How to Throw a Fun Yet Affordable Graduation Party

The following post is by MPFJ staff writer, Laurie Blank.  Laurie is a wife, mother to 4 and homesteader who blogs about personal finance, self-sufficiency and life in general over at The Frugal Farmer. Part witty, part introspective and part silly, her goal in blogging is to help others find their way to financial freedom and to a simpler, more peaceful life.

Summer is around the corner, which means families everywhere will be getting ready to throw high school and college graduation parties. If you’re preparing to throw a graduation party and have been talking to parents of other grads, you’re likely beginning to prepare to spend a LOT of money – or panicking about how a graduation party will affect your family finances.

The good news is that a great graduation party doesn’t have to be super expensive. Abandon thoughts of catered dinners and expensive decorations, and consider these ideas for a fun yet affordable graduation party.

Share Your Party

If your graduate has a best friend, family member or significant other who is also graduating, consider doing a shared graduation party. Not only will you be able to split the costs with the other family, but many of your guests will probably know both graduates and will likely appreciate having to only attend one party as opposed to two.

Cut Down on Equipment Rental Costs

It can be expensive to rent party tents, chairs and tables. A cheaper idea may be to rent a local park pavilion or to hold the party at the home of a friend/family member who has a large garage where most guests can be indoors without the need for a tent. Borrowing tables and chairs from family and friends can help cut down on costs there. Since the tables will be covered with tablecloths anyway it doesn’t matter much if they don’t match.

Keep a Handle on the Food Budget

There are several ways you can make sure the food budget for your graduation party doesn’t get out of hand.

Choose Your Party Time Carefully

Know that time of day makes a difference. If you hold your party at lunch time (between 11 a.m. and 1 p.m.) or dinner time (between 4 p.m. and 6 p.m.) people will expect a full meal. However if you hold the party during midday hours, you can get away with serving a lighter assortment of finger foods and appetizers.

Don’t Do the Catering Thing

Catering is often the largest expense for graduation party holders, but it’s not always a necessary expense. Choosing foods that are inexpensive and easy to prepare, and asking for help from close friends and loved ones will help you save substantially on food costs. Here are some ideas for easy-to-prepare and serve, inexpensive foods.

• Go to the warehouse club for maximum savings. They have great specials on deli meat, or if you really want to save you can get pulled pork for about $2 a pound and throw some BBQ sauce on it.
• Inexpensive salads. Again, the warehouse club is your friend here. They sell pastas, lettuce and other veggies at amazingly low prices and huge quantities. Look online for salad recipes that are inexpensive yet delicious.
• Potato and other chips may not be an adult favorite but kids love them. Warehouse clubs and stores like Aldi sell chips for super cheap.
• Fruit and vegetable trays. Instead of buying already prepared fruit and veggie trays, shop at the warehouse club or Aldi and recruit a couple of friends to help you put together a nice array of fruits and veggies along with some store bought dips.
• Warehouse clubs such as Sam’s Club and Costco sell delicious half and whole sheet cakes for amazingly low prices. You can usually get a whole sheet cake for under $40. If you don’t want to go the cake route, have close friends and family members contribute a plate of bars or cookies and have a dessert buffet instead of cake.
• Lighter fare. If you’re doing a midday party you can get away with deli sandwiches cut into triangles and an assortment of veggies, fruits and chips.
• Instead of serving sodas, choose to make punch with any combination of lemonade or Koolaid and add in lemon lime soda or Ginger Ale. Much cheaper, and different too. People drink soda often but rarely get to indulge in punch.

Invitations

Technology has made it very easy to do your own graduation party invitations, either on your home computer system or at a DIY photo system like the ones at Walmart. With pre-made templates to choose from, creating your own invitations will be cheap and easy.

Decorations

Decorations don’t have to cost a lot of money. Consider these ideas for a beautiful but frugal graduation party.

Tablecloths

Buy tablecloths at the dollar store in your child’s school colors for a colorful but inexpensive addition to your party.

Table and other Decorations

Instead of buying table centerpieces, use photos laid on tables or arranged nicely around the area, or use other items from home that reflect your child’s interests and talents. Books arranged nicely with ribbons work well as decorations too.

You can also decorate using your food choices.  Check out this Pinterest board for fun but easy ideas such as Diploma Cookies and Graduation Hat Pops.

With a little creativity and work, your child’s graduation party can be fun without draining your bank account.

A Word about Your Home’s Appearance

If you’re having your child’s graduation party at home, you may feel like you’ve got to remodel and redecorate and have your home looking picture perfect for the party. Know that cleaning, decluttering and a few inexpensive home enhancement decisions like a fresh coat of paint and a few flowers can go a long way. No need to remodel your entire home to impress people for one day. On the other hand, if you’ve been meaning to remodel anyway and have the cash on hand, an upcoming graduation party can be a great excuse to finally get it done.

How about you all? What are your tips for saving money on graduation parties? Do you have any ideas for inventive graduation gifts? 

Share your experiences by commenting below!

****Photo courtesy https://www.flickr.com/photos/attercop311/3092138753/

Would You Spend $28,000 for a One Week Vacation?

The following post is by MPFJ staff writer, Marie. You can read more of Marie’s articles over at her own blog, Family Money Values. Enjoy! 

Home and Garden TV has a show called Island Hunters. This past week, they featured a couple (business owners and spouses celebrating a 15 year wedding anniversary) with a budget of $28,000 for a one week vacation. I watched in absolute disbelief as they surveyed 3 ultra luxurious private island retreats and chose the one that $6000 over their budget.

Could you (would you) spend as much for your one week vacation?

How do the ultra rich spend their vacation time and money?

While we are not part of the billionaire club, we have spent thousands of dollars on vacations. Our most expensive one was to Hawaii. We took (and paid all expenses for) one of our adult sons. But even staying in ocean side vacation homes and indulging every activity whim, we parted with $5000 a week for our 2 week trip. That amount put me in shock for quite awhile prior to committing to my years long dream of visiting the island states.

Billionaires sometimes build their own vacation dreams.

