First Real Job...No Idea How to Save

[riverwed070707]

I know nothing about mint.com but keep in mind that if you are paid bi-weekly, your monthly income does not equal 2 checks. That would only be 4 weeks. For your monthly income, multiply your bi-weekly check times 26 then divide by 12.

So if you earn $1,000 every 2 weeks, that's $26,000/year. Divide that by 12 and you get $2,166.67/month.

Alternatively, base your budget on two paychecks a month and then consider yourself two paychecks richer at the end of the year. When you have a 3rd pay period in a month, put that whole amount toward a goal ... savings, debt, whatever. Easy way to save if you just budget without that money.

But yes, your budget should be based on montly and not per pay period because most bills only come due once a month.

[Whitechapel]

Here is my situation on mint.com:


As far as monthly expenses go, here is what is typical:
$160 - Super secret feel good expense every 2 weeks.
$50 - Paying back the mom. This is every check.
$635 - Rent (excluding utils)
$50/credit card - Payments of around $50 for each credit card (unless someone suggests a different amount)
$40 twice a week (for now) - I fill up typically 2-3 times a week. This will change once I move on the 18th and am not commuting 100 miles a day back and forth.
$50-60 for groceries - This is only for one week and using a model of what I eat now. I pretty much only eat out right now at fast food, it sucks. And I've been eating more at night since I only eat a burger and a drink for lunch, so I come home, do my thang, then get hungry later on.
$100 - One time payment that I owe my friend. Once I pay him back his hundred, I will only be in debt to my mom (the 50 dollars month above). I should be paying him this next Friday when I get paid.
$50-100 a month for beer/going out. This is an estimate. I haven't been tracking my finances long enough to know what a good amount for "beer and going out" is.

I should also mention that a lot of what I've been bringing in has been put towards paying back my friends. I got in a tight spot a couple times when I wasn't working, and I had no savings. So I had to borrow from friends.

I'd like to start saving for Christmas too, I'll need around 400-500 dollars total for my mom's present. Plus I'll buy presents for my family and some of my close friends. The more I like them, the more I'll want to spend. I'd say there'd be a limit of around 50 bucks for friends and maybe more for family. If that means cutting costs on stuff, then so be it. I love my mommy and want to buy her a nice TV as a family gift. I'd also like to begin saving money each check so in a couple weeks I can go on a little shopping spree. I'm talking new work shoes and clothes. If I get a new pair of shoes I love, a pair of pants, and a shirt or two I'd be extremely happy. However, I want to have a little more expensive taste in clothes, so I'd be willing to save a little more. I'm not fashionable at all but I hope to become! I need a girlfriend already, haha. I'd be OK waiting a month or two before I go shopping.
$165 doctor's fee every couple of weeks for a couple weeks then once every few months once we're good.
I will add more to the above list as it comes to me.

[riverwed070707]

Here is my situation on mint.com:


As far as monthly expenses go, here is what is typical:
$160 - Super secret feel good expense every 2 weeks.
$50 - Paying back the mom. This is every check.
$635 - Rent (excluding utils)
$50/credit card - Payments of around $50 for each credit card (unless someone suggests a different amount)
$40 twice a week (for now) - I fill up typically 2-3 times a week. This will change once I move on the 18th and am not commuting 100 miles a day back and forth.
$50-60 for groceries - This is only for one week and using a model of what I eat now. I pretty much only eat out right now at fast food, it sucks. And I've been eating more at night since I only eat a burger and a drink for lunch, so I come home, do my thang, then get hungry later on.

For budgeting purposes, you need to look at these numbers in monthly totals. For example your gas line should be how much you spend a month, not each time you fill up. You are also missing a lot -- eating out and groceries should be separate, where are your beer/going out expenses accounted for? Do you not have internet? TV? Phone? No car payment?

[Whitechapel]

For budgeting purposes, you need to look at these numbers in monthly totals. For example your gas line should be how much you spend a month, not each time you fill up. You are also missing a lot -- eating out and groceries should be separate, where are your beer/going out expenses accounted for? Do you not have internet? TV? Phone? No car payment?

I included groceries with eating out. I didn't know what should be grouped together and what should be separate, any advice people?
I didn't account my beer/going out expenses yet, it's something I need to think about for a monthly expense. Also, it might vary depending on the month. I live in Ohio (moving to Michigan), so we get the midwest seasons. I'll be going out less in the winter, but I still want to be able to if I want.
I live with a friend for free right now, although I do help pay half of all the bills. He hasn't given me the expenses for this month yet, we're waiting on a gas bill to come in. My mom pays my cellphone bill. And I already paid off my car but I really do need to begin saving, I'd like to buy new tires for it and have it in the shop for some repair (it makes a squeaking noise when I break, so it's something I should have done somewhat soon I guess).

