10 10 80 Financial Lifestyle

10 10 80 Lifestyle

Image by Tax Credits

This simple financial rule has been around for a long time. Some say it’s impossible to live by while others say it’s too simple of a rule for our complicated financial lives.

We’d say that even though the rule seems simple, it’s not only doable but also a great way to begin aligning your finances with your financial goals and dreams. After all, who out there would say no to a debt-free future, worry-free retirement and knowing that they’ve been able to make a positive difference in the lives of others simply through their financial decisions.

So lets unpack the 10 10 80 rule and see how we can use it as our financial compass.

As we generate income, 10 10 80 rules helps us with distributing our income in a way that would:

– Allow us to be generous with 10%.

– Provide us with a financial buffer or margin of 10%.

– Cover all of our day-to-day living expenses with the remaining 80%.

10% Generosity

We believe that generosity matters, but it’s not just our opinion. Statistics show that those who give of their time and resources are happier, healthier and live a much more fulfilled life. In a recent article by Huffington Post titledHabits of Supremely Happy Peoplegenerosity (spending money on other people) was among top habits.

So we encourage you to make giving a priority. It will not only increase your chances for a happier and healthier life, but it will also give you a better perspective on your own financial circumstances and will allow you to have the right perspective and relationship with money.

Here are few ideas on how to make generosity part of your financial journey:

– Give before you spend rather than after the fact.

– Decide as a family what matters to you most and make giving a family-wide affair. Let your children participate in the act of giving and talk about generosity and why it matters at your dinner table. Choosing to give to the right cause will make it that much more meaningful.

– Giving often is sacrificial, so take a look at your spending habits and see if there are ways to curb spending in certain categories or maybe cut one out completely in order to give. Again, work as a family to find ways to give.

– Participate in projects with your charities of choice. This is a great way to become more engaged and experience how your monetary gifts are being used to help others.

10% Saving & Investing

Creating a financial safety net and financial margin is critical to the well being of your finances. Without making it a priority, you’re in danger of living from paycheck to paycheck and always having to fall back on debt in order to cover life’s unexpected turns.

Instead of saving leftovers, make it a priority and an automatic must before you start spending your paycheck. Saving 10% of your gross income every month will allow you to build solid financial footing, will give you much needed peace of mind and will help you prioritize long-term financial health over fulfilling short-term financial wants. Here are practical ways to make this happen:

– Open a savings account and ask your bank to put withdrawal limitations on that account. This will make it harder for you to tap into those saved funds.

– Ask your employer / HR department to split your paycheck and designate 10% off the top to go into that specific savings account.

– If your employer offers a matching 401k, then use a portion of your 10% to go into that retirement fund and a portion to go to your savings account.

– Create a list of short and long-term financial goals. Assign a specific amount and a specific due date to each of those goals. Focus on building your $1000 emergency fund first, then on having 1 full month of living expenses set aside, and then, ideally, on having a 3-6 month living expenses fund.

If you’re looking for creative ways to save money, here are few ideas to get you started!

– Don’t forget to celebrate! Every time you meet another savings goal, celebrate that milestone as a family. Whether it’s a nice dinner or a special get away, make goal achievement a memorable event. It will help you see that your sacrifice is worth the effort and that you can still enjoy life even while on a saving journey.

80% to Live on!

None of us should consume 100% of our monthly earnings. If we do that, it spells trouble not only for today but also paints a grim outlook for our financial future.

By limiting our consumption to 80% of our gross income we are able to set right financial priorities for both right now as well as the future.

In order to set financial limits, you’ll need to understand what areas of your monthly spending are “in trouble” – consuming much more of your monthly income than they should.

Usually, housing is an area that many of us spend much more on than we should. In general, if you spend more than 25% – 30% of your gross income on housing, your budget will have to experience cuts in other areas in order to compensate for that expense.

Transportation, especially high car payments, are second in line and should be revisited with care to see if cuts are in line.

