Budget Planning

Get things done to start the year right!

There are several things I do in January to make a fresh start for myself and my family.

I take the credit cards out of my wallet and put them in my copy machine. Why do I do this? So, I’ll have up-to-date information on my cards in case my wallet is lost or stolen. If you want to do this, too, make sure to spread your cards out on the paper so you’ll have room to hand-write the contact phone numbers found on the back of the cards. This serves a few purposes:

You won’t have to go online or search past bills for contact numbers in case you need to cancel those cards in a hurry.
You will know exactly which cards you need to call on, and,
You’ll remember to take the credit cards off the copier.

I set new files for 2013. This includes my accordion multi-pocket folder for this years’ tax information. If I am organized at the start of the year, I will be all set for the accountant at year end.

I shred our paystubs when the W-2’s come in. Check to make sure they agree first!

We review last year’s bills. We really like to save money on every day expenses so we can afford the the things we really enjoy. So, we look at how we’ve spent our money in the past year to see if we can make any improvements. In the past, we have deregulated our electric, lowered our cell phone package, and cut out TV channels we don’t watch. We have made choices about what subscriptions to keep and what not to renew, keeping only the most useful magazines and memberships.

January is a month we plan our extra spending. These are the expenses that aren’t in the usual monthly budget, but are essential to our standard of living. If you want to plan your extra spending, here are some examples and tips:

What do you want to do this year for fun? We usually already have a vacation or two in mind.
What big events are taking place for your family or circle of friends? You usually know a year in advance if someone is planning a family reunion or getting married. Be sure to factor in travel costs.
What home projects do you need or want? With this past year’s weather, you may be thinking it’s time for that major improvement to your home.

If you need to spend money to have it, then it’s worth planning ahead. It’s so much easier and less stressful to have the money saved than to try to figure out where can to get the money at the last minute.

If you’re in a relationship, how do you handle finances as a couple?

Are you in a relationship? If you are, you know what it’s like to share your life with someone you love: your joys, your sorrows… and your money.

One of the biggest reasons for divorce (or breakups) is finances. I know you don’t want that to happen, so what can you do about it? Talk. Communication is the key to handling joint finances.

People have different ways of handling their finances. One person might be a saver who really values the money saved for future dreams and needs, while the other might be a spender who lives in the moment. If these two individuals become a couple, there can be disagreements about money that can escalate to divorce.

Take a minute to talk with each other about your money habits. It can be a really eye opening conversation. Really listen and try to understand the other person’s point of view. What did they learn about money growing up? What do they want right now? Where do they want to be in 1, 5, 10 years and beyond? With this understanding, you can choose a path that will work for the both of you. Meaning, the spender will save a portion and the saver will spend some money. Come up with mutual goals and agree on how you will achieve them together.

The goal is to handle your household finances and your goals in a blended way so that both people are comfortable. To do this, communication and action is key so that all feelings are heard and considered.

If you’re in a relationship, tell me how you handle your finances as a couple. Who handles the money? Who makes the budget? Who sets the goals?

Planning for 2012 Financially

I have to admit that I am a planner – I already have my 2012 calendar. Even if you prefer to live in the moment, you have to admit that some areas of your life must be planned ahead.

For example: if you are a homeowner and have your homeowner’s insurance escrowed, you can’t just switch insurance companies a week or two before the policy is set to renew. You need to make the changes ahead of time so that your mortgage servicer can send the check to the new insurance company.

Getting divorced? You might have to make alimony or child support payments. Children grown? Your alimony or child support will be ending soon. Is your employer struggling? You could see a reduction in wages, medical coverage or even be laid off.

Finances can be overwhelming. They certainly can be if you have to make many changes in a short amount of time.

I pencil noteworthy financial dates in my calendar to help me start the process early. In my case, my homeowner’s insurance policy will expire in early February. I don’t want to tackle this project during the holidays, so it’s on my calendar to do in early December.

Thinking ahead will save you the eleventh hour stress. Look at your year and pencil in the important changes you have coming in your future. By addressing these matters with time on your side, you can do more comparison shopping and make changes to save money. Get out your 2012 calendar and start planning.

WBDC CT Budget Coaching: Enroll Today

You know that I am a big believer in budgeting. Knowing where your money goes is the only way you can make changes to your spending so you can achieve your goals. For some people budgeting is a scary idea.

In today’s economy, many people are struggling with their finances. Simple short term or long term goals such as paying bills, planning for retirement or a child’s education can seem impossible when you’re worried whether you’ll still have a job in a few years. It’s critical that individuals gain an understanding of their current financial picture as well as set, and work towards, future financial goals.

I am involved with a program that can assist you with your personal finances and budgeting. This program assists with providing clarity on what is important in your life and your personal finances. We facilitate and empower you to build a budget, and a plan, that supports your needs and goals for today and your future. Through this program you will uncover more choices in managing how you think, feel, and act around money.

How to enroll

This budget coaching program is a four-month program which includes workshops and one-on-one coaching both in person and over the phone. For more information, an application, and eligibility requirements, please call me at 203-353-1750. Completed applications must be received by September 30. There is a $40 fee if accepted into the program.

Would you rather have a coupon or a raise?

Question: Which of the following is worth more?
A. $100 a month pay increase.
B. Saving $90 a month by using coupons.
C. The monthly interest earned on $100.

(The answer to our trivia question is at the bottom. But first, let’s talk about your savings account.)

Do you have an emergency credit card or an emergency savings account? Using a credit card for emergencies is like kicking yourself when you’re down. Whether you need a new roof, water removed from a basement, or car repairs, you will already be spending more than your monthly budget. You don’t want to pay interest on top of that.

