Some of you who read my blog early on may remember that I’m a little stubborn about my finances. For one I can’t seem to bring myself to create a traditional emergency fund. I do have the ability to quickly come up with cash if I have any financial challenges. So that’s not much of a concern these days.
The second big area where I’ve stuck on my ways is budgeting. Partly I’m too busy (or maybe lazy) to take the time to record all of my daily finances. The bigger reason is that I was trying to hold onto a degree of freedom with my spending. I didn’t want every purchase I made to be under the microscope.
That’s not to say that I am reckless with my spending. I actually rarely make any big or even medium sized purchases for myself. This would be pretty evident if you knew how little I spend on each item of clothing in my wardrobe or if you saw how beat up my everyday shoes are. Some might even call me cheap….oops I mean ‘frugal’ 🙂
The areas that I’m not as careful with are small ‘latte effect’ type treats for myself and varied levels of treats or gifts for others. I tend to not think twice with the smaller purchases even though I know they can add up to a lot when they are frequent.
The Wake Up Moment
As luck would have it I’m about to face a financial hurdle that is forcing me to tighten my belt. Ok I admit that it has nothing to do with luck. I simply didn’t properly plan my finances last year and allowed it to become a very expensive year. Let’s see, what happened in 2013? Oh yeah…a trip to Mexico, killing the engine on my car, getting engaged and buying a condo.
All of that would’ve actually put me into debt, but at my day job I get paid as a contractor. This allowed me to conveniently overlook how much I should’ve been putting aside for income taxes. Now I’m a little nervous about doing the paperwork for my taxes to figure out how painful it’ll be. Depending on how much I can save before taxes are due, I’m likely looking at a 5 figure deficit. That should be a decent test of my emergency fund plan.
On top of this the government will probably force me to pay quarterly installments on my income tax this year. In short, I need to get my shit together if I don’t want this to get ugly fast.
The Plan of Attack
Fortunately for me, getting into the whole financial blogging thing has given me the know-how to tackle this challenge head on. There’s no way I’m going to let this situation bury me under a mountain of debt.
The approach I’ll be taking is two-fold:
1) Increase My Income – To be honest, this is where I expect to make the most progress. At my day job, things are headed in the right direction with some new websites we’re building up. If all goes well I’d expect to see some bonus money coming my way in the next few months. I’ve just got to keep working hard.
Also in my favor is the side hustles I’ve been working on. Between my blog, other websites and additional online income sources, there’s some solid potential for extra money. There were some changes in the advertising landscape recently, but that just means I have to be smarter about making money online. At least the groundwork is in place.
2) Control My Expenses – I fully acknowledge that if I were to monitor my spending, there are bound to be areas that I can save money. I’m pretty sure that’s the case for most people.
Once I start recording all of my expenses and analyze it all, it should drill home just how much I spend on things. It will be much more blatant how much those small purchases add up. Seeing those totals will challenge me to push to lower those numbers each month. There is also the guilt factor. Knowing that I’ll have be accountable for all of my purchases, I’ll shame myself out of spending as much as I would otherwise.
The really exciting part is that once I get an optimized budget in place, I will be able to better plan my financial goals. How can you accurately plan your future finances if you don’t really know how much you are spending each month? With a planned timeline for those goals, it all becomes much more real and can help with motivation.
Getting Extra Help With My Financial Challenges
So now that I have a plan in mind, I need a method to track and analyze my finances. To be able to keep it up I need something that is easy to use. Ideally it also provides great reporting capabilities to accentuate the numbers.
The solution I have decided on is Mint. You can read the Mint review on my blog to learn about the features that sold me on this choice.
If all goes well I’ll be reporting back about how my progress is going within the next couple months. If it doesn’t go so well, I might ‘accidentally’ forget to update everyone 🙂
With the tools at my disposal I do have high hopes that I can easily overcome these financial challenges. Wish me luck!