The Simple Dollars’ 31 Days of Finance Fixes – Day 7-12

Yesterday I learned exactly how much an hour worth of work is to me. This is very important. When Energi Gal says that I’m not doing my share of the cleaning and suggests that we get a cleaning lady, I can figure out if this is really worthwhile to me. Today I’ll look at Stage 3 in the plan, building my own budget. This is not going to be my favorite stage as I don’t like to count each dollar going out. I just evaluate whether I need to spend the dollar or if the value that I’m getting for that dollar is worthwhile.

Day 7 (The Simple Dollar’s Day 7 Guide) + Day 8 (The Simple Dollar’s Day 8 Guide)

These days are very similar so, I’ll combine them. I am supposed to allocate hours for living expenses, debt, and goals. The Simple Dollar recommends that I do it by the week. Unfortunately my living expenses is by the month (see my living expense information here). So I’ll simply multiply that by 12 and divide it by 52. That means my living expenses are $343.52 a week. That allows me to figure out how much of my work week is spent towards expenses. I can’t go into exact details without giving out my income. It’s worth noting that the two goals from this day are motivational and psychological. Neither are much of a factor for me as I take an analytical view.

Day 9 (The Simple Dollar’s Day 9 Guide)

Today, I’m supposed to look at ways to reduce my expenses. Unfortunately after going over each of the suggestions there isn’t a place where I can save. This comes as no surprise to me as I’ve read many articles on how to save money and there’s not a lot of fat to trim.

Day 10 (The Simple Dollar’s Day 10 Guide)

In day 10, I look at the money that I saved in day 9 and note how those savings can get me closer to my original goals. Unfortunately, I was unable to come up with any savings, so my goals aren’t taken any further.

Day 11 (The Simple Dollar’s Day 11 Guide)

There are three things from this day that really stuck out for me. The first is thinking about purchases at time spent instead of money. Specifically, “Money comes in, money goes out, and that’s life. The truth of the matter is that every dollar we make is the result of some amount of time spent doing something for someone else.”

The second thing of note is the “debt snowball.” I couldn’t disagree with this method more. The fastest way out of debt is to apply the payments to the debt with the highest interest rate. Some say it’s best to pay off the smallest debt first, because it gives a psychological lift. I say, break out a spreadsheet program and calculate your debt. Calculate how much it will expand to next month if you made no payments at all. Then do the math of making a payment on the smallest debt and the one with the highest interest rate. You’ll find that you can magically save money this way. It’s a small accounting trick, but it should give you the same psychological boost – perhaps even more knowing that you moving toward your goal faster.

The third is my own little vice. I pretend that I have no debt, and thus could put all my money towards my goals, when in reality I have a home equity line of credit (HELOC). I play a little arbitrage game investing in Prosper earning interest rates that are more than my HELOC. The gains probably don’t amount to much, but I am putting significant money towards the HELOC. In terms of getting closer to my short terms goals, one of my biggest ones is to get the “To Go” column of my Alternative Income (see box in the top left of the page) to $1389 by October of this year.

Day 12 (The Simple Dollar’s Day 12 Guide)

This is the day where I’m supposed to construct my true budget. I think in all the conversion of hours to dollars, I lost some of the meaning. I’m not a very strong budgeter to begin with and the conversion makes it that much more complicated.

I enjoyed this particular quote: “Maybe you realize how much of your life is spent in the ‘now’ and how little you’re actually spending for the big things tomorrow. Maybe you believed you were planning well for the future, but you see some huge areas for improvement.” If anything I’ve found that I’m planinng more for the future and didn’t find a lot of areas for improvement. Then again, because I write about this stuff and lived it all my life, it’s not surprising.