Dear Self: Things I wish I Could Tell My Younger Self About Money

How many times have you thought, “If I could only go back in time”? What were some of the things you would have done differently? (Well, besides dating the guy/gal your parents warned you about) I think about it and I think if I had to write myself a letter about my financial future, it would go something like this:

Dear Self,

I am writing you today to make sure you don’t make the same financial mistakes I made. First, In 2000, when standing on the concourse, do not sign up for a credit card just to get a free t-shirt.

Second, learn to balance a check book and cut up the first debit card you get. It’s a gateway card to credit cards, which can be just as detrimental to your life. Online banking is great, but don’t count on the balance telling you how much money you have, that’s what your check book balance is for!

When you close your first checking account to go to another bank, remember to actually close your first checking account. They charge you $5 a month. When you leave that bank, you have $200 in that account. When it shows up as a charge-off on your credit report, you have negative $70. Remember to cash checks when you get them so they don’t expire in 90 days and you lose out on unclaimed money!

When you get your first “big-girl” job and you are holding your pay checks for a month before you cash them, don’t. Cash those suckers and start saving some interest on that unused money while the interest rate at the bank is still above 5%, it won’t be that way two years from then. In 2002, when you see that shiny new Dodge Ram sitting in the parking lot, don’t buy it. Your salary that year is going to be $19,800. The truck costs you $19,000. When you get those $379 a month payments, you’ll only have $32 a month after bills to live off of, including your gas and food. Drive the paid-for explorer your parents bought you until the wheels fall off, then go buy a used car with cash!

When you get back that HUGE tax refund check, save it. Don’t go out to eat three meals a day and blow it. You’re throwing away really great money!

Remember the store credit card you got about that time with the $250 limit that you charged up and then paid $50 a month on for the next  six and a half months before you did it again? Don’t do that! The APR was almost 30%, you could have saved the $50 cash for 5 months, made some interest off of it, then went and bought yourself new clothes, instead you paid someone else an extra $75.

Let me save some time, don’t use a credit card, not a single credit card. I don’t care if you need tires or diapers, don’t charge a single penny to a credit card. Don’t charge a single penny to start a business on a credit card either! PS, while they are good for some people, you can’t do a part time business and a full time job, it just doesn’t work, just don’t even do it. If a bank thinks the business is worthy, they will loan you the money at a much lower interest rate.

In 2003, you’re going to tell your husband you want to buy some land in the county and he’s not going to want to. Buy the land anyway! In five years, the land is going to be work quadruple what you’ll pay for it.

You’re also fixing to have a baby and you’re going to quit working for a year. Do NOT remove your retirement! You’ll go back to the same job and have to work there another five years to make it up.

In 2004 when you want to go back to school for another degree, don’t. Wait until your son is older, you just can’t juggle a full time job, a baby and school, also, if you decide later to go back to school, choose business, not accounting, you don’t like the morals, or lack there-of of a lot of people you’ll come into contact with. PS, that’s another $3200 your going to throw down the drain, instead, take that $3,200 and pay for a new used car, the explorer you’re still driving (I hope) is probably on its last wheel by now.

This same year your grandmother is going to offer to put a down-payment on a nice brick home on the same street you live on now without her help. Take it! Take her up on the offer, she won’t be here to help you if you wait. When she sends you a large monetary gift a year later, take half of it and save it, use the other half to go see her every chance you get. PS, call her every day and get every piece of investing advice you can from her, the woman is a monetary genius! When she sends you coupons, use them and the $25 for groceries she sends too. Now take that same money you just saved and put it with the other money from her you are saving.

When you want to invest in any money-making schemes and warehouse shoppers clubs, don’t. That will save you thousands over the years. You’re a sucker for anything that might make or save your family some money, simple is best and high risk investments fail. When in doubt, investment wise, don’t.

In 2009, the economy is going to really tank, do not try to start a business during this time, it’s just not going to work. Just stick to simple saving and your full-time jobs. PS, your husband will have a second job that’s just frosting money. Save every penny of it!

