Life goes on...

One day about a few months ago, I woke up and realized that this is my life. Everyday, I wake up, go to work, do my thing, come home, rest, and do the same thing again the next day.  I guess I thought that there would be a next step, something that would await me as I went through my daily routine, as if there would be a top 5 law school chasing me down and begging me to get my JD or a kick-ass job opening coming through to my inbox or my boyfriend deciding that he would finally move to NYC so we could be together.  But the truth is, that rarely happens. We are at an age where if we want something, we have to work for it, but at the same time, we have the power to change our circumstances to get it. You have to study for months before you take the LSAT; you have to apply to 50 jobs before you hear back from 1; and you will have to make hard decisions that you think will make you happiest. So after six exciting, tiring, unexplainable, unforgettable, beautiful years in NYC, I finally said goodbye. Life is happening and passing us all. The truth is that I don't need my JD, and I don't need a kick-ass job; my job is just fine. What I did need is my guy, and I refused to let my life keep passing by without him.  

I've been in Hershey for 2 months now, and I am so, so unbelievably happy.  It was the best decision I've made in a long while, and I'm mad at myself for not moving earlier.  That's not to say it wasn't hard because it was.  It was hard to leave my closest friends and church.  It was hard to make new friends, and the move was hard financially and logistically.  And it was so worth it.  So my advice to you is to go.  Life is what you decide to make of it.  If you're unhappy, change it.  You're young.  You have nothing preventing you from moving to Asia or Europe or California.  You can change your job if you dread going to work every morning.  Life goes on, and it will keep going on.

Happy Wednesday.

Ali

Living Below Your Means

One thing I learned during a college financial seminar was to always live below my means.  So even though I can afford a Grade A product, I should always go one level below to a Grade B.  It's obviously much harder said than done, and personally speaking, this is one of the most difficult things for me to do.

I've realized in the last few days that living by this rule will make budgeting a lot easier.  Once you start living below your means, you will naturally save more. Usually once people get promoted, they upgrade a lot of things in their lives.  They will get a nicer car or a nicer home or nicer clothes and bags. And while upgrading isn't a horrible thing, sometimes (usually) we start spending right up to our means, which makes budgeting harder.  Mo' money, mo' problems.

This post is really a reminder to myself.  It's not just about finances.  God calls us to be selfless and to live humbly.  He calls us to give more than we take and to be thankful for everything that we do have.  He gives and takes away and for good reason.

So no puppy for me. 

The end.

Credit Card Series - Part II

Today's post will be extra, extra fun! We're going to talk about the best way to use your credit card.

The main reason why you would get a credit card is to build up your credit.  When you eventually want to take out a loan to buy a house or a car or anything else that you'd need a loan for, the loaner will want to see your credit history and make sure you've historically made all of your payments on time.  Practically speaking, it would be very risky for a loaner to give you a bunch of money without knowing your payment history.  This is why you need at least one credit card to build up your credit.

One of the best ways to build up credit is to use your card, obviously, but you need to use your card strategically. Remember, the point of a credit card is to build up your credit and thus your credit score.  Here are some tips for doing just that:

1) Do not use more than 30% of your credit limit.  If your credit limit is $1000, ideally you should only be putting $300 on your credit card a month.  Having your statement balance more than 30% of your limit can actually drive your credit score down.  I usually spend more than 30% of my limit, but I pay off a portion before the statement ends to ensure that my final monthly statement amount is under the 30% mark, which is totally fine because lenders will only see your final monthly statement numbers.

2) But remember to still use your credit card and have a balance at the end of the month.  You want to show lenders that you can pay your card off.

3) Pay the balance off in full each month.  I know there are a lot of people who pay only the minimum payment, but seriously.... pay off the full balance or you'll get caught in a vicious cycle and fall into credit card debt very quickly.  Get into the habit of paying it all off each month.

