Family Finances

I Challenge You to Track Your Expenses

Have you ever written down a budget to see where your money is going? Well, we did this earlier this month and everything looks fine, meaning that we make more than we spend.

That means we can pay our bills – great! That’s check one. Check two – are we saving enough? No, we we’re not, but where do we get the money? We won’t find extra money to save until we find out exactly where our money is going.

If you want to do this process with me, follow these steps:

1. Write down a couple of short and long term goals, so you’ll be inspired to do the work.
Short term goals can be planning for a vacation, buying a car, paying down debt, saving for something that you want, and starting an emergency fund.

Long term goals can be saving to purchase a home, saving for your children’s education, retirement planning, and paying off debt/mortgage. What are yours? Imagine what you want or need and write it down now.

2. Track every penny you spend. That means finding a way to record your spending as it happens.
Don’t wait until the end of the month and use your bank statement or receipts. A single store can fall under many spending categories and receipts don’t always list items by name (or by names that you can decipher). Don’t think for a minute that your grocery store trip can be lumped under food. You may buy your pet food there, as well as cleaning supplies, shampoo, or even magazines.

I know this sounds time consuming, but it’s worth it. You can carry a pen and pad with you and write down everything by hand. Another way to track your money is by using a phone app. Choose the way that works best for your lifestyle.

3. Write your totals in a budget worksheet to see where you stand.
Once you see a month’s worth of numbers, than you can begin to analyze what is going on. With this clear picture, you can make changes – lower bills to save money, get rid of unused services, check out the competition to switch etc.

Tell me what you have discovered with this exercise. Next issue, I will tell you what we have changed.

If you would like to receive my inter active budget tracker, just sign up for my free bi-weekly newsletter here.

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The Importance Of Insurance

We all know we need insurance and probably have all the standard ones in place – homeowners / renters, auto, and umbrella. But it’s those special ones that are in question for us. I am referring to travel, car rental, pet, extended warranties, home warranties and more. We think we don’t need them, but do we?

We just booked a vacation and we have the option to add travel insurance for a reasonable fee. Do we do it? Is it a waste of money? Fortunately, we don’t have to make this choice for a few months. In the meantime, I wanted to share with you my initial research.

	Reasons you might need the coverage	Reasons you might NOT need the coverage
Travel / Trip Insurance	Non-refundable vacations You are taking an expensive vacation with lots of opportunities for losses Your health insurance will not cover you where you are going (anything from a doctor’s visit to medical airlift)	Your credit card that you booked your vacation with gives you the insurance coverage you need If your travel plans are refundable / changeable without or a minimal penalty You can financially afford the cost / loss
Car Rental	If you don’t own a car and therefore don’t have auto insurance If you are going to a location that your car insurance will not provide you the coverage	If you have this coverage on your current auto policy and it extends to your rental car
Pet	If you are the type of person that would do anything for your pet, regardless of the cost	If you can afford to pay for the services
Extended Warranties	If you want peace of mind knowing that your electronic device is covered If you are a person that tends to lose, break or damage things	If your budget can handle the cost of replacement on short notice
Home / Car / Appliance Warranties	If you want peace of mind knowing that you are covered	If the cost of the insurance is more than the cost to replace / repair If your budget can handle the cost of replacement with short notice

As you can see, I have suggested many things for us and you to think about before you make your own choices. Let me know any thoughts I have omitted and what helped you decide.

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Budgeting

This newsletter, we are going to talk about spending too much! Personally, we upgraded the master bedroom and bath. In addition to the insurance deductible, we added on the additional expense of better bathroom fixtures – granite counter, higher end faucet, natural stone ceramic tile and more. Yes, we did spend more (maybe too much). With a new year beginning, we need to reign in our expenses and rebuild our savings.

