Finances, Part Two

Part of being "date-able" is having your "stuff" together. And that includes your finances. Today is the second of two parts about Finances.

Have an Emergency Savings Fund. This is not a fund for fixing the refrigerator when it breaks down. You should have a house fund for that. Nor is your emergency fund for going to Vegas. You should have a vacation fund for that. An emergency fund is for actual emergencies--like being laid off or being out of work due to an illness. If you’re self-employed, you should have six months of expenses saved. Otherwise three months of savings will suffice. Keep this money liquid. Don’t tie it up in the stock market. Keep it in a high-yield money market or a CD--preferably one that pays enough to keep your fund ahead of inflation.

Get Out of Debt. Pay off your highest-interest credit cards first. Always pay more than the minimum payment. Don’t use your credit cards anymore until you are able to pay off your credit each month. Pay cash for everything (or use a debit card).

Budget. Know where your money is going. Track your expenditures for a month. Then assess: is this how you want to be spending your money? If you’re bad with money, withdraw the week’s spending money from the bank and pay for everything with cash. When the cash is gone, you’re done.

Sample budget:
Rent or mortgage, taxes, house/renters insurance, 33-40%
Utilities, 5%
Gas/car repairs/registration, 4.5%
House repairs, 5-6%
Retirement, 10-12%
Emergency savings, 5-6% (until you have 3-6 months of savings and then 0%)
Spending money, 7%
Clothes, 1-2%
Charity, 4-10%
Gifts, 1-2%
Vacation, 4-6%
Phone, 1-2%
Groceries, 5%
Dream fund, 1-6%--depending on what you can afford and how big the dream is. The fund can be for a new car, expensive vacation, new computer, going back to school, down payment on a house, etc. Whatever your dream is.

The percentages give you an idea of how much of your take-home pay should be going to the different categories. If you have debt or a car payment, you’ll need to budget that in as well. One word about loans: you should only be going into debt for items that have a financial payoff--like school or a house. Car loans should be avoided if possible.

Resources
Bach, David. The Automatic Millionaire: A Powerful One-Step Plan to Live and Finish Rich. Broadway Books, 2005.
Meany, Terry. Build Your Financial Future The Lazy Way. Macmillan Publishing, 1999.

The Wrapup on Creating Your Campaign Setting:
The Least You Can Do to Become a Domestician
Stock your kitchen with the basics
Select an interior design style
Rearrange your furniture, replace all non-furniture items that you’re using as furniture, Paint your walls, get some artwork
Get long-term disability insurance
Open a 401k or IRA if you don’t already have one
Start a dream fund
Get out of debt
Start saving for an emergency fund

Now that you’ve got your home in order, take a look in the mirror. Next Tuesday: Dress Me Up, Dress Me Down, A Geeks Guide to Looking Good