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Budget Lesson, Part 6
It’s been a month since I’ve written a post for the budget series, so I’ll be continuing that today. See these posts for the history of this series.
This time, I’ll be reviewing my non-monthly bills. These are the bills that have to be paid, but aren’t due on a monthly basis. Some are annual, some are quarterly.
- School Lunch – This could be cut by sending a bag lunch. We pay about $1.25 per day for school lunch. At that price, I don’t think I can beat the nutrition, let alone the convenience of the meal. We pay this whenever the account gets below $10.
- Property Taxes – We pay this semi-annually. This bill goes up every year due to the ****** ***-******* ******-******* who don’t care about their constituents making ends meet. ******* ***** ******* *******. Huh. Who knew WordPress came with a censor? I could move, but I’d have to get out of commuting distance to get this down much.
- Life insurance – I’ve got two quarterly life insurance policies. I can’t get these much cheaper, but I should be able to next year. The questions asked if I’ve smoked in the last three years, and that will be up on Halloween.
- AAA – It’s only been recently that I’ve owned vehicles reliable enough to avoid paying my AAA dues for me. I could cancel this, but for $80 per year, the hotel discounts make it a wash. One vacation per year comes close to making the difference.
- Vehicle Registration – The only way to cut this would be to get rid of a vehicle. I don’t think that’s possible for us. We work in opposite directions and, for at least one quarter per year, spend too much time chasing around for activities.
- Daycare – We’ve been using our current daycare provider since my oldest(10) was one. When my youngest turns 2 in June, our costs will go down. Without one of us quitting our job, this bill can only go down as the kids grow up.
- City Bill – This bill combines our garbage, water, and sewer. With three adults, three kids, and 5 animals in the house, reducing our garbage level is difficult. We do try to manage our water usage in the summer, to keep that down.
- Web host – I have a few domain names and a hosting package to handle my side hustles and miscellaneous projects. This is a deductible expense. I have been allowing my domain names to expire if the project isn’t being actively pursued.
- Memberships – I have annual dues to two organizations. I’m making payments on lifetime memberships, so these will be going away in about 18 months.
Reviewing this list, there doesn’t seem to be too much I can cut and accomplish any meaningful savings. Am I missing something?
Debt Options
When you’re buried in debt, bankruptcy can seem like the only option. When you get make ends meet, no matter how hard you pull on them. When bill collectors interrupt every dinner. When you have to choose between food and rent. When there is always more month than money. Do you have another choice?
Yes, you do.
Before you rush to file bankruptcy, take the time to understand your options.
Debt Settlement
Debt settlement is when you quit paying your bills and start sending the money to settlement company. The settlement company does…nothing. Really. They take your money and drop it into investments or interest-bearing accounts. You don’t get the interest, they do. Eventually, when your creditors are howling, the settlement company offers to make a settlement on the account. If the creditor accepts pennies on the dollar to kill your debt, the settlement company pays them. If not, they get to howl louder and make you more miserable.
While this process is playing itself out over years, your credit is taking a beating. You are doing nothing to dig yourself out of the hole you’ve dug. Finally, when your creditors are so desperate that they accept the settlement offer, you get a huge additional hit to your credit. “SETTLED IN FULL” is not a good status to have on your credit report.
Debt settlement companies do nothing you can’t do for yourself, and doing it for yourself at least lets you keep the interest your money is earning.
Debt Consolidation
Consolidating your debt comes in two varieties, a debt consolidation loan and a debt management plan.
A debt management plan is when you send one large payment to a debt consolidation company, and they pay your creditors for you each month. The company will usually attempt to contact your creditors and negotiate your interest rate and payments to try to get you into a situation that precludes bankruptcy and will keep your creditors happy. In the simplest terms, this is a debt payment consolidation.
A debt consolidation loan is generally done by taking out a line of credit against your home or other collateral and using that money to pay off all of your bills. Then you make the payments to the bank, to pay off your line of credit. The problem is that, if you can’t make the individual payments, can you make the payment to the line of credit? If you can’t, you risk losing your house.
Repayment
This option is my personal favorite. It involves taking responsibility for your decisions, cutting out the unnecessary expenses in your life, and paying your bills. There are a few popular plans for accomplishing this, including Dave Ramsey‘s debt snowball. The most important thing to remember are 1) debt it bad so stop using it; and 2) pay off as much as you can afford to each month. It isn’t as sexy as making all of your debt disappear, but it’s still a good option.
Bankruptcy
Let’s see. You borrow money on the promise to pay it all back. After you borrow too much, you renege on your agreement. You admit your word means nothing and you get all of your debt cancelled, forcing your creditors to raise the interest rates for all of the responsible debtors out there, as a way to balance the risk of those who will never pay. In exchange you doom yourself to lousy credit for the next 10 years. In extreme circumstances, bankruptcy may be the only option, but, I’m not a fan.
As you can see, there are almost always better options than bankruptcy. Please, before you take that leap, look into the other choices.
