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?

From Finance and FatCharge Yourself Exorbinant Banking Fees.

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!]

From Being FrugalThink Outside the Box!

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.

From Madison at My Dollar Plan0% Credit Card Arbitrage Strategy

[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!]

From wealthy_1 at Collecting My CashCreate a Cash Cushion by Rounding

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]

From Jacob at Early Retirement ExtremeOwn Quality not Quantity

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]

Plonkee succinctly reminds us:

It’s not what you make, it’s what you keep.

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:
Groceries
Kids Allowance
Entertainment
Dining Out
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.

From Credit WithdrawlAutomate Your Finances

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.

From Gather Little by LittleManage Your Finances Together

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!]

From Pinyo at MoolanomyMake Saving Automatic

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]

Carnival of Personal Finance

photo by ViaMoi


{ 17 trackbacks }

Thinking Outside the Box | beingfrugal.net
December 14, 2007 at 11:34 am
Roundup: Home Equity, Net Worth Rankings and the Nintendo Wii | My Dollar Plan
December 15, 2007 at 9:33 am
more links — On Financial Success
December 16, 2007 at 2:20 pm
Best Personal Finance Idea of the Year | Credit Withdrawal
December 17, 2007 at 6:28 pm
Manage your finances together | Gather Little By Little
December 18, 2007 at 9:02 am
Best PF Practices of the Year! | Moolanomy
December 19, 2007 at 9:01 am
The Best Finance Practices, Ways To Kick Start Your Financial Future @ My Carnival Picks
December 19, 2007 at 10:59 am
it’s not what you make, it’s what you keep : plonkee money
December 21, 2007 at 8:33 am
Carnival Roundup — New Library Job Edition | Mrs. Micah: Finance for a Freelance Life
December 21, 2007 at 4:47 pm
Carnivals featuring PaidTwice around the web | I've Paid For This Twice Already...
December 22, 2007 at 9:38 am
Sunday Morning Link Love ~ Christmas is Approaching | I've Paid For This Twice Already...
December 23, 2007 at 9:11 am
Over or Underbuyer? Guest Posting on Paid Twice | Mrs. Micah: Finance for a Freelance Life
December 28, 2007 at 9:00 am
Some Good Personal Finance Habits | Personal Finance Resources
December 28, 2007 at 11:57 am
The Snowflake Revolution | I've Paid For This Twice Already...
December 29, 2007 at 9:05 am
Mrs. Micah Gets Interviewed at Blueprint for Financial Prosperity | Mrs. Micah: Finance for a Freelance Life
January 4, 2008 at 8:34 am
Blog Half-Year Party!
March 2, 2008 at 6:59 pm
Your HELOC is NOT Your Emergency Fund
September 29, 2008 at 11:03 am

{ 19 comments… read them below or add one }

paidtwice December 14, 2007 at 10:55 am

I’m happy that the snowflaking idea inspires you! I can’t take credit for inventing it but I do certainly put it into practice continually! :)

Christine December 14, 2007 at 1:51 pm

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.

Kris December 14, 2007 at 4:40 pm

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.

Great post, Mrs. Micah!

wealthy_1 December 14, 2007 at 6:40 pm

What a great idea to collect ideas! I think I need to try Frank’s idea and Kris’s idea.

Anyway, here’s the link to mine.

http://www.collectingmycash.com/2007/12/best-personal-finance-idea-of-year.html

Jacob December 14, 2007 at 8:09 pm

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.

Here’s a link to my blog about it: http://earlyretirementextreme.blogspot.com/2007/12/own-quality-not-quantity.html.

The Digerati Life December 14, 2007 at 10:14 pm

Very informative! love the collective info idea. And thanks for bringing snowflaking to the forefront. It’s such a great concept. I’ve enjoyed Paid Twice’s info on this too.

plonkee December 15, 2007 at 7:02 am

“It’s not what you make, it’s what you keep”

I’ve learnt this on many personal finance blogs all year round, most lately on bripblap in his post on whether it’s worth going to college or not.

wealthy_1 December 15, 2007 at 9:17 am

Mrs. Micah, thanks for adding my post.

