Entries Tagged 'Personal Finance' ↓
July 9th, 2013 — Debt Reduction, Personal Finance
I know a few older women who are now on social security and struggling through no fault of their own. They have always worked hard and helped others. They didn’t have much financial education and are now senior citizens.
One sweet woman I know in real life has asked me for advice. I’m torn about what to say. Her health is failing so that’s another issue to consider.
If she is drawing social security, should she be trying to pay down her debt or should she try to save more first? I worry about what will happen if she has a big emergency. It doesn’t seem like all the debt could be paid in her lifetime anyway.
Do the rules change after you hit your late 60′s? Does anyone know of good sources of advice for people in this age group? Or do the baby steps fit senior citizens who still have a lot of debt?
July 2nd, 2013 — Personal Finance
you still couldn’t have all the shoes in the world.
Even if you had a closet big enough to hold them, there wouldn’t be enough days to wear them all.
Recognizing this made me feel better about living on a budget. I like to approach it like a puzzle. A budget helps me get the clothes I like the most that look the best on me. They’ll fit in my closet and I’ll get to wear my favorites more often.
When you maximize your budget, you wind up with a lot more than cute shoes. Use that budget to get out of debt and there’s plenty left over to drive a nice car, live in a great home, etc.
February 26th, 2012 — CheckMate, Personal Finance
Allocating money according to your budget
You’ve made your budget and it’s in a spreadsheet. The budget is the plan but now it’s time to allocate money according to your plan. Dave Ramsey calls this giving every dollar a name.
The first thing you’ve got to do is get your bills paid on time so you can stop living paycheck to paycheck. Getting this established will also let you know exactly how big your snowball can be.
Gather your bills and organize them by the date they are due. You can list them on your spreadsheet to the right of your budget. Be sure to note the due date.
Click here to see the spreadsheet with the list of bills and their due dates added.
I’m assuming that you aren’t seriously behind but that you are living paycheck to check. To get ahead, you’re going to have to fund only the minimum categories until you get everything under control. If Murphy leaves you alone, this will only take 4 or 5 paychecks. Look at how much money you have in your checking account and what bills have to be paid. Also – look ahead to see when your house payment or rent is due. If you have a car payment, factor that in.
As much as I hate to say this, it’s not time for your snowball yet. As soon as your budget is running smoothly and every bill gets paid on time with no hassles, then you can add other budget categories and your snowball.
I use CheckMATE to allocate our money. The first time you use it, you’ll enter the balance in your checking account. Then transfer money from the “unallocated” category to the bill that’s due next and transfer as much as you can to get your housing and car payments caught up to where they need to be.
Using the spreadsheet example, let’s say you have $465 in your checking account and you have a $100 cable/internet bill due right now before your next payday. You haven’t bought groceries and your car needs gas. Allocate $100 to the budget category for the cable bill, $200 for groceries, and $60 for gas. Now you’re set until payday and you have $105 left in the “unallocated” category. Look to see what will be due next. Transfer that $105 to the corresponding category (or categories).
On the next payday, allocate the weekly amount to groceries, gas for your car and the bill you just paid. If you keep doing that every week, you’ll have money for the cable bill without breaking a sweat. Now take whatever’s left and allocate that money to what still needs funding for this week – whatever bills are due now.
The next payday, allocate the weekly amount to groceries, gas for your car, the bill you paid two weeks ago and whatever you paid last week. Look ahead and pay what’s due this week.
By the time you get to the fifth week, every bill should be paid (except the semi annual and annual bills) and now you can just allocate the weekly amount. NOW you can add a budget category for your snowball and start transferring money to it too. Don’t forget things that every family has to have such as clothing and don’t forget to give yourself a small amount of blow money each week. This will keep you sane and keep you on track. Finally don’t forget to start transferring money to the bills that only come due once or twice a year. As soon as those are paid, start allocatiang the weekly amount to them every single week. When they come around again, you’ll be ready!
This is hard to explain but really easy to do with CheckMATE. The overview tab has detailed screen shots showing how you can establish budget categories, enter a deposit, transfer money to other accounts, and post checks or debit card transactions.
Please ask questions if you have any. Your questions help me clarify things for other people (if you have a question, others do too – trust me!) If you have tips on how to get this started using other software or spreadsheets, feel free to share those too!
February 25th, 2012 — CheckMate, Personal Finance
Pat (who is so respected on the Dave Ramsey boards she is almost revered) pointed out in the comments yesterday that there is a more accurate formula for computing the weekly amount to budget on an annual expense.
She’s right of course. The reason her way is more accurate is because some months have 5 weeks instead of 4. If you are paid weekly, you’ll have 4 months each year with a 5th paycheck.
We choose to budget the way we do because I’d rather wind up with extra in each category. That way, there are fewer surprises when the bill comes. We also enjoy finding extra after bills are paid and transferring that money where we like. It makes the job of paying bills a lot more fun. Pat also taught me that budgets are “magical money machines” and this is one way I found to have it pump out more money!
