The official email arrived in my inbox and I am starting my bootcamp. The Take Control bootcamp will help me to take stock of where I am with my finances and to help me figure out where I want to go. The first week is all about looking at my current financial situation and understanding my spending habits.
The second week is going to be about coming up with smart and realistic finance goals as well making a plan to achieve them.
They say that by the end of the two weeks I am going to feel in charge of my finances and on the road to supporting the life I want. That all sounds good to me.
The way the bootcamp works is that you go through 3 steps. For today’s lesson it’s broken down into Learn It, Master It and Crunch the Numbers.
This bit is all about understanding cash flow and setting you up to start tracking your spending. I put together a handy list of a variety of different methods, suggested by members of the LearnVest community ranging from the good old-fashioned notebook to fancy apps.
I am going to go with the simple zipper method, which involves saving all your receipts in a zipper envelope and then logging it all at the end of the week. I started doing this on Monday and to be honest I haven’t sorted out the proper zipper envelope, but I have been saving them in my purse.
This is a good first step for me. I am one of those people who thinks they don’t spend much money, but that’s probably not the case. I have a budgeted amount of money that I get to spend per month, but I don’t track it at all. I will be interested to see where my money goes.
LearnVest also has the functionality to let you link up your accounts so you can track spending, create budgets and do all sorts of useful things. However, since I am living in London at the moment I am not able to take advantage of it. I’d be interested to hear what people think about the tools on offer.
This step gets you to look at your assets and liabilities and teaches you the difference between good and bad debt.
They say that in order to figure out where you want to go, we need to know where you are starting from. A very wise thing to do. By knowing your current net worth you can start to understand if you are on the right track to meeting your retirement goals or if you have a big enough cushion in case something unexpected happens.
I’ve never actually worked out my assets and liabilities, so this was a good exercise that opened my eyes to my entire financial landscape.
The master it steps also wants you to start thinking about your debt. An example of good debt would be a debt that had a low-interest rate or 6% or less and that can be considered an investment for your future. They say that student loans, mortgages and business loans fall into this category.
Bad debt is going to be things like car loans, credit cards and consumer loans that charge you high interest rates and are not tax-deductible.
Throughout each step you are given the opportunity to comment on the topic. For master it you are asked what has been your experience with debt and to share your tips for paying it off.
I am very fortunate not to have any bad debt at the moment. This is down to circumstances and personal choice. When I was a teenager my mom stole my identity and ruined my credit by taking out several credit cards in my name. This prevented me from being able to take out a card for myself. It took about five years to sort the mess out.
I had to take out a secured credit card with Wells Fargo to help me establish credit and was able to upgrade the account after a certain point. Although I never ran up any debt that I couldn’t easily paid off. I will say that I only had a limit of $1,000.00
Another reason I’ve avoided debt is because being tied down to payments just scares the crap out of me. I’ve never had or wanted a car payment and I’ve lived a pretty happy life without credit cards. Money to me is freedom and I see debt as a chain around my neck.
The only real debt that I have is student loan debt, which I believe to be around $60,000.00. I say believe because I haven’t confronted the fact that I should really know how much I owe. I pay roughly $720.00 a month towards student loans. I’ll get more into that later.
My college, the Minneapolis College of Art and Design, was massively expensive. The tuition at the time was $30,000.00 per year and that is just the tuition. I will say that I never regret it and that my time at MCAD was so rewarding in more ways than I can count.
All that being said I am happy with the fact that I’ve avoided getting caught up in feeling like I need to buy things on credit that I can’t afford to make me happy.
Crunch the numbers:
This step makes you look at the numbers so you can work out a plan to achieve your financial goals.
There’s also a tool that you can use to analyze both your net worth and your bad-debt-to-income ratio to come up with a financial recommendation.
I feel like this was a first exercise to get my head in the right place. You’ve got to start with the basics and I know I am going to learn a lot from simple opening my eyes and tracking my spending.