Posted by: Brian | April 5, 2010

Bad Spending Habits

I have come to realize that I have several bad habits when I spend money. Some of the bad habits are very difficult to combat, especially for a twenty something living on his own away from his family. Over the past few weeks, I identified them and from some of the books I have been reading, I am not alone. Here are my top three bad habits of spending money and what I do to correct them or at least make their impact diminished. Also, this article on Get Rich Slowly has a very simple method to help you overcome yours as well.

Shopping online is way to easy. When I bought my iPhone, I linked my Apple App Store to the phone and listed a debit card on the site. This way I could download the latest games or app and not have to punch in my debit card number every time. I thought this was great and so I did the same for Amazon.com. I never had to think about the purchases because the process was so simplified. It wasn’t until I looked at my monthly bank statement that I realized how much I was spending on just these two sites.

Solution: I removed the debit card number from those sites and forced myself to manually enter in my debit card info. This might not seem like much, but when you have to enter 16 digits on the iPhone it is a big to-do. So far, I have not made any purchases on my iPhone since I started this mainly because I don’t want to enter in those darn numbers.

Buying in splurges to satisfy money cravings. I save and save and save some more but I eventually I would crave money. To satisfy my cravings I would go on these buying splurges after I had been saving for a long time, and these would usually negate half of what I saved. I liked to spend money because it made me feel powerful or like I was a big-shot able to spend where I wanted. I would go into a euphoria every time I went on these buying splurges (proven fact from research…will link when I find the article) and my mind would trigger cravings more often to get back to that same euphoria. Luckily, I wasn’t an addict yet but I just liked the feeling of buying.

Solution: Create a small amount of my budget for spending on frivolous things, like video games, books, or random nights out. This allowed me to control my cravings but also kept me within budget. I knew that I could buy whatever I wanted with my “splurge” money but it never stressed me out because it was factored into my budget. I ended up keeping my sanity and my finances together.

 

Not researching the product AND its intended use. Many times I would see something that would help me in learning a new skill that I had always wanted to learn. I like pictures and want to learn how to take good photos, so naturally I would see a digital SLR camera and want to buy it. I came close several times to doing just this. On other occasions I would not have the will power to stop myself, like when I bought magazines on woodworking because I want to eventually make a bookshelf.

Solution: Each time I saw something that would help me in learning that new skill, I would ask myself two simple questions. First, “Do I need this to learn my new skill?”, and 2) “Do I know the skills to apply this product to?” If I answer no to either question, I put the item down. This helped me this past weekend when I was in the local Borders. I saw a book on digital photography and was about to buy when I asked myself these questions. Since I don’t know how to take really good digital photos, I had to answer “no”to the second question and put the book down.

These are just a few of my spending bad habits and some of the ways I have taught myself to overcome them. I am definitely still working on better ways to control my “cravings” but even if I can reduce the amount I spend each time the better I will feel. What do you do to stop your spending bad habits?

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Posted by: Brian | April 1, 2010

March 2010 Financial Assessment

March was a very good month for me financially, especially from where I started the year. I received all of my refunds, taxes and security deposit from old apartment, and applied them to my credit cards. I managed to pay off two cards (almost), raise my emergency fund to $1000, and made a pretty big dent in the third credit card. I applied the refunds to the two credit cards in the middle of the month, so at the end of the month I was it with a small finance charge. Totally sucks that credit cards are figured on average daily balances and not the ending balances!  Anyways, lets take a look at where I stand now.

January 1, 2010
American Express Credit Card                        $1,291
iTunes Visa Credit Card                                  $2,743
Chase Southwest Credit Card                         $5,520
Bank of America Visa Signature Credit Card    $8,019
Capital One Visa Credit Card                          $10,697
Student Loan                                                  $11,471
Car Loan                                                         $31,293
Student Loan                                                   $35,565
TOTAL                                              $106,558

April 1, 2010
American Express Credit Card                        $2.31 (stupid average daily balances!)
iTunes Visa Credit Card                                  $0
Chase Southwest Credit Card                         $3,619.40
Bank of America Visa Signature Credit Card  $7,860
Capital One Visa Credit Card                         $10,391.83
Student Loan                                                  $11,221.68
Car Loan                                                         $30,041.14
Student Loan                                                  $34,903.05
TOTAL                                             $98,039.23

This month was also a good month for completing my goals. With some of my refund money, I purchased Rosetta Stone: French level 1-5. It did cost a good chunk of change but this will allow me to complete several goals over the year and it saved me about $200 by buying it in one package. I ran a 5K to help save Mt. Diablo, a local nature preserve outside of San Francisco. It was a lot harder than I thought since it was trail running trough creeks and mud. And finally I planned my first camping trip of the year to Lake Sonoma about an hour north of where I live. I hope to do the camping trip during April but might have to push it off because of some training with work.