Struggling with high transportation cost? Here are few ideas on curbing your spending in this budget category.

Food is the 3rd highest expense and without paying close attention to it, it can get way out of hand.

Here are 3 ways you can eat well and still save big!

Your budget will also have many “discretionary” areas that are non-essentials but we treat them as though our life depended on them. High cell phone plans and expensive phones, expensive cable packages and subscriptions to health clubs and magazines or periodicals will eat into your budget if you’re not careful.

So as you sit down to work on your monthly budget, write down the amount equal to 80% of your income and start listing all of the areas you spend money on. Evaluate each expense in light of essential or non-essential, and whether your current level of spending will require cuts in other areas.

As you can see the 10 10 80 rule, even though simple, gives us a great direction for realigning our financial priorities.

It will, no doubt, require some “financial gymnastics” in order to make your numbers work. Many of you won’t be able to do it right off the bat. If that’s you, it’s ok, as long as this is the direction you’ll be taking your finances. So here’s to all of us living by and enjoying the benefits of 10 10 80 rule!

Before You Cash Out: Alternative to Draining Your 401(k)

401k

Image by 401(K) 2013

Financial advisors discourage against drawing prematurely from 401(k) retirement funds, characterizing this as a risky last resort, but in today’s economy more Americans are tapping into this option to cover short-term emergencies as well as major purchases. Between 2008 and 2010, the number of Americans with outstanding 401(k) loans climbed to approximately 28 percent, and since then it has remained just shy of this mark, according to HR consulting firm Aon Hewitt. Financial experts such as Charles Schwab Foundation president Carrie Schwab-Pomerantz warn against the potential risks associated with 401(k) loans and withdrawals, which can incur extra interest payments, early withdrawal penalties, increased taxes and lost compounded tax-deferred growth. In light of such risks, Consistent Values president Pam Dumonceau has her financial planning clients brainstorm all other available options before turning to a 401(k) loan. Fortunately, there are other alternatives.

An Ounce of Prevention: Establish an Emergency Savings Account

Part of the problem is that the current financial planning system tends to divert funds employees need for short-term spending into long-term retirement savings, leaving nothing left for immediate emergencies, suggests Matt Fellowes, chief executive officer of financial guidance service HelloWallet. Fellowes suggests that in the current economy, many workers would be better advised to build an emergency savings account that avoids the risks associated with 401(k) plans before investing in retirement savings. Only after establishing an emergency fund should employees focus on retirement planning, he says. Opinions vary on exactly how big an emergency fund should be, and specifics will vary with your situation, but a widely-accepted rule of thumb recommends your savings should be at least enough to cover three to six months of living expenses, with retirees advised to have a year’s worth of funds available. If you feel like you just could never save enough for an emergency fund, CashNetUSA recommends possibly setting aside your tax refund (if you don’t have any debt to pay off).

Other Loan Options

When your savings account doesn’t cover your expenses, you may need to explore loan options, in which case there are various sources you should consider before turning to 401(k) funds. Dumonceau encourages clients considering 401(k) loans to first explore alternatives such as borrowing on a home equity line of credit, taking an unsecured low-interest personal loan, or applying for a credit card with 0 percent interest. Some employers may be persuaded to advance loans, either formally through a contract or informally as a way of building company loyalty.

If You Do Borrow from Your Retirement Funds

What if you do end up needing to resort to borrowing from your retirement funds? In this case, an expert financial advisor may be able to suggest ways you can tap into your funds without incurring standard penalties. Possible strategies include taking back a Roth IRA contribution, taking regular IRA payouts, and tapping an inherited IRA, according to Forbes. Some IRA withdrawal strategies carry their own potential risks, so consult an expert about your specific situation.

The information in this article is provided for education and informational purposes only, without any express or implied warranty of any kind, including warranties of accuracy, completeness or fitness for any particular purpose. The information in this article is not intended to be and does not constitute financial or any other advice. The information in this article is general in nature and is not specific to you the user or anyone else.

