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Plan. Plan. Plan.

If you pay bills every time you think you have extra money, you get ahead and stop living paycheck to paycheck. Even an extra $20, could add up if you pay it as an extra debt payment. Change your mindset from “What can I buy?” to “Where could I put this aside to help me?”

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Budgeting, Uncategorized

Budgeting with your spouse

“Money issues are so troublesome that people who say they’re experiencing stress in their relationship cite finances as the number one reason — easily beating out the second place contender: annoying habits, according to a study by SunTrust. Money issues are also responsible for 22% of all divorces, making it the third leading cause, according to the Institute for Divorce Financial Analysis.” (Woods, July 2015)

My husband and I don’t agree on money priorities. Confession: My husband and I don’t agree on how to spend money. I’ll spend money on the kids and house all day long. He wants to save for trips, retirement and a good nest egg. Every person will have some different priorities. We meet together to discuss where we are at with each of these priorities.

-Plan. First step in any budget is to sit down and make a plan. In order to get both people to stick to a budget, they both need to help with the plan. Understand and listen to the other person’s want and needs. They might say they don’t want to live on a budget or they want you to take care of it. It is so important to figure out what is important to each of you. Help your spouse understand the why of your financial goals. Listen to the why of their financial goals, also. Forget the past. Don’t bring up how much money they spent yesterday, last week or last year. You are both starting now.
-Prioritize. Decide which priorities are most important to you as a couple. One wants to save and one wants to buy a new car this year. Focusing on one priority at a time will help you see results more quickly. Make sure you are listening and agree that the priorities you set, you both want to achieve. After focusing on one area you will see results and then you can decide to stick with that priority or move on to another one.
-Evaluate. Make a way to track your priorities. I have a simple Excel chart that shows how much in debt we paid off last year. My husband likes to see a visual since numbers on a page don’t mean that much to him. Discuss at least once a month where you are both struggling to meet the budget categories that you set up.
-Flexibility. Always allow for flexibility in your budget. Evaluate together what you could do differently to adjust those categories or discuss ways to save in that area. Make sure you have a sufficient amount in your discretionary budget that is yours to spend on whatever you want. My husband often saves his up until he has enough to buy something bigger. I usually find something to buy with mine by the end of the week.
The first step in establishing a budget with your partner is to listen. Then, you can plan, prioritize, evaluate and improve flexibility together. Set aside time to have regular, uninterrupted conversations about your budget. Even after you have established a budget, leave blame and shame out of the conversation. If you start with the first step, listening, your joint efforts will combine, your priorities will shift towards each other, and your relationship will be strengthened.

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Woods, Jennifer Ryan. 10 Ways to Prevent Money from Ruining Your Marriage. July 6, 2015. Forbes Magazine.

Budgeting, Uncategorized

No crash budgets: 6 reasons budgeting is like dieting.

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My system of “No Crash Budgets” teaches you about interest, debt, savings and planning for emergencies while still living the lifestyle you want to live. My system is adaptable and flexible to you and your wants and needs. It allows you to still get your wants.

Saving money is a lot like losing weight or getting healthy. I advocate for a system of saving money and getting your finances in order that is sustainable unlike a “crash budget”.

  1. Be Real. You must set manageable, realistic goals. Just like when losing weight, you won’t go from $500 in savings and thousands in personal debt to $10,000 in savings in one year. Think about the times when you have gone on a diet and you cut out all sugar, soda and flour. It made you grouchy for a few days and then sometimes you come out feeling great. With a budget, a system allows you flexibility will help you keep on track.
  2. Focus. Find an area to focus on. Once you have a minimal amount in savings ($500-$1,000), it is more beneficial to focus on paying down your debt. But, if you’re paying down your debt and you don’t have a cushion for emergencies, then you go right back to the start. Dieting without a clear focus will not be as successful.
  3. Plan ahead. What actually constitutes an emergency? Things come up all the time. My kids need money for school things and it can feel like an emergency but it’s not. Christmas, birthdays and entertainment are not emergencies. So, I don’t touch my emergency fund.  I put away money every month for Christmas. I also look at whose birthday is during the month and set aside money for that. When you diet, if your house is full of brownies, you’re not going to lose weight. If you plan ahead and fill your kitchen with healthy items, you are prepared.
  4. Track. Track where you are spending your money. Tracking money is an important part of setting up a sustainable budget. Each time you get paid, you should be evaluating how much you’ve spent and where. If you’re out of money in a budget category, can you quit spending or do you need to evaluate another area to take the money from? Track where you are at every month. I even like to make a chart in Excel that shows my savings growing and debt decreasing. If you’re not stepping on the scale or noticing a change in how your clothes fit, the diet will not be as effective.
  5. Deal with setbacks. If you have an emergency fund established, you can handle emergencies. Does it seem like you have more emergencies than most people? Is your house old, your car old, or do you have medical expenses? Even when emergencies do arise, I can look at my budget and see where I could take money so that I don’t need to touch my emergency fund. When you use your emergency fund, start building it back up right away. Every few months, you can evaluate if your savings fund is enough for you. We had to replace a broken furnace during the first week of January. We had half of the money saved up because I knew it was coming. Along with that, we will be replacing our a/c unit in the spring. I am planning ahead and saving the money for that so it is not an emergency. Sometimes when you’re getting healthy you have an injury or just gain a few pounds back. You can quit or you can deal with the setback.
  6. Understanding debt, savings and interest. I recently saw a statistic that the average American owes $15,000 in credit card debt. I want you to understand debt. You can have a car loan and a mortgage as long as you understand exactly what it is costing you. Paying interest means you are sacrificing other things. You should understand interest, tax benefits and decide which is the most important debt to pay off first in your case. Muscle weighs more than fat so the number on the scale doesn’t mean everything. Sometimes, a few pounds is a good thing.

