Posts Tagged Money

5 ways to reduce financial stress

Financial stress can be crippling. It can affect your work, your relationships and even your health. Whether you’re worried about making your rent this month, actively dodging collector calls or worried about how you’ll retire, money issues can influence your entire world.

When I graduated from college, I had about $26,000 worth of student loan debt. I wasn’t making much money writing obituaries for a local newspaper (since I didn’t track my income, I’m still not sure exactly how much I was making, but it was less than $24,000/ year.)

Going from five figures in debt in my early 20s, to now being debt free and in control of my money and financial future in my late 20s took a lot of work and persistence. It also would not have been possible without taking the following steps…

1: Know your situation

Knowing the full scope of your money situation is the first and foremost way to become less stressed about it. I wish there was a way to plug your ears, close your eyes and hum and for it to just go away, but that isn’t reality. Fortunately for those currently in the dark, the unknown is always worse than the known.

When the six-month grace period on my student loans ended, I started getting a dozen-plus bills in the mail, due immediately. Each one had its own required minimum payment and I was living hand to mouth – so I ignored them.

A couple months passed and the letters got a little scarier. They had big, red “overdue” stamps on the envelopes and I started getting phone calls about all the money I owed from less-than-pleasant people.

I didn’t know how many loans I had, how much I owed, or any idea if I was close to defaulting or getting into serious, long-term financial trouble.

Needless to say, I was pretty stressed.

I decided I had to know how much I owed and who I owed it to. There was no way to start to attack my debt while still in the dark.

Once I tracked down all of my loans and student loan carriers, and added up the total amount now owed, interest had compounded the debt up to just under $33,000.

Knowing that number was scary.

Knowing that number was horrifying. I screamed. I cried. I had several cocktails I could not afford.  But then I was able to begin to make a plan.

2: Make a plan

In it’s most simple form, a budget is a plan for your money.

Without knowing how much money you are bringing in and how much is going out, you run the risk of spending more than you have available.

America’s three biggest banks earned more than $6.4 billion in 2016 from ATM and overdraft fees, according to CNN Money. That is a high cost for miss-remembering how much money you have in Checking.

By knowing and tracking your money with a budget, you get to give every dollar a job to do in your life. Without a budget, my money tends to just disappear. I have no idea where, when or what I spent it on, and it certainly isn’t helping my financial future. With a budget, I get to plan for expenses, savings and even having fun – all guilt free because I know everything is covered in my plan.

3: Have an emergency budget

In the middle of a crisis, no one is the best at managing their money. We spend emotionally. We panic .. We don’t have the stability and guidelines that our budget normally provides us.

Enter the Emergency Budget, your new favorite tool for peace of mind in a crisis.

Building one is simple and lets you know exactly how much money you need to live off in an emergency situation. This will give you some peace of mind as it’s likely much less than your current income. Second, it allows you to make hard decisions with a clear head, versus later during crisis mode.

By creating an emergency budget NOW, you’ll know the amount of money you really need to survive the month with a roof over your head, clothes on your back and food in your belly.

4: Work toward building an emergency fund

Even just $500-$1,000 saved in an account to be used only for emergencies can have a hugely relaxing effect on your mental stress.

That is enough money to pay for an unexpected medication or a blown tire.

It’s enough to turn something disastrous into something annoying.

While it won’t cover every situation, it will certainly help. Once you have an emergency fund, you’ll never want to be without it.

5: Set track-able money goals

Once you have a firm grasp of your money situation and spending habits, you can start to alter your daily choices to better your financial future.

Making room in your budget to prioritize saving for your emergency fund, paying down your debt or saving money for future expenses will all allow you to work toward things you want and will benefit you in the long term. Setting and following a plan to accomplish those goals will bring you a sense of achievement and joy as you complete them.

You will be in control of your money and much less financially stressed.

Your Turn!

  • What is the most stressful money-related thing in your life?
  • What was a money-related stress that you’ve defeated? How?