I Can’t Afford Life Insurance… But I Have to Keep my Cable!

Life Insurance

Image by hockadilly

When you’re deep in debt, it’s hard to think about adding another expense to your already stretched budget. Life insurance tends to be “that added expense” which many deem to be unaffordable or simply not a financial priority.

As of 2010, only 44% of Americans had individual life insurance. That’s an all time low, down by almost 30% from the 1960’s.

The truth is that life insurance has become much more affordable and accessible, and with very slight adjustments in our spending or in the way we budget, most of us can afford the coverage; we just need to understand the importance and value of it for us and our families.

Here are few approaches to life insurance, depending on where you stand financially and based on your current family situation.

Life insurance for those who are in debt

Your debt to income ratio has a lot to do with whether you have or don’t have life insurance coverage. If debt repayment is your priority right now, great! Keep going and don’t give up on your debt repayment goals and strategy. What you do need to know is that your priority does not have to automatically disqualify you from purchasing a life insurance policy.

At this stage of your journey, especially if you have a spouse and children, you should at least purchase enough coverage to cover your current debt and mortgage. If you’re healthy, you can purchase a $200K – $300K policy for around $20 – $30 a month! A few reliable sites to shop for life insurance include: Insure.com or Accuquote.com.

With a slight adjustment in your spending habits, you can easily find $20 – $30 a month to purchase a peace of mind knowing that if something were to happen, your spouse would not have to worry about creditors.

Tax season is just around the corner, and many insurance companies will give you a discount if you pay once a year instead of once a month.  You might consider using some of your tax return to purchase life insurance, if you expect to get a return this year.

Life Insurance Rule of Thumb

Life Insurance should not be viewed as a fool-proof provision but as a financial buffer and protection plan. As a rule of thumb, both spouses should have life insurance worth 10X their annual income. So, if you’re earning $50K a year, you should have a policy of $500,000 to cover your outstanding debts, mortgage and living expenses for a specific period of time.

Whole Life or Term Life Insurance? Private or through Employer?

In general, term life insurance is the best and most affordable option. You can purchase a 10, 20 or 30-year term policy and renew it once your initial term is up. The longer the term, the higher the payment, so if you’re really strapped for cash, you may opt for a shorter-term policy.

Your employer will often have free life insurance coverage for a smaller amount, covering both you and your spouse. If you’re not sure about your employer’s offer, check with your HR department so you are fully aware of the benefits. If you have an option of purchasing life insurance though your employer versus purchasing your plan privately, the second option tends to be a better one simply because if your employment were to terminate, your life insurance policy may terminate with it. If you purchase your plan privately, the plan will not expire unless you stop making the payments.

Last word of caution regarding your payments…

Do not pause your payments after just a few years. If you stop your coverage 3 years into it, those $30 monthly payments will turn into a $1060 loss! So make life insurance your priority, and if you have to downgrade or eliminate expenses like cable or other forms of entertainment, do so in order to assure those payments are made. After all, entertainment only costs you money month after month with no future benefit. Life insurance carries financial protection, hence should be much higher on your financial priority list!

5 Jobs in Finance That You Can Do From the Comfort of Your Couch

Work from Home

More Americans work from home than ever before, with one in four telecommuting some or all of the time. Telecommuting grew by a massive 73 percent between 2005 and 2011. If trading in your suits for sweatpants and your desk chair for the couch sounds appealing, these financial positions might be perfect for you.

1. Dabble in Stocks as a Day Trader

Spend your day monitoring the share market as a day trader. These financial experts hold stocks for short periods of time, sometimes just minutes, before trading them again. All business is wrapped up before the end of the day, which allows you to put away the laptop and connect with your family.

Day trading can be a bit risky as it doesn’t offer benefits or steady money. You also need to spend money on the market to make it. But if you have a talent for trading, you could easily exceed an office wage. Day traders have been known to post returns of 300 percent or more annually. It’s hard to argue with those numbers.

