Free From Broke

A Personal Finance Blog for Regular Folks

Saving

Family – Can’t Live With ‘Em…Unless It Helps Debt

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I was in the hole for thousands over a few credit cards.

I was getting better at paying on time and I was managing to pay more than the minimum due. I was also transferring balances to lower and zero interest rate cards (which had it’s ups and downs). The totals were chipping away but it still felt like it would take forever to pay my credit debt off. At the time I was living on my own supporting myself with a full-time job. What I could save I did.

Then something interesting happened – I lost my apartment.

Seems my landlord wasn’t really supposed to be renting his basement out to tenants. Some funny NYC law that said he wasn’t zoned for it. Great. I had a few dollars saved but really I was still living paycheck to paycheck. If I went and found a new apartment, which would be more expensive and involve moving costs, real estate fees, etc…, I would be completely tapped out and would have to add more to my credit cards to get by.

Fortunately my parents came to the rescue.

They still had an extra room and they were ok with me moving back in with them. Now understand, I love my parents and they were great in helping me out but the last thing I wanted to do was move back into my parents’ place. But I didn’t really have many better options either. So I managed to cram all of my stuff back at their place. My original idea was to stay as long as needed to save up enough to move to a new apartment (I wasn’t paying rent now so I should have enough in a few months or so). It was not fun being back at the ‘rents. All the freedom I had grown accustomed to were gone. But I needed time to save.

After the first month I realized something – by not paying rent or electricity I was able to save a lot more than I had been. By the end of the second month, seeing how my bank account had grown, I decided to put a new apartment on the back burner. I was gonna suck it up and stay at my folks until my debt was gone!

What was the point of moving back out and being in the same debt situation?

With my new resolution I started to pay much more than the minimum on my credit cards.

Soon one card was paid off. Then another. One day I was finally able to get rid of all of my credit card debt! I felt like a slave that had just been freed!! No more of that debt monkey on my back. I was able to look at all of my bills and accounts and finally say that I had a positive net worth! This was not just a financial victory but a huge psychological victory!

I started to save for real. Not saving to pay debt but saving for me. As tough as it was living with my parents I realized what freedom really was. Sure I couldn’t live the same way under my parents’ roof as I did on my own, but freedom meant being free from debt (or free from broke)! It took me being thrown out of my apartment and moving back with my parents to realize that.

Do you have a debt story? Let me know in the comments

Loose Change Gets Us Free Meals On Vacation

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So we usually go on vacation in the Summer.

Every time we get free meals from loose change!

Let me explain – We have two change jars in the house: one for quarters and one for all other change. This gets filled up whenever we come home for the day with change in our pockets. The quarters are for laundry so those get used pretty quick and isn’t part of our free meals. The other jar though slowly fills up over the course of the year and is usually filled to the brim by the Summer.

All year we watch the jar fill up higher and higher. It almost becomes a calendar for us to tell when it’s time for vacation! The week before our trip my wife and daughter will go to the local Commerce Online bank (yeah, it says online but they have a ton of brick and mortar locations where I live) and use their coin counting machine which is free for anyone! [This is better than Coinstar since Coinstar charges 8.9% to count your change (though if you convert your change to a gift card or eCertificate the counting is free)].

Now with cash in hand we’re ready to go on vacation.

We can usually get anywhere from $60-$100 depending on the change that’s in the jar. Maybe this only covers one special dinner or maybe this covers the first few meals for us. Either way we look at the meals as being free, paid for by change that accumulated in our pockets over the year.

Of course we understand that the meals aren’t really free.

What’s important is this is another small, disciplined way for us to save some money that we get to use on vacation. What’s more is it’s fun to watch the change grow and fun for our daughter to pour the change in the counting machine (extra bonus here is that she gets to see how saving small amounts can turn into large amounts in time).

What small tricks do you use to save money? Let me know!

Start Saving and Let That Money Build Itself

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So we all want to save more money right?   What can we do to increase our savings?

Many of us were told by our elders that if you want to save money the best place to put it is in a savings account at the bank (remember that old question of whether it’s better to put it under your mattress or in a savings account?).

This was good advice back in the day but the problem with it now is the average bank savings account barely gives you any interest on your money.  Truth is, for most people you are probably losing money since your interest rate is lower than the rate of inflation.

Yup, all that conventional wisdom about putting your money in a savings account is losing you money.

So what do you do?

A savings account is still a good idea but you need to find one that actually gives you a decent interest rate.  A good place for that is an online bank savings account like Capital One 360 Savings.

I’ve been using them for about four years or so and it has been great (there are other online banks out there but 360 Savings has been pretty good to me so far).  They have no minimum and no account fees.  Many other banks offer higher rates but you have to start with a good amount of money (doesn’t it seem likes it’s easy to make money when you have money?).

Go over there and start saving.

Here are some tips to start saving up money that will build itself:

1. If you don’t have to put a lot in, start with something small like $20.  Now you aren’t going to get rich with this but you will see your money growing.

2. Set up an automatic deposit for $5 a week.  We can all scrape together $5, can’t we (you can even start smaller if you need to)?  After a few weeks you’ll see your account growing.

3. As you feel more comfortable try to up the dollar amount, maybe $7 or $10?

4. Once you’ve saved for a bit ask yourself if you can afford to put away some money that you will absolutely not touch for six months.  It doesn’t have to be a lot just something you won’t be needing.

Really, don’t touch the money!  You don’t want to use this money.

Now take this amount and open up a 6-month CD, or Certificate of Deposit (Capital One also has no minimums for their CD’s).  This will give you a slighter better interest rate than your savings account.  Remember though, you shouldn’t need this money for at least six months (12 months CD’s are even better but that’s up to you).

When your CD matures (the six months are up) see if you can open up a new CD maybe with more money.

If you have specific goals to save for you can set up different accounts within your account and fund them differently.  For example, if you need to save up for the holidays set up a holiday account and put a few of your dollars in their every week/month, etc…

You should be seeing your account growing now both due to the money you’ve put in as well as the interest you’ve earned.  It’s actually kinda fun to look at my account and see how much interest I’ve earned this month.

I didn’t mention it but you will need to have a checking account already.  This will be where you transfer your money from into your 360 Savings account (and vice versa).

This in itself isn’t going to get you rich but it can help you to start saving more effectively.  The hardest part is putting those first dollars in there and keeping up the discipline.

The journey of a thousand miles starts with the first step.  The same idea holds true with savings and wealth – it all starts with that first dollar!

Let me know what you think and if this works for you!