Stephanie, Author at Poorer Than You

I Don’t Have a Budget

By Stephanie, updated April 17, 2008 19 Comments
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Budgets are the first thing people think of when I tell them that I’m “into personal finance.” There’s an assumption going around that I’m the Great Supreme Queen of Budgeting, ruling over all of the lesser peons with my Glorious Budget of Power, Puppies, and Being Awesome.

Ok, so, no one has actually worded it like that.

Confession: I don’t use a budget. I’ve tried PearBudget, the simplest of the simple, easy, and awesome budgeting software. And for budgeting software, I like it quite a bit.

But I don’t use it. Sure, everyone once in a while, I open PearBudget up and fiddle with it and put in all the purchases I’ve made since I last played with it. But something always goes wrong. An expense doesn’t fit, or my spending is too erratic from month to month to make any sense within the confines of a budget.

I’m a college student. I spend a random amount of money on textbooks three times a year. I spend a fluctuating amount of money on gas every month. My income is dependent on what part of the school year it is. Often times, PearBudget will commend me one month for spending far less than I earned! Except that the only reason that ever happens is when I know that the next month, I’ve got a lot of expenses and less income. So then budgeting software yells at me the next month for spending more than the income for that month.

Perhaps there’s a piece of budgeting software or some system out there that would work perfectly for me. But I really don’t see any need to go out and find it. I don’t need a budget.

Instead, I just track and plan. I have a simple spreadsheet I made for myself in Excel. I use it to track every single penny I spend. And every penny I earn. I also estimate my future income and expenses for the month, so that I know whether I’m looking down the barrel of a “good month” or a “bad month.” Then I plan accordingly.

That’s it. And it works for me. It’s been working for me for almost two years now. So if you haven’t pulled your financial life together yet because you hate the idea of making a budget, then it’s time to get started. Just track what you spend and what you earn, and after a while, you’ll figure out whether yoy even need a budget at all.

The Importance of an Emergency Fund in College

By Stephanie, updated April 11, 2008 7 Comments
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Twice since establishing my emergency fund last August, I’ve drained it (or nearly drained it). First to fix my car when the anti-lock brakes, break pads, alignment, and tires were shot, and then again a few weeks ago when my tax bill came due. Both times, I was extremely glad to have my emergency fund on hand!

Obviously I think an emergency fund is important for me – you can tell just from the fact that I have one and have used it. But is it really just as important for my fellow college students?

Yes.

If you own any object that you have come to rely on, but would be costly to replace or repair, then you need an emergency fund. Nearly every college student I know has a car or a computer – most have both. But very few of them could cover the cost of a major repair without feeling the pain. And while some people are currently saving up for their next computer, most of them would be screwed if their current computer gave out and they had to replace it today.

Wouldn’t you like to be smarter than that? Wouldn’t it be nice to have some cushion against catastrophe?

Sure, you might have your parents to lean on in times of crisis. Then again, you might not. What happens if one of your parents loses their job, and then your car breaks down? Or maybe your parents will decide that replacing a broken computer is your responsibility now that you’re at school. These things may not happen, but the ability (or willingness) of your parents to bail you out is not guaranteed.

Not to mention that showing some financial responsibility is the best way to convince your parents to help you out! My parents offered to pay for half of my car repair back in November, since they knew I could pay for the other half. By showing willingness to take responsibility for my car, I impressed my parents enough to get some additional help from them.

And setting up an emergency fund can really be quite painless.

Make it automatic. Figure out how much a month you can give up and have it automatically moved from your checking account to savings every month (this is easy to set up online at most banks). Even if you can only put aside a small amount (like $10 a month) it will add up. And it’s a good start, anyway – you can always increase the amount per month later.

I keep my emergency fund in a high yield savings account at ING Direct. I used a $250 student loan refund to start the account, and got a $25 bonus. You can too, using one of my ING referral links. If you decide to go that route, I suggest you start your emergency fund in your regular bank savings account, until you’ve saved up the $250 to start an ING account, and get the $25 bonus.

Define what constitutes an emergency.

I’m not going to tell you exactly what you should do with your money, but your emergency fund will serve you better if you set up some rules for it. Most personal finance books say that an emergency fund shouldn’t be for car or computer repairs – that you should anticipate these expenses and set up separate funds for them. But while I’m still in college, I find it easier just to have an all-encompassing emergency fund, and allow myself to use it for these expenses, as long as they’re necessary. Once I’m out of school and have greater income, I’ll start separate a repairs fund.

But “necessary” still doesn’t include things like say… spring break in Cancun. Rather, an emergency fund should be for if you end up stuck in the airport trying to come back from Cancun, and you suddenly need to buy an emergency ticket to get home. If you drain the fund for the trip itself, you won’t have the fund to help you if an actual emergency occurs!

The best emergency fund is one that you never have to use.

Part of your emergency “fund” should be the smart handling of objects you can’t live without. Pick up an external hard drive (or some blank DVDs) and make backups of the files on your computer. Take good care of your car – get the oil changed when you should and get it checked out regularly.

I know this is some common sense-y stuff, but the hard part is remembering to do it. When you’re in crisis mode, dealing with a dozen project deadlines and club activities and an on-campus job and… everything else… preventative stuff takes a back burner. The best thing to do is pick an hour a week, and set it aside for taking care of things that are important – but not urgent – like preventative maintenance.