You’ll need a knack for interpreting share market movements and some serious emotional stamina to succeed, but these talents will hold you in good stead if you decide to return to office work. Your share market knowledge would make you a perfect candidate for career opportunities at Fisher Investments and similar firms.

2. Balance the Books as an Accountant

Accounting is a fairly flexible field which often allows telecommuting. Many accountants initially work in an office before transitioning to a full-time work-at-home role, so it’s worth discussing your desire to telecommute with your boss. Some small businesses prefer these arrangements as it frees up office space.

If your employer isn’t happy with a work-from-home arrangement, or you’d like to diversify your workload, you may like to strike out on your own as a freelancer. Whichever model you choose, you only need a computer, a reliable internet connection, and your favorite accounting software to get started. Local CPA firms are good places to approach as you start collecting clients.

3. Tackle Teaching Online

Online learning is on the rise, with 6.7 million students taking at least one cyberclass last year. That’s twice as many pupils e-learning than there was just five years earlier. You don’t always need a teaching degree to turn your hand to virtual education; many schools will employ online teachers with a master’s degree in a relevant area. For example, you could put that accounting knowledge of yours to good use teaching others to become CPAs via Skype or pre-recorded lessons.

Online teachers are typically paid by the course without benefits, although some would call working from home a definite perk. The steady paycheck these positions provide is another real advantage. Pay is commensurate with your workload and educational credentials, but the average online teacher makes $30,000 in their first year.

4. Become a Freelance Financial Writer

Freelance writing is on the rise with demand expected to grow six percent between 2010 and 2020. Finance writing is a booming area which requires more specialized knowledge than penning human interest stories or entertainment pieces. Your experience in the finance world makes you perfectly poised to beat out your competition and take on these roles.

You’ll be paid accordingly for your knowledge, with financial writers often commanding several hundred dollars per article. Some finance writers find they can easily make between $70,000 and $90,000 annually, without ever getting out of their pajamas. You won’t need to eat into that salary with additional business costs either, as writers need little more than a computer and internet access. To command the top pay rate it pays to have a master’s degree in journalism, economics, finance, or management behind you.

5. Go Corporate, Remotely

Being part of the corporate sector doesn’t have to mean joining the rat race. Employers know that jobs working with computers can be done anywhere, so more than ever trust these roles to independent contractors over in-house teams.

Financial analysts, tax researchers, financial advisors, and auditors can all hope to enjoy the perks of working for a corporate firm without the restrictions of an office environment.

The modern workplace is evolving, with qualified professionals realizing they don’t need to chain themselves to the office to make the big bucks. Opt for a better work-life balance by taking one of these finance jobs you can do from home.

Image by Kathy Cassidy

Saving Your Savings in 3 Easy Steps

Savings

Image by 401(K) 2013

Statistic from Thomas J. Stanley, the author of “The Millionaire Mind” and “The Millionaire Next Door” show the following:  86 percent of people who spend money on luxuries like expensive cars, jewelry, and electronics are non-millionaires trying to act like millionaires by purchasing luxury brands.

Instead of spending money on more “stuff” the rich – at least a large portion of them – prefer to save a dollar rather than spend a dollar. There is a lesson for all of us.

It appears the wealthy have discovered the power of saving and instead of spending their time trying to “keep up with the Joneses ” they choose to live below their level of income and save and invest the rest.

So how can those of us who have been on the spending side of the equation learn to save? Here are 3 ways to protect you from overspending and to save your savings!

Save a minimum of 10% of your gross pay

If you’re not in the position of saving 10% of your gross income right now, that’s fine. How about making 10% your goal and creating a plan that will allow you, over time, to get there? Focus on what you can do, not on what you can’t do! The key is to have a doable, written plan you can follow.

Your goal should be to set aside at least 10% of gross annual income every month for both your short-term and long-term needs. A portion of it may go into a retirement fund while the rest into a regular savings account.

