Money Values: never regret a splurge ever again

A while back I created a page about things I splurge on.  But then I thought it would be just as important to delineate things I don't splurge on.  After all this is a money blog and I focus on wise spending.  Everyone has different money values, and there is no way I would tell someone what exactly they should spend their hard earned cash on.  But, remember that you can and should draw a line between splurges on random stuff and smart spending based on your values.  This will help you spend wisely and stop regretting those impulse buys (you may even have less!).

Write down your budget categories or "money values" on a piece of paper or take these "money values" and rank them:

• Entertainment 
• Outdoor Activities/Sports
• Social/Friends 
• Family/Significant Other
• Pets
• Clothes/Accessories
• Personcal Care/Spa
• Accommodations/Living Space
• Retirement & Savings
• Travel
• Education
• Philanthropy

Another version of this exercise is given in the book "Putting money in its place" by Ken Rouse, using these key words:

• Achievement
• Adventure
• Aesthetics and culture
• Authority/Power
• Financial security
• Friendship/Love
• Health
• Independence
• Integrity
• Philanthropy
• Recreation
• Service
• Spiritual growth
• Wisdom
• Work

Either way pick 5-10 and rank them. Use this information to guide future purchasing decisions! It's as simple as that!

Personally, that ranking translates to my drawing a line and deciding to spend less on these items:

• Personal care (make-up, massages, etc.)
• Basics (Clothes)
• Food / Dining out
• TV
• Concerts

because these items don't reflect my money values.  I'd rather spend money on anything social (making new friends, hanging out with old friends, going out), traveling, and a tiny bit of learning! Though on occasion I spend money on probably all the categories - that's why it's a ranking.

Of course money values change, just like people change as they grow older.  So revisit when necessary!

Spending money on a concert of sorts, but it was cheap and it counts as "hanging out with old friends"

I spent allll my savings

So it's been a year since I wrote a blog post...time flies I tell you. What have I been doing this whole time? Well work got crazy busy, I saved a lot of $, and then I decided to go to grad school...

Now I'm 3 weeks into grad school getting my MBA and I want to document this experience and regurgitate all the great lessons I'm learning inside and outside the classroom. Of course I'll keep this as money related as possible.

First lesson: quitting your job and going back to school means being poor. very poor.  And, I need to get used to it. All that savings slowly shrinking away.  The good thing is, tuition is paid and I only owe my mother a fraction of the total tuition.  Somehow through my AmeriCorps stipend, my IDA savings, my regular savings, a scholarship and a little bonus from my aunt I managed to bring the tuition down dramatically.  However, now I'm attending school in one of the most expensive cities in the world with no income and not a lot of savings.  My solution: learn how to invest over night and generate tons income. I can do it, right? ;)

Six Simple Steps to Saving Successfully SSS

1. Make it automatic

The best advice I can give you is to make your savings automatic.  Find a savings account that lets you set up automatic deposits.  You may think you'll be adamant and alert and remember to transfer your monthly contribution, and that it'll be a piece of cake...but don't waste your time.  The end of the month will come along, and most likely you'll have spent that money or decide to put it off until next month, because it's 'too much of a hassle right now.'  But really, even if you can save monthly you're better off setting up an automatic deposit, if simply just to save time.

2. Time it right 
Either take it out of your paycheck immediately or schedule it to transfer right after you get paid. Don't wait until the end of the month when you've had all 30/31 days to spend your hard earned cash on something else.  As I mentioned before, once it's close to the end of the month you'll be a lot less likely to transfer money to your savings.

3. Have a goal
You know what makes someone a good saver? Wanting something he/she can't get.  Vacations or concert tickets are a great start.  Figure out how much it will cost and start allocating a little bit every month.  By the time you go on that vacation, you won't need to worry about credit card debt, expensive meals for your girlfriend, or skipping out on that cool snorkeling expedition because the funds are running low.