All in all, March was a great month and not just for me, check out Adam from MoneyRealtionship.com and his success or David from MoneyNing.com. I look forward to many more months like it.

Posted by: Brian | April 1, 2010

Refocus Your Goals

If you have taken a look around my blog, you will see a goals page. On this page I have my list of 2010 goals and crossed off the ones I already accomplished. I recently put this page up using goals that I created back in early January, and already I need to refocus my goals. I have already paid off two credit cards, thanks in part to a large tax refund, and some of the other goals are being completed sooner than I thought. So, over the next week I will redo my goals for 2010 and come up with a new list of items to strive for and accomplish.

Interestingly enough, this is not uncommon for many people who create goals.  Life brings about the unexpected and you have to adjust your goals accordingly. The key is to keep after your goals and don’t get bogged down by things you cannot control. J.D. Roth, author of the blog Get Rich Slowly,  recently wrote about this very thing in his new book Your Money: The Missing Manual. In his book he talks about how goals need to be defined and specific but also have to the ability to be adjustable. I like this approach because then every goal you make is obtainable and, more importantly, doable.

I try to make every goal connected to another goal, but still able to be accomplished independently of each other. I will refocus my goal of “Pay off two credit cards” to “Pay off four credit cards”. This might be a stretch but I am going to give it my best, but it ties into another goal I will be adding, “Live on one paycheck per month.” I get paid about $5000 per month and if I can live on $2500 each month, I will accomplish my goal of paying off four credit cards. By tying the two together, I am more likely to complete each goal because I don’t want to fail at one goal, let alone two.

How do you create your goals?

Posted by: Brian | March 29, 2010

Time Saver: Using a Feed Reader

I have been reading many blogs on personal finance, cooking, sailing and any other topic that interests me. The problem is that there are so many articles that I can’t keep up with all of the different blogs. I would spend almost two hours finding all the latest posts on each blog and then realizing that only about a third of them were relevant. Then I discovered Google Reader which allows me to feed all my blogs into one nice spot. This feed reader will give me a quick glance at the blog without diving into the full site. I can read about 20 blogs over breakfast and pick out the articles I want to save for later or further review. The nice thing is that if I want to post a comment or maybe submit the post to Digg, I can click on the title of the post and the blog page pops up in a new window. This not only saves me a bunch of time during the morning but it also gives me a lot of information by respectable people. You can use almost any feed reader you want as there are tons out there. I like Google Reader because it allows me to see how many posts I get everyday and how many I actually read. Also, Google Reader makes recommendations for other blogs I might like, which has brought me to sites like Cooking with Amy after I selected Epicurious.com’s free blog. A feed reader might not save you money but it will save you time, and saved time can be used to save you money.

What feed readers do you use? Pros and Cons?


Posted by: Brian | March 25, 2010

Knowing is half the battle…

I used to watch G.I. Joe as a kid and every episode ended with the phrase “Knowing is half the battle.” this has always stuck with me, because its so simple yet completely true. I am an avid learner and an even more avid reader. I love to learn new things about almost any subject that will hold my interest. I want to know. I have read books on cooking, automotive repair, history, warfare, finances, personal development, and a large amount of science fiction. My goal is to learn something new every day. I will read opposing points a view just so I knew the other side of the issue.  Good sources of information are the Internet, professionals in the area of interest, and YOUR LOCAL LIBRARY! So many people I know don’t even know where their local library is or have a library card. The local library is a treasure trove of information on every subject you can think of and most of them have free internet access. 
When I learn about a new subject I run a quick search on Bing for relevant topics or authors.  This will give me a quick overview of sources such as blogs, books, magazine articles, and recent news coverage. for example, if I am researching personal finance, I search for blogs and forums on it and make note of them a pad of paper. Sometimes I will search Amazon.com for book titles or magazines on finance. Then I head to the library to check out the books on personal finance. If the books look interesting, I take them home for further study. Now I have two sources of information (books and internet articles) about personal finance, then if I have more questions I will call a local CFP or investment professional. Industry professionals like to talk about what they do, so give them a call and strike up a conversation. You may just benefit from it more than you know (think networking!). By then, I am well versed in the subject, or at least enough to talk to other people about the subject without sounding like an idiot.
You can do this with any subject or topic. The point is to keep learning. Never stop seeking out new information or expanding your knowledge base. There are many situations that I have been able to apply skills and knowledge I learned in the Boy Scouts while backpacking to areas such as planning my finances (i.e. the 3 piles of packing method explained in my old Scout manual applying to wishes, wants, & needs of budgeting). Right now, I am avidly learning about finances and how to become better with them. In a few years, I will be into buying a house and my knowledge on finances will come in handy in getting a loan because I will understand how the market is doing in relation to my mortgage rates. Every little bit of information helps whether you think its relevant or not. 
Knowing is half the battle…

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