personal finance makeover in 2008

[shinypenny]

I've been reading wisebread on and off because even though you all make me laugh and learn, you also make me feel guilty. The article about a recession coming... and it being almost the new year.... I'm thinking it's a good time to get my finance in ship shape.

I'm a financial wreck. I don't know where my money is, I don't cash checks for weeks/months, I don't have any investments.... but I want to. I want to be the financial supergirl that is super organized, knows where all her money is, and is making that money work as hard as possible.

I make a decent wage, and I'm not heavily in debt or struggling to make ends meet. But that's part of the problem. I'm fine in the short term since there's cash in my checking account so I can just hit the ATM. But I have no long term plan.

So wisebreaders, here's my question to you all. What should I do in '08 to get my financial life under control? Start from the basics. The easier it is the more likely I will actually stick to it. What worked to help you go from financial slouch to financial superstar?

Thanks!!! You're saving a life!!

always smilin'
-penny

[davoscat]

Ironically, most people get into financial shape only after they hit rock bottom.

It sounds like you are doing ok on a month-to-month basis, and that might be why you're having such a tough time getting things organized. What you need are long term goals. Ask yourself what you want to happen in your life a year from now, 5 years, 10 years...

Knowing those goals will probably motivate you to get your finances together.

[Greg]

Originally Posted by shinypenny

What worked to help you go from financial slouch to financial superstar?

Your question reminded me of something I read on the Simple Dollar. He outlines a day-by-day action plan to turn around your financial life in 31 days.

Here's the summary post:

The Simple Dollar » 31 Days To Fix Your Finances: A Wrapup

Good luck!

[Julie Rains]

Originally Posted by shinypenny

I've been reading wisebread on and off because even though you all make me laugh and learn, you also make me feel guilty.

I write for Wise Bread and I often feel guilty after reading the posts so don't feel too bad. I consider myself frugal but seem to be out-frugaled on a regular basis. I am also not terribly organized -- paperwork is my nemesis though the computer is my savior b/c I can find things there, so I have entered account numbers for investment accounts. (new year's resolution -- create a "where things are" file on the computer for items seldom used and paperwork files).

Per Trent's plan (The Simple Dollar), it does help to have goals to inspire greater savings (though it looks like there is more to the plan as far as outlining values). I marvel at the people who seem to know exactly what they want at age 20 and seem to work steadily and unwaveringly (with seemingly no obstacles) toward their goals.

And taking a look at expenses and seeing where you can cut back is extremely useful and should probably be done every year if not more often. Just freeing up an extra $25-$50 per month can help you make great strides. I'll plug a few of my articles that may be useful in helping you get started on saving and investing -- you can start without having your entire life values figured out.

3-6 months of expenses -- with the idea of funding a Roth account that you can use for long-term investment but if you need the money, you can take out contributions (not earnings) without a penalty
Dividend Reinvestment Plans
Sharebuilder vs. Discount Brokerage -- Investing

[Will]

Originally Posted by Julie Rains

I write for Wise Bread and I often feel guilty after reading the posts so don't feel too bad. I consider myself frugal but seem to be out-frugaled on a regular basis.

Maybe we should hold an "Wise Bread Frug Off."

[shinypenny]

Thanks everybody for the responses!

Originally Posted by davoscat

What you need are long term goals. Ask yourself what you want to happen in your life a year from now, 5 years, 10 years...

I started thinking about goals. But it all seems so far off. And what I really want (a house, a family) seem like really big steps that budgeting or using quicken would not necessarily help me get quickly. Of course it doesn't hurt to know if I'll actually be able to buy a house in a few years....

One of my goals for 2008 is definitely good financial organization. I have to know where my money is and where it's going before I can make long term plans. Or so I've been told.

Originally Posted by Julie Rains

I write for Wise Bread and I often feel guilty after reading the posts so don't feel too bad.

That's so funny Julie! Your investment posts sometimes (ok all the time) over my head and intimidating. I always saw you as that super financial girl I strive to be. It's comforting to know we're all human.

Originally Posted by Greg

something I read on the Simple Dollar. He outlines a day-by-day action plan to turn around your financial life in 31 days

Thanks for the links. That sounds like exactly what I need. I'll go read those articles now.


always smilin'
-penny

[Julie Rains]

Originally Posted by shinypenny

That's so funny Julie! Your investment posts sometimes (ok all the time) over my head and intimidating. I always saw you as that super financial girl I strive to be. It's comforting to know we're all human.

Thanks for telling me that. I have thought about going back a bit and explaining, for example, what a stock is in the first place.

[summrs1]

You say you don't have any investments. I think a good place to start there would be to invest in your company 401k, if you have access to one. Otherwise, have money transferred directly from your bank account to a Roth IRA.

Every little bit helps and the earlier you start saving the better.

[quitejaded]

Hey, I am interested in your journey. Can you keep us posted? I am interested because I am a college student who has finally begun seriously pending parental independence. But I don't know ANYTHING about money!! :S I have a credit card, but I don't know much money is in it. My parents just gave it to me and told me to use it when I run out of cash!

I wish there was some kind of guide... like for babies. A book called "Taking Care of Money for Dummies". What is a young person to do?

[n_vizion]

Perhaps you can start with opening an online savings account. You will earn more interest than traditional banks and keep your money off limits at the same time. You may also want to consider giving yourself a certain amount each week, or two weeks for your spending on items other than your rent, bills, gas, groceries, etc.

The savings account thing is a huge step because you will see your money begin to grow with each deposit. The interest deposited once a month is also a motivator that will introduce you to the beauty of compounding interest. Soon after, you will be ready to start with a mutual fund or other type of investment for your long term needs.