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3 Simple Ways Keeping Your Spending Organized

: Image via Wikipedia

On of the biggest problems we had with controlling our finances was knowing where the money went. Have you ever said “Honey, do you realize we spent $900 eating out this month?” I have. The amount we spent on some categories was mind-blowing. Maybe some people don’t see $900 at restaurants, $400 on clothes, or $300 on books and movies as a problem, but I do and it was ridiculous! We’ve dialed back hard on the unnecessary spending and the first step was to understand our spending habits. That was a painful self-examination.

Here’s what we did:

Have a Budget. This is quite simply the most basic step in organizing your finances. If you don’t have a budget, you don’t have a plan for where your money will go. Without a plan, your money goes on about its business without consulting you. Your money does not like you. It will do its level best to get as far away from you as fast as possible. A good budget is like shackles for your cash. Never underestimate the value of a good pair of shackles.
Use a Spending Journal. Before we went cash-only, I was a no-cash spender. Every purchase was with my debit card and every receipt went into my wallet. That’s a disorganized, but effective spending journal. When it was time to balance the checkbook, I could look through my receipts and no exactly where the money went. It was nice to have a chance to wave good-bye and send it a postcard as it ran away from home. Other people use a small notebook or even–for the truly cutting-edge–the register that comes in a box of checks. Whatever system you choose, make sure you use it. If you don’t know where your money has gone in the past, how can you plan for the future?

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Use a Ledger. Most people call this the checkbook register. I use Quicken. About once per month, I sit down with any receipts we’ve generated and the list of transactions on the bank website and I balance the checkbook. I note everything we’ve spent, flag everything that has cleared the bank, and make sure all of the numbers match. This gives me a chance to review everything we’ve had incoming and outgoing and address any abnormalities while there is still a chance to get the bank to address problems.

How do you track your spending?

Update: This post has been included in the Carnival of Personal Finance.

Homeland: What does it cost to make a hit TV show?

Celebrities

When you are producing your own TV show, you can do whatever you want to cut costs. However, you must realize that making a hit TV show is something that is very expensive to do. You must pay your actors handsomely because they are usually Hollywood A-listers, but your actors are only the beginning of the payroll.

You have a very large staff that works on the show to make sure everything works. If you have ever watched the credits at the end of a TV episode, you know that there are many people working on the show. You must remember that every single person on the credits was paid a salary to work on the episode. You must now imagine looking at your balance sheet and deciding how to pay all these people for each episode.

There are many people who wonder why their TV shows do not look as well produced as others. This is something that is left up solely to money. Homeland has Showtime behind them, and Showtime can afford to pay for the exotic locations and all the effects that are needed. However, there are other shows that have to shoot on a much smaller budget. They use a smaller amount of locations, and they use a smaller amount of effects. This does not hurt the show in all cases, but a lack of money would make a show like Homeland impossible.

When Hollywood was equal parts television and movies, Homeland would have become a movie because of the budget. The budget that is spent on just one episode of this show could be used to make a decent movie. In today’s Hollywood, there are many TV shows that would have been movies 20 or 30 years ago.

When you watch Homeland, you need to remember that there is a ton of money behind every episode. You may not like every episode, but you must remember that the producers and studio paid handsomely to have that episode produced. The money that fuels Hollywood today is off the charts, and we must respect that when every new episode come on the television.

5 Steps to Save

Finance

: Image by BitHead via Flickr

“Saving is too hard.”

“I don’t know where to start.”

“How much should I save?”

“Who the heck are you to tell me what to do with my money?”

“Shut up, Jason.”

These are the things I hear when I start talking about getting a good strategy in place to save some money. Financial matters are intimidating to a lot of people. They’d rather not think about their money any more than they absolutely need to, if that much. Here, I’m breaking it down to some simple steps to make saving easy.

1. Get motivated. Why do you want to save some money? Are you trying to make a secure future, or do you just want to buy a new toy? These are the kind of questions you have to ask yourself. Nobody else can tell you why you want to make changes to your lifestyle, and nobody else’s reasons matter in the least. Saving money is something you have to do for you.

2. Figure out how much you can save. Generally, you’re going to need a budget so you can figure out what you can afford to save, but not always. If you are making ends meet, then you get a raise, you can obviously afford to bank the difference. If you do that, you’ll never even notice the missing money. If you try to save so much your mortgage goes unpaid, you’re plan is doomed to failure.

3. Open an account at a new bank. The biggest problem I used to have when I was trying to save was that it was too easy to get the money. Every time I checked the balance of my checking account, I saw the balance in the savings account. Worse, it took seconds to transfer that money from my savings account to my attached checking account. Every time I wanted to see if I could afford whatever toy I was looking at, I’d see money that wasn’t earmarked for anything in particular. Naturally, that money got spent more often that it was ignored and allowed to grow. Now, I can completely forget about the money.

