Thursday, March 31, 2011

Spending Roundup for March

 Here's the breakdown of where my money went in March:

Fixed Expenses
These are the easy ones. My car payment, car insurance, AT&T bill, cable/internet, and CC payments fall into this category. I budgeted $750 and spent $750.

Budget was $250. I spent $212.20. Hooray!

Gas is currently $3.52/gal. in my area. Thank goodness my car gets 43 mpg! I budgeted $200 and spent $200.66. I may have to adjust my budget if gas prices keep rising.

I contributed $200 to my Roth in March and $200 toward savings, just as planned. This is automated so it's easy to stay on track! I also rolled an old 401(k) into an IRA, so that $200 will be rolled into my Roth as soon as the paperwork is processed.

Budget was $150. I spent $148.81. This is another possible area of adjustment, because I know my electric bill is going to rise when I start running the air conditioner. Time to get on levelized billing!

Budget was $150. I spent $173.32. FAIL!

Budget was $100. I spent $101.92. I really want to quit throwing this money out the window, but it's so hard to quit. I'm going to try to smoke less than a pack a day in April.

Budget for this category was $150. I spent $220.24, including $150 on random unnecessary shopping. FAIL!

Overall, my budget for the month was $2150 and I spent $2207.15. Over by $57.15.

Monday, March 28, 2011

My Bank is Awesome

If you're new to SOD, I'll fill you in on a little secret: I'm slightly obsessed with my bank.

I won't repeat my previous post about my love for PNC Virtual Wallet. To summarize in case you missed it, VW is the coolest thing ever and it's the #1 tool I've used to change my financial habits.

I've been very impressed by PNC's willingness to listen to customers and make improvements to VW. In the four months since I opened my account, I have communicated with PNC via Twitter, the Inside the Wallet blog, the iPhone app, and my online banking account. The one thing I've been screaming for? Remote check deposit.

Yesterday on the blog, guess what PNC announced? Remote check deposit.

I'd love to take credit for this exciting idea, but I'm pretty sure it was on the table long before I started asking for it. Plus I'm not the only one who asked. Still, I want to believe that someone read my pleas and decided to grant my wish. Soon, I'll be able to take a picture of a check with my iPhone to deposit it into my Virtual Wallet account instead of having to drive to a branch.

Last week I mentioned a $12.53 check I've been sitting on. Since the nearest PNC branch is in the town where I work, 50 miles from home, I haven't bothered going to deposit it. Now that I've eliminated the need to go to the bank, I'm about to become $12.53 richer. #winning

Complicating the System to Keep it Simple

I just made a major change to my financial plan that should, after the initial confusion, make managing my finances a lot easier.

I start my part time job in April. Because I won't have a set salary, my extra income will fluctuate depending on how many hours I bill for therapy. To complicate matters, the money will be added to my existing paychecks because I'm working for the same company in my full time job.

So I opened an Electric Orange checking account through ING Direct. No, I haven't fallen out of love with PNC Virtual Wallet. But I do have concerns about what this extra money will do to my budget. I can't really plan for it since the amount will be different each pay period. With my history, that puts me at risk for spending and/or wasting every dime of the money because it's "extra" or unaccounted for.

The new checking account will serve as my "fluff" money. I'll deposit a set amount each payday (I'm thinking $200) to spend on random stuff like books, gifts, clothing, restaurants, and going out. Everything else above my normal $1075 pay will go into savings in my Virtual Wallet account. I'll still use my VW checking for bills, groceries, and gas. My budget categories for restaurants/miscellaneous will go away.

There are several reasons why this is a good idea. First, I'll be able to separate optional spending from the money I use to pay for important stuff. No cutting it close when a bill is due. Second, I'll be able to limit my fluff spending to what's in the new account, so I won't have to budget as closely for random things I buy. Third, and most important, I'm giving my extra income a purpose so I don't waste it all.

