Dealing with the B-word

Per special request a series of posts will deal with practical budgeting. I’m not claiming my way is the right way, or the best way, for you to deal with your money. I’m simply offering the #BrokeMillennial budgeting system.

Other children of the 90s might remember the glorious time when clogs were fashionable for everyone, not just Dutch milkmaids, and before crocs existed. In 1996 clogs were quite the trend at St. Michael’s Catholic school in Gastonia, North Carolina. Every time I would see all the trendy 8th graders (aka the oldest girls in school) wearing those comfortable clogs my saddle shoes would feel so restrictive. My second grade self became determined to own a pair of clogs.

saddle shoes(Yeah, I was rocking those before Cole Hann made them trendy. This version is available at Payless!)

My mother, an always practical woman, knew that I would outgrow those clogs or the fashion would end within minutes of buying them for me. Instead of giving into my incessant pleading she made a one-sided deal with me. I could have the clogs, if I bought them with my own money.  Luckily, I was still sitting pretty on some money from my Krispy Kreme donut sales and had recently started to branch out into the cat-sitting business.

Armed with $15, I headed to the local Payless and made the first big purchase of my life.  I loved my $13.85 navy clogs with cork bottoms and I wore them proudly, every day for two weeks. Then St. Michaels banned clogs because they somehow clashed with our school uniform. Regardless, it remains a pivotal financial and budgeting milestone for me.

Denim-Cloth-Clogs_1776712B(My $15 did actually buy a full pair.)

***
Few things seem to bother people more than dealing with a budget. Who enjoys them you ask? Let’s call them accountants, accountants and me.

If it weren’t for my intense aversion to non-financial math and the horror stories about tax season, accounting probably would have been my calling. More than once my first roommate would walk into the apartment and find me gleeful pounding away on a TI-83 calculator and furiously writing numbers in my money notebook. The number crunching always proved, yes, I was still quite poor. Even so, I enjoyed knowing just how much money I did, or more realistically didn’t, have to spend.

A plethora of systems exist to help people deal with their money. Previously, I’ve discussed the envelope system of budgeting and explained where I made budget cuts when I first moved to New York (spoiler alert: it was food). Today, I don’t particularly endorse either but they fit at the time.

My goal of budgeting is simple: spend less than I make. For the sake of this post, I claim to earn $2,300 a month after taxes (this is a fictional number).

For those readers who remember my financial origin story it should come as no surprise that my budget focuses on saving. Future posts will discuss the importance of saving at least a little bit every paycheck, putting money aside for retirement and dealing with student loans and other forms of debt.

Before you can start saving, or paying off debt, you have to be able to survive your day-to-day expenses. As a 23-year-old living in New York City with no dependents, my expenses will vary drastically from people with children, joint-incomes, still living at home and various other factors. Please keep that in mind when reading my outline.

There are two types of budgets I focus on, weekly and monthly. I’m not neurotic enough to crunch numbers daily, but I have an idea each week how much I’ll need. If I’m traveling, going out for a friend’s birthday, entertaining visitors or a myriad of other situations, I mentally prepare to scale back expenses the week prior or after.

My weekly budget mostly deals with how much I can afford to spend on food and entertainment. Each month I budget $300 for food, because it only costs about $50 each week for my groceries and I add extra for dinners or drinks with friends.

My set monthly expenses are:

  • Transportation (NYCpublic transit) – $112 monthly pass
  • Laundry – $21
  • Toiletries (shampoo, conditioner, soap, toilet paper, etc) – around $10
  • Utilities (heat and electricity) – ranges from $30-$55 because my roommate and I      don’t use AC in the summer and we only have lights on in rooms we’re using.
  • Hulu Plus – $7.99 (We cut cable and went with a Roku box instead.)
  • Phone bill – $70
  • Food – $300
  •  Rent – $950

For a grand total of $1455.99, more than 50% of my monthly earnings.

roku(I highly recommend cutting cable and switching to a Roku device to save a few bucks.)

Working under the assumption that I earn $2,300 a month I then have $844.01 each month to allocate towards other expenses and savings. Realistically, each month brings a new hidden expense that aren’t factored into the monthly budget. For example, needing items dry cleaned, buying birthday or holiday presents, taking trips to visit friends or entertaining guests.

For those of you interested in starting to budget your money I encourage you to take the first step by writing down all your monthly expenses and subtracting it from your monthly earned income (after taxes). Once you have an understanding just how much money you actually have after expenses it becomes easier to know where to allocate your funds be it savings, paying off debt or a shopping spree.

Stayed tuned for future posts about how this millennial deals with budgets. During the interim, follow the journey on Twitter @BrokeMillennial or subscribe for emails about new posts. Feel free to email feedback or topic requests to brokemillennials@gmail.com.

Keeping a Millennial Milestone Cheap (Moving, Part I)

If you were to walk in the front door of my apartment right now you’d probably turn to me in shock and scream, “You’ve been robbed!” To which I would smile and shake my head whilst trying to figure out how to explain my minimalist approach to decorating an apartment I’ve lived in for two years.

