Net Worth Update – April 2013

Well, the rent debacle continues.  It turns out there was some sort of computer error that added an extra month onto everyone in my buildings rent.  Lucky for my, I hadn’t set up auto-debit yet, otherwise I’d really be pissed off.  The problem now is that, while they attempted to fix the charges in their system yesterday, they forgot to clear the old charges when they put in new ones!  So now my total due is over $5,000.  I live in a decent place, don’t get me wrong, but I definitely do not owe that much.  Hopefully this gets fixed correctly today.  If not, I’m going to just assume that nothing changed on my rent, walk downstairs and give them a check and hope it all works out.

But on to better things!  I owe you guys a Net Worth update.  April was a crappy month.  My car got impounded, I bought some plane tickets to go back to Boston and in general, spending just wasn’t where I wanted it to be.  As always, Template courtesy of J Money at Budgets Are Sexy.

So close to positive territory I can almost taste it

So close to positive territory I can almost taste it

Gah, almost all green except for my checking account.  And I’m almost in positive territory.  Way better than I initially thought but still way off where I want to be.  This is the third month in a row my cash accounts (checking and savings) have declined and that is not a situation I like.  Hopefully May will be better all around!

Checking Account: If you take out the plane ticket I bought back to Boston ($500) and the total cost of my impounding extravaganza ($405) then this goes right back into the green category.  Obviously I’m going to be paying much closer attention to street signs from now on in order to avoid that mess again.  With flying home, well, I only do it once or twice a year so I’m fine with the cost.  Really, I look at it as though I’ve been saving up for it (I have). So throwing out the negatives, I would have hit a slight positive in April.  Although it’s not actual money in the bank, I’ll take it.

Savings Accounts: Solid growth from my contribution, not the interest. Once I hit $2,000 I think I will actually stop the contributions in here and direct it towards either my debt or my investments.  I haven’t quite decided yet.

401k: Ah, the 401k.  It’s such a driver of my net worth yet I cannot touch it.  It’s right there but no, no touchy.  I haven’t changed my allocation but I’m keeping an eye on it to see if my stocks or bonds get a bit overheated and start taking over.  I’d love to just set it and forget it but I’m not like that unfortunately.  I’ve got to check it AT LEAST once a month 🙂

Vanguard: I’m pretty happy about the growth this month.  Most of the month my account was looking pretty crummy.  The only gains were from my contributions and I was actually taking a loss on them.  Then, finally, the market woke up and pushed my money up nicely.  While the gains in this account keep coming, I don’t expect it to stay this way.  I’ve got some plans on diversifying this and protecting my cash a little bit more but won’t be unveiling them until later.

The Acura: This is ridiculous.  The value of the car went up.  Up!  I didn’t even drive 400 miles last month.  I’m liking this trend, it makes me feel like the car may not be underwater too much longer.

Liabilities: Consistent drops, I like it.  I did use my credit card for my flight this month but I paid it off.  It’s an airline card, so I got some extra miles, free checked bag, priority seating.  You know, fun stuff.

Overall, I think April was OK.  I felt pretty crummy about my finances most of the month, so to see such positive changes at the end makes me pretty happy.  I’ll keep pushing myself for more positive growth and change over the next few months and we should see some good stuff come along!  Hope everyone else had a good April!!

Net Worth Update – April 2013

April Fools Prank

Today is one of my favorite holidays: April Fool’s Day. I love this day. In the past, I have gone as far as completely wrapping a coworkers desk, filling a cubicle to the top with ballons, replacing every single pen in the office with crayons, and numerous others. But these days, the pranks are not to be for me. I’m a boss now and have to do something called “setting an example.” We’ll see how this goes in the long run but I think that it’s just a bunch of rubbish!