I know some people are probably thinking, why not just save all the money? Believe me, I thought the same thing. But the money I save right now goes into my emergency fund, and I refuse to move it out for a non-emergency. If I start that, every bit of the money I've saved will be gone. Opening another bank account is purely psychological for me - I need to be able to spend a little, but in a controlled way. When that money is gone, the Electric Orange debit card will be put away until I get paid again. No more random spending from my VW account and potentially messing up something important.

It will take awhile for the new system to start, so I won't be able to judge its effectiveness for a few months. I feel good about my decision, though it will be a headache until I have the routine set up. I especially like the $50 bonus coming my way after I use the new debit card three times! I'll keep you all updated.

Sunday, March 27, 2011

My Credit Sucks

There is one drawback to reading a lot of personal finance sites. Everywhere I look online, I see stuff like this:

And it really makes me angry.

I've talked briefly before about filing Chapter 7 bankruptcy. It's one of the biggest regrets of my life - not the part where I got rid of the debt that was burying my family, but the fact that I let things get that bad in the first place. I've worked hard not to put myself in that position ever again. Unfortunately, five years later, I'm still suffering from the aftermath of my financial transgressions.

My FICO scores are in the low 600s right now. That means:

- I can't get approved for a credit card. Not that I need one, but I'd considered getting one to increase my available credit.
- I can't buy my home from my parents. They were kind enough to buy the house when I got divorced, with the expectation that I would take over the mortgage as soon as I was financially stable. I know they aren't hurting themselves, but I can't stand knowing I'm not taking care of my responsibilities. They won't accept rent, saying they'd prefer I get out of debt and build savings. It drives me insane.
- My son will need a car in less than four years. While I'm saving for that now and think it's dumb to finance a car for a teenager, I keep thinking I might have to finance a small part of it if an emergency eats into his car fund. My bankruptcy will still be on my credit report and I worry that I won't be in a position to help him get something reliable.
- If I wanted to change phone providers (not right now, but someday), I couldn't pass the credit check and would likely be required to put down a deposit despite 10 years of paying my phone bill on time.

Bankruptcy is NOT all bad. At the time we filed, we literally did not know how we would buy food or pay the utilities. I'm thankful for the opportunity to say, "Okay, I've totally screwed up and would like another chance." I just wish I would have come to that realization before things got so horrible. Now for another 4 years or so, I have to continue suffering the consequences of my past mistakes. That's the biggest lesson I can think of for anyone in this situation - you can't run from your mistakes, ever. 

If you're considering bankruptcy, please consider the impact on your financial present AND future. If there is any alternative, use it first. And don't file unless you're sure you are ready to change. One of the most helpful resources I found was a forum for people considering or involved in bankruptcy 

For now, I have to live with my crappy credit and do my best to improve it. I'm using Credit Karma to monitor my credit for free as I pay off debt. This month, I'm down to utilizing 10% of my available credit, which is what finally pushed my score above 600. I would definitely recommend Credit Karma, not because they asked me to say so (I'm not that important!) but because the service is really cool and tells you what the problem areas are on your credit report.

Hopefully someday I'll be able to write a post called "My Credit Doesn't Suck Any More."

Edited to add: My friend at Money Ning just posted about getting out of debt without bankruptcy. Go check it out!

Saturday, March 26, 2011

My Son Wants a Bank Account

My son will turn 13 this summer and he has decided he wants his own bank account. He has a small savings account, a ton of savings bonds, and lots of collector coins, but he wants an actual checking account with a debit card. What finance-minded parent can resist?

I wanted to open him a Virtual Wallet account, since watching me is what inspired this whole obsession. Unfortunately, PNC customer service informed me that VW is designed for those 18 and up. I haven't dug deep enough to find out if he can be authorized for a joint VW account in my name, though I plan to keep researching.

I've looked at a few banks that will allow a 13 year old to have a checking account. I've looked at some prepaid debit cards. But I can't find what I'm looking for. He needs an account with online tools to help him budget and save, but he also needs the ability to spend. I'm tired of paying for Wizards 101 currency and books from Amazon - I always threaten to take the money from his savings, but of course I don't. Handing him cash doesn't really mean much when everything he wants to buy is online.

