I dont save a dime! :( help...

[50stang]

Hi,

I am so new to this site and this type of information that I'm still wet behind the ears.

Ok, I have a few questions.

I am a 28 year old male who lives in southern california who currently makes 20k a year. I'm self employed. I started my small business about 2 years ago. Due to the nature of my business, I could jump to 40k a year with a hand shake, so I dont worry about my income because it will grow with time.

What I am worried about is that I DON'T SAVE A DIME! I have no money in my saving account! How do you save money when you always need it? I save up 50 bucks then I use it to buy a new tire or buy food.

Really, I need some basic saving advice 101 please. I was never taught how to handle money as a kid so I got to do the best I can now that I'm a man, and so far I'm doing a poor job.

Secondly, I currently use Bank of America. I HATE this bank!! I have given this bank almost 600 bucks in over draft charges and other various fees.

All banks look the same to me so how do I tell which is a good bank or a band one? I hear that online banking is good but due to the fact that I run a business I sometimes need to deposit my checks right away.

Ok that's all I can think of for now.

50stang

[sounderella]

Welcome to the site. What I'm doing is making a budget of EVERYTHING I buy/pay for during the month including gas and food. I use mvelopes (google it) Then, anything left over goes to savings....but in my case it's c.c debt. Seems to work out well for me. Sounds like you may need to keep track of what you're spending if you're getting a lot of overdraft charges.

As for banks. Washington Mutual is pretty good. They've cut out a lot of their fees and let you waive one overdraft charge a year.

[AmbitiousSaver]

I second what Sounderella just said. Its the most basic advice but really it does help.

I have used Quicken for years and thought because I did that I knew what my money was going towards and staying on budget so long as it never went towards the red... not so. We just started this and I already feel better cause we finally have a plan.

For banks, also look at online banking. We get reimbursed for ATM fees and everything so we never have to worry about taking cash out.

Our bank has a feature that lets you mail in your deposits or scan them at home for automatic deposit. I was leary at first about the "deposit at home" but its wonderful. You can also send them UPS QuickPost too.

[maat55]

Originally Posted by 50stang

Hi,

I am so new to this site and this type of information that I'm still wet behind the ears.

Ok, I have a few questions.

I am a 28 year old male who lives in southern california who currently makes 20k a year. I'm self employed. I started my small business about 2 years ago. Due to the nature of my business, I could jump to 40k a year with a hand shake, so I dont worry about my income because it will grow with time.

What I am worried about is that I DON'T SAVE A DIME! I have no money in my saving account! How do you save money when you always need it? I save up 50 bucks then I use it to buy a new tire or buy food.

Really, I need some basic saving advice 101 please. I was never taught how to handle money as a kid so I got to do the best I can now that I'm a man, and so far I'm doing a poor job.

Secondly, I currently use Bank of America. I HATE this bank!! I have given this bank almost 600 bucks in over draft charges and other various fees.

All banks look the same to me so how do I tell which is a good bank or a band one? I hear that online banking is good but due to the fact that I run a business I sometimes need to deposit my checks right away.

Ok that's all I can think of for now.

50stang

Your first need is to get on a tight budget. Cut every non essential expense you can. Then, sell things, find side work, deliver pizzia if need be, but get your budget to where you can save 10%.

Save up an emergency fund of 3 to 6 months expenses, after that you can start investing in mutual funds in a roth ira.

Also, you need a small working capital in your checking account. If you hide a few hundred or a thousand dollars in your account, it will stop the overdrafts. Say: 500.00 is 0 when you write checks.

[Ima saver]

You have to learn to pay yourself first before anything else. Save 10% and don't touch it.

[skydivingchic]

You've gotten some good advice. I believe the first step will be to sit down and list out ALL your expenses - don't forget things that don't come due every month like vehicle registration, any subscriptions or memberships, insurances, etc. You'll also want to include some money to save each month for periodic variable expenses like vehicle maintenance, that way things like new tires don't put you in the red. Compare the total of this list to your income. SoCal is a high cost of living area - I know as I'm in San Diego. I have a hard time imagining being able to make it on 20k out here. If your expenses are higher than your income, you'll need to immediately fix that problem - increase your business, get a second job, cut out whatever expenses you can, etc.

After that is addressed, you need to promise yourself that you will pay yourself first from now on and follow through with that promise. Open an online savings account like Emigrant or ING. You should be able to find a savings account paying somewhere around 3% right now. I have an online savings account with Washington Mutual and because I also have a checking account with them, my savings currently pays 3.3%. Put part of your check into this account - 10% is a good rule of thumb.

Establish an emergency fund. An online savings account like I mentioned above is a great place to keep your EF. You have your own business, so this needs to be fairly substantial - like 6 months worth of expenses or more.

You also need to be thinking about a retirement plan. Open a Roth IRA and put 10% of your pay in there. Start now, get in the habit, and give your money lots of time to compound.

That's a lot to think about, but take it one step at a time. Starting with a complete list of all expenses and income. There are some great budgeters on here, so if you are willing to list expenses out for us, you are likely to receive some helpful advice on where you might be able to cut.

[disneysteve]

Originally Posted by 50stang

currently makes 20k a year

I DON'T SAVE A DIME!

I HATE this bank!! I have given this bank almost 600 bucks in over draft charges and other various fees.

Welcome. You've come to the right place.

A few comments...

I can only imagine that surviving on 20K a year is extremely difficult. That is probably just barely enough to cover the basics. Still, as others have said, you need a detailed, to the penny list of all of your expenses. That's the best way to review and see if there is anything you can cut or reduce.

