This is a collective post. I’m going to start off with the best personal finance practice I’ve run across this year. You post in the comments with something you’ve learned from a blogger/book/friend or something you’ve come up with yourself. Sound good?
As you post comments (or e-mail mrsmicah at that gmail place dot com), I’ll add them to the post. Complete with a link to your blog (unless you’re a spammer).
Or link to me from your own post about it and I’ll add the link and a teaser to the post as well.
And now, to the meat of my post–the best personal finance idea I’ve come across this year:
Well, if you didn’t guess it from the picture, it’s the debt snowflake, a technique I learned from Paid Twice. She uses it to drastically reduce her debt.
From her primer:
I have a set amount I pay to debt without fail every month that is above my minimum payment due (about $800). On top of that, I also try to collect up little bits of money wherever I can and I apply those as well to my top priority debt (my credit card). I take surveys online, I sell possessions on craigslist and ebay, I have yard sales, and any money I get from these endeavors goes directly to my debt. I also keep a very strict accounting of all the money that comes in every month and what I spend and everything left over at the end of the month not earmarked for future expenses also goes directly to debt.
These are my snowflakes. I have averaged over $200 extra going to pay down my credit card debt every month due to these snowflaking efforts.
I think this is brilliant. It’s making her snowball larger and larger as it attacks the debt. But she doesn’t have the pressure to pay more than she can afford, either. She just pays it as she gets it.
You can use the same sort of thing to snowflake together your savings, or put money aside for Christmas. Little by little, she gets the money to make this work. I really admire her dedication!
And here’s a link to today’s post (which inspired me) about 5 golden rules of snowflaking. I won’t spoil you by clipping from it.
If you’d like to see all her snowflaking-related entries, here’s a link to her snowflaking categories page.
Now tell us, what are the best PF practices you’ve come across this year?
To help build the balance a little faster I decided to implement a rule that I would repay any withdrawals from the emergency account plus a flat 10% fee, rounded up to the nearest dollar. [visit the post to read more!]
To sum up Pinyo’s advice, when you think you need to buy something, stop and consider all your other options first. Can you borrow it? Can you fix it? Do you have to buy new, or could you find it for cheap or even free on Craigslist? [visit the post to read more!]
My cousin Christine — Sad Oatcakes — writes:
A month or two ago I started keeping track of all of my income & expenses on a spreadsheet. I’m pretty responsible with my money, but that doesn’t mean that I always know exactly how much goes where. Now I can keep track of what I’ve spent or made, sorted by categories, and budget accordingly (now that I have a proper idea of how much I actually make and spend).
This year I also set up an automated monthly move from my chequing account to a savings account I’m not allowed to touch. It’s not much, but it’ll compound, and this way it actually gets done.
[Mrs. Micah writes:] I’m not even attempting a summary. It’s incredibly complex and amazing. Somehow, they keep all their balls in the air. Don’t try this at home unless you’re super-organized. But it’s worth taking a look just to be impressed by their juggling act! So far they’ve made/saved $11,590!
Kris at Cheap Healthy Good has a great salary-related idea
Without a doubt, it was living on my old salary (the one from three, four years ago), and banking the difference weekly. I save much, much more money this way and barely miss the difference. [MM's note--that's amazing!]
Whenever I make a withdrawal or write a check, I round up in my check register. So if the check was $10.01, I enter $11.00 in my register. Also, when I make a deposit, I round down. If the deposit is $90.52, I round it down to $90. This way I always have a small “cushion” in my checking account. [read more here]
Good quality items can last for years, so I always make it a point to buy the highest quality which may not necessarily mean the highest price. Although it requires a larger initial outlay, it is less expensive over the years and I enjoy it much more than the stuff that need to be replaced annually. [read more here]
Racerx at Life, Liberty, and the Pursuit of Money writes:
The best tip for me has been moving to use of cash for certain budget items, can’t over spend then! We use Cash for:
Gas for the Car
This has directly led to us having less arguments about “where we are budget wise” and saving apx $400+ a month by sticking to the budget. More on my site.
This comprehensive post has tips on automating banking, bills, retirement–everything! Great ideas for getting your finances running in the right direction with less effort on your part. So hurry on over.
Money problems and disagreements are the number cause of marital strife and divorce in the US. The key to avoiding these problems is communication. I’ve discussed this topic before in these articles: How to get my wife or husband to follow a budget, In Financial Chaos? Pass the test, and 1 year ago today – 10 things we’ve done to regain financial control. [Visit the post to read more!]
It was very difficult for me to come up with $1,400 right before Christmas to pay for home insurance, and another $1,300 twice a year for my car insurance. When I switched to Liberty Mutual, things got a lot easier not only because of the lower rates, but they are now automatically deducting a small amount each month from my bank account – I don’t even notice the pain anymore. [read more here]
Amanda at Me vs. Debt writes:
My best PF practice of the year was setting PF Goals. I realized that having a goal in mind makes you work that much harder. Meeting your goal or even coming close gives you that much more motivation! [so true!!!!!]
VH writes that:
[Her employer just switched from bimonthly to biweekly paychecks, disconnecting the payperiod from the monthly bills.]
In desperation, I switched my budgeting from monthly to weekly and keyed the weekly budget to a cycle corresponding to the credit card I use the most, whose billing cycle closes on the 20th.
…If I spend all the amount budgeted for “week 2? before the end of that period, I delay new purchases until “week 3? starts. A day or two of living purchase-free is no deprivation, and it guarantees that I do not overspend my income. [read the rest here]
photo by ViaMoi