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Author: CeruleanDream Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 308363  
Subject: 1st Post/Newbie starter question Date: 6/19/2002 1:36 PM
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Hi Everybody,

I'm relatively new to TMF. I've only been lurking for about a month. I love it.--Finally, a place where people talk about everyday money issues. If only I'd discovered it sooner!

I've learned a lot so far--there's a large stack of credit cards living in my freezer that I've stopped using--the snowball idea is really helpful-- but now it's time to ask my first question: How do I start figuring out how much to pay myself? I usually pay whatever bills are due and then live on whatever's left over but I'm trying to switch over to the "pay yourself first" idea. Where do I start?

Thanks :-)
CeruleanDream
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Author: frissy Big funky green star, 20000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 131151 of 308363
Subject: Re: 1st Post/Newbie starter question Date: 6/19/2002 1:45 PM
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Budget! Budget! Budget!

You need to figure out what your bills typically cost (housing, utilities, car, gas, insurance, food, clothing, entertainment, etc) then figure out how much is going to your debts (student loans, CC's, etc) and see where you can cut back to add to your debt payments.

When I sat down and did my budget, I found that I was bleeding about $150-200 a month eating at places like McDonald's or grabbing something not that great at Circle K. $200 a month! Now that I live closer to where I work, I have a bowl of cereal and save my $2-4/day to go to my credit cards....

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Author: Leviathan Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 131162 of 308363
Subject: Re: 1st Post/Newbie starter question Date: 6/19/2002 2:34 PM
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I've learned a lot so far--there's a large stack of credit cards living in my freezer that I've stopped using--the snowball idea is really helpful-- but now it's time to ask my first question: How do I start figuring out how much to pay myself? I usually pay whatever bills are due and then live on whatever's left over but I'm trying to switch over to the "pay yourself first" idea. Where do I start?

Well, if you're still carrying a lot of credit card debt then you won't be able to pay yourself first because you need to get rid of that anchor that's dragging you down. However, you will need a budget. It will show you what you've got coming in and what you've got going out and will force you to prioritize. If you've paid all the credit cards but you don't have any money for food, then you've done your budget badly. Right now, the only paying yourself you should do is to get a small emergency fund of say, $1000, in the bank in a checking account. This money will cover you when you are working your way out of debt and your transmission falls out of the car. It won't cause new debt because you'll have a small cushion. After that and necessities, put all the money you can on your debt and get rid of it as quickly as you can. If you need help, feel free to post more details and we'll get to work on them :-)

Leviathan

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Author: Catleen Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 131165 of 308363
Subject: Re: 1st Post/Newbie starter question Date: 6/19/2002 2:51 PM
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CeruleanDream:

Do you have a budget and have the money put aside each week/month for gas in your car, eating lunches (remember eating out all the time while at work really reduces your disposable income...)?

By pay yourself first, I take that to mean that you are putting away money every month for some sort of savings plan. I will tell you what I do, I save about 15% of my income every month for savings. (By the way, that is amount is soon to go up, I got a second job for that very reason). I pay my bills and that savings money comes out of my checking account on a specific day for all my savings money. Now, if you are all ready in debt, you might want to start small. Say that you don't have an emergency fund and use the credit cards to pay for things that you know should be budgeted but haven't had the where with all to put into the budget. If that is your case, then I would start saving $20 a month or week and that is your starting emergency fund.

If you all ready have an emergency fund, then I would start some sort of drip or savings and put the money into that.

In other words, this question is impossible for one to answer until we know the specifics.

Catleen



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Author: CeruleanDream Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 131179 of 308363
Subject: Re: 1st Post/Newbie starter question Date: 6/19/2002 4:36 PM
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** Well, if you're still carrying a lot of credit card debt then you won't be able to pay yourself first because you need to get rid of that anchor that's dragging you down. However, you will need a budget. It will show you what you've got coming in and what you've got going out and will force you to prioritize. **

Unfortunately, I am carrying a lot of CC debt which is how I found TMF in the first place. I am working on the emergency fund--$20-25/week.
As for budgeting, I'm not really asking about savings right now. It's more important to get rid of the debt first--although I am having the company matched 6% taken out for my 401k.

