Financial Responsibility

[Don Ronny]

I am terrible with money. I hate keeping track of my bank account and often times I dont calculate my costs very well. As a result, I have accumulated quite a bit of debt over the years and there seems to be no end in sight.

What would be a good way to get my act together and start taking control of my money, instead of the other way around?

 

[djbr]

Good question.

Bump.

 

[ethnomethodologist]

Well take it like the bootcamp, but for money.

First, you have to STOP spending your money. I am in the same boat as you, from today on out, I am not spending any of my money on frivolous things.

Take a noteped with you. If you carry cash, have it tucked in your wallet, when you purchase ANYTHING make a note of it, and make a note to beanie as to whether or note it is essential. Any credit card responses you have, you must make a special note. Note the day, the time, and which card was used to make the purchase.

What your initial goal is, is to determine if you are spending beyond your means.

 

[A-Unit]

Re:

Separate bank accounts.

Take advantage of a Credit Union.

By splitting them, you're overall wealth is the same, but psychologically not seeing the same LARGE balance leads you to being more conservative. Also, it helps create a CASH debit card, rather than using a credit card.

I've created 4 different debit/checking accounts to assist me.

In addition, I opened a mutual fund account, and a brokerage account.

DEVELOP the habit. That's really stuck for me. Overtime, also, you learn to go without.

I created an excel spread sheet, adapted from readin ght book the Richest Man in Babylon. The book advocates living on 70%, saving 10%, and paying taxes of 20% (back then it was "Caesar"). I have 4 columns, each column a %. 10% for investments, 25% for taxes and 65% for living. Sometimes there's excess in my living budget, sometimes a lack. On the whole its fine. I allow that to direct spending. Much like a business would create income and balance sheets.

It's trial and error. When I began I tried to be perfect, doesn't happen though. I kept 1 bank account, but the balance was so big I overestimated what I had and spent too much. Then I went to 2, but it was still too accessible. Finally I went to 4, ala The Millionaire Mind/Millionaire NextDoor. 2 different banks, both close to each other and all over my region.

I'd also opened a brokerage account with I did $100/mth into on automatic debit, but the commissions were too high, $35/trade. So I ditched that and went to Scottrade, for $7. I'm sure there's cheaper, but the min. balance is only $500, whether it's all stock, all cash, or a combination.

I also had a ROTH IRA opened for sometime, $100 taken per month, and I sent extra as I want to/can. The roth I chose American Funds for now, because the maintain lower average expenses, and have top performing funds for younger guys like me. As I build that, I intend to roll it around to better funding programs, such as managed accounts, REIT, leasing funds, and possibly real estate.

On an internal level the change must occur with an easily executable plan. That's mine, but I refine it all the time. It's taken quite a few years. I'm simultaneously paying off my college which I completely funded, aside from some minor expenses on the part of my parents. So I'm pounding that away, getting balances up, and getting ready for R/E by gathering info on my area (Massachusetts).

A-Unit

 

[spider_007]

you can't do it on your own. If you didn't have the discipline in the first place......it's gona be extreemly hard to change your habits on your own.


Get a financial advisor (a good one, maybe even a personal banking manager at your local bank, they are usually free.)

 

[Francisco d'Anconia]

Stop thinking about money the way that most people who don't have money do. All they worry about is keeping track of it because they don't have enough of it.

Be radical. Focus on ways to make more money instead of worrying whether you have enough of it. Consider this, do you think that Bill Gates worries about keeping track of what is his bank account or balancing his checkbook with his ATM receipts?

Before anyone starts flaming about needing to keep track of it so that you don't end up broke like many has-been athletes, musicians and lottery winners I'll say that just because someone becomes rich, it doesn't mean that they know how to be wealthy.

Just something to think about....