Managing money.

[zCypher]

If you've been in debt, and escaped it and are now in excellent financial standing, you can probably help me out. If you're in debt still, don't bother.

But seriously, people who've had good amount of experience dealing with money and manging it well, I would appreciate a word or two of tips/advice, anything you can offer on the subject.

I've been thinking ahead a lot recently, as can be seen by one of my previous threads regarding moving out with my gf in the future (the thread was about our expenses, how much money we'd have assuming a given income, etc). Well, today is Thursday which I think is commonly known as payday for many people. Although I only work part time, I've also received some moula, much needed. I have a phone bill and Visa to pay, and next week I start classes - and I'm going to buy books/supplies for those tomorrow.

Problem : pay was a small $145 (not always work to do). I don't have enough money to pay for everything, and will be putting books on credit. What I'd like to inquire about is - is it a good idea to save a certain portion/percentage of what I receive starting NOW, even if I have some debt? For example, would it be wise to save $10-25 from what I made, and pay what I can with the rest - and keep doing this with every paycheck from now on?

OR, do you think it's a better idea to use 100% of my pay until I'm out of debt (not sure when that'll be), and hope that I can start making myself put money aside later on?

Your thoughts much appreciated.

 

[TubStain]

1) The start to maintaing your finances sould be to pay off all your credit. The huge interest rates they charge eat away your income. There is no point in saving money until you pay off your debts.

2) Live below your means (aka saving) be frugal on what you spend. In this materialistic world we live in, it is easy to be tempted to spend. Learn how to curb that spending bug and you'll be on your way.

Hope that helps.

 

[zCypher]

Originally posted by: TranceGOD
1) The start to maintaing your finances sould be to pay off all your credit. The huge interest rates they charge eat away your income. There is no point in saving money until you pay off your debts.

2) Live below your means (aka saving) be frugal on what you spend. In this materialistic world we live in, it is easy to be tempted to spend. Learn how to curb that spending bug and you'll be on your way.

Hope that helps.

Thanks for your input, TranceGOD. By the way, can you PM me with your favorite trance suggestions? heheh

About #1: I agree completely, but... I also disagree. I think there is no point in saving money if I'm only making a minimum payment on the Visa (and being suckered by interest). But if I make a payment LARGER than the minimum payment (say if I put $100 on Visa), then my balance will go down $100, and I don't get raped so bad. Sides, I only have a $500 limit, so paying this off won't be a huge big deal, and I've pretty much learned my discipline with credit cards from having this the past couple months.. I remember my first few weeks.. hehe

About #2: I know what it's like to live frugally.. I didn't use to work like this, so I was always scraping for money, and it came in and dissappeared equally fast. I never had money to do stuff, always borrowed off people when we went out. I can deal with not spending much I think.

But i'm wondering if I should just set aside $10-25 from this paycheck.. cause if I put $100 or $75 on the Visa right now doesn't make much difference, but if I do that every pay then I'll have a lot saved up after a while.

 

[Ns1]

pay off all your debts and then save



and what my trance suggestions? christopher larwence owns j00! progressive house owns j00!

 

[Viper GTS]

You're dealing with relatively small amounts of money (<$500), so the few dollars interest that you will be charged do not offset the stability you will get from having savings. If your income was stable, it might be different, but IMO you would benefit more from the savings than you would from paying down the Visa faster.

Don't just make the minimum, but don't dump every penny you have into your Visa. You'll end up needing cash, putting it on your Visa, & then you're right back where you started.

Viper GTS

 

[Wino]

While paying off all your debts before saving any other money may seem like the obvious thing to do, consider this:

What if you lose your ability to pay the minimums on your debt tomorrow and wont be able to do so for a couple months?

Suggestion:

Save a set amount of money each paycheck so that if you were unable to earn any money at all you would still have the ability to pay your minimums. This achieves two goals:

1) Gives you 2-3 month safety net so that you don't get BAD credit marks on your record.
2) Gets you in the habit of saving money early as possible.

These two items are worth more than the loss of a few bucks in interest payments. DO NOT use it as an excuse to always pay the minimum. Your goal should still be to get completely out of credit card debts ASAP. Don't spend your money on stupid things that mean nothing in a week. If you want to treat your gf to a romantic dinner, find a good receipe and cook something for her as a suprise (instead of going out to eat every week) etc.

gl!

