I started my first salary job in January 2009.  A few months later, the company I work for was having budget problems and had to lay off a few people and cut salaries.  As of today, we still have not gotten any of our salary back and for the past 14 months I've been bringing home about $450 less than what I started at.  Knowing I'm out that money sucks, but I always remind myself that I am lucky to be employed and I've made it work.  With that being said, I am still able to make ends meet and since I've had to be so careful with my money, I've probably actually saved more. 

This is how I do it:

I get paid weekly and my paycheck is direct deposited into two different checking accounts.  Most of it goes into my Bank of America account, which is for my monthly bills.  The other $100 goes into my Chase account, which I use for things such as groceries, clothes, and entertainment.  Once that $100 runs out each week, I'm done spending until Friday when I get paid again.  I pay my rent, car payment, credit card, and student loan from my other account each month and anything that is leftover goes directly into my savings.  By allocating my paychecks in this way, I can rest assured that I will always have enough money to pay my bills and I still have some extra money that I can use for fun things.  As I've said before, I try not to use credit cards unless I'm buying something expensive or in the case of an emergency.

Before the salary cuts, I probably spent that extra $450 each month on things I didn't need instead of saving it.  So as soon as we do get that money put back into our paychecks, I will have to set up an automated transfer into my savings each week and try to continue living off the lesser amount.  While having your salary cut is no fun at all, it has actually been good for me because I've learned that I can live off less.  Hopefully I will continue that no matter how much money I make in the future.

Thoughts?
 

In this video my boyfriend Paul explains how you can stop interest from working against you and start using it to grow your money.

Since this website is focused on personal finance, I don't think I've mentioned my love for travel yet.  So... I'm saying it now!  Traveling is my all-time favorite thing to do and it always been my favorite way to spend money.  (Paying a bill is my least favorite, in case you were wondering.)  The problem with traveling is that it can be expensive.  I always find ways to save money by booking everything myself, using fare comparing sites such as kayak.com, and relying on trip reviews to make sure my money will be well spent.  And... I make sure to get points or miles anytime I go anywhere, period.  I travel for work quite often and I get airline miles for Southwest for all of my hotel stays.  In fact, I usually make a point to only stay at hotels that are offering bonus miles so they add up much faster. 

I recently opened a new savings account specifically for traveling.  It is set up to automatically take $25 out of my checking out every Wednesday and deposit it into my traveling savings.  I know that $25 doesn't sound like a lot, but it adds up and it's always fun to know that that money is going to take me somewhere awesome.

I have a few money-saving tips for those of you who like to travel but worry about how expensive it can me:

1. If you want to go on a cruise, use CruiseCompete.com.  You tell them what cruise you want to go on and several different travel agents will send you prices on the cruise along with nice incentives in order to win your sale.  You can save a lot of money booking a cruise this way.
2. When shopping for flights, always add baggage fees onto the total cost. It may seem that a flight on American is cheaper, but when you add $40-$50 (round trip) in baggage fees, flying on Southwest (no baggage fees) might end up being cheaper.  Do the math before you book.  (I always use Kayak.com to find the best fares.)
3. Read reviews on TripAdvisor and elsewhere!  You can often find great rates at a hotel, only to find that the reviews are terrible.  Sometimes spending a few extra dollars will help you avoid an entire trip's worth of problems.
4. Get miles/points everywhere you go.  They add up fast and you get free hotel stays and plane tickets... you can't beat that!

Do you save money for traveling?  What are your money-saving travel tips?

Today is Cinco de Mayo, a holiday celebrated by drinking lots of margaritas, Corona, and tequila.  I'm sure it's also a day that people drop a lot of money out at the bar no matter how good the drink specials!  I'm not much for bars anymore, but I used to go every Friday and Saturday night and I remember it always taking a big hit on my finances.  While I fell out of the bar scene early, a lot of twenty-somethings are still going out regularly and that leads me to the question... how does going out to the bar affect your budget?  To you set aside extra money for drinking and cabs?  Do you set an amount that you're allowed to spend each night before you go out?  How do you avoid putting too many rounds on your credit card?

When I used to go out, I would take between $20 and $30 of cash with me, as well as my debit card in case of emergencies.  I tried not to spend more than I had in cash, but sometimes it was unavoidable.  But by not taking my credit card with me, I was never able to start buying shots and rounds for everyone I met out... and ultimately, that saved me a lot of money.  Even so, I've been able to save a lot more money since I stopped going out on a regular basis.  And I don't feel so guilty now when I go out for a nice dinner that costs me $30... because I could have easily dropped that much on 3 or 4 drinks.