According to How to Vacation Like An Eccentric Billionaire some of the wealthiest folks build themselves a dream vacation home and then decide to make it available to others – for a hefty fee of course.

One of the most mentioned is Sir Richard Branson (Virgin Group). He built his private getaway on an entire island – Neckar Island and later opened it up to anyone who wants to spend From $80,000 per night for up to 34 guests ($2,353 per person per night) to book the entire island. At certain times of the year, you can get just a room instead of the entire island for around a mere $4000 a night.

A couple of other billionaires with similar retreats for rent include:
• Nick Troubetzkoy – Jade Mountain – which can be rented for the night for around $2200 to around $3000 but this might not be all inclusive.
• Thurston Twigg-Smith – Twin Farms – an all inclusive in Vermont – starting at $1500 a night for 2.

The ultra rich don’t want mundane luxury travel.

While I was thrilled to sleep to the roar of the ocean waves and breakfast on the deck watching the sun rise over the sea, some aren’t quite so satisfied with typical vacation experiences

According to Adventures in Affluence: How the Billionaire Vacations they seek out extraordinary adventures like diving with the sharks or having a world famous chef cook them dinner in the chef’s home or being safely escorted to or through digs they would never consider visiting while at home. They might want to visit a dive bar or walk through a funky neighborhood with their guide.

Still other vacation pursuits of the affluent might include a hunt your own dinner, where they stay at a luxury cabin, get shooting lessons, go on a hunt and (assuming they actually catch something) have the chef prep it for dinner – hairy deer pelt to yummy venison steak.

Of course, there are still folks who enjoy activities at luxury all inclusive resorts – such as taking a snow sleigh ride or helicopter ride over beautiful scenery.

Who spends like this?

I believe there are three categories of travelers that might consider spending huge amounts on vacations.

People so rich that money is no object.

These folks are already used to a luxury lifestyle and don’t usually want to down grade it for a vacation experience. Similar to what Donald Trump had to do to become the US President and downgrade his living style to camp out in the White House. He has already designated Mara-a-Lago in Florida as his winter white house.

People who can write off the cost as a business expense.

Our HGTV couple wanting to spend a week on a private island probably fits this profile. They own a pool design company together and were checking out the way the different resort pools were designed and executed, even while touring them.

On our Hawaii trip, my spouse met someone who fessed up to traveling on the company expense account quite a lot. Heck, I even expense out my trips to our lake condo when ever I can. If you pay US taxes, expensing trips to a business reduces your bottom line profit and hence the taxes you own on income for that business.

People who have saved up for a special occasion.

Our HGTVcouple may also fit this category, as they were celebrating their 15th wedding anniversary.

This category fits me best. My spouse and I worked hard for years to achieve our degree of financial freedom. A Hawaii trip has been one of my suppressed desires since the 1970’s when my brother was stationed there in the Army and the rest of my family got to visit him there.

This category also may fit engaged couples seeking an alternative to an expensive church wedding and reception. Spending $5000 or $10,000 on a destination wedding/honey moon could end up being a whole lot cheaper than a traditional ceremony/reception.

Most of us, even the high net worth folks, don’t spend nearly this much.

What do the high net worth folks spend?

In 2015, Business Insider reported on a BMO Private Bank study that claimed affluent Americans (these folks have over a million in investable assets) spend around $13,000 a year on leisure travel.

What do average North Americans spend?

Until recently, we vacationed only every 2nd or 3rd year. Each year we would take just one trip. On that trip we typically spent around $3000 total for the two of us – including all travel, meal, lodging, activity and souvenir expenses.

Value Penguin Value Penguin reports that the average cost of mainland trips is $144 a day. So for our typical 10 day trip that would total up to $1440.

That seems low to me, how about you?

How about you all? Do you vacation? How much do you usually spend?

Share your experiences by commenting below!

****Photo courtesy https://www.flickr.com/photos/hotelinternazionaleischia/33066776756/

Tax Free Ways to Pass on the Family Wealth

The following post is by MPFJ staff writer, Marie. You can read more of Marie’s articles over at her own blog, Family Money Values. Enjoy! 

Perhaps from the moment you left home you have been struggling with all your might to become financially independent.  Maybe you worked hard, saved well then became a real estate tycoon by buying one rental home at a time until now you own multiple apartments.  Or perhaps you started a small, but very relevant web site that grew and grew until it started drawing the big bucks.  Or maybe you inherited some money from dear old Grandpa George, invested it and made it grow.

Now you have an unfamiliar problem.  Too much money, too many assets.  You don’t want your kids to have to start all over again, but how do you get the wealth to them without it being decimated by taxes?

Taxes can take a big bite, especially in the US – even now that the annual US Federal estate taxes don’t kick in until you have at least $5.49 million. But, some states do still charge estate taxes.  The inheritor does not pay these estate taxes, the estate of the deceased person does.

Laws can change rapidly, the US national debt is huge, revenue has to come from somewhere to pay it off.  Estate tax laws may become much less favorable in the future.  It pays to be alert to possible inroads to your hard earned money.

Back in 1996, when Mom died in the US, her estate was worth around $700,000 (which would be a bit over a million dollars in 2016).  It had to pay $80,000 ($122,375 in 2016 dollars) in estate taxes.  She and Dad worked hard for those dollars and would have been appalled if they had realized the government would get them on their deaths.

Your IRA can be a double whammy after you die.  It gets counted as part of that $5.49 million, your beneficiaries may have to take all the funds out within 5 years of your death AND the distributions get added to their taxable income, probably raising their income taxes significantly.

Canadian laws might be a bit more favorable. According to Canada Inheritance Tax Laws & Information:

“Non-registered capital assets are considered to have been sold for fair market value immediately prior to death. Any resulting capital gains are 50% taxable and added to all other income of the deceased on their final return where income tax will be calculated at the applicable personal income tax rates. They are taxed at the applicable capital gains tax rates.

The fair market value of a Registered Retirement Savings Plan (RRSP) or a Registered Retirement Income Fund (RRIF) is included in the deceased person’s income and taxed at the regular applicable personal income tax rates with no special treatment for any capital gains earned within the RRSP or RRIF.”