As always, I offer tax and budgeting advice for free. Contact me through my website. You can also follow me on Instagram at nocrashbudgets

 

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IRS Refunds will be issued amidst shutdown.

Government Shutdown carries on but I.R.S. will be open for tax season.

The government shutdown carries on. But, the I.R.S. will still open tax filing season on January 28th. I heard news stories that refunds wouldn’t be issued until the shutdown ends. But, the government has decided that amidst the shutdown we need the I.R.S. at work.

So, get your taxes done early.

 

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S.M.A.R.T. goal setting and achieving

Infographic: The Most Common New Year's Resolutions for 2018 | Statista

Eat healthier, get more exercise and save more money all tied as most popular resolutions of 2018, according to statista.com. This is not a surprise. These are all very popular goals every year. Saving money is an important skill that you need to learn for yourself. So, let’s apply the acronym of S.M.A.R.T. to reaching your financial goals.

  1. First, the goal needs to be Specific. Save more money is not a specific goal. You need to set a goal of a number you want to achieve this year. Do you want to only save money for short-term needs? Or are you looking to save for retirement? Save for college? Could you pay off debt that would help you save more in future years? The purpose for saving and the amount  of saving is a more specific goal.
  2. Second, the goal should be Measurable. Savings goals are easy to measure once they are specific. Measure it every month by writing it down or recording it on your computer. Open a savings account just for this amount.
  3. Next, the goal is Actionable. This is the step where you will break it down into smaller chunks. If you want to save $1,000 for the year, you will save $85 every month. Or, if you get paid twice a month, $42 every paycheck does the trick. What are the action steps you will take to reach this goal each month? Figure out what you can do or not do to save this money every month. Cooking more meals at home, less coffee stops, and cutting back on purchases are great ways to spend less.
  4. Fourth, the goal is Realistic. Once your goal is broken down, is it a realistic goal for you? Talk to your partner and make sure that you both want to work on this goal. Look at this goal and make sure that it is realistic but also challenging. Could you round up and save $100 every month? Then, at the end of the year, you would have $1,200 and could use that extra $200 somewhere else. Goals help you focus and you can achieve great things by stretching yourself.
  5. Fifth, the goal is Timed. A time limit is crucial to setting and achieving goals. But, don’t give up too soon. If something comes up and you only save $50 one month, don’t give up. Try again the next month. You are still working towards your goal.

Now, is the time to reassess your goals. New Year’s Resolutions are often too vague to actually be a goal. So, it’s time to take your resolution, reassess and change it into a S.M.A.R.T. goal that you can actually achieve. Good luck this year.

Please contact me to set up a budgeting phone call and get your finances in order this year.

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Tracking Expenses.

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The first step in making a budget is to see where you are spending your money. When you track expenses regularly, you might be surprised at where you spend your money. I spend my money differently than you. A set budget doesn’t work for everyone. You need to have the flexibility if you want to make it work.

I have an excel spreadsheet to track expenses and balance my checkbook regularly. But, I decided to try the free apps on my iPad and see which one I liked best. Here’s a review of the pros and cons to each app that I tried.

Checkbook. This is my favorite and the one I’m currently using. Pros: it is easy to set up categories, fun pictures for categories which makes it easy to see at a glance, easy to add transactions, recurring payments. Cons: if you put in the wrong date, it can be very difficult to find the transaction. Also, I don’t like that you need to go into the detail of the transaction to enter it but you can’t mark it as cleared until you’re on the main screen. This one has a lot of manual entry.

Mint: Pros: Most of the work is done for you once you set up your accounts. It will track your expenses. I like the reports. I like the e-mails when I reach a goal. And, I like the credit report tracking. Cons: I like to look through each category and make sure that my expenses are in the right categories. For instance, I buy my gas at Costco but I like to keep the amount separate from what I spend inside the store. So, I need to go into Mint and move transactions around. You also can’t put in the transactions before they clear your bank. You can put in a budget for each area and then once it clears the bank, it will take the money out of that bucket for the month. For some people, that might be a pro. I haven’t used it enough in that way.

Every time I get paid, I spend the money by entering transactions into Checkbook that day. I use my accounts more like the envelope system. But, I don’t like to carry cash or pay with cash all the time. So, by entering the transactions when I get paid, and spending all my money, I know where all of my money is going for the week because I get paid every week. I give myself $40 a week to eat out. This includes fast food, lunches, and date night. When the money is gone, I don’t spend anymore money on eating out that week. If I have some left over from the previous week, it gets added into this week’s amount.

Tracking expenses is an important part of setting up and maintaining a budget that works for you. You probably looked at my $40 a week to eat out and thought that’s way too much or that’s way too little. You get to decide what that number is for you and then stick to it.

If you can’t stick to the budget in an area, you need to look at which budget you can make smaller so that you have more room in this budget. If you can’t stick to the budget, what good is it doing you? Reevaluate your budgets on a regular basis.