I rarely cover personal finance, but since this is a lifestyle blog that touches ever other aspect of my life, I thought I’d do a quick Monday post with some personal finance tips and tricks I’ve picked up recently.
After reading Lifehacker and The Financial Diet over the past few months, I’ve really become interested in taking a good, long look at all things money. Specifically, my money. While I’m far from an expert (and my finances are still a bit wobbly), here’s a few things that have helped me get a grip.
- Know what you owe. For all of my student loan people out there, I totally understand what you’re going through. For the longest time, I had a rough (and wrong) idea of what exactly I owed to the banks in my head. I never opened up those statements to see what the remaining balance was. Facing that number was just too scary and overwhelming. But, recently I started a budget (more on that below) and as part of it, I wanted to see exactly how much I owe for my loans, my car, credit card bills, etc., and track it each month. Once I got it all down on paper, it surprisingly felt like a weight had been lifted. Now, I know exactly where I stand, and (bonus) I can celebrate a little each month that it goes down.
- Know what’s coming in and out. AKA have a budget. I’ve always had a loose budget where I told myself I’d spend less than X this month, but I never really stuck to it or made an effort to see where my money was going. Now, I break down my spending into several categories in an Excel sheet (bills, transportation, fun, food, medical, saving) and take time at least once a week, though it’s usually every day, to update it. There are also apps out there like Mint, if you’re into a tech-y approach. Tracking your spending, whether it’s going into your savings or to Taco Bell, and your income doesn’t take much time, but it makes all the difference.
- Consider a balance transfer. I have a meager emergency fund that I’m still building up, so I wasn’t willing to drain it for a recent $1,200 car bill. I did take some money out to pay for the car, but the rest went on my Mastercard. I got the card when I was first out of college, and as such, it had a super high (around 27%) APR. I also have a Discover card with a 15% APR, but I try to keep my available credit on that card low because I use it for work expenses (which are eventually reimbursed, but it can take a bit). Since the Mastercard was essentially paid off, I put the car repair bill on there. But, I don’t want to pay interest as I slowly pay down the balance, so I decided to apply for a balance transfer card that guarantees 0% APR for the first 15 months, and then a much lower interest rate after that. It should end up saving me hundreds in the long run, especially if I add on some of the debt from my Discover card and work to pay it all off in the 15-month timespan. (If you are thinking of doing a balance transfer, make sure it has no or low fees. Mine is 0% APR for 15 months and $0 fees for balance transfers made within 60 days of opening.)
- Keep it manageable. For a while, I was obsessed with paying off debt. That might not sound like a bad thing, but I noticed that month after month I was making aggressive credit card payments only to get to a few days before payday and be short on cash. And then what did I have to do? Use credit cards to get by until my next pay. This was stupid. Do not do this. I now make reasonable payments each month that also leave me with enough cash to last from pay-to-pay (it all goes back to budgeting).
- Know you’re not alone. Sometimes when I look at my debt, it feels so overwhelming. But then I talk to some friends or read some personal finance articles online, and it’s clear that this isn’t only a problem I face, it’s one that impacts most millennials. Debt sucks. But by facing the problem head-on, it definitely makes it a little less scary. Make your payments, try to get that debt down, but don’t drive yourself crazy.