Set Your Financial Goals for 2016

The following post is by MPFJ staff writer, Jeff. Jeff has been writing online about finance related issues since 2009, and after a lot of soul searching in 2015 has crystallized his goal of financial independence and blogs about his journey to freedom at zerotofi.com

Now that the New Year has come and gone, have you set any financial goals? If you did, 1 month later how are you doing on them? If you’re anything like me (and lots of other people) your motivation to pay off debt, start saving more, eat out less or anything like that is probably beginning to wane. If you’re looking for new goals or just never got around to setting some for 2016 yet, here are a few you should shoot for.

Pay off credit card debt

This is a popular one, and for good reason. Many credit cards have balances on them because of overspending or because they were used an emergency situation for a car repair or something similar. When you’re using credit cards and not paying them off in full every month, you’re racking up huge interest charges (typically >15%), making it tough to get ahead. To accomplish this you’ll need to be steadfast about not adding any new charges and trying to find any extra cent that you can use to pay above your minimum. If you have more than one card, look into the debt snowball method and see if it suits you. I was able to pay off my debt using this method in 2010, and have not carried a balance on a credit card ever since. It was certainly not easy, but looking back it has allowed me to do so many things.

Build An Emergency Savings Account

Many people get stuck with high interest credit card debt that they cant pay off because they dont have any cash for emergencies or unexpected events, like a car repair or home repair. If you find yourself in this situation, you’ll want to have a bit of money saved as a backstop so you dont return to credit card useage. While there are many plans and amounts, I think the following one would be easiest to follow, and would give you a savings balance of >1,300 by the end of 2016. You’ll be saving a certain amount of money each week, so you’ll need to find it in your budget.

Start off saving 52 the first week, then 51 the next week, then 50 and so on. By the end of the year, you’ll have a good amount saved up. Bonus part is if you get to July or August and want to save more than the required amount, just do that! A bigger savings account never hurt anyone.

At the end of the year, you should have money to help you weather most emergencies, and wont need to fall back on credit cards again.

Start a Side Hustle

If there’s one thing thing related to earning income that has changed my perspective, it is starting a side hustle. Paying off debt was an awesome feeling and very, very freeing, but being able to earn even a little bit of income on my own, outside of my day job is incredible. Just about anyone has some skills that they can trade for money in their spare time. You can mow lawns or shovel snow, fix things around the house for seniors, change oil in cars for your neighbors, help people move, start an online business and the list goes on and on. There are so many people who would rather just pay someone to deal with something than spend the 15 minutes to do it themselves! Step up and be one of those people making extra money! You can use the extra money to fund your savings account, or pay off debt!

How about you all? What money goals do you have for 2016?

Share your experiences by commenting below!

***Photo courtesy https://www.flickr.com/photos/pictures-of-money/17123254699/

Are You Frugal or Just Strange?

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.

Frugality is a much revered and time honored trait. Search the Internet and you’ll find quotes about frugality from greats such as Plato—“The greatest wealth is to live content with little,” or Warren Buffet—“Do not save what is left after spending, but spend what is left after saving,” or Thomas Jefferson—“We make ourselves rich by making our wants few.”

Yet, if we’re to look at ourselves and our generation honestly, we aren’t not nearly as frugal as previous generations. I’m thinking of women during the Great Depression and earlier who used the material from feed sacks to make dresses, or the pioneers who threw nothing out and always found a use for everything. Use it up, was their motto.

Now, many of us struggle to implement frugality because we just don’t know how. We’re so used to our disposable society that many of the frugal skills of previous generations have slowly disappeared.

However, thanks to the recession a decade ago, frugality has made a comeback. It was during the recession that my husband and I learned many frugal techniques that we still use today.

My family and I do a lot to live a frugal lifestyle, including:

• rewashing sandwich and freezer baggies,
• hanging up clothes to dry on our indoor drying racks (yes, that we asked for as gifts for Christmas one year),
• cooking at home from scratch,
• owning just one car,
• using that car until it dies (our current vehicle is 11.5 years old and has 163,000 miles on it),
• keeping our heat on 63 and our air conditioning on 81,
• shopping for clothes at thrift stores and garage sales,
• making minor fixes to clothes such as replacing elastic waistbands and sewing knee patches so we can continue to wear them,
• making some homemade Christmas presents,
• buying discounted or clearance food at the grocery store,
• cutting our own hair,
• gardening,
• collecting rain water in buckets to use in the garden, etc.

A search for frugal living strategies on the Internet and Pinterest reveals that we’re doing most of the things people recommend. However, when I dig deeper into frugality, I find another frugal segment that doesn’t get much attention—the uberfrugal.

