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Budget Lesson, Part 3

Finance

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.

School Lunch

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.

Budget Lesson, Part 6

Finance

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?

Credit Cards: How to Pick a Winner

Finance

Image via Wikipedia

We live in a decidedly credit-centric culture.   Whip out cash to pay for $200 in groceries and watch the funny looks from the other customers and the disgust from the clerk.    It’s almost like they are upset they have to know how to count to run a cash register.

If someone doesn’t have a credit card, everyone wonders what’s wrong, and assumes they have terrible credit.  That’s a lousy assumption to make, but it happens.   For most of the last two years, I shunned credit cards as much as possible, preferring cash for my daily spending.   Spending two years changing my spending habits has made me comfortable enough to use my cards again, both for the convenience and the rewards.

Having a decent card brings some advantages.

Credit cards legally provide fraud protection to consumers.  Under U.S. federal law, you are not responsible for more than $50 of fraudulent charges.  many card issuers have extended this to $0 liability, meaning you don’t pay a cent if your card is stolen.  Trying getting that protection with a wallet full of cash.

The fraud protection makes it easier to shop online, which more people are doing every day.   At this point, there is no product you can buy in person that you can’t get online, often cheaper.   How would you order something without a credit card?  Even the prepaid cards you can buy and fill at a store will often fail during an online transaction because there is no actual person or account associated with the card.  The “name as it appears on the card” is a protective feature for the credit card processors and they dislike accepting cards without it.

If you’re going to use a credit card, you need to make a good choice on which credit card to get.  There are a few things to check before you apply for a card.

Annual fee. Generally, I am opposed to getting any card with an annual fee, but sometimes, it’s worth it.    If, for example, a card provides travel discounts and roadside assistance with its $65 annual fee, you can cancel AAA and save $75 per year.     A good rewards plan can balance out the fee, too.   I’m using a travel rewards card that has a 2% rewards plan.  That’s 2% on every dollar spent, plus discounts on some travel purchases.    In a few months, I’ve accumulated $500 of travel rewards for the $65 fee that was waived for the first year.  The math works.  A card that charges an annual fee without providing services worth several times that fee isn’t worth getting.

Interest rate. This should be a non-issue.   You should be paying off you card completely every month.  In a perfect world.   In the real world, sometimes things come up.   In my case, I was surprised with a medical bill for my son that was 4 times larger than my emergency fund.   It went on the card.  So far, I’ve only had to pay one month’s interest, and I don’t see the balance surviving another month, but it’s nice that I’m not paying a 20% interest rate.  Unfortunately, as a response the CARD Act, the days of fixed rate 9.9% cards seems to be over.

Grace period. This is the amount of time you have when the credit card company isn’t charging you interest.  Most cards offer a 20-25 day grace period, but still bill monthly.  That means that you’ll be paying interest, even if you pay your bill on time.  To be safe, you’ll need to either find a card that has a 30 day grace period, or pay your balance off every 15-20 days.  Some of the horrible cards don’t offer a grace period of any length.  Avoid those.

Activation fees. Avoid these.  Always.  There’s no card that charges an activation fee that’s worth getting.  An activation fee is an early warning sign that you’ll be paying a $200 annual fee and 30% interest in addition to the $150 activation fee.

Other fees. What else does the card charge for?  International transactions?  ATM fees?  Know what you’ll be paying.

Service. Some cards provide some stellar services, include concierge service, roadside assistance, and free travel services.   Some of that can more than balance out the fees they charge.   My card adds a year to the warranty of any electronics I buy with it, which is great.

Credit cards aren’t always evil, if you use them responsibly.   Just be sure you know what you’re paying and what you’re getting.

What’s in your wallet?

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The Luxury of Vacation

Finance, Parenting

This was a guest post I wrote last year to answer the question posed by the Yakezie blog swap, “Name a time you splurged and were glad you did.”

There are so many things that I’ve wanted to spend my money on, and quite a few that I have.  Just this week, we went a little nuts when we found out that the owner of the game store near us was retiring and had his entire stock 40% off.  Another time, we splurged long-term and bought smartphones, more than doubling our monthly cell phone bill.

This isn’t about those extravagances.  This is about a time I splurged and was glad I did.   Sure, I enjoy using my cell phone and I will definitely get a lot of use out of our new games, but they aren’t enough to make me really happy.

The splurge that makes me happiest is the vacation we took last year.

Vacations are clearly a luxury.  Nonessential.  Unnecessary.  A splurge.

When we were just a year into our debt repayment, we realized that, not only is debt burnout a problem, but our kids’ childhoods weren’t conveniently pausing themselves while we cut every possible extra expense to get out of debt.  No matter how we begged, they insisted on continuing to grow.

Nothing we will do will ever bring back their childhoods once they grow up or—more importantly—their childhood memories.  They’ll only be children for eighteen years.  That sounds like a long time, but that time flies by so quickly.