 

[TubStain]

About #1: I agree completely, but... I also disagree. I think there is no point in saving money if I'm only making a minimum payment on the Visa (and being suckered by interest). But if I make a payment LARGER than the minimum payment (say if I put $100 on Visa), then my balance will go down $100, and I don't get raped so bad. Sides, I only have a $500 limit, so paying this off won't be a huge big deal, and I've pretty much learned my discipline with credit cards from having this the past couple months.. I remember my first few weeks.. hehe.

Consider debt a minus that grows faster(because of higher interest rates) than gain (generally fixed income). The NET effect is that as long as your debt is >0 it will gror pretty fast, taking all your hard earned income and using it to pay for interest...one of the most useless things you could spend money on. You are taking your hard earned money and giving it to a bank so that you can borrow money. Does that make sense to you? I think not. So... pay of that negative amount FIRST, coz unless you invest in an account that gives you more interest than the usual APR (no bank in the US comes even close) I wouldnt bother saving until the debt had been paid off. I think you basically just told me what I told you in the quote above


EDIT: I didnt take into account your small debt. I'm thinking debt in the thousands. Also info like stability of job, etc play into the final decision as well.

 

[zCypher]

Originally posted by: Viper GTS
You're dealing with relatively small amounts of money (<$500), so the few dollars interest that you will be charged do not offset the stability you will get from having savings. If your income was stable, it might be different, but IMO you would benefit more from the savings than you would from paying down the Visa faster.

Viper GTS

Thanks Viper GTS, that's what I like to hear!

I've put aside $40, paid $46.01 to my Visa and have $59.90 (son of a..) left in regular savings acct. I can retrieve the $40 in my other account at any time, but I like to keep it seperate there for to make it easier to save up.

So I have $60 left to either : buy my bus pass for next month ($25), pay my minimum payment ($15) or more to my Visa, and buy some school supplies. I'm thinking I will put the remaining of that money on the Visa so it does go DOWN, and use my mom's Visa for my books (I did this last semester, and I brought it back down to $0). It'll only be about $180-200 total, so I should be able to get rid of that relatively quickly.

Argh. I just hope I'm out of debt completely by summer so I can take motorcycle lessons ($500-600?). Working part time can be a biotch for getting things you want.

 

[zCypher]

Originally posted by: TranceGOD

About #1: I agree completely, but... I also disagree. I think there is no point in saving money if I'm only making a minimum payment on the Visa (and being suckered by interest). But if I make a payment LARGER than the minimum payment (say if I put $100 on Visa), then my balance will go down $100, and I don't get raped so bad. Sides, I only have a $500 limit, so paying this off won't be a huge big deal, and I've pretty much learned my discipline with credit cards from having this the past couple months.. I remember my first few weeks.. hehe.

Consider debt a minus that grows faster(because of higher interest rates) than gain (generally fixed income). The NET effect is that as long as your debt is >0 it will gror pretty fast, taking all your hard earned income and using it to pay for interest...one of the most useless things you could spend money on. You are taking your hard earned money and giving it to a bank so that you can borrow money. Does that make sense to you? I think not. So... pay of that negative amount FIRST, coz unless you invest in an account that gives you more interest than the usual APR (no bank in the US comes even close) I wouldnt bother saving until the debt had been paid off. I think you basically just told me what I told you in the quote above


EDIT: I didnt take into account your small debt. I'm thinking debt in the thousands. Also info like stability of job, etc play into the final decision as well.

Yeah, I thought you were talking about larger debt, cause what you said made good sense, but not particularly to my situation. So yes, I'm taling about small amounts of cash and part time work. It's relatively stable in the sense that I will get money every two weeks, but the amount can vary from $60-120 to $300+.. but that's why I like to have the savings here, in case I get a small pay when I really needed more.