In other words, Canadians aren’t taxed on the entire worth of their assets, just the capital gains.

Currently in the US, there are several ways to avoid being taxed on your hard earned dollars.  Some of them apply in Canada as well.

Make annual gifts.

In the US, each person can give cash or assets valued up to a certain amount (which changes each year to account for inflation) to as many people as they want.  A husband and wife can each give up to that amount.  In 2017, the amount is $14,000 per giver to EACH person they give to.  If a person gives over that amount in one year, it is added to a lifetime gift/estate take exclusion amount.  Anything left in the estate over the exclusion amount is subject to estate taxes on death.

In Canada, each person can give unlimited cash to as many people as they want.  There really isn’t a ‘gift tax’ per se.

Of course, you can’t read the future, so you have to balance the desire to avoid taxation with the potential for your future need for that money.  You should make sure you have enough to care for yourself before giving any away!

Instead of cash, in the US, a person can give assets, including shares in a business.  Establishing a family limited liability company (LLC) is one way to pass along highly valued real assets (such as a vacation home), over time, without too much hassle.  The vacation home is titled in the name of the LLC.  The operating agreement of the LLC is set up to designate a manager-member type arrangement so that the original owners retain control.  Then the original owners (which probably are the parents) can gift shares in the LLC to the members, and may be able to do so at a discounted price (since LLC member shares are not as liquid as cash).  This results in the possibility of gifting assets actually worth more than $14,000 in one year to one member.

This passing of interest in the LLC from original owner to members can continue over time until the majority of shares are owned by members.  This strategy gets that vacation home out of your estate and into your heirs without taxation.  This same concept can also be used for more liquid assets, if desired.

Open a Roth IRA or Tax Free Savings Account.

In the US, people can establish a Roth Individual Retirement Account (IRA) and contribute certain amounts to it (which decline by income levels).  In Canada the Tax Free Savings Account (TFSA) is a similar vehicle.

Both provide for tax free earnings and withdrawal from the account tax free.

Soon to be changed laws in the US allowed beneficiaries of an inherited ROTH IRA to keep funds in it, withdrawing over their expected lifetime, so that the funds continued to grow tax free.  Some called this concept a STRETCH IRA – because the tax free status is stretched over multiple lifetimes. In Canada, any income following death is taxed as ordinary income.

Pay for College.

Since Canadians aren’t limited in the amount of cash they can give, this one really only applies in the US.

If you are wanting to pass along family wealth to the kids or grand-kids without using any part of the gift or estate tax exclusion amounts, you can directly pay for medial or college expenses.  You have to write the check out to the institution though and not to your child or grandchild to give to the institution.  It is important to note that this only applies to payment of tuition, not room or board or books, etc.

There are other, more complex ways of passing assets tax free (or tax reduced) to your heirs.  Estate planning is a complex topic and you should consult someone who knows the laws applicable to you and is familiar with your own situation before making decisions on what you should do.  This is especially true for those folks who have assets both at home and in other countries.

How about you all? Do you have other tax free ideas to pass on the family wealth?

Share your experiences by commenting below!

****Photo courtesy https://www.flickr.com/photos/68751915@N05/6757821397/

Helping Kids Prepare Financially for Driving and Car Ownership

The following post is by MPFJ staff writer, Laurie Blank.  Laurie is a wife, mother to 4 and homesteader who blogs about personal finance, self-sufficiency and life in general over at The Frugal Farmer. Part witty, part introspective and part silly, her goal in blogging is to help others find their way to financial freedom and to a simpler, more peaceful life.

One of the biggest parenting – and child – milestones is when your child becomes old enough to start driving on their own. Driving and car ownership are big responsibilities in many ways. Along with the responsibility to drive safely on the road, kids need to be taught the financial costs of driving and car ownership as well. Here are some tips on how you can prepare your kids for the financial impact of owning and driving a vehicle.

Calculate the Costs with Them

It’s important to teach your children a good deal ahead of when they get their license that driving and vehicle ownership costs money. When they become old enough to get their learners permit, sit down with them and start having discussions about what kind of car they want to drive, the costs of purchasing the car, purchasing gas, the cost of car maintenance and repair and the cost of insurance.

Since you’re spend-tracking (you are spend-tracking, right?), go over your own transportation costs with them so they can get a real-life idea that driving and car ownership costs money.

Don’t Pay for Everything

This is just my personal opinion, but I’m a huge believer in having kids pay for at least part of their transportation costs, even while they’re still under eighteen. Kids tend to hold more respect for that which they’ve worked hard to pay for.

Whether it’s a car, a college education or whatever, there can be a lack of understanding with kids regarding the work that it took to be able to pay for those things. When you give some or all of the responsibility for paying for car costs to your child, you help them to appreciate the privilege of driving, to learn real-life lessons about how the world works and you help them prepare for the transition to independent adult.

Set Rules for Driving Preparedness

It’s helpful when kids and parents have a mutual understanding of how vehicle ownership and driving responsibilities will work in your home. For instance, if your child wants to have their own car, show them how to set some money aside for a car maintenance/repair fund. Make sure they have enough money saved for an insurance deductible in case of an accident.

If your child will drive a family car, set clear rules about when they can use the car, when they can’t, and who will pay for what portion of gas, insurance, etc. It’s important too to have a clear discussion about what the consequences will be if the house driving rules are broken, who will pay the fine if your child gets a ticket and so on. When your child knows clearly how the rules work beforehand, there will be less pushback when a consequence needs to be administered or when they’re handed the bill for the increased insurance premiums due to getting a speeding ticket.