4) Don't close any credit card accounts even if you're not using them.  One of the factors that your credit score takes into account is the length of your credit history.  They will actually take an average of the number of months/years you've had each of your credit cards. If you close a credit card, you'll lose the entire credit history along with it. So unless there is an absurd yearly fee with the credit card, just keep it open and leave the balance at zero!

5) Request credit raises once or twice a year.  If you've done a good job at numbers 1-4, it should be pretty easy to get a credit raise.  Nowadays you can just apply online, and it takes literally 2 seconds to be approved.  Sometimes the bank will give you a credit raise without you asking.  Credit raises are great because you'll be able to spend more (remember 30% threshold) and it'll give you some ease of mind.  If for some reason, you ever needed to borrow a lot of money, you have a place to borrow from.  Also, the higher your credit limit, the more likely another lender will let you borrow from them.  If they see that other banks trust you, they will trust you too!

A great place to find out your credit score is Credit Karma.  I was obsessed with this site after college.  It's totally free and will give you a report card of your credit.  Could be a good place to start if you're curious to see how you're doing.

That's all for a Monday.  Have a great week!

Ali

Credit Card Series - Part I

"What's a good credit card?" I've definitely had this question asked more than once.  The truth is, it depends on your spending habits and what you want in benefits.  So, I'm going to list out some things that you might want to consider and some of the most popular cards I've seen amongst people our age.

Things to consider:
1) Why do you want a credit card?  What do you want to use with your credit card benefits?  For example, do you want cash or do you want flight points? Do you want gift cards or do you want statement credits?  Depending on your answers to these questions, your credit card options may change because the rewards are different among the different credit card companies.

2) Where do you spend the most money?  Where are you going to gather the most points?  It's a game, really.  The more you spend, the more points you get and the more points you gather, the more rewards you get.  Some credit cards will give you 5% points on restaurants, while others will give you 1%.  If you only ever use your card on food, it would be wise to get the former.

3) Are you making money? Can you pay off your credit card bills on time? I guess this is the most important and I probably should have put this as the #1 consideration, but this should really effect what credit card you go with.  If for some reason, you only pay the minimum payment each month (which I highly, HIGHLY discourage), you will have to pay interest on the remaining balance, as well.  Depending on the card, this interest rate will vary pretty significantly. 

4) Are you spending enough/gathering enough rewards such that a yearly fee is worth it?  The "better" credit cards (or the cards where you can receive a lot more benefits) usually have a yearly fee.  This can be worth it if you spend enough throughout the year so that the fee is actually cancelled out in benefits.  This is kind of hard to determine until you've actually had the card, but it's just something to consider.

Popular cards amongst our friends:

1) American Express - Everyday Blue Cash
I actually have this card, and to be honest, the rewards really aren't that great. 3% groceries, 2% gas, 1% everything else. I've had a hard time building my rewards with this card, but the card itself looks really cool. 

2) Bank of America - Power Rewards
I also have this card and have seen much better rewards with it compared to my Amex.  I usually use it for statement credit, which is really great.

3) Chase Freedom
A lot of my friends have this one.  It has a neat 5% back on certain items feature and the item changes every few months.  They also usually have a deal when you initially open up the card... i.e. spend $500 in the first 3 months, get $100 back.  I've heard only good things about this one.

4) Chase Sapphire
This is also a popular card in NYC as it gives you double the points on restaurants.  One of my close friends bought a plane ticket to Europe with all of with her credit card points. Note this is a "better" card and there is a yearly fee.

5) GAP/Banana Republic, J.Crew, or other clothing cards
Most of my friends have at least one of these clothing store cards.  I was always told not to get one, but I can see where it can have its perks, especially if you only ever shop at that specific store. I think it would just encourage me to shop more, which is why I've never gotten a store credit card.

Next, we'll be covering how to use the credit card!

Ali

Greetings from Hershey!

Hi to all my readers - all 5 of you. 

