Live Real, Now

The no-pants guide to spending, saving, and thriving in the real world.

Search Results for: three-alternatives-to-a-budget/budget-lesson-part-5/debt-burnout/living-the-xbox-life-on-an-atari-income/budget-lesson-part-1/contact-me/subscribe-by-email/garage-sale-manual/573

Living On Credit Cards

Finance

About 2 months ago, Linda and I decided to go back on the envelope system for all of the parts of our budget that we aren’t able to automate.

English: Money seized during "Project Cor...
English: Money seized during “Project Coronado” by the DEA. Going in “La Familia Michoacana” article. (Photo credit: Wikipedia)

The reason we’re doing this is because we’ve been consistently over budget when we do all of our spending on our credit cards.

The reason we switched back to using our credit cards is because it’s a royal pain in the butt to always make sure we’re carrying enough cash for groceries and gas and date night and fundraisers and cover charges, etc.

It’s still a royal pain in the butt, and we still suck at it.

But one of our envelopes is labeled “This went on a credit card” and is used for those times we forgot to grab cash before heading to the store.

In the last two weeks, that’s $500 that we forgot to bring with us.

Cash sucks.

I’m tempted to go back to using the credit card for our primary spending.  Yes, we are consistently over budget, but it’s not terrible….for some odd definition of “not terrible”.

We generally seem to have about $1000 left on the card after making our last monthly payment every month.  Every month.  The overall balance never grows, it’s just hanging out $1000 over what we have budgeted to be paid automatically on the card.

That’s a bad thing, but….

Since I make a payment every couple of weeks, the interest is never assessed on that balance.   In the last year, we’ve paid exactly $0 in interest, without any funny balance transfer deals.

By my calculations, that means our credit card has given us $1000 for free.

If we pay that off and get strict about using cash, won’t that mean our free $1000 would have to evaporate?

I like free money.

That also means that the total interest we paid in 2014 is $672.91, all to our mortgage.   Even if we have a small balance we carry, we’re not paying interest on that debt, and–worst case–we could raid our savings to make it vanish tomorrow.   I’m tempted to make that happen, but our savings goals are more important to me that paying back the free money.

Money Problems: 30 Days to Perfect Finances

Welcome to the series, Money Problems: 30 Days to Perfect Finances.   The series consists of 30 things you can do, each in one setting, to perfect your finances.  It’s not a system to magically make your debt disappear.  Instead, it is a path to understanding where you are, where you want to be, and–most importantly–how to bridge the gap.

Day 1: Setting Goals

To start with,  we look at 3 questions:

  1. What is your financial goal?
  2. Why?
  3. How can you get there?

Day 2: What’s Going Out?

On day 2, you’re going to find out what you are spending.  For most people, this will be a bit of a surprise.

Day 3: What’s Coming In?

For day 3, you’re going to examine exactly how much money you bring in each month and think about how you can make more.

Day 4: Making A Budget

On day 4, you’ll build a basic budget.   This doesn’t have to be intimidating.

Day 5:  Boosting Your Income

This is the day we really dig into ways to make more money, whether that means getting a raise or finding work on the side.  Nothing beats more income for balancing your budget and getting out of debt.

Day 6: Reducing Expenses

Second only to more income, reducing expenses is the best way to save money.

Day 7: Paying Off Debt

If you’ve got debt, you are in interest-slavery.  Make that go away!

Day 8: Insurance

On day 8, you’re going to look at the insurance you have and the insurance you need.

Day 9: Health Insurance

On day 9, you’ll spend some time learning about your health insurance options and how to examine what you’ve already got.

Day 10: Debt Insurance

Debt insurance is insurance you pay for that will pay your lender in the event of your death, dismemberment, disfigurement, disembowelment, or unemployment.

The rest is yet to come.  Check back often!

 

 

 

 

 

 

 

 

 

3 Habits Every Soon-to-be-Successful Debtor Needs to Cultivate

Finance

Getting out of debt is primarily a matter of changing your habits.   We’ve all heard people swear by skipping your morning cup of coffee to get rich, but that’s just a small habit.   Much more important are the big habits, the lifestyle habits.  Here are 5 habits to cultivate for financial success.

