5 things I’m doing to take control of my finances, by Linda Eaves

You may remember Linda from her earlier FemCentral post on body image and weight loss surgery. Linda and I met in an online class a little over a year ago.  Although we live on opposite sides of the country and have never met in person, we talk on the phone almost weekly.  The topic of money management comes up on a regular basis.  I know that Linda has explored many different systems for personal money management, and she recently made great strides in taking control of her finances. So, I asked her to share her experience with the FemCentral community.

Getting a handle on my money has been on my mind for years. Making it, keeping it, saving it, and especially – managing it. Huh? Managing it? I’d be happy, no – ecstatic to get a handle on what I currently had in place. What I wanted was an idea of the energy, or flow, of who I did business with. Which banks, loans, credit cards, and recurring payments were happening and when?

Most of my life, I tried keeping it in my head.  That was fine in the beginning. But, in September 2009 I bought a house. Things got more complex; there were more things to track, and my current system wasn’t working. I was feeling out of control. I wanted to keep up with expenses and still be able to do what I enjoyed. So here’s what I did -  in no particular order.

1. Started negotiating overdraft fees with my bank

The ideal situation is to pay attention to what’s in your bank account and not go too low. In reality, sometimes the unforeseen happens and you’ll get a $30 (average) overdraft fee. Ouch! Banks spend a lot of marketing money to attract and keep customers. They also offset their overhead with fees. Thankfully, there are more choices now than ever as to where you can put your money. I’ll go into that a bit later. What I want you to understand is that it’s completely OK to phone your bank, explain the circumstances to the customer representative, and ask to have the fee reversed. Learn to communicate with your bank and establish a positive relationship. If at first you don’t have a preferred result with a call center, try going in person to speak with a manager and explain your situation. The point is not to always get away with something – but it never hurts to ask, especially if a two minute phone call results in immediately putting money back in your account. If it doesn’t work out and it seems like your particular bank isn’t too concerned with retaining you as a customer well, you have options. (See number 4 below.)

2. Set up an automated savings account

You’ve heard many times before about the importance of a cushion for emergencies or simply for more piece of mind. I’ve been at my current job for 12 years and it’s important to me to create a “Happy Trails Fund”. I enjoy my work and have no plans to leave, but wouldn’t it be nice to have some money set aside anyway if I decide to stay there or move on? Automation is really the easiest way to go. It’s done for you and you don’t have to think about it. Even if it is twenty five dollars a month, getting into this habit creates momentum as you see the balance grow. I can still transfer money back to my checking account but I set it up with the type of account with two business days before it gets there. This keeps me on track for my goals, keeps the money in savings, and is an impulse-spending safeguard.

3. Aggressively pay down my credit cards & then use them lightly

This one started to be really fun for me because it had the quickest payoff. I made a deal with myself to either pay on it twice a month, pay the full balance each month, or for my one card with a bigger balance, I pay much more than the minimum. I’m glad to say that although it’s been painful to do; my credit score went up quickly with doing this simple step. I’m down to having one card with a balance, and my credit score went up twenty points. To keep the score increasing, use no more than ten to thirty per cent of the credit card limit and/or pay off the balance each month. This is another tip (thanks for the reminder, Jennifer!) to help your credit score rise quickly and make your cards work for you instead of you being a slave to them.

4. Research alternatives to traditional banks

As I wrote in point number one, there are more banking options out there for you to explore and benefit from. You do not always have to go with a traditional bank to handle your financial business. Shop around; do your research. I bet you will be pleasantly surprised. For instance, check out your local credit union. They are like local banks but are not for profit, and are owned by their customers. Also, there are many appealing and safe FDIC insured online banks like ING or Emigrant Direct for your checking, savings, money markets, & individual retirement accounts .

5. Monitor my credit score

Usually you don’t think about your score until you’re ready to buy a big purchase like a car or house, and maybe not even then. But being unaware of this part of your financial picture can hurt you. These days more and more agencies and even prospective employers are checking out your credit score to evaluate your character or determine if they want to do business with you. For example, having a higher score will end up saving you hundreds of thousands of dollars over on the lifetime of a mortgage loan with a lower interest rate. I like to use a site called MyFico.com and purchase my scores twice a year.

Favorite resources & inspiring people who made me want to write this article

Yvonne Bynoe – Self-Sufficiency Coach, attorney and founder of http://SophisticatedWomanandMama.com, a company that teaches women how to stop under-earning, be financially independent, and live their best lives

Ramit Sethi – Author of I Will Teach You to Be Rich. This book made me laugh and you’ll make back the cost of the book using the bank negotiation script on page 66.

Jennifer Shelton – Effective money mastery with a feminine, intuitive point of view, and personalized astrological advice based on my chart and how I best handle money [thanks Linda! - JS]

[Note from Jennifer: Linda began to "expose her spending habits" by picking a few areas that really stood out for her.  Then, she moved on to the big picture that I talked about on Monday. That worked best for her. You have to decide what works best for you. You don't have to be perfect.  You just have to get started!]

Have you found an innovative way to manage your finances?  Or, do you feel overwhelmed?  Sharing your experiences may just help someone else in similar circumstances!