November – Zero Based Budget – (Irregular Income)

Work was good last month. I managed to bring in an additional $800 myself not to mention the weather has been good and hubby has been working hard. This month, we project a total of $5,100. Don’t be fooled…we will be saving for the winter with these extra funds. Winter is always “cold” as far as funds go. So here is what we are planning for this month in our budget…

    General Account:

Utilities (electric, tv, telephone) $375 (we increased this a bit since the weather is getting colder)

Health Insurance $499 (this is going up $40 next year)

Other Insurance $120

House Payment $589

Extra Principle on House Mortgage $400 (we are officially down to less than 4 years)

Children’s 529 plans $100

Charitable Donations $400 (we are increasing this for the holidays and also since income has been good)

    Envelope Additions:

Grocery $650 (I see oyster stew and shrimp this month :) )

Gas/Auto $230 (gas prices are going down!)

Clothing $100

Vacation $100

Christmas/Gifts $200 (right around the corner!)

Home Projects $100 (looking to get a bookcase for downstairs this month)

Recreational $150 (ball & gymnastics for the kiddos)

    Savings

$1,187!

Once we get through the winter, we will reassess our savings account and depending on what’s left, we may pay a lump sum to our house mortgage in order to get rid of this thing faster.

Where is your money going this month?

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September – Zero Based Budget – (Irregular Income)

The last few months have been pretty good. However I am feeling the need to “store up for the winter”. With our irregular income in the construction industry winter usually hits us pretty hard. We will be saving for the winter for when funds are low. This month, we project a total of $4,300

Here is what our budget looks like…

    General Account:

Utilities (electric, tv, telephone) $350

Health Insurance $499

Other Insurance $120

House Payment $589

Extra Principle on House Mortgage $400 (we are officially down to less than 4 years)

Children’s 529 plans $100

Charitable Donations $300

    Envelope Additions:

Grocery $600

Gas/Auto $245

Clothing $100

Vacation $100

Christmas/Gifts $100 (it’s sooner than you think!)

Home Projects $100

Recreational $150 (ball & gymnastics for the kiddos)

    Savings

$647!

Where is your money going this month?

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The Budget Month In Review (examining what works and what doesn’t)

It’s the end of the month. Did your money behave? How did your budget plan work out for you? Do you have any extra money? Did you run short?
These are questions you need to ask yourself before next month…before your next budget. A budget is only good if it actually works. Did your budget work last month? If it didn’t, you need to make changes NOW! Every dollar has a name, every dollar knows where it’s going. If just one of those dollars didn’t go where you told it to; then your budget failed. Sit down right now and figure out what worked and what didn’t and pave the way to a perfect September budget!

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Get Rid of Stuff…Finding Extra Money

You often hear Dave Ramsey talk about selling so much stuff on eBay and Craigslist that the children think they are next. Well, what exactly does that mean? I can tell you from personal experience that it means a lot of extra money. When we started the Dave Ramsey plan over 3 years ago, we were gazelle intense. Hubby was not quite as enthusiastic as I was, but nether less we were jumping in headfirst. I started looking around the house at things that were simply just clutter and putting them on eBay. The list included DVD’s (who really watches them again?), video games, toys, clothes…just about everything under the sun. We collected all this extra money and threw it straight to our debt snowball. It was great and I was truly amazed at the amount of things that we were willing to part with and the money that it added up to. So go now, look through all your cabinets, drawers, shelves and pick out a few things and list them. See how it goes and I guarantee that you will find some extra money.

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Invest Or Pay Off Debt

I know we all struggle with what to do with our excess money each month. YEAH RIGHT! But there is a question I would like to address. Should we pay off debt or invest? Some things to consider may be…

Type of Debt
There is a big difference between consumer debt (credit cards, vehicle, etc.) and mortgage debt. What did you spend the money on? Was it clothing or dinner that has long been gone, or is it a house that is hopefully going up in value?