If we are real friends or friends on Facebook, you should know by now that I have officially moved out of NYC.  Over the weekend, I moved to the sweet town of Hershey to be closer to a boy.  People in Hershey think I'm nuts, but boyfriend and I have been together for almost 7 1/2 years and have spent 6 of those years apart.  Are we stupid or what?  Anyway, I was sick of it and he was sick of it, so I made the move.  And here I am.  In Hershey. Actually, Hummelstown.  But let's just stick with Hershey.

I'm not sure how great this whole budgeting/finance/accounting themed blog will stay afloat here, so the direction of this blog (as discussed with some friends) may change. I'll have a lot more time to cook and design and go on dates and shop for plants, but who knows?  Budgeting is something that everyone has to do, not just those folks who live in NYC.  Hershey is obviously drastically different from NYC in terms of cost.  I've been here exactly 3 days, and I'm just gonna go through a few things that are "normal" here.

1) Grocery stores have real sales.  Like legit sales.  Stupid Trader Joes (they don't believe in sales) and Wholefoods (what's a sale when 3 leaves of kale is still $10) led me to believe that grocery stores don't offer decent sales, but boy was I wrong.  I got 4 bell peppers for $4! A can of chickpeas for $0.89! Who knew?

2) Parking is $1 for 15 minutes in Manhattan. Parking is 25 cents for 5 hours in Elizabethtown (a town just outside of Hershey where I found the most adorable coffee shop and spent 3 hours reading and chatting it up with a grandpa on how to connect to wifi.)  A quarter for 5 hours.  And I didn't have to worry about coming back to a dented and keyed car.

3) Outlets are the greatest thing known to mankind.  Why did I ever buy anything at a normal store when outlets have the same exact thing but at 50% of the price and then have an additional 50% off on top.  I don't get me sometimes.  I wish I could tell 20 year old me to put down that full priced blouse at J.Crew, suck it up, and just go to the damn outlet.

That's all for now.

Love,

Ali

Filing Your Taxes: The Basics

Hi there!

Since no one answered my poll (sigh) I decided the next topic on my own.  Filing your taxes (or Form 1040)!  How fun!  The deadline is April 15, so you still have a decent amount of time to gather everything you need, plop yourself down on a couch, and do the dreaded task that no one wants to do.  I actually think filing taxes are really fun, mainly because I know that I'll likely be getting cash at the end of it. 

Why do I have to file in the first place?  The government wants a little piece of every dollar that you make.  They need that money to give us highways and public schools and parks and unemployment benefits and everything else to run this country.  They also want this money consistently throughout the year, which is why every time you get a paycheck you should see federal and state and perhaps city withholdings.  Your employer takes out the amount of taxes from your paycheck that it thinks you owe, but it's an estimate.  It doesn't account for any deductions that you may have or credits that you may have earned.  So, when you file your taxes, you are taking that estimate and adjusting it to what it really should be.  It may be the case that you have underpaid your taxes throughout the year, so you will owe money, or it may be the case that you have overpaid your taxes throughout the year, so you will receive a refund.

What do I need to file? Before you even think about filing your tax return, you need to have your W-2.  Your employer should either mail it to you or allow you to access it electronically at your workplace, but this is the most important (and sometimes only) document you need.  It's the backbone of your tax return.  It lists out your earnings, federal and state withholdings, and other taxes that are all entered into the tax form.  The company also sends your W-2 to the IRS, so the IRS will be able to see any discrepancies between what you file and what is on the W-2 that they receive.  If you have multiple employers, you should receive a W-2 from each employer, and you'll have to enter all of this information separately into your tax return.

What else do I need? Depending on the deductions/credits that you plan to take, you'll need a few more documents.  If you gave any money to a church, synagogue, or charity, those organizations should provide you with documentation listing the total amounts you've donated throughout the year. Donations to charities and nonprofits are deductible.  If you made student loan payments, your servicer should provide you with the form 1098-E, which lists out the amounts paid on the interest portion of your loan. Only the amount paid on interest is deductible.

