I rent apartments not a first year, and yet I sometimes have a problem properly planning money for expenses like renting. I will pay it anyway, but sometimes I just wonder how it happened that I'm - the person who's never drunk - how do I afforded to remain without money.
When I have no money for rent I move out to our family property downtown which is not really convenient place to live actually, since daily pay for transportation is higher than renting and its too far away and inconvenient to get there.
My last excuse for not having enough money for rent was a robbery - it was month ago - I've lost all of my paper money. Another good lesson learned: part of money always should be available on bank account, no matter how much you dislike or distrust banking system.
I've heard good many times that I should have some profound amount of savings which would keep me afloat: I've heard the best amount of money is amount of money 4-6 times higher than monthly rent.
But understanding this wasn't enough for me. Last time when I dedicated such amounts of money to be saved I made a mistake: when I was out of money I got money from those savings designed for my apartment rent, then wrote down that I owe my budget X amount of money. Of course I'm the kind of person who doesn't likes returning money - doesn't matter who gave it to me: bank, relatives or friend. I afraid that my friends or relatives will get upset on me because of my loans to them, so I usally solve this problem by returning them money when I get chance. But my SAVINGS won't get upset, even if I'll waste them all.
I think many people can't have 100% guarantee that they will return money to their savings account. That's why something should be done about it. And I feel that the only right decision in this case is never using savings designed for one thing for another.
That's why I've created some system which will help me to that.
1. Let's imagine I rent an apartment somewhere at Manhattan in NYC and it costs me around $2,500 per month.
2. When I get chance, I go to bank and put there $10,000 with a commitment to not spend it anywhere except for apartment renting. $10,000 is quadriple amount of what I need to pay for rent per month.
3. I am freelancer and have irregular income e.g. $12,000 per month and I love having freedom of not working for several months (I need this time for get done other vital life tasks).
4. Since I have irregular income (as many of people do), I would also set another rule: whenever my savings account for my apartment renting gets bellow $10,000 (even if its $9,900) - I will have three choices (A) become a slave again (get regular job or get involved in other activity which provides you stable guaranteed payment without risks); (B) sell some of your assets (like company/car/phone/some luxury) or in other ways return your money on your savings deposit.
The main idea is always keeping this numbers up: $10,000. You can add some extra useful rules: if after 3 months of going bellow $10,000 your savings account still haven't met the necessary level, if quanty of money isn't the same, you can be eligible to require from yourself raising the savings level, as a penalty.
Along with mentioned rules above, there's main essential guidelines:
1. You aren't eligible to pay from this money for anything except for renting
2. You can't get a loan from this amount of savings (even for 1 day, even for 1 hour)
3. Don't get provoked by emergent situations. Mind tries real hard to tempt me for indulgence and I fight with it, because I know that $10,000 for me should mean 0, you could easily give all of this money 4 months upfront to your landlord - ask yourself - in this situation - is it so urgent, that you should go to bother your landlord to return part of your money you given to him upfront?
I've heard many times the advise from financial coaches - that its even better to have a lots of money in a pockets with you on the go - not because you have to spend this money which you always have with you, but for training to be wise with your money.
If you found flaws in this type of budgeting or just want to share your thoughts, you could use comment section bellow.
Posts
0 comments:
Post a Comment