Hesitations in paying for certain things

Attending a recent club party made me realize that at the 'advanced' age of 26, the idea of going to a (dance) club doesn't make me cringe yet, but the idea of paying a lot for one does. I honestly love (almost) any occasion that causes for me to dress up, but paying a lot to 'party' sucks all of the fun out of it for me. My behavior is very different from what I exhibited during and immediately after I graduated from college. Washington, DC, the city I've lived in since graduating is a 'college' town and several of the notable dance clubs here throw huge parties that some celebrities and notable sports athletes attend when they are in town. But attending these parties comes at a steep (to me) price unless you are 'connected' with someone affiliated with the club, are on someone's guest list or take advantage of the incentive many clubs offer of ladies to enter for free or cheaper before a certain time (usually 11:00 p.m.). I think guys get usually get a cheaper price as well, but I'm not sure if it's free.

During my college years I remember spending as much as $40 to enter a club during a special occasions like homecoming season amongst local colleges or graduation season. That entrance fee doesn't even cover your drinks. The fact that I always drink minimal alcohol when I socialize probably meant that I spent less than most but that's still alot! I enjoyed that time in my life, and don't really regret spending that money, because it came with the experience of being that age. But now that I am my mid-twenties and not my early twenties, my priorities have changed and I'm not interested in paying that much money for a club. I'd rather save it or if I spend it, I'd rather have a nice meal, go to a concert or even get a manicure/pedicure than pay for a club. I think most of my friends that went to my university would agree but you couldn't tell us going into whatever parties we paid all of that money to attend wasn't 'important' back then.

Is there anything you hesitant (or unwilling) to pay for as you get older?

How will becoming a vegetarian affect my budget?

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I've been ruminating over the decision to become a vegetarian for quite some time and figured that it was time to put it out there in the universe and really do it. For the long term health benefits of vegetarianism, I've decided that I will slowly phase meat out of my diet. I may eat fish occasionally, but won't eat other forms of meat. I'm not big on dairy, but will reconsider veganism in the next few years. Vegetarianism isn't for everyone and but I think it's a good choice for me. As I made this decision, I wondered how becoming a vegetarian will affect my budget.


I don't anticipate that vegetarianism will change my food spending much for the time being. I won't be purchasing organic meat any longer which can be very pricey. Substitution products like tofu and soy can be pricey as well, but I already purchase them in moderation and will continue to do so. My goal is to become more creative with my meals in general and to limit my intake of processed foods. I plan to to minimize food spending by doing things such as: buying fruits and vegetables that are in season, stocking up on beans and grains which are usually inexpensive, and will start comparison shopping for food items that tend to be pricier.


I currently spend about $200 - $250 per month on groceries and I spend about $80 - $100 per month on restaurants/take-out. I always see a spike in the amount I spend on groceries when I decide to try a new dish that requires ingredients I don't already have or if I decide to bake something because I frequently use organic ingredients and dairy alternatives to bake like the recipes in this book. I'll start monitoring my food spending more closely to see how cutting out meat impacts my food spending.

Winterizing my apartment to save money

There are many aspects of the cold weather that I like... drinking copious amounts of hot tea, watching snow fall before it gets dirty from foot/car traffic, winter accessories... I could go on. But one thing I don't like about the cold weather months is how my energy significantly spikes as the temperature falls. To avoid getting sticker shock every month when I look at the energy usage on my Pepco (the name of the energy company here in DC) bill I do the following:

• Seal my windows with plastic to prevent cold air from coming through the cracks. I absolutely love my apartment, but my windows are a bit drafty, so this is an easy way to prevent the heat from escaping.
• Lay a towel down by the crack at my front door to prevent the cold air from sneaking in. After all, I'm not paying to heat the hallway! Maybe eventually I'll find a more stylish option to block the door draft, but for now a towel or old pillowcase work just fine.
• Keep the heat temperature relatively low (no higher than 65 degrees) and just use a space heater to get the room a comfortable temperature. I also only need to heat one room at a time.
• All year-round I try to only turn lights on in the room I'm in at that given time. I love light, but it's kind of silly and a waste of money (and energy) to have every light in my apartment blazing when I'm home.