When I read about the uberfrugal and their techniques, I find myself wondering, are they clever and smart stewards of their money, or are they just. . .strange?

Many people believe that those who are uberfrugal are instead just cheap. But sometimes they’re also just called weird or gross. Consider these practices:

Using Family Cloth

Family cloth is a polite, albeit it misleading name, for using cloth, reusable toilet paper. People simply sew flannel squares of cloth (or recycle old t-shirts), use them, and then wash them in the laundry. The squeamish are grossed out just by the description, but the people who use family cloth insist it’s really no different than using cloth diapers and cloth wipes for babies.   In fact, they argue that family cloth is much gentler and better for your nether regions.

Only Flushing the Toilet Once a Day

I visited a family that had a pretty sign posted to the wall above the toilet bowl tank, which read, “Please, if it’s yellow let it mellow, if it’s brown flush it down.” And that’s just what they did. The toilet was flushed only once at night if it was just full of, um, shall we say, liquid excrement.

Sure, they saved on their water bill, but I have to wonder how sanitary the routine was. And besides, by the end of the day, the bathroom smelled pretty ripe.

Canceling Garbage Service

Honestly, I didn’t even know this was possible until I read that one of my favorite bloggers is doing this. Her goal is to shave off extra expenses so she can pay down her house quicker, which is an admirable goal. She plans to reduce her garbage load by repurposing and reducing her waste creation—i.e. using recyclable bags at the grocery store, composting produce scraps, etc.

Still, she must be generating a small amount of garbage, and she hasn’t addressed what she plans to do with that. Use a neighbor’s garbage? Bring it to a public garbage can?

Eating Food Passed the Expiration Date

We all know that food that is marked “sold by” does not necessarily have to be eaten by that date. However, how loose are you willing to go with the “use by” date? Some frugal people will pay no heed to use by dates. Other people will eat leftovers that are over a week old, way passed what is generally considered safe to eat.

These people often remark, “I’ve never gotten sick eating food this old before. Why should I start now?”

Or, if they see a spot of mold, they’ll just cut it off or pluck it out and go on eating the food.

While I’m generally pretty frugal, I’m also very cautious about eating old food. The freezer is my friend, so if leftovers have been in the fridge for a few days, I put them in the freezer with a note to eat them the first day I thaw them just to be safe.

Dumpster Diving

People who dumpster dive target apartment, restaurant, or grocery store garbage bins, and, as the name implies, go into the dumpster looking for treasures. Those who dumpster dive claim that, for those who are brave enough to try, there is a bounty of goodies including unopened boxes and cans of food as well as other items that are still in their wrappers.

However, many others are grossed out completely by the idea of entering or even going near a dumpster with the idea of removing an item to use rather than putting something in the garbage. There is also a real concern that you could be threatening your own safety either due to sharp objects like broken glass or animals that may be in the dumpster looking for their own treasure, not to mention consuming food that has been in the dumpster.

Furnish Your Home with Curbside Treasures

Reportedly, if you live near a college campus and cruise by near the end of the semester, especially near the end of the academic year, you can find all sorts of furniture. Apparently, many college students who go home for the summer have to empty out their dorm rooms or apartments, and the quickest way is to toss everything to the curb.

Also, if a neighborhood is having a large trash pickup day, you can frequently find furniture and other home goods.

But would you take those items and bring them into your home? Many people do and claim that they are getting very high quality furniture for free.

Those who aren’t so frugal, including myself, worry about the sanitary issues. What if the furniture is infested with fleas, cockroaches, or bed bugs? True, you may be saving yourself a lot of money by not having to buy the furniture, but what if you bring home some nasty creature that you have to spend weeks trying to eradicate?

How about you all?  If you’re frugal, where is your line in the sand? What practices are too frugal for you and instead, just seem unsafe or unsanitary?

Share your experiences by commenting below.

***Photo courtesy https://pixabay.com/en/dumpster-trash-bin-garbage-trashcan-100909/

How We Nickel and Dimed Ourselves into Massive Credit Card Debt

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.

Many people who’ve gotten themselves into massive amounts of debt have a pivotal moment when they made a decision to take on a lot of debt. Maybe they went back to school for their Master’s degree. Or maybe there were medical expenses from a surgery or other incident.

Our case was different: we literally nickel and dimed ourselves into huge amounts of debt to the tune of tens of thousands of dollars.

How it Happened

I can honestly say looking back that we’d never really been concerned with managing money properly during the first fifteen years or so of our marriage. We’d get into debt, get out of debt, not really ever having a plan for our money.