Stop eating out so much! Learn to dumb down that sophisticated pallet. It’s killing your pocket book! Use coupons every time you shop. This could save you hundreds of dollars at the store. Stop robbing your savings account to keep your checking account afloat. Just account for every dollar and you won’t ever have to worry about your account going in the negative.

When YNAB comes out, get it! Don’t waste your money on any other finance software, they’re overly expensive and you won’t stick with them because they are complicated and take up too much of your time.

If you will do all the things I have warned you against, you will have saved yourself on the low end, drum roll, $262,050 without interest and that’s on the low end. A house and two cars, paid for, debt free, plus another $125K towards retirement. I also will have saved you countless hours worrying about every dime and more free and happy time with your family and time to do things you enjoy to do.

Sincerely,

 

You 15 years older

 

What would your letter say?

Coupon Investing Experiment – End of Pay Period (PP) 1

If you have read the coupon investing experiment, you’ll know I am taking the funds that I save by using coupons and investing them. At the end of week one, I had saved $69. By week two, I saved another $16. I also went to the movies and had rewards coupons for a free ticket, $10.50, a free medium pop-corn, $8, a free small pop-corn, $6, and a small drink $6 that were all expiring by the end of the week, so I used them all. I decided to take this from my YNAB Entertainment Category  and add it to my investments. This will give me a total of $115.50 for the pay-period to invest. According to Betterment’s handy-dandy advice calculator, adding this will increase my retirement goal by $272.00. This may seem like small-potatoes, but I see it as an integral piece of the puzzle. If I can keep this level of investing each month, we are looking at thousands more towards my retirement. Just matching that same investment during PP2 of August, I will have increased my retirement by $525. That’s another $7000 added to a 15 year investment plan if I can invest at least that much extra every pay period.

While using the extra money I got from the movie coupons, I realized I can do the same for any budget category. I have gotten the “Retail-me-not” app on my phone, which sends retail coupons directly to my phone for pet stores, clothing, and even some restaurants. Even money saved from a percentage off will be a great way to save towards my investments. I also have a Winn-Dixie rewards card, which gives you cents off your gas purchases. I plan on taking that money from my fuel category and investing it as well. It has never been more important to save money now that I see the potential returns towards my retirement.

 

The Coupon Investing Experiment

I recently decided I was a fool. Yes, I admit it! I am a fool, I would go to the store every week for groceries, yet I didn’t take a single coupon, not even the ones I could log in and clip electronically! Since I don’t like being a fool, I  thought “what can I do to better my financial situation?” Since investing has been my new financial goal, I needed to find a way to improve my investments. At age 35, I will barely have over $100,000 by the time I retire if all I invest is the pitiful $150 a month I have been investing.  but I realized something, when I was couponing I wasn’t eating out, I always had food in the house, I was saving on my grocery bills and I was earning extra money for the price of a news paper. So it occurred to me, if I take the money I save in coupons, I could invest that money to buffer my honey pot with something extra and it wouldn’t cost me a dime more.

Could this be possible? Could I actually find a way to double my investments? I began with my YNAB budget. I looked at my expenses in restaurants and groceries and did a little trimming. First, I cut my restaurant category in half. I won’t be eating out if I’m going to the store every week. I took that restaurant money and I added it to my buffer category. If you have read my post on YNAB, you will know one of the rules is to create a buffer so you are no longer living paycheck to paycheck. At the time of my experiment, I have only been buffering at a rate of about $50 a month, give our take, so I wanted to bump this up. Admittedly, my restaurant category was morosely over funded, so switching this around will better my financial situation by paycheck one. I then turned my attention to my grocery category which I purposely have been over-funding so that I would be motivated to shop for groceries instead of restaurants. As of now, I am going to leave this category the same until I get in the swing of things.

Shopping multiple stores and sales papers seems to be my best bet for the best deals, but if you don’t have time for this, find a store (like Publix or Walmart) that take competitor coupons, ad match, or stack coupons. Matching coupons and sales papers is going to be a great way to start, but don’t be afraid to sign up with your grocery store for in-store deals and coupons. I also like to follow some coupon sights and follow them on facebook, I like hotcouponworld.com, southernsavers.com, krazycouponlady.com, and I sometimes use the service couponclippin4you.com, when I want multiple coupons of something or when I buy a paper with the coupons stolen out of them (which happens here more often than I like).