April Fools Prank

Ah, the wrapped up desk. Surprisingly took a long time. I’m terrible at wrapping

As is custom on the first of every month, it’s time to review my finances and see how I’m doing. Since we’re also through a quarter of the year, I’ll also look back at some of the goals for the year and see how we are progressing there. Anyway, to the chart! Template courtesy of J Money at Budgets Are Sexy.

Net Worth Update - April 2013

Net Worth Update – April 2013

This was a pretty decent month for me. Overall, I’d say that a $1,400 to $1,500 gain in Net Worth is what I truly expect each month. February was brutal in the spending category and I’m glad to be out of that hellish place. With March on a good track, I’m hoping to make April and May strong enough to get me within $1,000 of a positive Net Worth. Let’s take a look at each category:

Checking Account: This was the one major blemish in all of my accounts. This account dropped nearly $500 this month, which really does not work for me at all. My budget is extremely strict and while I stuck to it well, this still happened. There is at least one good thing to take out of this though: Every month I’m putting $400 combined into my savings and Vanguard, so I didn’t REALLY spend $483 too much. This just means I’m going to have to be more conscious of my spending and will probably have to shift some money around at some point in the future. Hopefully though, I can get this into a positive gain each month.

Savings Accounts: Solid growth from my contribution, not the interest. I’m sure this will grow throughout the year as I search for better ways to use my capital.

401k: I know it’s Tax deferred and I can’t touch it for another few decades but this account makes me happy. Each month, it goes up between $600 and $1,000. This really is the biggest difference between nearly having a positive Net Worth and being stuck with something in the negative teens. I’m pretty happy with how my company contributes to this and the service we use is extremely easy. For the record, I’m balanced in this with 30% in bonds and 70% in the S&P 500 Indexed Mutual Fund.

Vanguard: March was a busy month in the market. We hit new highs right at the end of the month in the S&P 500, so I’m not complaining. I’ve mentioned before that a pullback in the market will happen eventually but hey, I’m not worried. I don’t need this money now and won’t need it for many years from now. I’ll just keep contributing, no matter what!

The Acura: More and more reasons to not drive: the value of the car really holds up! If the current rate of depreciate holds and I continue making the slightly extra payments, I should no longer be underwater on the car in February of 2014. Hopefully, with some extra payments here and there plus maybe a bonus or two, I can have that take care of by the end of the year.

Liabilities: Another drop with no increase in Credit Card debt. It’s important to me to keep this up. I’m hopeful that I might have some free cash soon to throw at this. If I do, I think things will really start looking up here.

Just another few months like March and I’ll be in positive territory. That was goal number one at the beginning of the year and I’m nearly there. In fact, let’s take a look at how far along I’ve come since January of 2012, when I really started tracking my numbers.

Finance Chart

A chart of my financial history since January 2012

Just a little over a year ago, my net worth was almost at negative $22K. I’ve come a long way since then, paying off my debts, my credit cards, and growing my investment accounts like crazy. I’ve also got significantly more cash in reserves, making me feel a lot more secure in life.

If things can keep going in the right trends (that is, up), then this chart will start to look very good very soon. Hopefully I can pay off a huge portion of my car loan by year end, if not all of it. Once I do that, many things will change.

Happy April Fool’s Day everyone! Watch out for any pranks or tricks. Especially if you’re in my office!

Net Worth Update – February 2013

February 2013 Net Worth Update

Well, I knew the unbelievable gains of December and January would come to an end eventually!  Luckily I still managed to increase my Net Worth somehow, albeit barely.  Moving into a new place, plus the new (used) furniture and some other items really set me back.  Plus the girlfriend and I rescued a dog, which is changing our monthly expenses just a little bit.  His name is Jackson.  He’s awesome.

Anyway, let’s take a look at the chart, shall we?