If you are just starting out (and especially if you’re having trouble getting your budget to balance) do it Pat’s way. There’s a reason why she is on baby step 7!
Setting up a budget spreadsheet
This is pretty straight forward. You can do this anyway you like but I thought I’d explain how I do it.
I mentally divide my spreadsheet in half right down the middle.
On the left, I just start listing every bill and expense I can think of. I also try to order them from the most important to the least important. The first column will be the name of each expense and the second column is the amount you pay when it comes due. If the amount varies (utilities for example) I like to use the most I think it will be.
Once that’s done, go back to the top and line by line add another column to the right. This will be where you’ll convert each expense to a weekly amount.
At the bottom of the weekly expense column, sum the column. That final number needs to be less than your weekly take home pay.
Here is the spreadsheet for the sample data I posted yesterday. This budget doesn’t balance; it shows extra money each week. When you do yours, you’ll want to balance it. If you can’t get it to balance, you have to cut expenses and/or raise expenses. On the other hand, if you have extra money, you’ll have the good problem of figuring out where the extra should go. We follow Dave Ramsey’s suggestions which makes that job easy.
As time goes by, you’ll think of bills (especially when they come in the mail) that you may have missed. Extra expenses may crop up that you’ll decide to add to your budget. Many of these can be seen in advance (a child needing braces for example) and you can work it into your budget. Happily, most people get raises and it’s always fun working those into your regular budget. This is all normal and that’s why the budgeting process gets easier as you keep at it month after month.
If you don’t have Excel or spreadsheet software on your computer, Google Docs has great software (that’s what I usually use). If you have a gmail address, you have access to Google Docs. You can also download great software at no cost from Open Office.
In the next post, I’ll talk about how to get started allocating funds to make this budget work in real life.
February 24th, 2012 — CheckMate, Personal Finance
Someone wrote me and asked for tips on budgeting when you get paid weekly. I think getting paid weekly is the easiest way to manage finances especially when you are just starting out.
I’m going to answer this in a series of posts (just to make it easier to follow). The first thing you need to do is make a list of all your bills and expenses and convert each one to a weekly amount. It easy to do on a spreadsheet but you can do it on a piece of paper too.
I’m going to show you an example below with some numbers that I made up. I’m probably forgetting something important (and you may too if you’re just starting out). It’s okay – as the bills come in, you can always add them to your budget.
In the next post, I’ll explain how to set up a spreadsheet with your budget. If you don’t have spreadsheet software, don’t worry. I’ll link you to some free software that works really well.
Let’s say we have a couple with two kids. They get paid weekly and let’s just say they get paid $1,000 each week (to make the numbers simple).
Here are their bills:
Cell phones $75
Car payment $350
Credit card minimum payment $98
Student loan $86
Semi annual bill
Car insurance $400 / 26
Car Tags $50 / 52
Life Insurance $1,000 /52
The first thing you have to do is convert each bill or expense to a weekly amount.
Monthly bills get divided by 4
Rent $945 / 4 = 236.25
Utilities $300 /4 = 75
Cell phones $75 / 4 = 18.75
Cable/Internet $100 / 4 = 25
Car payment $350 / 4 = 87.5
Credit card minimum $98 / 4 = 24.50
Student loan $86 / 4 = 21.50
Semi annual bills get divided by 26
Car insurance $400/26 = 15.38
Annual bills get divided by 52
Car Tags $50 / 52 = .96
Life Insurance $1,000 / 52 = 19.23
Weekly expenses don’t need a conversion
Now add up all your converted numbers and make sure that number is less than your weekly income. In the example above, our totals come to $888.66 so we’re good (for the moment!)
If you have any questions to ask or tips to share, feel free to use the comments!
Stay tuned for the next post!
February 22nd, 2012 — Personal Finance
(photo by George Cavanaugh)
When George and I started getting serious about our finances, we had never heard of Dave Ramsey. We did know that we needed to start saving money and that’s what we did.
A few months later my eyeglasses broke. I wanted to use the emergency money and George wanted to charge them on a credit card. We had a huge argument and started realizing that we both had fundamentally different ways of approaching money.
It was the best fight of our lives though. We ended up using ideas from both camps.
We set up a formal loan to ourselves that had to be paid back over and above what we were all ready saving. We took the total amount needed for new glasses, added 10% interest, and divided the total by 10. That was our monthly payment.
It was the perfect answer for us at that time and we did follow through paying it back to our savings.
Now that we’ve read and embraced what Dave teaches, we wouldn’t do that if we were on baby step 1. We would refill the emergency fund as quickly as possible and get right back to baby step 2. But as you get further along, you may want to think about becoming your own banker.
$15 Amazon gift card give away
This is a reminder that a $15 Amazon gift card will be given to the top commenter in February. Please don’t be shy! Leave a comment and consider sharing this blog with others. Any comments you write during the month of February will count (you may comment on older posts too).
