbidden, freedom is lost." - 1980 Republican presidential candidate Ronald Reagan

  5. #5
    Cyburbian
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    Do you ever read Lifehacker? They have a couple different articles on personal finances every week. I don't know which ones you might find more useful so I'll just leave some of the more recent ones...

    http://lifehacker.com/three-times-i-...-di-1036930251
    http://lifehacker.com/the-financial-...gust-992606379
    http://lifehacker.com/how-to-pay-off...thod-576070292
    http://lifehacker.com/pay-off-studen...e-be-505698915

  6. #6
    Cyburbian WSU MUP Student's avatar
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    Off-topic:
    Quote Originally posted by Isaac View post
    Do you ever read Lifehacker?...


    I love LifeHacker. Even though I almost never undertake any of the projects they show or do anything they suggest, it's like a magical black hole time suck site of awesome ideas.
    "Where free unions and collective bargaining are forbidden, freedom is lost." - 1980 Republican presidential candidate Ronald Reagan

  7. #7
    moderator in moderation Suburb Repairman's avatar
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    I actually went through a Dave Ramsey course back when I still attended church. I don't think it is really worth it--it is all common sense or easily searchable on the internet. He is essentially a motivational speaker on personal finance & nothing more. I also found his obcession with cash-funding everything a little compulsive & unrealistic--maybe that's needed for people that are truly out of control and really borderline on making ends meet, but for most I think it is unnecessary. I also don't see any problem with buying a new car vs. used if you plan to drive it a long time (7+ years).

    I've helped a number of friends with their personal finances--I really enjoy it. If I suddenly became independently wealthy and didn't have to work, I would probably volunteer to help low income folks with financial planning (among many other things, of course).

    My recommendations:
    1. Get $1,000 in an emergency fund for piece of mind. If that is a tough jump, at least get $500 socked away.
    2. Use snowball method to pay down creditors (pay focuses on smallest balance first, building your capacity to make larger payments on your larger debts & creating feelings of accomplishment). I have an Excel spreadsheet that shows how this works & basically schedules your payoffs if you are interested.
    3. Automate everything you can
    4. If you're hardcore, cancel endulgent purchases for a while (cut back on cable, etc.)
    5. Eat at home. A lot. Plan your meals for at least a week, but still allow for 1-2 dining-out dates weekly if that is your thing
    6. Set up an automated fund that saves incrementally out of each paycheck for things like a home down payment. Create a separate one for vehicle replacement as well and maybe one for Christmas to help avoid building debt around that time of year.
    7. Save for retirement now while you are young & compounding works heavily in your favor.

    Those 7 things summarize probably 90% of Dave Ramsey's program. To that program's credit though, it does a good job explaining different types of life insurance and figuring out what is right for you.

    "Oh, that is all well and good, but, voice or no voice, the people can always be brought to the bidding of the leaders. That is easy. All you have to do is tell them they are being attacked and denounce the pacifists for lack of patriotism and exposing the country to danger. It works the same way in any country."

    - Herman Göring at the Nuremburg trials (thoughts on democracy)

  8. #8
    Cyburbian rcgplanner's avatar
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    So much great advice here thank you everyone. Kjel that down payment program sounds amazing, alas I think I make too much for most of those programs, but I am definately going to run the numbers. The down payment is the killer for so many people.

    Hink, I have most of my bills automatically scheduled to come out of my checking account, so that helps. I always start each month with a list of what needs to be paid and subtract from my salary. Whatever is left goes to savings and/or paying down debt.

    WSU, I love my credit union and they have some nice web-based programs that help with some financial training. I feel the same about financial trainers like Ramsey or Orman; it seems counter-intuitive to pay a good amount of money for books and programs to help you be better with money. That being said I know DR can be a great motivator and many people need that. I may go to the library and check out his Total Money Makeover book.

    Issac, I love Lifehacker for many things and they usually have good financial articles. I hadn't seem some of them so thanks!

    Suburb, the emergency fund is certainly something I am working on, but I feel like I should try to get my cards paid off first. I am not sure if this is the right choice but the fact I am accruing interest on something that could be knocked out by adding an additional $50 - $100/mo toward is annoying. We don't eat out that much which helps a lot, it is the damn credit card payments that is like a death by a thousand paper cuts.

    If you would be so kind as to send me a copy of the Excel spreadsheet you have set up I would be so grateful!

  9. #9
    Cyburbian Veloise's avatar
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    Don't buy new

    I've never owned a brand-new showroom fresh car, and to me this is not a big deal. I've also had car payments exactly once (credit union, paid off ASAP).

    Wardrobe: thrift stores are fun, and you can find some real treasures. Folks donate brand-new items, tags still on. Most of my clothing and much household items (furniture) comes from thrifts. I have a favorite used appliance store which has brought me my fridges and W/D.

    Do not rent appliances, furniture, TVs.
    Eating at home is a good plan. By the time you pay for a meal, beverage, and tip, you could have bought a couple bags of groceries.

  10. #10
    Cyburbian dw914er's avatar
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    Quote Originally posted by rcgplanner View post
    So much great advice here thank you everyone.{...] The down payment is the killer for so many people.
    Yes it is

    Quote Originally posted by rcgplanner View post
    Suburb, the emergency fund is certainly something I am working on, but I feel like I should try to get my cards paid off first. I am not sure if this is the right choice but the fact I am accruing interest on something that could be knocked out by adding an additional $50 - $100/mo toward is annoying. We don't eat out that much which helps a lot, it is the damn credit card payments that is like a death by a thousand paper cuts.
    We? Same person as: http://www.cyburbia.org/forums/showt...l=1#post684323 ?

    Regardless, goodluck RCG!
    And that concludes staff’s presentation...

  11. #11
    OH....IO Hink's avatar
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    Quote Originally posted by rcgplanner View post
    Hink, I have most of my bills automatically scheduled to come out of my checking account, so that helps. I always start each month with a list of what needs to be paid and subtract from my salary. Whatever is left goes to savings and/or paying down debt.
    See, but you shouldn't be having whatever is left going to savings. You should have a scheduled pay out just like your bills going to different funds. Emergency Fund, Down payment Fund, etc. These shouldn't be an afterthought, they should hold equal weight to your other scheduled bills.

    You need to prioritize based on those ALWAYS being paid. Your numbers might change depending on a big electric bill or something else, but you shouldn't use the left overs for your savings.

    I love talking finances...
    A common mistake people make when trying to design something completely foolproof is to underestimate the ingenuity of complete fools. -Douglas Adams

  12. #12
    Cyburbian rcgplanner's avatar
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    Quote Originally posted by dw914er View post
    Yes it is



    We? Same person as: http://www.cyburbia.org/forums/showt...l=1#post684323 ?

    Regardless, goodluck RCG!
    Off-topic:
    *Nods* it is the same person, but at least we now have two incomes coming in. Our tough conversations we had over the last six weeks resulted in her rededicating herself to the job hunt. She was finally able to find a job in retail, while it isn't much, it is a huge relief to have at least a bit more coming in each month.

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