Discussion Forum > Autofocus your finances !
Hi jacqueline, How do you proceed to auofocus your finance ?
May 7, 2009 at 20:05 |
Jupiter
Jupiter
Hi Jupiter,
I'm a little anal about finances, and it's all gone onto my AF list since January. Whether that's checking stock prices, reading about stocks, making tax free account contributions, filing taxes, putting a reminder to pay bills, price checking things I want to buy, checking out the real estate market where I'm thinking of buying my next house...
In the past I've forgotten to do things like send away for rebates (and lost the form to boot probably), but I've followed up with things like this in a way I haven't for years. I did our taxes this year using the little and often approach.
When I'm tempted to impulse buy something now, I will write it down on my list. By the time I come around to that page, I often realize I would be wasting money to buy the item. It serves as a good delay mechanism for me.
Were you thinking of something specific?
I'm a little anal about finances, and it's all gone onto my AF list since January. Whether that's checking stock prices, reading about stocks, making tax free account contributions, filing taxes, putting a reminder to pay bills, price checking things I want to buy, checking out the real estate market where I'm thinking of buying my next house...
In the past I've forgotten to do things like send away for rebates (and lost the form to boot probably), but I've followed up with things like this in a way I haven't for years. I did our taxes this year using the little and often approach.
When I'm tempted to impulse buy something now, I will write it down on my list. By the time I come around to that page, I often realize I would be wasting money to buy the item. It serves as a good delay mechanism for me.
Were you thinking of something specific?
May 7, 2009 at 20:35 |
Jacqueline
Jacqueline
Jacqueline,
I was victimized by XM radio, which I discontinued but they went ahead and charged my card for anyway. I caught it instantly because I check my bank's website with my morning coffee as a routine. It is nowhere on my AF list because it just gets done EVER day and it is ingrained as a habit. I can conceive that if I were out of my usual element, such as on vacation perhaps, I might forget to do it, but that would not hurt me as I'd resume when I got back and still have time to get the bank to put the stolen money back.
Check your bank to see if they have on-line protection. Mine (BOA) allows me to create virtual credit cards with a limit that I choose and an expiration I choose that are good for only one vendor. So if I go on-line shopping I give them that number (they don't know it is not a real card) and when I'm done shopping, I can cancel the virtual card on-line. It is more trouble than just using the card itself, but safer.
I was victimized by XM radio, which I discontinued but they went ahead and charged my card for anyway. I caught it instantly because I check my bank's website with my morning coffee as a routine. It is nowhere on my AF list because it just gets done EVER day and it is ingrained as a habit. I can conceive that if I were out of my usual element, such as on vacation perhaps, I might forget to do it, but that would not hurt me as I'd resume when I got back and still have time to get the bank to put the stolen money back.
Check your bank to see if they have on-line protection. Mine (BOA) allows me to create virtual credit cards with a limit that I choose and an expiration I choose that are good for only one vendor. So if I go on-line shopping I give them that number (they don't know it is not a real card) and when I'm done shopping, I can cancel the virtual card on-line. It is more trouble than just using the card itself, but safer.
May 7, 2009 at 20:54 |
Mike
Mike
Thans for the answer. Basicaly does it mean that you put day by day all your expenses and recepies including credit card, check or even all what is taken by the bank on your account such as the electricity bill, taxes and so ? Do you put it in the midle of yours tasks ? or apart ?
May 7, 2009 at 21:43 |
Jupiter
Jupiter
I don't know about Jacqueline, but I don't "put" my financial things anywhere, but into Quicken to categorize for taxes at year end. I don't do any real tracking, other than to see that things are as I expect them to be. I used to track things as I went but I found that it did not help me much. Right now I know we are spending too much for cable, cell phone, and internet, but I can't do much about it as my wife wants those things. I'd cut them in a heart beat, but I can't do it now.
May 7, 2009 at 22:06 |
Mike
Mike
Jupiter, I see what you're saying. No, but I'll tell you what I did do for many years in my journey to FI (financial independence) - and that was to track every penny I spent. I read a book about 15 years ago called "Your Money or Your Life" by Joe Dominguez and Vicki Robin which I highly recommend to anyone, even if they don't have the same goal that I have. It's not so much that I wanted to not work anymore, but I wanted to have the choice not to.
