Joe Szott

Dave,

We use the automatic bill pay as sort of a 'forced' saving plan. Sure it pays the mortgage, cable bill, etc every month, but we also transfer an amount to savings automatically every month too. I use a Roth IRA for long term savings and it deducts $100 every month from account. Plus I will shuffle money to a savings account (linked to checking) during good times and shuffle it back for lean (like during Xmas.) But mostly I consider all these accounts off-limits and only think of checking as the money we have to use.

It's more a mental thing than anything else. If I look at our checking account and see that it is low, I feel poor and will be frugal. In fact we have lots of savings in different places, but since I won't touch those accounts they don't feel like real wealth (when in fact the opposite will be true someday.) They are there if we need them and are feed automatically every month, but I try to live like they don't exist in the meantime.

Oh yeah, and never go into the red with credit cards. Never, ever - stop spending before that happens. CC debt can kill you financially quicker than anything.

Jason Hughes

I literally write down every transaction I make. If I get home from work and I charged $4.00 at lunch, I write it down on a list and keep a running total of my credit card bill for the month (which I always pay in full).

If I make so much as a $10 withdrawl from the ATM it gets written down that day. If I realize I am spending too much late in the month, I shut everything down, no bar trips, no Best Buy trips, buy only groceries that are on sale, don't eat out, etc.

I actually hand write this stuff, no spreadsheets on a computer. It forces you to pay attention to where you are at instead of plugging and chugging data.

Government in action = Government inaction

MarkHastings

That's the best way to do it. Keep constant track of funds and revise your spending accordingly each month.Everyone laughs that I do everything by hand (considering I practically live by my computer), but when it comes to finance, I don't want to mix it in with my other 'computing time'. This is where things can get mismanaged. Keeping my finances, in balance by doing it manually, forces me to keep a better eye on things.

D. Scott MacDonald

Oops, wrong thead.

Scott

Andrew W

I like the way Ron-P does it and do the same. Debit cards are bad because a holds, deposits or fraudulent charges against them are immediately removed from you checking account and you have no chance to dispute them. You are broke while your bank is "researching".

My CC account is at my credit union and all the info is live on the website.



With a credit card, if the actual charge doesn't come through in about 10 days, the hold is released.

Andrew in Austin

JonZ

" Debit cards are bad because a holds, deposits or fraudulent charges against them are immediately removed from you checking account and you have no chance to dispute them."

I have 2 checking accounts.My car payment comes out of the account I have my Debit Card for.Other than that I dont keep any money in it, just enough to cover the car payment which I deposit the week before(the bank branch is at my job at work- a 2 minute walk from my office)and a couple extra bucks to keep it above $0.

If I want to charge something on my debit card I deposit the money to do it. No extra money stays in there for the reasons you mentioned.

andrew markworthy

Computer and PDA programmes are only tools and will only work if you've got your finances in order to begin with.

FWIW, we do the following, which requires about two hours every year to set up, and provided you are suitably disciplined, requires no particular attention for the rest of the year.

(1) Annually (typically when I've received my annual salary rise) my wife and I sit down with the bank statements for the past year and work out what our monthly outgoings are on in absolutely every aspect of our lives. We also survey whether there will be a significant change in our incomings/outgoings both over the next year and in the longer term and whether we need to plan now for this. Generally we are deliberately pessimistic about this.

(2) If everything is in order, then pat on the back, nothing to worry about, and if there is a regular monthly underspend, we put the surplus money into savings. If on the other hand, if there is any overspending, then we examine where we can cut back (this is rare because my annual salary rise typically copes with this).

(3) From the above we work out how much we are going to spending on average each month on essentials - all bills, long-term savings, groceries, etc. Incidentally, in this list we include savings for annual holiday and the cost of buying presents.

(4) From the calculation in (3) we know how much we can spend on luxuries every month with a clear conscience. If we overspend on luxuries in one month or 'need' to buy something big that doesn't come into bank loan territory (e.g. new DVD player) it is on the clear understanding that no more or far fewer luxuries are bought in subsequent months in compensation until the money is in effect 'paid back'.

(5) To allow for the inevitable fluctuations in spending each month, we deliberately keep a float in the current account to allow for the fact that some months we'll inevitably spend more than others. This stops us getting charged for an overdraft. Having said that, we negotiated a very low interest rate with our bank if we go overdrawn by a small(ish) amount.

(6) We have one account for everything, with the exception of long term savings. Other than paying extra into my pension account, the rest goes into accounts solely in my wife's name because she is a non-taxpayer (I'm a Brit and am in the highest tax band, which means that a painful 40% of any interest is taken away in tax).

(7) If we need a big loan for anything, then generally we get this from a bank or similar and then use it to buy what we want. It may be different in the USA, but in the UK this is way cheaper than arranging a loan through the vendor. In fact, we budget that at any one time we will always be paying back a loan. This means that in long term planning we always in effect have a reserve to fall back on.

Ryan Wishton

Dont have enough money to budget really yet (still need to finish school), but I do have a small yet nice savings for someone my age and no debt. So I must have done something right at least.

I saw how having debt was incredibly difficult in family members and friends. Causes fights, destroys relationships, creates pure misery, etc.

I didnt want to deal with that (I hate to be miserable), so I try to be careful and pray. lol. If I can do it, anyone can. I love things. I hope a day comes where I can buy many nice things. I used to spend all my money younger on dumb things. Now, I think twice before buying that DVD or whatever. I still buy stuff, but in moderation. I still have a few problems to work on. Eating out for example. But not as bad as I used to be.

Excellent rule of thumb. Pay cash for any luxury purchase. If you dont have the cash to pay, it means you cant afford it and have to wait. Basically, just pace yourself and use common sense.

Also, allows be able to pay yourself first. This means contributing to retirement accounts, etc., before doing anything else first. This helps you to budget your money more wisely as well. You do need self control though.

I always question why so, so many people have no self control with money? I used to be one to some extent. When you think about it. If everyone was very good with money and bought no unneeded items, the economy with be a bottomless pit of hell. It would destroy it.

P.S. Not smoking is a good way to budget. Damn, that's expensive. I cant believe what some pay every year. Thousands. Easier said than done no doubt.

Francois Caron

The paycheck before the first of the month pays off the mortgage payment, municipal taxes and home insurance. The paycheck I receive in the middle of the month pays off all the bills. What's left over pays for food, clothing, bus pass and the occasional trip to the Casino. Since I have no car, I have no car payments to make, and I get to rent out my parking spot.

I only have one account, a checking account. Most of my banking is done online (paying bills) with the ATM machines used only to withdraw cash and deposit checks. Most of my purchases are actually done with the ATM card, freeing me from ever having to carry large sums of money on me (I rarely have more than $50 in my pocket). I also have one credit card and one department store card ONLY. I don't need more than that even if I do qualify for other cards.

Yee-Ming

Well said. All my HT purchases were paid for in full, since they are arguably a luxury and I couldn't justify debt to pay for any of it. Though on HTF some might disagree it's not a necessity...