Short-term goals should include having a $1,000 emergency fund, 3- 6 months of living expenses, a vacation fund, a Christmas fund, etc. Your long-term goals should focus on retirement, car replacement fund, and college funds for your children, etc.

Spend less than 25-30% of your gross pay on your mortgage

Buying more home than is needed or more home than we can afford has plunged many into situations of short sales, foreclosures or having to work tirelessly only to keep the mortgage going.

Here is another interesting statistic from Stanley: There are 1,138,070 millionaire households in the US living in homes valued under $300,000.

What’s obvious by looking at those statistics is that, quite a few millionaires are living in much less home than they can afford. Instead of spending enormous amounts of money on more home than they need, they save and invest their resources in order to have enough financial liquidity.

Are you living in more home than your current income can handle? Is paying your mortgage putting a lot of financial stress on your monthly cash flow? If that’s you, here are few suggestions to stop your home from being a money drain and turn it into an asset that allows you to save.

–       Is it time to sell and downsize? Depending on your financial situation you may have to consider this option in order to create financial breathing room. The decision to downsize should not be taken lightly. There are many factors to consider, such as your current equity, the housing market in your area (how easily you could buy something smaller and at what price), the interest rate on your existing loan versus the current interest rate, etc. If you need a little inspiration, here is a great story of a family that decided to dramatically alter their lifestyle in order to regain financial breathing room!

–       Can you rent out part of your space? Those who own homes with basements may be in a perfect position to use that space and generate rental income. With few slight modifications and adjustments you could turn your “money drain” into a “money maker” and earn additional $300 – $600 a month. As you consider renting part of your home don’t forget to check with your insurance agent in order to get appropriate coverage. In general you’ll have to report this income on your taxes but you’ll also be able to take advantage of tax deductions and you’ll be able to depreciate the rental unit and the furniture and equipment you install in it, as well as deduct a prorated portion of your mortgage interest, qualified mortgage insurance premiums and real estate taxes.

 Don’t let your “ride” become your financial downfall!

Would you like to guess what car Mark Zuckerberg, the CEO of Facebook, drives? A good old Acura. That’s right, a young billionaire (worth over 6 billion dollars) drives a $30,000 sedan even though he could easily afford the most luxurious car out there. If he can do it, why can’t we?

So why do you think it is that a billionaire is content driving a $30,000 sedan while many of us with annual family incomes of $45,000 – $65,000 feel the need to purchase vehicles with price tags nearing or exceeding 50% of our annual household incomes?

You may not be in a position to purchase your car with cash right now, but purchasing a cheaper vehicle with lower monthly payments will eventually allow you to set aside a “good chunk of change” in order to purchase another vehicle out right!  By simply setting aside $200 a month towards your next vehicle, you could have $7200 saved in just 3 years.  If you did it for 5 years you’d have $12,000 for your next ride!

Here are few basic checkpoints for making a major purchase, like a car:

1. What will be my TOTAL cost after paying the price and interest rate combined? Don’t be fooled by JUST your monthly payment amount.

2. How will the payment impact my monthly cash flow?

3. What if I lost part or all of my income tomorrow? Can I still afford to pay for that item at a lower income rate?

4. How will this purchase impact me long-term?

In order to see great results from saving, you have to understand that it’s a long-term proposition.  You can, however set smaller, short-term goals like saving your first $1000 for emergencies or saving 3-6 months of your living expenses in order to experience wins along the way.

 

Romantic Valentine’s Day on A Poor Man’s Budget

Valentines Day

Image by KaleidoscopePhotos

Valentine’s day is only 4 weeks away. We still have enough time to plan on having an amazing Valentine’s Day celebration without breaking the bank.

With Americans spending more than $17 Billion on Valentine’s Day (Yes, that’s $17 Billion on one special day!) let’s see if we can help you celebrate that special day BUT at a fraction of the cost.