Was there something that made personal finance start clicking for you?
February 19th, 2012 — Personal Finance
We’ve been paying down our mortgage like crazy. First, we got a 12 year note the last time we refinanced to take advantage of dropping interest rates. Second, we pay extra on the principal every month.
We pay on-line and we pay a couple of days before the payment is due. I check a few days later so I can update our spreadsheets with new totals and the extra principal has always posted with our payment effective on the payment due date (which is the first of each month).
Until now that it is.
I checked our totals and the extra principal for February isn’t going to be effective until March 1.
I’m ticked off. This is the same bank I wrote about here and now I’m just going to say it. If you bank with Regions, you better check how your payments are being applied.
I’m uploading a screen shot and apologize for its size. I don’t want to shrink it down so you can see what I’m talking about. Seriously check your records and don’t let your bank do this to you. I’m calling tomorrow and I hope to have a good update.
By the way, if I pull up previous transactions, the extra principal is effective on the same day as the payment. This is new and it really makes me angry.
February 7th, 2012 — Frugal Living, Personal Finance
8 questions to help you save more money over at GetRichSlowy is a great guide to help keep you from spending money impulsively.
I loved the statement
A marketer or salesperson’s job is to make you think you need something that five minutes earlier you didn’t know existed.
It reminded me of a clear, sunny afternoon after church when we decided to hit the mall before coming home. Everyone was happy and having a great time. That is until I saw the dishes. 5 minutes before I didn’t have a care in the world. I saw this great new pattern for casual china and I knew we couldn’t afford them (we didn’t need them either but I guess that’s a different topic). I was bummed and depressed.
On the way home, I told myself I had to snap out of it. This was crazy! That’s when I decided I wasn’t going to stores any more unless I had a list with definite needs.
Since then, our strategy has evolved into what we call “The Game”. We know sales and marketing people want our money. We also know we’d like to keep some of it. “The Game” is simple and our net worth is the score. If our net worth has increased by the end of the month, we leveled up. We play the game by having fun trying to figure out how we can meet our needs and get things we want without giving up more money than we need to.
Egg slicer? How about using the pastry blender? Hey it worked! High fives around – we scored!!
As we got better at “The Game”, savings grew. Really nice clothes? Gourmet sewing. Luxury car? Luxury used.
This game is fun!
$15 Amazon gift card give away
This is a reminder that a $15 Amazon gift card will be given to the top commenter this month if there are at least 3,000 unique page views for this blog! That’s only a few hundred more than last month by the way. Don’t be shy! Leave a comment and consider sharing this blog with others. Any comments you write during the month of February will count (you may comment on older posts too).
February 2nd, 2012 — Personal Finance
(image from Starbucks)
$15 Amazon gift card give away
First, this is a reminder that a $15 Amazon gift card will be given to the top commenter this month if there are at least 3,000 unique page views for this blog! Don’t be shy! Leave a comment and consider sharing this blog with others. Any comments you write during the month of February will count (you may comment on older posts too).
Capturing the savings
One of the beauties of online banking is that you can make a deposit with just a few clicks any time you feel like it!
I had to drive to Atlanta yesterday. Normally when I drive, I get hypnotized by the road. Starbucks has always saved me. I gave up coffee and sugar after Christmas and was surprised that I was alert the entire drive. Since pulling off to hit Starbucks at least once during the trip was always a given, I took the $10 I would have put on my Starbucks card and put it into our Drive Free Cars account instead.
Online banking lets me capture savings immediately. While I was making the transfer, I also checked our balance and saw that we were paid 97 cents interest for January. The new balance is $1836.38 and though it’s only about eleven dollars higher, it still makes me smile. I couldn’t help but notice that the amount paid in interest is climbing too. I guess I didn’t expect to see that because the interest rate is so low.
I brought snacks with me for the drive along with my music. It was a fun trip that went faster since I didn’t have to stop for coffee. These are the kinds of savings that don’t take away from our lives. The money adds up though and one day will make our lives incredibly richer.
Don’t just say you saved some money by bringing your own snacks. Follow through and make the deposit! Otherwise you can just say “I spent less.”
How about you? Do you have any tips for getting extra money to your snowball or bank account?
January 19th, 2012 — Personal Finance
This is something new I learned today. It makes sense and I can’t believe I never read this before.
A mom posted on a message board at Two Peas that they were going to have to replace their pool liner and it would cost nearly $2,500. It had torn and it was questionable whether it was an accident or not. They filed a claim with their homeowner’s insurance. An adjuster came out and denied the claim.
She posted later that her agent got involved and really fought for her. He had the case reviewed and they reversed the decision to deny it!
Another mom posted saying she was an insurance agent and that she always says “Your insurance is only as good as your agent”.
I never heard that before! Most of our claims have been auto accidents resulting from other people hitting us. Some companies were better to deal with than others.
So now I’m wondering if our agent is any good (our previous agent died and our new one just took his place.) How can you find a great insurance agent?