Single-Step Personal Finance Challenge

One of my fellow College Money Network members, Laura at Green Panda Treehouse, tagged me and the other CMNs recently with the First-Step Personal-Finance Challenge.

Originally started by Mrs. Micah, this challenge is simple: Find one step you can take to make your financial system better or more organized.

I’ve been thinking about it, trying to decide which areas of my financial system need to be updated. There’s giving, which I overbudget for so I can live the principles I believe in, but which I sometimes struggle with and haven’t come to a conclusion over; there’s saving, which is mainly focused on my steady stream to the ER fund and continued investment in my down-payment fund; and, last, there’s spending, which I could always cut more on, honestly.

Of those three, the one that seems to have the most tangible goal-setting potential is spending.

I’ve tried specific spending challenges before: only spend XX on eating out this month, etc. The point of this challenge seems to be what all my other goals were lacking: it’s something small.

So my single step: I can only order out food once next week at work.

What about you? Wanna take the challenge?

So I Have This Friend (or, on mooching)

What do you do when, say, a friend comes to visit and suggests you go to THAT restaurant with the amazing food and the great atmosphere, the one that makes delicious food but hits your wallet big-time? Then, say, this friend orders an entree and drinks and more drinks and a side of this and a bit of that, laughing it up and saying how good it all is, only to say, when the bill comes, that she can’t cover it?

You only ordered something small, because, well, you’re on a budget after all. And your friend says something about how she doesn’t make much money and it’s hard to find good work and you know? Maybe you can help her out?

This happens to me sometimes. Not frequently, and not with a lot of people. But with some people very frequently, in fact with one particular person all the time. I’ll know I can spend $10, so I’ll order something small; Friend knows she has $10 in her wallet but orders something big, knowing I can help her, if it comes to that.

I don’t mind giving to my friends; in fact, I believe in it. But maybe there’s some kind of line we can cross with giving. Maybe at some point, giving becomes excusing? Maybe at some point, my “sure, here’s another $10″ becomes “you don’t have to be responsible for what you do”?

This same friend has been looking for a better job, on and off, for almost a year. She makes $8 now, so, yeah, she doesn’t have much money. So what do I do? I offer to help her with her resume, thinking that this could help her get a better job, help her make better money. I spend three hours one Friday night beefing it up and reorganizing and formatting, etc. I send it to her and say, voila! like she’ll fall over herself gushing with praise. She doesn’t respond. She never says if she’ll use it.

The truth is, she never asked me to look at her resume. It was my idea, my plan to help her get in a better financial situation. In other words, it’s what I’d want someone to do for me. Just like I’d want someone to help me if I needed money, though, to be honest, I’d never, ever, not-in-a-million-years order something I knew I didn’t have the money for. I wish someone had helped me make a resume when I was frustrated, desperate for a job. I wish someone had given me advice and guidance to getting the right position. I wish someone would help me when I feel like I need it.

But do I wish that only because I’m looking back? I mean, if I hadn’t done anything, would that have meant I needed help that no one gave or that I didn’t want it (the jobs/resumes/whatever) enough?

What do you think? Can you give too much to your friends? Is there a way to know if you can? And how do you train yourself to stop helping people who don’t want you to? How do you love them enough to say, You can do it yourself? How do you love them enough to say, Sure, I’ll pay for it again?

Image: cedric1981

Paris, Au Revoir

A few months ago, my coworker was talking about going to Paris, saying I should join her. We’d sit at cafes and spend nights by the Eiffel Tower, practicing our bit of French and enjoying an escape. It was this fantastic, really fun, big-dream kind of conversation.

So just for fun, we looked at plane tickets, and they were pricey: around $1K usually, per person round-trip. That was way too much.

I knew I couldn’t afford a trip like that, at least not right now and with the goals I’ve set. So I told her, “Maybe if we could get tickets for $500,” half-serious. “Then it’d be a sign.”

About a month or so later, we found just that: round-trip tickets from Chicago to Paris, for about $500 each (plus tax). It was a good deal, all things considered, and I told her I’d think about it.

That’s when I realized it wasn’t the $500 difference that was stopping me, giving me hesitations. It was all the other things: spending a big chunk of my vacation time, using a big chunk of my savings, knowing I’d be doing all that for a few days in Paris, a city I like but wouldn’t say I love.

So I said no, and so did she. And come this fall, we’ll both be staying in Chicago. Paris, and Italy and Greece and Prague and all the other great places, will still be there later.

Image: StevenVanwel

New Goal: I want to buy a house with cash! (or, I hate debt)

I feel somewhat hypocritical talking about debt as a bad thing, seeing as I never went into it. It’s a little like a skinny teenager lecturing a Weight Watchers group. True, I have no debt… BUT my parents paid my college tuition. BUT my parents let me live rent-free while I was in grad school. BUT I grew up in middle-class, affluent America, with all the comforts and privileges therein, and I didn’t pay for them.

The truth is, if I had had to pay for all the blessings I’ve been given, I’d be indebted up to my eyeballs. From orthodontia to college to eating out to my car, there’s no way around it: I’ve been given a lot. But instead of asking me to pay for it, it’s as if someone’s wiped my slate clean, forgiving all I could have owed. I get to be debt-free, not because of hard work, but because of grace. This is true in other areas of my life, too, but I digress.