The premise of the book (basic version) is that you figure out how much you've made in your life, and your net worth - with this you can see how much money you've just blown on stupid things in your life. This is kind of depressing. :-)
You figure out your real hourly wage - which is your salary less your true costs of working - commuting, clothes for work, lunches out, etc. This will also give you a basic idea of how much you could live on if you were financially independent.
Then you track your spending into the various categories such as housing, travel, etc. To do this, I tracked every penny - and I mean every penny - that I spent. I would write down in my daytimer in the date area every time I made a purchase and transfer it to a ledger / spreadsheet at the end of the month. At the end of the month, I would add all those automatic things like mortgage, etc. that weren't actual credit card or cash outlays.
You look at your spending objectively then and determine how much value you received from your purchases and how much was just habit. For example, you probably don't get a lot of value out of interest charges on your credit cards or bank charges - so you work to reduce those things. You may get a lot of value out of a clothing purchase - or not. I found that I spent hundreds of dollars per month on books and while I love to read, was it really worth $5000/year to me when I could go to the library? Now I take the book out of the library, and if I decide I really like it and will refer to it often, I write it down somewhere and look for it used, or possibly buy it on Amazon.
Once you start building your savings, you track those and your profits on your investments and the point where you "cross over" to Financial Independence is where your income from investments meets or exceeds your monthly expenses.
I don't do this anymore (the tracking) because it seems my habits are pretty set now. But because I still have impulses to buy things I really don't need, like I said, it's helpful to write those down on my AF list to provide a delay between when I get the impulse and when I can step back and determine if I really want that item. Most times the answer is no.
Now I purchase very little on my credit cards (or even generally) which is why I could spot so quickly that I was being "compromised."
Mike, I like your ideas for when I go on holiday/sabbatical, but I don't think we have that functionality up here - not to say that I couldn't open a BOA account when I go to the US. My other bank card is very good about tracking my spending - heaven forbid I don't call them when I go on holiday! One purchase down south and I'm getting suspicious looks and having to produce ID, which is fine with me!
The premise of the book (basic version) is that you figure out how much you've made in your life, and your net worth - with this you can see how much money you've just blown on stupid things in your life. This is kind of depressing. :-)
You figure out your real hourly wage - which is your salary less your true costs of working - commuting, clothes for work, lunches out, etc. This will also give you a basic idea of how much you could live on if you were financially independent.
Then you track your spending into the various categories such as housing, travel, etc. To do this, I tracked every penny - and I mean every penny - that I spent. I would write down in my daytimer in the date area every time I made a purchase and transfer it to a ledger / spreadsheet at the end of the month. At the end of the month, I would add all those automatic things like mortgage, etc. that weren't actual credit card or cash outlays.
You look at your spending objectively then and determine how much value you received from your purchases and how much was just habit. For example, you probably don't get a lot of value out of interest charges on your credit cards or bank charges - so you work to reduce those things. You may get a lot of value out of a clothing purchase - or not. I found that I spent hundreds of dollars per month on books and while I love to read, was it really worth $5000/year to me when I could go to the library? Now I take the book out of the library, and if I decide I really like it and will refer to it often, I write it down somewhere and look for it used, or possibly buy it on Amazon.
Once you start building your savings, you track those and your profits on your investments and the point where you "cross over" to Financial Independence is where your income from investments meets or exceeds your monthly expenses.
I don't do this anymore (the tracking) because it seems my habits are pretty set now. But because I still have impulses to buy things I really don't need, like I said, it's helpful to write those down on my AF list to provide a delay between when I get the impulse and when I can step back and determine if I really want that item. Most times the answer is no.
Now I purchase very little on my credit cards (or even generally) which is why I could spot so quickly that I was being "compromised."
Mike, I like your ideas for when I go on holiday/sabbatical, but I don't think we have that functionality up here - not to say that I couldn't open a BOA account when I go to the US. My other bank card is very good about tracking my spending - heaven forbid I don't call them when I go on holiday! One purchase down south and I'm getting suspicious looks and having to produce ID, which is fine with me!
