As I mentioned in an earlier post, a friend recently asked me for advice on getting herself on the right financial path. Obviously, I’m no expert, but I gave her a few simple steps to get her on the right track. I told her the first step was to figure out what she owed.
She came back to me, having written down the details of her debts, and she was understandably overwhelmed. She assured me she was making minimum payments, but now that she knew how much money she owed, she felt the throw all the money she could at her debts. I told her that was a good desire, but there were a few other things she should do first.
I asked her if she was tracking her expenses. She admitted that she really wasn’t. She knew that she was saving enough money that she could afford to make her minimum payments, but that was about it. I told her the next step, in my opinion, was to figure out what she was spending every month and where she could cut back. While that $10 lunch didn’t seem too expensive, grabbing lunch just once a week meant spending $40! Even cutting back to going out to lunch just every other week would save her $20.
I promised her I wasn’t going to insist she cancel her cell phone or never ever go out to eat. In fact, I wasn’t planning to tell her anything. I had a feeling that once she totaled up how much money she spent in various categories, she would want to make some changes on her own.
Megan is a 30-something government employee in the Washington, DC area. She got interested in Personal Finance when she got out of college and realized that her paycheck wasn’t going to go as far as she had hoped. Since starting this blog, she has managed to buy a house and make a solid start on her retirement goals, and hopes to help others do the same. Here is her story:
In 2007, I was a gainfully employed 20-something with no debt but not a lot of knowledge about personal finance. It was a co-worker’s comment about Roth IRAs that sent me to the internet, searching for information. It was then that I realized that I really didn’t know a whole lot about personal finance and that my current financial situation was due a lot to inherent frugal tendencies, generous family members, a fear of debt, and good luck. While that was working for me, clearly I needed a better plan.
While I had no debt, I was also pretty much living paycheck to paycheck and not worrying about going over budget (I say this as if I had a real budget) because I had an emergency fund set aside to cover any overages.
Except that’s not what an emergency fund is for.
So I did a lot of research, read a lot of blogs, and decided that I needed a plan. I needed to budget. I needed to know what I was spending my money on. I needed to prepare for the future.
I decided to create a blog not only to make myself accountable to others but also to share the knowledge that I gained along the way. I’ve learned so much from my fellow bloggers, and I hope that my readers can find something useful in what I have to share as well.