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Things to buy that will save you money

While the old axiom “it takes money to make money” is sometimes true, but I’d argue that it often takes money to save money as well.

For instance, a small investment in money for equipment to do a service yourself that you usually pay for can save you a lot of money in the long term.

Here are a few things I’ve personally spent money on that have since saved me far more than the cost of the item.

Generic pet medication / grooming tools

I love my sweet dog, but costs associated with her can get extremely expensive. I use a sinking fund to pay for her annual shots and check up, but refused to pay for grooming or overpriced, brand-name flea and heart worm prevention medication while I was getting out of debt.

Dog hair clippers take a while to get the hang of, but with some practice, your pooch can stay stylish and trimmed for only the cost of a good pair of clippers.

I’d advise getting a quality set here that will last you for years to come. A $10-20 set may not be able to handle the hair long-term.

Cost: Around $30-40 for a quality set

Nail clippers are also cheap and easy to use. My dog hates having her nails clipped, but it’s for her own good and she hates it the same whether I do it or the vet does.

Cost: Less than $10

Websites like www.petshed.com allow you to order generic flea and heart worm prevention medication for a fraction of the cost of stocking up at the vets office. Websites like these do charge for shipping, so buying in bulk saves.

Cost: Around $30 for 1 year of pet medications, varies according to breed and size

Basic Car Tools/ Jump Box

I have a 5-n-1 power pack in my car that cost about $65 and has saved me time and money over and over.

The little rechargeable box not only makes me feel safer when driving because it contains an air compressor (quarters at the gas station to top off your tires adds up!), flood lights, power plugs capable of charging a phone or laptop, a radio and, most important to me, jumper cables capable of starting a dead battery.

I also keep a hydraulic jack, which is much more powerful, reliable and easier to use than the jack that comes with cars, and a basic emergency kit in my car that contains a tire patch kit, multi-tool, tire iron, first aid kit, water and other supplies.

Cost: Around $60 for a power pack, varied cost for car emergency supplies

Organizing Bins

When I invest money, even just a few dollars, in organizing my spaces, I end up knowing what I have and where it is – which stops me from buying things I don’t need.

When I need something and can’t find it, I end up buying multiples, which wastes money and clutters my home.

You can often use free containers (shipping boxes, empty food jars and product packaging) to organize things as well. Money never spent is money saved. Simple systems tend to be the best and the results don’t have to be Pinterest-perfect, they just have to work.

Cost: Free to $5 per container

Quality clothing

Having nice clothing that fits me well keeps me from constantly shopping and wasting time and money filling my wardrobe with disposable items.

But that doesn’t mean you should overpay or even buy the best quality on everything.

Check out our article on what clothing items to save your dollars, which to splurge on and how to get the best deal on them all. (link)

Cost: Varies (but less than MSRP)

Crock Pot/ Cooking tools

Crock pots (and now Instapots) are practically kitchen miracles, allowing people to cook in bulk, cook outside the kitchen, meal plan, manage their time and make cheaper meats and veggies taste amazing.

A lot of my generation eschews the trusty Crock Pot, but I adore it. It makes it so easy to plan dinner on busy nights and it’s already done when I get home. If I have something in the crock pot, I’ll never run through a drive-thru or pick up food. It forces me to eat what I have.

My favorite way to use the crock pot is to bulk-buy chicken when its on sale, separate it into plastic bags with different marinades on a weekend, and freeze them all. All I have to do day of is run some water over the bag to loosen (or put in the fridge overnight) and dump it into the pot. However many hours later, I come home to a delicious smelling house and a home-cooked meal.

Cost: $15+ (always on sale around the holidays)

Your Turn!

  • What have you bought that saves you money?
  • What’s one purchase you regret?