I won’t go into details on how to coupon, there are plenty of tutorials on these sights, and even on YouTube, but I will share with you some of my latest receipt information. I do have a spreadsheet that I made up for my grocery list, a price list, the coupon price, if they double, and the final price so that I can go back and check my receipt against my spreadsheet to see store savings vs. coupon savings. Sometimes when you look at your receipt, it will say something like “You saved $36.49 this trip”. I don’t count that toward my investment money because I would be paying the sales price with or without the coupons; however, if I have extra in my grocery category at the end of the pay-period, I’ll send that money over to my “Betterment-Lending Club” category, which is my investing category. This week, I have shopped at Kroger and CVS. My Kroger OOP (out of pocket) was $74.98, I saved a total of $46.99 with store savings and coupons, but I am only looking for the MFG CPN on the receipt. This is the manufacturer coupon savings. I had $11.85 in coupons.

When I shopped at CVS, my OOP was $75.87, but my total coupon savings was $51.12, I also had Extra Care Bucks (ECBs) that totaled $39.00, which is like having cash in your hand. I can use these $39 to pay for some of my OOP expenses and even stack them with coupons, to buy more groceries, but I won’t be adding the $39.00 to my investment category because even if I had not used coupons, I would still earn ECBs.  In total, I used $62.97 coupons to pay for things I was paying for OOP! See what I mean? FOOL!!! Since the money was already budgeted for grocery expenditure without coupons, I don’t have to raise my grocery category to cover the cost of the investments.

I am not an extreme couponer, but I do stock up 2-4 items at a time, because it will only go on sale every 12 weeks or so. So this week, I bought enough shampoo, deodorant, laundry detergent, dish washing detergent, toothbrushes, and toothpaste to last the year, so I won’t have to buy them again, unless I have really good coupons that will make something free or $1, because I give Cotton balls for Christmas to family members. I have several other staples such as frozen veggies, rice and cereal. So next week I will really be focusing on perishable such as meat, eggs, butter and milk (which all freeze!!!) I only have about $100 left in my grocery category for next week, so I probably won’t have too much going toward the investing category, but I do have coupons for all of these items, so I may end up investing another $10. Since I get paid bi-weekly, that means I will have about $72 extra to invest this paycheck.

If I can keep this rate up, I could double my investments, but only time will tell. I would like to say I am on my way to becoming a Mustachian (if any of you read mrmoneymustache.com), but I’m not there yet. Maybe my mustache can be pencil thin at least! So far, it feels a little wrong taking money out of my grocery category knowing that I could use it on more groceries, but when I look at the long-term goal of better investments and consider I was foolishly throwing this money out anyway before I was using coupons, it is worth it!

I hope to give you an update by the end of the month.

 

Where in the world has DM Smith been?

It has been a while since I have posted, truthfully, I have been busy being awesome in life! Thanks to my wonderful blogging skills, I landed an offer to publish a book for The History Press publishing company. I published “Haunted Auburn and Opelika” in 2011, which I co-authored with some good friends. I also just released my second book in October, “Legends, Lore & True Tales of the Chattahoochee” (also published through The History Press).
I kept my day job, writing for regional-based history publishers will probably not make you a millionaire, but every now and then you can get a nice royalty check to pay back your out of pocket expenses. After two years of a fifty hour day job and a twenty hour writing gig, plus my volunteer obligations, I decided to break from it all except my bill payer.
Now that I have a little more time on my hands, I can get back to what is important to me, which is focusing on my family, to include our financial situation. One of the things I wanted to focus on was investing. We are in a good place financially. We have a low-interest rate on our mortgage as well as a low monthly payment to include taxes and insurance. We have both cars paid off and only one outstanding loan we used to consolidate credit cards we used in our not-as-smart days.
We currently invest in both Lending Club, a peer-to-peer lending sight, which I will talk more about later, as well as Betterment which is a program that invests for you. We don’t invest much, only about $75 bi-monthly right now but I am aiming to improve this.
That’s what’s been up with me. I hope to focus more on the blog now that I have more time, so I hope I will find some good nuggets of knowledge to share with you all!