Dinner Ideas

If you have a limited budget but would like to enjoy a nice dinner for two, Chili’s has a great deal for you. For one appetizer and two entrees you’ll pay only $20 (plus tax).  As long as you opt to drink water, your dinner, including a 20% gratuity tip, will run you less than $27! If you LIKE Chili’s on their Facebook page, you can also get a coupon for a FREE dessert, which will help to top off your valentine’s dinner.

IHOP has a great deal where you can get 3 free meals when you sign up for their pancake revolution! So you can go online and sign up (two of you would have to sign up individually) and you can actually have a FREE meal on valentines!

Outback has some great deals on steak dinners, and if you don’t mind celebrating Valentine’s a few days early, you can get a 3-course meal at Outback for less than $12 (deal available on Wednesday’s only). Combine this great offer with a discounted gift card purchased on Giftcardgranny, and you are good to go!

If you don’t like any of the above choice, you can still get an awesome deal on your valentine’s dinner by visiting Restaurant.com where you can simply put in your zip code and find the restaurant of your choice. You can get a $10 gift card for $4.00 or a $15 gift card for only $6.00!

Entertainment Ideas

If you really want to go to the movies but you don’t want to pay full price, check out sites like Giftcardgranny.com or Plasticjungle.com for the opportunity to get discounted movie theater gift cards.

If the price of movie tickets is not in your budget, but you’d still like to watch a good movie with your special someone, check out redbox. If you’ve never used redbox, you can be treated to a free movie rental (just pay attention to how long you keep the DVD, because you’re charged per 24-hours; so the free movie is only free if you return it within a day)!

Have you visited your local library lately? You can find a decent FREE movie selection there.

If you just want to enjoy good conversation over coffee, you can get a BOGO deal at Starbucks on Valentine’s Day with their “Share the Love” offer.

So don’t stress over your Valentine’s Day. Simply opt to participate in one or 2 of the deals we listed, and you and your special someone can enjoy a nice evening or a nice afternoon for less than $30 including food and entertainment!

7 Creative Ways to Save Money

Save money

Image by Images_of_Money

Fox Business released an article with encouraging statisticsabout saving trends among Americans.

Citing new research from Gallup, it appears that 40% of Americans say that they prefer to save rather than spend their money. That’s great news, especially since 25% of us still have no savings at all!  With an average household debt of over $100,000, it’s imperative that more and more of us find ways to set money aside on a regular basis.
Saving can seem like a daunting task, especially for those who live from paycheck to paycheck, but with a little creativity, this habit can be mastered.

Here are 7 creative ways to help you save money:

Home haircuts!

With the cost of a haircut (for men) ranging form $15-$25, you can save over $200 a year by simply learning how to cut your son’s or your husband’s hair! Every time you do a haircut, take the money you would otherwise pay at the salon, and place it in a separate savings account or in a paper envelope. At the end of the year you’ll have quite a nice stash!

Eat soup!

It’s amazing what a little soup can do for your family’s savings account.  You can feed a family of four with a hearty chicken and vegetable soup for as little as $6- $8! If you decide to cook soup once or twice a week for dinner, you will save $10-$20 a week.  In one year, you can add $500 or more to your savings account.

Ask before you buy

I’m sure that if you looked around your house, you’d find plenty of items you’re no longer using like clothing that’s too small or too big, home decor items, or furniture. The same is true for many of your friends and family members. So, before you buy extra clothing for your children or before spending money on a new bed or an appliance, ask around to see if someone in your network of friends may have what you need.  Quite often, you’ll find it for free or at a highly reduced price.

De-clutter!

If you’re not a fan of yard sales, there is still a way to save money on items you no longer use or want. If selling them via Craigslist or eBay is not your thing, find your closest Salvation Army or a Goodwill store and donate your items for a charitable donation receipt that you can use as a deduction on your taxes. Charitable contributions in the form of clothing, furniture, or any other items, can be a great way to reduce your tax bill or increase your tax refund.