This is a sponsored post written to provide some insight into the world of bankruptcy and debt consolidation.
Best of Money Carnival #87, the Gold Rush Edition
- Image via Wikipedia
Welcome to the Best of Money Carnival #87, the Gold Rush Edition.
On January 24th, 1848, gold was discovered in Coloma, California by construction overseer James W. Marshall. The following year, one hundred thousand people moved to California to either strike it rich, or profit from those who were trying to strike it rich. The gold rush began 163 years ago today.
10. N.W. Journey presents Business use of Home Deduction posted at Networth Journey and says, “How to deduct your business home expenses.”
Some people recommend stockpiling gold so you’ll have something of value to spend after society as we know it collapses. Does anyone know how to make change from a gold bar for a loaf of bread?
9. Darwin presents Present Value of Money Explained – MBA Monday posted at Darwin’s Money and says, “One of the most important financial concepts is also one of the most misunderstood. Make sure you understand the Present value of Money – with these real life examples. It will save you thousands!”
In 1854, a 195 pound gold nugget was found at Carson Hill in California. It was valued at $43,534. That would be worth $3,160,357.20 today.
8. RJ Weiss presents What Your Optimal Income? posted at Gen Y Wealth and says, “An exercise to find your optimal income level.”
Q: Which weighs more: a pound of feathers, or a pound of gold? A: A pound of feathers. Gold is weighed using Troy Weight, which only has 12 ounces per pound.
7. BWL presents How To Select A Financial Advisor posted at Christian Personal Finance and says, “Find out how to select the best financial adviser for you.”
Until the onset of modern electronics, which use gold because it doesn’t corrode or tarnish, gold had no practical value of its own. Its entire value resided in the fact that it was pretty and relatively scarce.
6. Miss T presents 10 Ways to $ave Energy Comfortably | Prairie EcoThrifter.com posted at Prairie Eco-Thrifter and says, “How great is it to save money and the planet at the same time?!”
Q: Which weighs more: a ounce of feathers, or a ounce of gold? A: A ounce of gold. Troy Weight has fewer ounces that avoirdupois, but each ounce weighs more. There are 31.1 grams in a Troy ounce, but only 28.4 grams in a standard ounce.
5. Craig Ford presents Employers Look at Credit Reports | Ludicrous or Smart Business? posted at Money Help For Christians and says, “Should employers be able to see your credit report?”
Outside of collectible or government-issued coins, gold is priced according to it’s spot price, which fluctuates constantly. Dealers will generally pay a percentage under spot when buying gold, then sell for a percentage over spot. Always know the spot price of gold before you agree to buy or sell any.
4. MoneyNing presents Tax Time: Do I Have to Report that Income? posted at Money Ning and says, “Did you receive any income last year? Do you really have to report everything?”
Gold is the 58th most rare natural element, out of 92.
3. Silicon Valley Blogger presents I Just Lost My Job! How I’m Downsizing My Household Expenses posted at The Digerati Life and says, “I share my story of job loss and what ideas I have for paring down my expenses in order to cope with this loss of income. In the meantime, I’m doing what I can to find a new job!”
Only 20% of the gold from the Gold Rush deposits has been reclaimed. The rest is still out there.
2. The Financial Blogger presents 5 Reasons Why You Need A Partner In Your Business posted at The Financial Blogger and says, “A post outlining the benefits of a business partner.”
As of the end of 2009, more than 160,000 tons of gold have been mined, most of which was done in the latter half of the 20th century.
And the winner is…
1. Amanda L Grossman presents Frugal Lessons from People Who Survived the Great Depression posted at Frugal Confessions – Frugal Living and says, “Have you ever met someone who was alive during the Great Depression? They are changed people. The Great Depression left a great impression on their thoughts, their styles, and their habits. I am fascinated by this time period, and researched the question of what frugal habits these people developed to survive.”
I’d like to thank everyone who participated. Next week’s host is PT Money, so don’t forget to submit your entry!
2011 Goals
It’s that time of the year when people make public promises to themselves that last almost as long as the hangover most of them are going to earn tonight, otherwise known as New Year’s Resolutions.
Not a fan.
I am, however a fan of planning out some concrete goals and doing my best to meet them. I do this through a series of 30 day projects. I set a goal that can be reached in 30 days, and push for it. I tend to make my goals fairly aggressive, and I tend to meet them.
Here were my goals and results for 2010:
- January: Wake up at 5am AND read to my kids every night before bed. These were easy goals to meet. A year later, I am still getting up much earlier than I ever have, even if it’s not 5AM. I write better late at night than I do early in the morning, anyway. I’m not still reading to my kids every night, but we are making progress on teaching my four-year-old to read.
- February: Do 100 push-ups at one time by the end of the month. I accomplished this in 22 days. I also had a secret project that involved doing something sweet for my wife every day. By the end of the month, she was convinced I had done something horrible that I was trying to make up for.
- March: Do 100 sit-ups at one time by the end of the month. It took me a week, but I found out how bad sit-ups are for your back. Pure failure.
