Budgeting, taxes

Did you owe taxes this year?

Many people in the U.S. were frustrated this year by the amount they owed to the IRS. The Tax Cuts & Jobs Act was supposed to save taxes not increase them. First of all, it will help to understand payroll withholding and then how your balance due or refund is calculated.

Payroll withholding is how much your employer holds out of each paycheck and sends to the government to help pay your taxes for the year. Your employer looks at your paycheck amount and calculates how much your tax liability will be if you make the same amount all year. They withhold that amount from the paycheck. That’s why when your paychecks are large, your withholding might be really high.

Balance due or refund is calculated by your actual tax liability minus your payroll withholding for the year. At the end of the year, we add up what you actually made for the year, and then calculate the taxes on that amount of income. This is your tax liability. We then subtract your withholding amount from your tax liability to calculate the balance or refund.

The Tax Cuts & Jobs Act changed the withholding tables. When the tax laws were changed, the employers were given new withholding tables to hold out more or less of each paycheck. So, the idea was to enjoy more of your money during the year. I actually agree that getting a big refund isn’t ideal. I would rather use my money during the year. The government doesn’t pay you any interest. So, they get to use your money all year without paying you for it. Here are two options:

  1. Leave your withholding as is, and save the money to pay your balance due. Divide your balance due from 2018 by how many paychecks you have left in the year, and save that money from each paycheck. Then, when you get your taxes done, you’ll be prepared to pay the money. Having the money planned and set aside empowers you to go get your taxes done early, and be able to say “I’m prepared.”
  2. Change your withholding. The IRS offers a paycheck checkup on their website. You can go here and enter your information to know what to tell your employer to withhold from your paychecks. You calculate the exemption amounts. If you don’t think it will fix your amounts enough, talk to your employer about other options. You can claim less exemptions, you can withhold at the higher single rate, and/or ask your employer to withhold an extra percentage or amount from each paycheck.

Give yourself the power to understand taxes and you will feel better at tax time. Nobody really likes taxes but it is so much easier when you are prepared. Without getting too political, our taxes do pay for many incredible things like education, roads, and safety.

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This guy says thank you.


Meal Planning DIY Style

I have a written a meal plan every month for years. It works so well for us. I keep mine flexible. If I don’t want to make something or we are too busy, I just look at the week and figure out what works for that night. So easy. But, I already have the ingredients on hand for each dinner.

Here are three of the reasons I like to make my own.

  1. My family is TOO picky. Let’s be honest, I’m picky, too. So, I look at those meal plans and while they look good most of the time, my family wouldn’t eat half of the meals. So, I’d be constantly looking for things to add in, anyway.
  2. My family mostly rotates through the same meals. The meals plans need to come up with new and exciting recipes all the time or what are you paying for. All I do is copy the same menu from last year this month. So, I copy over the current month from a year ago. I look it over and make sure that it still matches with things we like to eat. I add in any new recipes we have found that we like. I also add in a few tryout recipes to see if my family will eat them.
  3. I would rather spend the money on actual food. A quick search through my pinterest page can find great pictures of food my family will enjoy. I would rather have the money I would spend on a meal plan to purchase the food I want and know we will eat.

Making a meal plan is an essential part of budgeting. It keeps you from last-minute grocery store purchases and eating out all the time. My family rarely eats out because it can be very expensive to take out a family of six including two teenage boys. When we do it is very intentional and already figured in the budget.

I have a free printable meal planner for March. Look at your calendar and start filling it in. Once you’ve filled it in with your regular dinner items, you can look on pinterest to add in a few new things.


Student Loans

According to a 2017 USA Today article, outstanding student loans has passed credit card debt. Total outstanding student loans at that time were estimated at $1.4 Trillion. Most people believe that student loans are necessary. Once it comes time to pay it back, you need to be educated and know exactly what you have gotten yourself into so you can get yourself out as quick as possible.

If you haven’t started college yet, I want you to look at your options for staying debt-free. Using your savings accounts, shopping for a cheaper college and using available scholarships and grants are great ways to reduce your debt before you even start. Educate yourself on all of these options and the best loans to acquire for your situation.

