Money Management
Gather Information
So, you're fresh out of High School, no debts, and you want to develop
some cash base to launch off whatever you want to do? Wicked.
The first thing you must have to get cash, is to earn it. Whether its
doing odd jobs, going to work 8-4, or promoting your own thing, you
have to be bringing in cash. Any means you make money, you pile it in
under INCOME.
Next, you have to analyze your CORE EXPENSES. A core expense, is
anything YOU MUST PAY, as compared to an expense. Bills, credit,
vehicles, rent all fall into this category (notice I did not say food).
LOOSE EXPENSES are all other expenses that are variable by you, or otherwise variable beyond control.
So, open up your spreadsheet, and generate something like this.
http://www.sosuccessful.net/forum/at...1&d=1185046243
1. Light Grey-Coloured are the numbers used in calculation.
2. Dark Grey is a calculation.
3. Expenses are (-). (especially if you are the type to use formulas)
So, looking at this chart, you can see I almost double over my expenses, both core and loose.
Credit cards are min payment.
Now, we take a look at these expenses. If you want to cut out money,
what can you do without? My phone generates me money, I'll keep that.
That daily coffee...I should consider taking that out. Social, we all
have a cost I guess.
So, once you've generated that chart, if you want to widen that gap,
widen it, make more money, or tighten up whatever expenses you can do.
Focusing that EXTRA Money to Benefit You
To Recap, I have about $2000 every month in excess money.
How can I best use this money to make myself better off? (remember, $24000/yr)
Credit:
Well, I have outstanding in credit...about..$8000.
Lets add this out, assuming I was stable the whole year, with $0 to start out.
+8000 (4 months to get 8k)
- 8000 (to the credit card)
[Result? An additional $415/month]
So NOW, for each month thereafter, I generate $2415 in spare money.
+19320 (8 more months)
So basically, by getting rid of 8k of credit, I generate an extra $415
a month for myself. I save myself...$3320 that would of went to credit
(what I'd pay over 8 months to them). Essentially, I only paid out
$4680 to my credit card when it's all said and done.
That's one very good example of how you can cut your expenses down.
Smart Purchasing:
Because I deliver food, I was driving a 89 Beretta GT. Insurance...$80
a month (dad's policy). Gas per night, anywhere from $30 to $40.
So, when I saw the 91 S10 Pickup for $2500, 5 speed standard, owned by
a mechanic, lady driven, oil changes every 5000km, etc etc, I jumped on
it. I used my credit and cash on hand to buy it. I was cash strapped
for a few weeks...
Why did I do that? Because I saw the VALUE in owning that truck in
comparison to the car, and I always wanted to move to a truck.
So, $80 that went to the car, fire that into the truck insurance, and now I'm only paying about $110 extra?
Alright. But the gas savings. I now spend maybe $15-25 a night. That's
$15-25 a day savings in gas by driving the truck. 30 days in a month,
that's anywhere from $300-$750 savings. There, taking the lowest number
(least risk of error) I'm $190 up already, every month.
And the ability for the truck to carry loads? $20 minimum for loads in this city? All the better.
So, the truck will pay for itself in...probably a year and a half.
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Another couple examples of buying smart (or not buying at all). I don't
own a TV. Nor do I pay for tv channels. I run off a laptop that's over
5 years old. My beer supply cost is larger then my groceries (and I
take forever to go though 24 beers). All of my random doo-hickies (ice
pack, string, cards, cable adpaters, headphones, whiteout, batteries,
etc). It's all in a box. My desk, free. Beer cups hold my change.
Clothes? Lying in or around a $10 wooden shelf on the floor. Shoes?
Year and a half. Jeans, I was running off 2 year old jeans for the
longest time, until I saw a deal for 2 new jeans, marked down from $40
each to $10 (actually, $9). My bed? A futon mattress.
Live simple, spend simple.
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Investments
If you have the money built up, and you're free of those pesky
little interest charges that credit cards have, start making it earn
something. Keep it in a savings account so it's earning at least a
little bit of change, if not negating bank fees, and as you grow this
money, invest it where you know it'll earn money. Mutual funds, bonds,
the stock market, a RRSP, etc.
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Investing for Return
If you feel you're ready to really make something back on your money,
real estate, stock market, horse betting, poker (if you have the
skill), your own business, eBay, etc. Find something that works for
you, and make it grow.
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And that's really about it to controlling your money.
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