I don't understand why banks haven't recognized the need for teen bank accounts. It's easy to find a savings program for kids, complete with printable coloring sheets, but very little exists for teens. And in our increasingly electronic society, it makes sense to be able to transfer allowance to a kid's account instead of giving him/her the money. Piggy banks are fine for toddlers - not so much for teens.

Anyone know of an option I've overlooked? Am I crazy for wanting to hand plastic to a 13 year-old? Let me know what solutions you've come up with for your kids!

Wednesday, March 23, 2011

I'm No Financial Superwoman

I have practically raised my 21 year-old cousin. Well, I guess that's inaccurate - my grandparents raised him. But before he could drive, I took him to all the places my grandparents didn't want to go, like band practice, the mall, and the movies. I helped him with his homework. I let him stay at my house when my grandparents were being "mean" to him (i.e. making him clean his room). I might not have raised him, but I definitely like to think I contributed.

Cousin recently moved out on his own. He has a good job (makes much more than I do!) and some seriously bad financial habits. The disadvantage of living with my grandparents is that he grew up very spoiled. I remember him whining at age 14 when my grandmother bought him socks because they lacked a Tommy Hilfiger logo. Walmart socks just would not do. My cousin has owned probably 50 cell phones, has ruined more name brand clothing than I'll ever own, and got a Mazda RX-8 when he turned 16.

So now I'm trying to keep him from committing the same financial sins that I did. I was able to convince him of the importance of saving, especially since his income fluctuates each week. For the most part, he lives on his base salary and puts the rest in savings. I felt like I was really teaching him some Important Life Lessons.

And then he calls to say he needs a truck.

Not just any truck. A specific truck with specific features that is going to cost around $20,000. I just died a little inside when I typed that. He's having a hard time getting financing because of his limited credit, though he does have $7,000 to put down and more than enough income to pay for the truck.

I advised him to pay $7,000 cash for a decent used truck, then save the $500 a month toward the one he wants. He thinks I'm a blithering idiot. "I don't want a used one," he tells me. "I can afford this; why shouldn't I get what I want?"

Because you don't need a flashy vehicle. Because that is an obscene amount of money for something you'll be tired of in a year. Because you could lose your job or get hurt or get sick. Because you're going to pay ridiculous interest if you even get someone to loan you money. Because you are 21 years old and not responsible enough to adjust your spending to compensate.

In the end, there isn't a lot I can say. He's an adult, as hard as it is to see him that way, and he has to learn on his own. I don't know why people (including me) refuse to take advice in the areas where it matters most. I could save him so much stress. My dad tried to do the same thing when I was making financial mistakes, but for some reason humans seem hard-wired to ignore the most important and well-intended advice.

As much as I love my cousin, I can't don a mask or an awesome cape and save the day. I can only be there when he is ready to listen, and unfortunately, if he's like me, that day won't come until it's too late. Sigh.

Update: He bought the truck. My grandfather cosigned to save him from 24% interest. *headdesk*

Monday, March 21, 2011

Random Thoughts for Monday

- I noticed a large increase in blog traffic today. Readers are getting here in some strange ways, but mostly through Google searches for PNC Virtual Wallet. I'm glad to know my love of VW is out there for all to see!

- I found $10 in my car this morning. Is it weird that I didn't want to go all the way to the bank to deposit $10? So I ate at Fazoli's for lunch with the money and couldn't even enjoy my food because I felt guilty. Mad at myself.

- On a semi-related note, I got a check for $12.53 when I refinanced my car. I have yet to deposit this check because it seems silly. Guess I should have put it with that $10 I found this morning. How much money is required to justify using a deposit slip? I have no idea.

- Finally got the check from my 401(k) rollover. A whopping $208. Still, that's money I didn't have before. I wish I knew why they won't just send it to ShareBuilder instead of making me the middleman.

