Concentrate on the Big Three

In backpacking a common piece of advice to those who want to reduce their pack weight is to reduce the weight of their big three first.  The big three consists of  a backpack, sleeping bag, and shelter.  These are usually the three heaviest items one carries.  It makes sense to concentrate on reducing the weight of these first since this is where the greatest progress can be made.  It doesn’t make much sense to be drilling holes in your toothbrush when you’re carrying a backpack that is twice the weight you need.

The same concept can apply to personal finance.  There isn’t much point in washing out your plastic baggies and re-using them and then driving a luxury SUV that you can barely afford.  You need to identify what your big three are and then see what you can do to reduce them.  Most people would have housing and transportation as two of their largest expenses.  Taxes would probably also be in most people’s three biggest expenses but since you’re limited in how much you can reduce those you might want to concentrate on the next biggest expense. If you keep track of your expenses, which you should, then it will not be a problem to identify your largest expenses.

The old saying penny wise and pound foolish defines what this advice is meant to fix.  Of course once you are pound wise it is good to be penny wise as well.

February Credit Score

My February credit score is 787 which is my highest ever.  It was 770 last month and 782 the month before that.  I’m not sure what is causing the fluctuation.  It will likely be going down next month because I plan to transfer $4,900 of my 8.5% Grad Plus loan to my credit card that is offering me a 3.99% for life rate.  My overall debt won’t increase but my credit utilization percentage will go up causing a reduction in my credit score.

Enrolled in 401k

I was surprised to receive information on how to enroll in my employer’s 401k earlier this week.  I assumed I wouldn’t be eligible to enroll since I’m not actively working there currently.  The website did allow me to enroll though.  The plan matches 100% for the first 3% contributed and 50% for the next 2%.  I signed up for a 5% deduction to take full advantage of the match.  I could have contributed up to 25% of my income but I decided not to since it will be difficult for me to contribute the full $5000 to my Roth IRA and I want to max out my Roth before making more 401k contributions.

This may not mean much though.  I hope to work there this summer but I’m not sure how much or if I’ll be able to work there though.  Getting a job that will give me legal experience is my first priority for this summer. If I still have time to work the pizza job then I will do that as well.  If not there is no harm in signing up since it is free.  My contributions and the employer match vest immediately so I’ll get that money even if I don’t work there after this summer.  I think I can then just roll the money over into my Roth IRA but I need to check on that.

More Free McD’s Food

When I was eating my free weekly meal at McDonald’s yesterday I noticed a sign promoting a deal for a free Mcskillet burrito when you buy a medium or large drink on Feb. 28th or 29th.  I really don’t need to be eating more Mcd’s but I love getting free food.  I haven’t tried the Mcskillet burrito but it seems like a pretty good deal to me.  You can confirm this deal at your local McDonald’s or at their website.

When Do You Give Up on a Car?

My car has 223,000 miles and hasn’t had too many problems until recently.  I just replaced my clutch yesterday at a cost of $440.  This is on a car that is worth maybe $1000.  I’m not sure how much I should spend on the car at this point.  Before I took the car to the shop I told myself I wouldn’t spend more than $500 on it and the repair came pretty close to that.  There comes a point when it is better to quit repairing an old car and get a new(to you) one. I’m not sure what that point is but I do not plan on making any more repairs to my car.  I’m hoping to replace it with a van this summer so I’m not even sure that I should have fixed it now.  I could get by during school without a car if I had to.  I’d just prefer to get a little more use out of my car.