Other Driving and Vehicle Ownership Suggestions

There are other responsibilities that go along with driving besides the financial ones. For instance, one of our house rules is that we don’t push our kids to get their license right at the legal age of sixteen, instead allowing them to determine when they’re emotionally ready for the responsibility. It’s important to teach your children these rules as well:

• Never talk, text or browse on your phone will driving. Pull over in a safe place if you have to make a call or text
• Obey all traffic and driving laws at all times (this will be easier for kids if they see their parents doing the same)
• The better you take care of your car, the less it will cost you
• Make sure to insist that those who ride in your car wear seat belts at all times and stay calm while on the road so that they don’t distract you as you drive
• Always be attentive, cautious and defensive when you drive, watching out for other drivers who may be distracted or aggressive
• Avoid confrontations with other drivers by being polite on the road and heading to the nearest police station if there’s trouble
• For tips on what to do if your vehicle breaks down on the road, check out this AAA Auto Checklist.

Driving and car ownership are big responsibilities, both financially and otherwise. The more you can teach your kids ahead of time on how to be prepared for those responsibilities, the better they’ll be able to handle all of the tenets of driving.

How about you all? What other suggestions do you have for teaching your kids about driving responsibilities?

Share your experiences by commenting below!

***Photo courtesy https://www.flickr.com/photos/statefarm/7979445278/

Office Work Hacks

The following post is by MPFJ staff writer, Marie. You can read more of Marie’s articles over at her own blog, Family Money Values. Enjoy! 

Getting along and getting ahead in the office involve age old problems.  Here are some problems with ideas on solutions.

Inability to focus is causing you to be less productive.

You head into the office each day refreshed and ready, but once you get logged in to your applications, the next thing you know it’s lunch time and you haven’t accomplished anything!

Hack: Downsize distractions and focus on priorities.

You can’t control your office environment, but you can change its effect on you.  If the guy in the next cube has a constant stream of visitors, talks to himself out loud, plays loud music or just otherwise distracts you – put on your headphones (they will discourage visitors from approaching and can block the noise).  Reduce clutter in your area so that you aren’t distracted by it.  If you are in a high traffic area, see if the company will put up some noise and sight protection in the form of higher cube walls, signs or other preventative measures.

Focus on priorities by writing down the very most important things that you accomplish each day, and listing tomorrow’s priority tasks.  Check in once in a while with the boss or project leader to make sure you are on track.  Avoid diverting phone calls, emails, text messages, and non-essential or less important project tasks so that you have laser like focus on the priority items.  BUT, if you get stuck working on priority items, it is OK to switch off temporarily to work other items – as long as you get back on track fast.

You feel invisible to the boss.

A boss or mentor higher in the corporate chain of command is an important ally when trying to advance your career.  He or she can steer special projects to you, make you known to other executives, put you in for a raise or bonus, push your ideas, save you from a general layoff, or help in a myriad of other ways.

Hack:  Go face to face

Electronic or phone communication is fine, but your boss is inundated with it day in, day out.  Get to know the boss by going face to face on select topics.  You won’t be invisible long – but take care to be visible in a positive way!

Here are some ways to to meet person to person with your boss.

If he assigned a task or deliverable to you and you finish it successfully, try hand delivering it with a very short verbal reminder of what it is and when it was requested.

If your boss does an annual evaluation, request a touch base meeting once a quarter or twice a year to ‘verify that I’m on track’ with what is needed.

Ask around to see what your boss’s outside interests are, and if you have similar ones, strike up a conversation in the lunch line, bathroom or break-room about the topic.

Volunteer for special projects or activities in which your boss is also involved.   Working directly together on a project will allow you to directly demonstrate your ability, creativity and productivity.

If your boss is not at the same location as you are, try using the phone, video calls or attempting to schedule a visit to his or her location for a special meeting on something important to the boss.

Your work performance suffers due to co-worker or staff member office socialization.

Yes, you are part of a group.  Yes, the group is important.  Some socialization is good for the group and good for productivity, but too much is just a waste of time.  Creativity can be spawned by some group socialization, but so can negative, hurtful gossip that distracts you from the job at hand.   If your good friend in the next department makes a habit of stopping by for a chat each day, and ends up talking for half an hour, the benefit of inter-department communication is outweighed by the loss of work time from both of you.

Hack: Turn the talk back to work subjects.

Don’t be a jerk, do visit for a few minutes, but then gently turn the talk back to what is going on with the project, or a new idea you had to make things better, or a discussion of how to go about the next steps you both need to take.  Don’t get me wrong, managers can gain a lot of good perspective by being open to informal communication with their staff and peers, but perspective on who will take the Superbowl may not be all that beneficial.

Use off hours (such as breaks, lunch and after work time) to really socialize with co-workers.

Meetings suck your office time, then you have to stay late to get your actual work done.

As a manager, I attended and ran a lot of meetings.  There were very good reasons to hold many of the meetings, but often the purpose was not realized.  Sometimes (actually many times) the meeting participants are unprepared to fully participate in what could be a great meeting. Sometimes the meeting organizer isn’t aware of other work that should be happening in the meeting time frame.  Meetings don’t equal work done (usually), but can be beneficial in some cases.

Hack:  Make your meetings meaningful.

When you attend a meeting:

• Understand its purpose.

Question the meeting purpose it doesn’t make sense or if a meeting is not the way to achieve that purpose, but question in private.

• Make sure you should be attending – are you an interested party, can you contribute? Check in with the meeting organizer or your boss if you are unsure why you are attending and then:
• Participate fully.

As the meeting organizer:

• Make sure you have a purpose.

Consider carefully whether a meeting is the very best way to achieve that purpose.

• Verify that each and every meeting participant is required.
• Hold the meeting for the shortest possible time, with the tightest possible agenda.
• Lead efficiently.
• If you hold a lot of meetings, get training on how to lead effective ones and how to accomplish things without meetings.

Any meeting where the leader talks and everyone else sits around fidgeting is a failure!

Work sucks but you don’t feel like you can do anything to change the way things are.

When we lack seniority, we often don’t feel empowered to put our own imprint on our work place.  If we try, sometimes we are told “This is the way we do it – it’s always been done this way”.  Yet you do know of a better way – or at least think you do.

Hack: Figure out how your company solicits or allows input. 

Most companies have implemented multiple ways for employee ideas to trickle up to higher levels of management.  Many companies long for the great employee suggestions and go to great lengths to make sure they are heard.  You just need to figure out what those currently are.

