Comments on: Chipping Away at the Paycheck to Paycheck Routine

By: Doug C.

Doug C. — Sun, 24 Aug 2008 21:42:47 +0000

Trent, thank you for this article. I’ve been living this routine for far too long and I need go start doing something about it.

I had a cell phone for a while and I would have to agree they are “extras”, whether you like it or not. It was also a big fat hassle – plans, extra costs, hidden costs, and the horrible support. Bleh. I was glad to go back to a land line.

I now have cable for both my internet and my phone and it’s less than what I was paying for just the cell phone.

By: Credit Expert

Credit Expert — Mon, 21 Apr 2008 20:31:11 +0000

Great tips:

I’ve found some interesting ways to trim the fat from my spending, but never thought to immediately plug that into a savings account.

By: Margaret

Margaret — Fri, 14 Mar 2008 05:41:32 +0000

Paul (comment 37) — if you put the first $50 in a week before you would have put in the first $100, then yes, you make slightly more interest, although the difference is very small – something on the lines of a a few pennies per $100 deposited. If you are charged a bank fee on the transaction (ING doesn’t, but your chequing account might), then you are better off making fewer deposits (e.g. $100 twice a month).

By: Paul

Paul — Wed, 12 Mar 2008 21:58:24 +0000

Hey guys – tell me if my line of thinking here makes sense to you.

I currently do two separate $100 transfers each month into my ING savings account for a total of $$200 each month.

As I understand it, they compound interest daily, and deposit it monthly. I believe that you start making interest on your money within 1-2 days of it being deposited.

In that case, is it true that I would make (a little) more money if I deposited $50 each week ($200/month)?

The idea is that the $50 would start compounding immediately, and increase by $50 each week of the month as opposed to putting $100 in twice a month.

If they compounded monthly, then there would be no difference. But it seems to me that, by compounding daily, I should make more.

Does that make any sense? (me != math whiz)

Does that make any sense at all?

By: thehungrydollar.com

thehungrydollar.com — Wed, 12 Mar 2008 20:05:48 +0000

Just a thought… when you’re looking to save money, try not to get target locked on your discretionary spending. Re-evaluate your monthly fixed costs and maybe you’ll find that some of these expenses are not so mandatory.

By: kentuckyliz

kentuckyliz — Wed, 12 Mar 2008 00:58:44 +0000

The discipline of automated savings is good, however, discipline without a goal is masochism.

So, what is she saving FOR? When there’s a real goal there, something she (and spouse and family) is excited about, then the pleasure of saving far outweighs the temporary fleeting pleasure of frittering away one’s money on crap.

To build the budget from the ground up, start with the survival essentials. A person needs food to stay nourished to continue working: budget basic groceries. Heat and light help, so there’s utilities. Shelter is good; budget mortgage or rent (and consider if you have too much house or apartment to get any traction). Getting to and from work is the next necessity–what transportation can meet your need? The bus or train? Bike? Walk? Basic car? Budget that. Necessary clothing (not recreational designer shopping at the mall). Then add the next layer of basics…keep building from there. It forces the fluff to become apparent and a person can make better decisions about what are truly spending priorities.

By: d

Tue, 11 Mar 2008 18:42:14 +0000

As far as “needs” go, I believe that access to a phone high on the list. When I had my own financial meltdown, I went w/o electric before I had my cell shut off. I just charged my phone on my way to/from work. Now electric is one of the luxuries I can afford to splurge on. Besides, it’s not socially acceptable and oddly enough, my neighbors seemed to be bothered by it. What I think is even worse is people knocking on my door on a daily basis to use my phone to call work, order pizza, call the girlfriend. TV is a big so-called need and most people would be lost without it. I think it’s ironic how people will talk about wasting money and falling into societies trap, etc. I wholehartedly agree! The problem is that these are often the same ppl who have cable or satelite, go out to the movies, maybe even rent or have a netflix acct. They can often justify that it entertains the kids, they have to pay for cable to have CNN the weather channel or some other way of validating the most disaterous invention known to man.

By: daydreamr

daydreamr — Tue, 11 Mar 2008 18:14:01 +0000

some folks are being a bit hard on !wanda. We certainly take a lot of luxuries for granted, things we could do with out (like cellphones). There are a lot of benefits to having one though and it depends on your circumstances. They are great when living w/roomates. It’s just one less bill to split, one less risk to take as the roomie could run up the bill and move out…a cellphone is great for emergencies and I feel safer having one when I travel and you can take it virtually anywhere (that can be a bad thing too!). When I move, I don’t have to pay $40 to set up new service either. I recently got a better cell plan, got a landline and swiched to DSL and now I’m paying $30 less between the 3. I know a lot of ppl who only use cell’s.

As far as Susie goes, I would add that tracking your expenditures and planning a budget would be helpful. It doesn’t need to be rigid and you could give yourself some ‘wiggle room’ and make it realistic. Work personal care products, food, the occasional/daily coffee, clothing, commuting costs…See where you can cut corners in many of your regular expenditures. If buying in bulk is realistic (or worth it), even a few $ a mo. add up. Whenever possible, stock up on things you use when they go on sale and/or you have a worthwhile coupon. Make less trips to the store (less spent on gas and less temptation to buy).

