Subcultural engagement for the 21st Century...
Barbelith is a new kind of community (find out more)...
You can login or register.

Budget help.

The Great Jor of Babylon

15:51 / 30.01.06

I'm looking for advice on dealing with finances, the idea just descended upon me to work on a budget. at the moment I'm not even saving for emergencies. How do the mighty Barbelithians deal with money? Do we have any investors here? I'm interested in tips and recommendations especially on things that seem obvious but I'm sure I missed. This is all in in monthly payments and in U.S. dollars and what's in parenthesis is debt.

MBNA Visa $400 ($1,768.76) 8.9%
Rent $625
Cell phone $45
Dept Educ. Loan $90 ($12,205.84) 2.88%
Student Loan $40 ($2,127.75) 5%
Utilities $0
Transportation $0
Gym membership $50
Groceries $200
Eating out $240
Fun/Misc. $280

Monthly income $2,306
Total Monthly expenses $1970
Result $336

I’m not entirely sure if this is accurate, I’ll wager that my Fun/Misc. is on the conservative side. But the fixed expenses are there... any thoughts?

Any help would be appreciated.

ONLY NICE THINGS

16:16 / 30.01.06

Dude.You're earning more than you spend and you're asking _us_ for advice?

Dude.

Benny the Ball

16:44 / 30.01.06

Pay off more on your visa card - that's my advice.

Alex's Grandma

17:05 / 30.01.06

I wouldn't be inclined to put personal financial information out on the internet, were I you, chief. You never know who's paying attention.

That said though, I think that you should basically drink more beer.

The Great Jor of Babylon

17:10 / 30.01.06

I felt it was fairly general info... about the beer, duly noted!

invisible_al

17:36 / 30.01.06

I'd agree with the idea to pay off your Credit Card quicker, then move onto your student loan. But you've got more money than you're spending to live be thankful you don't live in London

.

Once you've paid off your loans then think about saving, you'll find you have a lot more spare cash without the loan re-payments round your neck. Also things like a rise in interest rates won't hurt you as much if you're not in debt.

The Great Jor of Babylon

17:51 / 30.01.06

I wonder how living in London compares with living in Washington DC... thanks for the advice!

Mistoffelees

18:07 / 30.01.06

It looks as if you already can manage your money. That´s more than most people I´ve met and known.

But you asked for advice, so...

One advice that I once read in a book about building up wealth is to invest the money you have left at the end of the month. Because if you just use it to pay off your debts, you´ll pay off your debts quicker, but when you´re finished you´ll have saved 0,00 $ (= the amount of money you had when you were born

).

If you invest/save that money, it will take longer to pay off the debts, but when they are paid off, you already have some money saved. And then you can use the money (that you don´t need for paying off debt anymore) to invest, too.

From personal experience I can say it´s horrible to have debts that you know will take decades to pay off, and it´s a very good feeling to be debtfree and have savings.

tom-karika nukes it from orbit

18:25 / 30.01.06

Mistoffelees - surely that only makes sense if the rate of earnings on your investments is more than the interest paid on your debts... otherwise, you lose money. And because the rate of interest on a debt is going to be much higher than the earnings of savings, you'll always be better off if you pay off the debt as quickly as possible.

Or am I missing the point, and this is just a way to make sure you have some savings to start with?

Mistoffelees

18:35 / 30.01.06

No, you´re not missing the point. We just differ about interest paid on your debts being higher than what you can save.

A loan at citibank right now (here in germany) is 6,67 % interest (the real interest, not the 4 % in the ads). On average you can make a 10 % profit at the stock market each year. For example the DAX [stock market index consisting of the 30 major German companies] made 27 % in 2005. So in the long run (=10-20 years!), you will make a profit, if you act like I mentioned.

Mistoffelees

18:41 / 30.01.06

I just did more research. The dow jones "only" made 8 %/year since the early seventies. That´s less than the 10 % I mentioned, but it´s still more than the average interest that King Salamander has to pay.

The Great Jor of Babylon

18:52 / 30.01.06

Yeah, I was wondering about my lack of savings... I mean a big emergency would really mess me up. So putting some money away once I pay the credit card is next on the list.

ibis the being

20:28 / 30.01.06

Don't save any money until you've paid off your debt. It just doesn't make sense. Granted, your Visa APR is mind bogglingly low (what the fuck dude?) but still, the longer you drag that out the more money you're wasting on interest.

Set up a retirement fund though. Small one. Some sort of IRA or Roth depending on what suits you.

But why am I giving you any advice? My Visa APR is almost 30%, fuck.

invisible_al

09:52 / 31.01.06

To be honest all you have to make sure of is that after you've paid off your debts you immediately switch the money that you were budgeting on that into savings or investments. Then you won't be tempted to start spending it and you'll never miss it.

Here's a question, if you're going to invest in something would you invest in an ethical investment scheme? I know you can bank with the co-op over here and they're pretty good (compared to most international banking conglomerates) but what kind of options would you have in the states?

modern maenad

10:49 / 31.01.06

In addition to prioretising paying off your credit card, you can cancel the account to stop yourself using it ever again. I recently did this and its made such a difference - not having access to any credit has made me regulate my spending and, contrary to what I was expecting (to feel restricted, hemmed in, curtailed etc.) I feel a lot freer. I've worked out what I'm going to be paying off each month, how long its going to take and now feel grand about a having a plan.....

The Great Jor of Babylon

12:52 / 31.01.06

invisible al, I actually have no idea about ethical investments it's def something I will have to investigate.

modern maenad, I paid off another credit card and I didn't close it... I figured it's a line of credit I could use in a bind... and of course I have enough self control to NOT use it. Thanks for all your help this is all great stuff.

ibis the being

22:24 / 31.01.06

Here's a question, if you're going to invest in something would you invest in an ethical investment scheme? [...] what kind of options would you have in the states?

Try Domini Social Investments. They have a decent record both ethically and financially. I used to use them when I was an office drone and had a 401k.

Add Your Reply