A few methods I have seen at various employers include:

Company wiki’s with sections for various parts of the company – where anyone can post an idea.

Ongoing braintrust meetings – open invites for certain departments, levels or mixes of employees gather to present and discuss ideas for new products, process improvements and etc.

Awards – formal channels to submit written proposals to an award committee to review and get implemented.

Third party award systems – third parties sometimes are hired to come in and solicit money saving suggestions from the folks closest to the work.  These usually come with some pretty significant ‘prizes’.

Special calls to action – a director or vice-president is on a special mission and requests ideas on how to accomplish that mission.

Company Strategic mission committees – most companies have a mission, with goals, strategies and tactics to get to them.  Ask around to find out who is eligible to work on these committees, offer up strategies and tactics or be on the projects to implement them.

Brainstorming meetings – typically held around one particular topic.

Once you understand the change procedures, explore the particular item you want to change.  Learn the history of how and why the process came to be.  What was tried before, would it fail again now?  Was your idea previously suggested?  How could it be implemented differently to be more effective?

Of course, you can always just talk it over with the boss or your other co-workers.  Building support for your change can give its chances of adoption a big boost.

The above work hacks are based on my own work experience and may not necessarily work for you.  It’s always good to get the lay of the land before diving in head first on some of these things.

How about you all? What work hacks have you seen?  Are there issues in your workplace interfering with your productivity?

Share your experiences by commenting below!

***Photo courtesy https://www.flickr.com/photos/83532250@N06/7650804342/

Set Goals to Create Additional Streams of Income

The following post is by MPFJ staff writer, Chonce. You can read more articles by Chonce over at her personal blog, My Debt Epiphany. Enjoy! 

How many streams of income do you have? When my husband got laid off early last year, we realized that one stream of income just won’t cut it anymore.

Diversifying your income can provide you with more financial security which is why it’s a great idea to set goals to create additional streams of income this year.

Why You Need More Income Streams

Most millionaires have an average of 7 different streams of income. Whether you’re trying to be a millionaire or not, you can probably agree that the more income you have coming in from various different sources, the more financially secure you’ll be.

When my husband got laid off, he lost his entire income in one fatal swoop. Luckily, I was working at the time and freelancing on the side with more than 10+ different clients. It was safe to say that by me having multiple streams of income, it really helped up get through that rough patch.

Income diversification can not only help you feel more stable, it can also allow you to meet your other financial goals quicker and allow you to earn more money over time as well.

Here are a few ways to diversify your income this year.

Start Freelancing

If you can provide a service to others on the side of your full-time job, it can be a great way to create an additional stream of income. There are so many different ways to freelance whether you like to write, edit, design graphics, take photos, do customer service or data entry work and so on.

The best part about freelancing is that you can choose your own clients to work with and set your own rates and hours. You don’t have to work an extra 30 hours per week if you don’t want to or know you won’t have the energy. Once you build your network and start finding clients, you can maintain as little or as much work as you want.

If you want to perform the tasks you do at your day job on the side for others as well, that’s an option as long as your employer is okay with it. For example, if you work at a daycare and want to offer some of the parents babysitting services on weekends, as long as your employer is fine with it, you can earn some extra money that way.

I used to take my son to a child care center that allowed that and parents like me were relieved since the center was closed during evenings and weekends.

Back when I worked at a web design firm, I used to think about how much the graphic designers and programmers I worked with could have earned if they did a few freelance projects on the side.

A graphic designer can easily earn an extra $1,000 per month by taking on only 1-2 extra projects on the side.

Sell a Product

Want to sell a product your created or a product on the market that you believe in? Consider this semi-passive way to diversify your income.

If you like to create handmade products and goods, consider setting up an Etsy shop and selling your items online. You can also design t-shirts to sell, create an e-book, flip used items for profit by selling them on sites like Amazon and Ebay.

I knew a blogger who wanted to pay off her student loans so bad that she started buying gently used designer clothing at thrift stores for cheap then selling them online for a profit.

As another option, you can sell products through a direct sales company so you can earn commission from each sale. Companies like Avon, Stella and Dot, Beach Body and Premier Designs, are all great options but there are tons of direct sales companies out there depending on what you’re interested in.

You can show your product catalogs to family, friends, and coworkers and make extra money that way.

Invest

Investing is a great way to diversify your income by creating passive income streams. You can invest in the stock market or in peer-to-peer lending.

You can also invest in real estate. Crowdfunded real estate will allow you to share the costs of investing in commercial and residential properties if you don’t want to purchase a property entirely on your own.

However, if you do purchase a small home or condo, you can earn money each month by renting it out and allow your tenants to pay off the mortgage for you.

Start Brainstorming With This Master List of 20+ Ideas

As you can see, there are quite a few options for diversifying your income this year. Below, I’ve compiled a list of specific ways that you can create additional streams of income. With these ideas, you shouldn’t even consider having one job or a single income stream a possibility anymore.

• Babysit
• Offer a cleaning service
• Buy a rental property
• Drive for Uber or Lyft
• Rent out your car when you’re not using it with Turo
• Rent out your home or a property with Airbnb
• Write an ebook that helps a specific target audience solve a problem
• Start a blog and monetize it
• Sell your crafts and creations on Etsy
• Design T-shirts via Tee Spring to sell online
• Become a freelance writer
• Become a virtual assistant
• Become a freelance photographer
• Sell your images to stock photo websites
• Sell clothes or books online
• Tutor students online or in your community
• Invest in the stock market by building a dividend portfolio
• Flip a house
• Become a peer lender
• Buy website domain names then resell them online
• Host direct sales parties

How about you all? How will you create additional streams of income this year?

Share your experiences by commenting below!

****Photo courtesy https://www.flickr.com/photos/striatic/101594790/

Should You Really Give Up Your Latte?

The following post is by MPFJ staff writer, Chonce. You can read more articles by Chonce over at her personal blog, My Debt Epiphany. Enjoy! 

What’s your guilty pleasure expense? For many hardworking adults, it’s their daily latte or cup of coffee.