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Why you Should Hold an Annual Money Summit

A goal without a plan is just a wish. – Antoine de Saint-Exupéry

Every year I spend about 30 minutes to a few hours to do something that I consider integral to my financial well-being. I call it an annual budget/ money summit and the new year is the perfect time to do one because starting a new year is like a clean slate.

This is better than New Year’s resolutions. Those can be done or not, but you will absolutely spend money this year. And you can spend it well or badly. You can change your money habits. You can set goals and achieve them. It all starts with a plan.

The difference between a money summit and a budget is that you aren’t just planning for a month, you’re planning your whole year. Things that may seem low-cost on a monthly basis, may shock you when you see how much you’re spending on them yearly.

Step 1: Evaluate your budgets/ spending

It takes more than just adjusting your last monthly budget to make a new money plan. If you’re already a budgeter, pull your budgets from the past year and look through each line for the past year.

Look at your regular line items for each month one by one. Did you overspend? Under-spend? By how much? Was it only around holidays? Or during the summer?

Say your grocery budget was $300 every month this year, but you spent closer to $350 every single month. It might be time to adjust your budget so you can spend that $350 guilt free and not worry about where to “steal” that overage from elsewhere in your budget.

In your new proposed budget, really consider each line item and expense. Look back onto costly mistakes or events that happened in the past year and think about how you could pay for those that may happen again. Look forward and incorporate planning for known future expenses (birthdays, graduations, weddings, anniversaries) and try to anticipate any budget busters that may come along.

Looking forward may involve setting up some sinking funds to save up for those expenses.

If you aren’t already a budgeter, start with our How to make a budget guide here to learn how to set up your first budget. You can and should still have a money summit, but you may have to evaluate your spending by looking back into your bank account statements to see where you’ve been spending and how much.

I recommend taking about 3-4 months worth of expenses (spread out through the year, so January, May, September and December of this year) and calculating how much you spent on average in the categories you’ll be making in your budget. This should give you some realistic guidelines for starting out.

Step 2: Dream some dreams

Now is also the time to decide what money goals you would like to meet this year.

Do you want to get out of debt? Pay down credit cards? Save for a vacation or a new car? Maybe you want to buy a new couch.

All these things are very do-able, especially when you break it down month by month.

Now is the time to figure out when you want to take that vacation or buy that couch and then do the math to see how much you need to save to make it happen. If you can get that number to work in your budget, you’ll get to do the thing you want. Easy peasy.

The same goes with debt. If you have debt and want to eliminate all or some of it this year, calculate how much you can allocate out of your budget to do it and set goals to get it done. Make sure to reward yourself as you’re sacrificing and paying off debt by marking milestones – like for every $5,000 you pay off, decide to treat yourself to something small ($20-$100) to keep you on track and motivated to keep paying off debt.

Step 3: Balance it out

You’ve probably done a lot of money shuffling and the budget may not total up anymore. If you’ve increased several categories and your income isn’t increasing, you’ll also need to shuffle expenses from somewhere else to get back to a zero-based budget.

It’s okay to change your mind and really think on what is worth your money… especially when you are looking at how much said item will cost over the next year.

My BEST advise for a money summit is to have no “sacred cows.” Every expense, membership and want is up for debate. If you’re not sure on something, consider cutting an expense for 2, 4 or 6 months, with that cost going toward one of your goals instead, and seeing if you really miss it. Seeing yourself get closer to your money goals may be more fulfilling than the original thing that money was going to.

Step 4: Sit on it

Save and close your budget and sit on it for about a week so you can go back in with fresh eyes and make sure all your bases are covered.

You may remember an event or future expense that you can’t overlook and will have to change your budget to account for. If you are married, make sure your partner makes a pass or two and approves it in its entirety. If you’re single, consider having a trusted friend take a peek to offer advise on if you’re being realistic or not.

Remember that this budget will be the basis for your entire year. You can certainly change it if needed, but it’s doubtful that as the year picks up, you’ll have time to make large changes.