Start your emergency fund now, and you’ll be miles ahead of the game.

The best part is that you’ll have that emergency fund started already when you graduate. Sure, you’ll probably need to expand it for your new, post-graduate lifestyle, but you’ll already be two steps ahead of everyone else. Most people don’t realize until years after college that they need an emergency fund, and once they do, most people still don’t make one. You’ll already know you need one, and have one started!

I know you’ll be thanking me for this later!

Charity: Helping Those Poorer Than Me!

By Stephanie, updated April 5, 2008 9 Comments
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I spent a week last month running around like the proverbial headless chicken, managing a fundraiser for “Students for Cambodian Schools” – the club at my college that recently appointment me as president.

So, uh, what does this have to do with personal finance, exactly? Look, there’s more to money than hoarding it away in a high yield savings account or index funds. What good is money to you, if you can’t use it to do good?

So today, I’m here to shill for the charity of my choice. But really, I’d just be happy to know that you guys are donating to something that you believe in. And donations don’t always have to be monetary – clothes, time, effort… you can donate to a cause just by doing something that helps raise awareness.

That’s what I’m going to do right now: raise awareness for my cause. (The following was written with help from my good friend Sam, who founded the club at our school and was the president until I took over.)

What do you know about human trafficking in Cambodia?

[50% Off by YouTube user tomate1990]

For a text explanation, see theyoutubeproject page for the video.

Human trafficking may seem like a long-gone problem to those of us who live in developed Western nations, but it’s a problem that is all too alive and well, especially in places like Cambodia. Children sold out of their homes by parents who need the money for food. People tricked into believing that they’re getting a factory job… only to be kidnapped and sold.

The past century has taken its toll on the country; the effects of war, rapid changes in government, and genocide are still playing out on the people who live there. Children have little chance of advancing economically in their lives because they have so few opportunities.

I don’t want to be doom-and-gloomy – it’s not my style. I prefer to cowboy-up and jump into the “how can I help?” portion.

And you can help.

The Rural Schools Project

“American Assistance for Cambodia (AAfC)/ Japan Relief for Cambodia (JRfC) are independent nonprofit organizations dedicated to providing opportunities for the youth and rural poor in Cambodia.” One of the major ways AAfC and JRfC have influenced the Cambodian youth is through the Rural School Project program.

This program builds schools in some of the poorest areas in Cambodia and, in the areas they are built, has drastically cut down on illiteracy, long-term poverty, and human trafficking. In order for a basic school to be built, $13,000 must be raised. This money is matched by the World Bank and Asian Development Bank and goes towards a school, teacher, and well. Additional money raised goes towards school enhancements such as solar panels and computers, books, and extra teachers.

Our club, Students for Cambodian Schools, is determined to raise this sum of money to build, support, and name one such rural school.

We’ve raised about 6% of the $13,000 needed to build the school through the Rural Schools Project. It’s a good start. If you want to help out, you can donate directly to our club using the widget below:

Raise money with ChipIn

(If you can’t see the widget, you can contact me to find other ways to donate.)

Your donation will help to fill out the bar a little (or a lot, if you so choose!). It might a lofty goal, but I am working as hard as I can to get the full $13,000 raised before I graduate one year from now – I really want to see us reach our this goal before I have to leave this school.

If you believe in this cause like I do, please tell someone about it. Whether or not you can find some money to spare for it, the real good you can do for any cause is just to raise awareness.

Time for Poorer Than You to Get a New Look?

By Stephanie, updated April 3, 2008 11 Comments
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There was a time, a little over a year ago, when I loved the layout of this blog. Green! That’s my favorite color! And it’s the color of money! What’s not to love about this theme?

Then I looked at it for a year. And on other monitors, where it burned my eyes. I’m sure there are a lot of you reading this who hate this layout as much as I do. [Side note: if you hate the layout but love the content, you can save your eyes by subscribing to my RSS feed or getting site updates sent right to your email.]

So I’m wondering if anyone out there knows someone who’s really good at designs, and knows WordPress really well… and works for cheap. I had someone lined up a few months ago, but he got some awesome job and moved away… such is my luck!

Net Worth Update: March 2008

By Stephanie, updated April 2, 2008 2 Comments
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Another $3,301 in student loans this month, plus a nice tax bill, and I knew I wasn’t going to be sitting pretty when I started tabulating up my net worth for March. Time to check out the damage:

Change: -$3,569 or -11.36 %

Hmm… it sounds bad, but I’m actually not too disappointed. The $3,301 increase in student loans (and a $258 increase in interest on the loans I already have) was inevitable, and I knew I was looking at a tax payment this month.

A tax payment? Yep. I made some money from this blog and from my freelance job last year, but not enough to owe any income tax. But, since those are both self-employment incomes, I did owe Social Security tax and Medicare tax. So I had a $260 tax bill to pay. No biggie, though – I also knew that was coming, and was at least partially prepared for it. I took all the money I’d stashed away in my various high yield savings accounts and threw them at the tax bill.

So if you ignore the student loans and the tax bill, I actually would have gone up by $250 this month! And $190 of that was paid toward my credit card balance – so that’s where I see the silver lining on this. I’m ahead of schedule for paying my balance off in full before I lose my promo 0% APR!

For a look at my assets and liabilities, check out my NetworthIQ for March. For an explaination of the categories I use, check out the bottom of my entry about February’s net worth balance.