First Real Job...No Idea How to Save

[BuckyBadger]

How's it going? You still with us?

I know it can be a bit overwhelming over here, but people really just do want to help -- they want to keep you from making mistakes that they can see looming but that you might not realize yet that you're walking into...

[Whitechapel]

Yes, I'm still with everyone. I've been busy the last couple of days and I've been avoiding this place a little bit while I cool down.

I think first you need to understand the point of a budget. A budget is a measuring tool so see how well your spending habits align with your goals. You can have a budget that makes it appear that you're savings $500/mo but that means nothing if your spending doesn't actually reflect that.

That said, what you should be doing with your budget, once created, is tracking your spending for each month and at the end of the month totaling up all of your expenses for each category in your budget to see how much you spent in relation to what you budgeted for. Every penny that leaves your wallet needs to be accounted for, and every expense has a category. One thing that was difficult for me in the beginning was figuring out where my expenses should go, but once everything has a place, it's pretty easy and you only need to balance the budget once or twice a month.

Regarding when to pay bills, I pay all mine through my banks bill pay system so I have a record of it all. I pay bills twice a month -- once on the 15th for all the bills that are due in the second half of the month and once on the 30th for all the bills that are due at the beginning of the following month. This way it's easier to track what has been paid and what hasn't. I keep a list of all my bills along with estimated payments with all my budget stuff so I can make sure everything gets paid on time. If you switch to a method like this, you will really have to be responsible about your spending because that means not spending your whole paycheck the day you receive it. It's all about habits, and you *can* change them.

Thanks, this makes sense. I'm still in the phase where I'm seeing how much my expenses will be. I've been labeling all my transactions correctly too, so at the end of the month I can take a look at my spending. I'm trying to save right now but I have around 300 bucks to last me the rest of this week and next (this includes this month's rent and a credit card payment I pre-approved). Then I need to pay $635 on the first for my rent.

Why do you need 3 different accounts (and 2 checking accounts)?

2 checking, 1 savings. Two checking so 1) I can have access to my money anywhere (with Chase) and 2) build up some credit with a credit union so when the day finally comes and I can afford a new car, I can get a better interest rate on a loan. It's just something I've been told that could help me out down the road. The savings would be with the credit union. I'd basically just use the credit union to help me out with a future loan.

I haven't changed much in my spending habits since the last time I posted. I know no one wants to hear this but it's going to be a process and I will get better at it. It just feels meek from my point of view even when I'm doing nothing to help myself. I'm just trying to do what makes sense most financially for a bank account. I haven't gone and done anything yet.

So, where I'm at. I have 300 dollars to budget for the rest of this week and next. So I guess I can begin with this to make it last the rest of the week. My only problem...I dont know how to make it last. So let's come up with a solution to this problem, because even if it wasn't now, I may need to do it again in the future. And as history has proven to you guys, I am not good at making money last. Even $300 might be a stretch. This must include money for groceries and gas.

I talked to my mom and told her I didn't want her money. But if it makes sense to borrow some (not the full $1000 I originally asked for) so I can be alright for a while, then I'd be willing to have that conversation with her. But this should be a LAST resort I guess. Or used to somehow propel myself out of some debt while keeping my head above water.

I should mention that another reason I've been avoiding this site is because every time I look at this site I realize how much I'm being tortured and how it's all me doing it. You guys are doing your part with the advice and how-to's for a first time saver like myself, but ultimately I am my own worst enemy in this. And it just brings me down. I will check back after I get off work, I can't be brought down when I need to be in a good more for a few more hours.

[bjl584]

Whitechapel, I'm going to quiz you and see how much you are learning from being on here.

You said you are trying to improve your credit so that you can get a car loan in the future.

OK, what is your time line for that? What kind of a car are you thinking about purchasing and how much will it cost?

[Whitechapel]

Whitechapel, I'm going to quiz you and see how much you are learning from being on here.

You said you are trying to improve your credit so that you can get a car loan in the future.

OK, what is your time line for that? What kind of a car are you thinking about purchasing and how much will it cost?

My timeline is when I can afford it. I was thinking about a new VW Passat. I'm expecting to spend 22-24,000 on it.

My car is fine for now, but I'm starting to run into little problems with it finally. But a new car is one of the future goals I definitely have.

