clrturquoise *.*

With all the uncertainties going on these days, I've been feeling unsettled (to say the least!) about my financial future. I've been doing OK at my plan to be wiser about spending, following a budget, etc but what with the looming specter of layoffs in combination with the dismal markets (both stock & housing), it seems like every time I look at my overall net worth, I'm worse off than I was before! This has been nagging at me for some time, making me feel guilty every time I've spent money (and certainly not helped by a long-awaited trip with girlfriends to Las Vegas at the end of October!) Last night I finally decided to look at where I am, re-group and come up with a PLAN. (I am more addicted to 5-yr plans than any Soviet bureaucrat and about as successful :P)

First step was to look around online for ideas & advice. Came across an interesting book called The Total Money Makeover by Dave Ramsey. Nothing earth-shattering about his guidelines (and from some of the excerpts I saw, the writing style seems a little annoying) but joy of all joys, he has my other favorite thing: a LIST. (Like plans, I find "to-do" lists irresistible.) Here they are, in the order he espouses:

(1) Establish a starter $1k emergency fund

A couple of years ago, I set up an automatic investment into a couple of mutual funds so *technically* this could be considered done - although I am reluctant to even try to tap into it right now since it's worth only about 1/2 of the initial investment. I think I may just start from scratch and keep my fingers crossed that the market recovers at some point. I did cancel the automatic investment for both and set up a savings account with SmartyPig both to retain the "automatic" and "not easily raided" features which prevented me from using the money elsewhere! Plus, they have this cool feature where you can make your goal public so you can see how I'm doing.

Of course, the trickiest part of this first step for me is that you have to use cash only (or debit card - money must be available before it can be spent). I am good at this 95% of the time -- EXCEPT that I always feel like I need to carry around a credit card "for emergencies"...and then have non-emergency emergencies all the time. It's particularly hard for me to turn down lunch out at work or good deals. For the lunch thing, I think I just need to find non-spending alternatives to getting off campus and taking a social break from working. This is not particularly easy since all my friends go out for lunch every day...temptation is always around!

(2) Pay off all debts, excluding mortgage.

Ramsey recommends starting with your lowest balance debt first for the psychological benefit of seeing faster results, then add the money to the next one on your list. He also recommends using every available extra penny - to the extreme of not even spending money on retirement - nothing - until debts are completely gone. As you complete each step, the idea is to take the money you were allocating to that goal and apply it to the next to really accelerate your progress.

(3) Save 3-6 mos income for a real emergency fund.

(4) Invest 15% of your income for retirement.

(5) Save for college - hey! an easy one! :)

(6) Pay off mortgage

(7) Build wealth

There you go. Nothing too novel or complicated but like I said, it somehow seems easier to think of as a to-do list than my other approach of trying to just "be better" without any clear plan. Of course, the most difficult part of this will be starting this NOW just before the holidays (notoriously my worst time of year for spending $$). Kind of like starting a diet just before Thanksgiving. Oh well. Wish me luck!