I do use budget billing for my Pepco bill because I like knowing how much my payment will be each month, but if my usage spikes significantly, my monthly payment can be raised, so I really try to monitor my usage year-round. These small steps make me more comfortable indoors and help me to manage my energy bill.

Do you have small tricks you implement to winterize your home?

I Opened Roth IRA

After going back and forth over whether I should hold off on this goal a while longer, I decided to open a Roth IRA. I will transfer $200 per month into my Roth IRA for the remainder of the year. Why do I have an extra $200 in my budget you may ask? It's not really extra, my private student loan from college recently went into deferment (nearly $300 per month) because of my in-school status as a part-time graduate student. So, I've decided to use this money I'm already accustomed to paying out each month into a Roth IRA and the remainder will most likely be diverted to my credit card balance. My student loans are not a financial focus for this year but I hope to be able to accelerate payments in 2010 and beyond. For now, I'll keep chipping away at my other financial goals, which I've discussed in detail before like adding to my emergency fund, paying off credit card debt and contributing to retirement funds. When I do start paying my student loans again in 2010, after my graduate program is over, I plan to increase my income and decrease unnecessary expenses in my budget.

Can Adopting a Pet Fit in My Budget?

I have been strongly considering adopting a kitten at some point this year. I think I would enjoy having a pet and cats are independent enough that having one wouldn't impede on my work schedule or social life unlike other types of pets like dogs as much as I love them. But I keep thinking about how like a person, pets come with unexpected costs and could throw a monkey wrench in my budget.

There are upstart costs to consider like a litter box, toys, scratching post, cat brush, initial vet visit, room deodorizer (because I can't stand walking into someone's house and you can smell the cat before you see it!), food & water bowls...I'm sure there are more but that is what comes to mind at the moment. There are also fixed regular costs like food, kitty litter, boarding (if I go out of town for vacations) and vet visits. If my future cat were to have health problems, which usually come with age, those would have to be factored in also. Hmm much to consider. Maybe I should start a pet fund and reevaluate my budget in a few months? I REALLY want to eliminate as much credit card debt as possible this year, can I do this and afford a pet?

Any thoughts from those that have pets? Has having a pet gotten in the way of sticking to a budget?

Photo: http://www.littlefolkspuzzle.com/catalog/1350-30PCFLOORPUZZLE-KITTEN.JPG

My 2009 Monthly Budget

Here is my monthly budget for 2009 based on my income after taxes. My retirement account (403b) and health insurance costs are not included for this reason. But I get about 3% taken out of each pay check for my 403b and get a company match. I am still evaluating whether I will open a Roth IRA/or start contributing monthly to the IRA account I have from rolling over my 401K from my last job in 2009. I am leaning toward paying off my credit card balance first since I am already contributing some money for my retirement and have a few decades to worry about retirement anyway. I have the feeling that one of my personal finance gurus, Washington Post columnist, Michelle Singletary would agree with me.

I definitely want to start tracking my spending more closely and will strictly adhere to the budget as much as possible. Any windfalls I receive over the year will be split between debt payoff and savings. Money leftover from any category can be used toward another category or applied to debt repayment. I've gotten a little lazy in tracking my spending by relying on Mint.com. But I find that the categories don't always apply my money to the correct areas, for instance, my purchases at CVS are very rarely a health/medical expense, but Mint often puts them in this category. The best thing for my to do is track my money daily with receipts and use Mint as a back up and a way to easily look at all my account balances at one time.

I just used the percentages in my budget below, but will be using dollar amounts that I am over/under in each category when I track this at the end of each month starting in January. It's kind of disappointing that I can't really afford to apply more money to debt right now so I can focus on my savings goals, but I'd rather stay within my budget on a consistent basis and save what I can, than save too much and be short on cash for other things I need each month. When looking at my housing/utility category, keep in mind that I don't have roommates, so I'm not sharing the costs of rent/utilities with others.