February 2013 Net Worth Update

February 2013 Net Worth Update

After two consecutive huge months ($4600 gain in December, $5100 gain in January) this month really brought me back to earth a bit.  My Net Worth only increased by 188 dollars!  Yikes.  I guess the good news is I somehow managed to not have my net worth go down.  I’ll take that as a victory.  Now let’s take a closer look at each category:

Checking Account:  Wow.  This account dropped by $1900 this month.  Basically, I spent WAY too much money on furniture, deposits, and general moving expenses.  Luckily, this is an aberration.  We’re planning on staying in this awesome apartment for longer than four months, so I don’t see these expenses coming up again until 2014, at the earliest.  Even then, we’re definitely keeping this furniture.  It’s awesome!

Savings Accounts: I beefed up my B of A savings account for the time being, negating a fee that happens if it falls under $500.  I’d completely forgotten about it and it was beginning to drive me nuts.  As for the ING (Now Capital360), the $200 a month is making a difference.  The interest isn’t much but I’m definitely enjoying seeing the balance jump as I add more money each month.

401k: As my contributions to this account grow (and the match made by my company grows as well) this account is becoming a huge, huge portion of my net worth.  This and the Vanguard account are really driving my growth here.  I’m diversified well enough in my account that I shouldn’t be too screwed up by any changes in the market but still, i’m keeping an eye on things here.

Vanguard: February was not the best month for stock appreciation.  The market only grew by 1.1%, as opposed to 5% in January.  The best thing I can do here is to keep on putting money in it and letting dollar cost averaging work its magic over many years.

The Acura: This was surprising but VERY welcome.  The new residence is less than a mile from work and I’ve taken to walking some days.  Overall, my mileage per week has dropped so much that it’s already starting to keep the value of my car up.  I’ll take it!

Liabilities: Another drop with no increase in Credit Card debt.  I’ll just keep slowly chipping away at this.  Someday, it’ll be gone!

I’m hoping that I don’t have another month like February soon.  I’m getting really close to having a positive net worth and I think I’d like to avoid any more heartbreaking three digit changes (or negative!!) in my net worth.  With a bit of a renewed focus on my budget and cutting back further on going out to eat, I think I’ve got this!

Are you a $30K Millionaire?

Courtesy of Sergey Melkonov

Are you a $30K Millionaire?  No, I don’t mean $30 billion, I mean are you someone who makes $30K a year but acts like a millionaire?  It’s ok if you’re that person.  Hell, we’ve all done stupid things (if you’re reading this here, I am assuming you DON’T want to pretend like a millionaire but rather BE one).  I’d say that my car purchase, currently the bane of my personal cash flow, was me acting like a $30K millionaire.  But REALLY is a $30K millionaire?  Is this an actual thing?  Is there, perhaps, a website or article regarding them?

Courtesy of Sergey Melkonov

Courtesy of Sergey Melkonov

I first heard about the so called $30K millionaires several years ago, when I was living in Texas.  It was common there to meet plenty of young men that were living well above their means, working an OK job during the day while partying at night.  As you might guess, they financed or leased everything.  It drives right to the heart of financial illiteracy.  In Texas, these guys were common.  They’d just gotten out of college, got their first job and wanted to appear successful.  $30K doesn’t get very far but when you live at home and you lease that BMW, you can look pretty goddamn slick.

Moving to LA, I’ve experienced this even more.  When asked about it, most people will just say something along the lines of “Fake it till you make it.”  Now, don’t get me wrong, sometimes this can be a good thing!  You visualize your goal and you put yourself in a position to achieve it.  That’s a huge part of the psychology of athletics and success on several levels, including business and personal.  But when we’re talking about achieving financial independence or becoming an actual millionaire, I think these guys might be missing the point just a little bit.  They want so bad to appear rich and powerful that they’re willing to completely destroy their financial future for it.  All because in their mind, that’s the only way to make it.

So, are you, my readers, $30K millionaires?  If you answer yes to at least two of the following questions, you might be one:

1.  Do you go to clubs or lounges (not regular bars) more than once or twice a week?

2.  Is your car leased or financed with next to no money down, despite being a luxury car?

3.  Do you have more than two credit cards, all of which have a balance on them?

4.  Are you living paycheck to paycheck?

5.  Do you spend more money on clothing, expensive dinners, and clubbing than rent?  That is, if you pay rent.  If you live at home, just assume you paid rent.

