Wednesday, September 26, 2012

Managing My Money


It is strange having money. Now, I am by no means rich, but I actually have enough money to have a budget. I used to make a budget in a way, however, it was mostly me trying to scrape enough pennies together to afford the least amount of everything it would take for me to survive. That is not exactly fun. It helped me get by I suppose.

Today, though, I get to move my money around! It is great! Maybe I want to pay off more of my debt; I will just go to the movies less this month. Want to eat out more? Perhaps I can pay off less of it. Or I can always look for deals. Either way, I get to plan out, organize and deal with my money in a way I have never had the opportunity to do before. And the internet makes it so much easier.

Of course, I think it was Abraham Lincoln who famously said, "Mo' money, mo' problems."



Google Docs Budget


To organize my budget I use a template I found on Google Docs/Drive. The original is also found here. It is easily customizable. In fact, I have changed it plenty of times. There are certain fields I do not need and certain ones I decided to include. Plus, since I live in Korea, I had to put in formulas to convert Korean Won to America Dollars and the other way around. That made my figuring out my budget much less stressful. All of my daily expenses are paid in won, but all of my debt has to be paid in dollars. That means each month I have to go to the bank and tell them how much to send to my American bank. It costs money to do so. And since I do not want to pay that money more than once a month, it really pays off to know exactly how much to transfer when I go in there.

Snowballs

Another advantage/thing to deal with is how to pay down my debt. Thanks to college and life, but mostly college, I have plenty PLENTY of debt. For most of my post-college life, I have paid the minimum payments on my loans and credit cards (except for while I was working at Walmart, I paid a little over the minimum). But how do you decide what to pay first? Jackie told me about this website that helps with that.

What you do is create "snowballs." You decide how much in total you want to pay off in a month. This number has to be at least the sum of all your minimum payments. For me, I can now pay much more than that. Then you list all of your debt and include the APR. You pay the minimum payments on everything except the one with the highest interest rate. Then, once you pay that off, you use all the money you had been paying off on that bill and apply it to the debt with the next highest interest rate. It made sense to me, but I decided to ask my mom what she thought since she is a financial genius (at the very least she is really good at budgeting and paying off debt). She said that is exactly what she has been doing for years, but without the help of a website or program. She simply writes it all out by hand.

Confusing? Well, this website does all the thinking for you. All you have to do is plug in the numbers. It will lay it all out for you and tell you how long until you are debt free. You can update the numbers each month (including if you made more purchases on a credit card or made a payment of whatever you decided) and it will update immediately to reflect your new situation. Since I began to use it, I have paid off four of my highest interest rate credit cards. (And thanks to 0% interest offers, I was able to do it before I really took a hit)

According to the site, if I continue making my payments and not adding debt (and I have started to try to save more now since, you know, I actually can now), I should be out of debt by the summer of 2015. That's still a while out, but if you had told me a year ago that I would be out of debt before I was 30, I would have laughed in your face. Like the Joker in "I Am the Walrus."



The next step is saving for retirement. I will start looking that up as I get closer to my debt payoff date.
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