Stop Milking Me! - Cow’s Journey To Financial Freedom

Have you ever had a financial madness month that you have to deal with a number of unexpected expenses and totally screw up your budget? Well, this month is my financial madness month.

After switching my job role recently from an on-the-road consultant to an office lady, my boss told me that I have to learn how to play golf. Apparently, the people I work with constantly work at the golf courses; discuss business strategies while taking a few swings. I was very reluctant to take on a golf club and secretly planned to ignore my boss. But after visiting a driving range, I actually like the sport quite a lot. So I decided to put my boss’s assignment back on agenda. The problem? Cheapest golf clubs cost a few hundred dollars!! Ouch!!

Not to mention that I still have to squeeze money to solve my bra problems and pay for the $230 bridesmaid dress for my best friend’s wedding. And that Garmin Streetpilot i5 GPS has been on my “most wanted” list for a while since I constantly got lost while navigating in the town due to my lack of sense of directions.

If I buy everything right now, I am looking at $500 for golfing equipment, $600 for my bras ( I did buy 3 VS bras since I wrote my last Bra Emergency post), $230 dress money I own to the credit card, and at least $350 for the GPS I want. Total price tag: $1650. My current month budget allowance: $650.

Well, I can certainly charge everything on my credit card and worry about the balance later. But I don’t want to do that. That’s how I got into credit card debt situation when I was younger.

So here is my plan to deal with the problem:

1. Golf Clubs: Found some used clubs for 24 bucks a set earlier, thanks to my expert golfer friend. When I got home today, I received a package. It was a whole set of top brand golf clubs from my buddy Paco! Holy Cow!! I was very surprised. Yes, I was helping him with his career earlier but not in my wildest dream that he would actually give me his favorite set of golf clubs!!! He could sell them on eBay for a handsome profit! So thanks to both guys for helping me out!
2. Bridesmaid dress is a done deal. That’s for my best friend’s wedding. So I am paying whatever it takes to look good.
3. GPS: Although I am still suffering from the frustrations of getting lost constantly, I think I can wait till the next month and budget that expense into my “toy” and “recreation” categories. For now, I just need to be very friendly with mapquest.com
4. Bras.. hmm.. bras… Like I said earlier, it is hard to give up your favorite brand. But I am going to give Target Generic brand a shot. Buy a couple of $13 ones and see how they fit. If they feel nice, I will mix a few more of them into my VS collection.

With this plan and my friends’ help and generosity, I am only spending around $450! I still got money left to drink a few more White Chocolate Mocha and treat my friends with some magaritas!

We all have the concept to save for an emergency fund to cover the unexpected events. Well, I certainly didn’t expect my emergency fund could be used to cover.. umm… my bra emergency.

Lately, my usual elegant comfy Victoria Secret bars that I have been wearing for a while are irritating the heck out of me. They even caused quite a bit of bruises on me. So to fix the problem, I went to a nearby VS store’s wardrobe room to seek for professionals’ help. Turns out, I have naturally gained a cup size so all of my other VS bras don’t fit anymore… Ok, I guess that’s a good problem for a girl…

But after I came home and laid all of my beautiful VS bras on the bed and did a calculation, I wasn’t too happy with what I saw. Since I buy the top line designs, each piece costs me about $45. To replace my entire collection, I am looking at a whooping $720 budget! Although it is not as severe as Carrie’s shoe problems (if you remember Carrie from Sex And The City when she found out she spent $30,000 on shoes over the years), it’s still a steep price tag for me since I am saving every penny to try to buy a home this year…

But the thought of downgrading from Victory Secret Very Sexy Collection to WalMart Granny Collection is just not too appealing to me.

Well, maybe I will just have to make the Cow site to work harder and pull in some Ads dollars and expand my sales on eBay. So my next month’s Free The Cow’s Project goal is to milk enough money to make my boobs happy… Ok, that just didn’t come out right.. but.. you know what I mean…

I recently tried www.myspendingplan.com online to figure out where my money all went. Gosh! It took me about 3 hours to set it up, not to mention keeping it up in the future. So I finally gave up, pulled out an Excel Spreadsheet and did the same thing in about 30 minutes.

I even used pencil and paper before to figure out my monthly budget. It’s quick and convenient, but without a trace since I don’t have a habit to stack up random scratch paper.

At one point when I had tons of credit card debts, I used Notepad to list all of my credit card rates and my balances. I even set up a debt consolidation plan in the same text file. Believe it or not, I still use it to keep up with what’s going on.

Although I only spent about 2 hours on Microsoft Money due to its complexity, I heard enough complains about the tool and how hard to balance the books.

It almost occurs to me that the more complex the tool is, the less useful it is. How do you feel about this?

Matter of fact, MyMoneyBlog did a nice little survey and you can read about the results here. It seems that most people use Excel spreadsheets and a large chunk also use the fancy software like MS Money and Quicken.

For now, I think I am very happy to figure out the pluses and minuses using my spreadsheets, text files, paper and pencil.