Once in school you can make a big impact on your student loans. Generally, they don’t need to be paid while you are in school. But, if your loan is not subsidized (income requirements) then they are adding interest to your loan every single month. If you take out a $10,000 loan at 10% and don’t start paying it back for 4 years, you now owe almost $15,000. On the other hand, if you can just pay the interest each month, you will owe the $10,000 when you leave school. On a $10,000 loan, $84 every month pays the interest. So, drive a cheaper car, cut the cable or internet, work a part-time job, don’t eat out regularly. A $10,000 loan is much more manageable than $15,000. Do whatever you can to start paying early.

When you graduate, you now have this student loan bill and don’t know if you can pay for it. So, here’s some ways to get it paid off early.

  1. Consolidate. Be very careful that you use a reputable lender for a consolidation loan. Make sure that it will reduce your interest rate and your monthly payments without extending the loan repayment period. This could be an option to help you pay them off. But, if you understand the debt snowball, you would want to keep some loans small so you can see the progress you have made. If you have a $5,000 loan and a $50,000 loan and you consolidate them, it is harder to see your progress.
  2. Pay more than the minimum. Once you graduate, most loans give you a 6 month grace period before they require repayment to start. If there is any way to start making the payments sooner, please start. The interest is again adding into your balance on the loan. Then, they calculate your payment over 10 years. So, always pay extra even if it’s just a little.
  3. Extra cash. Apply your extra cash towards your student loans. When you get a raise instead of spending the money, immediately increase your payment to the lender. Don’t let yourself spend that money and you won’t miss it. As with any debt snowball you are working toward, any extra cash like bonuses or tax refunds go towards your smallest debt.
  4. Don’t get behind. As with any debt, don’t get behind. Late fees and penalty interest add up to even more. Make sure that you pay the minimums on every loan every month. The government can not only damage your credit like other lenders but they will take your tax refund and can even garnish wages if you don’t pay back your student loans.

Student loans can seem like they will take forever to pay off. But, by paying as much as you can as soon as you can, you will shorten this time. The sooner you pay it off, the less you pay in interest. Just think what you could be doing with that money each month.

If you really can’t afford your student loans, you should talk to the lender about reducing your payments. But, make a budget and try to pay them off.

I offer free phone consultations for setting up your budget. Click on my contact page.

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6 Ways to Improve Your Credit Score

Your credit score can affect where you live and how much you pay, it can affect what you drive and your car payment, it can affect a job search and it can affect your other monthly bills. A good credit score will give you freedom to do many more things with your money. Whether you use credit or not, a good credit score will help you in your life. So, how do you fix your credit score if it is currently not good?

#1 – Request your credit report. Requesting your credit report will not affect your credit score. Go online to any of the credit reporting agencies and you can request a credit score for free. You can request one each year. This is the minimum amount of time you should go before checking your credit report again. Review thoroughly each separate account and dispute any claims on there that you feel are in error. Make a plan or a credit score goal with a time-frame. Avoid expensive credit monitoring services. You can do it on your own. If you have questions, call the credit reporting agency and they will help you.

#2 – Pay bills on time. To fix your credit, now is a good time to stop paying your bills late and late fees. If you absolutely must pay them late, be careful to keep it under 30 days late. Set up automatic bill pay so you don’t miss any payments. Late fees are so expensive but if you go over the 30 days, the late payment can also effect your credit.

#3 – Reduce debt owed. Look at your bills and see if you are really living within your means. This means you can pay all of your bills each month. Start paying a little extra on the bill with the lowest balance. Is your car payment or rent way too high? Look into other options so that you can reasonably pay your bills each month. It is expensive to sell your car when you’re upside down or to terminate a lease on an apartment, but in the long run it might be better for you if you can find more affordable options.

#4 – Focus on credit cards. Credit cards make it too easy to overspend every month. Stop moving your balances around. Keep your balances low. Avoid opening new credit card accounts. Pay off your oldest debt first. But, do not close the oldest accounts. Closing old credit card accounts can actually hurt your credit. Just leave the balance at zero.