I do set aside money for rent each week, for commutation as well. I'm brining bag lunches to work these days & have broken a $4-6/day coffee habit by stashing a box of tea bags in my desk.

**If you've paid all the credit cards but you don't have any money for food, then you've done your budget badly. **

I guess this is the part where I'm stuck. Do people have a specific amount of money they budget for themselves out of each pay check to live on--it seems like such a silly question--that's the amount I'm trying to figure out-- how to find money for the basics once the CC bills are paid?

I know the more specifics you have, the more you'll be able to help so I'll post again when I have that information handy.

Thanks for your help!

CeruleanDream
:-)



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Author: ishtarastarte Big funky green star, 20000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 131182 of 308363
Subject: Re: 1st Post/Newbie starter question Date: 6/19/2002 5:10 PM
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I guess this is the part where I'm stuck. Do people have a specific amount of money they budget for themselves out of each pay check to live on--it seems like such a silly question--that's the amount I'm trying to figure out-- how to find money for the basics once the CC bills are paid?


Yep.

Sample budget. (based on current income and expenses; not taking into account impending lay-off)

Income: $1064 every two weeks (after taxes, 401k contribution and DCAP)

PLUS $161 DCAP contribution*

*DCAP is where they take a pre-determined amount out of my check, pre-tax. Then I pay daycare and submit a receipt for daycare paid, and they refund me what's in the account.

I budget two paychecks a month, which gives me two "extra" checks a year.

So, Monthy Income: $2450

Rent: $920
Daycare: $400
Elec: $ 60 Summer estimate
PGE gas: $ 20 Summer estimate
cable: $ 6
save 1: $ 30
save 2: $ 30
gas, car: $ 20
Phone: $ 80
Internet: $ 20
Tae kwon do$ 65
________________
$1651

save 1 is short term savings (ins, car maint, etc)
save 2 is long term savings (efund)

Leaving $799 for Groceries, ent, eating out, debt payment.

I pretty much go:

$300 - groceries
$ 50 - cat litter, paper product, etc
$250 - debt (min is $100, rest is snowball)
$199 - Ent/eating out/gym membership/misc

Now, I'm spending an awful lot on groceries right now, and I'm still not sure why; I'm not shopping much different than I was in San Diego.

I already know where the "fat" in my budget is to trim when I'm laid off. Cut the grocery bill, reduce debt payments to mins, reduce ent to one outing with kidlet a month ($20-30/mo), cut cable, reduce phone usage, cut internet, buy cheaper cat litter; if I'm not working I don't need daycare, trim electric bill. If that's not enough, cut Tae Kwon Do (or try to make other arrangements.)

So, if we HAD to, I could live on as little at $1420 a month (provided my rent doesn't go up. If I do get unemployment, it's $380/wk or $1520 every 4 weeks. Livable. Tight, uncomfortable, annoying, but livable.

Ishtar




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Author: Leviathan Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 131184 of 308363
Subject: Re: 1st Post/Newbie starter question Date: 6/19/2002 5:26 PM
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Unfortunately, I am carrying a lot of CC debt which is how I found TMF in the first place. I am working on the emergency fund--$20-25/week.
As for budgeting, I'm not really asking about savings right now. It's more important to get rid of the debt first--although I am having the company matched 6% taken out for my 401k.


Honestly, if I were in your shoes I would stop putting money into the 401k altogether. That's not a popular opinion, but it's what I would do to get out of debt that much quicker because I just dislike debt so badly.

I guess this is the part where I'm stuck. Do people have a specific amount of money they budget for themselves out of each pay check to live on--it seems like such a silly question--that's the amount I'm trying to figure out-- how to find money for the basics once the CC bills are paid?

There is a board devoted to budgeting :

http://boards.fool.com/Message.asp?mid=17386526

However, there's no handy-dandy guide to budgeting that I can point you to. Most of us can look at a budget and tell if something is out of whack, but it's much harder to look at one and tell that everything is right. Plus, there's more than one category of "necessity". You need to take care of those FIRST. I don't know about your needs, but mine might look like this :

1) Food
2) Rent/Mortgage Payment
3) Water
4) Electricity
5) Gas

Now, most people can scrape by and pay just on these things from their jobs. When you budget, plan for these first. Now, that might mean a lot of 25 cent boxes of Mac & Cheese for a while. So be it. At least you'll be eating. Now, if this uses up all your money then guess what? The credit cards don't get paid and that's okay in the short run. You have to take care of you first, even if that means you don't pay on your debt. However, I don't want you to be a deadbeat and you don't want to be a deadbeat either. That may mean getting a second or third job for a while so that you have extra money to pay on your debts. Even if you're just paying the minimums, they will pay off eventually (it may be decades). You'll be heading in the right direction. Does that help?