Did you do Standard vs Itemized? I hear this a lot.  These are the 2 types of deductions.  The standard deduction is the deduction that the government gives everyone, regardless of the deductions that they actually have.  It varies a little each year and is different if you are married or single, but for individuals, the standard deduction is $6,100 for the taxable year 2013.  The itemized deduction is  calculated on your own, and you will obviously only itemize if your deduction is greater than the standard.  How do you calculate it?  You use the various tax forms that you've received and just add up what your potential deduction would be.  If you use any programs (like the ones mentioned below), the program will calculate the deduction and determine whether you should use the standard or itemized deduction.

There are a bunch of sites that offer free filings of the federal return (states are a different story). You can file through the IRS, TurboTax, TaxACT, or H&R Block all for free. Because we are pretty simple people with only a few simple deductions, it's really not necessary to buy a TurboTax Deluxe program or hire an accountant.  Remember that you also have to file a state return for every state in which you have earned income, and you usually have to shell out some money for these returns (no more than $30).

Happy tax filing!

Ali

Saving for Retirement: The Traditional IRA

Today, I will go over the Traditional Investment Retirement Account (IRA).  Yay!

The Traditional IRA: This account, like the Roth IRA, is an account that you can open up with most banks.  (Remember that a 401K is one that is opened up through your workplace.)  Banks will likely give you a bunch of investment options, ranging from CDs to money markets to mutual funds to stocks and bonds, and you can choose what you'd like to invest in based on your own preferences of risk and return.  The IRA is kind of a blend of the 401K and the Roth, and I'll explain why.

Pros: Like the 401K, your contributions are deductible.  That means you can adjust your income to deduct any contributions to your IRA, which will reduce your taxes.  Because your money is growing tax deferred, this means that the gains on your account will be larger.  Unlike the Roth, there are no income eligibility requirements, so if you're making $50K a year or $250K a year, you'll be able to contribute to the IRA as long as you're under 70 1/2 (don't ask me why they make up these weird age limits).  The max amount you can contribute during 2014 is the same as the Roth - $5,500 a year.

Cons: Because you are deducting your contributions (AKA not paying taxes on the money when you initially put it into the IRA), you will be paying taxes on it when you start to pull the money out.  Another requirement of the IRA is that you will be mandated to take money out once you turn 70 1/2, whereas with a Roth you're not required to do that. Consistent with the other retirement accounts, you will be hit with a 10% penalty fee if you start taking money out before 59 1/2, unless you meet one of the exceptions.

I know saving for retirement seems like a long, long way off, but it is really essential to start saving for it, especially when you're young.  The difference between starting a retirement account when you're 23 vs. 33 is huge. Like really, really huge. Some people think, "Oh, I'm still young, I'll start it when I'm 33 because I'll be able to contribute a lot more." What I say to those people is, "You are likely wrong."  Even if you're contributing a lot more when you're 33, the amount you can compound in 10 years with a smaller amount of money will likely be bigger.  My advice to you all is to open one up as soon as you can, even if you know you'll be putting just a little bit in each month.  I put aside 10% of my paycheck into my 401K.  I could decide later to put some into a Roth and some into an IRA, but this is just works for me at this stage of my life.  It's totally all personal preference, and there is no right or wrong retirement account to invest in or right or wrong amount to contribute, but something is better than nothing.

Happy saving!

Ali

Saving for Retirement: The Roth

Hello my budgeting friends!

Sorry I have been so MIA for the past few weeks.  Busy season is finally coming to a close, and I will give this blog a little bit more lovin’.  I’m continuing my posts on retirement accounts. Here we go!

The Roth: Another popular retirement account that could be of interest to you!  The greatest advantage to the Roth is that the money comes out tax free -- you put in after-tax money, let it build, and you take out all the money without paying the government a dime of it. It’s a great retirement account to have if you believe your tax rates will be high in 40 years when you retire, which is why it’s popular amongst younger people (will explain this more below). You can open up a Roth with pretty much any bank, and the amount you can contribute to the Roth varies a little bit each year.  For 2014, the limit is $5,500/year. 

