MYOLD Week 15 - Time for Me and The Big Money Plan, Pt. I
So, this week, I looked at taking time for myself and Part One of The Big Money Plan. The Big Money Plan is kind of extensive, so let’s talk about taking time for myself first. My goal was to set aside 30 minutes every day where I did absolutely nothing and then took one day of the week off completely. Utter failure. There wasn’t one day I was successful. It was driving me crazy to sit and do nothing for 30 minutes. Things kept racing through my mind – all the things I need to do, all the things I should be doing. I was plagued with anxiety and guilt; it was more stressful than doing the things I needed to do. There were several times where, absent-mindedly, I forgot that I was taking time off and just started doing stuff. Unplugging is important; everyone needs an opportunity to recharge. But I haven’t learned how to turn my brain off, and it really starts racing when confronted with the option of nothing to do. So, to compensate, I took time to just have some fun. I don’t watch a lot of television, and when I do, I’m pretty much a news junkie, so that’s not fun or relaxing. I do watch Scandal religiously, but that show is so intense that it’s not relaxing or fun. So, I took 30 minutes to watch a sitcom or something lite on television, I played games on my phone, and even bought a magazine and read it. While it’s still not completely unplugging, it was enough to get refueled a little bit and it did make me function more productively. It’s a little like 750 Words, where I can do the non-linear, stream of consciousness brain dump and get all of the gunky stuff out of the way and think more clearly for the rest of the day. I need to work more on the complete unplug, but I need to do more unplugging in general.
Now, for The Big Money Plan, Part I. I did a lot this week, but I’ll try to make this more functional than just me rambling. Part I was all about information and education, so I’ll lay out my process in a step by step process.
Step One: What accounts do you have? Anything that holds money for you – checking, savings, money markets, stocks, bonds, retirement accounts, whatever. Get to know your accounts. In addition to how much money you have in them, document the features of the accounts. What fees are associated with them? What are the current interest rates (and look at you annual percentage yield – APY – that’s the best measurement)? What features does it have – online transfer capabilities, online bill payment, money management and budgeting, etc. – and what do they cost? I found that a couple of accounts had features I didn’t know about and one account didn’t have a feature I had just assumed it had.
Step Two: What are you spending your money on? At the beginning of the year, I started looking at my money more closely through LearnVest. Expense by expense, my money is categorized and compared to budget. Now, I’m looking at how I am spending as compared to my budget. Why am I over on this line? Why am I under on this line? And looking at several months helps to identify patterns. This is key as I start to make financial decisions. I need to know what I need to what my fixed and variable expenses are as well as where are the first areas to target as I need to adjust expenses to pay things off or save more.
Step Three: What accounts do you need? As a single woman, I just need one checking account. (If you’re married I’m an advocate for three – one for each spouse and one that is shared (all can even be joint checking accounts, but one person primarily controls the check). Ladies, make sure you have accounts in your name!). This is to pay bills and monthly expenses. But I need several savings accounts: one for six months’ worth of expenses that I set aside; one short-term savings for things like trips or Christmas; one for long-term savings like cars, addition to the house, etc; and one for cash flow for expenses that pop up like my car breaking down or having to get a new phone because I dropped it. I also want a mad money account – this is a monthly amount I set aside to do whatever I want to with it. I don’t have to document it or count it against budget; I just get to have fun. And that doesn’t even have to be an account; that could just be a jar on the nightstand. And then I need at least two types of accounts. I need a growth investment account where I take a few more risks but have bigger rewards for those risks, and I need a more stable IRA-type of account.
Step Four: The dreaded credit card. So, get a list of all the cards you have, including cards you don’t use or don’t have a balance, and get the info. How much do you owe on each account? What is your minimum payment and when are payments due? What’s your average payment? And, most importantly, what’s your annual percentage rate (APR)? So important because a 29% rate versus a 14% rate may be the difference in paying your card off in two years versus five. And I think you should look at your credit cards in two ways – a) if I keep up my average payment, how long will it take me to pay off my card and b) if I want to pay my card off in XX amount of time, I need to pay how much every month? Here’s a great CNN website to figure both of those out.
Step Five: Your credit score and your credit report. You should know your score and you should set a goal for what you want it to be in a year. You should also review your credit report – really review it. I found two big errors on mine and I’m in the process of working those out now. You can get a free credit report every year, so check it out at: annual free credit report.
I’ve been going to the library (Week Two at work!) and getting a lot of books on the subject of financial management. I have found Suze Orman to be really helpful, and she’s got a great website. Check her out at www.suzeorman.com.
So, next week is Part II of The Big Money Plan and I’m only drinking water all week (after my morning coffee – it’s not a pretty site without my coffee). So, we’ll see how it goes. Later gators.