Mostly, lack of finances contribute to my apartment’s aesthetic. Moving to, and living in, New York City takes quite a toll on the bank account, so I’ve  selected to only have the bare essentials. However, an even stronger influence on my design choices are my mother’s moving philosophies.  That, or I  identified with Cindy Lou Who in my youth and secretly hoped my grownup apartment would look like the Grinch had ransacked my home on Christmas Eve.

how-the-grinch-stole-christmas-1966-cindy-loo-who(I truly rocked pigtails and onesies in my youth.)

Mama’s First Philosophy:  Until you’re ready to settle down, everything you own should be able to fit in the back of a car.

That piece of maternal advice came my way on the eve of my move to New York. I stood in my parent’s basement as I attempted to sort all my worldly possessions into two piles, “Take to New York” and “Leave behind.” In my mother’s defense, I only had the room of a Honda CR-V to get all my belongings to the Big Apple so the advice was probably more practical in nature than a lifelong motto. Regardless, it has stuck.

HPIM5968(I wish I could move with only two duffel bags.)

My mother’s philosophy aside, growing up as an expat contributed to my minimalist lifestyle. When you grow up prepared to move every few years you learn to cut out the extra weight (or your parents force you to get rid of your excessive stuffed animal collection because 15 is a little old to be so attached to teddy bears).

Mama’s Second Philosophy: Focus on decorating one room at a time and buy quality furniture that will last you a long time.

She’s right. I don’t have any witty words about it. Wait, I do. This sage advice has a powerful nemesis, Ikea.

My Philosophy: Don’t waste your money buying boxes and bubble wrap.

Do not, I repeat, DO NOT buy boxes or bubble wrap from a FedEx, UPS, Staples or Home Depot stores. If you’re packing up your own belongings then ask the proprietors at your local grocery or liquor for their leftover boxes. Typically, they are more than happy to hand them over.

If that doesn’t work out for you then cook a nice dinner for your friends that work in an office. After a bottle of wine, politely request they pilfer the the recycling piles at work for boxes and newspapers. If you’re staying in the area and just moving apartments/houses try asking all your buddies to loan you duffle bags or suitcases.

HPIM8430Moving incurs significant expenses so it’s important to try and pinch some pennies where you can, especially if you’re a millennial without a relocation benefits package.

For daily bits of wit and financial advice follow the journey on Twitter @BrokeMillennial. Go the main page and subscribe if you’d like to receive once-a-week email updates about new posts!

Bonnie: Why I Hate Cats And Love Saving Money

After my lesson in start up costs, I decided the next business venture shouldn’t require seed money from my father. Unfortunately, there are limited options for a seven year old striking out into the business world. After a few failed attempts at friendship bracelets and paint-by-numbers sales I had a break through in the pet sitting business.

Our next-door neighbors had a cat named Bonnie. Bonnie embodied evil. She would lurk behind the couch near the door. When I stepped over the threshold she’d propel herself towards me hissing and swiping the air with her claws. For five dollars a day I braved the possibility of death by satanic cat and diligently cleaned her kitty litter and put out fresh food and water each morning and evening.

mean cat(What I saw)

CatSwipe(What was probably happening)

Needless to say, I still am not a fan of cats and would much rather rough house with a German Shepard.

puppies3                      (Yes, I deliberately juxtaposed an adorable puppy photo with the evil cats.)

The money from taking care of Bonnie went right into my childhood savings fund, a candy tin hidden in my closet. Perhaps the threat of my money being taken created the need to hide it (years later I was devastated to learn about taxes). I filled up that tin can with dreams of buying my first car, a red Mitsubishi Eclipse.

eclipse

(No, this did not end up being my first car.)

The dreams of buying a car at 16 died when my family moved overseas and getting a driver’s license was impractical and improbable for a young gaijin. Instead, the pet sitting empire expanded.

Those early years of pet-sitting taught me how to earn my own money and more importantly to save it. With no living costs, except entertainment, I could bank most of my earnings and routinely would save up for large purchases or just save “for the future.”

A decade after my tussles with Bonnie, on the eve of my departure to college*, my father gave me a book called The Rules of Money by Richard Templar. Rule 27 read, “Start Saving Young (or Teach Your Kids This One If It’s Too Late For You).”

Mr. Templar suggested coming up with a “figure” to save from each paycheck. He wrote that he personally put aside 50 percent. Not to be outdone by the man, I put aside 50 percent of all my paychecks in college in order to create a “nest egg” for my post-college adventures. I dreamed of a going to Australia for a year or back-packing through Europe for a few months.

In reality, neither of those happened, but I did end up needing a savings cushion. My first “real world” job brought me to New York City, the United States’ most expensive city to live in. A land that requires 50% of my current paychecks to pay rent. But my first “real job” paid about $200 bucks a week. An amount that didn’t even cover a month’s worth of rent. More on that to come.

Saving your money from a young age is one of the greatest financial lessons to learn. I don’t, however, recommend saving it in a candy tin, even if you are eight. As my father says, “Compound interest can be your best friend or your worst enemy.” More to come on that too.

* Ironically enough, my college mascot was “The Bonnies.” Political correctness forced the University to change from the original mascot, the Brown Indians.

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