Caring About Money – Part 2

August 7, 2008 at 6:07 pm 2 comments

I started paying attention and I had a goal. I wanted to be able to buy an apartment. So I started reading up.

First, I started by reading the LiveJournal community poor_skills. The community tends to have a lot of the same points over and over, but it is great if you are just getting started. The people there also tend to post alerts about different deals, so it is good to watch if only for that. The major things I learned from that community were:
1) Build good credit. A good way to do this is to have no debt (obviously) or work on reducing the debt you have as much as possible. The main thing that was helpful to me was reading about having a credit card that you use and pay off the balance of every month.
2) You can always cut more expenses. Things you can’t live without, you can find a way to do cheaper.
3) I am lucky. The major thing I came away with was that I am really fortunate to be in the position I am in-there are a lot of people in the community a lot worse off than I am.

Next, largely on recommendations or links from poor_skills, I started reading various money & finance blogs. My favorite was Get Rich Slowly, which was the first one I read regularly and is one of the most popular with good reason. From Get Rich Slowly I learned:

1) Pay yourself first. Put money into your savings account as soon as you get your paycheck, or better yet, have it withdrawn automatically. You can’t miss money you never had, and you can’t accidentally run out or go over budget and decide not to save.
2) Build an emergency savings. I am working towards about 3 months of expenses. This also ties into point 3 above-I may be lucky now, but anything could happen in the future. An emergency fund means that the next time I lose my job or become ill or some other unexpected expense comes up, I can have some time to deal with it and won’t end up in debt.
3) There are a few different simple rough budget plans. The one I went with is 60% regular expenses (food, shelter, transportation, health, pets, regular bills), 10% long term savings, 10% short term savings, 10% retirement, 10% entertainment/free/whatever. Just having this idea in my head changed things for me a lot.
4) Track what you spend.

I then started reading more money blogs and articles and talking to people and finally have recently started figuring things out for myself. I started reading some negative examples that showed me what I didn’t want to do. Amongst these was the book Confessions of a Shopaholic. It’s an excellent negative example. It shows:

1) It doesn’t matter how much you earn if you spend too much.
2) Pay attention to what you spend.
3) Deal with the reality of your situation. (Just ignore the very ending.)

I haven’t read any actual financial advice books. Get Rich Slowly summarizes them fairly frequently and I read those summaries but that’s it. I’ve learned a lot from those summaries, from other blogs, and from articles but I think these are the main ideas that got me started.

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$50000 (Haven’t You Always Wanted a Monkey) Caring About Money – Part 3

2 Comments Add your own

  • 1. Tim Ramsey  |  August 7, 2008 at 6:25 pm

    I recently came accross your blog and have been reading along. I thought I would leave my first comment. I dont know what to say except that I have enjoyed reading. Nice blog.

    Tim Ramsey

  • 2. debtfreesaver  |  August 13, 2008 at 8:47 pm

    Thanks Tim =)

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