What I’m getting at here is that I know I’m no expert, no authority. I know people in debt have many reasons and situations that have gotten them there, and many times, it’s the same kinds of things I’ve done. No judgment here, OK?

But I HATE debt.

I hate that it traps people, I hate that it takes away people’s homes, I hate that it makes us spend more than we should or buy things we can’t wait for.

After more than a year in the PF world, I’ve only just now read Dave Ramsey’s Total Money Makeover. I’m not saying I see eye-to-eye with him on everything, but a couple things he writes really, really clicked with me. Things like paying off all debt with gazelle-like focus. Things like having an emergency fund in place. Things like not buying a brand-new car unless you have the liquid funds to do so. Also:

*Our society accepts debt as normal.
*Going into debt = paying interest = a larger purchase price at the end.
*There are a lot of things I don’t need; it’s possible to live on less.

Which leads me to the culminating announcement: I’ve made a change to my future home-purchase goal, and here’s my new plan:

When I buy, I’ll put down the largest down-payment I can afford (formerly aiming for 20%, now thinking closer to 50%, though 100% would be ideal and obviously would not require a mortgage).

If I do need a mortgage, it will be a 15-year. I will not purchase the home if my monthly mortgage payment is more than 30% of my monthly take-home pay.

My sidebar goal will stay at $50K, as that’s my 2008 goal. But I’d secretly like to get it up to $60K by December. A lot of people would say this is crazy, that going into debt for a home is not wrong (I agree!). But I’m thinking this: I’m still young, I have a great living situation, I have few expenses.

Why not set higher goals like these? Why not dream of a life with no debt?

Photo: sugu

Savings Updates (Goal #2 Accomplished!)

In the sidebar, you’ll notice a few updates to my savings goals. I’ve removed the Cali Vacation bar, as that’s completed and accomplished.

And there’s a new completed goal, too. As of this morning, at the open of the business day, I will have deposited the final $500 into my 2008 Roth IRA.

Two goal down; two to go!

Image: s2photo

Additional Income for June 2008:

I decided at the end of last month to start looking at my income differently, to start finding ways to bring in alternative income. Here are the results of my first month with this attitude:

$125, Payment for guest-speaking in May
$500, Selling my camera on eBay
$43, Other Selling on eBay

TOTAL: $668
WHERE IT WENT: $500 to Cali fund; the rest to down-payment fund, which I’ve become a little more serious about

Photo: Mint Software

Even Bank Tellers Use ING

Today, my brother stopped by his Washington Mutual, and the bank teller (glorified sales person) tried to sell him on a savings account.

“No thanks,” Brother said. “I have an ING.”

“ME TOO!” the teller exclaimed.

Grand Total to Vacation: $817

The good news is that this is way under budget, as expected. How did I spend that $817 on my trip; where did the money go? After some quick analysis tonight, here’s what I discovered:

PREPAID SPENDING:
$54 Flights
$330 Hotel

ON-TRIP SPENDING:
$193.40 Food (We took turns paying, without too much of the nickel-and-dime business)
$82.43 Clothes (Totally unprepared for the HEAT!!, I bought a pair of shorts, a sun dress & new sunglasses, which I forget to pack)
$150 Transportation (buses, BART, rental car on Saturday)
$7.02 Toiletries (Again, what I should’ve packed)

The extra (”leftover”) money is going promptly to my savings. I’m even more serious about the downpayment fund here in Chicago now, having compared our real estate prices with California’s (OY!).

Want to know which places were my favorites? Whether you’re headed to SF or just enjoy hearing about trips/travel/food, check back here tomorrow.

I’m leaving for Cali tomorrow!

I can’t believe it’s been three months since I posted about my upcoming Cali trip. Tomorrow is the day I take off, and I’m so excited!

Having saved my full goal of $1000, I am financially prepared to take in all this long weekend has to offer. San Fransisco, here I come!

Here’s the breakdown of costs, so far:
*Flights, $54 taxes (My dad gave us his credit card points again, meaning free flights! I didn’t factor this into my $1000 budget because I paid for it a while ago.)
*Hotels, $330 for my share of four nights in a four-star hotel (purchased through a TravelZoo promotion.)

More to come! And while I’m gone, I thought you might enjoy hearing advice from Cali natives in the know. Kim of Kim’s Kitchen Sink will be guest-posting with her SF tips on Friday, and SF Money Matters will be giving her stellar advice on Monday. Enjoy, and see ya back here next week!

Do People Go into Debt for Wedding Rings?

My out-of-town friend this weekend, in passing, was telling me about her future diamond. “I don’t care if he has to go into debt for it,” she said. “It better be big!”

I laughed, and told her that she better be joking. She was joking, right? She just laughed.

This is something I’ve never even heard in passing, the idea of taking out a loan to pay for an engagement ring. I guess anything’s possible, especially in debt-filled America, but seriously: Do people actually go into debt for wedding rings? Do you know anyone who did?