Have and follow a financial plan

I’ve got Quicken set up with preliminary budget data. I’m going to have to adjust it as I go along, because A) the way the spending is set right now, I’d only have $20 left over each month and B) as I get more history in the system, I should be better able to predict future expenses.

I really hate the way it feels to be out of money at the end of each paycycle. I hate that more than I hate the tedium of tracking stuff and maintaining the data. My “towards” goal is the sense of peace I will feel when I truly know what I have & what I can spend, while still being able to get myself out of credit card debt.

I like the tools on mint.com but there’s no forecasting ability; only visibility into what has already cleared. I need to be able to track upcoming bills; checks I’ve written or pre-scheduled payments that haven’t cleared yet; etc. in order to have full insight into where my finances stand and where they’ll be in a week.

I’m hoping that Quicken 2010 will get me closer to truly managing my money, and give me the tools I need to actually have a full financial plan.

I need to set spending goals for major discretionary categories like food, household supplies, hobbies, cons, festivals, etc.

I can’t change my bills right now – but choosing how to divide up what’s left after the bills are paid will give me a sense of ownership and control over my finances.

Back when I was a single Mom (daughter’s grown & gone now), I was really, really good at this out of sheer survival necessity. Over the past few years, I’d gotten away from it – and it’s hurting me financially. I have the skills; I need to dust them off and put them back into regular use.

A friend told me about mint.com so I created an account and took a little time to look at the trendlines (only 90 days of history, but still helpful).

OMG. I spend way, way too much money. No wonder I feel like I’m living paycheck to paycheck! The biggest and easiest area to trim: food. Dining out has gone down, but grocery costs are still ridiculously out of proportion.

I need to do some serious thinking about how to fix this immediately.

After E’s recent birthday, he’d accumulated enough in his regular savings account to make it worth getting a CD. We’re not going to let him touch that money for years, so we went to the bank to get a 5-year CD and he’ll be earning a much higher interest rate. Though “higher” is 3.2% and S and I remarked to each other how when we were kids, interest on regular savings was 5%. We’re so old!

We all went to the bank together and explained to E what we were doing and why. That’s (hopefully!) worth something too; that he will come away realizing that you have to think about how to manage your money.

The portion of his gift money we let him keep burns a hole in his pocket. We really struggle with helping him spend it wisely. Basically, if he knows he has money, he immediately longs to spend it. Begs to go to a store, or if we’re in one, wants whatever he can find to buy. If we encourage him to plan ahead on what he wants to buy, and then it’s not there, he just has to have something else immediately. He can’t go empty-handed. I just hope that it’s a matter of practice and that eventually he’ll internalize the lessons we’re trying to teach. Because believe me, we’re constantly reasoning with him about money issues, trying to get him to act rationally. Right now he’s acting completely out of his id!

Well, the pamphlets from the gov’t came, and I was underwhelmed. They’re the equivalent of the magazine articles that say “Give up just a cup of coffee from a coffee shop a day, and you’ll save …” (some amount of money.) In fact, they even use that example. But clearly that is not the key to wealth. Nor bringing your lunch to work. I’ve always brought my lunch (and now work at home). S brings his lunch. E brings his lunch most days. We virtually never buy any sort of refreshment like coffee, water, or a snack when out and about. I always bring refilled bottles of water and granola bars that I’ve bought on sale, with a coupon. We watch those nickels and dimes.

And there was more inanity: They key to financial success is, and I quote: “Earn money. Don’t spend it all.” S and I had a good laugh at that one. Our tax dollars at work, there, creating and distributing that keen insight.

But anyway. We had to replace S’s car, so we took on another car payment, and this makes us nervous. But what we earn seems like it should be adequate, and I really don’t think we live like spendthrifts. So we decided to see where the heck all our money goes. S found a free Quicken-type program online and we’re starting to track our expenses there. I think that’s an excellent first step. Then maybe we can figure out some limits on things that we’re going overboard on.

this

Seems like a good place to start.

I’d like to do things like sit down and evaluate our net worth, figure out what our financial goals are and what we need to do to reach them, and things like that.

We make attempts to do things right, but mostly based on uninformed guesses. For example, I have long-term disability insurance, but does S? I don’t know. And how much life insurance should we be carrying, compared to what we have? Again, I don’t know. We have 401(k) (me) and TIAA-CREF accounts (S) but I am sure we’re contributing far too little. And we rely on windfalls (tax rebates, e.g.) too much.

So we need to sort this all out.

I am quite sure we can’t afford a financial planner, but I am also sure there are checklists and guides available online telling me what I (we) should be considering.