Archive for February, 2009

8 Choices – Income Tax Refund

February 25, 2009

If you’re lucky enough to get an income tax refund this year, you have some choices to make.  What do you do with this windfall?  Do you pay down debt? Do you set some aside for fun?  I propose you use this money to pay for those non-monthly expenses that can pop up unexpectedly on your expense list.  Here you go.

1) Buy Kids’ Clothing.  You know that children grow.  Go ahead and set some money aside to address this need.  You can find good used clothes at yard sales and consignment shops.  Go ahead and buy the next size up and be prepared when Junior hits his next spurt.

2) Pet Care.  My wife and I just bought a puppy back in the spring.  I’ll be darn there are some upkeep costs with this canine.  Immunizations, groomings, and exams are more frequent than I imagined.

3) Replace car tires.  Don’t let this creep up on you.  If your tires are in good shape now, put the money in a savings account so the replacement is not an emergency later.

4) Long awaited repair.  If you’re like me (I hope not), there’s probably something in your house that is past due for repair.  My front head lamp on my car went out this week.  Go ahead and get whatever it is fixed.

5) Fund your vacation.  The most unenjoyable vacations are the ones you pay on for a year after the event.  Plan ahead.

6) Open a savings account.  You can fund many of the above situations by doing this.  You can open one at www.ingdirect.com for as little as $25.00 a month.  It can be linked to your checking so you can make transfers when necessary.

7) Save for Christmas.  It happens every year in December.  Don’t be among those who don’t remember this until the month before.

8) Go on a date.  Those of you who are married may have stopped this dating thing after the rings were put on. It’s never too late to make time for just the two of you to have some undivided time for each other.

I hope you found a couple of these helpful as you decide how to spend that income tax refund.  Have a great day!

Money Woes In the Family: How to Respond

February 20, 2009

In these difficult times many families are experiencing money shortages.  It’s safe to say that folk are in great need as the effects of the recession continue.  What I wish to focus on today is how to help family members who come to you for assistance. Where do you draw the line and decide how much is enough? What are reasonable expectations about repayment of family loans?

Do What You Say You Will Do.  It’s important for you to do only what you say you will do.  If you decide they can stay at your house 1 month, stand by it.  If you decide a $500 loan is enough, stand by it.  Family relationships are the most troublesome when it comes to money.  The help itself is not the issue, it’s establishing strong parameters aroung the type of help given.  It’s important that you give them a hand up, not a hand out.

Put it in writing.  If you’re expecting return of payment on your loan, it makes sense to put it in writing.  While this need not be a formal legal document, it’s important to make the particulars of repayment clear.

Be Willing To Gift It Away.  I’ve heard it said to not make loans to family.  You need to consider this strongly when looking at the long-term situation.  You won’t see your friends at Thanksgiving every year, but you will see your brother Sam.  Some things are not worth fighting over.  If you only get half of what you agreed on, it might be best to tell them it’s a gift (maybe Christmas came early).

Give them Information.  Information is power.  Maybe your family member lacks information.  Do they know what a budget is? Do they have one?  Is he/she aware of resources in the community that can help?  Resources such as free credit counseling (www.nfcc.org), low cost housing, temporary job placement, and public transportation are available in most communities today.  Oftentimes these resources are just a phone call away.

Bartering.  Maybe your family member has some skills that you lack.  A week’s stay at your house in exchange for a repaired pipe might be a good trade off. 

Listen to your spouse.  You need to let your spouse know of your family member’s request for help.  Your spouse may offer other options that can benefit the situation.  Your spouse may be better informed on just what kind of help your family is able to offer at the time.  It’s better your spouse be involved on the front end rather thnn them find out later.

The decision to help a family member with financial problems is a big one. It’s important that you do what you can and keep the security of your own financial needs as well.  What about you? What ideas above make the most sense to you when you consider helping your family with money?

7 Tips – Getting Off The Credit Card Treadmill

February 19, 2009

Ever wondered if you’ll be free of those credit card payments?  Do those payments linger around like  a friend who has long worn out their welcome?  Below you will find 7 tips that will help you put an end to credit card debt.

1) Have an Emergency Fund.  One of the reasons folks use credit cards are for emergencies.  The car breaks down. The dryer stops working.  Having a minimum of $1000 in your emergency fund allows you to handle these expenses without going to the credit card. 

2) Stop Charging.  You simply won’t get ahead until you do this.  Implement number 1 and you can accomplish number 2. 

3) Pay More Than the Minimum.   Paying more allows you to do 2 things: 1) Pay the credit card off much faster; 2) Saves you hundreds of dollars in interest paid.  Below is an example of the momentum you can have by following this practice:

$5000.00 Visa Balance, 13% apy, paying the minimum payment $100.00. Result: Pay it off in 6 years, pay a total of $2, 123 in interest, total amount paid: $7,123.00!

Same as above except paying $200 month (100 extra) a month.  Result: Pay it of in 2 years, 5 months, $788,98 in interest, total amount paid, $5788.00! 

