Author Topic: There is always money in the banana stand.  (Read 6532 times)

vertigo

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There is always money in the banana stand.
« on: January 25, 2014, 12:39:52 AM »

I was born at 5:34 in the morning.  32 years later, I feel I have the same financial capabilities that I did on day one.  My home state, Kansas, never really afforded me many opportunities to make a lot of money.  I eked out a living doing IT work, but there wasn't much demand for my expertise anywhere near a 500 mile radius of my house. 

One day, after half a year of planning, I loaded up my Jeep with everything I owned, and drove my cat and I 1500 miles away from home.  I found a job with more pay than I'd ever had before.  Six months later, and I got promoted, so now I'm at as high a salary as I'd ever dreamed of before.

For many of you, this ultra-high salary won't sound like much.  It's $48k a year.  But for a single guy in his 30s with no children, it's a bucketload.  Or it should be.  Yet somehow, I'm not managing to retain any money.  I'm living paycheck to paycheck.  Some of that is because I had/have a lot of household items to replace (I've been in my new city less than a year).  A lot of it is because I just don't do a fantastic job with money.  I don't understand it.

Here's a breakdown of where I'm at:

I have about 50k in student loans (no monthly payment yet, that's coming very soon)
I am also paying 150 a month for tuition separate from the student loans (it's about 3k total, but at 0% interest)
I have about 1k of credit card debt currently.  I have always paid off my credit cards in full, so I never end up with interest.
I pay 650 in rent.
I pay 100 for my cell phone.
FIOS Internet and TV comes to about 125.
Public transportation is 70 a month.

Anything that isn't a fixed expense, I have no solid numbers to give you.  Groceries, dining out, clothing, hair cuts, etc, I have no idea.  I picked up YNAB to try and help track my costs here.  The last few months have had some very large ticket items show up - HDTV, bed, TV stand, PS4, book stand, a rug, well, I won't keep naming things, but imagine you moved with almost nothing at 30 something.  That's what I did, and I went a bit wild getting things.  I still have things to get, but I've put myself on a spending freeze until I sort this out.

Anyway, that's my situation.  I don't know that I have a question, but I'd love to hear comments.

-Vertigo

There is no Jeep payment anymore, I sold it after I got a job and found that public transportation works well for getting back and forth.

I just started my 401k, 6% of my income goes into that (the max that my company does matching for). 

I only get paid twice a month, if that makes any difference.

Kaminoge

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Re: There is always money in the banana stand.
« Reply #1 on: January 25, 2014, 02:47:27 AM »
Out of curiosity how often do people in America usually get paid? Twice a month is double what I'm used to.

Sounds to me like your plan of doing some tracking to figure out where exactly the money is going is a good one. Having no idea means you don't have any idea how to fix the problem. I think it's good that you put yourself on a spending freeze until you've figured a few things out. Could you get cheaper for cell phone/internet/tv? Those amounts sound a lot to me but I'm not American so maybe they're normal there.

dragoncar

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Re: There is always money in the banana stand.
« Reply #2 on: January 25, 2014, 03:01:50 AM »
Out of curiosity how often do people in America usually get paid? Twice a month is double what I'm used to.

Sounds to me like your plan of doing some tracking to figure out where exactly the money is going is a good one. Having no idea means you don't have any idea how to fix the problem. I think it's good that you put yourself on a spending freeze until you've figured a few things out. Could you get cheaper for cell phone/internet/tv? Those amounts sound a lot to me but I'm not American so maybe they're normal there.

Anecdotally, I'd say most get paid biweekly (every other week).  Next most common is semimonthly, then maybe monthly.  Obviously, there are other arrangements as well (weekly, per-job, etc.).


edit:  I agree that some of the numbers look high.  Phone and tv/internet can definitely be much lower (particularly if you drop TV).  FIOS is great but those speeds are really far above the point of diminishing returns.  I do fine on around 3 mbps, which I split with multiple neighbors so it's basically free.
« Last Edit: January 25, 2014, 03:05:41 AM by dragoncar »

Kaminoge

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Re: There is always money in the banana stand.
« Reply #3 on: January 25, 2014, 03:10:49 AM »
Interesting. In Australia we get paid fortnightly (which is what you're calling bi-weekly) but I've worked in multiple countries around the world and monthly has always been the norm. I got the impression we were the only ones. Learn something new every day!

dragoncar

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Re: There is always money in the banana stand.
« Reply #4 on: January 25, 2014, 03:13:37 AM »
Interesting. In Australia we get paid fortnightly (which is what you're calling bi-weekly) but I've worked in multiple countries around the world and monthly has always been the norm. I got the impression we were the only ones. Learn something new every day!