Instead, we spent as we wished and when things got too tight we’d panic and pay off the debt in one way or another, usually by cashing in an investment or a retirement account.

In 2010 my husband got laid off due to the recession and our one-income family of six officially became a no-income family. As usual, we didn’t panic; after all there was a three-month severance package and unemployment to help us along after that.

Seven months later Rick got a job offer that left us with a tough decision: the job was with a major company that he’d always wanted to work for, however the pay they offered was 20 percent less than what he’d been making at his old job.

In our “wisdom”, we decided that he should take the job and that we’d simply use credit cards to cover the salary difference until he worked up to the salary he’d been paid at his old job. Looking back, I’m amazed that we talked very little of cutting expenses or changing our lifestyle. In our uneducated opinion, we “really didn’t spend that much money.”

At the time we lived in an affluent suburb, and since we spent “much less than most people” we knew and lived by, we accepted our expenses as reasonable, even though we had very little idea what those expenses actually were.

Our Financial Wake-Up Call

Two years after Rick started his new job, we sold our home in the suburbs and moved to a small hobby farm, eager for a more quiet life with our children. The move to the country was a real eye-opener for us. We felt as if we were viewing “normal” life from the outside looking in. In the country, no one cared about what we drove, what we wore or what activities the kids were in.

They simply cared about the content of our character, to quote MLK Jr. As we pondered this new way of living where the Joneses didn’t matter, we sat down to take a real look at our finances. When we added up all of our credit card debt, we were dumbfounded at the astronomically high numbers.

Searching for answers, we went back and looked at our bank statements for 2012, writing down all that we spent on groceries, entertainment, clothing and the like. The numbers were shocking. Even though we thought we “never” went out to eat, we were spending nearly $300 a month on drive-thru runs, occasional restaurant meals and trips to the snack bar at the local big box store.

The grocery numbers brought similar shock. In our vague attempt at budgeting, we’d set our grocery budget for our family of six at a reasonable $600 a month. In reality, we were spending $900 a month on groceries due to a lack of good menu planning and runs to pick up random “stuff” here and there at the grocery store.

Suddenly, it became all too clear why we were in so much debt. In a panic, I began googling terms like “how to get out of debt” and found the wonderful world of personal finance blogs. I’d never read a blog before, but I was soaking them up now as I read about dozens of others who had found themselves in massive debt but worked their way to debt freedom.

For the first time in our lives, we began living off of a real budget and tracking all of our spending starting in January of 2013. While budgeting had always seemed invasive and restrictive to us in the past, we decided to give a real go at it and fell in love with being in control of our money. For the first time in our marriage, we knew where our money was going and we had a plan for what we wanted to do with it.

There have been many ups and downs for us financially in the three years since we first began living with a plan for our money and working to pay off debt. Major home repair expenses and other unexpected costs, combined with a super high debt-to-income ratio (we started at 65%), have made our journey to debt freedom a “one step forward, two steps back” kind of a journey.

But we are winning our battle to dump debt. If all goes as planned, our tens of thousands in consumer debt will be paid off by the end of 2016.

If you’re feeling overwhelmed by your debt, or wondering how you got in debt in the first place, don’t give up hope. With a solid plan and a commitment to persevere, you too can become debt free.

How about you all? Have you ever struggled with debt? Have you ever had a financial “wake-up” call?

Share your experiences by commenting below!

***Photo courtesy https://www.flickr.com/photos/armydre2008/2969764323/

What to do if You Can’t Pay Your Income Taxes

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.

It can be a real panic situation if you can’t pay your income taxes. But even if you can’t, panic is an emotion that you need to resist. The IRS offers a number of ways to pay your income taxes, so the best strategy is always to take positive action.

File Your Income Tax Return By the Due Date

If you can’t pay your income tax bill, at least make sure that you file your income tax return when it is due. This will start the process that will enable you to make a payment arrangement with the IRS.

It will also reduce the amount of penalties and interest that you will ultimately have to pay. That’s important, because the penalties for late filing your tax return – or not filing it at all – can actually be more severe than what they are for late payment of income tax.

File for an Extension of Time to Pay Your Tax Bill

If you have ever filed an extension to file your income tax, you may be surprised to learn that there is also an extension available to pay your income taxes, if the non-payment is due to temporary factors. If you don’t have the money to pay now, but you expect that you will a few weeks or months, this is a good strategy.

The extension to pay will get you up to 120 days to make a full payment. Just remember that you must file your income tax on time in order to begin this process.

You can make the request for an extension of time to pay by calling the IRS directly at 800–829–1040 (there are no forms for you to complete). Using this payment option you will not have to pay any type of upfront fee, but interest and penalties will be assessed on the unpaid tax balance until it is fully paid.