This budget can be your playbook to massive financial success if you’re willing to give it the consideration and attention it deserves. Just imagine the financial situation you could be in next year at this time if you can meet all the money goals you’ve set.

Good luck and happy budgeting!

Your Turn!

  • What is your number one money goal for 2018?
  • What is one money mistake you made this year?

8 things you should never do to save money

I’ve tried a lot of weird things to save money. A journalist and finance vlogger by day, I’ve gone dumpster diving, emptied fast food ketchup packets into a bottle, tried DIY beauty treatments involving food items (and more hours of clean up than I’ll ever admit on the internet), and even shared library cards with friends in different states to expand our e-book selection.

Some of those activities could be considered a little strange, a couple might be frowned upon in some circles, and only a few worked at all.

But despite my willingness to try “extreme” money-saving tips, there are some things that I would never do… primarily things that aren’t ethical, hygienic or legal. These would absolutely save you money, but at a very different cost, one that I think crosses a line between being penny-wise and being a tightwad.

1. Stealing

Stealing takes more forms than hiding an item under your shirt and walking out of a store or lifting someone’s wallet.

Filling a bag with more than your share of complimentary items at a restaurant, smuggling home office supplies or toilet paper or even getting a water cup and filling it with soda are all stealing. No crime is victim-less and these are not viable ways to save money.

2. Using services meant for the needy

There is nothing wrong with taking help when you need it. Services like food stamps, soup kitchens, food libraries and the like are meant to be used. But taking those services when you don’t need them in an effort to save a little money robs someone else of that resource.

Consider volunteering instead, charity event organizers nearly always plan to feed volunteers as a thank you for their time. I helped out at a church-run food pantry a couple of times a month where the church provided dinner for volunteers.

It was a free meal for me, provided by people who wanted to help who couldn’t spare the time. It both helped my food budget a little and I was able to help people in the community who were truly in need. It was a win-win.

3. Lying

I’ve heard countless times about people “pulling one over” on big corporations by taking unfair advantage of “Love it or your money back” guarantees. If you honestly didn’t like the product or service, absolutely take the business up on their offer, but using 90% of something and returning it just because you can is dishonest and shameful.

The same goes for people who argue legitimate charges on their accounts or claim their food is bad at the end of the meal after they’ve eaten most of it.

I don’t care how big the business or corporation is, lying like that is stealing.

4. Not washing my clothes or body

I’ve read tips more than once saying to step into the shower in your day’s clothing and wash them with you. I’ve read about people only spraying their clothing with air freshener or never washing their clothing at all. I’ll wear clothing items that don’t get dirty (office work wear and the like) multiple times but clothing that gets sweaty, smelly or dirty always goes straight into the wash.

Cleanliness is one of the markers of a polite society. No one wants to work with or spend time with people who are stinky by choice. This will eventually affect how people treat you and your future opportunities.

Wash your clothes, wash your body. Take some pride in your appearance. It costs very little, but has a huge return on your investment.

5. Getting rid of pets

A pet is a big responsibility and should be treated as such. Dogs, cats, ferrets, hamsters and moose (not judging), etc. all cost money for food, medicine, and care throughout their lives.

I’m always saddened and a little shocked to see tip lists that recommend getting rid of the family animal to offset costs. Unless you own a very expensive animal, and are jeopardizing your own ability to survive by providing for it, I would never say to kick your pets to the curb.

Instead consider shopping for the most affordable pet food and medications (generic heart worm and flea pills can be found at websites like www.petshed.com for much less money than at the vet’s office), learn to groom your own animals, and write a line into your budget to pay for monthly and annual pet costs to always have the money there to feed Fido.

6. Stopping tipping

If you can’t afford to tip, you can’t afford to go out.

As a former waitress myself, I know all too well how many people choose not to tip and the percentage is completely unacceptable. Whether or not you agree with the custom, we all know that wait staff are often paid well below minimum wage and their tips are expected to raise their salary to a reasonable level (aka more than $2 per hour which will nearly all go to taxes anyway.) When you don’t tip, the service worker isn’t getting paid for their services. It’s an unfair system, but until it’s changed, don’t punish the person serving you.