#5 – Sustain an emergency fund. Borrowing money at high interest rates when you have an emergency arise, can hurt your credit and cost you crazy amounts in interest. Always have a plan for emergencies and maintain your emergency fund first. When you use it, stop paying extra on other bills and re-establish this crucial fund. Everyone with good credit or zero debt has an account sufficient for most of their needs.

#6 – Avoid quick-fixes. Unfortunately, repairing credit takes time, years even. If someone is offering you a quick-fix, it is most likely a scam. Just like with losing weight, you must change your habits and gradually you will lose the “pounds” of debt that you are carrying.

Start somewhere small. If you are drowning in debt, start by paying off one bill. Then, move on to the next bill using the extra payment that you are now free from. Track your progress every month.

Do you need help setting up a budget or evaluating your finances? Click on my contact page. I offer free budget consultations. Coming soon, a free debt e-book to help you start the journey of improving your credit score.

Budgeting, expenses

6 Reasons to Get Out of Debt

Americans feel conflicted about their debt. About eight out of ten Americans have debts. Most people believe that debt is necessary but that they would rather not have it. Today, I will focus on the benefits of being debt-free. Reducing your debt can also help with some of these feelings.

  1. Free up your income. Not having debt payments each month, gives you opportunities to spend your money wherever you want. It also allows more freedom in the kind of work you do. Dave Ramsey posted, “My grandmother always said, ‘There’s a great place to go when you’re broke – to work.'” Debt compels you to work more and harder. If you’re debt free, you are “free” to change jobs, take time off, and enjoy your family more.
  2. Less risk. Many people are one paycheck away from losing everything. Budgeting can help with this. But, also, getting yourself out of debt helps. You’ve learned how to budget, live within your means and you have a savings cushion. Debt-free is a big cushion to get by for many months with smaller income.
  3. Less stress. #1 and #2 are great reasons and they also contribute to less stress. Debt creates stress. You worry about how you’re going to pay all your bills. When you have debt, sometimes, it is difficult to enjoy doing anything because you are worried about your debt. Getting rid of your debt releases a lot of stress. Then, you can spend time with your family, enjoying your work, and find new hobbies.
  4. Better relationships. Do you see the pattern of these reasons all building on the one before? When you don’t have debt, you can enjoy your family more. You can also enjoy all the activities that come with kids even though they are expensive. When you’re not worried about your debt, you know exactly how to pay for those expensive things that come up. I still require my kids to help pay for half of the activities they do once in high school. I think this better prepares them for life. My son plays football and he can’t have a regular job most of the year but he can do a couple of yard clean-ups every month to help pay his expenses.
  5. Helping others. I know that helping others helps you. Debt-free means you can help others. Even if you are still in debt, start finding ways to help others that don’t cost money. You can help people shovel snow, rake leaves, visit with family or friends. Once debt-free, you already know the benefits of helping others and will want to continue.
  6. Higher Self-Esteem and Confidence. I will give an example. One person goes into a dealership to buy a car not even sure of their credit score or how much they can afford. The second person goes into a dealership with cash to buy a car that they have been saving up for and know exactly which one they want and can afford. Buying a car is a high-stress situation but which of these two is more confident when they walk in the dealership? Which one gets the better car even if they spend the same amount? Buying a car is a great reason to be debt-free and easy to see the confidence it will bring to you.

These are only my top six reasons to be debt-free. But, knowing why it’s good and doing it are two different things. Start with a budget. If you can’t make your budget make sense, you should consider talking to a credit counselor. I offer free budgeting consultations. I do not consolidate your debt but I can help you make a budget that works for you. Erin Barbee erin@e3accountingsolutions.com


Tax Preparation & Budget Consultations

I have 15 years of experience doing taxes. My practice is starting out so I charge $60 – $100 for most returns. Self-employment income, rental income, and other complicated returns rates will increase.

I also offer budget consultations. Let’s find a way to get you on track with a new budget for this year.

Contact me




Don’t give up on your budget.

You’re trying to make changes so you can live a better life. According to Balance.com, a budget is “hard work, and often brings to mind feelings of restrictions, limitations, and plain old not getting what you want when you want it. A budget is a cornerstone of good financial health. It sounds like a diet. So, let’s think about it in terms of dieting again.