4. Automate. I’ve automated everything I can. All of my bills are paid automatically, except for one company that insists on quarterly paper invoices. I’ve got $665(neighbor of the beast!) automatically transferred to my INGDirect account, to get divided between my various savings goals, including a fund for my semi-annual property tax payments and a fund to pay for the braces we haven’t actually had to buy yet, but will in a couple of years. The money disappears into a bank I don’t use for my day-to-day expenses and grows completely out of sight. Every once in a while, I look at the account and get surprised by how much has accumulated.

5. Get rich. Once you’ve got the other four steps in place, all you’ve got to do is let it work. Over time, you will build wealth in a way that may surprise you. Your goal at this point is to do nothing new. Every once in a while, you can pull out some money and tuck it into an investment account to get some real growth going for you.

“Thank you.”

“You’re the best.”

“What would I do without you?”

“How can I show you my appreciation? <wink><wink>”

“What the heck are you doing with my wife?”

These are the things I always hope to hear after sharing my strategies to save money.

Mortgaging a Rental Property

Finance

Now that we’re down to the last ten grand on our mortgage, we’re starting to look into getting another rental property. The one we’ve got has worked out pretty well over the last two years, giving us about $800 extra each month. We broke even on all of the repairs we had to sometime in the spring. That’s almost $5000 in pure, almost-passive income.

With numbers like that, if we can get a similar property and keep the mortgage under $800, we should be golden for getting another property and avoiding having it as a new drain on the budget.

However…

There’s always a however.

Our current tenants are moving out at the end of the month, which means the passive part of the income is over while we either find a renter or hire a property manager to do that for us. Since that came at the same time I got the opportunity to be unemployed, there was a bit of panic at my house.

The idea of having a mortgage, no job, and no renter scared us into waiting to buy another property.

It’s not stopping us from getting ready for the next property, though.

We live in a fairly high-cost area. Our house is on an eighth of an acre and is valued at around $250,000. Our rental is on a slightly larger lot, but is a smaller house valued at around $200,000. We don’t have a quarter of a million dollars laying around waiting to hatch into a new house, so we’ll be getting a mortgage. A mortgage for a business property is a bit different than one for a home you’re planning to live in.

First major difference? You need a 20% down payment, with a 25% down payment getting you a much better rate. We don’t quite have that, but if we pushed, we could have it in 6 months, I think. And then we’d have no cushion if anything bad happened in our lives.

The next thing is that we’ll need a reserve that covers all of our expenses–personal and investment–for 6 months. That can be home equity, savings, cash, or retirement accounts. We’ve got this one covered.

We don’t qualify for a standard mortgage plan right now, but there are options:

Live poor and save hard for a year. We could make it happen in 6 months, but I will still want an emergency cushion just in case a job or tenant go away.
Buy as an owner occupant. This would mean we buy a new house, then move into it and rent out our current house. We’d have to stay there a year before we’d be allowed to rent out the new property.
Compare mortgages online. The internet is a wonderful thing, full of the complete knowledge of the human race. There is no better way to try to find an affordable mortgage than hopping on the net. Just make sure you’re looking at a reputable site and dealing with a legit mortgage company.
Live comfortably and save slower, then buy the property in 2 or 3 years.

Honestly, of all of the options, we’re probably going to do a combination of 3 and 5, but 2 is a serious consideration, since we’ve talked about moving out of the suburbs a bit anyway.

Did I miss anything? How would you fund a rental property?

My Mortgage is Smaller Than My Credit Card Balance

Finance

It’s been one heck of a spring summer for my family, financially speaking, and it turned out to be a bit more than we had budgeted for.

English: Victor Fung and Anna Mikhed dancing a... — English: Victor Fung and Anna Mikhed dancing a ballroom tango. The couple, dancing for the USA, came third in the World Professional Standard Championship 2009. Photo taken in 2006 by Porfirio Landeros, Kwixite Media, in San Diego, California. (Photo credit: Wikipedia)

Here’s what we’ve done on top of our regular spending, so far:

Remodeled both of our bathrooms(at the same time!) ($6000-ish)
Summer camp for two kids ($500)
Swimming lessons for three kids ($350)
Replaced the entire air conditioning system in my car ($1600)
Finished paying for our current round of ballroom dancing lessons($400)
New mattress on our bed($1200)
My wife is off work for the summer. Part time and sporadic hours when it’s not the school year.

Taken in reverse order…

Mattress

The wire frame on our mattress broke. I wish that was a complement to my prowess, but nothing was happening when it snapped. Sleeping with a jagged piece of steel poking you sucks, to say the least.

Dancing

Ballroom dancing is something my wife and I both enjoy, and it’s good exercise, so we decided to keep it up. We are officially in training for competition-level dancing, but now that our favorite place to dance is closed, we may not continue. The lessons are paid for through next spring, though.

Air conditioner

My A/C system “grenaded”. Basically, the insides decided to disintegrate and go flowing through the rest of the system, mucking it all up. And making the car undriveable. On the plus side, this hard-to-find leak I’ve been ignoring in favor of annual $75 A/C recharges is fixed, now.