Buy used

This is especially true if you have young children. As parents we tend to spend a fortune on clothing for fast growing children who probably outgrow their outfits twice a year, if not more often. Check your area consignment sales and your second hand stores for children’s clothing. You can often get great, slightly used outfits for $2-$5. If you’re looking for a camera, laptop, or another piece of electronic equipment, search for one-owner used items.

Become handy

There are certain projects around the house you should always hire an expert for, but there are other projects you could learn to do on your own. Paying someone for work you could do yourself will always cost you more. If you have a friend who is extremely handy, ask them to show you the ropes. Do you have a Home Depot in your area? Sign up for their weekly workshops where you can learn how to install crown molding, how to install tile and much more! You can also find wonderful video tutorials on youtube.

Save on childcare

If you have young children that require childcare, daycare costs can add up to $700-$800 a month. Before you decide on a traditional daycare, do some research and see if there is someone in your network of friends or family members that’s looking for additional income and would be able to provide a quality care for your child. Finding a dependable and trusted individual can save you up to $50 per week or $200 a month.

How about babysitting cost? With a price tag of $10/hour, an evening dinner can turn into quite the expense. Why don’t you find another couple with children that you could exchange babysitting favors with? You can agree on monthly date nights and save each other $30-$40 a month just by watching one another’s children.

How about you? Have you found a creative way to save money? If so, share with all of us your best tips.

Budgeting for Periodic Expenses

Budgeting for Periodic Expenses

Periodic expenses are frequently overlooked while creating a budget.

It’s easy to budget for activities we do every month, like buying groceries, paying mortgage and utilities.  Activities that occur on a periodic basis tend to slip through the cracks and catch us by surprise, leaving us unprepared to cover the cost.

It’s those periodic expenses that can keep us trapped in the debt cycle; so it’s important we include all of those periodic expenses in our budget in order to have cash set aside when the expense comes up.

Make a List

Before you do anything else, take a few minutes and think of all the periodic expenses that should be part of your budget. Here is a quick lists to help you get going: Christmas, birthday gifts, car maintenance, medical expenses, home maintenance, vacation, HOA fees, etc. As you can see, this is a list of activities you know will happen sometime throughout the course of the year and will require funding, hence you should fund those expenses before they occur.

Fund Your Periodic Expenses

Now that you have a list of periodic expenses, estimate how much you expect to spend on each activity in the course of the year. Once you have the annual amount, divide it into 12 and that’s the monthly amount you should set aside.  If you’re using Mvelopes, it’s very easy to do. Just create a virtual envelope for each periodic expense and start funding it each month with the predetermined amount.

Sticky Fingers & Roll over

One very important thing to keep in mind is that you should not tap into your periodic expense envelopes in order to cover another expenses. You need to be disciplined enough to leave all of your periodic expense envelopes alone until that particular need comes up. The beauty of having a solid budget plan for those periodic expenses is that you may find a way to spend less than you budgeted, and, if that happens, you can roll the remaining amount over to the next year and build solid savings in those categories. Can you imagine having enough cash saved to cover a major car repair without tapping into your regular savings? Or how about doing your Christmas shopping completely debt-free year over year! What a freeing feeling that will be!

So do not skip over this important step in your budgeting process. Don’t underestimate the power of being financially prepared for those periodic expenses since they can add up to quite a good amount of cash that you will otherwise have to sacrifice from your savings, or use credit, in order to cover them. Expect the unexpected and prepare–you’ll be glad you did!

Making Technology Work for a Better Budget & More Savings

mobile-phones

The holidays have come and gone, and for many of us, so has our extra cash. Where our wallets were once flush (okay, so maybe just lightly lined) with cash, there now exists a big empty hole of perpetual sadness. But rest assured! All of those technological gifts and gadgets, those do-hickeys the kids on the television are going on about are capable of more than just letting us express our frustrations by beaning multicolored birds with rocks—technology to the budgetary rescue!