I always spend my fortnightly salary on a hogshead of ale.

Rural

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Re: There is always money in the banana stand.
« Reply #5 on: January 25, 2014, 06:26:57 AM »
Interesting. In Australia we get paid fortnightly (which is what you're calling bi-weekly) but I've worked in multiple countries around the world and monthly has always been the norm. I got the impression we were the only ones. Learn something new every day!

Other than minimum wage retail jobs as a teenager, which paid weekly, I've never been paid anything but monthly in my career, all in the US. I think it varies wildly.

OP, it sounds like you have what you need to make a comfortable place to live, with several extra luxuries besides. You need to make that spending freeze permanent. You don't need anything anyway, and with monthly payments coming up, you need wiggle room.

Good job on the Jeep.

tracipam

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Re: There is always money in the banana stand.
« Reply #6 on: January 25, 2014, 07:06:09 AM »
I agree on the phone/internet/TV.  Also, figuring out what your grocery bill, eating out bill, etc. might be a good idea right now. 

I think this is also a good time to start thinking about your goals in life.  Do you value the things that your buying (TVs, PS4, etc)?  What do you want to spend your money on?  Where do you want to be in 5 or 10 years?  Some people think this through, love their job, love their 'things' (vacation, toys, houses, cars, whatever) and decide they're comfortable with that. 

Some people (highly represented on these forums) may or may not enjoy their job but value their time/freedom more than their 'things.'  This is a sliding scale and you can fall anywhere you want to along it.  The important thing is to start thinking it through.  Once you know what your priorities are, it's hopefully going to be easier to align your spending accordingly. 

theSchmett

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Re: There is always money in the banana stand.
« Reply #7 on: January 25, 2014, 07:37:46 AM »
Spending freeze is a great idea. So was selling the Jeep. So was the $650 apartment. And transit.

Once you stop buying first gen gaming consoles and flat screens you should see some gains.


Fireman

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Re: There is always money in the banana stand.
« Reply #8 on: January 25, 2014, 07:47:32 AM »
So my envelope math says you're bringing home about $2400 a month after taxes and such.  Subtracting all the expenses that you detailed, you should have about $1300 left over as "discretionary spending."  If you're living paycheck to paycheck then your discretionary amount is entirely too high.  At some point you're going to need to decide between having fancypants things in your place or lots of little employees in your bank account.  You started the 401k which is a good step, especially with the employer match.  Congrats to on the Jeep, going no vehicle is also a big step! 

You've accomplished the hardest part...realizing you can do something different to improve your situation.  Even after utilities, groceries, and necessities, you should have over $1000 left over each month to erase your hair-on-fire debt.  Apply it as follows:

$1000 to credit card (paid off in 1 month)
$3000 to tuition (paid off in 3 months)
$50000 in student loans (with $150 extra from paying b, paid off in 44 months or just under 4 years)

With no drastic changes (other than the spending freeze you've already enacted), you can be debt free in 4 years!  That being said, let's find some savings and cut that time down even more!  My suggestions are:

1)  Drop FIOS and get a standalone internet package through another provider.  There is so much free programming on the internet in addition to Netflix ($7.99/mo) and Hulu (stick with the free version).  Even if you have to pay an ETF, it will pay for itself in the long run.  You should be able to get internet for $30/month.

2)  Switch out your cell plan for an MVNO.  Personally, I recommend Ting (just switched and love it).  You should be able to get a phone for $30/month.

I.P. Daily has a fantastic post about MVNOs, other cheap cell phones, and internet stuff.  Check it out here: 
     http://www.mrmoneymustache.com/forum/share-your-badassity/communications-tech-isps-voip-cell/

3)  If you have a large enough space (you never pointed out if its an apartment or what), you can post an ad on Craigslist for a roommate to split rent and utilities.  Savings $325/month.

So let's add up all the savings:

1)  $100 a month
2)  $70 a month
3)  $325 a month

That's roughly $500 extra a month.  By changing your spending habits and applying that $1500 a month to debt, you could erase it in 3 years!!

Vertigo, you have a lot of low hanging fruit that will make it easy to erase your debt with just a few simple changes.

Good luck!

CU Tiger

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Re: There is always money in the banana stand.
« Reply #9 on: January 25, 2014, 08:06:05 AM »
 

For many of you, this ultra-high salary won't sound like much.  It's $48k a year.  But for a single guy in his 30s with no children, it's a bucketload.  Or it should be.  Yet somehow, I'm not managing to retain any money. I'm living paycheck to paycheck.  Some of that is because I had/have a lot of household items to replace (I've been in my new city less than a year).  A lot of it is because I just don't do a fantastic job with money.  I don't understand it.