That is all. Just a few of the things bouncing around in my brain at the moment!

Oh, and a mutant fire bat. My son drew this for me a few years ago and I keep it in on the wall in my office at work, much to his embarrassment.

Sunday, March 20, 2011

Budget is No Longer a Four-Letter Word

Budgeting used to be one of those things I thought were for other people, not for me. I thought a budget was a good idea for someone who couldn't manage their money, and I was managing mine just fine on my own. Never mind the fact that I was racking up debt and overdrawing my bank account every few weeks!

When I finally realized I was out of control, I broke down and made a budget. And failed miserably at staying within it. Why? It wasn't realistic. I had no trouble organizing my fixed expenses, but I severely underestimated how much I spent on variable expenses because I was in denial. I never budgeted for my pack-a-day smoking habit, for example, because I told myself I was going to quit soon. Yet I kept buying cigarettes and wondering why my perfect (on paper) budget wasn't working.

Now that I have a bank account that helps me track expenses, it's easier to see where my money goes and budget accordingly. If I exceed my limit in a particular category, I have to decide - was the amount I set insufficient, or did I overspend? Usually I find I spent too much.

I only bring home $1075 every two weeks, or $2150 a month, after taxes, health insurance, dental, life insurance, long/short term disability, etc. My agency does not offer a match on their pathetic 403(b), so I don't contribute. My salary sucks! Still, that's what I've got until I start my second job next month.

Here's the breakdown of where my money goes:

  • Car payment: $360 (accelerated to pay off sooner)
  • Groceries/household stuff: $250
  • Gas: $200 (I commute 500 miles a week for work)
  • Roth IRA: $200
  • Savings: $200
  • Utilities: $150
  • Restaurants: $150
  • Credit card payments: $130 (debt snowball)
  • AT&T: $110
  • Cigarettes: $100
  • Car insurance: $90
  • Cable/internet: $60
  • Misc./clothing/other: $150
  • TOTAL: $2150/month 

You'll notice there are lots of places where I could cut expenses. The sad part is, this is my budget after making a ton of cuts already. After I've learned to maintain this budget for awhile, I'll make further changes. I really do need to quit smoking - it pains me to see that $100 being thrown away each month.

So that's what I'm working with for now, and I'll post updates every month to see how I'm doing.

Sunday, March 13, 2011

Joining the Yakezie Challenge

It feels silly since I've only been blogging for a minute, but I decided to enter So Over Debt in the Yakezie Challenge. Yakezie is an awesome network of personal finance sites/blogs. In order to join, I am committing myself to a 6-month challenge in which I'll work to improve my blog, both in Alexa ranking and content, enough to be worthy of membership. In return, I will have an entire community of personal finance minded people to learn from, share with, and get to know. It's pretty exciting!

As I start today, my Alexa ranking is 10,247,988. Meaning that So Over Debt is not a super popular place for people to visit right now. Between now and September, my goal is to break 200,000. To be honest, that seems impossible! But so did getting out of my cycle of overdraft fees, and I've now made it 3 months without paying a single fee to my bank. Like anything else, completing the challenge and becoming a Yakezie member will require hard work.

If you are a Yakezie member checking out SOD for the first time, welcome! I love feedback and would be thrilled to hear from you. Otherwise I'm back to obsessing over my ranking....

Saturday, March 12, 2011

Send Your Finances to Therapy

Thinking about money can be confusing and overwhelming, especially when your money situation is as out of control as mine used to be. No matter what state our finances are in, we tend to think about money in terms of something else we understand. This week, as I've worked on plans to return to providing therapy part time, I realize there are similarities between the way I view my money and the way I work with my clients.

Any time you go to therapy, the first order of business is assessment. The therapist will ask all kinds of questions to find out your history and what brought you to where you are now. Many clients are nervous about sharing their life story with a stranger, and often they aren't completely honest at the first appointment. That's okay - the therapist expects that - but it does slow down the process a little.

