Budgets

Let A Good Budget Be Your Guide

February 27, 2015 By Twila Van Leer

Dave Ramsey recommends having an emergency fund of three to six months of expenses in place.

A budget is not the enemy. It is a road map that can keep you from crashing into the roadblocks that cause economic strain for many Americans, according to a set of “Your Life, Your Money” interviews. Without one, you’re flying blind.

Rule Number One of personal finance is a simple one: You can’t spend more than you have coming in without consequences. Rule Number Two is also simple: Save something from every pay check and you’ll build security and the ability to make necessary purchases without stress down the road.

One of the common flaws with budgeting is that people write into the budget what they know, things such as rent, food, utilities, insurance, transportation costs, tuition payments, etc. What breaks the budget are the things that don’t get written down, such as what you spend for cabs, coffee breaks, newspapers and all the little “pick-up” items that seem necessary at the moment. Write it down, whether it is an $800 computer or a $2 magazine. When you have a clear picture of the usual amount of spontaneous spending you are doing, allow yourself a certain amount for un-budgeted items and don’t go over the allowance.

Keep a spending diary that lists every item you buy for a period of time. It may help you discover how come the end of the pay period too often finds you without funds.

A simple way to analyze your spending habits is to download your banking transactions for a period of a year. Import the data into Excel. Sort the payees to help you categorize transactions. You can easily total the amounts your are spending at Starbucks or your favorite restaurant. Get totals on your utilities, housing and other fixed payments as well as your leisure spending. When you get this bird’s eye view of your spending, then you can make new decisions to help you create a workable budget that cuts unnecessary spending.

Don’t spend without thinking about it first. Impulse buying gets you into trouble. If it isn’t in the budget, you can do without. And give serious thought to what is really necessary and what simply sounds attractive at the moment. A little bit of sacrifice now may buy you a lot of security as time goes by and you gain control of your income and put it to work for you.

5 Tips To Cut Housing Costs

February 23, 2015 By Twila Van Leer

If you’re a typical family, you spend about 33 percent – about $17,000 per year – of your income on housing. That doesn’t mean just the mortgage or rent payment, but all of those related costs that are the natural result of living in a home.

Here are some tricks you can call on to reduce those costs.

1. Upgrade Your Appliances

It may make sense to you to stick with your old washer and dryer and the old standby refrigerator, but they might be costing you more in the end. Often, they were not energy-efficient in the first place and to continue using them is costing you money you could save by updating. The Department of Energy says some $47 billion is wasted on energy used by refrigerators produced more than 10 years ago. Investing in an Energy Star-rated appliance might save you from $35 to $300 over the lifetime of a large appliance.

2. Stop Keeping Up With Your Neighbors

Don’t add “frills” to your home that you don’t really need. So what if the Joneses next door throw in a swimming pool. Invest your money instead on an early pay-off of your home. Things such as swimming pools and Jacuzzis tend to lose their glamor over time.

3. Minimize Utility Usage

Be aware of heating and cooling costs and try to minimize. Put on a sweater when the weather begins to cool and keep the thermostat a couple of degrees low until you really need the heat. Use a ceiling fan and don’t kick in air conditioning until it is necessary. Get a programmable thermostat an set it to adjust the temperature in the house when you are away. Dropping the water temperature in the water heater a degree or two will save money without any significant dent in your comfort. You can save as much as 1 percent in your heating bill with each degree you drop the thermostat for eight hours of the day, usually when you are asleep or at work. Cover drafty spots, add weather stripping or insulation for further savings.

4. Monitor Water Usage

Monitor water use. Turn off the tap while you brush your teeth. Use cool or cold water if hot water is not essential. Clothing that is not heavily soiled will come as clean in cool or cold water. The difference could be as much as 56 cents per load of laundry. Having a full load of laundry or dirty dishes saves money.

5. Keep Up On Repairs

Make repairs as quickly as you notice there is a problem. Don’t ignore a leaky toilet or tap. Fix a small hole in a screen to prevent it getting larger. Postponing such repairs almost always costs money. Preventative maintenance, such as emptying the lint trap on the dryer, changing furnace filters and cleaning gutters routinely prevents problems. Make seasonal inspections of your home to see what is needed, than do it.

Putting aside approximately 1 percent of your home’s value toward maintenance and repair and maintaining that reserve is a good way to sidestep the wear and tear costs that are inevitable with home ownership. This is one area where the old “ounce of prevention” rule makes good common sense.

Coke Fans Now Pay More For Less

February 5, 2015 By Twila Van Leer

Smaller sized Coca Cola containers mean larger prices per ounce.

Amid growing health concerns about the effects of popular soda pops, many Americans are cutting back on the number of refreshing sips they allow themselves daily. And some of the producers of such products are paying attention.

Both Coke and Pepsi, the largest of the carbonated drinks purveyors, now offer smaller cans and bottles of product – and charge more for them. The smaller containers have fewer calories, hence less guilt for the guzzlers. But the price is steep. You won’t be saving any money by purchasing the mini cans.The smaller containers can cost twice as much per ounce as standard cans and bottles.

The 7.5-ounce mini-cans and 8-ounce or 8.5-ounce bottles have been around for awhile, but the soda giants are hyping them to ride the health-concern crest. Last year, Coke reported sales of a million mini-cans.

The shift is an about-face for the producers, who have in the past measured the volume of product sold. But they see an opportunity to give the soda drinkers alternatives while health officials are blaming their products for a role in the national epidemic of obesity, especially among children.