Interest Rate
Some people answer the question whether to pay off debt or invest using the interest rate as their deciding factor. It is easy to decide if you are paying 23% on that credit card, but let’s say you have a home mortgage with an interest rate of 3.0% and you are looking at a mutual fund with a historical return of 10%. This 7% difference is what we struggle with.

Dave Ramsey has an interesting way to help answer questions such as this. Turning the question around, ask yourself, would you take out a 3% loan to invest with a possible rate of return of 10%?

I like to only think of things that I know will not change, that aren’t variable or dependent upon other factors. The interest rate on that mortgage (if it’s a fixed rate loan) will stay the same. There will be no change from month to month, always 3%. However, there is a lot that can change in regards to that mutual fund. Nothing is guaranteed.

So what do you prefer?

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June – Zero Based Budget – (Irregular Income)

We are finally seeing a real income increase this month. We have a total of $4,600 to work with this month. Oh YEAH!

So happy to be in charge on our money! Now lets tell every dollar where to go…

    General Account:

Utilities (electric, tv, telephone) $350

Health Insurance $499

Other Insurance $120

House Payment $589

Extra Principle on House Mortgage $400 (this keeps us in line to pay off our only debt of our house in less than 5 years)

Children’s 529 plans $100

Charity $250 (we are increasing this for June. The kids will be going to some Vacation Bible Schools and we want to give)

    Envelope Additions:

Grocery $600 (looking forward to this going down next month when the garden starts coming in)

Gas/Auto $245

Clothing $100

Vacation $500 (increasing this a bit since we are headed to the BEACH in a few weeks)

Christmas/Gifts $100 (yes, it will be here soon!)

Home Projects $300 (will finish the playhouse this month!)

Recreational $200 (its summer fun!)

    Savings

$547!
Yes, we are spending a lot more this month but the important thing is that we are still saving!

Where is your money going this month?

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Is Student Loan Debt “GOOD” Debt?

There has always been a debate on whether or not a debt is GOOD or BAD. There are some obvious…Payday loans = BAD, House = GOOD. But what about student loan debt? Is it always a good debt? Or can it sometimes be a bad debt?

I recently had a conversation with a person that tried to convince me that her $70k student loan debt was a “GOOD” debt. Let me give you the facts and you decide…

She is a 38 year old mother of 2 who has been going to school full time for the last 3 years. Her husband is the sole breadwinner of the family. She is going to school to be a teacher. Teachers in our area have an average income of about $40k per year. On a personal note, her children are struggling in school but she wants to show them that anyone can succeed in school.

So what do you think? Was this a smart move on her part? I personally do not believe it was. For the fun of it, let’s run some hypothetical numbers…

4 years of income she lost (a modest $25k per year if she would have kept her previous job) $100,000 plus
Student Loan of $ 70,000.

By this calculation, she is starting off with a negative $170k before she even starts! Now, let’s assume she gets a job directly after she graduates at the age of 39. She will be making approximately $15k more per year then if she stayed at her previous job. If she devotes this entire $15k to paying of the loan and compensating for the debt she racked up during her 4 years loss of income (and don’t forget about interest); it will take her approximately 15 years to get herself back to even. She will then be 54 years old before she can start seeing a return on her investment.

Some say the best investment is in yourself and I totally agree with that statement but does this always mean a diploma hanging on your wall? So many people think that student loan debt is good debt; but is it always good debt?

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Debit vs. Credit


It’s a battle of the cards. Debit vs. Credit. Which one is right for you? Let’s find out the differences between the two and their advantages.

What’s the Difference?
A debit card is directly tied to a checking account. Each debit card transaction debits funds from that checking account immediately. You must have the money in the account or the transaction will not be approved. A credit card is not tied to a checking account. Each credit card transaction is a loan from the credit card issuing company with you as the borrower. The bottom line is that a debit card is using your own money and a credit card is using someone else’s money.

What are the Advantages and Disadvantages?

When you use other people’s money there is a price to pay. Interest rates for a credit card can be astronomical not to mention the maintenance fees, late fees, and the like.

Points and commercial perks are cited by a lot of people as the reason they prefer to use a credit card. Don’t be led astray since some debit cards have the same perks. PerkStreet for example offers a debit card with a points system similar to Visa/MasterCard.

