Last week, I asked you guys whether I was being cheap or being frugal by putting off the purchase of a new power adapter for my laptop. I got a variety of answers, but a lot of common opinions kept popping up. Notably, several people told me that buying a new adapter would save me time, and thus make me more productive, which would save me/earn me more money.

No offense guys, but… WRONG.

Saving time does not save you money. Extra time on your hands only saves/earns you money if that time is well spent. I’m a huge procrastinator and a master at finding distractions, so five extra minutes in my day doesn’t mean five more minutes of work - it means five minutes of mindlessly checking Facebook.

That isn’t to say that saving time can’t save you money - just that it probably won’t. Unless you have some sort of productivity system in place, that extra time will just get lumped into the rest of your day, and you probably won’t see any difference at all.

The same goes for money. Frugality, without some sort of greater plan for your money, won’t get you very far. Sure, you might save $1.10 by going to this gas station instead of that one, but unless you have some idea of what to do with that extra $1.10, it doesn’t really matter. The more money people have, the more they tend to spend. Have you ever noticed that money problems tend to follow people, even if they get a raise or a higher-paying job?

Money doesn’t solve money problems, a change in behavior does. More time doesn’t solve time management problems… a change in behavior does. Once you have a plan for your time and money, then you can worry on trying to find more of each to accelerate that plan.

Now if you’ll excuse me, I have some quality procrastinating to do!

I had a conversation with a friend the other day, and I’m not exactly sure where I stand on my finances now, because of it. So, I’d like to take a moment to post that conversation (well, more of a dramatization of the conversation, since my memory isn’t quite word-for-word) and ask you guys what you think.

(Written in pseudo-script format because, hey, I paid for those script-writing classes, didn’t I?)

Interior, Classroom, Day

STEPHANIE, a gorgeous, intelligent, awesome, amazing college student [hey, it's my script, I can describe myself however I want] enters the room and sits next to FRIEND, who is completely ambiguous in every way. Stephanie take out her laptop and spends a solid two minutes fiddling with the power cord.

FRIEND: “Uh… Steph? What are you doing?”

STEPH: “My power adapter is… wonky. Broken-like. I’ve gotta wiggle it to make it work.” [Yeah, I really talk like that, in an informal setting]

FRIEND: “Time to buy a new one, maybe?”

STEPH: “Yeah… probably… if I had the money. But I don’t, and wiggling makes it work. Eventually.”

Stephanie’s eyes light up as the indicator light on her laptop lets her know that it is finally receiving power from the cord.

STEPH: “See? Still works!”

FRIEND: “Uh… yeah. Ok. But you should probably get a new adapter, anyway. Don’t you get paid this week?”

STEPH: “True! Except that money is for my insurance. And gas for my car. And, of course, my credit card bill. I’m paying lots and lots to my credit card bill to try and pay it off before November.” [Insert boring explanation of my switch to a 0% APR credit card here]

FRIEND: (waking up from the nap taken while I droned on about credit cards) “That’s great and all, but, won’t you be making more money during the summer? Theoretically? I mean, shouldn’t you pay a little less to your credit card now, buy some stuff you need, and then ramp up your credit card payments in the summer?”

STEPH: “Ok, yes, theoretically, I should be making more this summer, in whatever job I get. But I don’t have that job yet, and I don’t like the idea of relying on ‘future dollars,’ since that’s what got me into this credit card debt in the first place.”

FRIEND: “Yeah, ok, I understand that, but you’re being pretty cheap.”

STEPH: “I think you mean frugal.”

FRIEND: “Nope. Cheap.”

STEPH: “Frugal!”

FRIEND: “CHEAP!”

STEPH: “FRUGAL!”

Stephanie and her friend growl at each other and then suddenly appear in the American Gladiators arena, ready to fight. [That totally happened, I swear.]

So, back to you, readers. Am I being cheap? A power adapter for my laptop isn’t the only item on my list of “Things I Really Ought To Buy” - a year of compacting has left me with a laundry list of purchases that I probably should be making.

I’m still not sure I want to drop down my credit card payments at all, but if I did, it wouldn’t be “drop down to just the minimum payment” or anything. I’m paying $160 a month to my credit card on my current plan, and if I did drop it down, it certainly wouldn’t be to anything less than $100 (for reference, my minimum payment is $17).