4) Buy Needs, Not Wants.  We need food, clothing, and shelter. If your current appliances and cars work, you don’t need the newest version.

5) Pay with cash.  Dave Ramsey says we pay 18% more when we purchase with plastic.  Watching real money leave your hand makes you a wiser shopper.

6) Don’t take them with you.  You can’t use what you don’t have. 

7) Cut them up.  Enough said.

Bailout: Where You Throwing Your Money?

February 16, 2009

Our government is about to unload another HUMONGOUS stimulus package to improve the economy.  Whether or not it serves its intended purpose remains to be seen.  Our new president and Congress believe that saturating the economy with more money will restore the economy’s health in the long term.  Let’s make the bailout personal.  How much has excessive spending helped your personal finances?  What are you throwing your money at?  What results are you getting on your expenditures.  What percentage of your monthly income is spent in the following areas:

DEBT

Non-mortgage debt – credit card payments, signature loans, student loans, vehicle loans, etc.

Mortgage Debt – Principal, Interest, Taxes, Insurance (Home)

Food – Groceries, Eating Out,

Insurance – Car, Life, Health, Disability, Long Term, Dental 

Entertainment  – movie rentals, vacation,

ASSETS

Savings – Emergency Fund, long-term savings

Retirement – pension, 401K, IRA, Roth IRA, SEP-IRA, Roth 401K, etc.

It’s important to know what returns you are getting on the dollars you spend? Are you spending a lot of your income on servicing debt?  How much of it is being spent on assets?  Unlike our congressman, you have to be accountable for your financial choices.  While it’s unclear who will pick up the tab for our government’s spending, you are accountable for what you spend. Do yourself a favor and spend money on things that appreciate rather than depreciate. Adios!

Weekend Roundup: Sites of Interest

February 14, 2009

As I’ve travelled the web this week I’ve found some interesting aticles regarding personal finances. At www.centsabilitytowealth.com I found a good article (Feb. 11) about strategies for lowering your grocery bill.  I also found a gem at www.stupidcents.com about being a newlywed and dealing with money issues.  At www.getrichslowly.org  J.D. posts a good one about the best place to park your savings account money.  Please do read the comments.  This is where all the good advice resides.  At www.bripblap.com I found a great post (Feb. 11) about 10 ways to stop worrying so much about money.  Hats off once again to www.biblemoneymatters.com in referencing Dave Ramsey’s 7 Baby Steps.  Dave’s plan is one of the best out there.  Finally, www.sensetosave.com shares 15 ideas for saving money at restaurants.  Give these a read.  They’re bound to help you.  Have a great weekend!

Dentistry & Money: A Comparison

February 11, 2009

Have you ever connected dentistry and your finances?  Think about it for a minute.  Nobody likes to talk about their money problems. Nobody likes to face that dreaded dental exam.  If you think about the principles behind dentistry you can find some real connections to your finances.  Below are some common themes that connect dentistry and money.

Prevention.  We’ve all heard the phrase that an ounce of prevention is equal to a pound of cure.  Brushing those teeth regularly is equal to having an emergency fund.  The emergency fund protects you from events that can set you back financially.  Regularly funding your emergency is the equivalent of flossing to ward off those unexpected cavities that can develop over time. 

Protection.  Protecting your teeth is an investment.  You need those teeth to carry you through a lifetime of eating.  Making sure you have adequate insurance protects you and your family from risks.  Having adequate insurance on your health, cars, life, and home is a must in order to protect yourself from large liabilities. 

Periodic Exams.  Your teeth need a regular check up.  Regular check ups help you know the condition of your teeth and any problem areas that may arise.  A good financial plan must be reviewed regularly.  Some financial choices need monthly reviews.  Balancing your checkbook and writing out your monthly budget are 2 examples.  Reviewing your savings and investment accounts may need review every 6 months. 

In summary, your finances and your teeth need regular attention.  Neglect in either of these areas can result in decay and have consequences for you. I challenge you to be the model patient and implement the practices of prevention, protection, and periodic exams.  When was the last time you had a financial check up?

Wants vs. Needs

February 9, 2009

We  have a lot of choices about what we do with our money.  How much of what you buy every week is a need?  How much is a want?  What about your credit card purchases? What return value are you getting on these items?  In looking back over the choices that you made with money this past month did those choices benefit you long term?  We all have 3 basic needs: Food, Clothing, Shelter.  Transportation is probably a close 4th.  Let’s look at the number of choices you have in these 3 areas.

Food – What do you spend on groceries every month? Do you shop for bargains? Do you keep a sharp eye for items on sale?  Do you use coupons? While food is a basic need, there are many ways to shop wisely and keep costs down.  What do you spend a month on Eating Out?  Is this a need or a want? I say want.  How much money could you save if you only ate out 1/2 as much as you do now?