Now, let me clear, being a $30K millionaire doesn’t make you a douchebag, like the Dallas Morning Observer article was talking about.  That is, obviously, a very specific and rare breed of $30K millionaire.  But that doesn’t mean you aren’t living beyond your means trying to create an image for yourself.  It doesn’t have to be a millionaire image.  It can just be the image of moderate success.  Remember, I was guilty of this as well.  I had credit card debt that I kept revolving.  And I purchased my car in a panic driven state, put next to no money down and now have a monthly cash flow drain that makes me furious every time.

So, who out there is a $30K millionaire or a recovering one?  Let me know your story!  You know mine and I think it’s time for you to share.  Leave your stories in the comments or feel free to send me an email.

Net Worth Update – January 2013

And it’s that time of the month again! It’s time for the monthly Net Worth Update.  January was a very good month for me, as I actually received my first ever bonus from the Corporation.  As you’ll see below, it significantly improved my current cash holdings and it is certainly making me feel a whole lot better about things.  Unfortunately, with moving into a new apartment (and getting some new furniture), I don’t anticipate the bonus to last all that long.  But hey, something is better than nothing!  Even better though, January was a great month for stocks and my 401k and Vanguard account both grew tremendously.  I’m definitely looking forward to 2013 as the year I hit positive numbers! (Template courtesy of J. Money at Budgets are Sexy)

Net Worth

My January Net Worth

HUGE improvement!  My biggest increase to date.  As I mentioned above, I don’t think this is going to be a continuous thing.  In fact, chances are February will be a down month, with the deposit and moving costs, as well as new furniture.  However, with no more credit card debt and a decent amount of savings, I’m definitely feeling good about the days to come.

Checking Account: I won’t lie, I’m not sure where I’m going to be moving this cash.  Some of it will definitely go into the B of A generic savings account, enough to make it so I never pay any fees.  The rest of it will be split between apartment obligations, my Vanguard and my ING account.

Savings Accounts:  Still low but only temporarily.  I’m contributing double into my ING account now, so that should grow much quicker.

401K: I actually increased my contribution for 2013 and with the very minor raise I got, it should grow by at least $800 every month.  This is quickly becoming the most significant component of my Net Worth and I’m OK with that.

Vanguard:  In addition to doubling my contribution to ING, I have also doubled my contribution to Vanguard.  This way, things will grow much, much quicker here!  Additionally, I’m considering finally opening a Roth IRA this year.  I’ve been considering it for a while and I think it’s about time.

The Acura: This decline is to be expected.  More and more I’m thinking about selling this and going with a less expensive car.  I’ll stick with it for now but we’ll see.

Liabilities: Still no credit card debt!  I also paid a bit extra towards my student loans last month.  I’m not sure why but I just felt like making a bit more of an impact.  Hopefully this helps.  These just keep going down which, I hope, remains a constant over 2013.

So there we have it.  I’m pretty close to a positive Net Worth!  If I really work at this, I’m pretty sure I can get there before the middle of the year.  We’ll see.  Does anyone out there have any good news about their Net Worth?  Let me know!



Financial and Personal goals: 2013 edition

2012 was a pretty good year for me.  I had another successful year at the job and I was able to really reign in my budget and seriously improve my net worth.  Overall, I achieved many of the milestones I was gunning for when I started this blog.  Between my Vanguard account, my checking and my savings, I have my three month emergency fund pretty well set.  I’ve whittled my debt down to my student loans and my car loan.  I didn’t get my Net Worth to be positive but at this point, I have that firmly in my sights for 2013.  So, here are my goals for 2013!

1.  Positive Net Worth – That’s it, I’m going to make it!  I’m only about $11K away at this point and with the way I was knocking off my debt last year, I should be able to get this taken care of before too long.  Needless to say, I’m excited about this.

