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Focused Living, One Month at a Time

Saturday, March 31, 2012

Challenge #9, March 2012: FINANCIALLY FITTING


I will address my finances and make specific changes to my budgeting, savings, and investment strategies - for the short, and especially for the long term.

“Many people take no care of their money till they come nearly to the end of it, and others do just the same with their time.”   
– Johann Wolfgang von Goethe




Background
Focus, really focus, on money for a whole month – not fun, and definitely a challenge unless you are an accountant, right?   So this one was tough, but definitely rewarding by the end of it. I have never been too fond of facing money issues head on, but it was now time for some direct action and better planning than what I have been doing lately – not much.  I have long since worked my way out the student loan and credit card (yikes!) debt of my twenties, and abandoned my brief but dangerous hobby as a day trader in 1999, ha!  (What was I really thinking, and why didn’t I just hold onto that AMZN all this time!).  I just needed to sit down and face some general and specific organizing, allocating, and budgeting questions that have been increasingly nagging at me over the past few years.  I am by nature (or more likely by nurture) somewhat of a frugalist, which has served me well since working for myself for the past six years, with no pre-set paycheck to count on.  My income is directly related to how much time I put in, how well I serve my clients and meet their expectations, and how hard I work to pursue new ones.  These facts have been both daunting and liberating to me, and I really can’t imagine earning a living any other way now.  I wanted to get a better handle on my budget, savings, and investment plans, and thanks to some great resources I was able to do exactly that this month.

What I did and how it went
My goal was more overall for the month rather than “do something every day” as in most of my previous challenges.  So I set specific objectives to:
·      Read a good overall book about personal finances, for some general guidelines and input - thank you J.D. Roth!
·      Set up a detailed monthly budget plan, then tracking it for the next six months starting in April, to see if it is accurate as far as what I think I am spending, and where I might need to make adjustments.
·      Research and decide on some new investments for my Roth IRA and other long term savings accounts.  Most of the investments (socially responsible mutual funds) have done okay over the past several years, except a few small positions in stocks that have been disappointing to say the least.  So I wanted to simplify and be more conservative with my next bunch of cash that has been building up in the IRA, my biggest chunk of retirement planning funds.
·      Set annual goals for income, savings, tax strategies, giving to charity, etc goals.
I have been following a few personal finance blogs for months now and learned so much. I highly recommend Get Rich Slowly, Budgeting in the Fun Stuff, and Financial Samurai.   They all provide a wealth (sorry, couldn’t resist) of easy to understand and useful information on this subject, and I delved into some of their robust archives while researching this month.  When I finally did get started after about ten solid days of assorted procrastination strategies (I said this was a hard one), I got lucky and soon found my organizing savior in mint.com – hooray!  I did some extensive online homework about the site, read A LOT of reviews about privacy, security, etc and then signed up. Entering all the usernames and passwords from my various online accounts was a bit nerve-wracking, but once I got over it and realized the value of keeping everything in one accessible place, and the very cool budgeting tools they have, my nervousness turned into sheer gratitude.  I set up a reasonable budget and started tracking everything by spending categories – easy peasy!  I will work on adding in savings goals after I see how my planned budgeting goes for a few months. 

What I learned
May main takeaway was that it took something simple, straightforward and automated such as this - rather than trying to do it all myself on an excel spreadsheet, or learn a new program like Quicken - to really get into the swing of budgeting and proper financial oversight.  The reason I procrastinated so much to even start was that I thought it was going to take a lot of dull and dreary work to even look at it all in a highly efficient way – not the case I found.  I also learned that I have been somewhat on the right track so far as far as spending and long term planning goes, but paying a bit more attention and tracking these things will definitely help me sleep better at night and feel more confident about it all.  I know I will now also be able to address any major life changes as I move beyond my 40s with a good handle on what I have and what I need (financially speaking) using these new tools.  How about you – any financial issues that need attention, and how are you handling them?

Bonus accomplishment this month:  I slimmed down my RSS feed roll from well over 60 to just 30 – my new max.  There is just no way I can keep track of all that extra information, no matter how insightful and interesting it all seems to be.  I now have a manageable (so far!) amount of news and reading to pay attention to, rather than building up to hundreds of unopened items that weighed on me until I went through them.  I went on an Information Diet and my brain feels lighter indeed - more room for more important stuff now!