Sweeping out the financial house
I am in the midst of a financial house-clean in preparation for reducing my work hours to four days a week in the fall. Despite my fears at having less in my pay packet, I’m feeling great about tightening things up and putting my spending and accounts under a microscope. As I’ve written here before, Mint.com has really opened my eyes by alerting me to monthly and annual fees, interest payments and other items that otherwise escape my notice. After using it for several months, it is clear where my money is going and what steps I need to take for financial responsibility:
- No more extraneous accounts! I have a lot of accounts set up – a legacy of moving cities, having various loans and mortgages and switching banks. Of course, more accounts mean more hidden fees (even on a no-fee account like my RBC Savings which is charging me $2 per month in bankbook fees) which really add up over the course of a year.
- Switching to no-fee banking and credit cards. Using Mint, I have realized that my credit cards and bank accounts charge me close to $400 a year in fees. I have since switched to the ING Direct No-Fee chequing account and applied for a no-annual-fee credit card so that I can eliminate my fee-based accounts in the fall.
- Getting rid of stupidly high amounts of interest. Seeing my interest payments roll into my email account as “alerts” every month has really underscored the importance of paying off my debt – since I was paying close to $100 per month in interest alone. Fortunately a well-timed work payment allowed me to pay off the highest interest debt, and I’m working on the lower-interest portion now.
- Putting savings aside first. There are short-term savings and long-term savings. Right now, our house is the long-term saving – short term savings are there to help with car repairs, house emergencies, and vacations. Just because I am working less, I can’t skimp on this (or else it means accumulating more debt).
- Moving to a “cash-only” system. Which means that on payday I take out the cash I’m allowed to spend, and that’s all I get to spend. If I do use a credit card for a purchase, I immediately take the cash out of my wallet for the credit card payment and set it aside so I don’t spend it twice. Dealing with myself this way feels a bit infantile – but let’s face it, spending money in plastic form where the wallet is never empty is far too easy.
And that’s the plan I’m working with right now – really a reorientation away from plastic cards and debt and towards savings and reduced spending overall. Which is a little challenging given my somewhat lax habits and the fact I have a crap-load of school books to buy this summer. But I really think working one less day a week is worth it!