I spent a few hours yesterday to dig into my spending habit and compared it with my budget plan. Surprisingly, I am not too much off from my budget besides the following categories:

1. Travel and Recreation:
I had about $250 budgeted for this category. But I spent a whooping $618 per month on average in 2006. Holy Cow! I guess that’s one bad part of being a travel consultant for this long – it never occurred to me that hopping on an airplane and grabbing a hotel room was a big deal. Whenever I need to go somewhere, I just book the tickets and go. This habbit needs to change!

2. Clothing
I am a young female and I only spent $34.01 on average on Clothe and shoes. What’s wrong with me? I didn’t even use up my $100 budget!

3. Tech and Toys
Gee, I spent $297 a month on BestBuy and Internet services. No wonder I didn’t spend money on clothing. The tech toys got all of my attentions. Hmm, that’s not good for my feminine image, isn’t it?

All other expenses are pretty much in line with my budget plan:
1. I spent $150 eating out a month and $400 on grocery and household goods
2. I spent $44 on average per month on Starbucks coffee, down from $160 comparing with a year and half ago. Whooooohoooo!
3. I spent $60 - $100 a month on gas
4. I spent $41 on books and music per month
Plus the usual rent and utility, it’s a pretty sizable chunk of money I consume each month.
My target is to bring down my travel cost. But with an upcoming wedding and home trips, it’s a bit harder to do… The good thing is that snow season is almost over and hiking, camping trips nearly cost nothing. So hopefully, I can squeeze a bit from there when weather turns a bit warmer. Tech toy is another category I can save on. Just don’t go to BestBuy.

In order to save a few thousand dollars a month to quickly rebuild my “safety nest”, I have to make another decision:
I have to pull either Roth IRA or lower my 401K contribution. Currently, I put max amount into both. I don’t think I can afford doing so this year in order to meet my short term goal. Which one to give up? That will take some thinking…

I am stressed out these days. After working 10 years, I finally hit the moment that I can’t even pay my bills. The last time when I had to worry about making my ends meet was a year after my graduation. I just got a job; I was living in New York and I spent like a princess. I ended up having to receive $250 from my mother every month to cover grocery. Well, obviously, I learned my lesson soon after and never had to worry about finance … until this month.

After cleared up my cash recently, I had about four hundred bucks in my saving’s account. Guess what, if the worst things could happen to you, it would happen. A few unexpected big expenses sent me straight into the negative red zone:

• My new car’s city tax $859
• My new car’s license plate $540 (yep, that’s what you pay in Colorado)
• Lawyer’s legal fee $1600
• My new car’s insurance $787

All require up front cash payments. After paying the first 3 items, I have nothing left. Unless I sell my last bit of stock funds or borrow money, I am screwed. I am 32 and too shamed to ask my parents for money. And all I can do right now is kicking myself for blowing the money on a fancy car.

Just a month ago, I was so confident about my financial situation that I decided to buy a brand new Toyota RAV4. Since my credit issues and large debt (that’s another story), I opted to pay cash for the car and cleared $26000 from my emergency fund. I guess I violated rule #1: Never ever touch your emergency fund unless it is an emergency. Instead, I blew it on a fancy SUV. I could have bought a used Camry for $15000 and still be happy with it.

I guess when they tell ya, “prepare for the unexpected”, you really gotta listen. I do regret that even with all the things happened around me, I could have managed my finance a little smarter so no matter what, I have something to fall back on.

Well, this month is almost over. I just finished my spending report and budget plan. So starting from the next month, I am going to squeeze everything I can squeeze to re-build my “safety basket”.

While I am heads down doing research and education on how to flip a home, run online store and battle with Google’s Adsense, I can’t forget about my bottom line. After all, no matter what we do, I gotta have money saved up to do what I plan to do.

First of all, I believe in saving for the rainy days. You never know what’s gonna happen so having an emergency fund where I can easily withdraw the cash is extremely importantly. Currently, I have no emergency fund. Yikes! The financial advisors usually recommend saving 3 – 6 months of living expenses. I like to go for the higher end so I can last at least half year if bad luck strikes.

Second, in order to buy a house to flip, I still gotta have money no matter how Down Right Ugly the home is going to be. My target is to buy a place in the mid 200’s range with 5% down and 7.5% fix up cost assuming I have a partner to do the project with.

That’s $46000 hard currency I will need to save up. OUCH!!! With my current $26,400 bottom line, I still need to save $20000 in less than a year to achieve the following goals:

1. Close a home by this Aug with $12500 cash.
2. Have $20000 handy during the fix-it-flip-it period (from Sept 2006 to Spring 2007)
3. Emergency fund of $15000 cash set aside by Dec 2006.

It’s challenging, but doable, thanks to my high paycheck and very simply frugal life. After all, planning money is nothing more than creating a project plan. You do the math, create a set of tasks and timeline and just follow it. It’s a very mechanical procedure. The hardest part for most of people is to create the plan and get started.

Anyway, in order to come up with a savings plan, I have to revisit my budget to know exactly how much I can save each month and understand where the money goes… Will I be able to maintain my current life style while saving that much money? If not, what should I cut back on? Should I stop my retirement investment for now? I will have to figure out each question to come up with the best plan and strategy to accommodate all of my short and long term goals… Stay tuned…