4. Make it a habit
I would much rather you save $5 every month than $1000 once a year.  Why? It's about making saving a habit, a part of who you are. Not a one time, 'I got my tax refund!' kind of act (though there is absolutely nothing wrong with putting your tax refund into a savings account)... Studies show (don't worry, I've seen 'em) that people who learn to save a little every month or every paycheck start saving more.  Somehow you start to realize how easy it is and you start 'risking' more and all of a sudden you can afford a freaking boat! (FYI that would be an awesome goal)

5. Make it a budget item
If you have a budget, great, add savings as an expense.  That money is gone! Buh-Bye. Well until you take it out to fulfill your goal...

6. Spend it! 
Unless your goal is an emergency fund, allow yourself to spend it.  That's why you were frugal and saved in the first place.

You ready to do this?
Here are some resources that'll help you get started right away:

• Smarty Pig (Great for getting started because it forces you to set a goal and timeline) 
• ING Direct (I currently have an account with them, though I started it way back in 2005 when the interest rate was a whole lot higher)
• Get Rich Slowly Blog This blog has a great summary of different savings accounts with high interest rates

Happy Hour: Saving my social life and my money

To me, the hardest part about saving is the toll it can take on my social life....or maybe it's that my social life always ruins my savings plan! Everyone has different money values, but for me spending money to hang out with my friends is totally worth it, which definitely makes it hard to tighten this particular budget item. 

It's great to save on drinks and spend some time gossiping with friends.  As an added bonus, I try to look for happy hours that have reduced prices on food.  That way you're pretty much having a cheap dinner at the same time.  Depending on how long you're out, you'll get hungry anyways so finding places with food is clutch.  Also watch out for 2 for 1 deals, often times it's per person, meaning each person automatically drinks two.  If that's the case, make sure they serve food as well! 

Depending on the situation, you can use the happy hour idea to avoid an expensive dinner.  Group dinners are pretty typical among friends and co-workers, but if you're feeling your budget tighten, suggest a happy hour with food.  It'll be less filling, there'll be drinks involved, and you'll be going out earlier in the evening than you would for dinner. 

Here our some of my favorite happy hours in SF:

• E and O Trading - happy hour till 6pm =/ but nice
• Waterfront Restaurant - yummy till 7pm
• Palio - $1 pizza when you buy 2 drinks
• Otis SF - happy hour till 8pm
• Cafe Metropol - yummy crustini! 
• Million Thai - happy hour till 8pm

Embarking on a Savings Marathon

The next couple of months I'm embarking on a savings marathon. Why? Well for many reasons...vacations, a possible new business venture, higher ed...and as if all that's not enough Christmas is around the corner.  In about three months time we will all need a little extra cash to cover the holidays.

Before I embark on this new savings marathon I thought I'd take a deep dive into my current cash flow to see how flexible I can be/how easy it will be to save more.  Good thing I use mint.com - it takes all but a couple minutes to pull up a couple graphs and see my spending trends of the past couple months!  Here's what it looks like so far:

My total spending over the past 6 months

Spending fluctuations over the past 6 months

And what does all of this mean? Well let's start with the categories (Image #1).  The good thing is that only about 1/3 of my budget is fixed expenses (Housing and Bills).  My 'Food' category is taking up a large chunk of my budget, but well it's food and I kind of need it to survive, but I'll get back to that.  What I need to look into is my "other" category (quite large), my uncategorized category (which is skewed because one expense is really a reimbursement I had trouble categorizing correctly) and lastly my shopping category.  Looking at the spending over time (Image #2), I can definitely see the month of May standing out.  This is probably because I booked flights and hotels to Las Vegas and Seattle.  A more alarming trend is my spending going up over time (keep in mind this month isn't over yet).  I could attribute that to it being summer and there's just more stuff to do, but if I want to be serious about saving, I'll also need to focus on reversing the trend.

O.k. back to my 'Food' category. I broke down my food spending into more specific categories:

Spending on food broken down into different categories

With it broken down like this, I can see that my 'Restaurant' spending is a lot higher.  This is of course expected since going out to eat is more expensive than staying in...but again, this could be a source of savings! 

Spending on food by month

Lastly, my food spending by month.  April and June are standing out. Thinking back, all I can think of is that in April I was going through a stressful work situation and in June I traveled to a lot. Otherwise it looks like my spending is quite steady, which is good. I should be able to see swift changes, if/when I start focusing on this category. Next, I'll have to do this same breakdown for the other categories (like shopping) to inspect my spending trends and find places to save.  