Also I should mention two other possible accounts:
1) My old heat utility bill. I forgot to shut it off and I didn't pay for months on it. Now I owe probably around 200 bucks, I will check when I get home. So I'll need to get this paid off quickly. I'd like help figuring this in to my budget.
2) I have an old Charter One account. They overdrew my account on a bill pay to eBay which I did not authorize. I called in to argue this and the jackass told me I needed to go into a branch to take care of it. I told him I work M-F and can't go on lunch, and he said there was nothing he could do for me. Exactly why I left the account in the negatives and refuse to go back.

[riverwed070707]

You will always have two kinds of expenses - fixed and variable. You still need to budget your variable. It's usually best to estimate on the high end. For example, your utilities will vary month to month but you should budget for what you typically pay in the coldest months. Alternatively, check to see if your utility has a budget billing option that will let you pay a set amount each month.

For things like beer, you should probaby just have an "entertainment" or "fun money" line and account for that there. I would say something between $100 and $200 is pretty average. That may or may not work for your budget and lifestyle, but it gives you a ballpark to start from.

[Whitechapel]

You will always have two kinds of expenses - fixed and variable. You still need to budget your variable. It's usually best to estimate on the high end. For example, your utilities will vary month to month but you should budget for what you typically pay in the coldest months. Alternatively, check to see if your utility has a budget billing option that will let you pay a set amount each month.

For things like beer, you should probaby just have an "entertainment" or "fun money" line and account for that there. I would say something between $100 and $200 is pretty average. That may or may not work for your budget and lifestyle, but it gives you a ballpark to start from.

Awesome! Thank you! I added to the above post too, it may or may not interest you.

Also...I asked my buddy about a high yield savings account. His response was: "Bad idea.... 1% yield is pathetically low, you won't even keep pace with inflation. Invest in gold, silver, energy, and maybe some big name stocks with dividends like Lockheed Martin or Boeing." Thoughts?

[toys]

zero exemption

I used to have a real mooch for a boyfriend. No matter how hard I tried to save money, he would undoubtedly avail himself of my personal ATM card and deplete my hard-earned savings. We also shared an account, a checking account, into which we deposited the majority of our money. However, I also had a savings, a fairly tiny, rainy day type fund. Most weeks, I may have added as much as $20, nothing serious, just progress.

Or so I thought...

Every time I knew the balance should be substantial enough to consider some major purchase... I would check it and discover he had ATM-drained it all, again. Damn video games!

So, I had to find another way to save. I decided to use the IRS. I know, I know, this is probably wrong on a number of levels, but I was young (as if that's a valid excuse). On my W-4 at work, I claimed the minimum amount of exemptions, zero, and had them take an extra $20 (or so) from each check. I did this so that the maximum amount of taxes would be deducted from my paychecks. Then, at the end of the year I had a very healthy refund, enough to finally consider a serious purchase, like a real vacation, a down-payment on a new home, etc.

If you never actually had the money to begin with... you don't really miss it.

[BuckyBadger]

Awesome! Thank you! I added to the above post too, it may or may not interest you.

Also...I asked my buddy about a high yield savings account. His response was: "Bad idea.... 1% yield is pathetically low, you won't even keep pace with inflation. Invest in gold, silver, energy, and maybe some big name stocks with dividends like Lockheed Martin or Boeing." Thoughts?

Thoughts? He's an idiot.

Precious metals and individual stocks are things that you do as a small part of an overall investment strategy. You should work on getting emergency money in some sort of saving account and paying your bills and paying off your debt. Then you should work on retirement and you should work on nice long term investments like index funds.

Only then, when you've got everything sorted out and you're looking for your next step, do you play around with gold, silver, and individual stocks. If everything is in order, sure, go out and buy a few grand of some fun stock. But as far as where you are RIGHT NOW, that is some of the worst advice I've ever heard in my life.

[disneysteve]

I included groceries with eating out. I didn't know what should be grouped together and what should be separate, any advice people?

At the most basic level, you need to separate Wants from Needs. Buying groceries is a need. You have to eat. Dining out is a want. Luxuries and necessities must be separated. That doesn't mean you can't have and enjoy luxuries. You just need to recognize that they are, in fact, luxuries. When times are tough or money is limited, it is the luxuries that need to get trimmed or eliminate to make ends meet.

So dining out is a luxury while buying groceries is not.
Buying beer is a luxury while paying the electric bill is not.
Taking a vacation is a luxury while putting gas in the car to get to work is not.

All of that said, I also agree with riverwed. Even your Needs may not be fixed. While your rent may be the same from month to month, your utilities may not, for example. For budgeting purposes, you need to come up with a reasonable monthly number based on past experience. For utilities, I'd use the highest number from the past year to be safe. If you come in under, that's great. You'll have a little surplus to cover other things. Since you are just starting the process, there may be things that you really can't estimate accurately right now. That's okay. Do your budget for the next month and see how it goes. Then adjust as needed when you do your budget for the following month and so on down the line month after month.