Budgeting Apps for Your Phone

While websites that provide budgeting tools have been popular for some time, the mobile versions just never caught on in the same way. That is, until apps were developed by everyone who was well, anyone. These handy little downloads are great for busy people—they live in your pocket and allow you to track and manage expenses with just a few strokes of your finger. Some even allow you to “scan” documents by photographing them!

Free Text Programs

There are a variety of applications available to help with your texting habits. Applications like Textfree (which actually costs $5) allow you to text whomever you want, free of charge. While some of these apps don’t offer special features (like picture messaging and emojis) they can save you a few bucks come bill time.

Video Calls

If you’re lucky enough to own a cell phone with a forward facing camera, this may not be of much help to you, but if you don’t, take note—there’s an app for that! Fring is a free application available to Android and Iphone users that lets you turn your single camera phone into a video calling device—sure beats a $200 phone upgrade!

Wireless Internet

Wireless internet is pretty much a necessity anymore, though it can get quite expensive. If you’re switching from dial up to wireless, there will be some hardware you need to buy, not to mention your monthly service fee. To save a few bucks, consider a program like Tether, which turns your phone into a personal wireless hotspot. For $50, Tetherer creates a network for you. Androids also have the built-in capability to tether, so check it out!

Music

You’ve probably figured it out by now, but the music industry has changed. Gone are the days of buying CDs only to find out you don’t like many of the songs. Music programs like Spotify and Pandora allow you to listen to music of your choosing for free. Though you’ll have to occasionally listen to a commercial, you can create playlists and radio stations, find suggestions for music you might like, etc.—all for free!

Let’s embrace technology. Celebrate it. Let it clean up the Christmas bank account.

Heidi Andrews roots for the LA Dodgers and the freedom to eat chocolate for breakfast. When she isn’t learning to make those cool designs on espresso drinks, you can find her writing about financial freedom, new technology, and investment opportunities for Jason Hartman Media. 

Budgeting for Periodic Expenses

budgeting for periodic

Image by 401(K) 2013

Periodic expenses are frequently overlooked while creating a budget.

It’s easy to budget for activities we do every month, like buying groceries, paying mortgage and utilities.  Activities that occur on a periodic basis tend to slip through the cracks and catch us by surprise, leaving us unprepared to cover the cost.

It’s those periodic expenses that can keep us trapped in the debt cycle; so it’s important we include all of those periodic expenses in our budget in order to have cash set aside when the expense comes up.

Make a List

Before you do anything else, take a few minutes and think of all the periodic expenses that should be part of your budget. Here is a quick lists to help you get going: Christmas, birthday gifts, car maintenance, medical expenses, home maintenance, vacation, HOA fees, etc. As you can see, this is a list of activities you know will happen sometime throughout the course of the year and will require funding, hence you should fund those expenses before they occur.

Fund Your Periodic Expenses

Now that you have a list of periodic expenses, estimate how much you expect to spend on each activity in the course of the year. Once you have the annual amount, divide it into 12 and that’s the monthly amount you should set aside.  If you’re using Mvelopes, it’s very easy to do. Just create a virtual envelope for each periodic expense and start funding it each month with the predetermined amount.

Sticky Fingers & Roll over

One very important thing to keep in mind is that you should not tap into your periodic expense envelopes in order to cover another expenses. You need to be disciplined enough to leave all of your periodic expense envelopes alone until that particular need comes up. The beauty of having a solid budget plan for those periodic expenses is that you may find a way to spend less than you budgeted, and, if that happens, you can roll the remaining amount over to the next year and build solid savings in those categories. Can you imagine having enough cash saved to cover a major car repair without tapping into your regular savings? Or how about doing your Christmas shopping completely debt-free year over year! What a freeing feeling that will be!

So do not skip over this important step in your budgeting process. Don’t underestimate the power of being financially prepared for those periodic expenses since they can add up to quite a good amount of cash that you will otherwise have to sacrifice from your savings, or use credit, in order to cover them. Expect the unexpected and prepare–you’ll be glad you did!