Along the lines of Trent’s emergency fund, stashing a bit of cash in a spot where you won’t be tempted to spend it is also helpful. Even if you tuck $20 under the carpet, behind a drawer, etc. and resist the urge…you will forget about it sooner or later. I often use this strategy as a rescue fund, I hide a few $ in my glovebox. There have been times when I needed gas but forgot my wallet or didn’t have the funds. It’s best to learn to be responsible and spend less than you earn but this process doesn’t happen overnight, we all have bad months, unexpected expenses, etc.

By: Evan

Evan — Tue, 11 Mar 2008 17:38:13 +0000

I think the list should include – selling unneeded or unwanted items.

By: Michael

Michael — Tue, 11 Mar 2008 16:08:31 +0000

Mike, ING’s American accounts are FDIC insured. ING is one of the biggest companies in the world. It is true that there will be bank failures, but your credit union is more likely to become insolvent since its margins are tighter, it is smaller, and CUs don’t have much government pull. (But I keep my money in a credit union, too.)

By: Jen

Jen — Tue, 11 Mar 2008 16:06:53 +0000

I only make calls on my cell phone, but I keep a landline because it’s cheaper to pay for that plus my phone-line-based internet service than it would be to drop the landline and switch to broadband. :-)

By: Robin S

Robin S — Tue, 11 Mar 2008 15:57:09 +0000

@Personal Finance Management (#22)

Trent wrote, “The gym membership that you don’t use might save another $30.” (emphasis mine) I don’t see him suggesting that one should stop going to the gym, but that paying for a gym membership and not using it is a waste of money.

By: Ryan

Ryan — Tue, 11 Mar 2008 15:38:52 +0000

I do the VOIP land line supplemented by a prepaid cell for myself and my wife. My wife spends about $100 per year on her prepaid cell, I spend $10 per year on mine. The voice over IP is $15.99 per month. Of course, you have to pay for high speed internet first though, but we are internet junkies, so that works out.

By: Mike

Mike — Tue, 11 Mar 2008 14:35:28 +0000

I’d be really careful about using internet banks, I was reading some things that suggest the government is expecting allot of bank failures, even Ben Bernanke (the fed chairman) SAID, there will probably be some bank failures. (Of course I can’t find the link now). That said, the advice itself is reasonably solid (stashing the money someplace it isn’t easily accessible), but I would still suggest a brick and mortar building someplace FDIC insured you can drive to in a pinch. I keep my emergency money in a local credit union, but I don’t have billy pay through that account or a debit card for it. Works great. Frankly, because I stay out of that money as much as I do the bank’s caution-flagged it a couple times, they’re afraid somebody’s gonna steal it. I’ve had to answer security questions when I’ve checked on it a couple times. I don’t mind. Heck, they can DNA test me if they like!

By: sally

sally — Tue, 11 Mar 2008 13:51:16 +0000

I have a cell phone and no land line, and this is common among my friends. Cell phones are more convenient for one main reason: I’m 22, and when I move (sometimes 4-5 times a year), my phone number comes with me automatically, no hassle. And I pay less than $16 a month (I have a pay-as-you-go phone), so it’s not a big expense. When I “settle down” in a house, I might switch to a landline, but for now, a cell phone is what works best for me. And isn’t that the important thing? Personal finance is *personal.*

By: DrBdan

DrBdan — Tue, 11 Mar 2008 13:12:25 +0000

From the way that the paragraph mentioning cell phones is worded (Trent mentions it as being strictly related to social activities) I believe it is in reference to a cell phone on top of a home landline. In my opinion a cell phone in that situation is strictly a convenience and a luxury.

Now, if you don’t have a landline then a cellphone is probably a good idea and depending on your plan might not be any more expensive than a landline.

By: ongrowthtrack

ongrowthtrack — Tue, 11 Mar 2008 13:08:28 +0000

Yes, a dashboard of running total is great, but one must hide away current cash in saving / money market account before that.

By the way, paying a few bills can help one to build credit history as I recently covered today, so one must be careul with internet cable, telephones etc.

Best things in life are free. Being free is best

By: KMunoz

KMunoz — Tue, 11 Mar 2008 13:00:15 +0000

Joining in on the cell phone debate, I use one as my main phone line. But you really need to look closely at your bill. Two times I have found strange charges on my bill for services I never signed up for. They were promptly removed when I called and asked, but you might be blindly paying for services sometimes… especially if you have expenses automatically withdrawn.

Also, for services you HAVE added on, make sure they are worth it. My boyfriend was getting charged $17 a month to have his night hours start at 7 p.m. instead of 9 p.m. Once he figured out that’s what he was paying for monthly, he canceled that quickly.

and about the gym expense, I think Trent means if you don’t use it regularly. If you’re paying $30/month (and a lot more than that in major cities) and you go to the gym twice a week, that’s not really worth your money. Buy a pair of sneakers instead with that and run outside for free or something. If you do go often, the price per visit ends up being very inexpensive.

By: Personal Finance Management

Personal Finance Management — Tue, 11 Mar 2008 12:51:19 +0000

I would disagree about one thing. That would be the gym membership. People should not throw away that kind of thing just to save $30. In my opinion going to gym and working out can only help you. You feel better about yourself, you’re stronger and more refreshed than ever. That can really motivate work more or harder, which results in more cash earned in job or extra activities. Better health + More cash. That sure sounds a win-win situation for me.. ;-)

Regards,

By: Canadian

Canadian — Tue, 11 Mar 2008 12:32:47 +0000

I consider a cellphone an “extra”. I don’t have one, never have. (Unusual for my age group!) Perhaps for some few people it is a necessity, but not most.