2.  Begin really saving for a house I’ve spoken about this before and while I’m still terrified of it a little bit, I definitely want to do it.  The thing holding me back at this point would be my lack of a down payment and the insane housing prices in LA.  Prices have started to go up like crazy here, to the tune of a 25% increase for some people in the last year.  I might have missed the bandwagon a bit which is one of the reasons I’m just saving to buy a house, not actually buy one.

3.  Pay off half or all of my car loan – This loan kills me.  It eats up a huge chunk of my income each month, way more than it should, because I didn’t heed my own car buying advice (more on this later).  If I pay an additional $400 a month, I should be able to pay it off in 27 months.  Who knows, if I get a bonus this year (fingers crossed!) I can apply it to this and really knock off a good chunk of it.  We’ll see!

4. Take better care of myself physically – I’ve really fallen off the work out and eat well wagon in the past few years.  CrossFit really got me back on track but since I left the gym I have had a hard time keeping up.  I definitely need to do this though, I can’t allow myself to get out of shape, sick, etc.  It’ll be a downward spiral for the rest of my life.  So, I need to apply the same discipline here as I do in my financial life.

Well, 2013 is going to be an exciting year.  Who knows what it really has in store but as long as I have goals and know where I am trying to go I can forge a path for myself.  Until next time everyone!  Have a great weekend!

Net Worth Update for a new year

It’s been a few months since I’ve written but I’m back!  Happy New Year, Festivus, Kwanza, etc to everyone.  I’m hoping that all my readers had a great end to 2012 and it wasn’t nearly as crazy busy as mine!  Between work, my new apartment, and the holidays, I nearly lost my mind.  Fortunately, my wallet didn’t suffer TOO much over this time.  With that said, let’s take a look at my Net Worth (Template courtesy of J. Money at Budgets are Sexy).

Net Worth

Overall, things have improved from September to December!  My net worth has gone by by almost $3.5K and we’re getting awfully close to the negative $10K threshold.  That would be a big step for me!  I started the year around negative $24K and with a potential increase in salary coming my way, I think I should be able get into the positive net worth area later this year!  Let’s break down the categories and see where I improved and where I can use more work:

Checking Account: A half decent improvement, it’s a bit more than I’d like to keep in my spending money.  Ideally, I’ll always keep this under $2000, moving the excess every month to either my ING or to my Vanguard.

Savings Accounts:  Yikes.  These guys took a bit of a hit as we bought some furniture and the Christmas season got into full tilt.  A trip to Texas for Thanksgiving with family also nicked it up a bit.  Hopefully this will be noticeably bigger by the end of 2013, as I have doubled the amount I intend to put away each month.

401K: This just keeps trucking away.  It’s already the biggest part of my net worth and I just upped my contribution for 2013, which will be matched by my company.  I’m set up reasonably aggressively in it but I’m not too worried about it.  It’s money I won’t be using for a while, so it can match the market for now.

Vanguard:  I’m reasonably happy with this and with Vanguard.  The progress here is good.  Not great but good.  Considering I didn’t even have this at the beginning of last year, I’ll consider this a victory.  A very, very small one.  Since I’m trying to move towards a positive Net Worth, I’ve double my monthly investment into here as well!

The Acura: This decline is to be expected.  I wish it wasn’t so under water but hopefully my loan will catch up faster than the depreciation can move.

Overall, my assets didn’t go up very much.  The depreciation of the Acura took out any of the real oomph I might have had.  Fortunately, I killed it in the debt reduction the past three months.  As of December 31, 2012 I am Credit Card Debt Free.  I’ve knocked my student loans and my car loan down a decent amount and will be contributing more to this after the first quarter is up.  For the next three months, the money formerly known as credit card payments will now go into the savings and the Vanguard fund.  I’d say that I’m making good progress on getting to a positive Net Worth.  Hopefully I can move this even further along in the coming months.