May 8, 2009 at 1:47 |
Jacqueline
Jacqueline
Jacqueline:
I think the word "freedom" is the right one when it comes to finances. The sense of freedom one get when one owes no money to anyone is almost like being let out of prison. I actually think that is more exhilarating than knowing you have enough money to live on without working. Unfortunately our culture pushes everyone in exactly the opposite direction.
I think the word "freedom" is the right one when it comes to finances. The sense of freedom one get when one owes no money to anyone is almost like being let out of prison. I actually think that is more exhilarating than knowing you have enough money to live on without working. Unfortunately our culture pushes everyone in exactly the opposite direction.
May 8, 2009 at 7:56 |
Mark Forster
Mark Forster
Jacqueline,
You may not have that functionality yet, but it will come so I'd keep a watch out for it. As economies turn down there is more crime and therefore banks will do more to help protect themselves. At least nominally, banks stand behind you when you are embezzled, but they do make it hard, in practice, to get your money back. I really like that limited use "virtual credit card". If I am going to make a purchase from Amazon that comes to $127.95, I can create a card for it, fund it at $130.00 and have it expire in one month. Of course it is not places like Amazon I worry about.
You may not have that functionality yet, but it will come so I'd keep a watch out for it. As economies turn down there is more crime and therefore banks will do more to help protect themselves. At least nominally, banks stand behind you when you are embezzled, but they do make it hard, in practice, to get your money back. I really like that limited use "virtual credit card". If I am going to make a purchase from Amazon that comes to $127.95, I can create a card for it, fund it at $130.00 and have it expire in one month. Of course it is not places like Amazon I worry about.
May 8, 2009 at 9:32 |
Mike
Mike
Mark, I do think that independence is another rung up the ladder of freedom though.
For example, last fall, the company I was working at (which was doing well) was brought down by our parent company into bankruptcy. This was totally unexpected by everyone in our office.
Immediately, the atmosphere changed to one of fear and worry because 99% of these people had bills to pay and some probably owed more than they were worth. I was a little annoyed for a day or so because it had disrupted my plans (and messed up my calculations!), but I wasn't afraid. More like - couldn't this have happened a month ago, and I would have had a great summer holiday? Of course, as luck would have it, I was offered my previous job back 2 weeks later, only at contractor rates. Go figure. :-)
What was interesting to me though was that despite knowing they would be laid off, and many of them had very little savings, all of the staff still went out for a $6 morning latte and lunch out every day. And immediately started slacking off. And here I was putting in overtime! It made no sense to me. A couple of months later, I started getting calls to give a reference for them for their next job. Hmmm....
When my son was laid off in January, he posted about it on Facebook and the next day his previous employer prior to the job where he was laid off begged him to take his old job back. (The kid is like a one man time-and-motion study when he's working, it's really quite fascinating to watch him.:-))
I thought it was an excellent lesson for him to learn at 20 years old - that good people always have opportunities even in a bad economy, don't burn your bridges, that there's no guarantee on any job, always have a nest egg - and owe nothing. :-)
For example, last fall, the company I was working at (which was doing well) was brought down by our parent company into bankruptcy. This was totally unexpected by everyone in our office.
Immediately, the atmosphere changed to one of fear and worry because 99% of these people had bills to pay and some probably owed more than they were worth. I was a little annoyed for a day or so because it had disrupted my plans (and messed up my calculations!), but I wasn't afraid. More like - couldn't this have happened a month ago, and I would have had a great summer holiday? Of course, as luck would have it, I was offered my previous job back 2 weeks later, only at contractor rates. Go figure. :-)
What was interesting to me though was that despite knowing they would be laid off, and many of them had very little savings, all of the staff still went out for a $6 morning latte and lunch out every day. And immediately started slacking off. And here I was putting in overtime! It made no sense to me. A couple of months later, I started getting calls to give a reference for them for their next job. Hmmm....