Assessment is also the first step in changing your financial life. Before you can make any kind of change, you have to look at where you are and how you got there. That means making a list of all your debts and account balances, which is nerve-wracking, but it also means being honest with yourself about why and how you spend. Until you are able to discern the root of the problem, you won't be able to do anything about it. And just like in therapy, this first step is one of the hardest. It's not enough to say you spend too much or save too little. You need to determine your priorities - both the ones you think you hold and the ones you actually do hold - and the real reasons for the choices you make.

The next step in therapy is planning. Based on what the therapist knows about your situation, s/he will work with you to decide what needs to change and how. This is solely based on your personal goals and your comfort level, and the plan can change throughout the therapeutic relationship. You will determine an overall objective - What do I want to get out of this? - and measurable goals to help you reach that objective.

For example, a depressed person comes to therapy because they want to feel better. That's the objective. The therapist would talk with them about how depression affects them personally (can't get out of bed, isolating from others, crying) and what signs would tell the client that the depression is better (spending time with friends, crying less, getting out of bed when the alarm goes off). The goals, then, are designed to move away from the negative effects and toward the positive ones. The person may work toward going out with friends twice a month at first, for instance, or setting limits on the behaviors they don't like (I'll only hit the snooze button 5 times each morning, then I'll get up).

Financial planning is the same way. Your objective might be to get out of debt, to become a millionaire, or maybe just to stop overdrawing your bank account every month. You can't make up an objective based on what other people do; it has to be personalized or it won't matter enough for you to follow through. Once you've determined your goal, you need some concrete actions to take in order to reach it. These are what Dave Ramsey calls "baby steps." If they are unrealistic or too ambitious, you may get discouraged. Think of small things you can do. Don't say you aren't going to eat at restaurants at all any more, because it's too easy to slip up once and think, Well, I already failed at my goal, so I'll just continue spending. Instead, start by taking your lunch to work on Tuesdays and putting the $10 you would have spent into savings. Once that becomes pretty comfortable, take lunch on Thursdays as well. Before long you'll make a change that is sustainable and doesn't seem too painful.

At this point in therapy, you are working. You've identified the small things you want to do, and you're trying them out. You may discover that some of your small goals could be expanded, or that some of them aren't achievable. That's why I said your plan will change constantly throughout the process. It's all about discovering what works. During this stage, it's important to notice your thoughts and feelings and how they relate to your actions.

For example, last weekend I slipped up and went shopping. Looking back, I realized I was feeling stressed, which led to thoughts like, I deserve to get something new. That's one of those underlying issues that I caught during the assessment phase of my financial journey - I justify spending sometimes because it makes me feel better. A therapist would point that out as resisting cognitive dissonance. Cognitive dissonance happens when your expectations and experience don't match, and you rationalize the experience to match the expectations. As human beings, we don't like that yucky feeling when we do something wrong, so we try to get rid of it. I knew that buying a pair of sneakers and a print for my wall went against my goals, but I tried to convince myself that this was a special circumstance. That way I wouldn't be held accountable for the poor choice I made. Learning to sit with cognitive dissonance and accept mistakes is a large part of any effort to change.

So at this point, you have assessed your situation, made a plan, and worked toward your goals. With minor adjustments along the way, you are actively engaged in the change process. The longer you take your baby steps, the more they solidify into a habit. After awhile, you won't need your plan any more because you're automatically doing what you need to do to meet your goals (personal or financial). In therapy, this would be the point where you feel pretty good and don't need to see a therapist any longer. That's not to say you may not need help again in the future! It just means that you've achieved what you needed to at that moment.

Personally, I'm still working on my financial treatment goals. I've implemented lots of baby steps like automatic transfers to savings, opening a Roth IRA, and reducing expenses, but I haven't been doing those things long enough to feel they are permanent changes. As I learned last weekend, it's all to easy for me to return to old habits if I'm not careful. So I continue working, and this blog serves as my "therapist" to hold me accountable for what I'm trying to do. I know change is possible, because I have seen it over and over with the clients I work with. I just have to make it mine, which is exactly what I tell them to do.

