Debt Reduction vs. Saving

Normally, here at 2OTC, we are all about penny-pinching and avoid macro personal economics, but I've been reading a lot of financial blogs lately. I think I need to cut back, actually, not just because it's making me a less-productive employee, but also because I am actually finding it DIScouraging.

How you ask? Well, quite frankly, I am getting down because of all the posts I keep reading about aggressively paying down debt and being debt free and making huge strides on the path of retirement savings.

I have finally realized why I feel that I cannot compete with these people. It's very simple, actually. They are all older, more established, and make more money than I do. In other words, they are starting from a fundamentally different place, so naturally their course is going to plot differently. If I owned a home and pulled in twice what I do, I would probably approach things with a different attitude. For instance, this financial blogger mentioned having only $481 to last the three weeks til her next expendable paycheck. I laughed. What a piece of cake that would be (she seemed to have already adjusted for after-bills). I could go nuts with that (and probably would...).

Here's my rough situation and my thinking on it:

* I have some student loans. Compared to most people my age, the balance is modest. The minimum payment (automatically deducted) is super-manageable.

* I own my car outright. Of course, I sank over $600 into her last month, but she's mine.

* My usual modus operandi is to keep $500, give or take a bit, in my regular savings account that is directly linked to my checking account. This is for periodic expenses like car insurance or minor repairs, things like that, and "minor" emergencies that I might not be able to swing with my usual monthly cash allotment. In my Emigrant accounts I have an emergency fund which was super until May, when I had an emergency and had to buy my car. Now it has a little over one usual month's worth of living expenses in it. I could eke it out for longer if I tightened my belt. Then there's a couple hundred bucks in my vacation fund. It will probably go to buying a plane ticket to a friend's wedding in June.

* I also have a savings account dating back to first grade. It has about three hundred bucks in it. I try to forget it's there. It's earning essentially no interest and would be somewhat difficult for me to access, but I could if I needed to. I think I have like thirty dollars in an old checking account, too. I consider those my Mason jar buried under a tree in the backyard.

Right now the "$500 savings" is nowhere near target balance (remember that $600 in car repairs?), but I take great pride in the fact that I did NOT tap into the true EF.

Having student loans bothers me. Having a negative net worth bothers me. I want to be like the other people, paying down my debt rapidly and going "Woohoo! Look at me! Debt-free is how to be!" But right now, that's not my best option.

Reluctantly, but at the advice of Suze Orman, I have decided to focus on growing my emergency fund. The logic here is that emergencies + no savings = more debt (probably on a credit card at a higher interest rate than my fixed, consolidated rate with my student loans).

In fact, I take great pride and comfort in the fact that I always contribute something to the EF and vacation fund every month and do not touch the balance except in dire need. My contributions may sometimes be very, very small (like this month with the car bills), but if I keep putting a little in no matter what and don't take it back out, it will grow. I pay off my credit cards (one "real" and two store cards that get used like twice a year) in full every month. I take great pride and experience great pain from that, too.

As a young, single person, having that safety cushion of savings is more critical than paying down student debt I'm not even close to drowning in. A few thousand dollars towards my student loans might make me feel better, but if something unforeseen happens, that same money in the bank would be what would bail me out. When I have about four months' living expenses saved up, plus enough to purchase a modest but decent used car if it became necessary, then I will start focusing on prepaying student loans. Or saving for a downpayment on a house, thus acquiring more "good debt." Argh.

Selling your stuff!

Sorry I've been a bad girl of late and not posted but I took part in a craft sale last weekend and had been busy all the preceeding month with making as many crafts as possible. Before that? Um...
Anyway! Moving right along to the joys of selling off all your possessions for money! No I'm not going to talk about pawn shops and choosing between your microwave and the cup noodle that you were planning on making in it. There is a pawn shop on my way to the old homestead though so maybe in the future.
I'm talking about selling books and crafts for money both of which I have taken up of late. Recently I was given a pile of old books by an aquaintance who had an attic overburdened with things she no longer needed. I gladly accepted since I'll read nearly anything and what I won't read I could sell. Unfortunately there were a few more in the won't read category than I anticipated and while my yard sale (see earlier post) took care of a few of those books I still have a few boxes cluttering my study. So off to my old friend internet I went.
I learned a lot actually and while most people's first thought would be to rush to Amazon.com I found that Half.com was a lot more seller friendly. Half is a division of Ebay so if you have an account with them you can start selling on Half today. More importantly with Half there are no listing fees and your items stay up as long as you like without any additional fees. They do of course take a percentage of your sale as their commission but they also provide a generous shipping allowance so you're not likley to spend more than you make.
If you have an insatiable appetite for books and a little more money to throw around a quick search will net you several book exchange sites where you list your books to swap and browse books you would like to have. Different sites work different ways but generally when someone orders your book you get a credit with which you can then order one for yourself. You pay to ship your own books so any you order are free and you only pay shipping for the books you already wanted to get rid of.
As for selling crafts you can either do so locally with craft fairs like the one I attended this weekend which usually have a table fee and transportation costs but are a good way to build confidence and interact with other crafters and customers. You can also use Ebay however most crafters these days are selling their wares on Etsy which is generally known as the Ebay of crafts. There is a 20 cent listing fee which lasts for 4 months. They are still working on making it a bit more user friendly however the site is already host to thousands of vendors and appears here to stay.

Guys & Dolls

Or something.

I came across this article today on MSN. I have never patched a radiator hose or framed a wall, but I was pleasantly surprised to learn that I have several of these "guy" skills down cold and have a running start on many more. I never mastered sharpening a knife, but at 24, I think I could do it now. And I remember Dad mixing concrete with a hoe in a wheelbarrow many, many times. I picked up some cool tricks, though, like the six-o'clock trailer backing and the cottonball in Chapstick firestarter. Learn to repair a dead outlet yourself, too.

On the girly note, my dress and wrap for Althea's wedding have arrived. They were on clearance at Target.com. I paid $35.00 for the ensemble. They are gorgeous. I rock. :)