So here it goes:

Charity - (1%)
Saving - (2.1 %)
Housing - (37.1%)
Utilities/Cell Phone/Renter's Insurance - ( 13.8%)
Food - (6.2%)
Transportation (Metro/Amtrak/Bus rides) - (12.4%)
Clothing - (1%)
Personal - (5%)
Recreation/Entertainment/Gym Membership - (2.9%)
Debts (Student Loans/Credit Card Balance) - (20.9%)

No Target for the month of August

While I don’t think its realistic to drastically cut my spending with several weeks of summer left and the fact that I’m going to Florida for the first week of August on two family trips, I can take a small step and stop spending in a store that has been my “budget kryptonite” for the past few months: Target. My job happens to be across the street from a shopping center that has a Target, making it way too easy to head over there and spend money I have no business spending. From snacks to greeting cards to clothes to household items, I have definitely been giving a nice chunk of my money to Target since it opened earlier this summer. Target is a one-stop-shop type of place where you can get such a variety of things, so it is tempting to overspend. My Mint account has forced me to shine a light on this weakness and nip it in the bud. I like Mint so much because it is an easy way to determine where your money is going and keep track of your cash flow. The only frustrating thing is that sometimes all of my accounts aren’t updated every time I log on, but I wonder if it’s just my ridiculously slow lap top that is responsible for that. So for the month of August, I won’t be spending a dime in the store. If I'm successful at this, I'll keep it going. I guess I should get that tool kit I was eyeing before my self-imposed deadline. I really need to think about every purchase I make and ask myself: Do I really need that? Because if I don’t, the item should stay in the store. I will work out a revised budget in September after the summer is over.

Do you have a store at which you are making an effort to curb your spending?

Image: Target Website

Michelle Singletary Says...

I started this post last weekend, and am just getting around to finishing it, but better late than never. I don't know if I ever mentioned how much I love Michelle Singletary, so I'll say it: I love Michelle Singletary. Or at least I love her personal finance advice. Michelle Singletary has a bi-weekly personal finance column in the Washington Post that I have been reading for the last few years. She also has a show (which is currently on hiatus) on the TV One cable television channel. She gives excellent, no-nonsense advice and encourages people to get the monkey's off their backs and live debt free.

Last Saturday, I attended an event on homeownership at my alma mater here in DC where Singletary was the keynote speaker. Just as she does in her column and books (she has published a few), she told attendees to get back to the basics and to stop their high consuming habits. The event overall was great, but I liked Singletary's keynote the best. The event had different workshops focused on issues such as the merits of home ownership vs. renting, information about loan options, specific information about DC area properties, opportunities to talk with agents, etc. Here are a few pf gems she discussed in her presentation that may not be new to most people, but hey most people (myself included) aren't completely debt free so there is nothing wrong with reinforcement.

Michelle's Advice on how to feel better about your personal finances:

Order your steps to wealth

1. Have an emergency fund. Life is filled with large and small emergencies, so its best to be prepared.


2. Have a life happens fund. There are times in life that don't qualify as an emergency, but were not alloted for in your budget.


3. Pay off debt. I believe Michelle regularly uses the phrase: debt is slavery and I am begining to agree with her.


4. Invest in a retirement fund. Even those people blessed with children shouldn't depend on them to take care of them in retirement. I'm sure most people would like to live as well, if not better than they currently do when they retire.


5. Invest in your children's college education (if you have them). Knowledge is power, and one of the greatest things you can do for your child is invest in their education. But not at the expense of your own retirement! If you don't have children, you can invest in furthering your own education, or that of a relative (niece, nephew, cousin, godchild).

The benefits of budgeting

1. It helps you to use your money on the things that really matter to you. When you are not worrying about bills and debt, you can free up your time to pursue your own dreams or even just figure out what those dreams are.


2. It let's you to control your money instead of your money controlling you. Enough said!


3. It will tell you if you are living beyond your means. What is really the point of "keeping up with the Jones'?"


4. It helps you to meet your savings goals. Whether its for a rainy day, a vacation, or a home, savings is the cornerstone to building wealth.