So… thoughts?

I first started getting financially savvy by (yes, this is true) reading personal finance blogs. But I had a little bit of trouble with it, because there was just too much information - and a lot of it didn’t apply to me, at least until I knew where to start.

So, if you anything like me, you might need it boiled down before you can start digging in and trying all the tips, tricks, and plans outlined on the internet and in personal finance books. Hey, I understand - I was there, and I feel like I wasted a lot of time just trying to figure out how to start.

So, to save you a little time, I’ve thrown together this Quick Start Guide, pieced together from my favorite bits of other personal finance blogs and books (links at the end), and from my own experience. It’s only three steps, so don’t panic! Enjoy!

RULE ZERO: SPEND LESS THAN YOU EARN

Rule Zero is at the heart of everything else - everything in this guide, everything on this site, everything on the other PF sites and in all the books. Spend less than you earn, and save the difference. But how? HOW?

Step #1: Track what you spend

In order to spend less than you earn, you have to know what you spend, and what you earn. Knowing what you earn is generally pretty easy - for most people, you just add up your paychecks, and you’re done. Boom. But what you spend? That tends to escape most of us unless we write it all down.

I don’t care how you track it. I use a simple Excel spreadsheet that I made. A lot of people use a little notebook and pencil that they carry around with them at all times. Some people keep all of their receipts in one place and then write it all down at the end of the week. Some people carve it into a wooden block, because those people are crazy.

This step is rather important, so I implore you not to skip it. Of all the tools I have made for myself on my journey to financial freedom, none have been as useful to me as my spending list has been. I’ve been keeping it for over a year now, and I still wish I had more data. (I love data.)

Step #2: Don’t pay the bank, make the bank pay you

Once you start tracking your spending, you’ll probably see a few expenses that you just wish you weren’t paying. If any of those expenses are bank fees, stop. Stop now. If you really like your bank, go in and ask if you can have the bank fees waived for your account.

If that doesn’t work (or if you just want to switch banks), shop around for a free checking account. You can usually get a free checking account pretty easily if you’re a student, or if you can do a qualifying monthly direct deposit. Or you can use ING’s Electric Orange checking account, which has no maintenance fees.

Also, make sure you have a savings account, and that it’s paying some actual interest. Most brick-and-mortar bank savings accounts offer interest rates around .2% (that’s POINT two percent, or one fifth of one percent), and considering inflation averages out at about 3%, that makes your “real” interest rate around -2.8%. That’s terrible. Online savings account offer rates upwards of 4%, which beats average inflation and gives you a little something extra. I have online savings accounts with Emigrant, E*Trade, Citibank, and ING Direct, and although I’ve never had any problems with any of them, the one I recommend more than any of the others is ING’s Orange Savings.

Step #3A: Take down debts

(If you’re debt free or your debts all have interest rates of less than 8%, skip to Step #3B.)

Debt - your future money that someone else has a claim to. Ick - let’s get rid of that. Use this calculator to snowball your debts - whether you pick the “interest order” or the “balance order” depends on whether you feel better knowing your saving the most amount of money, or feel better knocking down debts as if you were shooting in Duck Hunt.

If you have some wacky debts that make it impossible for you to use the snowball calculator with any sort of accuracy (for example, you might be like me and have student loans that are in deferment), then just rank them for yourself on a piece of paper. But no matter what, pay the minimum payment on all of your debts every month and throw whatever else you can at the debt on the top of your snowball list. 

 Step #3B: Save up some savings

Start with an emergency fund. You probably know better than anyone how much of one you should probably have, but the rule of thumb that’s generally thrown around is “3 - 6 months worth of expenses,” more if you have dependents. If you’re a college student or anyone else with strange, unpredictable, lower expenses, you might just want to pick a nice round dollar amount, like $1,000.

Don’t feel like you have to build this all up as fast as possible, although it is important, so don’t shrug it off either. How much you throw into your savings probably has a lot to do with whether you have a lot of debts from Step #3A or not. If you’re paying on a lot of high interest debts, it makes more sense to worry about knocking those out, and only build your savings up by about $10-$20 a week (or per month, if you’re a college student or younger). Otherwise, try to save at least 10% of your income, bare minimum - more than that is better.