Pros: As I’ve mentioned, the huge advantage of a Roth is that your money comes out tax-free when you retire, which is not allowed with a 401K. So think about it. We’re young and we’re not making big money just yet, so our tax bracket is at the lower end.  Then, imagine yourself 40 years from now.  We’ll hopefully be making big money and that would put us into a higher tax bracket. If you put money aside now in a Roth, you’ll be paying very little in taxes and when you finally pull the money out in 40 years, you won’t have to pay any taxes on it! 

Cons: Because you pay taxes before you put the money in, you will be building less.  So, for example, instead of putting $100 pretax, letting it build up, and paying the tax on it when you retire, you are paying tax on the $100 first which will really be like putting in $70, letting it build, and then pulling it out tax-free.  Building up $100 over 40 years will get you more money than building up $70 over 40 years.  Another disadvantage of this account is that there are income eligibility requirements (another reason why it’s popular for younger folks). If you are making more than $114K a year, the contribution limits will start to phase out.  And while I don’t know any 23 years olds making this kind of money, if you make over $129K, you won’t be able to contribute to a Roth at all.  Some people who know that they will be making this amount in a few years don’t even bother creating a Roth because they know they will be phased out eventually.  Like the 401K, you cannot pull any money out of the Roth until you are at least 59 1/2 and have held the account for at least 5 years or you will incur penalty fees.  There are, of course, exceptions to this rule. 

If you're interested in starting an account, there's a great website I found that will be able to answer more of your questions if you have any.  Still trying to figure out how to create an anonymous question box.  Closest thing I got was a poll (see left).

Next up the IRA!

Ali

Updates

First off, I want to apologize to the 10 beautiful people who read my blog.  I haven't put up a post in weeks, and there really is no excuse for it.  I of course have an excuse and that is that it's busy season at work, and I just haven't had the time to update.  I don't ever want to write posts that are rushed and not thoroughly researched. So I am very sorry.

Secondly, I just want to let everyone know that I won a Super Bowl Pool at work. Holla. At. Your. Girl.  $175 in my pocket. Go me.

That's all.

Have a great week!
Ali

Saving For Retirement: The 401K

I know this seems a long way off, but starting as early as possible is the best way to go.  Just think about it.  If you want to retire when you're 65, and you don't die until you're 90, which is pretty common nowadays, you need to find a way to support yourself for 25 years without any income.  Retirement is all about compounding, which is a fancy word for adding onto what you already have, and the earlier you start setting aside money for it, the more you compound.

I'm going to share with you the 3 most common types of retirement accounts and the pros and cons of each type over three different posts (retirement accounts can get pretty heavy).   So here goes...

The 401K: If you work for any company with standard benefits, you'll be offered the opportunity to start with a 401K, the very basic retirement account that everyone talks about.  So what is it?  It's an account that you own, and will continue to own, for the rest of your life.  Even if you change jobs, you don't lose it.  It's yours.  You put money into it and choose how to invest it and hopefully make more money out of it.  Different companies have different plans (i.e. mutual funds) on how to invest.  There are some that are higher risk, but have greater returns.  Some with lower risk, but smaller returns.  Some are very actively managed so you may have to pay extra fees.  Usually big companies will match a small portion of your contributions, but that varies depending on where you work and how long you've worked there.  Regardless of whatever plan you choose to go with, the main purpose of this account is to save you money and make you more money for retirement.

Pros: The great thing about putting money aside into a 401K is that you can make your contributions to the account pre-tax.  That means the money will come out of your paycheck before you are taxed, which means you get a tax deduction for it.  By getting a tax deduction, you will reduce your adjusted gross income (AGI), which will in turn put you in a lower tax bracket and allow you to pay less taxes throughout the year. Another good thing about putting in the money pre-tax is that you're able to build more interest over time (i.e. it grows tax deferred, which is a fancy way of saying you pay taxes on it later).  For example, putting in $100 pre-tax will build a lot more interest over time than putting $65 after-tax and having it build over time.