[disneysteve]

2 checking, 1 savings. Two checking so 1) I can have access to my money anywhere (with Chase) and 2) build up some credit with a credit union so when the day finally comes and I can afford a new car, I can get a better interest rate on a loan.

I'm not really sure what you mean by "build up some credit" with the CU. It is true that CUs tend to have better rates than commercial banks but I don't think you need to be with them for any period of time to get the better rate. It would be the same if you walked in off the street and signed up. At least that's how I think it works. So I wouldn't open an account you don't need currently just because of a possible future need. The more places you spread out your money, the harder it will be for you to keep track of everything and stay organized. Simpler is better.

As for borrowing from your mom, keep in mind that doing so really does nothing to correct your situation. In fact, it might actually have a negative effect. It could take away some of the motivation to alter your spending habits if you get that sudden infusion of cash. You need to learn to live within your means without outside help. You can't borrow your way out of debt. If you can't make ends meet with what you personally bring in, you need to change things so that you can.

Good luck. Keep us posted.

[bjl584]

My timeline is when I can afford it. I was thinking about a new VW Passat. I'm expecting to spend 22-24,000 on it.

My car is fine for now, but I'm starting to run into little problems with it finally. But a new car is one of the future goals I definitely have.

Here is a rule of thumb for cars if you must finance. A car payment should be no more than 10% of your monthly take home and the loan should be no more than 36 months. Can you buy a 22-24K car with your income with the above guideline? If so, then fine. If not, then you need to scrap the idea of a 24K VW and look at something used. Paying cash is optimal, but if you must finance the above rule should be followed.

[Whitechapel]

I'm not really sure what you mean by "build up some credit" with the CU. It is true that CUs tend to have better rates than commercial banks but I don't think you need to be with them for any period of time to get the better rate. It would be the same if you walked in off the street and signed up. At least that's how I think it works. So I wouldn't open an account you don't need currently just because of a possible future need. The more places you spread out your money, the harder it will be for you to keep track of everything and stay organized. Simpler is better.

As for borrowing from your mom, keep in mind that doing so really does nothing to correct your situation. In fact, it might actually have a negative effect. It could take away some of the motivation to alter your spending habits if you get that sudden infusion of cash. You need to learn to live within your means without outside help. You can't borrow your way out of debt. If you can't make ends meet with what you personally bring in, you need to change things so that you can.

Good luck. Keep us posted.

As usual, you're 100% right Steve.

What I need from you guys right now is to give me an idea of what I should be doing besides saving money. In 15 days I can finally sit down and figure out where all my money is going and how to cut down on some expenses, but what can I do in the mean time to help myself out? A good starting place for me might be to budget this $300 I have left. I can at least get some practice with budgeting this little amount.

[Whitechapel]

Here is a rule of thumb for cars if you must finance. A car payment should be no more than 10% of your monthly take home and the loan should be no more than 36 months. Can you buy a 22-24K car with your income with the above guideline? If so, then fine. If not, then you need to scrap the idea of a 24K VW and look at something used. Paying cash is optimal, but if you must finance the above rule should be followed.

I did the math..

Let's say I'm looking at a 24k VW. Divide this by 36 months gives you $666.66 base payment. This is without trade-in or anything down. No interest either.
Let's say I make $2k/month. 10% of that is 200.

So needless to say, this wont work out right now for this specific car. But this is all worthless right now (except for getting a rough idea of how much everything will cost), just spit balling. I have all kinds of debt to get under control first plus school loans.

[disneysteve]

My timeline is when I can afford it. I was thinking about a new VW Passat. I'm expecting to spend 22-24,000 on it.

Please don't take this as a personal attack - it is not meant that way - but you just aren't getting the message we are all trying to give you.

You take home $2,000/month. You have a bunch of debt and are struggling to make ends meet. If you need to replace your car, as Brian said, you should be borrowing for no more than 36 months with a payment of no more than 10% of income. For you, that means $200/month for 3 years. That would get you a $6,500 loan at 5%. You need to get much more realistic about what is affordable to you.

[Whitechapel]

Please don't take this as a personal attack - it is not meant that way - but you just aren't getting the message we are all trying to give you.

