Dawn's Evolution

I just had the weirdest, scariest weekend ever. My week or the last few weeks have been a bit stressful with work and school exams coming up, but I am trying to maintain a bit of positivity through it all.

I do have some good news though. As of this month I have reached my tuition goal!
Yep, it's at 100%. I am so happy with it.
I also have a small buffer or emergency fund saved up that I will be fattening.

Right now I am realigning my goals to add on some fun/play time. It's been a while since I have done anything just for fun and I have yet to set foot outside my country.
I plan on traveling, either spending a week abroad or spending a weekend outside the city just having fun.
I'm setting up a budget, I'm hoping to vacation in either September or October. I have to start my internship in November and want/have to be well rested by that time.
At this point my budget is not air tight, most of the amounts are guesses and I will be spending the next month ironing out the needed details.

What do I need:

• To renew my passport. I have been a procrastinator, this is bad as it could take me a few months to get this in order.
  
• Ticket costs of ~$400.
• Play money of ~ $300.
• No hotel cash needed as I have friends and family there who can and want to take me in.

I plan on staying a week, packing lightly and spending as much time outside as possible.
I'm being intentionally vague as to where I am going, but there will be further details when it is all set in stone.

Part of the Carnival of personal finance
I had the rudest awakening this weekend.
Nothing is certain, I could lose my job just as easily as everyone else.
I always felt like I was on the outside looking in, not really feeling the crisis, just waiting for it to blow over.
And then I woke up.
The crisis is here and it affects me as well.
So I am making my emergence fund my priority and pushing paying back my debt back a bit.
I can do this because I don't have to pay interest on my debt.
I'm not sure how much my E-fund needs but I will be feeding it cash every month from now on and not set a limit.

For February I put 500 in savings and 500 in the E-fund.
For March I will put 900 in my school account and 300 in my E-fund account.
I don't have any more books to buy so I expect it to be a frugal month for me. The only thing that could set me back would be my sisters birthday, I have a set amount that I am willing to spend on her gift and am now on the lookout for that special something.

At the end of the month I will placing all my extra cash into my extra account, the one I keep forgetting to feed even though I absolutely have to.

That is the plan for now.
If I lose my job now I am in deep trouble, loosing my job would mean no more school tuition, books or anything. My schoolfund is way too small right now.
But my E-fund will be my priority, while I plan on continuing my set saving plan for my tuition.

THE HOME PURCHASE PLAN (from Dimple's)

The home I want:

Price: $0 -> $80,000

Down payment: $20,000

Ideal Monthly Mortgage (including taxes, PMI, HOA, & hazard): $1000 (max)

Location: close to the city(preferably a gated community)

Bedrooms: 3

Bathrooms: 1+1/2

Square footage: ?

Year Built: New (custom)

NEEDS/WANTS:

* Quiet neighborhood
* Quick access to major highways
* Close to where I work
* Nice neighborhood
* Gated community
* Hardwood flooring

Posted in Carnival of Personal finance

Growing up most children learn about money from their parents. Some parents take the time to show their kids how to handle money, how to save etc, while others just lead by example.
My mom has always been a frugal woman. Well she had to be, she was a single mother raising 3 daughters.

1. Keep track of your income and expenses
She had a low salary and still tried to take of us on her own, she used to write down all of her expenses on notepads.
I can remember her notepads on the side table, she would make columns and write a description and amount each day. She would close it of at the end of each month and sit with a calculator before she would start on the new month. I always admired her drive and her ability to stick to this habit as I most of the time do not know where some of my cash is going. I need to start tracking my money like my mother did.

2. Generate multiple streams of income
My mother her strategy for getting by was generating multiple streams of income. She would bake cookies or cakes to sell. She knew how to sew so she took orders from people and had her little side business. The money she made from sewing alone was enough for us to live on so she left her salary untouched on the bank.
My mother never finished highschool but kept her focus on courses that she knew would make her money. She took cooking and baking courses, she took courses on sewing and how to create the popular traditional dresses. To this day she still uses the skills she learned at these courses. She now not only bakes and sews but now also teaches these skills to others, while still maintaining her day job(albeit with reduced hours but still full pay).

3. Save through automatic payments
This is something I recently picked up from her after her virtually drilling it in my head since job one. I had always been saving my money the wrong way by keep it all on one account. So when I felt like shopping I would end up going into my savings. I wish I had picked this up much sooner.