So I have $500 Visa with $477 on it right now. Minimum payment is $15 for this month, due the 27th. I want to (and usually do) pay more than the minimum. Other debt includes $175 but at 0% interest and no due date (I can pay it back any time, it's to a family member). Other than the Visa and that, I have no debt.. I'll have a phone bill every month, but that's not debt, I pay that as it comes in. Otherwise I will have $180-200 to pay off when school starts, and $25/month for a bus pass.

I can manage, I can manage...

Edit: I also forgot to mention that I pay for everything for myself now (didn't use to). I buy my own food when I eat out, I pay for my own clothes, phone and monthly bill, anything I "want" or whatever I buy myself... even the wallet that carries my money. However, I've pretty much finished my spending sprees on clothes/items like that, since I have enough now.

 

[FeathersMcGraw]

Originally posted by: zCypher

Problem : pay was a small $145 (not always work to do). I don't have enough money to pay for everything, and will be putting books on credit. What I'd like to inquire about is - is it a good idea to save a certain portion/percentage of what I receive starting NOW, even if I have some debt? For example, would it be wise to save $10-25 from what I made, and pay what I can with the rest - and keep doing this with every paycheck from now on?

OR, do you think it's a better idea to use 100% of my pay until I'm out of debt (not sure when that'll be), and hope that I can start making myself put money aside later on?

Ask your school financial aid department if they provide short-term emergency loans to students. Some will allow small (under $200) loans interest-free.

Unless you've got a starter rate, you're looking at upwards of 12% interest by carrying a balance on a credit card. Whatever savings you're scraping to cobble together aren't going to give you that rate of return, so expunging your debt in the short term is going to allow you to accumulate savings far better than paying them off later, particularly once interest charges start compounding.

 

[zCypher]

Originally posted by: FeathersMcGraw

Originally posted by: zCypher

Problem : pay was a small $145 (not always work to do). I don't have enough money to pay for everything, and will be putting books on credit. What I'd like to inquire about is - is it a good idea to save a certain portion/percentage of what I receive starting NOW, even if I have some debt? For example, would it be wise to save $10-25 from what I made, and pay what I can with the rest - and keep doing this with every paycheck from now on?

OR, do you think it's a better idea to use 100% of my pay until I'm out of debt (not sure when that'll be), and hope that I can start making myself put money aside later on?

Ask your school financial aid department if they provide short-term emergency loans to students. Some will allow small (under $200) loans interest-free.

Unless you've got a starter rate, you're looking at upwards of 12% interest by carrying a balance on a credit card. Whatever savings you're scraping to cobble together aren't going to give you that rate of return, so expunging your debt in the short term is going to allow you to accumulate savings far better than paying them off later, particularly once interest charges start compounding.

The interest rate on my credit card is 18.5%. hehe.. That still doesn't amount to much when you have a $500 limit on the card. The biggest interest i've been hit with so far has been $6 or $7, which really isn't a bother.

 

[Viper GTS]

Originally posted by: FeathersMcGraw

Originally posted by: zCypher

Problem : pay was a small $145 (not always work to do). I don't have enough money to pay for everything, and will be putting books on credit. What I'd like to inquire about is - is it a good idea to save a certain portion/percentage of what I receive starting NOW, even if I have some debt? For example, would it be wise to save $10-25 from what I made, and pay what I can with the rest - and keep doing this with every paycheck from now on?

OR, do you think it's a better idea to use 100% of my pay until I'm out of debt (not sure when that'll be), and hope that I can start making myself put money aside later on?

Ask your school financial aid department if they provide short-term emergency loans to students. Some will allow small (under $200) loans interest-free.

Unless you've got a starter rate, you're looking at upwards of 12% interest by carrying a balance on a credit card. Whatever savings you're scraping to cobble together aren't going to give you that rate of return, so expunging your debt in the short term is going to allow you to accumulate savings far better than paying them off later, particularly once interest charges start compounding.

When dealing with small amounts of money & unsteady income, the insurance provided by savings is worth more than the few dollars interest that will be charged for his CC debt.

Viper GTS

 

[zCypher]

Just from spending a $20 bill here and there, and leaving the change on my desk when I get home, after a bit I'd accumulated $10-20 just in change! :Q I used it for bus fare for the next week or two, and for some food.. heh heh. doh

 

[kranky]

If I had a dollar for every time I recommended that someone pay off their debt... but in your case I'll change my tune...