You take home $2,000/month. You have a bunch of debt and are struggling to make ends meet. If you need to replace your car, as Brian said, you should be borrowing for no more than 36 months with a payment of no more than 10% of income. For you, that means $200/month for 3 years. That would get you a $6,500 loan at 5%. You need to get much more realistic about what is affordable to you.

Please see the above post.

A new car is not necessary right now, nor is it feasible. My car has barely 60k miles and I bought it brand new. I can wait on a new car, it's just something I'd like down the road. Plus it looks like I'll be sinking some money into car repair, mine is making noises now.

[disneysteve]

In 15 days I can finally sit down and figure out where all my money is going and how to cut down on some expenses, but what can I do in the mean time to help myself out? A good starting place for me might be to budget this $300 I have left. I can at least get some practice with budgeting this little amount.

No need to wait 15 days to start cutting expenses. You can do that immediately. The sooner the better.

You mentioned that the $300 needs to cover groceries and gas for the next 2 weeks. Aim to not eat out at all during that period. Cook your meals at home. Brown bag your lunch. And try to use up any food items you already have in the pantry and fridge/freezer first before buying new stuff.

As for gas, pay attention to which stations in your neighborhood tend to have the lowest prices. You can also check gasbuddy.com, for local prices. Pay cash. And limit your driving to what is necessary for work. No going out with the car just for fun - burns gas and probably gets you to somewhere where you'll end up spending money. No recreational shopping - don't go hang out at the mall because chances are you'll end up buying something you don't really need.

[disneysteve]

Please see the above post.

A new car is not necessary right now, nor is it feasible. My car has barely 60k miles and I bought it brand new. I can wait on a new car, it's just something I'd like down the road. Plus it looks like I'll be sinking some money into car repair, mine is making noises now.

I was posting at the same time. Sorry about that.

If your car needs some work, shop around and get quotes from a couple of shops. And don't go to the dealership. That is almost always the most expensive place to get service. Assuming the car is otherwise in good shape, you shouldn't need another car for a long time. And it should be a used one when the time comes. We bought both of ours used. I've had mine for over 13 years and my wife's for over 9 years.

[bjl584]

Please see the above post.

A new car is not necessary right now, nor is it feasible. My car has barely 60k miles and I bought it brand new. I can wait on a new car, it's just something I'd like down the road. Plus it looks like I'll be sinking some money into car repair, mine is making noises now.

I wasn't attacking you or picking on you. But, I can see you falling into a trap that so many people do. They buy too much car and it financially buries them. If your current car exploded or was totalled in a accident, what would you do? Would you buy a nice used car in the 6000 dollar range or would you go and buy your 24K Volkswagen?

[Whitechapel]

No need to wait 15 days to start cutting expenses. You can do that immediately. The sooner the better.

You mentioned that the $300 needs to cover groceries and gas for the next 2 weeks. Aim to not eat out at all during that period. Cook your meals at home. Brown bag your lunch. And try to use up any food items you already have in the pantry and fridge/freezer first before buying new stuff.

Only thing is I have barely anything in the fridge. I can survive tonight. But I haven't been buying anything other than drinks and lunches since I'm moving on Friday. I'll use up what I have left to save cash. I have some stuff like mac and cheese I can munch on.

As for gas, pay attention to which stations in your neighborhood tend to have the lowest prices. You can also check gasbuddy.com, for local prices. Pay cash. And limit your driving to what is necessary for work. No going out with the car just for fun - burns gas and probably gets you to somewhere where you'll end up spending money. No recreational shopping - don't go hang out at the mall because chances are you'll end up buying something you don't really need.

I also check gas prices. GasBuddy is one of my favorite apps on my Droid. I do limit my driving, but 100 miles back and forth each day is gas heavy. Every 3-4 days I need to fill up. This will change drastically once I move on Friday. I've just been hanging with friends or by myself lately. I haven't really gone shopping other than for groceries.

[Whitechapel]

I wasn't attacking you or picking on you. But, I can see you falling into a trap that so many people do. They buy too much car and it financially buries them. If your current car exploded or was totalled in a accident, what would you do? Would you buy a nice used car in the 6000 dollar range or would you go and buy your 24K Volkswagen?

I'd be screwed. A car accident is one of my biggest fears right now. Michigan is an "at fault" state too.