If your 2017 goal is to track your expenses and come up with your actual budget, there is an exercise I like my clients to do when they have their budget created. Take out two different color highlighters. Use one color for your fixed expenses (amounts that can’t easily change) and then use the second color for expenses that you can adjust or eliminate. Typically, I see three areas for the adjust or eliminate category:

Penalty fees (late fees, overdraft, over limit, etc.)
Do it yourself fees – these are things that you pay others to do that you could do yourself and save money (lawn maintenance, snow removal, housecleaning, coffee, manicure / pedicure, laundry, trash pick-up, etc.)
Life extras – these are the things that you do that you could reduce or live without (entertainment, movies, concerts, dinning out / take-out food, personal care, etc.)

Now make a list of five ways to reduce or eliminate specific items. For example, I could find a teen to shovel my snow versus paying a snow plowing service.I could download a movie for free (Hoopla) or borrow from the library versus renting and not returning on time and incurring a late fee. I could balance my checkbook regularly to know how much money I have available and not incur an overdraft fee. These are just a couple of ideas. Now make your list and track your savings. How much did you save this month? How much would that be in one year?

Are you getting the hang of it? Are there more ways to reduce or save on your expenses? Share what expenses you have reduced or eliminated by 5pm EST on March 10, 2017 as a comment below and you could win a copy of my new book 111 Ways To Save. Three winners will be selected randomly at the end of March.

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Holiday Tipping

The holidays are coming! The holidays are coming! You probably know this and the retail stores are starting the holidays off during the summer. From Labor Day weekend, I see the holidays all over the place in retail stores. I’m thinking the beach and heat and they are thinking December. While it’s not bad to plan ahead and be proactive, it’s too early for me, but it’s never too early to think about your budget.

Tipping is always something that comes up around this time of year. Here are my thoughts and what we do.

First, we don’t wait for the holidays. In my opinion, good service doesn’t have to wait until the end of the year. If someone goes out of their way or does an exceptional job, then by all means tip them. A while back we bought dining room chairs and the person in the store took the time to go out of his way. That deserved a tip then and there.

Second, give what you can afford. While it’s nice to give cash and to be able to give to everyone, that may not work for your budget. You can thank people verbally and express your gratitude with a conversation, special note in a card, contact the company or supervisor and express the great service you received, instead of cash. I have made calls to the airline to express how grateful we were for a particular person and the excellent service we received. Rarely do companies get calls like this and they can seem shocked at the call.

This is my plan of attack. Create a list people in your life and here are some examples:

Mail Carrier / Package Delivery
Personal Care (Hair, Nails, Massage)
Child & Elder Care
Teachers
House Cleaner / Lawn Care / Snow Removal Care
Pet People (Groomers, Walkers etc.)
Doorman / Maintenance Workers
Assistants / Key Employees

Then make a plan. If you were to tip everyone in one week, you would break the bank. I like to start after Thanksgiving and end this by New Year. Now if you have decided on an actual tip, it can take the format of the cash or possibly a cash gift card, unless you know them well enough to pick a specific merchant’s general gift card. Spreading out the tipping, helps my budget. Plus, I like to do this in person. So when I have a service done, that’s the time I tip, and again throughout the year helps my budget as well.

Finally for cash tips, make a trip to the bank and get nice new crisp bills and have thank you or blank note cards. People who get many tips need to know who they received it from, so a short thoughtful note handwritten in the card works well. It always is so much nicer to give a tip with a good presentation. I feel that the recipient thinks you took the time to think about them versus handing them crumpled bills from your wallet.

Not sure how much to give? That’s entirely up to you. There are many guides on the internet to assist you, but ultimately it’s your choice. Make your plan now so that you check one thing off your holiday to do list.

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Relationships & Finances

Finances don’t have to be difficult, but there are things you need to think about when you get into a relationship. You have a way of handling your finances and it’s worked great for you and you like the system.Your partner has a way of handling their finances and it works for them. Seems simple enough. Then you find out that you do things totally opposite. Now what?

You have to come to a compromise that both of you are comfortable with. First, start by really listening to your partner and putting yourself in their shoes. It’s hard to do, but it’s really important. Listen to their reasoning and why they do what they do. Then have the same conversation with the roles reversed. Now come up with a negotiated and agreed upon game plan.