When soda sales reached their peak in 1998, the average American was drinking the equivalent of 576 cans a year. By 2013, that average had slipped to 450 cans a year. The smaller containers appeared to the producers a good alternative to seeing sales continue to slip. It fits into the current philosophy of smaller portions of all edibles.

So while the cans get smaller, the price tag gets larger. A regular 12-ounce can of Coke sells, on average, for 31 cents. The 7.5-ounce mini-can one shelf over carries a price of 40 cents each. That means the purchaser is paying 2.6 cents per ounce for the larger version, 5.3 cents per ounce for the cute little can. The result is increased revenue for the producers. Sales indicate that many soda fans are willing to pay the difference. The company’s sales for the smaller versions were up 9 percent through last October, while the old standard sizes only saw an 0.1 percent hike.

Still, the old standbys dominate the industry and nobody knows how long the yen for smaller servings will last.

Coke is hedging its bets with other products that cater to more health-conscious Americans, such as a reduced-calorie drink sweetened with a mix of sugar and stevia, a sugar substitute.

The whole “smaller is better” scenario is a direct about-face after years of increasing the size of soda pop servings. Until 1955, the standard 6.5-ounce bottle was the most frequently sold serving. Then came larger and larger containers, up to and including the three-liter plastic bottle. At the fountain, the availability of 32- and even 64-ounce cups fed the craze.

When it became apparent that all those big gulps of soda were contributing to poor health habits, officialdom began taking steps. In Berkeley, Calif., voters approved a per-ounce tax on the drinks. It seemed prudent for the Coke and Pepsi people to join the crusade for fewer calories. Last fall, the two producers were joined by Dr. Pepper in supporting an initiative to reduce the calories in their drinks by 20 percent over the next decade. Smaller-sized servings will be part of that campaign.

Budget Is The Key To Personal Finances

February 3, 2015 By Twila Van Leer

Budgets help you to meet your financial goals.

Whatever steps you are taking to make yourself financially secure, the word that is at the bottom of it all is “budget.” Without having a clear understanding of what resources you have coming in and what you have going out, everything else is just guesswork.

The process can be intimidating, but it lays the foundation for whatever moves you make. And it doesn’t have to be an awful experience. Get your family together now and get started. Here’s how:

Identify your goals. Your objectives will be guided by your own circumstances, which are likely vastly different from those of others. For instance, if you are retired, your financial map will look considerably different from that of a young married couple anticipating parenthood. Distinguish between short-term goals (getting rid of credit card debt, for instance) and long-term goals such as retirement. Once you have discussed your goals, compromising where necessary, begin creating a budget that will help you achieve these goals.

Identify all sources of income and make a list of monthly expenses and outstanding debts. The living expenses are usually pretty consistent and can’t be waived for other objectives. Then concentrate on debt elimination, even before working on retirement savings. Getting rid of the debt gives you more to stow away for the future. Go over your figures with a fine-toothed comb to see if there are ways to live more frugally so your leeway will be enhanced.

With all the ducks in a row and barring unexpected financial disasters, you are ready to put your plan (budget) into action. You will have a certain amount of money each pay period to pay down debt. Then the trick becomes to avoid the temptation to digress. You may have to adjust (see financial disasters, above) but stick with the budget unless there are compelling reasons to do otherwise.

Even with a budget in place, you need to reassess on a regular basis to be certain you are on track. Monitor spending carefully. It may have been frivolous spending that landed you in debt to begin with. Don’t let it happen again. Look continuously for ways to spend less.

Budgets are vital, but not set in concrete. Flexibility is essential as changing financial facts come into play. Talk about your budget monthly and look honestly at what is working and what is not. Readjust as necessary without throwing in the towel on your basic goals. Too much water under the bridge can wash away your good intentions and delay the progress for which you are reaching.

Not Too Late To Make Personal Finance Resolutions

January 17, 2015 By Twila Van Leer

Paying bills online is the easiest way to pay your bills on time.

By now, most of the resolutions made on Jan. 1 are in the wastepaper basket. Experience shows that most of them don’t last into the second week of the new year. But if you’re willing to take a second shot at it, here are some ways you can improve your financial standing in 2015:

Analyze how you pay your bills. Many, if not most, utilities, credit card issuers and merchants, give you the option of paying online. If you decide that is a good approach, give some thought to whether you will direct your payments to the creditor’s online payment center, or utilize your bank’s bill pay program. Either will allow you to make payments directly from your checking account and in some instances, automatic withdrawal is available.

These payment options have benefits. They save you having to keep track of payment due dates. The bank’s online bill pay keeps all your payment data in one site. It can save you time for more productive things.

If you prefer paper payments, get a system for storing all bills and receipts correlated to your banking. Set a time to review each month and balance your checking account. Having all your bank accounts – checking, savings and primary credit card all at one institution streamlines accounting.

Track spending. Knowing how your money comes in and goes out is critical to good management. Monitor accounts weekly. Watch for unexpected fees or unauthorized activities. Be sure to note ATM withdrawals as you go. Keep a spending log, either on paper or electronically, documenting every transaction and purchase. Trim if you need to.

Build a budget. Knowing up front where your money needs to go lets you make more confidant decisions about spending and investing. It is the foundation for your personal finances, a plan in concrete that keeps bills paid and allows for working toward the “rewards” of your labor – vacations and travel, further education and retirement.

A session or two with a qualified financial planner may be useful, especially as you embark on this resolution to make you money work for you. It can be done. Just do it.