Cons: You can't touch the money until you're 59 1/2 years old or you will be hit with a 10% fee.  There are some exceptions to this, like if you take money out to buy a house or get really sick and need money for medical expenses or even qualified education expenses. Another big con about this account is that because you contributed to the 401K pre-tax aka tax deferred, you will get taxed when you take the money out.  So yes, that 10% early distribution fee seems rather small if you decide to pull out money before you're 59 1/2, but you're also going to get taxed 35% when you take the money out.  Another thing to be cognizant of is that the amount of money you can put in is capped at $17,500 per year. This changes slightly year to year.

Things to Consider: Tax rates.  Taxes will never, ever go away.  In some ways I'm grateful for taxes because I work as a tax accountant, and I'd be out of a job if we didn't have taxes, but it also makes you reconsider where you put your investments.  What if taxes in 40 years are really high and your retirement plan is only half of what it could be?  On the other hand, what if the taxes are really low when you retire and you end up with a lot more than you expected?  Taxes are a big reason why people diversify their retirement investments, particularly people with lots of money where taxes can really affect how much money they put in their pockets at the end of the day.  Another thing to consider is the type of plan you choose to invest your 401K.  You can choose a plan that invests mainly in stocks or a plan that invests mainly in bonds.  Stocks are riskier, but will generate much larger returns, whereas bonds are relatively risk free and generate very tiny returns.  It all depends on how you feel about risk, which is simply a personal preference.

More on retirement plans to come!

Cheers!
Ali

Hey Mike, Hey Mike...

Camel: Ask me what day it is. 

Mike: What day is it?

Camel: HUMP DAYYYYYY!

This commercial will never get old for me.  Ever.

In honor of it being Wednesday, and also just not having much work to do today, I've revamped the blog!  I did it all myself too!

Some other fun news! As some of you may or may not know, I've decided to do a 10 mile run in February.  This was another one of my resolutions, so I'm glad I'm in the process of checking it off my list.  I started training about a week ago, and since then, I've ran 16 miles!  I've gotten progressively faster in my runs, which is pretty encouraging and even just completing the run surprises me every time.  It seems so long, but in the end, you realize it's totally doable.  If people on the Biggest Loser can lose over 100 pounds in 12 weeks, I can run 10 miles. Puh-lease.  I hope people can keep me accountable or even better, go for a run with me on Saturdays! :)

I also wanted to share this super cool website called Unroll me.  I used to get about 10 or so emails every morning from J.Crew, Madewell, Gilt, Groupon, etc, and more than half the time I just would select all and delete.  Unroll me gathers all of those subscriptions and rolls it into one consolidated email "The Rollup", so you can quickly filter through just one email each day.  It's great because it allows you to not miss any big deals (hello 50% off J. Crew sale last week), but it still declutters your inbox.  Trust, me, you'll love it.

That's all for this hump day!

Cheers!

Ali

Traveling on a Budget: Part II

We're going to Turks and Caicos! 

Yup, those beautiful little islands with some of the top rated beaches in the world.  I can't tell you how excited I am to go, but I am more excited to share how I managed to pull this trip off. 

I've known for a while that I wanted to take a vacation in March and have been researching for the past few months. Do I want to go to Europe or the Caribbean?  South America or Napa Valley?  Ultimately, we decided on Turks and Caicos because of it's warm weather and relaxing vibe.  Here are some tips for booking a trip that you can afford.

Be patient: I've been monitoring flight prices for a few weeks through Kayak, which has a really nice flight price alert that sends you emails when the prices drop.  I personally really like Bing to look at flight prices also.  Booking too early or booking too late can cost you more money.  You'll also see pricier airplane tickets if you book on Friday - Sunday, as opposed to Monday - Wednesday. I've been monitoring different hotel prices through Expedia and Hotels.com and also checking to see if there were any new deals on Groupon Getaways and Jetsetter.  Ultimately, I found a deal to "get the 3rd night free" on Expedia, so we saved a good amount of money here.

