Clicking on other personal finance sites recently, I'm finding myself both depressed and challenged by many of them.
While others are having similar issues forcing them to stray from their budgets here and there, many people are well on their way to a high positive networth.
Unlike them, I am still lugging around a negative networth, primarily due to my student loans and one year of job experience.
I am going to continue reading those sites, and see if I can gleam their secrets and apply them to myself.
Certainly my most important month to month finance goal is to stay on budget. For too long, I have lived on the philosophy that my salary will outpace my spending.
This is simply not true.
Tuesday, July 1, 2008
Networth Depression
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What has helped us is kind of a unique approach to budgeting and saving (or debt elimination since we have lots of it). We created a fun fund, which represents 5% of all our net income for each month. We then track all our spending down to the last dollar in all categories (fixed, variable, gas, groceries, etc). Things that we know are non-mandatory or are spur of the moment niceties we subtract from our fun fund. Dining out, buying "stuff", movies, pizza, etc all gets tracked in this category. Bigger things like trips and electronics will take a little time to save up for by taking money from the fund and carrying it over to subsequent months. This is the only really budgetary item in the sense of restrictions that we have, the rest of the tracking helps us to manage expenses, and easily see where all our money goes. We can then use this information to reduce/manage spending in all areas. Here is our actual breakdown for June 2008. A budget where restrictions are created in all categories of life took the fun out of it for us and it was hard to stay motivated and organized. We now approach all spending decision with a lens of frugality and know that 5% or about $230 in June is money with no strings attached and set aside to blow.
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