Wednesday, January 9, 2008

financial literacy?

Ok, so this is something I though everyone knew, but the way to not be broke all the time is two-fold: A) Have enough income, and B)Budget, save, and invest.

Having enough income is a doozy. Some people just don't, and, well sucks to be you. Learn about french wines at the library, and get a job waiting tables in a restaurant that sells 800 dollar bottles of wine. Or something similar. There are all kinds of areas that require special knowledge, and lots of knowledge is available for free at the library. The other option is to college, learn something you'd like to do, and start doing it. That's what I'm trying to do.

Once you have that income, or even before, it's a good idea to draw up a budget. This is how my monthly money should go:

-800 Loan Payments
-600 Rent
-200 Groceries
-100 Gasoline
-300 Camera Bills (I have an account at the local camera store)
-200 Savings
-300 Incidental expenses

The camera bill will go away soon; I only owe them about 1800 bucks, and I'll pay off about half of that if I get the contract for web design at my current job. That 300 in incidentals isn't a lot; it's easy to go through it what with bar tabs and whatnot. That totals to about 2500 dollars a month. This is a significant ammount of money; I actually make around 1400 right now. I'm adding some things, trying to bring my income up to what I'd like it to be. Freelance work. If it'll work out. But the point is I have this budget, and if I ever get out of being paycheck to paycheck (soon), I have a plan.

The other part is the investment. Google is your friend, and you can find out a lot about how to make money once you have money that way. Mutual Funds, money market accounts, these all start at around $1000 bucks. A good fund can get you 10% in good market times, which is 100 bucks a year (maybe more, depends on the year) for just having that money sitting around. And if it really is a good diversified fund, then you won't be losing money that often. So I can save money and earn more back than I'm paying out in interest on my student loans, in theory. In practice, I'm actually years away from that, just because of the difference in principle, but saving and investing wisely will make that time much shorter.

With all that said, I have a new goal: to be completely debt free in five years (I would love to say two years, but that's a little unrealistic). The repayment period on all my loans is ten, but I figure if I start overpaying now, saving and investing, I can pay them off by then. I'll be 28. I think when that happens I'm going to take that 28th year and go around the world. If I haven't been doing that already. Then maybe I'll think about grad school.

And maybe I'll have some photos later. Tell about my exciting night at the bar. Or not.

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