Don't forget to add in expenses that aren't paid monthly, like insurance premiums, car registration, etc. For example, if car registration is $60/year, put it in the budget at $5/month.

[riverwed070707]

Here is my situation on mint.com:


As far as monthly expenses go, here is what is typical:
$160 - Super secret feel good expense every 2 weeks.
$50 - Paying back the mom. This is every check.
$635 - Rent (excluding utils)
$50/credit card - Payments of around $50 for each credit card (unless someone suggests a different amount)
$40 twice a week (for now) - I fill up typically 2-3 times a week. This will change once I move on the 18th and am not commuting 100 miles a day back and forth.
$50-60 for groceries - This is only for one week and using a model of what I eat now. I pretty much only eat out right now at fast food, it sucks. And I've been eating more at night since I only eat a burger and a drink for lunch, so I come home, do my thang, then get hungry later on.
$100 - One time payment that I owe my friend. Once I pay him back his hundred, I will only be in debt to my mom (the 50 dollars month above). I should be paying him this next Friday when I get paid.
$50-100 a month for beer/going out. This is an estimate. I haven't been tracking my finances long enough to know what a good amount for "beer and going out" is.

I should also mention that a lot of what I've been bringing in has been put towards paying back my friends. I got in a tight spot a couple times when I wasn't working, and I had no savings. So I had to borrow from friends.

I'd like to start saving for Christmas too, I'll need around 400-500 dollars total for my mom's present. Plus I'll buy presents for my family and some of my close friends. The more I like them, the more I'll want to spend. I'd say there'd be a limit of around 50 bucks for friends and maybe more for family. If that means cutting costs on stuff, then so be it. I love my mommy and want to buy her a nice TV as a family gift. I'd also like to begin saving money each check so in a couple weeks I can go on a little shopping spree. I'm talking new work shoes and clothes. If I get a new pair of shoes I love, a pair of pants, and a shirt or two I'd be extremely happy. However, I want to have a little more expensive taste in clothes, so I'd be willing to save a little more. I'm not fashionable at all but I hope to become! I need a girlfriend already, haha. I'd be OK waiting a month or two before I go shopping.

I will add more to the above list as it comes to me.

Based on this addition, I really feel like you're not seeing the bigger picture. You're trying to take 3 steps at a time. You're also already talking about increasing your frivolous spending while saying what you want is to pay down debt and build a secure future. You can't afford to spend $1000+ on Christmas this year. Your mom does not need a $500 TV and if she loves you too I would assume she'd rather see you getting your life together than spending money on her and just treading water on your finances. Do these steps in this order:

1) List your expenses (how much you pay on everything monthly)
2) List your debts (how much you pay on everything monthly, not per week/paycheck, etc). include total balances and interest rates.
3) Set goals. How much can you afford to put toward debt? How much can you put toward savings? How much should you be contributing to retirement? These should be longer term, not just wanting new clothes and a spendy christmas because truthfully I think both of those ideas shoudl be scratched until you get the rest of your spending under control. Condsider this your first big test -- you want to learn to save, so tell yourself no and don't splurge on these items.
4) Get a 6 month e-fund in place. You need 6 months worth of expenses in savings that is not to be used for anything but *needs* (see Steve's post above)
5) After all of these other things are in place (several months/years from now), then you can start thinking about investing. Right now it's irrelevant. You can't invest if you don't have money.

You've done a good thing by coming here, but slow down and take it one step at a time.

[Whitechapel]

Thoughts? He's an idiot.

Precious metals and individual stocks are things that you do as a small part of an overall investment strategy. You should work on getting emergency money in some sort of saving account and paying your bills and paying off your debt. Then you should work on retirement and you should work on nice long term investments like index funds.

Only then, when you've got everything sorted out and you're looking for your next step, do you play around with gold, silver, and individual stocks. If everything is in order, sure, go out and buy a few grand of some fun stock. But as far as where you are RIGHT NOW, that is some of the worst advice I've ever heard in my life.

An idiot might be going a bit far, I think he's just speaking from his viewpoint. And from his view, he's pretty well off right now, and he hasn't even graduated college.

So what are some good ideas for a high yield savings while I try to get back on my feet financially? Someone mentioned Amex. I have a savings account with my bank account, I'm not sure what the interest rate is. And I have to go into the branch to transfer savings, if that helps. I think not having instant access to the money might be good for right now, but maybe not something I want down the road once I'm financially sound.

[elessar78]

At the outset, I wouldn't worry too much about interest rates for savings accounts. You won't get rich off the interest off your savings account at the beginning.