This will take multiple conversations and time. If you both agree to the plan, you have conquered the first hurdle. Here are some of the questions you need to come to an agreement on:

$ What are our goals / what do we want to achieve?
$ How do we get there?
$ Who is going to be responsible for what? Think bill paying, savings, spending, bank reconciliation, credit, debt, investments, retirement, and more.

I have seen this work in many different ways. Here are a few examples:

They keep everything separate. Each person keeps their own income in their own bank accounts.They have agreed to who pays for what bills. Each handles their own investments and goals.

One person handles the big/long term items of the finances and the other handles the day to day finances. So long term is for the future – investments, retirement, savings, college, home buying, etc. and short term are more of the daily finances – bill paying, household purchases, routine items that are in the day to day budget.

The do everything together philosophy. All happens with a meeting of the minds and each person is involved in all aspects of the family finances.

No matter what you choose and how you choose to handle your finances, it all starts with communication and a game plan. All people should know what is going on, where to find the information and how to access it. After my mother died, my father had a hard time figuring out the finances, as he wasn’t involved with them.

Make your joint choices and know that you have the option of trying and changing until you find what is right for the both of you.

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Simplifying Your Finances

While I was at Columbia College during my Financial Literacy training, I had the opportunity to meet and speak with Harold Pollack, the author of the book, The Index Card. I have always liked simplification and ways to do things easier and more efficiently, and this is a great example of this.

Finances don’t have to be rocket science, you can make your finances simple and create your own rules. He is someone, like me, who learned to make better choices with his finances. It’s never too late to start and take that first step towards your goals. He has 10 steps that he wrote on an index card that he uses to manage his finances.

So after reading his book, we made our own list for where we are right now with our finances at this stage in life. We thought about these key areas:

$ Savings – emergency, retirement, goal savings, etc. – set a goal.
$ Debt – face your debt and make a plan to payoff.
$ Insurance – make sure you have the coverage you need.
$ Investments – contributions and money management – really understand what you are doing. Don’t do this blindly.
$ Tax Advantage Savings – understand what is available and take advantage of it.

Now create your index card and post it somewhere you can see it all the time. Finances don’t have to be complicated. Start your journey today.

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Taking Stock & Cleaning Out

This summer we have spent time cleaning out – lots was tossed and donated. We even had a tag sale! We also went through our bills and eliminated, reduced and replaced. Here is some of what we did.

We came to the realization we have too much stuff, much of it usable but too much for the two of us. So on one of those 90+ hot humid weekends, we had a tag sale. We cleaned out the basement, garage, and everything in between. Earlier in the year, I didn’t believe that we had enough stuff, but you can see we did.

We cut the cable to basic and slashed our bill in half. With one simple call and by the end of the call, the TV channels disappeared and the bill was cut in half. So now we have broadcast basic channels. We set up other options for streaming live TV channels as well as access on demand shows and movies. If you have followed me, you know we use the library for many services and Hoopla is one. We can watch movies for free from the comforts of our home.

We reassessed our car insurance and made some changes, reducing our bill. We switched electric companies to reduce our bill even more. Another thing in life that you need to stay on top of to save the most.

Yes, we had a lot more time this summer with Dave being home for 4 months and this helped us to achieve all of this. He put his time at home to good use. For us, less stuff means less stuff to clean, a more relaxing home as you enter each room, etc., and more CASH in our pocket. Our goal is to have a calm, peaceful retreat from the outside world in our home.

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Low Or No Cost Summer Fun!

As you know, Dave has been home for three months unpaid, with his shoulder replacement and my position ended with Norwalk Community College. It’s summer time, there is so much we wanted to do and we need to do this on the frugal side.

Summer is perfect here in CT. We have access to great beaches, parks and entertainment. So this is the place we want to be.

So this is what we have done so far.

We have gone to the Stamford Museum for free, the Connecticut Beardsley Zoo for $5 each (66% discount over the regular pricing) and walked at the Audubon Center (free). All this thanks to our local library which offers free or discounted admission to many local attractions. That’s a great budget saver for us and could be for you too.

