Traveling on a Budget

Being on a budget doesn't mean you can't travel.  In fact, I love traveling and try to do it as much as I can, whether internationally or domestically.  This year, I spent close to 2 weeks in Japan, a week in Montreal, a long weekend in Vegas, a weekend in Boston, and I'll be heading to a B&B in Newport, Rhode Island for a few days at the end of December.  Vacations are necessary, personally speaking, and they can be enjoyable without busting your bank account.  Here are some tips for vacationing on a budget.

Deals, deals, deals:  Expedia, Groupon, Gilt, and Kayak are only a handful of all the websites that have deals all year round.  You should check regularly if you want to be on top of new deals.  You can sometimes find deals that include the flight and hotel, which makes it super easy to plan.

Be open minded: Sometimes you will find a great deal for a trip to a place you would have never initially wanted to go, but these trips can be spectacular! For example, when most people think Europe, they think the UK, France, Spain or Italy, but why not try Iceland, Ireland, the Czech Republic, or the Netherlands? You'll save more money going to these "less touristy" sites.

Ca$h: Try to avoid credit cards, especially if you are traveling internationally.  Most cards will charge a foreign transaction fee.  Also, using cash helps budgeting easier because it's pretty easy to overspend if you're just swiping all day.  If you've only set aside $100/day, then you can only use $100/day.  It's pretty simple.

Do your research:  Plan beforehand your meals and activities.  Look up restaurants and their prices before you go on your trip.  The worst thing you want to do is just walk down a street and go into a place without knowing how good the food will be and what the prices look like.  I'd also recommend researching free activities to do during the day.  When we went to Boston, we ended up going to the Sam Adams Brewery, which is totally free (they ask for a little donation).  It was definitely the highlight of our trip.

Free loyalty programs: Sign up for them! Usually when you check into a hotel, the front desk will ask you if you'd like to sign up for their loyalty program.  If they say it's free, sign up!  It sounds like  a hassle to fill out a brochure where you usually have to fill out your name and email address, but you can get free wifi access, upgrades, and even free nights.  I think it's totally worth it.

Wishing everyone a happy holiday and safe travels if you're going to visit your loved ones this week!

Cheers!
Alison

Happy Hump Day

I've realized that budgeting is a lot of numbers and thinking and is probably pretty boring for most people, so I've designated Wednesday as a more personal post. It is hump day, after all.

Last night, my good friend and I went to see the Philharmonic Orchestra at Avery Fischer Hall at the Lincoln Center. We saw Handel's Messiah, and I thought it was absolutely beautiful. 

There is a long standing tradition to stand up at the "Hallelujah" chorus.  There was something so magical about seeing almost 3,000 people stand in silence to hear a chorus and an orchestra play. That was definitely my favorite part.

As a side note: I got my tickets on Travelzoo for a discount.  Just goes to show that you can still be on a budget, but enjoy all that NYC has to offer.

Cheers!
Alison

Creating a Budget

Who loves budgeting? Nobody. But you gotta do it, especially if you live in NYC and are in a lot of debt like me!  Yesterday, I spent some time trying to figure out how I wanted to budget for 2014.  For 2013, I used my own template that I created on Excel, I dabbled a little bit with Mint, and I used an iPhone app Toshl, but for the most part, I didn't really budget. For 2014, I've decided to revamp my own spreadsheet and use Mint in conjunction. 

What is Mint? Mint is one of the more popular budgeting websites.  It links up your bank accounts, loans, credit cards, mortgages (basically anything you have to your name), and it'll sort out your expenses by type.  So everytime you swipe your card at a restaurant, Mint will record it and label it as "restaurant."
Pros: It's a great way to see where you spend your money and track your spending trends. It's also really good from a "big picture" standpoint.  You can create budgets and goals on the site, which can really be helpful. There's also a nifty app that's nice.
Cons: It's so damn complicated.  You have to categorize some of your expenses.  It's only really helpful if you use credit/debit cards for everything.  Cash withdrawals/checks are harder to categorize.

My budget is a little bit more user friendly, but I guess you can decide that for yourself.  I've created a hypothetical budget below.

Part I:  INCOME

How much do you bring home a month?  This should be your paycheck and any other money you're bringing in.  I have tax net savings on there, which we'll get to later.

Part II: EXPENSES

What are the 8-10 categories that you spend the most money on?  Maybe you take cabs every night, so you could add public transportation on there.  Maybe you go to a lot of broadway shows, so you could add entertainment on there.  Be real with yourself, and really assess where your money goes.  The percentage next to the amount is the percentage that you spend on that item with respect with your total income. This should be less than 100%.  If it's over, that means you're overspending on your income.

Part III: Net Savings

This is the real important number.  This should not be a negative number.  If it's zero, that's fine (not ideal), but as long as you are not negative, you are not overspending. You can carry this through as "Net Savings" income for the next month.

Once you have the file set up, you have to make sure you update it monthly or that defeats the purpose.  See how much you've actually spent (what you use Mint for) and then match it against this budget that you've created.

If you would like the actual excel file, feel free to comment and let me know.  Happy to share!

Cheers!
Alison

Making Loan Payments 101

So now you know what loans you have.  Maybe you consolidated them, may you didn't.  Now what do you do?  Pay them. Duh. Here's how.

(Disclaimer: If you have just one loan, you're in luck and this post might not help you much.  If you happen to have more than one, read on.)

Organize yourself: List out your loans by interest rate: from the highest interest rate to the lowest.

Not all are treated equal: You're going to start with the loan with the highest interest rate.  Pay over the minimum payment on the loan with the highest interest rate and pay the minimum payment on everything else.  Obviously don't overpay if you can't afford the minimum payment on everything else.  Once you're done paying off that loan, move down the list to the next highest interest and so on.  The goal is to overpay on the highest interest rates first so you pay less interest in the long term.