Set Up an Installment Agreement

If you have a larger tax liability, one that you will be unable to pay within 120 days, you can set up an installment agreement. The IRS will allow you to set up a payment agreement that will extend as long as 72 months (6 years), and require equal monthly payments until the liability is completely paid. Penalties and interest are added to the amount of your tax liability due and there is a small setup fee ($50 to $120) to initiate the process.

You can use this method for a tax liability up to $50,000, however you may be required to submit personal financial statements in the event that the balance due is higher than $25,000.

There are three ways that you can set up an installment agreement:

1. Contact the IRS by phone, again at 800-829-1040, or by calling 800-829-4933 if the liability is for a business tax return
2. Complete an Online Payment Agreement Application, or by filing IRS Form 9465 and file it with your income tax return
3. Complete an Installment Agreement Request, and mail it in to the IRS

Here’s the general sequence involved in requesting an installment plan:

• You can complete and file Form 9465, or a written request for a payment plan (include all details of the plan, including the monthly payment amount and due date) and attach either form to the front of your return.
• If you have filed your tax return, and the IRS hasn’t contacted you with a bill, you can request a pre-assessment installment agreement on current tax liabilities.
• If you received a bill from the IRS you can request an installment agreement using the Online Payment Agreement Application, or you can submit Form 9465 or attach a written request for a payment plan to the front of your tax bill and return it to the IRS.
• You can also request an installment agreement by calling the toll-free number on your bill or if you do not have a bill, call the IRS at the phone numbers listed above.

Your installment agreement request will generally be processed within 30 days of your application or phone call.

The IRS provides several payment methods, including:

• Direct debit from your bank account;
• Payroll deduction from your employer;
• Payment via check or money order;
• Payment by Electronic Federal Tax Payment System (EFTPS);
• Payment by credit card via phone or Internet; or
• Payment by Online Payment Agreement (OPA).

The IRS usually charges a $120 fee to set up a payment plan, but if you make your payments by direct debit, the fee is only $52. The fee for a request to restructure or reinstate an existing installment agreement is $50.

The amount of your monthly payments should be an amount that you are able to pay comfortably. If you can’t, you may be setting yourself up to default on the installment agreement, which will bring a host of complications. The IRS will allow you to request a specific monthly payment amount, as long as it is sufficient to satisfy your liability within 72 months.

There is also flexibility in regard to the date of the monthly payment. The IRS will allow you to choose a due date between the first and the 28th of each month. If you plan to submit payments by mail, it is recommended that you send them at least 10 days before the due date, that way they will arrive on time.

You can also use payroll deductions to make your monthly installment payments. This can be done by completing and submitting IRS Form 2159, Payroll Deduction Agreement. The form must be completed by your employer since it is an agreement between you and your employer.

Offer In Compromise

So far we’ve been talking about what to do when you actually have the ability to make installment payments. But what happens you can’t do that either?

The IRS offers a solution. It’s referred to as an offer in compromise, or OIC.

You can apply for an OIC if your inability to pay your tax liability is due to permanent financial difficulties, such as a business failure or job loss. The IRS doesn’t completely waive your tax liability, but they may agree to accept a reduced amount as full payment of the debt.

To receive consideration for an OIC you must make sure that all returns have been filed and that previous year’s tax liabilities have been paid. It’s important to understand however that you will not be eligible for an OIC if you’re in bankruptcy proceedings.

You can determine in advance if you are eligible for an OIC by checking out the IRS’s
Offer In Compromise Pre-Qualifier. That won’t represent a formal request for an OIC, but it will help you to know if it is worth pursuing.

Be aware however that applying for an OIC can be a complicated process. You will almost certainly be better off hiring a CPA or tax attorney to handle the process for you, particularly if you have a substantial tax liability.

Using Non-IRS Sources

Applying for what are essentially debt arrangements with the IRS can be a complicated and intimidating process, particularly if you’ve never done it before. For that reason, you might be better off trying to cover your tax liability using other resources. You’ll still be in debt as a result, but at least you won’t be in debt to the IRS.

Sources you might consider to satisfy your tax liability include:

• Credit cards
• Home equity line of credit
• Personal loans
• Family sources
• Selling a major asset or a group of assets

One common source of funds you may want to avoid is liquidating funds from retirement accounts. That may get you the funds you need to satisfy your tax liability, but it will generally result in additional taxes (and often penalties) due as a result of liquidating a tax-sheltered savings plan.