One thing we crossed off our bucket list was the Essex Steam Train and Riverboat. On one of those hot days, we took the train ride from the shoreline into CT, then took the Riverboat from Deep River, CT and back on the train to were we began. It was a great day trip and a surprisingly cool way to spend a half day.

We have gone to our local beaches. One of our beaches (an island) requires a 20 minute ferry ride and we brought a picnic to the island. It was a beautiful day so we rode the ferry an extra trip – love the sunshine and the salt water! This is a minimal cost as a resident.

One of my favorite things to do in the summer months, is to watch a movie in the park. Our town, as well as other towns in the area, do this. We bring a picnic dinner or take out, sometimes the dog and watch a movie under the stars.

We have dinners outside at home with the vegetables from our garden. There is nothing better than growing your own, picking it and having it right away – just delicious. Salad is always from the garden. Our tomatoes are starting to turn red and the string beans are there for the picking. All for the minimum cost of a packet of organic seeds.

We are exploring our area and doing some of the stay-cation things in town and across the state. With more nice weather weekends ahead, there is so much more on our list of places to explore so stay tuned. What are you doing this summer?

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Financial Independence Part 3

We’ve all heard the saying “Don’t keep up with the Jones”. What does it really mean? You are fine with your sofa and all is well with your family. Then your friends gets this really nice brand new sofa that is gorgeous. Then you start to think, my sofa is older, starting to look its age, maybe had a stain in the corner, you start to rationalize that you need a new sofa too.

Just because someone else gets something new, you don’t necessarily need that too. That’s keeping up with the Jones’. All of these steps are hard to do. You have friends and family showing you their new things, marketing showing you the bright shiny items that you love to own, but do you need it?

Needs and wants are a hard subject to learn. You have to come to some balance of what you want and what you can afford. So in my example above, you can do some thinking – there are choices in etween the current sofa and the new sofa:

Current sofa
Clean the sofa
Buy a slip cover
Reupholster the sofa
Buy a second hand sofa
Buy a new sofa

See how many choices that I just wrote out between the current sofa and the cost of a new sofa. Some of these in between steps may work better with your budget. You don’t always need to have the latest, greatest new item.

If financial independence is something that you aspire to, then you need to work on all three of these steps, to get your finances in order once and for all.

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Financial Independence Part 2

This is part 2 of 3 of obtaining financial independence.

Spending less than you earn, sounds easy – but is it? The basic principle is if you earn $100 then you need to spend less than $100. That’s the general rule. But there are times in our lives that this isn’t possible. When you are just out of school and your rent, utilities and student loans are almost your whole paycheck, you may experience times when you are not working – in between jobs, can’t work for medical issues etc., these make spending less than you earn a challenge.

If you have been reading this newsletter, you know that my husband had been home from work after shoulder surgery and is not getting paid while he is recovering. So what is our household supposed to do to spend less than we earn? The answer for us is to reduce our expenses and to fund the shortfall with our savings. Luckily this was a planned surgery, so we had time to plan ahead to save. But this may not be possible for everyone. First, you have to have a savings to fall back on to get through whatever life throws at you.

Spending less than you earn is critical to financial independence, as you have to save on a regular basis, putting a regular amount from each and every paycheck into savings first – pay yourself first.

Here’s how to start:

Take a calendar out and mark your paydays.
Determine the amount that you want to save. It’s okay to start small ($10 a week) and then increase often.
Set up automatic system. There are two ways to do this – with direct deposit have your paycheck split by your employers so that the amount you want to save is directly taken from paycheck and deposited to your saving.The other way is to set it up with online banking and have a transfer from your checking to your savings.

There are some suggestions to making this work. Make sure not to link your savings account to your ATM card. You may want to have this savings account in another bank or credit union – not where your checking is located. You want to have access if you need the money but not have easy access to use if when you just want something. It’s too easy to transfer money without thinking.

So for that $100 you earn, you will want to save money first – pay yourself first, then live off the rest. The rest is what you pay your bills with, shop for your necessities and the money to have fun with. Yes, that’s a lot, but I know you can make it work. You want to be conscious of what and where you spend your money, so that you can make choices. Do you want to purchase that now or have that money saved for later? The choice is yours.

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