Leviathan

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Author: payumoff Big red star, 1000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 131188 of 308363
Subject: Re: 1st Post/Newbie starter question Date: 6/19/2002 6:13 PM
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I guess this is the part where I'm stuck. Do people have a specific amount of money they budget for themselves out of each pay check to live on--it seems like such a silly question--that's the amount I'm trying to figure out-- how to find money for the basics once the CC bills are paid?



Sounds like more month than money.

You may need to start learning to Live Below Your Means (LBYM)...there's another board here that gives some great tips on how to cut expenses.


When we first started digging ourselves out, we were in the same position. (Some months, it feels like we still are.) If I paid the bills and just the minimums on the credit cards, we were already overbudget without taking regular living expenses into account...regular expenses like food!

The first thing I had to do is quit relying on keeping our finances in my head and start putting everything down on paper where it could slap me in the face everytime I looked at it.

The second thing I had to do is realize that we don't need or deserve everything we think we want. We could do without alot of the things we had.

For us, it required:
*** selling a 3rd vehicle
*** raising insurance deductibles
*** cancelling the newspaper subscriptions
*** selling stuff on eBay and having a garage sale
*** cutting back on groceries and utilities
*** doing away with long distance and going to a prepaid long distance service
*** Quit dining out all the time
*** Quit buying soft drinks
*** Called to get APR's lowered on credit cards
*** Doing without new clothes this past year
*** Getting the best possible deal on our internet service
*** Paying bills online to save on postage

You CAN turn things around. You CAN get out of the debt. It just takes some discipline, some determination and loads of patience.

Congrats on taking that first step...realizing there is a problem and making the decision to do something about it.

Go ahead and post the numbers. There is something liberating about it...for me, it was a relief to finally tell "someone" (a bunch of anonymous internet someones) exactly how bad I'd screwed up and have someone else post that they'd had more debt at one time and were now debt free or nearly debt free. Kinda reassuring.

So welcome to the boards and post the specifics when you can.


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Author: LaTejanaFria One star, 50 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 131191 of 308363
Subject: Re: 1st Post/Newbie starter question Date: 6/19/2002 6:24 PM
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Cerulean Dream:

Get our your spreadsheet! I use mine to play with figures to I can see how different scenarios play out. As many have already suggested, create categories, examine HOW you're spending money, and figure out what can be cut, what needs to be, and what absolutely cannot be.

Here are the categories I use. If I know there's an expense coming up that isn't in the budget, I know exactly how I can deal with it (money from the budget and dip into the money market if absolutely necessary). You'll notice that many of amounts are stable. I can't change the amount of the house, the car, or my insurance (okay, I could if I shopped around some more), so that leaves other expenses to play with.

For example, how much would you have if you pay only the minimums on the credit cards? How about if you bump it up $5, $10, $50, $150? Can you still eat? Will your budget be so tight there's absolutely no wiggle room? Try out different scenarios. This might help you to see the possibilities.

Incidentally, I decided on scenario 2. When I get my raise in Sept., that money will go towards the credit cards.

Budget


House 604.61 604.61
Car 352.02 352.02
Insurance 107 107
Vet Ins 36.06 36.06
MoneyMarket 100 100

Charitable Donations:
Heifer Proj. 10 10
KNME 15 15

House Related Exp.
Greeley Gas 31 31
LPEA 29 29
Phone 35 35
Cable 13.80 13.80
Gasoline 50 50
AREM 95 95

Scenario 1:
Debt: Net income 2151.01 HELOC 200 200 Expenses 1780.86
Discover/MBNA 50 50
Student Loan 52.37 110 Total 370.15

Total: 1780.86 1838.49


Scenario 2:
Net income 2151.01
Expenses 1838.49

Total 312.52

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Author: LaTejanaFria One star, 50 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 131192 of 308363
Subject: Re: 1st Post/Newbie starter question Date: 6/19/2002 6:27 PM
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Sorry, but the columns didn't translate. Those sets of figures following the categories are two columns.