Almost everyone has a guilty pleasure expense and it’s often a smaller expense you may hardly even notice.

Maybe yours is the discount section near the checkout at Target, picking up a freshly baked bagel on your way into work in the morning, or grabbing a scratch-off lottery ticket at the gas station.

For the sake of this post, I’m going to be offering a new perspective on the latte factor since many people drink coffee and it’s understandable how that small expense can add up quite a bit over time.

Breaking Down the Latte Factor

How much does a typical cup of coffee cost? In most areas, it can run you anywhere from $2-$5 on average depending on the size of the cup whether you’re grabbing a cup at the gas station or at your local Starbucks.

If drinking coffee is a daily habit for you, that means you can spend anywhere from $10-$25 per week just on your lattes if you pick one up each week day.

While that may not seem like much, that could be gas to fill up your car or go toward a smaller monthly bill.

If you buy coffee on your way to work each morning, you could spend anywhere from $40-$100 per month and that’s if you’re not a repeat offender who picks up a second cup in the afternoon.

Needless to say, your daily latte habit which seems so small can really add up over the course of the year.

If you have financial goals to pay down debt, save more, or stop living paycheck to paycheck, it could seem like you’re wasting your money on an unnecessary expense that you need to cut ASAP.

Before you think about giving up the latte completely so you can become a debt-free millionaire, here are a few reasons why you shouldn’t.

How is the Latte Helping You?

Before you give up your guilty pleasure expense, first determine if and how it helps you. My example of purchasing items from the discount section was a bad example because it’s not the best idea to keep buying things out of habit.

However, if you were looking to decorate your home for the season or pick out a birthday gift for your coworker or niece, you might find some good deals which could help you save money.

If your daily latte helps you wake up and focus, it could increase your productivity throughout the day so you get more done.

You May Not Have to Go Cold Turkey

If buying the latte is your thing, you might have a hard time trying to go cold turkey and cut it out completely.

If you try to cut out your habit too quick, you might pick up other bad habits that cost you even more money and provide no real benefit to you.

This is why I believe when smokers try to quit, they find better results if they work on weaning themselves off cigarettes first.

In the case of coffee, you don’t always have to purchase it at your local cafe. You can brew your own coffee at home or wait until you get to work if your employer provides coffee for free.

I’m not much of a coffee drinker myself, but my husband is and we pick up cappuccino drink mix at the grocery store so we can make coffee at home each day for less.

It costs about $4 per small container and that container makes about 17 cups so we save a ton of money with this DIY hack.

See if you can find more affordable hacks for the expenses you’d like to keep so they don’t deter you from reaching your goals.

Going After Big Wins

Finally, the most important reason why you may not want to give up your latte is because it’s still a small element in the grand scheme of things.

Yes, it’s important to cut unnecessary expenses especially when you’re trying to manage your finances better or get out of debt. However, you may find it difficult to cut out everything.

And if you do, you’ll realize that there’s not much else you can do to lower your expenses once you’ve cut out several categories.

What you should do is focus on going after big wins instead of focusing so hard on the small wins.

Scoring a raise at work, establishing an additional stream of income, or selling your car for $7,000 are all big wins that can have a profound effect on your finances.

When I was working a traditional job and started freelancing on the side to generate more income to put toward my debt, I earned an average of $2,000 per month after taxes essentially giving myself a $24,000 annual raise which was huge.

I committed to bringing my lunch to work most of the time but at least once a week I’d eat at a restaurant or order takeout because I like dining out and it was a great way for me to relieve stress from work and get out of the office for a little time.

The $5-$10 I spent on lunch once a week didn’t deter me from meeting my debt repayment goals for the year given that I was bringing in $2,000 from side hustling each month.

So Should You Give Up That Latte?

Only you can decide what’s best for you since you know your situation best. You should take all these factors into consideration and try to find a balance between cutting back on the small stuff and going after big wins.

Making small adjustments to reduce your expenses can definitely add up and help, but big wins provide a faster, more satisfying result.

How about you all? What small adjustments in your spending have you made that have really helped (or not!) your budget?

Share your experiences by commenting below!

***Photo courtesy https://www.flickr.com/photos/akane2011/14330276248/

How to Keep Kids’ Activities from Breaking the Bank

The following post is by MPFJ staff writer, Laurie Blank.  Laurie is a wife, mother to 4 and homesteader who blogs about personal finance, self-sufficiency and life in general over at The Frugal Farmer. Part witty, part introspective and part silly, her goal in blogging is to help others find their way to financial freedom and to a simpler, more peaceful life.

Studies show that the average cost of raising a child from birth to age eighteen is nearly $250,000, and a recent study reveals that a decent chunk of that cash is spent on extracurricular activities. In the case of elementary-aged children, it’s an average of $463 this year, and in the case of secondary-aged children, it’s a whopping $1,124 this year.

If you’re “average”, that means you could be spending nearly $10,000 on each of your children’s extracurricular activities over the 13-year period that they’re in school. And that’s simply the national average, which takes into account all school-aged kids – even those not participating in after-school activities. If you’ve got a kid involved in a serious sport such as baseball, hockey, gymnastics or dance, you’re likely spending a lot more than $1,100 a year, even for elementary-aged kids.

If that seems like an astronomical amount of money to spend on kids’ activities to you, you’re not alone. The fact of the matter is that the days when the education system picked up a large amount of the financial burden for extracurricular activities such as sports is long gone, and parents are left to foot the bill.

How can you as a parent keep kids’ activity costs reasonable but still make sure your kids can have the sport or other extracurricular experiences that help make for a fulfilling life? Here are some tips.

Limit Activities to One or Two per Year

Many parents these days feel as if their kids need to be involved in some type of extracurricular activity all year around. The truth is that even one or two activities a year for your child will benefit them and help them to grow in teamwork skills, discipline and obedience.

When considering which activities to sign your child up for, ask them to decide which activity or activities they like best, and narrow the list down to their top one or two. Not only will this save you money, it’ll save time and lower stress levels as well.