The reason most people don't save is because they can't get started. They don't think they can save anything. Right now you are willing to start, and want to start. For you, I recommend that you start saving. You have a small amount of debt, which is not crushing you.

Get started now, and you will find you can continue to save throughout your life. When you start to earn more money, increase your savings proportionally. The biggest factor in having a big nest egg is to start early, and let the power of compound interest work in your favor. It's true that for credit cards the compound interest is working against you, but again you don't have a large debt now. Start saving, and don't add to your debt burden.

 

[zCypher]

Originally posted by: kranky
If I had a dollar for every time I recommended that someone pay off their debt... but in your case I'll change my tune...

The reason most people don't save is because they can't get started. They don't think they can save anything. Right now you are willing to start, and want to start. For you, I recommend that you start saving. You have a small amount of debt, which is not crushing you.

Get started now, and you will find you can continue to save throughout your life. When you start to earn more money, increase your savings proportionally. The biggest factor in having a big nest egg is to start early, and let the power of compound interest work in your favor. It's true that for credit cards the compound interest is working against you, but again you don't have a large debt now. Start saving, and don't add to your debt burden.

Thanks for the good advice, kranky. I'm going to try to save at least some money from every pay from now on. You are correct, my debt is not crushing me at this point, and I have no desire to further it either. It is possible that I get a higher credit limit some time in the (not too near) future, but I would only want that if I also have increased income.

So should I have a set % to save from each pay, and automatically apply that when I make more money?

 

[kranky]

Setting aside a fixed percentage is a great idea, but doesn't always work in practice. I think most people should save 10% of their income. If they did that, they would accumulate a tremendous amount of money. But you also have to be realistic.

Some people decide to save 10%, and before too long they want some new gadget and pull the money out of savings to buy it, because they weren't genuinely committed to saving that money. That's not real saving. It's fooling yourself.

Some people can save half of their income, others only 2%. I'm committed to saving 10% but I'm at about 16% now. It's easy for me since I don't buy a lot of stuff and don't really want to. A realistic percentage is going to vary with your life circumstances. The most important thing is to get in the habit of saving for the long term. If you decide to buy a HDTV (for example), instead of putting it on a credit card save up extra money above and beyond your regular savings. When you have the money saved up, buy it then. That way you avoid debt and avoid dipping into your long-term savings for non-essentials. I tell myself if I can afford the credit card payment, then I can afford to save up the same amount until I have enough.

Another thing I do is when I think I really want to buy something I ask myself, "If I couldn't tell anyone I bought this or show it to anyone, would I still want it that much?" Lots of times the answer is no.

 

[SCSIfreek]

I say find another job or get a second job. If you could only pull in $150 per packcheck, you're in deep trouble boy. I mean you don't make enough to cover school books and tuition

<----ever thought of getting some financial aid help? perhaps student loan, which is much better than VISA charges.


--Scsi

 

[alrocky]

You must make a determined effort to reduce your debt, limit your spending and begin saving for the future. Do not carry a balance on your credit card. If you can't pay off the CC balance each month you are not living within your means. Don't regard that $7 CC interest charge as a "really isn't a bother." As mentioned it's better to save up for a big ticket item than paying by CC. Also the best time to start saving for the future is now. Since there will always be some temptation or need to buy something, you may find that you are never really out of debt to justify that 'Now I can start to save.' You have to chance your attitude toward money and start practicing saving. This allows you to learn what it's like to save money and change your monetary habits. Do you need the motorcycle lessons? Pay off that CC and the relative.

 

[Sluggo]

You are young enough, and seem to want to do it properly.


I suggest you visit www.daveramsey.com and look around. See if you can catch his radio program in Canada, if not I highly recommend his book " Financial Peace Revisited".

It will teach you good basic money management, and has specific advice for people who have variable income.

 

[katka]

Get a financial calculator or finance program, learn how to use it and it CAN help you. It will show you which bills to pay off first etc. Also, you should not exclude people from giving you advice. Just because someone has not been there doesn't mean that they don't know how or can't tell you how to get there. :Q You have to evaluate ALL responses and be wise enough to know the difference.