Several months passed and despite my best intentions to save 10% of each paycheck for retirement, and 10% for investing, and have 3 months worth of expenses in a savings account for a rainy day I was actually further away from my goals than when I started. I had actually managed to accumulate a small amount of debt!! How could that even be possible!
I realized that each month, even though I had a budget, emergencies would come up, or there were cool and fun things that I wanted to do. So I would spend, then at the later parts of the month when my checking account was running low, I would transfer money back from my savings (because it was obviously an emergency if I couldn't buy food or gas). I also had my credit card set up as overdraft protection for my checking account, so when I would overdraft I would accumulate a little debt at a time or I would make a big purchase on my credit card so I could get the "points".
The worst part was that I was spending money on things that didn't matter to me and when the time came to do fun stuff that I really wanted to do I didn't have the money to do it so either I would pull out the credit card or stew over how much my life sucked and how I couldn't wait until I made so much money that it didn't matter what I did.
That is when I came across the work of Ramit Sethi. He was a Stanford Psychology Major who worked under BJ Fogg in the Persuasive Technology Laboratory (now the Behavior Design Lab). He wrote a book called "I Will Teach You To Be Rich" where he lays out not only what to do, but how to set it up so that your entire personal finance system is automated. I highly recommend the book (I linked the title to the amazon page) if you are struggling with personal finances or spend way to much time managing them.
I learned a lot from his book and I read his blog, watched youtube videos etc until I had an idea of how to form my own system. Before I go into my system, I want to give you a link to his youtube video that really breaks everything down simply.
Automating Your Finances in 12 minutes
follow the links above to check out his book and this short video. I will see you next time where I will break down my system.
Andrew
twitter @andrewzimbd