Frugality

“Beware of little expenses; a small leak will sink a great ship”– Benjamin Franklin

As Chris Farrel wrote in “The New Frugality“, being frugal is not about being cheap, but finding the best value for your money.  When my wife and I had our second baby, we couldn’t justify spending $170 on a breast pump, so we bought the $30 model.   It was quite a bit slower than the expensive model, and was only a “single action”, but for $140 of savings, it seemed worth the trade.   Six weeks later, it burned out so we bought a new one, still afraid to justify $170 on quality.   This thing took at least 45 minutes to do its job.  When it burned out 6 weeks later, we decided to go with the high-end model.   This beauty had dual pumps, “baby-mouth simulation” and it was fast.  The time was cut from a minimum of 45 minutes to a maximum of 15.   That’s 3 hours of life reclaimed each day fro $140. Six months of breastfeeding for each of two kids means my wife regained 45 days of her life in exchange for that small amount of money.   At the rate of 6 weeks per burnout, we would have gone through 8 cheap pumps, costing $240.   The high-end unit was still going strong when we weaned baby #3.  Buying quality saved us both time and money. I wish we would have gone with the good one from the start.  Sometimes, the expensive option is also the cheap option.

Maturity

A very sad, sad panda :(
Image via Wikipedia

“Maturity is achieved when a person postpones immediate pleasures for long-term values.” -Joshua Loth Liebman

Being a mature, rational adult is hard.   It means accepting delayed gratification over the more enjoyable instant variety. We save for retirement instead of charging a vacation.  It takes a lot of restraint to put off buying the latest toys, clothes, gadgets,  cars or whatever else is currently turning your crank until you actually have the money to actually afford it.   It means planning your future instead of looking like a surprised bunny caught in a spotlight every time your property taxes come due.   (Who knew that the year changed every year?  Do they really expect annual payments annually?  Geez!  There’s so much to learn!)   It means thinking about your purchases and buying what you actually need, actually want, and will actually use instead of resorting to retail therapy whenever you feel like a sad panda.    The only benefit to mature, rational management of your finances is that, given time, you will have the security of knowing that, no matter what happens, you will be okay.   That’s a huge benefit.

Pleasure

[ad name=”inlineleft”]

“Do not bite at the bait of pleasure, till you know there is no hook beneath it.” – Thomas Jefferson

If it hurts, you won’t do it.   You have to learn to take pleasure from from things that won’t make you broke and you have to learn not to hate putting off the things you can’t afford.    Take pleasure in the little things.  Enjoy the time with your family.  Presence means so much more than presents. So many people never learn how to enjoy themselves.  Take the time to experience life and enjoy doing it.

Update:  This post has been included in the Carnival of Debt Reduction.

Jules Bianchi – Is a high-risk career worth the money?

Celebrities

Formula One World ChampionshipThe violent crash at the Japanese Grand Prix calls into question whether the life of a racing driver is worth the money. These men are paid handsomely for their efforts, but they could die at any minute on the track. It is best for people to remember what it is like to do this job, but it is also wise for people to think about what it means to the driver who do this job.

The Risk

The risk in F1 is high, and Jules Bianchi saw that firsthand when he was injured so badly that he had to be rushed to the hospital for emergency surgery for head injuries. His crash was so violent that is stopped the race. People crash all the time, but this crash stopped the race. Bianchi is no doubt a millionaire, but people would wonder why he would risk it all just to drive a car quickly.

Every one of the drivers on the circuit does not have an imagination. People like Bianchi or Schumacher or Alonso or Vettel do not think for a second about what could happen when they crash. These men only think about winning races. They only think about doing their best. They know the risks, but they do not sit around thinking about it.

The Pay

F1 drivers are paid extremely well, and they participate in the most glamorous sport in the world. They do something that is more difficult than any other sport, and it is difficult, but they live the lives of rock stars. They know this fame will be short-lived, but they drive regardless.

Jules Bianchi knew the risks when he got in the car. He is being paid extremely well to do his job, and it is worth it to him. People around the world may not have the bravery or raw talent to become a great driver, but he does. He has a ride on the Formula One World Championship circuit. He has to take his car to the limit if he wants to do well.

The Alternatives

Someone like Jules Bianchi does not have to leave the sport even if he is injured badly. Many drivers will get back in the car, but other drivers will simply move to other parts of the sport. Drivers can become owners, engineers and test drivers. These drivers can become test drivers and designers for auto makers, and they can commentate on the sport they love.

They do not want to go to these alternatives because they cannot drive forever. There is also a Masters Series coming up for F1 where drivers who are over 45 can ride. These men get back in the car at high risk to their lives because it is what they love. When someone is this passionate about something, they must keep doing it.

10 Ways to Secure Your Kids Against Debt

Finance, Parenting

Everybody wants their children to do well.  I want my kids to grow up without making my mistakes.  Here are a few ways to help them avoid debt.