We decided it was necessary to reduce our debt repayment and start saving for family vacations.

Last summer, we spent a week in a city a few hours away.  This was a week with no internet access, no playdates, no work, and no chores.  We hit a number of museums, which went surprisingly well for our small children.  Our kids got to climb high over a waterfall and hike miles through the forest.  We spent time every day teaching them to swim and play games.   Six months later, my two year old still talks about the scenic train ride and my eleven year old still plays poker with us.

We spent a week together, with no distractions and nothing to do but enjoy each other’s company.  And we did.   The week cost us several extra months of remaining in debt, but it was worth every cent.   Memories like we made can’t be bought or faked and can, in fact, be treasured forever.

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Sunday Roundup: It’s Push-Up Time

Life

I Knew Pushups Would Pay Off Someday
Image by reid.gilman via Flickr

It’s the end of a month, so it’s time to announce my new 30 Day Project.   Last February, in 22 days, I went from having my abs cramp after doing 15 push-ups to doing a set of 100.   Yes, really.

The problem is that the push-ups weren’t perfect. Funny things happen to your body when you are doing 100 push-ups.   It’s hard to tell what your body is doing.  I had good form for the first 80, but after that, my body wasn’t perfectly straight.  I looked like a typical second grader in gym class.   But  I did it.  They were push-ups.

I haven’t done a push-up since.

In March, I am going to get myself back up to 100 push-ups, only this time, I will only be doing perfect push-ups.

Here’s the plan, based on what worked last year:

This weekend, I established my baseline.   I did as many push-ups as I could, until the point of failure.  Failure for this purpose is defined as either my form faltering or me collapsing.  I went until I couldn’t hold my body straight.

Starting on the first, I will be doing 5 sets of push-ups, twice a day.

Set 1: One half of my baseline. Starting from 24 push-ups, this set will be 12 push-ups.  As I progress, this set will never be more than 20 push-ups.  It is the warm-up set, after all.

Sets 2-4: ¾ of my baseline, so 18 to start.

Set 5: Go to failure. Once again, failure is defined as faulty from.  This will establish my baseline for the next session.

If I don’t progress for 3 days, I will take a day off to recover and–given previous experience–come back with some serious improvement.

This is a self-correcting progression.  If I can’t meet the previous day’s baseline, my last set will be lower, which will lower the baseline for the following session.

An interesting question I have is how it will affect my diet.  I haven’t been exercising at all, to see how well the slow carb diet does on it’s own.  Now, I’m going to be adding an aggressive exercise plan on top of it.   A plan that involves a bit of muscle bulking.  I’m guessing that my weight loss will slow down a lot, but I will shed inches like mad.  I will be tracking my progression, and my weight and  measurements.   The graphs should be fun.

30 Day Project Update

I am on the Slow Carb Diet.   At the end of the month, I’ll see what the results were and decide if it’s worth continuing.   For those who don’t know, the Slow Carb Diet involves cutting out potatoes, rice, flour, sugar, and dairy in all their forms.   My meals consist of 40% proteins, 30% vegetables, and 30% legumes(beans or lentils).    There is no calorie counting, just some specific rules, accompanied by a timed supplement regimen and some timed exercises to manipulate my metabolism.   The supplements are NOT effedrin-based diet pills, or, in fact, uppers of any kind.  There is also a weekly cheat day, to cut the impulse to cheat and to avoid letting my body go into famine mode.

I’m measuring two metrics, my weight and the total inches of my waist , hips, biceps, and thighs.   Between the two, I should have an accurate assessment of my progress.

Weight: I have lost 33 pounds since January 2nd!   That’s 3 pounds since last week.  Only 9 more to meet my goal for February.  Oh wait.   I won’t be hitting it this month.

Total Inches: I have lost 17 inches in the same time frame, down half an inch since last week.

Giveaway

I’ve got some codes for H&R Block Premium Online.  It’s federal only and the state return costs an extra $35, but that’s still a screaming deal.  Premium handles small business and investment tax issues.  If you want to get it, leave a comment saying so.  First come, first serve, until I’m out of codes.

Best Posts

Yes, I Am Cheap has a post about growing up poor.

Public Service Announcement: Liquidation sales are rarely good deals.  When one store in a chain closes, the profitable merchandise always gets shipped to another store.   The rest of it will often get marked up, in anticipation of people shutting off their critical thinking skills in the face of big “On Sale” signs.

I’ve found a new life goal: underground glowworm cave tubing.  Wow.

OpenLibrary is offering up 80,000 ebooks to borrow, for free.   10,000 of them are still in copyright.   I need a kindle.

LRN Timewarp

This is where I review the posts I wrote a year ago.  Did you miss them then?

A few years ago, I sold a truck(on payments) to a friend, who promptly quit paying me and disappeared.   I ended up playing repossessing the truck.

There was also a story about how I convinced two big companies that collecting on me for a bill of more than $800 wasn’t worth the effort.  It was good, because I didn’t make the call.