5. It helps you to leave a legacy. Don't we all want to leave a legacy to our loved-ones besides debt? I know I do.
   

Path to prosperity

1. Decrease your debt. I don't want to bein debt forever, do you?


2. Budgeting better. This can keep you from wasting money you didn't know you were wasting in the first place!


3. Owning a home. a major way most people build wealth.


4. Investing. Your last name doesn't have to be Buffett to invest, we all can.

Reinforcement is important, and I enjoyed hearing Michelle's get "back to basics" message, though it wasn't necessarily new information to me. Home ownership is a goal that is at least two years away, but it's never too early to gather information for when I am ready to take the step. In the mean time, I will be infused with inspiration and resolve to be debt free by reading my favorite pf blogs and Michelle's column.

Photo: Washingtonpost.com

Weekend Spending

In an effort to monitor my spending better, I will start tracking my weekend/weekday spending. Here’s the breakdown for the weekend.

Friday
--$8.76 lunch
--$28.18 household cleaning items
Saturday
--$26.73 Groceries
--$8.00 Bottle of wine to take to an Obama House Meeting (I don’t like to go to people’s house empty handed)
--$4.00On Demand movie
Sunday
--$15.00 Watermelon, etc.


Total: $86.67

Overall I didn’t spend that much over the weekend considering I haven’t bought food/housegoods in a while, but that is mainly because I didn’t go too many places over the weekend. Next weekend's spending will be higher because of the holiday and due to the fact that I am pretty sure I will be traveling to Philly. I've lived in DC 6 years including college and I still haven't spent a 4th of July weekend here...don't really have a desire to either.

I am kind of proud of myself because I foolishly went in H&M (my budget kryptonite is inexpensive, cute clothing) on Friday after work and though I saw some cute skirts (on sale) I didn’t buy anything. I do still want to buy a few more summer clothing items, but they can wait until I replenish the money I used from my Emergency Fund while out of town in New Orleans for work.

Traveling for work is a tease

Traveling for work can be a tease sometimes. I just got back from attending a conference in New Orleans for my job and stayed in a beautiful hotel. But I was so tired after sitting in sessions all day that I did not feel like sightseeing or even sitting by the hotel pool. I passed out from exhaustion for the three nights I was in New Orleans. Now I realize why a few of my coworkers came a few days early or are staying until the weekend to have downtime and do some sightseeing. Oh well…you live and you learn.

I spent less than I expected on food because breakfast and lunch were provided onsite at the conference. So the only meals I had to pay for were dinner and snacks. But, I did purchase a skirt and a dress on sale while in New Orleans for about $60. I have decided to keep the skirt but the dress will be returned over the weekend. I think it was more of an emotional purchase than an actual desire to have the dress. I also paid $12 for a 15 minute massage which I think was worth it because that is going to be the closest thing I have to a spa experience for a while. In hindsight that I could have spent way less if I had planned a little better. Here is a breakdown of spending (approximate):

Sunday through Wednesday
--$10 – coffee*
--$35 – Taxis*
--$75 – Food* (Dinner, snacks)
--$70 – Shopping
--$8 – ATM withdrawal fees (My bank apparently doesn’t have a branch down there)
--$25 – Airport reading (I know this was a frivolous expense…)
--$12 (plus $2 tip) – Massage (This was also a little frivolous but enjoyable)
--$290 – Hotel*

*I will get reimbursed for these expenses by my job.

Overall I had a nice time and was happy to have had the opportunity to go. Traveling for work is okay, but traveling just for the sake of traveling is my preference.

Revisiting the budget

There was one key aspect of my budget that I overlooked...tithing and charitable giving. Oops. I know I could give more if I factored it into my budget. My tithing and charitable giving is pretty haphazard, but I will do better in the future with that. My charitable giving for at least the next several months will consist of donating money to the non-profit organization I volunteer for. I will evaluate other organization's I want to give money to at a later date.