Sunday, March 6, 2011

Weekend Thrift Fail

I usually spend my weekends close to home. I've become really good at finding fun stuff to do without spending a ton of money, like hardcore Apples to Apples tournaments with some of my best friends (if you've never played, you're missing out!) or watching movies on Netflix.

This weekend? Total failure.

My 21 year-old cousin recently got his first place. He has been asking me to help him decorate, and I've resisted because home accessories are one of my biggest weaknesses. This weekend I finally said I'd go.

The good news is that my cousin got some stuff for his house. The bad news is that I bought things too. The damage? $150, between a print for my spare bedroom wall (it was 50% off!) and a pair of shoes (I had a $10 off coupon!).

I am incredibly angry with myself right now. I did want something for the huge blank wall in my spare room, but I wouldn't have died without it. I did not NEED to buy the print no matter how great the deal was. And the shoes - let's just say I have a bit of a shoe problem. I have an eight foot wide closet with four shelves holding nothing but shoes, and I have to double them up because there isn't enough room. To make things worse, I bought sneakers when I already own about 30 pairs.

With both purchases, I justified spending the money in a number of ways. As I said above, both items were purchased below regular price. That's one of the easiest traps to fall into - thinking I'm saving money because of a discount. I could've saved 100% of that money by leaving my debit card in my purse! I also told myself I deserved to buy something new because I had a stressful week. For me, that's dangerous because every week can become "stressful" if that's how I'm allowing myself to spend. I also reminded myself how disciplined I've been and reasoned that spending a little would keep me from going on a spending spree. That is total crap! If I had a dollar for every time I used one of these excuses, I'd have a lot more than I just spent.

It hasn't seemed that difficult to save, but this situation has shown me that I'm not fully recovered from my addiction to stuff. I need to get it together before I regress even more. I decided I would lose money by returning the things I bought (I was about 80 miles from home and those stores aren't available any closer), so I'm going to keep them, but I've reduced my discretionary budget for March to make up the difference. That money will be put in savings instead.

I'm trying not to be too depressed by my mistakes. Time to refocus on my goals and remember this yucky feeling the next time I start telling myself I deserve something.

Friday, March 4, 2011

Extra Income? Yes, Please!

For several months now, I've wanted to find a way to earn extra money. I'm paying my bills, paying down debt, and saving, but my goals seem really far away sometimes. I used to complain about needing more income when I was spending like crazy, but it's even worse now that I'm serious about gaining control of my money.

My work schedule makes it difficult to find a second job. I am the clinical director of a group home for kids with psychiatric and behavioral problems, and there is no such thing as a typical day. I typically work 9 to 5 (or 6 or 7), but I'm also on call every third week AND I commute an hour each way to work. I didn't want to do anything on weekends because that's rare quality time with my son.

This week I had a brilliant epiphany. My agency has a ton of outpatient therapists. They all work different schedules because, instead of receiving a salary, they are paid by the number of hours they bill for therapy. So I wondered if I could go over there a couple nights a week after work, see some clients, and make some extra cash. I asked my boss, and he was fine with it (he knows my salary is pathetic since he's the one who assigned it). I emailed the department to ask if they needed some help in the evenings, and now it's just a matter of filling out paperwork.

Earning potential? Broken down by hourly rate, this will pay almost three times what I make in my full-time job. If I see six clients a week, I'll basically earn an extra paycheck each month. Now that's what I call exciting!

So hopefully my debt is going to get its butt kicked even faster and my savings will increase dramatically. I'll be able to create new goals for myself, like maxing out my Roth IRA (I promised myself I wouldn't until all the CC debt was paid off) and taking my student loans out of deferment. The only part that sucks is knowing I'll miss that extra money if I decide the extra hours are more than I can handle.

Anyone have brilliant advice for juggling a full time job, part time job, housework, a 12 year-old, and 3 dogs completely by yourself?