@plonkee: “It’s not what you make, it’s what you keep.” That’s one of my mantras. It’s so true. I remember my mom telling us that many, many, many years ago.

Christine December 15, 2007 at 4:16 pm

“Oatcakes” is one word, dollface :)

Racerx December 16, 2007 at 2:26 am

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:
Groceries
Kids Allowance
Entertainment
Dining Out
Gas for the Car

This has directly led to us having less arguments about “where we are budget wise” andsaving apx $400+ a month by sticking to the budget. More on my site.

http://lifelibertyandthepursuitofmoney.blogspot.com/

And one good link deserves another!Linked back to you from mine. Great post idea!

Kris December 18, 2007 at 1:14 pm

Mrs. Micah! Congratulations on making Consumerist!

mrsmicah December 18, 2007 at 1:17 pm

Thanks, Kris! :)

David December 18, 2007 at 9:36 pm

Earn more or spend less. Anything else is just lip service. :-)

mrsmicah December 18, 2007 at 9:38 pm

Lol, David. Those are the two big ones–but I hope this can compile ways to earn more and spend less.

Miss Cellania December 18, 2007 at 10:19 pm

That idea for living on what you made a few years ago is fascinating. Whoever came up with that probably makes more money now than they did then. If only life were like that…

Amanda (Me vs Debt) December 21, 2007 at 9:40 am

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 you goal or even coming close gives you that much more motivation!

vh December 23, 2007 at 9:26 am

Best thing I came up with this year happened when Our Beloved Employer switched from bimonthly to biweekly pay. This disconnected my income from my monthly bills, posing a serious risk that too little cash would be available to cover living expenses between the 1st and the 31st.

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.

With each paycheck, I leave enough in my checking account to cover 1/2 of recurring bills (utilities, insurance, etc.) paid with automatic deductions. I move 1/2 of the amount I think I will charge on the card for food and daily necessities into a money market checking account (earns a little interest, but you can only write two or three checks a month). Then I budget a specific amount for each of four “weeks” (actually a little longer than 7 days) starting on the 21st and ending on the 20th.

I have all my automatic deductions for utilities and other recurring bills made on or after the 20th. So far, this has meant that two paychecks always contribute to the amount needed to cover those expenses, providing enough to cover them.

This is working. 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. If I hold off buying anything on the 20th, all that billing cycle’s charges will clear on the credit-card statement, & so I’ll have no problem paying the card in full and I start at 0 for the next cycle.

This allows me to put $300 aside for property taxes, homeowner’s insurance, and car insurance; pay $250 toward principal on a small home improvement loan; put $170 a month into personal savings; and still have a few bucks left over at the end of the month. It’s a miracle!

Shauna December 26, 2007 at 12:52 pm

Thanks for your post–very inspiring.
I just wrote a blog, “How Resolutions Will Save AND MAKE You Money,” that features related money making ideas. It’s a great idea and I hope people take advantage!

Best of luck in the new year!

Shauna
http://shauna26.wordpress.com/

cybele February 10, 2008 at 11:27 am

In the old days when cheques were used more than online banking, I used always to “round up” to the nearest 5 or 10-cent amount when I balanced my chequebook. That is, if the amount was $15.47, I’d subtract $15.50. And anything over $15.85 became “$16.00.” Those “virtual pennies” added up (and saved me a bunch of aggravation because I don’t like math)…and at year end, you’d be surprised how much you can then transfer to either paying something off or sticking into a savings account. You can’t tell exactly how much the amount is unless you’re keeping track (not my thing) but you can take a pretty good guess. I know it doesn’t work for everybody, but it worked for me.
My best tip, though, is…don’t spend it if you don’t have it or don’t have a way to earn it. I’ve been poor and it’s not fun.
And…read all the catalogs you want, turn down the pages, and then…throw them away!
Also…buy the best quality you can afford, rather than buying a lot of poorer quality things…they last longer and look/wear/feel better. And it saves space in your closets and makes you feel orderly. Think French for clothes — good quality and fewer with a nice scarf or belt — Italian for food — best quality and do as little as you can. Gosh, how old-fashioned and stuffy, but…

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