- April: Spring Cleaning. I will declutter every room in my house this month. We missed one room and one closet, but made a lot of charities happy.
- May: Have a sit-down dinner with my family, at the dining room table at least 3 times per week. We managed this one and enjoyed it, but we haven’t managed to keep it up. I’ll have to try this again.
- June: No computer use, while anyone else in the family is awake, except for household necessities, such as bills. This one worked well and improved the quality of our interaction. I’m not quite this strict about it, but my computer use has gone down dramatically while my family is awake.
- July: Write fiction every day. I don’t think I wrote more than a few pages of fiction, but I did write every day.
- August: Buy nothing new this month. We came very close to doing this one perfectly. It wasn’t easy.
- September: Attempt to learn a new language. Total bomb. I never even got started.
- October: No yelling at the kids. Have you ever thought about trying this with a a two-year-old and a four-year-old? We never got started.
- November: No complaining. Not at home, not at work. I didn’t make this an actual month, but I’ve been trying to complain much less. I think it’s been working.
- December: I will have done 14 projects this year. December is a month off. As planned, I took December off.
So I missed 4 months of projects. This year, I’m going to modify my overall plan and only do 6 projects, every other month. That will give me a month off to either relax or incorporate the goal into my ongoing habits without any stress.
Here are my goals:
- January: I’m going to do Tim Ferriss’s Slow-Carb diet. Yes, it’s a fad diet, but it beats the constant stream of garbage I eat now. The basic plan is to avoid anything white; no bread, pasta, rice, potatoes, or sugar. That’s accompanied by a targeted supplement regimen and a timed exercise plan to manipulate my metabolism. I’m not adding any aerobic exercise to my day, because I want this to be as controlled an experiment as possible. If it’s working at the end of the month, I will keep it going. It’s time to not be fat anymore.
- March: In February, I managed to get myself able to do 100 pushups in a single set. In March, I hurt my back trying to do the same with sit-ups and that killed my workout habit. This March, I’m going to do the 100 pushups challenge again, but this time, I’m going for perfect pushups. Last year, they got sloppy after about 80. This year, that won’t be good enough.
- May: I’m going to do at least 30 days of the Couch to 5k running program. It’s a 9 week program. As a 30 day project, it’s designed to establish the habit. When I tried picking up running last year, my knees were causing problems. Hopefully, my January project will mitigate that this year.
- July: I’m going to pick up a new language. This is the failed plan from September 2010. I’ve narrowed it down to either Spanish, Swedish, or Italian. One is useful, one is a part of my heritage, and one is for fun. At the moment, I’m undecided.
- September: Undecided. I am leaning towards a “nice” month. 30 days of doing something nice, for someone, somewhere. If I go this route, I’ve got 9 months to plan, because that’s a lot of things to do.
- November: Absolutely undecided. Any suggestions?
That’s my plan for the new year. Six specific goals, each lasting 30 days. I could definitely use some help for September and November. Please give me some suggestions in the comments.
Budget Lesson, Part 3
I keep calling these lessons, but they are examples and explanations, more than lessons. Names aside, please see Part 1 and Part 2 to catch up. The Google Doc of this example is here.
This time, I’m going to review my non-monthly bills. These are the bills that have to be paid, but not on a monthly basis. Some are annual, others are quarterly, or even weekly. Every month, the amount–adjusted to the monthly equivalent–is set aside in Quicken.
- School Lunch – We don’t qualify for any of the reduced lunch plan, and I don’t know that it is possible to send a brown-bag lunch that is both cheaper and healthier than the school’s menu. This is automatically replenished whenever it gets below $15. This actually gets paid about every other month.
- Property Taxes – Semi-annual and increasing every year. I know the valuations around me, so I don’t think an appeal would win.
- Life insurance – We pay this quarterly. If I die, my family will be completely covered for several years, without adjusting a single expense. If the expenses are adjusted to account for the fact that I won’t be eating, driving, or using electricity, it will last much longer. This is a separate policy from the one discussed in Part 2. GET INSURANCE! Take care of your family.
- AAA – Since we got reliable cars, this hasn’t been a money-saver, but it’s priceless in terms of peace of mind.
- Vehicle Registration – We have two cars and a motorcycle that need registration every year. I’m planning to sell the bike in the spring, but I was planning that for last spring, too. It’s easy to put that off, since I enjoy riding.
- Daycare – Daycare is a weekly expense. As a two-income family, this isn’t an expense we can do away with…yet. As time goes on, the bill will be getting lower. In June, my youngest reaches a cheaper pricing table and my oldest is almost ready to be done with daycare completely.
- City Bill – Our garbage and sewer are paid through the city on a quarterly basis.
- Web host – I’ve got this blog, plus a few other side projects hosted here. I have been simplifying and reducing the projects that aren’t fun or profitable, but I’m not sure this expense will ever go away.
There aren’t too many items here that can be legitimately and responsibly trimmed.