  1. Talk to your kids about money.  Your kids will never learn how to handle their finances if nobody teaches them how.   This is important.    The factor that contributes most to stress, divorce, long hours, and unhappiness can’t be left to chance.
  2. Set a good example. Spend less than you have and let them see you doing it.  No matter what you tell your kids, if they see you doing otherwise, they will learn the bad lesson.   Money, work, relationships.  They all need attention, and your kids are watching you manage each of them.  Make them proud.
  3. Open a savings account for them, and let them fill it. Teach them the value of their money by letting them work for it, watch it accumulate, and spend it on something they care about.  I make my kids work to convince me to make a withdrawal, so they know it is only for the important things.  I don’t, however, decide what is important for them.
  4. Start a college fund. $100 or $10, it doesn’t matter.  Start putting something aside today.   College costs keep rising.  In 10 years, or 20, you can be sure that college will cost more than it does today.  Last year, nearly two-thirds of students graduating with a four-year degree did so with an average debt of more than $23,000.   Anything you can do to move your kids towards the debt-free 35% will help.  They will thank you for it for the rest of their lives.  Remember, they are in charge of choosing your nursing home.
  5. Teach delayed gratification. Don’t let them think that every whim needs to be satisfied…ever, let alone immediately.  Sometimes, anticipation improves the act.   When I am looking forward to a good meal for a few days or weeks, I really savor it when I finally do get the chance to eat it.  If they want everything they see, make them figure out what they want most, and what it will take to get it.
  6. Teach them to balance a checkbook. This is one of life’s basic skills that far too many people are lacking.   If you can’t balance your checkbook, how do you know what you have?  If you don’t know what you have, how can you know what you’re able to spend on necessities, or even luxuries?  Knowing where you are is at least as important as knowing where you are going.
  7. Give them control of money. This is the best time to learn how to manage money.  Give them an allowance and make it big enough to cover school lunch and bus fare.   Let them practice real-world skills and, more importantly…
  8. Let them make mistakes with it. This is their opportunity to make financial mistakes that won’t haunt them for years or decades.   Let them have some money and let them screw it up.  When they can’t buy the new game, or can’t fix their car, they will learn.  It’s better to do that as teenagers living at home than as adults forced to move back home.
  9. Let them see your pride in their good decisions. If they do well, tell them.  Let their endorphin rush come from your praise instead of their purchase.  You aren’t helping them by getting them hooked on the latest gadget.  You are helping them by making them feel good about making the right decisions.
  10. Beat them with a stick.

How do you protect your kids’ future finances from the kids themselves?

 

https://liverealnow.net/tag/budget/

Be Prepared or Be Me

Finance, Life

Hail clouds often exhibit a characteristic gre...
Image via Wikipedia

We had some nasty storms roll through over the weekend. There was a lot of tornado-ish activity, 70 mile-an-hour gusts of wind, hail, and an electrical blackout.  For almost 24 hours, we were living in the stone age, with nothing but smartphones for internet, and high-lumen flashlights being used to see.   With no cartoons for the girls, we were forced to read them bed-time stories, while my son and his friends were forced to use their imaginations to entertain themselves.

Every time we called, the electric company added 12 hours to their estimated repair time.   Amazingly, they came in 7 hours ahead of schedule, if you don’t count the first two revisions.

By Saturday afternoon, we were out shopping for things we should have already had ready.

For years, we had discussed buying a generator.  For some reason, it never became a priority.  We have a large freezer and refrigerator full of food.   With no electricity, a generator was suddenly prioritized.   All of the places near us were sold out of budget-priced generators when we decided it was better to drop $400 on that than to lose $600 worth of food.   We did find one, eventually, but it would have been better to take it out of the garage than have to shop for it when we needed it.   Naturally, 10 minutes after we got it home, the power came on.  Do yourself a favor:  if you own a home and have a small corner available for storage, start shopping for a generator. Pick one up on sale instead of waiting until you have no real choice.

We have a ton of batteries.  It’s one of the things we stock up on when they are on sale.  Unfortunately, our broadest-beam flashlight takes a 6-volt battery, and we don’t keep a spare.   By the end of the night, it was getting pretty yellow and dim.  Another night would have killed it completely.   This wasn’t a widespread blackout, so there was no shortage of batteries, but it would have been nice to have the spare already at home.  Check your emergency supplies and make sure you have replacement batteries that fit everything you need.

The one thing that would have improved the night most is a good lantern.   We had our 5, plus two of my son’s friends all trying to play board games by flashlight.  A lantern could have been set on the entertainment center and lit most of the room.

For everything we were without due to the blackout, the one thing I truly missed was the air conditioner.  When the storm died, so did the wind.  Completely.   Opening all of the windows didn’t help at all.   Other than that, it was nice to have everyone forced to interact.   Nobody was whining about being bored and we were all having fun.

I want to schedule a pseudo-blackout more often.