When trying to live a healthier lifestyle if you don’t eat on plan every day, you don’t give up, rewrite a new diet and further restrict yourself. You should look at worked and what didn’t work and then make adjustments. Let’s talk about our new healthy financial lifestyle.

  1. Improve your budget. Continually evaluate your plan. If you overspend consistently in one area, look at that area. What can you change? Make sure your budget adds up. If it’s too restrictive, you may not stick to it just like a fad diet.
  2. Know where you’re spending every dollar. This is like meal prepping and planning. If you know where you’re going to spend every dollar you make for the month, you will be less likely to overspend. Yes, you can still have flexibility and fun or discretionary money. But, you know exactly how much money that is. Or, you go get it out of the bank and use cash so you don’t overspend.
  3. Set short-term goals. If your goal is to pay off $50,000 in debt, that can be daunting. I think of the joke, “How do you eat an elephant?” “One bite at a time.” So, break it up into smaller chunks like six month goals or even monthly goals. Or, give yourself a small reward when you stick to one of the areas you are struggling with. This could even be a highlighter on your budget, to mark the areas you stayed within. Notice the small victories and that you did better than last month.
  4. Understand opportunity cost. When you are tempted to overspend, think of what you are giving up. When you have clear goals, it is easier to see that buying a cute pair of boots isn’t as great as being out of debt. You can also think of purchases in terms of time. If you make $20 per hour, that $100 pair of boots will cost five hours of your time. If you’re trying to get out of debt, so you can quit that job and do something you enjoy more, then the boots might not be worth it.
  5. Allow yourself a break. You didn’t completely blow your budget. Don’t give up. Look back at your accomplishments with your budget. If you’re starting to get burned out, you might need to take a step back and make your budget work for you. A budget is useless unless you can implement it in your life.

Contact me for help setting up a budget you can work with. Make this the year, you get out of debt.

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.


5 Ways to Stop Living Paycheck-to- Paycheck

78% of workers in America claim to live paycheck to paycheck. No, the answer isn’t to make more money. 1 in 10 workers making $100,000+ every year, still live paycheck to paycheck. The answer is to be smarter with your money.

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1. Track spending and create a budget. Yes, I always start here. I believe that a budget means freedom. If you create a budget that works well for you, you don’t restricted in your budget. But, you do learn to live within your means.
2. Save money the day your paycheck comes. If you use online banking, you can use automatic transfers to move money the day you get paid. Start moving a little money into a savings account right now. It can be $5-10 every time you get paid, but it still adds up. If you don’t have online transfers available, set some money aside from each paycheck.
3. Break monthly expenses into chunks. If your house payment is $1,000 and you receive two paychecks every month, set aside $500 from each. Don’t wait and take all the money for a big expense out of one paycheck. This is one of my favorite tricks which I will talk about the many ways it can help you pay down your debt.
4. Change your attitude. You can pretend to earn less than you do. Cut back on a few expenses every month. If you really like to go out, you still can. But, look at your expenses and adjust them to just save a little.
5. Change paycheck withholdings to get a smaller refund. If you had less withheld from each check, you could be saving or paying down debt quicker. The IRS doesn’t mind holding your money but they don’t give you any interest. If you receive a $4,000 refund, you are paying the IRS an extra $333 every month that you don’t need to pay. If you lowered your withholdings and paid an extra $333 every month on your debt, you would save about $200 in interest for the year on a 10% interest loan. Plus, you don’t have the worry of living paycheck to paycheck. I know you like the big refund but wouldn’t you also like to have an extra $300 a month to pay yourself.
Big Refund? See my ideas of how to spend it.

Living paycheck to paycheck is stressful. Don’t continue to get caught in that cycle. Start with small things to move into financial freedom. Contact me for a free budgeting consultation.

Note: If you always pay the IRS, start 2019 with a small savings account to pay that bill when it comes due. The IRS interest and penalties when you don’t pay your bill by April 15th is very high. You can set up an appointment with me to discuss how much interest and penalties you are paying by not paying your tax bill by April 15th every year.