For now, I will designate 50% of my side-gig income (which was not factored into my budget on purpose)for charitable giving. The other %50 of my side-gig income will have to get thrown toward paying down debt faster. My credit card balances have been woefully creeping up this month. I paid for travel for a trip out of town for my job which I will be reimbursed for soon. I also recently paid for airfare for a family trip to Florida in August. I need to make some more progress on that front this summer. After I monitor my spending for the next month or so, I will probably tweak my budget a little more.

Do you calculate tithing or charitable giving into your budget?

A Budget, Do You Have One?

I am considering moving to cash-only management of my variable expenses in an effort to control my spending and monitor progress I am making on my revised budget. This won’t be too difficult given the fact that my job is right next door to my bank. In an effort to control my spending better, I will also enforce a weekly grocery store visit (armed with a list and perhaps even coupons) instead of randomly going throughout the week. I just find it too easy to spend more money than I mean to when I use my debit (or worse credit) card.

After looking at my spending through the website Mint.com, I realized a disturbing amount of my money goes to the grocery store which is also right next door to my job. It also does not help that my job is also directly across the street from a Target. I find I make random purchases at both Target and the grocery store I don’t necessarily need and spend more money on prepared foods to grab quickly for lunch instead of taking the time to prepare lunch at home which would be cheaper. I will be a little more flexible with travel-related expenses for the months of June-August when expected (and unexpected) travel will arise. Here is the breakdown:

Fixed (Approximate Percentage of After Tax Expenses)
Rent: 35%

Student Loans: 16%

Public Transportation: 3 %

Cable/Internet/Landline: 5%

Cell Phone: 0%

Savings: 5%

**Retirement: 6% (employer match included in this percentage)
______________________________________________________

Variable (Approximate Percentage of After Tax Expenses)
Utilities: 6%
Note: This bill should be considerably cheaper in the upcoming months since I’m not a big fan of air conditioning.

Credit Card Payments: 15%
Note: Windfalls get applied to this category

Travel/Entertainment/Personal Items/Gifts/Clothing/Etc.: 15%
Note: This category has always been the hardest for me to adhere to…

**Retirement contribution is taken out of each pay check pre-tax

In 2009, after a significant amount of my credit card debt is paid off, I will bump my savings up to 10% and bump my retirement savings to 12% (employer match included in this number). Separating my "needs" and "wants" is not always as easy as it sounds, at least for me. I will limit my clothing/shoe shopping after making a few summer wardrobe additions (I'll give an update on those later this week). I'll have to make do with what I have unless absolutely necessary. All trips home this summer will have to be made on the bus (Note: I can't stand taking the bus! But you can't beat the price) because it is more economical than Amtrak.

Do you strictly adhere to a budget or is it more flexible? Has budgeting helped you to achieve your financial goals?

I Need To Be More Aggressive With Paying Off My Debt

I have admittedly been a little lax with paying down my debt and controlling my spending over the last few weeks. I definitely need to tighten up my budget because my budget busters have been getting to me (clothes and shoes). I had a graduation to attend last weekend and another this weekend and had slim clothing options…so I bought a new dress last week and another this week. I also did purchase an iPod with money I received from an unexpected windfall; the iPod I once had has been broken beyond repair for a minute. I rationalized that purchase by telling myself that I do spend a lot of time in transit (hey, I’m human!).

But I am resolved to get back on the frugal wagon and tighten up my spending again. There will be some unavoidable expenses coming up though: Mother’s Day gifts (this week), train or bus rides home (next month), booking travel for my trip to Florida (August) and other events I’m sure will pop up when the summer starts officially.

During the upcoming weeks: I will resist the temptation of surfing iTunes for more music for my iPod, I will stay away from bookstores and get books from the library instead, I will go grocery shopping more regularly to prevent overspending money on food while out in the street and I will avoid ordering movies On Demand and find something else to entertain me on the weekends that won’t cost money. I will also create a new budget and stick to it.

It’s not always easy making responsible decisions….but I hope to see the difference in my bank account soon and make progress on paying down my debt.