Carnivals I’ve Rocked and Guest Posts I’ve Rolled

Slow Carb Diet: How to Avoid Going Bat-**** Crazy was included in the Festival of Frugality.

Three Alternatives to a Budget was included in the Totally Money Carnival.

Protect your home was included in the Carnival of Personal Finance.

Budgets Are Sexy ran my post, Side Hustle Series: I’m a Gun Permit Instructor.  I forgot to link back to this, last week.

Prairie EcoThrifter ran my post, The Luxury of Vacation for the Yakezie Blog Swap.

Thank you! If I missed anyone, please let me know.

Yakezie Blog Swap

Eric hosted the Yakezie Blog Swap, which is a bunch of bloggers writing on the same topic and sharing the posts with each other.   Here is his list of the participants this round.

I wrote about my journey to become a DJ at Beating Broke.

Beating Broke wrote about shoe shopping at Narrow Bridge.

Barbara Friedberg got a really nice couch and shared the experience at Wealth Informatics.

Suba doesn’t think the rent is too damn high, in fact, Suba thinks it is worth it and shares at Barbara Friedberg Personal Finance.

Mr. and Mrs. BP spent a lot when they got a dog. Read about it at 101 Centavos.

101 Centavos went nuts on an anniversary, but you know what that can get you… Read about it at Broke Professionals.

Latisha Styles’ post at Bucksome Boomer is I Spent How Much?! My Birthday Trip to the Bahamas.

Kay Lynn spent her heart out on a new car with all the bells and whistles and you can read about it at Financial Success for Young Adults.

Derek got a sweet new digital camera and tells us about it at My Personal Finance Journey.

Jacob has splurged a couple of times on travel and outdoor gear and has no regrets and shares the experiences at My Life and Finances.

Miss T. likes to splurge on travel. We have something in common. The difference? She wrote about it at Live Real Now.

Jason is a fan of the luxury of vacation. You can read about it at the Prairie EcoThrifter.

Squirrelers went to Europe for three weeks. Totally worth it! Read about it at Money Sanity.

Money Sanity likes good champagne. I can’t judge, I like good Scotch. Read about why at Squirrelers.

Melissa took 10 days and took the trip of a lifetime to visit a friend in China. Read about it at The Saved Quarter.

The Saved Quarter bought a Blendtec blender. Yes, the blender from “will it blend.” The story is at Mom’s Plan. (In case you were wondering, this blender can blend anything. Well, anything but Chuck Norris.)

Get More Out of Live Real, Now

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Have a great week!

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How to Live Happily Without a Budget

Finance

Three years ago, we sat down and built our budget. We spent 9 months adding the non-monthly bills that we forgot about when we created the budget.   Setbacks and shortfalls almost killed the budgeting plan completely. It took almost an entire year to get our budget right.

Unrelated Image

Now?  I refer to the budget once per month.   No more.   I don’t check it at bill-paying time. I don’t think about it daily.   It’s there as a reference when I need it, but it no longer drives our finances.  How did we get to that point?

First, we firmly established our budget.  We know exactly what we need to cover our expenses.   None of the predictable bills catch us by surprise any more.  This is important.

Once we had the budget established, the rest was easy.   I moved almost every bill to US Bank’s online bill-pay system and switched to electronic billing and automatic payments.   The automatic payments are all through US Bank.  I only allow my mortgage to be set up with the merchant. I want total, instant control over the rest.  I won’t call a merchant to ask them to change a payment if something comes up.   The bank sends me an email when a payment is automatically scheduled, and again when it is paid.

Once I got comfortable with the automatic payments, I switched to electronic billing. I don’t need to see the bill or waste the paper if I know it is being handled for me which is why I encourage you to manage all your finances online.  I do check the few bills that may change, like the credit card and cell phone.  Now, I see few of my bills.  They are all sent electronically to my bank, automatically paid, and scheduled in Quicken–all without intervention from me.

[ad name=”inlineleft”]We also use an envelope system.  I know how much we need for groceries, baby crap, clothes, etc.   At the beginning of the month, I take out all of that money in cash and put it into the appropriate envelopes.   Other than this money, almost everything else takes care of itself. I don’t need to pay attention to by bills on a day-t0-day basis.   Any extra money that comes in gets divided among our debt repayment and savings goals, which only takes a few minutes to arrange.

I glance over my budget at the beginning of every month, but I only review it when something changes. If we change our cell phone, or our budgeted gas bill changes, I make the change to our budget.  Other than that, it’s not even an afterthought.

That’s how we do it.

Another option includes the Sloppy Math System. This consists simply of rounding deposits down and rounding expenses up.  The more you round, the better the system works.    If you round every deposit down $50, and round every expense up to the next $10, you are naturally building more room for error.  Given enough time, you will have enough of a slush fund to handle emergencies and the occasional impulse purchase.