The other day I dropped my car off at the auto shop. Harry (who I think is the manager) and I discussed a week earlier about what I wanted to get done: flush fluids, change belt because it was cracked pretty bad, change oil, and rotate tires. The costs would be around $650. 10 minutes after I drop off my car, Harry calls and says that he needs to check the brakes because they sound really bad, and he’ll call again to let me know what’s going on. He calls about an hour later, and the first sentence he said was, “Don’t shoot the messenger.” Well fuck.
I enjoy doing all this research about personal finance and presenting it to you guys hopefully in a way that is easy to understand and motivates you guys to take action now. As important as defining all the terms and understanding how things work, I want to also make sure that we put personal in personal finance. Cheesy, I know.
Read about my financial goals and I share some questions to get you thinking about yours!
Back to my story: Harry says that all my brakes are shot to hell or close to hell, and it’s Chinese haggle time! (I laughed. We’re both Chinese and from the 626 area in California. We bonded.) Anyways, we agreed on this: change brakes and belt, free oil change, and free tire rotation for a discount of $950. Yeah, you heard me… a discount of $950.
I did not plan for this trip to the shop to cost me $950. Now I’m more motivated than ever to build up my rainy day fund. But I’m getting ahead of myself.
This post has two parts to it: (1) let’s think about your personal finance goals, and (2) let’s set up some structure to make it happen.
Think About Your Goals
Some questions I thought about when determining my financial goals:
- What is your current lifestyle?
- What kind of lifestyle do you want?
- What are your life goals? Answer this in terms of assets, like owning a house or a company, or starting a family.
Secretly, all these questions feed into: What do you want to do? Where do you see yourself in five years? Who are you?
What is your current lifestyle?
- Am a female in my 20s (paying for birth control pills, pads, and tampons – all the female tax items)
- Live in Boston (expensive, but I managed to snag a deal on my rent and parking).
- Commute 40 minutes each way to work 4-5 times a week (gas money).
- Have a car to maintain (buckets of money gone at a time).
- Try to not drive my car around too much on the weekends. Usually I end up taking public transportation (cheap but inefficient) or Lyft Pool (cheap and slightly more efficient).
- Eat most of my meals at home. I mostly shop at Trader Joe’s or Whole Foods because it’s on my own home – it’s all about convenience.
- Enjoy eating out once or twice a week, which usually ends up being dinner (more expensive).
- Don’t like to buy things at full price, so I wait for deals and sales.
- Don’t like to pay shipping costs, so when I order online I search for free shipping (always free or free after you buy a certain amount, doesn’t matter) and free returns.
- Return things to the store that need to be returned. I’m usually not one of those people who is like, “Well… it only cost $3 so it’s okay.”
- Won’t spend money to hang out with people I barely like, but will invest money to do things with people I care about or admire.
- Pay my credit card balances in full each month.
- Pay my student debt at the minimum right now because I don’t have that much left.
- Pay for myself on dates. If my date insists to pay for the meal, then I buy him dessert or a drink afterwards.
What kind of lifestyle do you want?
- Want to be able to do what I want without thinking about finances.
- Want to be able to purchase items online without needing to wait for sales and deals.
What are your life goals?
- Want to travel all over the world. Seriously, I can be a backpacker or a luxurious traveler, I just want to travel all over the world.
- Want to learn how to fly a plane.
- Want to learn how to ride a motorcycle.
- Want to meet Anthony Bourdain.
- Want to have an in-kitchen dining experience at a restaurant.
- Want to have a business.
- Want to do all the outdoorsy stuff my body could handle (whitewater rafting, bungee jumping, spelunking, etc.)
To figure out how in touch with your finances you are, answer this question: How do you deal with your finances right now?
This one takes some serious self-reflection.
- I get antsy if I don’t check all my checkings and credit card accounts every week.
- I track every transaction in Quicken, which is a personal finance management tool that you pay for. I mainly use the Cash & Credit section (image below), but would like to be better at using the Investments and Assets & Loans sections.
- I don’t direct deposit money into my IRAs or personal savings account, which should absolutely happen.
Work Towards Your Goals
I was listening to a podcast the other day about Leonardo da Vinci, who kept a notebook with him at all times. Every day he would write down questions he was curious about, like how come a woodpecker doesn’t blow its brains out when it’s smashing its beak into trees at a very fast speed and force? Then he’d go about finding a way to answer the question. I never found out whether he answered his woodpecker question, but the point is that there’s little use in thinking and wondering without taking action.
Should I budget?
You should budget if it works for you. If you have the patience and tenacity to record your expenses and track your budget on a weekly or daily basis, go for it.
I hate budgeting. Hate is a strong word. I hate budgeting.
For some reason, every single year I think, “I’m going to create a budget and stick to it this time.” Tried 4 times, and failed 4 times. I like the idea of budgeting, but my mind is always on the go that I forget to check in with my budgets monthly. That was what the point of my financial diaries, but since I’ve been traveling so much since August, it’s been hard for me to keep up with it. Tried 5 times, and failed 5 times.
Some budgeting guidelines I keep in mind for myself:
- Don’t spend more money than you make. Duh. Common math problem, if you spend more money than you have, then you’re in the hole. Keep living that way, and you’re just digging yourself a deeper hole. If you don’t like holes, then don’t get yourself into one.
- Follow the 50/20/30 rule: 50% of your income goes towards essentials, including housing, food, transportation costs, and utility bills. 20% of your income goes towards savings, including 401ks and IRAs. I kind of do this right now. And 30% of your income is for personal lifestyle, including cell phone plan, gym memberships, dining out, hanging out activities, and Netflix.
Let’s dig into the 20% of your income part. How should you think about that portion?
I’m going to sound like a broken record because I’ve mentioned this in both posts Beginner’s Guide to Retirement Savings Accounts and Understanding Work Benefits. Have you contributed to your 401K and met the maximum of company match? The answer by now should be yes.
I am giving myself two actions items to be done within the next week, and I hope you guys do it with me!
- Make sure that I am meeting company match for 401K.
- Set up direct deposit for my personal savings account, so it just happens.
Materials related to topics in this post:
- How to Budget Surprise Expenses – this is pretty much how I felt about my car expense. It wasn’t a huge surprise for me, but I just wasn’t ready to pay that much money on my car. Jesse Mecham basically says that there are very few things in life that are surprise expenses – if you have a car, you know you’re going to need to maintain it. If you have a pet, you know that baby will have to go to the vet.
- A video relating Leonardo da Vinci to modern geniuses – I love how da Vinci is curious about life.
- Mint’s 50-20-30 Budgeting Guidelines