So, you know I like to talk about money.
It's literally my job.
I noticed that I often post about my student loans, but I never really tell you how things are going here in the financial "real world."
First off, I'm pretty neurotic about finances and organization, so of course my finances are organized in what some would call a neurotic way. I've read and am a big fan of Dave Ramsey, but I'm not into carrying cash. He promotes the envelope system for budgeting, and I may have taken that to another level. Instead of having envelopes for different budget categories, I have different bank accounts. They're free to have, and it works for me.
So I have my general checking account, at Chase. This is where my paycheck is direct deposited, and where everything comes to before it gets budgeted out.
First to come out is my tithe. This account is at Regions. It might be easier to have all of these accounts at the same financial institution, but specifically for my tithe, I prefer to have it at Regions because it is the only thing I use Regions for. When I get paid, I write a check from my Chase account to my Regions account for my tithe. I like doing this because as soon as the money is in Regions, I basically forget that it exists. It is no longer mine. From this account, all of my monthly donations to missionaries/churches etc. come out, and I also have a debit card on this account for when I get the privilege to buy breakfast for a favorite seminarian or someone else in need.
I also have a few accounts at Fidelity. Two of them are emergency savings accounts. One account is just a solid emergency fund of $1000. This isn't even close to the recommended 3-6 months of living expenses, but I feel pretty secure in my job, and I hate having cash that is idle and not working for me. (Especially when I owe Sallie Mae an arm, a leg, and my first born.) Then I have a car expenses account. I put $600 in this account at the beginning of the year to use for oil changes, car repairs, and things like that that may come up. The reason I chose $600 is because it's $50/month. So far this year I've had an oil change and a tire repair, totaling about $56. Over the year, the account will dwindle and I'll put another $600 in for next year. I am thinking about contributing $150/month to start paying for gas out of this account. If I do this, all of the expenses for my car will flow through this account and when I do a year end review of my finances, it's much easier to plan for the next year.
And then of course I have my 401k. 7% of my gross income goes into this account and the company matches it (and then adds 10% of my gross salary to the account each year through our profit sharing plan!) My contributions are after-tax dollars, their contributions are pre-tax. It's aggressively allocated and actively managed by Strategic Advisors, the advisory arm of Fidelity.
Expenses that I have that just come out of my normal checking account include rent, student loans, groceries, electric/water, cable/internet, clothes, gifts, and miscellaneous.
I don't have a savings account, but that's because I really don't need one at this point. I'll get one once I am maxing out contributions to my 401k and IRA and have paid off my student loans. (This will take a while.)
Now let me tell you about this brilliant idea I had a few weeks ago. I've been paying off student loans little by little and sometimes it feels like there's no end in sight and that I'm not making any headway. Well, I got an offer in the mail from Regions for an interest free credit card for 12 months, which got the wheels turning. (I already have a credit card through Chase, but I don't carry a balance on it.) I started thinking about how I could put a portion of my student loans on a new credit card with a zero interest rate. So I went to Regions and got a new credit card with a rather high limit. I got pretty stoked about the prospect of saving about $150/month in interest by just putting $5000 on the card and paying it off over the year. Well... you know what they say about the best laid plans.... Apparently, Sallie Mae has a policy that you can't put more than just your minimum payment on a credit card. Now, in general, I think this policy is probably a good idea because credit card interest rates are higher than student loan rates, and it prevents broke 20 somethings from getting in over their heads. But for me, in this particular scenario, I was pretty annoyed. So now I have this credit card that I don't need and can't really use how I want. Lesson learned: find out if what you want to do is possible before you make plans to do it.
BUT! There's a silver lining. I just got my Q4 Bonus and my tax return so I put a couple thousand on my highest interest loan. So even though I wasn't able to do what I wanted, I still feel like I'm finally getting ahead on my loans. I can't wait to be debt free. Only a few more years!
Do you need help getting organized, budgeting, or saving? Obviously I'm pretty enthused by the whole situation, so if you need help, ask!
St. Matthew the Apostle, patron of money management, pray for us!