It's your turn to weigh in... how does the bar affect your budget?

For the past few years, I've been solely responsible for paying my rent and I've had to find places that were within my budget.  Even so, I never really calculated the ratio between my rent and my income.  I've recently learned that the "rule of thumb" is to spend no more than 30% of your income on housing.  And I'll be the first one to admit that my housing is currently more than 30% of my income after taxes.  Rent is my biggest expense and I have to save my money all month just to pay it on time... but I live in Chicago.  The less you pay, the more you are giving up.  If I were to find a place that was $200 cheaper per month, I'd probably have less privacy, less room, more problems, more roommates, and live in a less desirable neighborhood.  It's pretty difficult to find a place that you can afford that still has all of the features that you want...

This goes for buying a place too.  While I've never purchased a home before, I know that the rule of thumb applies to a mortgage too.  If you take out a bigger mortgage than you can afford... well, we already know about the recent housing crisis.  Bad things happen. 

So are those hardwood floors and granite counter tops really worth it?  What about your vicinity to a park or a coffee shop?  What are the most important things you look for in a house/apartment/condo and what are you willing to give up?  Are you following the 30% rule of thumb? 
 

About a year and a half ago, I started making an effort to use my debit card instead of a credit card for most of my purchases.  I used to be not-so-great at keeping track of finances and I would often find myself charging dumb stuff to my credit card and forgetting about it... that is until the bill came and I didn't have the money to pay it off.  My other problem was that I didn't track all of my credit card purchases and they would add up a lot faster than I would realize.  Although I generally only charged items to cards that had a 0% APR, I was still spending more than I could afford without realizing it. 

Many credit cards offer pretty good rewards for charging even the smallest purchases. (Like a 79 cent Slurpee...)  But if you have a bad record with paying off those purchases in full each month, the rewards might not be worth what you'll end up paying in interest.  So because my record isn't that great, I use my debit card for everything.  If I only allow myself to spend money that's in my bank account, I'll never find myself with a bill that I can't pay.  The only exception to this is when I purchase large ticket items and unexpected emergencies.  If I'm going to buy something pretty expensive, I've usually budgeted for it and I won't forget that I charged it... so I put it on a credit card so that I can get the points or miles.

My boyfriend is the opposite. He charges everything and pays it off in full every month.  He claims that credit cards companies actually pay him to use their cards because he gets tons of points and cash back rewards, but never pays a dime in interest.  If you can pull this off, work it!

So which kind of plastic do you prefer?  Have you come up with a system that works for you?
 

I never realized how important it was to be on the same page financially as your significant other until I got to the age where many of my friends were getting married.  My boyfriend's smart financial habits have been a huge motivator in getting my own finances in order, but I'm sure many couples do not talk about money issues as often as we do.  It's not as important at the beginning of a relationship, but as you get more serious it is not a bad idea to have a discussion about finances.

Once a couple gets engaged (or even before they do), it's important that they discuss how they will go about their finances once they are married.  Will you both be working?  What will your combined income be?  How will your budget have to change?  Do either of you have debt?  How will you use credit cards?  Will you combine all of your bank accounts, or maintain individual accounts?  Should you consult each other before making larger purchases? 

I don't know the statistics, but I've read that money is one of the biggest issues that married couples fight about.  Although it would be difficult to avoid any disagreements involving finances, I'm sure you could avoid a lot of them if you came up with a budget and a few rules beforehand.  But like I said, I'm no expert.... what do you think?  How do you and your significant other deal with your finances?
 

I mentioned elsewhere on this website that I would start a blog that would hopefully spark some conversation about money topics.  Most people have questions about how to go about their finances and while I probably don't have the answers to most of those questions, other readers might!  So feel free to use this blog as a forum and let's get the conversation rolling...

This morning on Good Morning America, Mellody Hobson, their financial guru, was answering questions about student loans and paying for school.  One student asked her if it was smart to try and pay off student loan balances faster than required.  She told him that since federal student loans have such a low interest rate, (usually between 5 and 6 percent) it's not a bad thing to pay off your loans over time and definately pay high interest credit card balances off first! While I definately agree that you should pay off credit card debt first, I'm not sure how I feel about paying just the minimum payments on student loans if you can afford to pay them off faster.  I want to be debt free as fast as possible!  What do you think?  How do you plan on dealing with student loan debt?