Another move to make: Sign up for direct deposit. You can usually get a 0.25% reduction in the interest rate if you sign up for direct deposit, which means that the servicer will automatically take the minimum payment out of your account.  Keep in mind if you overpay,  most servicers will still take out the minimum regardless.  So make sure you double check to make sure that you have the funds in your account for the minimum payment.

Two is better than one: Paying more frequently will reduce the interest built up each month.  Instead of making one monthly payment of $300, make 2 payments of $150 a month. BUT (This is a HUGE BUT) if you can sign up for direct deposit, ignore this point, as getting a 0.25% interest rate deduction will probably be more beneficial.

Now let them steal your money! Just kidding... not really.  You're one step closer to being debt free.

Cheers!
Ali

Loan Consolidation 101

Yesterday, in my post "Paying off Student Loans 101", I mentioned loan consolidation.  It's something that requires some math and a little thinking, and I didn't go into great detail about it. I'll try to make it as straight forward and easy as I can.  I believe in you. You can do this.

You know what it issss... right?:  Loan consolidation allows you to take all your existing loans and all their different interest rates and combine them all into one big (AKA consolidated) loan with a single interest rate.

So what does that mean?: It means that if you have a huge loan at a high interest rate and a small loan at a low interest rate, you can actually save money with consolidation. An example I used in the last post, if you have a $40,000 loan at a 7% interest rate, you will be paying $2,800/year in interest.  Say you also have a $10,000 loan at a 2% interest rate, you will be paying $200/year in interest.  That means, in total for both of your loans, you will be paying $3,000/year. Just in interest. SIGH. But, you can consolidate! So rather than having 2 separate loans with 2 different interest rates, you have can a $50,000 ($40,000 + $10,000) loan at a 4.5% (7% + 2% divided by 2) interest rate, which means you'll be paying $2,250/year.  You do the math.

Gimme more: Another huge advantage of loan consolidation is that it makes it a lot easier to make your payments.  Instead of making different payments to different loan providers, you just pay one guy, and it's done.  This was extremely helpful for me as I consolidated 10 loans into 1 ginormo one.

Hold on, the math ain't adding up: Loan consolidation is not for everyone.  Sometimes you can pay more interest with loan consolidation.  If you have a small loan at a high interest rate and a big loan with a low interest rate, it won't help you.  So make sure you do the math! Another thing to watch out for is consolidating private loans.  Federal loans are nicer to us because they qualify for loan forgiveness.  If you become a teacher in an underprivileged community or volunteer in the PeaceCorps, you can have your loans forgiven, but if you consolidate federal loans and private loans, you will lose these benefits.

Let's get to it to it:  This is the sketchy site I used to consolidate my loans.  I know, I know, it looks like a 5th grader website.  Unfortunately, the government can only hire 12 year olds to make their websites these days. It'll take a few weeks for them to process everything, so I would call weekly and make sure things are moving.

Phew. Hope this wasn't too boring, but you made it through.  Do a happy dance!

Cheers!
Ali

Paying Off Student Loans 101

I've been working for a little over a year now.  To be honest, I thought that by now I would have cut out a significant portion of my student debt, have a few grand saved up in my bank account, and not be living paycheck to paycheck, but I'm not even close. (So now that I think about it, maybe I shouldn't be really giving advice....) But I am an accountant! This is my job, and going into 2014, I want to make a conscious effort to eliminate my student loan debt by $15,000 next year. This means I have to pay off at least $1,250 a month. Holy. Crap.

Just a little history and a bit about myself, I am 23 years old.  I went to college at one of the most expensive private universities in New York City.  And as if I wanted to dig myself an even bigger hole, I did my graduate studies at the same expensive private university.  After 5 years of school, I accumulated $90,000 in student loans.  I secured a full time job at a top accounting firm, and I currently work as an tax accountant.  This was the ultimate goal: to get a stable job and pay off my loans quickly.  I'm looking back at the past year and see that I have utterly failed at the latter.  So now, in an attempt to motivate myself, and the 37 million other student loan borrowers, I have created a list of tips to start the journey to eliminate student loan debt.

1) Get a reality check.  Know your debt- student loans, credit card debt, mortgages, what have you.  When I started college, I signed whatever I needed to sign to take my classes, not knowing at all what I was really signing up for.  The National Student Loan Data System is a federal system that gathers all the loans under your name. 
2) Cry a little.  Take a deep breath.  Then organize. List out all of your loans from the highest interest rate to the lowest, with the principal balance, interest accrued and new principal balances.
3) Look for glimmers of hope.  Look into consolidating your federal loans (NOT private).  What loan consolidation does is average out the interest rates to give you one huge consolidated loan.  You will have to calculate the percentages to see if it is worthwhile. For example, if you have a $40,000 loan at 7% ($2,800/year) and a $10,000 loan at 2% ($200/year), you can consolidate to have a $50,000 loan at 4.5%. ($2,250/year).  With consolidation, in this example, you save $750 a year! 
4) Pay more now, save more later.  Pay off more than the minimum payment.  An extra $25 will go a LONG way.  Also paying 2 smaller amounts a month, rather than 1 big amount a month, will lower your interest accrued each month.
5) Did you really need that Celine bag? Budget, budget, budget! I will have to create multiple posts for just this point.
6) Everyday I'm hustlin'. Find some more money.  Sell your old textbooks on Amazon, old clothes on Poshmark, look through your couch cushions, or start a blog and get ad revenue!

I know this can be very overwhelming, but I hope you find comfort in knowing that there are millions struggling with student debt.  Whoo-sahhhhh.  We will get through this together.

Cheers,
Ali