I’m in debt.
Not outrageously, dangerously in debt, thank goodness. Just a little, especially all things considered (“all things” being the four years in a private college and four years of living in one of the most expensive areas in the US). But it does bother me – especially because none of that debt is toward a home or a business that can grow in value. I’ve got no equity. I don’t think that it’s an uncommon situation anymore, either. It seems like a lot of people are in roughly the same place. We’ve got car payments, student loans, bastardly credit card debt (credit cards rate a nasty descriptor, in my opinion). Some of us do have mortgage payments. Hell, some of us have a couple kids in the mix, too. Now THERE’S an expense for ya (parents… I don’t know how you do it, I really, really don’t).
And yet, talking about money is a little taboo, isn’t it? Our personal financial resources are just that – personal. I’d no sooner ask my friends about their credit card debt than I’d ask what underwear their wearing because it’s none of my damn business.
I’m not asking to share any financial stories here. There are plenty of great personal finance blogs out there (I’ll list my favorites below) and since I’m still in the process of figuring things out for myself, I’ve got no business setting myself up as an expert.
What I can do is share some of the things that are helpful to me. None of this stuff is guaranteed to work for anybody else. Personal finance is, after all, a personal thing. Everybody’s got a differences of opinion on how things ought to be handled, how much debt they’re comfortable with, and everybody’s got a different set of resources to work with.
So with that… here are some things that have been helpful to me. I’ll add things to the sidebar where appropriate.
#1 Online Banking
I pay almost all of my bills online. The only exception is the water bill. (I had some trouble getting the website to recognize the information – that was a year and a half ago, though. I suppose it’s time to try it again.) I used to sit down every pay period, figure out all the bills so I could see exactly where I was financially, then write out the checks. That came to a screeching halt when the bundle of payments I sent out through the office mail room arrived back at my apartment – the mail room clerk had taken my money for postage, but neglected to actually put the postage on the envelopes. My credit card bills were included in that bundle and I got hit with late fees and my APR was jacked up. Lesson learned…don’t trust anybody else with my bills. Take care of it personally. That way, if something goes wrong, I’ll just be angry with myself instead at someone else who just made a mistake.
I happen to have an account with Wachovia, so that’s the online banking system I use. I’m not particularly attached to it – in fact, I’m considering closing the account in a couple months, but for now it’ll do fine. I would imagine that the features it has are pretty standard.
The single most important feature to me has turned out to be the automatic payment schedule. I hated the idea of letting the damn computer take money out of my account. I fought it for years. I cannot tell you why. It’s just one of those irrational ideas I got into my head and wouldn’t let go. It’s especially puzzling since I’ve got my paycheck set up to automatically put a set amount into my savings account every time I get paid. That’s definitely a type of automatic payment. Anyhow, for a couple years, I’d pay as much as I could every month toward my credit card balance and save enough out for groceries, gas, etc. Sounded like a good plan – except that it never worked. I always wound up with some unexpected expense or temptation and I’d reach for the bastardly credit card. So, finally, I broke down and set up automatic payments for my credit card. Every time I get paid, I automatically make a payment toward my credit card balance. I’ve been at it since Christmas, and by God, it’s working.
Warning: The site does take a bit of faith on the part of the user.
The idea behind Mint is to provide a place where you can track all of your accounts and all of your spending. It does this by collecting all your usernames and passwords for various accounts and displaying transactions and balances from those accounts. (This is where the faith comes in…if the site is ever hacked, all your usernames and passwords are in there. Yikes.) The site is free to use. It pays for itself by providing advertising for banking and credit card companies – but they have it set up to take a look at your current accounts and only show you ads for companies that could potentially save you money in interest rates, fees, and rewards. And they sequester those ads to a page titled “Ways To Save” so you have to go check them out voluntarily to see them.
I’ve been using the site since October or so, and I really like it. There are some distinct improvements that need to be made, but because the site is still technically in Beta, I have high hopes that those features will be added. Specifically, I’d like the ability to track add my car payment so I can watch the balance wind down, and the ability to add my student loans. I’m not sure if you can add a mortgage account to Mint. This isn’t an issue for me, but it it was, I’d want that on there, too.
Once I set it up, I very quickly saw that I spent way too much money in a favorite store… ok, fine… it was Ulta. They’ve got this bonus point system – you can save up points and get free stuff, and it sucked me right in. I bought a bunch of Christmas presents there. Anyway, I curbed my trips to Ulta and saved a fair amount of money. I don’t know how long it would have taken me to figure out that my little trips were racking up more than bonus points without seeing it laid out in Mint. I also got an eyeful of just how much I spend on food (groceries, fast food, and eating out). I knew it was a significant expense, but geez.
Mint also helps you set up and stick to a budget. You can set how much you can spend on various transactions, and it’ll track how much you actually spend. If you overspend in a category, it’ll email you and let you know. It even puts the info in a nice little bar graph every month so you can see how you’re doing.
Mint’s easy to use, the interface is nice, and so far it’s been trouble-free for me. If you’re looking for a reality check, Mint might be a good place to try.
I just found recently, so I’m not sure how this is going to work out yet. Seems like a neat idea, though. NetWorthIQ gives you a simple form to fill out to figure out your net worth, then tracks your progress. You can fill out the form as often as you like (every day or week, or month). Every time you fill it out, a point is plotted on your graph, so you can see if your net worth is growing, shrinking, or staying the same or time.
It’s billed as a social networking site, so if you *want* to, you can share your totals. I’m opting not to. My net worth is on my short list of personal info I’d rather not have published on the internet. For me, the real value here is the incentive to stick to the plan of paying stuff off. (Damn those student loans, they are one hell of a debt.) Having the visual indication of progress might be helpful. We shall see.
#4 Like-minded Individuals Online
One of the hardest things about paying off debt is resisting temptation – just one big temptation can really set you back. (Thank you, Captain Obvious, right?) It’s tough. Maybe especially if you live an a particularly affluent area where its seems like everybody around you has nicer clothes, cooler electronics, and a newer car. One thing that can help is contact with like-minded individuals. There are a couple blogs I like to read to help me keep perspective…I’ll add them to my blogroll for you.
Get Rich Slowly – This one includes daily posts on personal finance topics ranging from the pros and cons of paying off a mortgage early to wacky stuff like people voluntarily living on less than $10 a day as a protest against the US government. I’ve found the site to be accessible and interesting.
The Simple Dollar – The posts here are a little more general interest, I think. There are some book reviews, and reviews for websites and services that can help save money (I think I may have found Mint and NetWorthIQ through the Simple Dollar…can’t recall anymore). It’s also readable and the topics have held my interests for quite a while.
Zen Habits – While this isn’t solely a personal finance blog, there are occasional finance-related posts. He most often blogs about tips and tricks for dealing with everyday life. It’s way better than I’m making it sound. Honest.