Down and Dirty Money Management, part 1: The Basics

Posted by: fff In: Culture| Popular

I didn’t grow up with a silver spoon in my mouth. Most of us don’t, I suppose. My parents drilled me on the importance of getting an education and a good job (which I did). They didn’t teach me, however, what to do with the money that I made. So, little ol’ fff finds himself over-educated, over-worked, and still living paycheck to paycheck. And I hate it. So with a little help from the web and the brilliant F&L readership (that’s you BTW), I’m hoping to put together some down & dirty money management tips. I’m gonna make this a multi-part post that evolves as needed. Feel free to add some on if you’ve got some insider secrets and correct me where I’ve over simplified things. And like my dad always says “get paid for using your brain, not your back.”

1. Make some money.

I’m not gonna delve into how you make your money. You gotta bust your hump. Whether that means going legit with the whole college thing, or being the best pole dancer you can be, or through the “procurement and distribution” of specific merchandise. Whatever your game, just get a job and keep it. Oh…playing PartyPoker is not a “job” idiot, it’s a hobby.

2. Get a bank account.

Get both checking & savings. I’m amazed how many people don’t have bank accounts. Do it and don’t ask questions. Choose your bank wisely, however. Read the fine print. Some banks offer free online bill-pay, money transfers, free checking, etc. And some banks charge ridiculous amounts for withdrawals from non-system ATMs (on top of what the ATM’s bank charges you). This fee (usually $0.50-$2.50) could easily push you into the $5-$10 per transaction range (depending on which stripclub ATM you’re using) just to get some folding green. If you travel a lot, you need to find a bank with branches nationwide.

3. Save some of it.

If you can, have your paycheck directly deposited into your bank account and a portion of it (10-20%) automatically put into a savings account. It hurts way less than having to transfer the money yourself. And it’s there when your fridge goes on the blink. Put any bonus you get straight into savings. Checkout EmigrantDirect or INGDirect for higher interest accounts.

4. Establish your credit.

If you’re just starting out in the game, this may be a little tricky. You’ll probably run into the “how do I get a loan without credit & how do I get credit with a loan.” Well, you’ve got a few options here; some better than others. Most people start out by getting a credit card or two. It’s quick, easy, and fairly painless. However, you don’t want to screw yourself by dropping loads of debt on credit cards with high interest rates. Do you ever wonder why you get 2-3 credit card applications a day in the mail even though you don’t have a job? Because credit card companies make money hand-over-fist when you buy things you can’t afford. Then, you don’t pay it off for years and you end up paying for it three times over (guilty here). You just had to have that $1500 Acoustic Zen Gargantua Power Cord (you read it right - F*ing power cord!!!) for your home stereo, right?

5. Make a monthly budget.

And follow it (guilty). Keep good records of your transactions and your money flow. Banks make mistakes too and it’s your money. Checkout Quicken, Microsoft Money, or the free GNUcash.

6. Spend wisely.

Pay with cash or debit card. Don’t use your credit card if you don’t have to. And if you do, then pay them off this month.

7. Check your credit report.

Your credit report includes information on where you live, if you pay your bills, whether you’ve been sued, arrested, or filed for bankruptcy. Every time you go to get a loan, an apartment, some insurance, and/or apply for some jobs; this information tags right along with you. Here’s the federal trade commission’s take on your right to a free annual credit report. The ONLY legitimate site to obtain your free online credit report is here.

8. Pay your taxes.

Yes, it sucks, but so does an audit. And jail sucks even worse. Do you really want to tell your cell mate “Little Tony” that you’re in for tax evasion. SooooWeeee…good times. Pay your taxes. There are free filing services available every year (if you know where to look). Some employers off free or discounted filing services as well. Check it out where you work.

9. Do NOT File Bankruptcy.

DON’T do it. Seriously. This is the absolute last ditch effort in getting a hold on your finances. Bankruptcy stains your financial records for several years, making recovery even harder. There are two types of bankruptcy filings available: Chapter 7 & Chapter 13. Chapter 13 bankruptcy allows you to repay your debt over time and they don’t take your stuff, but it stays on your credit report for seven years. Chapter 7, the more serious form of bankruptcy, wipes out most of your debts. However, it doesn’t erase federal taxes, child support, alimony, and/or student loans. You have to sell most of your stuff (or they take it). Most states usually allow you to keep your clothes, a car, your furniture, your life insurance, retirement funds, the tools of your trade, and your home most of the time (but not always). Chapter 7 stays on your credit record for 10 years. The only real winner here is the bankruptcy lawyer who gets a nice cut of your dough regardless of what happens to you.

Stay tuned for…D&D Money Management

Part 2 - Saving It

Part 3 - Spending It (wisely)

cha-ching, fff