When I first started budgeting, I built a small emergency fund of $1000. This is the first of seven baby steps recommended by Dave Ramsey. Over 6 years, we built up the emergency fund to cover 6 months of expenses. At the same time, we also have sinking funds. So what’s the difference between emergency and sinking funds? And do we need to have both?
Before I started budgeting, I was horrible with money. I had a minimum wage, part-time job, and was living paycheck to paycheck. I also got help from my parents with tuition and some living expenses. But, I still wasn’t making any progress in my financial situation, as my checking accounts always dwindled back down to zero at the end of the month. I couldn’t build up any savings or emergency fund, which was horrible since I couldn’t come up with the funds for an emergency root canal.
In 2014, I started to learn about personal finance and budgeting, and tried YNAB. I credit the YNAB method on getting out of the paycheck to paycheck cycle. Here, I want to go over how I got out of the paycheck to paycheck cycle and was able to save for emergencies and future large purchases.
Last week I wrote about credit card churning. This week I want to go over the credit cards we use for cash back and how we optimize their usage to get the most discount. By stacking these with cash back portals and discounted giftcards, we’ve been able to get almost 25-30% discounts on our recent purchases.
Happy new year! it’s a new beginning. This year, we decided to automate our finances. After figuring out our monthly expenses, setting our budget in Buckets, and consolidating our bank accounts, we’re finally at a point where we feel comfortable automating everything. Here’s what we did. Budgeting Each time I get my paycheck, I budget our monthly expenses for the next month in the Buckets software. I budget for all our fixed monthly bills, variable expenses, sinking funds for regular or irregular expenses, and our savings and wants. I also budget for our Roth IRA contributions. The Buckets software has goal settings, such as a targeted amount. This can be used to set up monthly contribution amounts to things like car insurance bills, so that by the time our car insurance is due, we have the entire premium available. Checking Account We’ve had our joint checking account with Ally for
My husband and I are frugal, but we’ll pay for long-lasting high quality items. Here are some of the items that saved us time and money in the long run. It’s also better for the environment since I’m not constantly replacing broken things. We bought most of these items on sale by looking out for deals and coupons. We also used camelcamelcamel.com to track prices on Amazon. And I found some of these items used on Craigslist and Facebook Marketplace. Kitchen items We eat rice almost every single day for lunch and dinner. And I’m not the type to cook rice in a pot on the stove. When our cheap Aroma rice cooker died after just 5 years, I decided to buy a Zojirushi neuro fuzzy rice cooker. While it wasn’t cheap, it had really good reviews. 7 years later, it still makes great rice every time we use it.
Today I want to reflect a bit on my gradschool budget. I got a stipend of about $2350 each month. We split our bills 50/50 in gradschool, and we each had our own spending categories. Below was my average monthly budget, including my half of the bills. Monthly bills Rent – $567 (1 bedroom, 1 bathroom apartment) Water, sewage, trash – $30 Electricity, gas – $45.50 (on a budget billing plan) Cellphones – $15 (Mint Mobile was really cheap!) Internet – $46 Netflix -$5 Groceries – $225 Food – $60 (we cooked a lot at home) Fuel – $40 (this includes a few pandemic months with less driving) Household stuff – $37.50 (too much TJ Maxx) Oskar – $140 (includes vet bills, pet insurance, food from Chewy, sweaters for Michigan weather) Amazon prime – $2.60 (we were on the Student Prime plan) Costco membership – $2.50 My own expenses This
Why should students care about budgets and savings? Don’t we have enough things to worry about? Classes, exams, research… Now you want me to add budgeting into that? Forget it. The problem is, the average American carries a total debt of $152,612 . About $6,900 of the total average debt accounts for credit card balances. 54% of college attendees took on student loans to fund their own education , with an average balance of $58,000 . If we break down the student loans by demographics, we find that Black college graduates have about $25,000 more in debt than White college graduates, women owe 58% of all student loan debt, and the average student loan debt is the highest amongst adults in their 30s and 40s . And the more education you want to pursue, the more debt you accrue: PhD holders have an average debt of $159,625 . That’s insane. Not