Graduate School: Is It Worth It?

I've been gone for a while, I know.  Sometimes life gets in the way!

Last week I was in Germany for my cousin's wedding.  Happy to visit family and be part of the celebration, when the usual question came up: "When are you going to grad school?" And my usual answer: "Im planning on it...next year" with a big smile... But, it's not completely untrue, grandma, just the "when" part. I have been looking into it and I have an idea of what I want to study.  Two problems I encounter every time: standardized testing and the $$$.  I'll talk about standardized testing in another blog. Right now I want to talk about money (duh!).

It's going to cost a lot...every time I look at the numbers, I wonder why people even think about doing this. But here I am thinking.  One program, that looks really cool (really cool), is going to be $100k.  Of course on their website it says $51k, but that's only for one year and to graduate it's scheduled to take two years. So sneaky!

So I started doing the math in my head.  Say I save $20k and my parents help with $20k, that'll bring it down to $60k.  With my current salary, I could probably afford $500/month, living very cheaply that is...anyways, $500/month is $6000/year.  If I kept it up, I'd have it paid off in 10 years. Oh wait, interest. =( Interest calculations are too hard to do in my head...and even on paper.  So, I found some pretty cool resources online (I'm not going to be a mathematician so it's ok):

• FinAid Calculators: Most detailed calculator. 
• Debt/Salary Wizard: A very simplified calculator.  More of a guideline than a standard, since it assumes how much you are able to pay every month based on your salary, not your frugality! 
• You Can Deal With It: This site has a bunch of different calculators you can use to figure out either how many months it will take, how much your monthly payment should be, etc. 

In conclusion, before you consider grad school, you really need to figure out realistically how you're going to pay for it.  Imagining having a great, high paying job or lots of scholarships isn't going to cut it.  Having both would definitely help, but better safe than sorry.  As for me,  not sure I'll ever have a super high paying job as I like the nonprofit/NGO world, but I'll work on getting scholarships!  Including the interest, my monthly payments would have to be about $540/month to pay off the debt within 10 years.  So for now, I'll just save money like it's going out of style...

Why AmeriCorps?

I started this blog shortly after I started AmeriCorps, in part to chronicle my year or service and in part to regurgitate what I was learning.  I figured this was important stuff and more people need to know about it.

But let's reflect on my AmeriCorps year itself.  The pay was minimal, the rewards: great.  Good thing I was straight out of college.  I didn't completely notice how poor I was, because the stipend I received was more than I was making in college! Now that I actually make a normal salary, I feel very grateful for my current job and can really appreciate its value.  With that out of the way - I really enjoyed my year of service for many reasons.  Not only did I learn a lot about personal finance at SparkPoint Marin but I made great friends, learned how to live on my own, and came away with it equipped with great transferrable skills and experience.

At SparkPoint Marin I learned how to budget, to save, and to file taxes.  Now I volunteer every year during tax season to help people file their taxes and file my own for free as well!

Here are some of the resources I learned about that could be useful to you too:

• 211 - Call it and they will help you find what you need. 
• Health and Human Services 
• Food Banks
• Women's Initiative 
• Get Money Smart 
• Consumer Credit Counseling Service
• Low Income Home Energy Assistance Program

Since we were a pretty small team I definitely bonded with my co-workers as we all embarked on our own financial planning while developing a program from ground zero that would benefit the larger public.  I also made friends with other AmeriCorps people stationed in organizations around my area.  The great thing was, we could all go out and be cheap together, because none of us could afford anything too fancy! When everyone around you is financially conscious, it makes it really easy to do the same.  It's a great built-in support system. 

Lastly, I finished my year empowered and ready to take on more challenges.  I came away with marketing skills, organizational skills, enhanced customer service skills, confidence in voicing my opinions and sharing ideas, and lastly, the ability to analyze programs, find the inefficiencies, come up with solutions and implement them. 

I definitely recommend it to anyone and everyone.  Not saying it was easier finding a job afterwards, but I did have the skills to actually land one.  Finding a job will almost always take time, effort and lots of motivation.