Pick Activities That Will Benefit Them as Adults

The reality is that the majority of kids won’t grow up to be professional athletes or world-class Olympians, no matter how much promise they show at a younger age. If your goal as a parent is to raise up a professional athlete, you may want to reconsider your motives and instead choose an activity that will hold life-long benefits.

Activities such as self-defense classes that will show them how to handle themselves should they get trapped in an attacker situation or school sports such as cross country that will help them develop a life-long habit of self-care through exercise are some examples of activities that will benefit your kids long after they’ve graduated from high school.

Do Activities as a Family or With an Organized Group of Friends

Many families choose to do activities together instead of being involved in school-sponsored sports. Some families train for marathons, triathlons and obstacle courses together, or bike together in charity or other events.

Planning regular activities with family members or groups of friends allows those same benefits of teamwork and training for a fraction of the cost.

If you’re set on providing extracurricular activities that do cost more than you’d like, there are a few ways to help make the financial burden less impactful.

Work the Costs into Your Budget

Just like you would with a regular bill such as your utility bill, it helps to figure out the annual amount you’re spending on activities and adding that monthly “bill” into your regular budget, saving the money in a separate savings account or envelope. This way when fees are due you won’t be scrambling to come up with the cash.

Ask if the Studio Will Do a Work-for-Pay Trade

Some sports centers will allow you to volunteer or work there in exchange for lowering your child’s participation fees. Just remember if you do participate in some type of a barter situation to check and follow the bartering tax laws for your state.

Kids reap many benefits from being involved in extracurricular activities. With a little planning, choosing and creativity, those activities can be affordable for almost any family.

How about you all? How do you keep kids’ activity costs affordable?

Share your experiences by commenting below!

***Photo courtesy https://www.flickr.com/photos/luigi_and_linda/7240626210/

 

Buying a Car 101: What You Need to Know

The following post is by MPFJ staff writer, Melissa Batai.  Melissa is a freelance writer who covers topics ranging from personal finance to business to organics to food.  She blogs at Mom’s Plans where she shares her family’s journey to healthier living and paying down debt.

I hate the whole car buying process.  From haggling to sitting in a dealership for hours, I just hate it.  That’s probably why my husband and I have not bought a car since we bought our current car 12 years ago.  However, the time had finally come when sharing one car was no longer working for us, so we set out on a search for a second vehicle.

Although our search lasted only two weeks, the entire process was annoying and stressful.  We did learn a lot, though.  If you plan on buying a car anytime soon, let me share with you what we learned.

Cash Is Not Always King

The old rumor used to be that you’ll pay less for a car if you pay cash.  While it is true that you’ll pay less for the car because you won’t be paying the interest over the life of the loan should you finance a car, paying cash won’t give you a lower price at the dealership.  When I asked one salesman about this, he said that dealers now prefer that you get a loan through them.

Why?  When you get a loan through the dealership, “an auto dealer actually acts as a middleman for car lenders.  To make money off the loan, some dealers will then offer you an interest rate higher than what they are paying the actual lender—or the financial institution that is backing your loan.  This rate increase is typically called the ‘dealer markup’ and can be an additional 3% in interest—significantly increasing the cost of your car.  This is perfectly legal most of the time, with only a few states limiting how much a dealership can markup rates” (Fox Business).

Know Your Credit Score

Before you even set foot in a dealership, make sure you know your credit score.  The higher your score, the more power you have to get very low interest rates.

Get Pre-Approval First

An easy way to learn your credit score is to go to your bank and seek pre-approval for a car loan before you begin your car search.  The bank will run your credit report and tell you how much you’re approved for.  This will give you a baseline number when dealing with the dealership.  It will also help you determine how much your monthly loan payments will be at different price ranges.

For instance, my husband and I were approved for by our credit union for a loan at 4.5% interest, which was more than we needed to pay.  Dealerships we visited offered us 3 to 3.5% interest rates, which we knew were a better deal than we could get at the credit union.

Know What Monthly Payments You Can Afford

I was surprised that our credit union pre-approved us for a loan amount with monthly payments higher than we felt we could comfortably afford.  Instead, we choose a car that was $6,000 less than our pre-approved amount—at that price, we could comfortably afford the monthly payments.

Just because you’re pre-approved for a certain amount doesn’t mean you need to use the full amount.

Don’t Negotiate Based on Monthly Payments

Every time we stepped on a car lot, we were always asked, “What is the monthly payment you’re looking for.”  Not, “How much do you want to spend for this car?”  Most Americans already have debt, so they’re comfortable evaluating the price of the vehicle based on a monthly payment amount, and the sales people use that to their advantage.

If you negotiate based on the monthly payment, not the overall price, you’re giving the salesman a tremendous amount of leverage.  “A dealership can easily meet your maximum monthly payment by stretching financing out over an additional year instead of actually reducing the price” (Money).

You may be surprised, as I was, to find that now banks and credit unions are willing to offer up to 72 month loans for used cars!  Am I the only one who thinks that’s crazy?!

Check the Blue Book Value

Once you have a car in mind, make sure to check the Kelly Blue Book value, either at home before you ever step foot on the lot or on your smartphone while walking around the lot.  My husband and I always searched the Internet for cars we wanted to look at in the dealership before we went on the lot.  At home, I checked the Kelly Blue Book value of the car we were interested in.  This let me know if the car was priced fairly or not.  It also helped me consider how much room I had to negotiate the price.

Be Aware Online Prices Are Not Always As They Seem

This was probably the biggest lesson I learned from our car search.  Internet prices are subjective.  We drove two hours to a dealership because we were very interested in a car that was in our price range and had fairly low mileage.  We took a test drive and were ready to buy the car.  When we sat down to negotiate, imagine our surprise when the dealer tacked on an additional $2,700 in “dealer extras” that were not listed as part of the Internet price.  That’s not even including the additional cost for plates, title, etc.

What were the dealer extras?  Applying a special exterior coating to keep the paint from fading or peeling and a special coating inside on the upholstery and flooring to repel stains.  We called foul and left the dealership.  That was a whole day wasted from what I called false advertising.