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Author: LaTejanaFria One star, 50 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 131193 of 308363
Subject: Re: 1st Post/Newbie starter question Date: 6/19/2002 6:32 PM
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ONE MORE TIME:

Cerulean Dream:

Get our your spreadsheet! I use mine to play with figures to I can see how different scenarios play out. As many have already suggested, create categories, examine HOW you're spending money, and figure out what can be cut, what needs to be, and what absolutely cannot be.

Here are the categories I use. If I know there's an expense coming up that isn't in the budget, I know exactly how I can deal with it (money from the budget and dip into the money market if absolutely necessary). You'll notice that many of amounts are stable. I can't change the amount of the house, the car, or my insurance (okay, I could if I shopped around some more), so that leaves other expenses to play with.

For example, how much would you have if you pay only the minimums on the credit cards? How about if you bump it up $5, $10, $50, $150? Can you still eat? Will your budget be so tight there's absolutely no wiggle room? Try out different scenarios. This might help you to see the possibilities.

Incidentally, I decided on scenario 2. When I get my raise in Sept., that money will go towards the credit cards.

Budget

House 604.61 604.61
Car 352.02 352.02
Insurance 107 107
Vet Ins 36.06 36.06
MoneyMarket 100 100

Charitable Donations:
Heifer Proj. 10 10
KNME 15 15

House Related Exp.
Greeley Gas 31 31
LPEA 29 29
Phone 35 35
Cable 13.80 13.80
Gasoline 50 50
AREM 95 95

Scenario 1:
Debt:
Net income 2151.01
HELOC 200 200 Expenses 1780.86
Discover/MBNA50 50
Student Loan 52.37 110 Total 370.15

Total: 1780.86 1838.49


Scenario 2:
Net income 2151.01
Expenses 1838.49

Total 312.52


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Author: ishtarastarte Big funky green star, 20000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 131194 of 308363
Subject: Re: 1st Post/Newbie starter question Date: 6/19/2002 6:33 PM
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Sorry, but the columns didn't translate. Those sets of figures following the categories are two columns.

Hi! Love your name!

Anyway, if you want to do columns as a part of a post, you can type < pre > without spaces before starting the colums and </ pre > without spaces to stop it.

Remember to preview the post after that, because a little mistake can make you have you scroll right to read the whole thing!

Ishtar
(trying to be helpful!)

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Author: ishtarastarte Big funky green star, 20000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 131195 of 308363
Subject: Re: 1st Post/Newbie starter question Date: 6/19/2002 6:34 PM
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LoL! Never mind, you knew!

Ishtar

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Author: TMF2Aruba Big funky green star, 20000 posts Old School Fool CAPS All Star Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 131205 of 308363
Subject: Re: 1st Post/Newbie starter question Date: 6/19/2002 8:14 PM
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Hi Everybody,

I'm relatively new to TMF. I've only been lurking for about a month. I love it.--Finally, a place where people talk about everyday money issues. If only I'd discovered it sooner!

I've learned a lot so far--there's a large stack of credit cards living in my freezer that I've stopped using--the snowball idea is really helpful-- but now it's time to ask my first question: How do I start figuring out how much to pay myself? I usually pay whatever bills are due and then live on whatever's left over but I'm trying to switch over to the "pay yourself first" idea. Where do I start?


Hi CeruleanDream!

First of all, welcome to TMF, and to this board! We're very happy that you're with us!

Good for you for wanting to pay yourself first. That's the key to building up savings, emergency funds, and even retirement.

The goal is always to pay yourself what you can afford, and then to increase it when you can--same as with your job---give yourself periodic raises when you're able.

Only you can decide how much to pay yourself of course, and I'd suggest trying for 10% of your net income--if possible. You can then tailor it from there up or down as you see fit. Naturally, the bills have to get paid, but if you're paying yourself first and then the bills are paid, you discover that what you're saving is money that is no longer just disappearing on things you didn't need in the first place. :-)

Good luck with this, and again, welcome!

Tony
...but I still am...