As for the bank, why do you hate your bank? You mention overdraft fees. Sorry, but they aren't the bank's fault. They are your fault. It is your responsibility to not spend more than you have. In fact, that is a pretty basic rule of finance. Right up there with paying your bills on time and never carrying a balance on your credit cards.

[50stang]

Thanks everybody. Yup that is allot of info at one time and what I will do is take it one step at a time.

As for the overdraft charges I guess you are right. I mean, it was my fault it wasn't like B of A stuck me with fees for no reason. I just felt that If I went over 3 or 4 bucks that 35 dollars was a little to high of a fine.

What hit me the most is that I need a least 3 to 6 months income saved up. I know I could feel a lot better if I had this amount stashed away.

Yea, 20k is not a lot to work with in So Cal, but I must admit I had a job that if i work all the hours,lol, I could have made 40k a year. However, I HATED the work, I HATE to punch a time clock, and I HATE to answer to a boss so I quick cold turkey and started a legit business. Its great! I do what I want and I'm free to call my own shots everyday. I'm not a robot and no amount of money would make me bow to a boss or time clock. We only have one life to live and tomorrow is not granted. Take a look around look what happen in China, that could happen anywhere.

Anyway, I realized that I need to learn the habit of knowing what to do with my money once I get it because even if was making 100-150k a year I could still be in the same boat.

I have a buddy who is in the same business, he makes at least 90k a year. He has big corporate contracts all over So Cal, however, some times his bank account looks allot like mine because he spends all his money on stuff he don't need ( Hummer truck, large rental house, ect). I haven't seen his bank account but he is always stressing for money, sometimes he has no money to pay me if he subcontracts the work to me.

So in the end its not how much you make but what you do with it once you get it which is why I am here.

[maat55]

[quote][quote=50stang;167636

What hit me the most is that I need a least 3 to 6 months income saved up. I know I could feel a lot better if I had this amount stashed away.[/QUOTE]



Not 3 to 6 months income, just expenses.

Also, you would do the same thing if you were the bank. You are in controll of who wins that game. Be a big boy and move on.

[tabbycat31]

as for banks, you might want to see if you can find a credit union or community bank.

[Superhuge]

Look into getting a line of credit set up tied to your checking for Overdraft protection at whatever bank you end up with.

[disneysteve]

Originally Posted by Superhuge

Look into getting a line of credit set up tied to your checking for Overdraft protection at whatever bank you end up with.

Why? Why not just stop spending more than you have in your account? I've never understood the need for overdraft protection. Don't write checks if you don't have the funds in your account to cover them.

[50stang]

Disneysteve,


Yea I agree with you on your last post. Everytime a bank teller looks at my account they all push me to get a overdraft protection. I tell them no everytime beccaue it is my faut that I went over. I just felt that 35 dollars was a steep price to pay If i did go over a few bucks.

But like what some of you said, its time to grow up and face the music that I did it to myself. There may be a better bank but my problem will just follow me as I'm just spending more that what I have.

[prosper]

I think that you ought to work at least part time until your business becomes more profitable. This will provide you security and a back-up plan just in case your business does not succeed.

[creditcardfree]

Write down everything you spend money on as you spend it. This will give you an idea about where your money is really going. As a result of that information, you may be able to find areas of spending to cut back on.

Increasing your income would help, but at the same time you need to know what you are spending now.

Save all your change in a jar everyday. At the end of the month, cash it in and save it. You may have $15 -$30! That's more than the dime you have now.

Good luck!

[LuxLiving]

Automate your savings. Most all banks these days have an autodraft feature that you can set up and then forget about it - just remember to subtract it out of your check register!

[50stang]

Originally Posted by prosper

I think that you ought to work at least part time until your business becomes more profitable. This will provide you security and a back-up plan just in case your business does not succeed.

In a way I do have side job. I work in the same industry for a guy I know. He pays me 30 bucks an hour to do his work. But I wont work full time for him because I will then loose time for working on my own behalf.

Regardless, the way the market is going, and as buck gets weaker some jobs just arnt worth even doing at all.


Great ideas folks,

Thank you all

[tripods68]

Originally Posted by 50stang

Disneysteve,


Yea I agree with you on your last post. Everytime a bank teller looks at my account they all push me to get a overdraft protection. I tell them no everytime beccaue it is my faut that I went over. I just felt that 35 dollars was a steep price to pay If i did go over a few bucks.

But like what some of you said, its time to grow up and face the music that I did it to myself. There may be a better bank but my problem will just follow me as I'm just spending more that what I have.

Overdraft protection is good when you "occasionally" spend more than what you have. For example, if you written a check for $50.00 and it bounce (not enough money in your checking) you would have to pay the merchant penalty usually around $35.00 plus bank charges around $15.00 - $25.00. You could pay $50 plus being a few dollars short. With ODP bank only charges anywhere $3.00 to $10.00 per check. ODP save you for paying all the fees. I have ODP link with my savings cost $3.00 per transaction.

[disneysteve]

Originally Posted by tripods68

Overdraft protection is good when you "occasionally" spend more than what you have.

My point is that you shouldn't "occasionally" spend more than you have. You should NEVER spend more than you have. If you (general 'you', not you specifically) can't manage to keep track of how much is in your checking account, which is basic elementary school arithmetic, perhaps you shouldn't have a checking account.

If you do bounce a check, you deserve to get nailed with an overdraft fee. Same goes for late payment fees, credit card over-limit fees, etc.