Swimming, not dying

My youngest kids have never had swimming lessons and my oldest isn’t a strong swimmer. Helping my kids not drown is a good thing.

Camp

We put the down payment on camp back in February, then promptly forgot about paying for the rest of it until the deadline hit. I paused while typing this to add it to my budget so I don’t forget for next year.

The remodel

We had, at one point, $9500 set aside for the remodel, but I raided that account a few times if we went over on our monthly spending. Then, when we got the estimate, we neglected to include one of the subtotals together when we agreed to it, so the job cost more than I was expecting from the start. We still got a great price, though.

Until the tub surround didn’t come in a color we liked and could get in less than 6 weeks. So, we upgraded to porcelain tile.

And the ceiling started peeling.

And we decided to get nice fixtures, so it would be a bathroom we loved enough to demonstrate physically, for years to come.

And we noticed the basement bathroom floor tiles were loose.

So much money just poured out of my credit card.

At the moment, we have approximately $8,000 on our credit cards. That’s the highest balance we’ve carried in years. This month was the first time I’ve paid interest on a credit card since August 2012.

What’s our plan for the credit cards?

I get a $500 bonus every month. Getting this bonus is almost entirely under my control.
We gave our renters(two of our closest friends) a good introductory rent until their current lease expires. Their rent triples at the end of the month.
I stopped paying double mortgage payments.
We have some money in our emergency fund.
We should have about $1000 left in the remodel account when the job is finished.

That’s $1500 as an immediate payment, plus about $2300 per month on top of our normal spending to pay off the cards.

That means we’ll be down to about $4300 in two weeks. When my wife gets her first full paycheck at the end of September, we’ll have the cards paid off.

Then comes the challenge of catching back up on the mortgage. Until yesterday, we were projected to pay off our house on December 1. Our current balance is $4660, with a mandatory monthly payment of $470.58. That’s about 10 months of payments. We were making an extra $520 interest payment each month, which brought it down to the December payoff date. For the next 3 months, we’re only going to be paying roughly the minimum, which means we’ll have to pay a bit over triple for November and December to be done with it this year.

I think we can do it.

How do we avoid this in the future?

With our renters paying full rent now, our goal is to pretend Linda isn’t getting paid when her work picks up again in September. We want to save or invest everything she makes, on top of the current savings. Not all of that will be long-term, and not all of it will be spendable. That saving will include things like braces for the younger kids, vacations that are more than just long weekends, and maxing out both of our retirement accounts.

That should still let us pad out our emergency fund to 4 months of expenses by spring, which is a pretty good cushion for us.

I hope. I haven’t done the math.

Twitter Weekly Updates for 2010-01-23

Misc

Uop past midnight. 3am feeding. 5am hurts. Back to bed? #
Stayed up this morning and watched Terminator:Salvation. AWAKs make for bad plot advancement. #
Last night, Inglorious Basterds was not what I was expecting. #
@jeffrosecfp It's a fun time, huh. These few months are payment for the fun months coming, when babies become interactive. 🙂 in reply to jeffrosecfp #
RT @BSimple: RT @bugeyedguide: When we cling to past experiences we keep giving them energy…and we do not have much energy to spare #
RT @LivingFrugal: Jan 18, Pizza Soup (GOOOOOD Stuff) http://bit.ly/5rOTuc #budget #money #
Free Turbotax for low income or active-duty military. http://su.pr/29y30d #
To most ppl,you're just somebody [from casting] to play the bit part of "Other Office Worker" in the movie of their life http://su.pr/1DYMQZ #
RT @MoneyCrashers: Money Crashers 2010 New Year Giveaway Bash – $8,300 in Cash and Amazing Prizes http://bt.io/DQHw #
RT: @flexo: RT @wisebread: Tylenol, Motrin, Rolaids, and Benadryl RECALLED! Check your cabinets: http://bit.ly/4BVJfJ #
New goal for Feb. 100 pushups in 1 set. Anyone care to join me? #
RT @BSimple: Your future is created by what you do today, not tomorrow"— Robert Kiyosaki So take action now. #
RT @hughdeburgh: "Everything you live through helps to make you the person you are now." ~ Sophia Loren #
Chances of finding winter boots at a thrift store in January? Why do they wear our at the worst time? #
@LenPenzo Anyone who make something completely idiot proof underestimates the ingenuity of complete idiots. in reply to LenPenzo #
RT @zappos: "Lots of people want to ride w/ you in the limo, but what you want is someone who will take the bus w/ you…" -Oprah Winfrey #
RT @chrisguillebeau: "The cobra will bite you whether you call it cobra or Mr. Cobra" -Indian Proverb (via @boxofcrayons) #
RT @SuburbanDollar: I keep track of all my blogging income and expenses using http://outright.com it is free&helps with taxes #savvyblogging #
Reading: Your Most Frequently Asked Running Questions – Answered http://bit.ly/8panmw via @zen_habits #

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