Here's a breakdown of where I'm at:

I have about 50k in student loans (no monthly payment yet, that's coming very soon)
I am also paying 150 a month for tuition separate from the student loans (it's about 3k total, but at 0% interest)
I have about 1k of credit card debt currently.  I have always paid off my credit cards in full, so I never end up with interest.
I pay 650 in rent.
I pay 100 for my cell phone.  You can lower this - read around here on the site and the forums. I.P. Daly has a great forum post with everything you need to cut your phone costs to almost nothing.
FIOS Internet and TV comes to about 125. Dude...you come to the MMM forums site and you have to know people are going to pick on this. Do you really need to pay $125 to have fancy television piped in? TV is just the most ridiculous, sedating, non-productive thing to do with your time, even if you DO only watch nature specials and PBS. Go to the library and check out some books. Get outside and take a walk. Learn to cook. Invite people over to play games. Take up knitting. Exercise. Go to bed early and get up early to take a bike ride. Put that $125 towards your debts or invest it. My point being...even if you had a lot of money, that much money for television is just crazy.
Public transportation is 70 a month.

Anything that isn't a fixed expense, I have no solid numbers to give you.  Groceries, dining out, clothing, hair cuts, etc, I have no idea.  I picked up YNAB to try and help track my costs here.  The last few months have had some very large ticket items show up -
HDTV, TV stand, PS4  Really? REALLY? You are making more than you ever made before, but you are also spending like a drunken sailor on hookers and blow things that are not necessary. You can't save, but you can spend on things like this? Not just a tv, but an HDTV? You couldn't just put the tv on a box or on the floor? Consider your face punched, in a gentle lady-like fashion.
 bed Everyone needs something to sleep on, so you get a pass on this :-)

 book stand,
a rug, well, I won't keep naming things, but imagine you moved with almost nothing at 30 something.  That's what I did, and I went a bit wild getting things.  I still have things to get, but I've put myself on a spending freeze until I sort this out.

When you find things that you really need for the comfort of your new apartment, check out craigslist, freecycle, and thrift stores. You can get some great things and not spend too much money. You just have to be willing to do some searching, rather than pulling out the CC and heading off to the store.

Anyway, that's my situation.  I don't know that I have a question, but I'd love to hear comments.

-Vertigo

There is no Jeep payment anymore, I sold it after I got a job and found that public transportation works well for getting back and forth.

I just started my 401k, 6% of my income goes into that (the max that my company does matching for).    Good job. Consider raising that amount 2% at a time until you are saving at least 15-20% of your gross. Do it slowly and you won't even notice.

I only get paid twice a month, if that makes any difference.  My husband gets paid twice a month and I am paid weekly. Whatever your frequency of pay, just make sure you plan so each paycheck gets you not just TO the next paycheck, but past it.

When I graduated from college and moved to the big, bad city, I was making the princessly sum of $18,000 - in 1989. I had a table but no chairs, a mattress and box spring but no bed. No tv. I listed to the radio on my clock radio (so 1980s!) and read hundreds of free books from the library. Each time I got paid, I bought ONE thing for the house. It took me four paychecks to have four chairs... I got a bed frame from an add in the City Paper. I made friends and we would have awesome potluck suppers every Wednesday night. I had so little, but looking back on it, it was one of the least complicated, happiest times of my life. I guess what I am trying to say, in an encouraging way, is that spending a lot of money on THINGS isn't going to make you happy. What will make you happy/content is to live within your means, save something for the future, and work towards having an interesting life where you have friends,  and are always learning something.
You sound like a smart, brave guy - you can do this! (

SunshineGirl

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Re: There is always money in the banana stand.
« Reply #10 on: January 25, 2014, 08:11:44 AM »
You're making some good decisions. Moving was probably the best one of all.

I encourage you to keep using YNAB. It's extremely helpful and gives you so much insight to everything you spend. If it bugs you to have to track everything, then, for instance, say you want to spend $200 on groceries for the month, take it out as cash, allocated to groceries, and pay cash for them all. At the end of the month, if you've got anything left in that envelope, you can reallocate or take out less for the following month. Whatever you do, give it a few months with YNAB. 

reginna

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Re: There is always money in the banana stand.
« Reply #11 on: January 25, 2014, 09:39:46 AM »
Love that show!

ice813

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Re: There is always money in the banana stand.
« Reply #12 on: January 25, 2014, 10:45:13 AM »
Vertigo:

First of all you need to start tracking everything you are spending (cash included to the penny). Just keep your receipts and then write the totals at the end of the day on a piece of paper, then review said paper at the end of the month. I find that most budget software doesn't properly identify expense categories so i did it by hand until i got my spending under control.