Off2Aruba

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Author: rah1420 Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 131210 of 308363
Subject: Re: 1st Post/Newbie starter question Date: 6/19/2002 9:40 PM
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Honestly, if I were in your shoes I would stop putting money into the 401k altogether. That's not a popular opinion, but it's what I would do to get out of debt that much quicker because I just dislike debt so badly.

I disagree with you on this only because of the added 'spiff' of the company match. That's like found money in your pocket. And you need time on your side, especially when you're fiddling with a retirement. Cut the 401K to the company match but save any additional cuts out of there for last, especially since they increase your taxable income.

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Author: Pennsyltuckian Three stars, 500 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 131236 of 308363
Subject: Re: 1st Post/Newbie starter question Date: 6/20/2002 12:08 AM
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CD,

We took a long time to grasp not only the concept, but also the execution of this "Pay Yourself First" business.

Step one for us ( and you're bound to hear this over and over) was Getting the Debt under control. Now we took the long route. (I love the CC's in the Freezer. Our Credit Counselling service reccomended freezing them in a bowl of water to prevent impulse purchases.) We tried Self Control, and we tried Debt Consolidation, and we even tried Rolling Balance Transfers. When we had tried all those strategies and failed, we had to go lookin for help, and we got it through a not for profit Credit Management Service. We paid them $4 dollars per month, per account. They got our creditors to lower their interest charges so we could start making some headway against all that principle. They also set up a (pretty flexible) monthly automatic debit from our checking acount. We got to pick when the debit happened, and we timed it to fall during the pay period that didn't include the mortgage. That was step one - and it was the cornerstone for our bridge to freedom.

Step two for us (and this is obviously a personal choice) was a realistic financial pledge of support to our church. Seriously, this was the very next thing we did after looking down the long tunnel of debt and finally seeing a glimmer of light. We asked "how much of this money can we reasonably count on being able to give away each month?" How did we come up with the nuimber? Well first of all, we had failed to meet our pledge the previous two years, so we knew we couldn't meet those figures. We basically counted how many times we ate in restaurants (usually charging the meals), and agreed to cut that number in half. That's the amount we decided to give away. It doesn't all go to church. Some goes to the humane society, some to a local theatre group we want to support, some gets dropped into charity boxes or open palms, and some just finds its way quietly into a family or situation where we think it might be of help. I really think this is important.. The universe didn't put us into debt. There's no sense in us taking our troubles out on it.. Step two for us - make a commitment to pay back the cosmos for giving you a chance to wake up in the morning.

Step three for us was retirement planninig. We're both pretty anxious about getting old. The women in my wife's family get veeerrryy old. The men in my family do not. In fact, it's been three generations since a man in my father's family lived to retire. Creepy, right? We had a couple of long neglected IRA's. Some pension funds from a time in our lives when we both worked in a Union, and a collection of life insurance policies. We gathered all the insurance stuff up, and determined just how much protection we had - not quite enough for a box and a hole, so I got a term life insurance policy to protect the mortgage, just in case. That took care of the dead husband issue, now what about the old couple possibilities? Dumped the smokes, (perhaps my best financial decision of all time) - learned to like salads - bought a bike at a yard sale - tried a SlimFast - (not too bad, -95 lbs and counting!). We also started putting 5% of my check into a 401(k) at work. My wife's retirement options were lousey at her job, so we took a pass. We also consolidated all the various pensions and IRA's into a few managable mutual fund families. We finally knew how much we had, and how much of a safety net we had should the worst happen.

Step four was (finally) paying ourselves. We started keeping track of our expenses using Quicken. We were maniacal about it. Even tracked cash spent out of our jeans pockets. For the first time, we saw what we were spending and where. Essentially, we looked at a couple of month's numbers, and asked "How much of this can we live without?". We came up with a figure, then found a money market mutual fund with a very low minimum balance (we use Pax World) and started auto depositing into it. It was hard enough to get to that we didn't use it to by baseball tickets, but easy enough to get to that we could transfer funds into checking when the cash flow turned sour. This was the start of our emergency fund, and the first real savings we'd done since we had all those wedding checks stashed away in 90 day CD's.