At the beginning it's about behavior and changing one's attitudes about money. You're building a base for your personal finances, which is done with some liquid cash in the bank (heck, it could be frozen in ice in your freezer). The idea is that if something happens you don't need to take a step backwards.

[Whitechapel]

At the most basic level, you need to separate Wants from Needs. Buying groceries is a need. You have to eat. Dining out is a want. Luxuries and necessities must be separated. That doesn't mean you can't have and enjoy luxuries. You just need to recognize that they are, in fact, luxuries. When times are tough or money is limited, it is the luxuries that need to get trimmed or eliminate to make ends meet.

So dining out is a luxury while buying groceries is not.
Buying beer is a luxury while paying the electric bill is not.
Taking a vacation is a luxury while putting gas in the car to get to work is not.

All of that said, I also agree with riverwed. Even your Needs may not be fixed. While your rent may be the same from month to month, your utilities may not, for example. For budgeting purposes, you need to come up with a reasonable monthly number based on past experience. For utilities, I'd use the highest number from the past year to be safe. If you come in under, that's great. You'll have a little surplus to cover other things. Since you are just starting the process, there may be things that you really can't estimate accurately right now. That's okay. Do your budget for the next month and see how it goes. Then adjust as needed when you do your budget for the following month and so on down the line month after month.

Don't forget to add in expenses that aren't paid monthly, like insurance premiums, car registration, etc. For example, if car registration is $60/year, put it in the budget at $5/month.

Awesome, thanks man! I will definitely sit down tomorrow and hammer out a budget. I'll do it during my down time at work...I've been putting it off since yesterday.

At the outset, I wouldn't worry too much about interest rates for savings accounts. You won't get rich off the interest off your savings account at the beginning.

At the beginning it's about behavior and changing one's attitudes about money. You're building a base for your personal finances, which is done with some liquid cash in the bank (heck, it could be frozen in ice in your freezer). The idea is that if something happens you don't need to take a step backwards.

Alright, that sounds good. I understand.

Also, I added to the list of expenses.

I haven't started a budget because I don't knew where to start. Where is a good place to begin?? Any tips?

[Whitechapel]

Based on this addition, I really feel like you're not seeing the bigger picture. You're trying to take 3 steps at a time. You're also already talking about increasing your frivolous spending while saying what you want is to pay down debt and build a secure future. You can't afford to spend $1000+ on Christmas this year. Your mom does not need a $500 TV and if she loves you too I would assume she'd rather see you getting your life together than spending money on her and just treading water on your finances. Do these steps in this order:

1) List your expenses (how much you pay on everything monthly)
2) List your debts (how much you pay on everything monthly, not per week/paycheck, etc). include total balances and interest rates.
3) Set goals. How much can you afford to put toward debt? How much can you put toward savings? How much should you be contributing to retirement? These should be longer term, not just wanting new clothes and a spendy christmas because truthfully I think both of those ideas shoudl be scratched until you get the rest of your spending under control. Condsider this your first big test -- you want to learn to save, so tell yourself no and don't splurge on these items.
4) Get a 6 month e-fund in place. You need 6 months worth of expenses in savings that is not to be used for anything but *needs* (see Steve's post above)
5) After all of these other things are in place (several months/years from now), then you can start thinking about investing. Right now it's irrelevant. You can't invest if you don't have money.

You've done a good thing by coming here, but slow down and take it one step at a time.

OK, sorry! I will do as you ask tomorrow. Im packing my lunch so I'll have some time to work on it at least. Bed time soon now.
What is an e-fund?

[BuckyBadger]

What is an e-fund?

E-fund (or EF, as commonly seen 'round here) is "emergency fund." It's 3 to 6 months of basic living expenses that you keep in very liquid assets, usually cash in a savings account.

Your EF amount should be calculated by considering your basic necessities -- so only what you couldn't cut if a true emergency suddenly hit you. So it would include rent and utilities, but not eating out or, say, an elaborate smartphone plan. It would include only minimum payments on debt.

As far as how many months you want, that depends on how comfortable you are with your job security, what other emergency resources you have, if you are the sole wage earner, how stable you think your job is, etc. Some people want a full year available in cash. Most are comfortable with between 3 and 6 months.

You have this money so if something happens -- a true emergency -- you can survive for a while without having to go back into debt. Ideally, you have enough so that if you were to lose your job or have a medical emergency you could pay all your bills and continue to live in your residence, pay your utilities, drive your car, and eat until you can get a new job.

Personally, I keep about 3 months in cash in a savings account. We are comfortable with this because we are a dual income household and we have other assets that we could tap in am emergency -- it would just take a couple of weeks to get to it. If we had fewer assets or only one income we would probably have twice as much in our EF.

Remember, the point of an EF is NOT return on your investment, so you aren't going to try to invest it in something high risk/high reward. You want it in something SAFE and ACCESSIBLE, which is usually -- yes -- a crappy low interest savings account.