It might hurt at first, and you might not even be able to save that much at first. Don’t freak out - just save something. Even if it’s $5 a month. Or $1 a month. Get in the habit and try to increase it each month. The habit is 90% of the process, the dollar amount is only the other 10%.

(It might seem obvious to some people, but this savings should be going into a high yield account, like one of the ones I suggested in Step #2.)

Beyond (Thunderdome)

Once you’re tracking what you’re spending, your bank accounts are in order, you’re snowballing your debts, and putting something aside into savings, you’re ready to start sifting through the vast amounts of information out there. Time to move into budgeting and frugality and retirement accounts and all of those things that might seem very daunting right now. Once again, don’t panic. You’re already ahead by having made it through this guide, the next steps are just as simple.

Like I said, this quick start guide is borrowed and pieced together from the things I read when I was starting out, and the things I’ve read since. Once you’ve made it through this guide, here are three other guides that you might want to try out:

• I Will Teach You To Be Rich » 2006 Makeover - This link leads you to Step 4 of Ramit’s makeover, which includes links to the previous three steps.
• The Simple Dollar » 31 Days To Fix Your Finances: A Wrapup - Trent’s super-comprehensive guide will have you examining your goals and developing a definitive vision of 
• 8 Ways to Take Control of Your Finances in 2008 ∞ Get Rich Slowly - As usual, JD says more than me, better than me, in less words. Check it out!

Photo credits: YTaP’s “Eat Money”, Kris Taeleman’s “Money, i has it!” and Digital Sextant’s “Money”

A few months ago, I managed to get my hands on a new credit card with a 0% introductory rate for 12 months. I transferred the balance from my other credit card, which means that if I can manage to pay it off before the intro period ends, I won’t have to pay a cent more in interest, beyond what I’ve already wracked up.

It’s a bit easier said than done, perhaps.

Just yesterday, I have to plunk an additional $350 on that credit card in order to pay for needed repairs on my car. I would have paid for it in cash, if I could have - I’m not happy with the idea of putting anything on my card, even if it is at 0% interest.

The key to a 0% APR balance transfer is to make a commitment to pay it off before the intro period ends. For me, this means paying more than three times the amount I’ve been paying monthly to the card. It’s going to be tight. It’s going to be painful. But it’s exactly what I need to do to pay off the card.

The other good thing about transferring my balance is that it leaves the original card free and clear, so that I can begin to use it responsibly again. There was a time (circa early 2006) when I only put small purchases on that card, and paid it off every month - never carrying a balance. Now I have a chance to get back to that, and enjoy the float and rewards points that using the card can offer me.

After I’m done paying off my credit card balance, it will be on to the next thing that’s bothering me: paying off the interest on my student loans!

$2,000. That’s the exact amount that my net worth fell in 2007. Sort of creepy, isn’t it - getting that nice, perfect, round number? After a year of scrimping, saving, careful budgeting, tracking my spending, and (of course) blogging, my net worth dropped by exactly $2,000.

And I’m quite happy with it.

The truth is, my net worth dropped by only $2,000. With new student loans and some serious cash dropped on car repair, I’m quite happy with the progress I’ve made - even if it is “one step forward, two steps back.” The truth is that I would be much worse off if I hadn’t paid strict attention to things this last year.

Yet, there were several outside factors that helped - especially family members helping me out as birthday and Christmas presents. Repeating this “success” will not be easy, but….

My goal for 2008 is to do as well, or better than, 2007. In other words, to have my net worth fall by no more than $2,000.

Stick with me guys, this is gonna be an interesting year.

My generation: do we have a name? We are the young adults, born between 1980 and 1995 (give or take). I hear us called “Generation Y,” “Echo Boomers,” “the Digital Generation,” and “the iPod Generation,” but none of these names strike a chord with me. But there’s another possibility - are we “Generation Debt?”

One of our own, columnist Anya Kamentez, gives us this label in her book Generation Debt: Why Now is a Terrible Time to be Young. I picked this book up at the library after having read several of Anya’s articles on Yahoo! Finance - and I have to say, it was one of the most enjoyable and eye-opening books that I’ve ever put my hands on.

The book is a mishmash of relevant statistics and commentary on the economics of our generation, and how social and political factors play into those economics. It’s hard to write up a review, or even an overview, since no page is to be missed. It’s all startling and staggering.

In short, I knew our generation was in trouble, but I had no idea how much trouble we are in until I read this book.