4. Make sure the money you are saving is not easily accessible
Makes sense right?
And still I was making this huge mistake. For as long as I can remember my mom has been saving for me and my sisters, we all had our own savings accounts safely tucked away. We could not touch the money even though we really wanted to use that cash to buy new toys(or clothes).

5. Windfalls, gifts etc go directly into savings
Every birthday or good report card me and my sisters would get some money from family members as congratulatory gifts. My mom would take this money and deposit it directly in our savings accounts. We would sometimes kick and scream because we want to spend the cash but ultimately I am thankful for her decision. This is something I have really been slacking on. All my monetary gifts have been spend on frivolous things and I now regret not taking her teachings to heart much sooner.

6. Save for big purchases do not borrow (unless it's a house or car)
Another important lessons I learned from my mother was to avoid loans as much as possible. If you really want it: then you should save for it. If you can not save for it then you must not really want it or you just can not afford it. This is a lesson I fully embraced, even now I am working full time to save for my school tuition instead of taking a student loan. No matter how they market those loans to us at school I stay away, because interest is interest and I do not want to spend years paying of probably twice of what I actually borrowed.

This is some of what my mother thought me, how about you? Any money lessons to share?

Since I have already defined what my ultimate goals are, it’s time I listed my short term goals. To do this I will be using the SMART method just to put my schooling to good use. Hehe
What is the SMART method? You may ask, the SMART method helps you properly define your goals. SMART is an acronym for:
S=Specific
M=Measurable
A=Attainable
R=Realistic
T=Time based

So here goes:
My Specific goals:

• Pay my school Tuition
• Receive my 2010 goal salary in 2009 ( I need $14 more, hehe)
• Build up an Emergency fund

How will my goals be Measured:

• Save 2000 Euro’s by the end of February 2010, I still need 1500 Euro’s to pay for next schoolyear
• Get a great performance review and receive more than the minimal salary adjustment (+$14)
• Save up to $1400 and place this amount into a special account for my emergency fund

What do I need to do to Attain my goals:

• Put 150 Euro’s into my school savings account for 10 months
• Educate myself in my new work-project and make use of my contacts. Network some more.
• Put $200 into a separate savings account until I reach the desired amount in my E-fund

Are my goals Realistic based on my current resources:

• I can live comfortably off the money that will remain in my account.

Are my goals Time based? When will they be reached?

• I will reach my tuition goal before February 2010 when I have to make my last tuition payment
• I have my performance review on January 23 2009
• I will reach my E-fund amount within 7 months

I also have goals for this site but before I can fully flesh them out I will need to do some more research. When I have the information I need I will blog about it.
Now all I need to do is figure out how to put a tracking graph in my blog’s sidebar.

These are my short term SMART goals, what are yours?

To me budgeting is like dieting. If your diet is too strict you will end up binge eating. And most people tend to see a diet as something temporary, so that after they have reached their goal weight they resume their old eating habits. Thus they regain the unwanted weight.

That’s what happens to me when I budget. I go through periods of frugality which are always followed by moments of binge buying. And at the end of a certain period I look back and can’t believe that I spent so much money on unnecessary things that I either don’t use or weren’t even bought for me.

So I will not live on a budget, what I will do is:
1. I will be changing my habits.
2. Instead of focusing on a budget amount I will focus on the amount or percentage of income that I can save.

1. The new habits.
I will change the way I deal with my money and make sure that I don’t feel restricted. Because when you feel restricted and deprived that’s when things tend to go very wrong. This to me means:
• Setting aside some play money for eating out, clothes shopping etc.
• Using this play money to allow myself a set amount of clothes e.g: 2 blouses every month
• Put away my ATM cards and only use the cash I have on hand.
• Have a “safe” amount of cash on my ATM card for splurges and small emergencies
• Every end of the month I will reward myself for good behavior 

2. Saving a fixed amount of cash.
This amount or percentage will be automatically relocated to a savings account. Depending on my income or my mood (lol) I may increase the amount that I put into the savings account but I will never go lower than a certain amount. I believe having a minimal amount that you want to save is important.

Why?
It’s all about feeling accomplished. Trust me on this, when you are used to putting away a certain amount of cash each month, you tend to feel a sense of accomplishment when you are able to exceed that set limit. It’s a great feeling and it encourages you to continue saving.

Also important is not looking at that savings account too often when you have just started saving. It can either discourage you or make you want to spend the cash.

This is how I plan on reaching my financial freedom while staying motivated and happy :)

What's you opinion on budgets?