Just by seeing where your money is going will make it easier to pick some of the low hanging fruit and start asking the tough questions (Can I get a roommate? Do I really need a cell phone? Can I cook at home more? Do I need a TV or should I put that money towards student loans?). The questioning part is where you get creative and start flexing those frugality muscles! I also find a sense of ease knowing exactly where my money is going each month.

You are off to a good start increasing that income, Best of Luck!

dragoncar

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Re: There is always money in the banana stand.
« Reply #13 on: January 25, 2014, 02:52:10 PM »
Interesting. In Australia we get paid fortnightly (which is what you're calling bi-weekly) but I've worked in multiple countries around the world and monthly has always been the norm. I got the impression we were the only ones. Learn something new every day!

Other than minimum wage retail jobs as a teenager, which paid weekly, I've never been paid anything but monthly in my career, all in the US. I think it varies wildly.

OP, it sounds like you have what you need to make a comfortable place to live, with several extra luxuries besides. You need to make that spending freeze permanent. You don't need anything anyway, and with monthly payments coming up, you need wiggle room.

Good job on the Jeep.

For those interested: http://www.dol.gov/whd/state/payday.htm

A national employer is likely to set policy meeting minimum requirements of all the most populous states.  Plus, people like to get paid often.  Getting paid 30 days after the fact seems like a stretch to me (I suppose some monthly payers could give you an advance instead, but that seems unlikely).

Kaminoge

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Re: There is always money in the banana stand.
« Reply #14 on: January 26, 2014, 01:06:05 AM »
When I first left Australia and started getting paid monthly I found it really hard. Not making the money last (that's never been a problem thanks to a ridiculously Mustachian upbringing) but just the fact that I felt like pay day never came around. When you're paid fortnightly (a lovely word, don't mock it!) every week is either pay week or the week before pay week.

I'm used to it now. The norm for my jobs is to get paid per calendar month. So in Japan I always got paid on the 25th. Here it's around the 15th (it varies quite a bit here, they aren't as precise as the Japanese). So you're getting paid for about half a month you already worked and half a month you haven't worked yet.

StarryC

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Re: There is always money in the banana stand.
« Reply #15 on: January 26, 2014, 03:25:59 PM »
It sounds to me like you need some tactics.  Cut the fixed expenses, as described above.  Start tracking spending.  If you have mostly used cards, Mint will do a good job of this from the current data to give you information for the last 3 months.  Otherwise, track going forward.

1) Save First.  You are doing this with the 401K and that is great.  For now, how about an extra $100 a month into an emergency fund.  Open a savings account.  Set up auto withdraw.  On the 16th and the 1st (or whatever is the day after your pay days, usually), transfer $50 from wherever your paycheck goes to the savings.

2) Guestimate a budget.  For a single guy, I think a good start would be $200 a month on groceries.  This is high.  You can work down from there, and if you know you spend less, then use that less figure.  $100 for utilities (gas, electric, water) This might be high or low, if you know, adjust it.  $100 for eating out.  This is high around here, but it is a $15-$20 dinner once a week + tip or a $10 drink once a week, and 3 $5 lunches.  If you never eat out, make it lower.  If you eat out all the time, make it higher (for now). $20 a month for haircuts, $50 a month for clothes.  This puts you at $1,215. As you go through the month realizing things you forgot in the budget add a line.  This is a YNAB budget, or a mint budget, or a written budget, or an excel document.  After 2 months you should have a pretty good idea of what your actual spending is.  You'll also be CONSCIOUS of your spending, so will probably have lowered it already.  Then, you can start being more intentional.   

3) Put a notepad on the fridge or wherever you think of things to shop for. When you realize, hey, I want Game-X for the PlayStation or I want a Blu-ray player for the HD TV or I want a new lamp or I want a waffle maker, write it down.  Write the date.  Wait until the next calendar month.  See if you have room in your budget.  See if you really still want the waffle maker.  See if there is a waffle maker on craigslist.  Spend the month looking for waffle makers on sale and researching the best ones.  Buy the waffle maker. The delay between spending and wanting should be at least 2 weeks.

4) At the end of the month, if there is anything left in checking, transfer it to savings (along with the $100 you already transferred).  The "end of the month" can be the last day of the last pay period in the month. Start again, and do better.  Up the auto savings to $75 x2, or $100 x 2, etc.   When the loan starts coming due, try to keep up the savings and still pay the payment.  After you have $4,000 in the savings, put the "savings" transfers toward the loan. 

Fireman

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Re: There is always money in the banana stand.
« Reply #16 on: January 26, 2014, 05:11:48 PM »
StarryC, I like number 3, personally!  I'm going to start doing that.