When we called the next dealership, we were on to this game.  I asked if the Internet price had any additional fees added on.  It didn’t.  That dealership was upfront with their Internet pricing, and we ended up buying from them.

Negotiate Up from the Dealer’s Cost, Not the Sticker Price

When you begin negotiating, you have a powerful tool if you don’t start your negotiations based on the sticker price.  Money states, “Consider starting around the invoice price, or the price a dealer pays the manufacturer for the car.  Edmunds.com notes that a popular strategy is to ask to see the dealer’s invoice and offer an amount, say $500 over that.  Invoice forms can be difficult to read, so spend a little time looking over one before testing this strategy out.

“While getting a price at or below invoice is ideal, be prepared to spend an amount somewhere between the sticker and invoice price.  Ideally, you’ll at least pay no more than the average sales price you were supposed to look up on sites like Edmunds and Kelly Blue Book.”

Don’t Be Afraid To Walk Away

People always say, “Don’t be afraid to walk away,” and I found that to be true.  I couldn’t believe how many sales people would call us at home and continue to negotiate.  I wish that they wouldn’t say, “final offer” when it’s not really their final offer, but keep in mind if you walk away, you likely still have room to negotiate.  The sales person will likely be calling you to further negotiate.

Car buying is not fun for me, but I wish it had been easier.  With these tips, you can hopefully have a smoother, less eventful car buying experience than we did.

How about you all? What other tips would you add to help make the car buying experience smoother?

Share your experiences by commenting below!

****Photo courtesy https://www.flickr.com/photos/rubelroy/9096822638/

One of the Benefits of Financial Independence: Sabbaticals

The following is a post by MPFJ staff writer, Kevin Mercadante, who is a freelance professional personal finance blogger for hire, and the owner of his own personal finance blog, OutOfYourRut.com. He has backgrounds in both accounting and the mortgage industry.

One of the benefits of achieving financial independence is the possibility of creating sabbaticals. These are breaks you can take from work, every few years. They can last anywhere from a few months to a couple of years. They are more typical in the education field, but if you have financial independence, you can work them into your own lifestyle.

After all, since we all have limited time in his life, there’s often a trade-off between time and earning money for a living. We can see the value in weekends and vacations, so periodic sabbaticals aren’t a ridiculous idea.

Early Retirement Doesn’t Have to be the Ultimate Goal of Financial Independence

The whole concept of financial independence has now become almost synonymous with early retirement. The idea is that you will reach a level of financial worth where you will no longer need to work to earn a living.

That’s certainly a worthwhile goal, but it does have a few flaws in it. The first is that it’s not likely that most people are going to reach a point where they can stop working fairly early in life, and never have to worry about money again. Another is that not everyone necessarily wants to stop working and retire. For many, it’s enough just to have the ability to retire, even if you never do.

But that’s where sabbaticals can come into the picture. Even if you don’t fully retire for the rest of your life, you can take periodic breaks during your career. For example, you could decide to work for five years, and then take a year off.

One of the advantages of this is that you don’t have to wait until you have the enormous amount of money you will need to keep you from having the work for the rest of life. Instead of waiting until you can early retire at say, 50, you can take sabbaticals much earlier in life. If you create some level of financial independence, you could even do it as early as 30. It’s a less challenging task, which makes it more doable in the near-term.

Sometimes You Just Need a Break for a While

So why would you even want to take a sabbatical? Sometimes you just need a break. For many people, working year after year is a recipe for job burnout. But if you take a break every few years – and schedule that into your life – just the idea of doing it could prevent burnout from happening.

It may not even be that you dislike what it is you do for a living. Sometimes just getting out of it for a while helps you to reorganize yourself and clear your head, so that you can come back with a fresh perspective and a new determination.

Recharging for the Next Major Advance in Your Life

It may also be that you just need some time to get yourself ready for a major change in your life. It could be a career change, starting a new business, taking a different approach with the same career, or perhaps taking some time to get some additional training or education. A sabbatical can help you to bridge the gap between where you are and where you want to go.

Sometimes those advances are not necessarily career related. For example, you may need to take some time off to be with ailing relative, or even to welcome a new child into the world. Your employer may allow you up to 12 weeks for either of those responsibilities, but you might choose to take more time. If you have achieved a solid level of financial independence, you can take that time.

Adding Rich Experiences to Your Life

Maybe you just want to take some time off to travel the world. While it may be nice to have such a plan for when you retire, what if you don’t want to wait another 10, or 20, or 30 years to do it?

Planning a sabbatical can enable you to take such a trip in just a couple of years. There’s no need to wait until you are 50 or 55 or 65. And let’s face it, even if you’re on track to retire early, there’s no guarantee how it will all play out, or what your outside circumstances will be at the time.

If you’ve achieve financial independence, you should be able to take that time now, rather than waiting for sometime in the distant future.

Creating a Series of Mini-Retirements

It’s not necessary to try and pack a lifetime of experience into a single sabbatical. You can plan one every few years. That will give you time in between to decide on new goals and directions.

It will also help you to prepare financially. Let’s say that you want to take a sabbatical in five years. If you can save 20% of what you will need to live on for a year, each year between now and the time the sabbatical starts, you will be able to take the time off and not worry about how you would survive.

Usually when people achieve financial independence, it’s because they are able to save a much higher percentage of their income than most other people. For example, while the average person might save 10% of their income each year, you may be able to save 20%, 30%, 40% or more. If you allocate some of your savings for your sabbatical, and some for longer-term savings and investments, you will be able to have the best of both worlds. That means a sabbatical in the near-term, and greater wealth in the future or whatever else you want to do.

Early retirement is an excellent life’s plan. But if you don’t entirely trust all the possibilities that the future may hold, it’s not a bad idea to plan on taking some extended time off in the not so distant future. Think about what you want to do with your life, and how a sabbatical might help you do it. You may find out that it’s the best time off you’ve ever had.

How about you all? Have you ever taken a sabbatical from your career? What were your experiences and what did you learn?

Share your experiences by commenting below!

***Photo courtesy https://www.flickr.com/photos/tylerkaraszewski/2654986116/sizes/q/