Tomorrow I’ll be posting my goals for 2013 in both my personal finance life and just my regular life.  If you have any suggestions, leave them here!

September Net Worth

This past weekend was incredible busy and I completely forgot to update the blog at all, completely missing my monthly Net Worth update! Moving took its toll on me, eventually causing me to actually take a half day today (at which point I finally got some writing done).  Between the heat of the San Fernando Valley and the dust kicked up during moving, I just didn’t stand a chance.  But what about my financial health?  Unfortunately, it was a bad month for me when it came to net worth.  My net worth, as of September 30 is (drum roll please!):


Yikes, only an increase of $161 bucks.  That is pretty harsh.  I guess I had gotten used to month after month of $1000 increases and just got spoiled.  Well, let’s look at the reason why.  It was a good month on the stock market and I accidentally paid double on my student loans.  I feel like this should much better (Template courtesy of J. Money at Budgets are Sexy)

September 30 2012 Net Worth

So first off, yeah, look at the growth in my vanguard and 401k!  Not too shabby.  And my car loan and student loan went pretty well.   But god, my savings and my credit card took a hit.  What is going on here?

Well, as I mentioned before, my girlfriend and I moved this weekend and that emptied the coffers quite a bit.  Security deposit and first month’s rent are no joke in LA.  Not to mention all of my furniture did not handle the move all that well.   Overall, we moved, spent a decent amount of money on the new apartment and set ourselves up with a budget for items to make it look like someone actually lives there, as opposed to a hobo occupying the place.

With the credit card, well, that’s an interesting scenario.  It’s never going to show up as $0 on my monthly Net Worth report because I keep it revolving and the payment date is actually on the 20th of each month.  Oh well.

So, that’s it.  I had a ridiculously small improvement and I’m not too happy with it.  I still have a long, long way to go before I have a positive net worth but I think I’m making the right choices. Considering my net worth at the end of last year was under -$24K, I’ll take eight solid months of improvement and one meh month.  As long as the net worth keeps going up, I’ll be happy and continue to refine the way I do things.  Until next time!

Net Worth and the importance of tracking it

The past few days I’ve spoken about Net Worth and budgeting a lotThe general idea with this has been to introduce the concept of them going hand in hand for one’s financial freedom.  You really cannot build your net worth without budgeting but at the same time if you budget without really paying attention to your net worth, you’ll be left in the dark as to your true progress.  You can look at it like this: budgeting is where you fight the battles but net worth is the reward for winning the war.

Calculating your net worth is a fairly easy thing to do.  If you’re familiar at all with accounting or if you ever check out the balance sheet of a company before you invest in it (which you shouldalwaysdo by the way) then you’ll know exactly where I’m coming from.  All we’re talking about here is a balance sheet for your household:

Net Worth

If you look at the above you’ll see that you can create this spreadsheet easily in Excel or in Google Drive.  If you don’t want to do it manually you can always use your account to review it, although it’s always helpful to do it yourself and really see what you’re working with. What you’re looking to do is figure out what exactly you have in Assets and Liabilities (debt!).  The assets side is easy enough: what do you have in your bank accounts, your 401K and other retirement and investment accounts.  You should also count the value of your rapidly depreciating car (arguably the item that will drop the most on a month to month basis) and the value of your home, if you have purchased a house.  When trying to value your house I would use both and to get an estimate and then take the average of the two.  As a note to this, always try to get the estimate around the same time of the month for consistency.  I always shoot for the end of each month to give me the best picture of my net worth.

For your liabilities and debt, put your car loans, student loans, home loans, credit cards, accounts payable, deferred taxes and anything else you’ll have to pay over here.  This side sucks.  But we’ve got to deal with it and recognizing that it sucks is probably one of the first steps to actually reducing it.