There’s a large focus throughout the book, most especially at the beginning, on the problems in paying for college. This is obviously something I know a great deal about, living through it every day. But Anya has pulled together all of the factors feeding into it, which brought new light to the problem for me. The government’s shift from providing grants to guaranteeing loans. Schools raising their tuition prices faster than inflation and faster than the growth of the average income. The FAFSA (Free Application for Federal Student Aid) being a poor system for calculating aid, since it doesn’t take many factors into account, including recent changes in family status (such as unemployment, disability, or emergencies).

Although there’s a strong focus on college and the enormous debt it brings so many of us, there’s also a good deal on low-wage earners: both those who forgo college (for any number of reasons) and those who get a degree that doesn’t end up being any help.

Our benefits are shrinking. Social security won’t be there for us. The entire economic system is taking a shift, and we’re going to be the ones caught up in it. The baby boomers are beginning to retire right now - and over the next 30 years or so, we’ll be picking up the bill for a lot of them.

As I said, this review is difficult to write. The copy of the book I have is full of post-it notes - item after item of things I would like to go on about in great detail. But here it is: you should really just read the book. Whoever you are. If you’re a member of Generation Debt, like I am, do not miss this opportunity to pick up the book and start to understand the world that you’re entering.

If you’re a parent of one of us “G-Debters” (I just made that term up - Anya, you can thank me later), please read this book. Please, please. I’m very much hoping to get this book into my parents’ hands, so that they can better understand what world they’ve sent me and my siblings into.

If you’re a high schooler, I also encourage this book. But be warned, a lot of it will seem like doom and gloom, and you may even be tempted to put the book down and never look at it again, halfway through. Do not fall into this trap - you really want to read the whole thing and especially get to the last chapter: “Waking Up and Taking Charge.”

This generation is not lost so long as there are those of us who are willing to go the distance to make things work. This book has inspired me to start something big - I can’t get into it now, but look for updates on that in the coming months. (Oo, SUSPENSE!)

Ouch. Just… ouch. Both months, I knew my net worth was taking a nose dive, and both months, I knew it would be bad. It really is akin to being stabbed in the gut. I’m warning you right now: the damage is bad. Don’t scroll down if you’re financially squeamish.

So, what was the damage?

Change, November: -$3,288 or -11.91 %

Change, December: -$474 or -1.53 %

Wow… that… hurts. Look at that line! The drop in November brought my net worth crashing down to lower (much lower) that it’s been the whole time I’ve been tracking it! And December was just rubbing salt in the wound.

So what happened?

Nothing unexpected, really. November’s drop was almost entirely due to student loans I had to take out in order to start Winter Quarter of my glorious education. I don’t actually view November’s drop as a “bad thing,” in the scheme of things. It’s likely to happen at least three more times, as I take out the money for the last three quarters of my undergrad degree.

All I can really do is try and make sure the line goes up as much as possible in between in quarterly drops. And I actually did that fairly well: November also included my biggest gain in cash reserves.

December, on the other hand, I can feel a little bad about. The drop there was mainly due to car repairs. It could have been worse - in fact, it should have been, but my family took on half the cost as my Christmas present. Still, I had to tap my emergency fund in order to keep my car on the road. The other major expenses this month: textbooks and gas.

For January, I’m hoping to lower my spending on gas, and throw as much money at my credit card as possible. But that’s a story all its own, which I will get to in a few days. As usual, stay tuned!

That’s right, everyone - I’m back.

No, the strike is not over. And the first person to call me a scab or use the phrase “crossing the picket line” gets hit with a lawn chair. (Just kidding! Or am I?)

Having this blog on strike no longer serves its intended purpose. I set out to bring attention to the WGA strike, and I feel I have done that as much as my personal strike can do. Now it’s time to get back to the keyboard and bring attention the opposite way.

This was not an easy decision, and I consulted a lot of friends for their opinion before making my choice. I felt in my gut that it was time to come back, and after some banter, the unanimous decision from my friends was that they would also like to see me return.

Not to mention, I’ve got to explain that huge drop in my net worth soon, or some of you readers are just going to start freaking out.

I will be doing some strike related articles, in as much as I can tie them to personal finance. So, be ready for things like “How to Help the Writers Without Spending a Dime.”

I have to say… it feels good to be back.