I know that the common wisdom says "pay down that debt". It makes sense, of course. The money in our MMFund was returning about half of what the money in our charge accounts was costing. We might have paid them off faster if we hadn't tried to save at the same time. But we found that having the e-fund gave us a financial safety net once we made the comittment to STOP using the cards entirely. Brakes on the car (garage sale find!) medicine for the cats, even this year's Christmas presents came from there, and not from the Visa folks. Watching the balance in our savings go up while our debts went down was a really good feeling, and I think a pretty sound plan.

I'm looking forward to step five, which will be socking all used-to be-debt-service cash away into a real E-fund, start saving for that Hybrid car we've had our eye on, and putting some of what I've learned on the other boards at TMF into action in a discount brokerage account. Oh, and raising my pledge at church. I know a reason to be thankful when I see one.

Peace,
bob






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Author: LuluB Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 131246 of 308363
Subject: Re: 1st Post/Newbie starter question Date: 6/20/2002 9:55 AM
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How I pay myself. First, I make sure my 401K is fully funded, which means that I am sure to contribute the maximum I am allowed (15%). When desperate I lower my contribution to the company-matched 5%. Next, I try to pay myself 10% of each paycheck before paying anything else.

I don't know if you have read "The Wealthy Barber" by David Chilton, but if you have not I recommend you rent it from the library and read it. The other book I recommend is "The Millionare Next Door"

Louise

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Author: Catleen Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 131256 of 308363
Subject: Re: 1st Post/Newbie starter question Date: 6/20/2002 10:58 AM
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Budgeting can be a bit sticky and it certainly is a work in progress! You might want to look at the receipts for the food shopping for the last few weeks and just count that for food right now. I am sure that you will find that you can reduce or cut some items.

I get gas in my car every week, and pay my bills and carry about $10 in case something happens or I want lunch. Yes, I carry my lunch every day and most weeks I don't eat nearly that much.

Catleen

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Author: Leviathan Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 131259 of 308363
Subject: Re: 1st Post/Newbie starter question Date: 6/20/2002 11:22 AM
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disagree with you on this only because of the added 'spiff' of the company match. That's like found money in your pocket. And you need time on your side, especially when you're fiddling with a retirement. Cut the 401K to the company match but save any additional cuts out of there for last, especially since they increase your taxable income.

I agree somewhat, but the plan is not to stay out of the 401K for years, but just to knock a few months or even a year off the time in debt. After getting out of debt, not only can he get the match but he might be able to contribute far more to the account than he could before (and he's out of debt sooner). I just like people getting out of debt quicker, but I doubt it's the end of the world either way (staying in the 401K vs. not contributing more to it)

Leviathan

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Author: snerge One star, 50 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 131279 of 308363
Subject: Re: 1st Post/Newbie starter question Date: 6/20/2002 1:23 PM
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Unfortunately, I am carrying a lot of CC debt which is how I found TMF in the first place. I am working on the emergency fund--$20-25/week.


How much is "a lot of CC debt"? Not knowing that makes it very hard to give any specific advice. I started dealing with my credit cards when i was $25,000 in debt and making just a few thousand more a year than that. What level of constraints you put on yourself financially to pay off your debts depends on how long you need to keep the new plan going. If you have a debt that you can pay off in a year choosing to live WAY below your means might be worth it, but if you're in it for the long haul (like I was) you probably need to work out a more sustainable plan.

The most valuable tool for doing either is figuring out how you spend your money now by writing down everything you spend for 3 months and putting it all in a spreadsheet. Then you can make choices for yourself as to where you want your money to go. Getting amounts other people spend can be helpful to see if you are out of the norm or not but your starting point should really come from where you're at now.

Snerge



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Author: VladTI One star, 50 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 131284 of 308363
Subject: Re: 1st Post/Newbie starter question Date: 6/20/2002 3:42 PM
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Personally speaking, coming up with a realistic budget is the most challeging part of the process. If you find it difficult to get 'real'
figures for where your money is going then i'd look at eithe MS Money or Quicken (I'm a Quicken user).

A lot of financial instutions can download directly into these tools and you'll soon become (painfully) aware of where money is going.

The more advanced versions also contain debt-reduction planners and budgeting tools.

One thing i would say, if you possibly can continue to make 401K contributions then do it, especially if your employer matches - this is free money !!

Vlad
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