Clothing – There are lots of choices in regards to clothing.  Does what you buy have to be new? Consignment sales and yard sales can offer slightly used, good clothing at much lower prices.  My two brothers and I spent most of our early years in garage sale clothes and we don’t have any negative repercussions.  You can also get good sales as clothes are going out of season if you keep your eyes open.

Shelter – We all need a place to protect us from the elements.  As I write this my wife and I are building our first home.  The costs of this are coming apparent as we approach the last 6 weeks of this process.  We do want to stay ‘in budget.’  There are lots of choices inthe amount you can spend on your home.  Look at appliances.  TV, Refrigerator, Dishwasher, Oven, Computers, Sound systems. The list could go on.  Before you replace that next appliance, ask yourself, “Is there anything wrong with the one I have?”  “Can I repair it cheaper than buying a new one?” “Can I pay cash for the new one?”  “Can I find a good one that is slightly used?” Can you say, Craigslist? 

We all have lots of choices in how we buy the things we need and want.  If you find yourself cash strapped and stretched with your money, it could be time for you to address needs vs. wants.  Distinguishing a need from a want is a valuable skill if you want to move ahead financially.

Weekend Roundup: Best Sites

February 7, 2009

Here are some posts that I read this past week.  I hope you drop by them if you have the time.

There’s an interesting post at www.getrichslowly.org about a 10 minute budget.  On Feb. 5 www.nodebtplan.net shares about “It’s only a deal if..”.  At www.freemoneyfinance.com  Feb. 4 post he shares about a March Madness competition between bloggers (Feb.5). There are some great articles to read there about finances.  At www.christianpersonalfinance.com  you’ll find helpful links such as “Budgeting 101”, “Get out of Debt”, and “Save Money.”

Money Secrets?: Spill the Beans

February 4, 2009

There’s a reason it’s called ‘personal’ finance.  How you spend your money is personal. You choose what you buy.  You choose what is too expensive and what is not.  When a couple joins their hearts together in marriage they bring their money issues into the marriage as well.  Sometimes the ‘personal’ issues of money are not addressed until much later in the relationship.  This can create tremendous stress on a marriage.  While we all have made money mistakes, some issues (debt) are just better left alone, right? NO.

The time to address the money issues you brought into the marriage is now.  Money fights are the number one reason for divorce in this country.  You may wonder if your partner will remain with you after telling the truth.  I can’t answer that.  I do know that honesty is a very foundational value in marriage.  Being truthful establishes trust.  Trust must be present for a marriage to survive.  Maybe you’ve incurred a lot of debt after you got married.  Are you and your spouse fully aware of the debt load you have created?  Below are 3 benefits of being completey honest about your debt.

1) Complete Awareness.  It was years into my marriage before I sat down and looked at all that we owed.  It was a wake up call for me.  Knowing how much I owed brought home the fact that there was a need for change.

2) The Urgency for Change.  Once you know what the full scope of the problem, you can then begin to see the need for change.  You may acknowledge for the first time your financial train is headed for disaster.  You may first begin to see that it’s time to chart another course.  It’s time to read and heed those warning signs.

3) Confront Denial.  It is so easy to spend money and not know where it goes.  You swipe the card and go on home with your purchases.  You are like a kid in a candy store.  You will not be deprived of what you want.  Behaving like there is no tomorrow does have its consequences.  The purpose of this post is for you to address your denial now.  Assess the damage and make a new plan for the future.

4 Questions to Answer TOGETHER.

1) What do we owe?  This may take a few days and several conversation.  Get out paper and pencil and write out every debt you owe. List it by name, current balance, interest rate, monthly payment.  This is a list of every loan and credit card balance that you have.

2) Are we happy with it? When you look at what you owe are you comfortable?  Is the plan you have for eliminating debt working?  Do you lose sleep thinking about your debt?  These questions can help you determine if you need to stick to your current plan or devise a new one.

3) Do we see the need for change?  Does knowing all that you owe make you angry? resentful? regretful?  If  you’re having strong emotions it’s probably time to make some changes.

4) What change can we start now?  This  a critical question.  Maybe you need to chop the fat from your budget.  Do you “have to” eat out so much? Do you “have to” have Starbucks three times a week?  Do you “have to” eat out for lunch everyday?  Saying no to a few things can free up money to be directed toward your debt. 

Complete honesty is critical when it comes to marriage and money. I hope the words I shared today will help you and your partner to have a higher trust level.  More trust in marriage results in more stability. Good luck!

Home Ownership: Your Advice Needed

February 3, 2009

My wife and I are building a house.  We estimate that we’ll be in some time around mid-March.  We will be first time homeowners and request the advice of friends on what to expect once get under the mortgage and all the other expenses.  I’ve estimated what the payments will be along with estimates on utilities, taxes etc.  I just wanted to hear from friends about anything we need to be on the watch for.  We are excited about it but also want to be as ready as possible.  Please comment any ‘hidden’ expenses that we can better prepare for.  You can comment on this post or drop me an email.