When my son was laid off in January, he posted about it on Facebook and the next day his previous employer prior to the job where he was laid off begged him to take his old job back. (The kid is like a one man time-and-motion study when he's working, it's really quite fascinating to watch him.:-))
I thought it was an excellent lesson for him to learn at 20 years old - that good people always have opportunities even in a bad economy, don't burn your bridges, that there's no guarantee on any job, always have a nest egg - and owe nothing. :-)
May 8, 2009 at 14:01 |
Jacqueline
Jacqueline
My recommendation is this. DO NOT put your finances into Autofocus. Or rather, DO NOT DEPEND ON AUTOFOCUS to help you pay your bills. It's a DISASTER. This winter, for the first time in years, I missed TWO credit card payments because I had "auto-focused" them. Mark does not recommend that you do this -- he says, quite clearly: activities which must be done by a certain date or time should NOT be autofocused. As the American Bard sang, "take a tip from one who's tried" -- and don't do it.
May 8, 2009 at 14:17 |
Steve
Steve
Totally agree with you there Steve - credit card payments definitely aren't *discretionary*. :-)
I do put a reminder on my list to pay bills that I don't have set up to be automatically paid, but I rotate through the pages pretty quickly, and will usually pay it at the first opportunity where I'm at a computer and it comes up (they stand out for me quite clearly). There's no way I'd miss an item like that on my list for a month. I'd rather have the peace of mind and pay quickly (before things are due) than miss the $10/year of 'opportunity cost' money I'd make by leaving the payment for a couple of weeks.
Sometimes if I make a big purchase on my credit card, I'll also immediately pay that amount on the card too, just so I don't fool myself into thinking I have more money in my bank account than I really have. Then there's no big surprises at the end of the month either.
But for some things like checking stocks etc., I don't want to be looking at it every day because the ups and downs can drive me crazy.
I do put a reminder on my list to pay bills that I don't have set up to be automatically paid, but I rotate through the pages pretty quickly, and will usually pay it at the first opportunity where I'm at a computer and it comes up (they stand out for me quite clearly). There's no way I'd miss an item like that on my list for a month. I'd rather have the peace of mind and pay quickly (before things are due) than miss the $10/year of 'opportunity cost' money I'd make by leaving the payment for a couple of weeks.
Sometimes if I make a big purchase on my credit card, I'll also immediately pay that amount on the card too, just so I don't fool myself into thinking I have more money in my bank account than I really have. Then there's no big surprises at the end of the month either.
But for some things like checking stocks etc., I don't want to be looking at it every day because the ups and downs can drive me crazy.
May 8, 2009 at 15:59 |
Jacqueline
Jacqueline
Steve:
I have every bill I can set up to be paid automatically. Nearly all my "plastic" payments are by Debit Card, not Credit Card, which get debited directly to my bank account and therefore don't need a separate payment.
On the occasions when I have to pay a one-off bill I simply put the bill in my In-Tray and pay it directly as part of clearing Paper.
There's no need for me to have a separate system for paying bills. Of course, this only works if your finances are in good enough order to be able to pay bills on receipt.
I have every bill I can set up to be paid automatically. Nearly all my "plastic" payments are by Debit Card, not Credit Card, which get debited directly to my bank account and therefore don't need a separate payment.
On the occasions when I have to pay a one-off bill I simply put the bill in my In-Tray and pay it directly as part of clearing Paper.
There's no need for me to have a separate system for paying bills. Of course, this only works if your finances are in good enough order to be able to pay bills on receipt.
May 8, 2009 at 16:30 |
Mark Forster
Mark Forster
Imagine my surprise yesterday when I looked at the balance of one of my credit cards online, thought it looked high and went to investigate. There have been about a dozen fraudulent charges going onto my account over the last week. As my new statement for the last billing period just came online, I wouldn't have noticed these for a month until my statement came out if I hadn't checked my recent transactions online. My card hasn't been stolen, but nowadays it's apparently easy to make an imprint of a card if you just have the information.
I'm happy that having the task come up on my list enabled me to cancel the card quicker and put a stop to this theft. Now I'll have to set it as a more regular recurring task - maybe even write it on the top of every page... :-)