If you don’t want to tip, feel free to take your food to go, park your own car, do your own beauty services and make your own drink.

7. Mooching

“Forget your wallet” at a group lunch often enough, and you won’t get invited to them anymore.

Friends and family should be joyous parts of your life, not vehicles to save a buck.

Now, there’s nothing wrong with letting your relatives buy dinner when you’re visiting for the weekend, but consider returning the favor the next time they visit you. Relationships shouldn’t be about who owes who and is soured when people take advantage of people.

If you’re often invited to expensive dinners or events by more affluent friends, consider suggesting more frugal outings where everyone can have fun and not jeopardize their individual money goals. Also don’t forget that everyone loves a welcoming invitation over for a home-cooked meal. Friendship doesn’t have to be expensive.

8. Miss out on life

The easiest and most effective way to save money is to not spend it. Saving money is important to me. It’s a key strategy in my long-term money goals. But I won’t decline every invite to do something fun with friends in order to save every possible cent.

Life is meant to be lived and enjoyed. There are tons of free and frugal things to do and it’s also okay to spend a little more on occasion to have life-enriching experiences.

Your Turn!

  • What “frugal actions” are too far for you?
  • What will you do to save money?

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Money Habits of People Who are Debt Free

Whether your goal is to become debt free, run a marathon, or simply declutter your home and live a more minimalist lifestyle, we often turn to those who have had success and do what they do. It’s called studying best practice.

If you want to learn how to run a marathon, you would talk to other runners and follow a training plan. If you want to enjoy a more minimalist lifestyle, you would read up on minimalism and talk to other minimalists. If you want to become debt free, you adopt the money habits of people who are debt free.

Organize and Pay Attention to Your Bills

Rather than just piling up the bills and walking away from them, people who are debt free open their bills as soon as they come in. They check to make sure that the statement is accurate and organize them in a way to ensure that the bill is paid on time.

Live Within Your Means

People who are debt free do not spend beyond what they earn. It seems obvious, I know. But in these days where credit is easy to come by, and most aren’t spending intentionally, it’s easy to spend more money than what comes in every month.

People who are debt free follow the principle that if you don’t have the cash, you can’t afford it. So part of living within your means also requires you to strengthen your savings muscle and set aside money each month for larger purchases like vacations, home improvements, or a new-to-them vehicle.

Don’t Try to Keep Up With the Joneses

People who are debt free have learned to practice the art of contentment and are grateful and happy with what they have. They don’t worry that their neighbors just purchased a shiny new vehicle or just upgraded to a 75-inch flat screen television.

They also avoid the trap of emotional spending and buying items to make them feel better. They know that these unplanned purchases only have a temporary effect on one’s feelings, and if anything may lead to feelings of stress later on in the month.

Demonstrate Self-Control

In order to live within your means, it’s important to be intentional with your money and develop a spending plan. Debt-free people create a budget before the month begins which gives each dollar coming in a job, helping to eliminate money that disappears or gets wasted.

Part of living on a budget also means avoiding impulse purchases. These impulse purchases can quickly destroy a budget. Instead try avoiding the stores that you know cause you the most temptation when it comes to buying impulsively. You know that trip to Target that you made to purchase one item and ended up walking out with $100 worth. Trust me, been there, done that!

Be Proactive

It’s no surprise that being proactive is the first habit discussed in “The 7 Habits of Highly Effective People” by Stephen R. Covey. People who gain control of their finances and live debt free have learned to be proactive. This means that they have looked at ways to cut their budgets and their spending to free up extra income to pay off their debt and then start saving. They will also look for ways to earn an extra income if it’s necessary to reach their financial goals.

Your Turn!

  • What’s one money habit that you would like to improve?
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