Don't assume: Expedia and Priceline and Kayak will all say that you save money by booking the flight and hotel together, but that's not always true.  Depending on the hotel and deals on Hotels.com, I found that with some of them, I actually saved money by booking them separately.  So just double check!

Prioritize: I would rather stay at a nicer hotel than eat every meal like a queen, so I paid a little more for a nicer resort and plan on spending a little less on meals.  Maybe you want to pay more for a non-stop flight and stay at a cheaper resort or maybe you don't mind a long layover and you want to eat out every meal... it really depends on the type of person you are, but if you're on a tight budget, just make sure that you set these priorities beforehand or you will most likely overspend.

Enjoy it!: Even though I'll be on a budget, I know I will want to spend... and that's okay!  It's a vacation!  There is a difference between budgeting and being cheap and you definitely don't want to be cheap on a vacation.  At least I don't! 

Hope you guys find this helpful.  Happy traveling!

Cheers!

Ali

P.S. I'm trying to figure out how to create some sort of anonymous question submission thing in this.  If anyone knows how to do that, please let me know. Thanks!!

More Savings Fun

Happy Friday!  I was working late last night and a coworker and I started sharing some of our New Year resolutions.  I told her that one of my resolutions was to start saving more, and she said she wanted to do the same.  She told me about her savings plan, which I thought was pure genious and actually kind of fun, so I've decided to share it with all of you.

1.  On a piece of paper, write down the numbers 1 - 52.  (One number for each week of the year.)  You can also get 52 post-its or index cards and write down each number on one post-it or card, if you'd like.

2. Once a week, put an amount between $1 - $52 dollars in a jar and cross off that number on the piece of paper.

3. Repeat weekly, crossing out a different number each week.

Maybe during weeks when you're short on money you can cross the smaller numbers off your list, and certain weeks where you have more cash sitting around, you can hit the big numbers.  The great part about this savings plan is that if you do this every week, you'll end up with $1,378 by the end of the year!  Ridiculous!

Hope you all find this helpful and start making this a year of saving!

Cheers!

Ali

Finding Everyday Savings

Sometimes people are surprised that I'm able to pay my rent and loans and other expenses, but manage to still go on vacations and shop.  I thought I'd leave a few tips on some everyday things you can do to leave a little cushion in your budgets so you can splurge.

Be flexible:  This is the biggest one for me, I think.  My boyfriend and I have been long distance for almost 6 years now (sigh), so I've spent quite a lot of money on buses and trains.  Usually I plan my trips based on the cost of the train.  Thursday train tickets are usually cheaper than Friday tickets, so sometimes I'll take a Friday off work or work remotely to spend a long weekend with him and save money too!  It's a win-win.  Planning ahead is always a good thing, too.

Start cooking: Literally. Start cooking.  I usually go grocery shopping once a week and spend somewhere between $35 - $60 on average.  It really depends on what I'm feeling for the week, how my work schedule looks like, any plans that I have, any sales that are going on, etc.  Typically, I like to make all my meals Monday through Friday and splurge on the weekends.  This is not just because I don't want to gain weight, which is what usually happens if I eat out too much, but it's also so I can save moolah.  Cereal for breakfast, salad and fruit for lunch, and some sort of protein for dinner.  You can save a lot of money here.

Make your coffee at home:  This one is simple.  Make your coffee at home!

Find the deals: This one is a little iffy, but I'll put it out there.  I try to do most of my drugstore shopping at CVS rather than Duane Reade/Walgreens.  Based on my experience, CVS tends to have better coupons and deals than DR.  They also have a coupon machine at the entrance where you scan your card and get a print out of all the coupons you can use.  If you're going to find the same brand of shampoo at both stores, why not walk a few extra blocks for a cheaper one? 