Some people argue that a credit card offers more protection than a debit card. If either card is fraudulently used, the transaction has to be disputed with the card’s issuing institution. I have personally disputed a credit and a debit card transaction and didn’t have trouble with either. On another note, if you chose to use a debit card, make certain you don’t carry a large balance on that account since the only thing that can stop a thief from continuing to use your debit card may be a zero balance. You should have multiple bank accounts anyway with some that don’t carry a debit card just in case your debit card account is stolen, you have a backup fund.

You will spend more if you use a credit card. It’s a known fact that consumers spend more money when they use a credit card vs. a debit card or even cash (easier to spend someone else’s money than your own). In fact cash is the safest, cheapest, easiest way to pay and ultimately, you will pay less.

Know your options and pick what’s right for you but most importantly, take control of your money. You are the boss of those greenbacks. Don’t fall for point scams, high maintenance fees, and other hidden costs that will cost you more in the long run. Know what you are spending no matter what type of currency you use.

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May – Zero Based Budget – (Irregular Income)

Things are finally starting to look up a little. Spring has definitely sprung here and construction has picked up which means the hubby is extra busy. We have $4,200 to work with this month. The biggest change this month is that we are adding $100 to our house principle payment. We really want to pay this thing off and it looks like we are putting away more that an average of 10% into savings each month so we increased the principle payment to be on schedule to pay off the house in 48 months!

Remember, with the Zero-Based budget, every dollar as a place to go with nothing left over. Here is our May 2013 budget…

    General Account:

Utilities (electric, tv, telephone) $300

Health Insurance $499

Other Insurance $120

House Payment $589

Extra Principle on House Mortgage $500 (We are wanting to shorten the payoff to about 48 more months!)

Children’s 529 plans $100

Charity $150

    Envelope Additions:

Grocery $600 (I’ve cleaned out the pantry and we have eaten a lot of our extras, so I’m bumping our food budget up this month, however it should go down when the garden starts coming in but that will be next month)

Gas/Auto $250 (I’ve raised this a little, ball season has started and we are running the roads a little more

Clothing $100

Vacation $120

Christmas/Gifts $ 75

Home Projects $100 (Still working on the playhouse!)

Recreational $100

Garden Fund $35 (I will be buying some more seeds and plants this month)

    Savings:

$562! YAY!

Make your money behave!

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Put The Brakes On Extended Car Loans

OMG! I recently read that according to the credit-tracking company Experian, the average vehicle loan is now 65 months. Some people are even opting for an EIGHT year loan. Can I get an OMG!? That is absurd. Are these people planning on living in these vehicles?

Why do we think that car loans are acceptable, good debt? Do cars increase in value like a home? Does a car define who you are? When I talk to individuals regarding the pending purchase of a car (i.e. auto loan), here are a few things I hear…

But I need to get my monthly payment down to something I can afford!
I want to say this as nicely as possible…..This is STUPID! If you need this long of a term to get the kind of monthly payment you can afford, they you are better off walking, you don’t need a car! Be honest with yourself, if you can’t afford a payment, then don’t get one. Save up and buy only what you can afford.

It’s an investment.
A vehicle is a bad investment! Then add on compound interest on a long term loan and this is a no win situation. Some would argue that a vehicle is not an investment at all, it’s an expense.
A vehicle loses value the moment you drive it off the lot. Just think about it, do you really want to drive your retirement down the road?

I deserve a nice car.

NO! What you deserve is financial freedom and getting a ridiculous loan on something that depreciates faster than your mother-in-law annoys you isn’t going to get you there. You do deserve a nice car, but you deserve it debt free. The feeling you get driving a debt free car totally out weights the feeling of that payment to your checkbook. As Dave Ramsey would so famously say “Live like no one else now so that later, you can live like no one else”.

Let’s all make WISE decisions when purchasing a vehicle (or perhaps deciding NOT to purchase a vehicle). Think before you sign on the never ending, dotted line!

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