In 2007, Americans on average saved 1.2% of their gross wages. In these uncertain times, it is important that you have a savings account to fall back on. Experts say that your emergency savings should be equal to a minimum of eight months of income.

Do you have that much in savings just in case? If not, here are a few suggestions to get you to save more:

Have a set amount withdrawn from your paycheck every pay period. Done automatically, you won’t even notice it is missing.
Start using cash. When you break a paper bill, save the change by putting it into a bank or other container. You will be surprised by how much this can add up to monthly.
Look at your spending habits and reduce or eliminate something. Pay yourself the reduced amount by putting it into your savings account. Some suggestions: bring your lunch to work or make your coffee / tea at home instead of buying it at the store.
Just say “no.” If it cuts into your savings plan, and it’s not a life necessity, then wait. Reward yourself after your savings account is healthy.

This should boost your savings account and give you peace of mind for whatever life sends your way.

Trivia Question Answer:
B. Saving $90 a month by using coupons.

The savings you receive by using coupons are savings with after-tax dollars. Even if you are in the lowest tax bracket of 15%, a $100 raise is only worth $85 after taxes.

Using coupons is a great way to trim expenses so you can build your emergency savings account.

Take 5 Minutes Each Day to Improve Your Finances

One little step each day may be the answer to your finances being in order Are you the type of person who procrastinates about your finances? Do you dread the thought of addressing issues? This is your solution.

Take 5 minutes each day and do something to better for your financial picture These are some examples of how little things can add up Make a call to your credit card company to question a charge that you are unsure of Call and cancel that unwanted service that you are paying for to save you money on your bill Make that appointment to take that class Spend 5 minutes filing your receipts so that you’re able to easily balance your checkbook when the bank statement arrives Open that high interest bank account so that you earn more interest on your money Set up the automatic deduction so that you save money on a regular basis.

I personally called and cancelled a service that I wasn’t using on my phone bill I have registered for a driving class that will lower my auto insurance premium I called a doctor’s office to question a charge instead of just paying it without thought These little steps took me less than 5 minutes each We all can find 5 minutes in our day to address these issues that get put off.

These tasks may seem overwhelming all together But if you do one each day, your financial picture will improve and you will be taking care of your finances and saving money.

Reduce Interruptions, Retake Your Time

This is the second part of streamlining the interruptions in your life.

As of January 1, 2005, the Do Not Call list went in to effect Adding your phone number(s) to the list prohibits companies with who you do NOT have a direct relationship (non-profits and political organizations are exempt) from contacting you for solicitation purposes You can register your telephone number(s) (cell phones too) so that unwanted calls are substantially reduced To register your phone numbers go to www.DoNotCall.gov or call 800-382-1222 Registration takes 31 days to take effect and numbers remain on the list for 5 years, at which time you should re-register So if you registered when the law started, it’s time to re-register.

Also in 2005, the Junk Fax Protection Act was enacted Each fax should include the option for you to remove yourself from that companies fax list, by providing you with a toll free number to call to get your number removed from their list.

Sometimes after all your efforts, you continue to receive unwanted communications, and you have made it clear to the company that you do not wish to be contacted and you have no relationship with them or a sister company and you continue to get contacted, you have the option of reporting the company to their regulatory agency For example, for calls and faxes contact the FTC to file a complaint.

The system is not perfect, but I personally have eliminated most unwanted mail, calls and faxes.

If You Can’t See Your Money, You’ll Spend More

Don’t let your bank profit from overdraft fees! In 2009, it’s estimated that banks earned $20 billion (yes, with a b) in overdraft fees Transactions from ATM machines, debit cards and reoccurring bill payment transactions are mainly responsible for record overdrafts These are invisible money transactions because you can’t see how much you’re spending or how much you have left in your account.

With the new Credit Card Act of 2009, things are changing.You will not be able to automatically overdraw your bank account.Instead, your transaction will be declined.But, that information may come too late to save you from difficulties with creditors and merchants.

The only way to prevent overdrafts is to keep good financial records You must know how much you have available at any given point Better yet – use cash According to studies, people who use actual cash spend 20% less than using other forms of payments That’s because they can see how much money they have left after making a purchase If you choose to use cash, use larger bills The larger the bill, the less likely you are to spend it It is so much easier to spend $5, $10 and $20 It doesn’t seem like much if you spend $20 in 5 different stores But if you have to break a $100 bill, you will have a true understanding of how much you’ve spent.

If you still want to use invisible money, and you aren’t going to track your account, you will have to opt-in with your bank to have your transactions pre-approved Remember that you will still have the fees associated with overdrawing your account.Those fees are typically over $35 for each transaction.

Spend wisely by avoiding fees Avoid fees by keeping good records or by using cash Overdraft fees are a total waste of your hard earned money.

Can you save a year’s worth of income?

Can you save a year’s worth of income for your emergency savings account? Yes, you can. Here are some steps to get started:

Be patient. You won’t save a year’s worth of income in a single year. Work out how long it will take by determining how much you can set aside each month. If it takes 3-5 years, then so be it. Five years will go by whether you save money or not, so you might as well have something to show for it.
Set aside a firm amount from each paycheck. Think of it as a monthly or weekly bill you owe yourself. You can even automate the process so it’s deducted from your paycheck like taxes or insurance.
No take backs. Your savings account deposit should be just as irrevocable as your mortgage payment or utility bills. You can’t call the gas company and ask for your payment back so you can buy a new outfit. Don’t take money out of savings for anything less than a real emergency.
Reduce expenses. There are so many ways to cut back, especially when you know it’s temporary. Do you have cable TV, a gym membership, an expensive stylist? Give those up for a few years. As soon as you have a year’s worth of savings, you can go back to the way things were.

Remember, saving money is not a sacrifice because the money is ultimately yours.