Get a little exercise:  Living in the city, we spend a lot of money on transportation: cabs, subways, buses, etc.  Why not start walking or biking? Not only will it keep you fit, but it will also save you some $$$.  I signed up for the CitiBike membership and have gotten pretty good use out of it.  It was only about $100 for the entire year, whereas subways cost a little over $100 per month.  Granted, for some people, it is simply not feasible to walk/bike to work, but if you can, I'd strongly advise it.  I take a 20 minute walk to work each day, rain or shine, and I'm lucky to avoid the crowds and get a little exercise each morning.  The rule that I typically use is, if it's 2 or less subway stops away, walk! 

For each of these tips, you'll save a few dollars here and there, but they will add up!  Trust me!  Give it a few weeks and you'll be able to buy those shoes you've had your eyes on.

Cheers!

Ali

Starting a Savings Account

One of my goals for 2014 was to start saving.  I was never a fan of savings accounts because I thought they were silly.  Most of them generate returns of only .01%, which amounts to pennies (literally), and that seemed pointless to me.  More and more, however, I realize that I have little self-control, and if I see the money in my checking account, I'll spend it.  The only real advantage of having a savings account is that it forces you to save.

When I was looking into different types of accounts, I realized that there are quite a few different kinds from different banks that you can choose from.  Here are the 3 most common types that you can choose that I found:

Regular Savings: These are basic savings accounts that usually have rates of .01% per year.  This means for every $100 you have in your savings account, you'll get a return of half a penny. Yes, 0.5 cents.  (It's nothing, I know, but again, remember that the purpose of a savings account is to force you to save, not necessarily making money off of it.) Regular savings accounts often have smaller dollar requirements for you to open and maintain, often $200-$300 depending on the bank.  They will also charge fees if you don't maintain that amount or if you don't have a reoccurring deposit in the account each month, somewhere around $20-$30, again depending on the bank.

Regular Savings on Steroids:  These accounts are just like regular savings accounts, but generate higher returns for higher balances.  Different banks will call them different names, like "Platinum Savings" or "Plus Savings".  These often require you to open and maintain at least $1,000 and will charge fees if you don't maintain that amount or don't have the reoccurring deposit.

Certificates of Deposits (CDs): These are different from savings accounts because they have specific and fixed terms with fixed interest rates. They are also virtually risk free and have rates higher than a regular savings account.  The downside of this account is that you need to start and maintain a higher dollar requirement - almost always $1,000 minimum.  Depending on the timeline that you choose, you will get a greater return.  So say you buy a 3 year CD of $1000, you will generate a higher return, maybe in the range of .13%-.17%, as opposed to a 3 month CD, where you will probably get .02%.  The caveat is that when you put the money in, you cannot take it out until your time is completed.  This is a good account to have if you have thousands of dollars just sitting in your account that you plan not to spend for a while.

Like I said before, I think savings accounts are more to force you to save rather than to generate a return.  Keep in mind that the interest rates don't really matter that much if you think about how much you're putting in.  If you put $1,000 in, you'll get 5 cents instead of 1 cent with a CD rather than a regular savings.  Woah! 4 cent difference!!  It would only really matter if you have more than a few thousand dollars sitting in your account, in which case you probably don't need to read this at all.

Cheers!

Ali

New Year, New Goals

Happy New Year!

I have a few new year resolutions.  Aside from the obvious if you've been reading along, which is to get my finances in order, I also want to make something of my other interests. I went to a painting class a few months ago and loved it, so I want to do more of it and be proud of what I paint.  I love wine, so I want to study and learn more about it.  I want to be a better daughter, sister, girlfriend, and friend.  I want to worry less about things I cannot change, things that do not matter much, things that aren't worth worrying about. I want to be healthier and stronger.  I want to soak in more moments and enjoy them as they occur. 

It's a new year! Here's to a clean slate.