Once you’ve put everything into your spreadsheet, just subtract your liabilities from your assets and boom, net worth!  Or in my case, negative net worth.  But now that you have your net worth, what does it mean?  Obviously if it’s negative like mine, you’ve got your work cut out for you.  And while a positive net worth is a great goal you still need to have an eventual goal to get past the average net worth for your age and salary bracket.  It’s here that I turn to Doctors Thomas Stanley and William Danko, authors of the New York Times Best Seller The Millionaire Next Door.  This book is considered one of the most eye opening personal finance books out there because it proved that many millionaires are just frugal, hard working people who save and invest their money wisely.  Another idea that came from their research (because their book is based on dozens of studies over a two decade period) is a formula to calculate the average Net Worth by age and salary.  Their formula reads as such:

(Pretax Annual Income X Your Age)/ 10 = Average Net Worth

This formula can give us a true number to work towards each year.  For example, my number is just a bit over $160K.  So, I’m only about $175K off from meeting the average for my age and salary group.  Doing this should give you a true goal to work towards with your Net worth and your budgeting.

If you have any other ideas or thoughts on Net Worth and how you can use it to improve your personal finance situation, leave a comment or send me an email!

Budgeting your way to health | Learning to cut the fat

When I first moved to Los Angeles, I had about a hundred dollars to my name.  I had some budgeting experience from my college life (“How many cans do we need to recycle to get a thirty rack?”) but at this point I just needed to survive. I had just driven across the country from Boston for my first post college job.  I knew no one, had no money, and needed a place to live.  I ended up at a coworkers place for about two weeks and then moved into my first apartment (I’m still there and I still don’t have a fridge).  After about a year of miserable savings, I started a account and really began trying to figure out why I couldn’t save any money.  After my first month, I logged on to categorize and organize my expenses and really take a look.  What I saw shocked me.

I was spending almost $600 a month eating out and going to bars.  How did this happen?  I mean, I guess twenty-five cent wing night sort of got out of control from time to time but really? $600??  It was time to cut the fat, literally. Budgeting around my fixed costs of rent and student loans was the easy part.  Trying to figure out how to never go out to eat was a little more difficult.  It really takes an iron will sometimes.  All your coworkers are going to that awesome new burger place or the internationally renowned hot dog place and you don’t want to be left out!

This temptation is something that everyone is going to face and it’s one that a lot of us cannot say no to.  Budgeting requires an immense amount of work to keep in check.  The first few months after this revelation I still struggled.  I tried and I tried and although my happy hour attendance dropped tremendously, my lunches with the coworkers did not. I needed to find a way to force myself into action.  Budgeting for the number wasn’t enough so I began to look at how busting through my budget affected my net worth.

Eating out every day is expensive.  On an average week though, I ate out about 5 times between work and my weekends.  The average amount I’d spend per meal was $15.  Assuming I’d spend roughly the same amount whether I’m at work or on a vacation, we can safely say that I was spending $75 a week going out to eat.  That means that over the course of the year I was spending roughly $3900 dollars!

Yikes, that’s a whole lot of cash.  But wait a second, just because I’m not eating out does not mean that I’m not spending any money at all!  I do have to eat sometimes.  After doing some more research I figured out that the eventual difference between eating out and buying groceries was going to be $40 a week.  I could save just a little over $2000 a year if I stopped eating out.

Boom, that did it for me.  I always need a reason for something and numbers always work best to convince me of a certain way.  Budgeting will always be the best place to start but budgeting can only get you so far.  It’s easy to create a budget with drastic cuts and look at your potential savings with glee but it’s a lot harder to put it into practice.  Here’s my suggestion: start with small cuts.  Once you can go 6 weeks with those cuts and making them work, then work on the next item.  It takes 6 weeks of forced repetition to create a habit whether it’s working out, dieting, or budgeting.  The best thing you can do when it comes to budgeting is start small and slow and create good habits one item at a time.  And remember that when you set up your budget to always pay yourself first.  Until next time!