If you owe the IRS money that you can’t afford to pay right now, arrange to satisfy the debt either through an IRS plan, or through alternative resources. The worst strategy is to do nothing. Not only will that make the debt go even higher, but it could result in ugly collection efforts by the IRS that will hurt your credit and disrupt your income. Being proactive is always the best strategy with the IRS!

How about you all? Have you or someone you know ever been in a situation where you couldn’t pay your income taxes? How did you handle it?

Share your experiences by commenting below!

Photo courtesy https://www.flickr.com/photos/jakerust/16836483201/sizes/n/

5 Tips for Turning Your Finances Around in 2016

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 great things about starting a new year is that it can be used as a time to make a fresh start in areas in which you may feel you aren’t functioning at optimum level. A full 25% of people made financial wellness a part of their New Year’s resolutions in 2015, according to this Nielsen article.

Most people, when asked, say that they’d love to have less debt and more money in savings. January is the perfect time to formulate a plan for turning your finances around and increasing your financial wellness. Interested? If so, here are 5 tips for creating a better financial life for yourself and/or your family in the coming year.

Financial Wellness 101

Assess Your Situation

You can’t improve your finances successfully without first knowing where you stand moneywise. Make a list of all assets such as savings, investment and retirement accounts, any homes you might own, and any large pieces of property, such as automobiles, boats or recreational vehicles. Write down:

• Name of asset or Bank name
• Type of asset (retirement, non-retirement, car, boat)
• Current worth
• Average interest rate earned

Now make a list of all debts or liabilities including mortgages, consumer debt, medical debt, etc. Write down:

• Name of debtor
• Balance owed
• Interest rate you’re paying
• Minimum payment due

After you’ve calculated your total assets and your total liabilities, you can subtract your liability number from your asset number. The answer you get is your net worth. Your net worth is an important number to know because it’ll give you an indicator of where your finances are at. From there, you can take steps to get to where you want to be.

Determine Your Financial Goals

Now that you’ve got a clear picture of where you’re at financially it’s time to determine where you want to be. What are your financial goals? Determine three short (within a year), three medium (within 1-5 years) and three long-term (longer than 5 years) financial goals, write them down and post them prominently.

Some ideas of short-term goals could be:

• Pay off “X” credit card or loan
• Save “X” amount of dollars in an emergency fund
• Save cash for an upcoming vacation
• Save cash for a needed replacement vehicle

Some ideas for medium-term goals could be:

• Pay off all consumer debt
• Save six to twelve months’ worth of living expenses
• Increase kids’ college savings accounts by fifty percent

Some ideas for long-term goals could be:

• Pay mortgage off in ten years
• Increase 401k or IRA contributions to the maximum allowed
• Save enough in a non-retirement investment to retire in 15 years

By choosing short, medium and long-term goals that are important to you, you increase chances of reaching those milestones.

Make a Solid and Doable Financial Plan

A solid and doable financial plan is one that is realistic enough that you’ll stay with it, but challenging enough that you’ll be motivated to reach it. If your goals are too audacious you’ll give up quickly, certain you’ll never reach the finish line. When it comes to successful financial plans, smaller, more realistic steps will get the job done more often.

Take Regular Steps to Achieve Your Goals

If your goals aren’t regularly at the forefront of your mind, you’ll soon forget about them. One of the keys to turning your finances around is to take regular daily or weekly steps to reach the financial goals you’ve set in place.

That might mean working side hustles to earn extra money to put toward debt each week, or working overtime at your job so that you can increase the amount of money you’re putting in your 401k. It might entail selling things you no longer use, looking for cheaper housing or any other number of things that will help ensure your financial renewal is successful. Just make sure to spend time on a regular basis looking for extra ways to help you achieve your goals.

Choose to Persevere

Perseverance is a successful key to achieving any goal. As you work to turn your finances around, roadblocks will come in the form of unexpected expenses or opportunities to spend money outside of your budget.

Choosing to persevere in spite of roadblocks – whether that means overcoming spending temptations, working to recover from a spending mistake or dealing with an unexpected expense – will help you to see that successful financial plans aren’t about not making mistakes; instead, they’re about learning to recover from those mistakes and move on.

How about you all? What steps do you plan on taking this year to improve your financial wellness? Do you have other ideas on how to improve your financial wellness that aren’t listed here?

Share your experiences by commenting below!

***Photo courtesy https://pixabay.com/en/packs-pile-money-finance-currency-163497/

Change Your Life One Year, One Goal, at a Time

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.

If you’re like most people, you likely may have overindulged this holiday season. You may have had a few too many drinks, ate a few too many sweets, had a few too many glasses of egg nog.

Your budget may have suffered, too, as you bought additional gifts for people who weren’t initially on your list or you forgot how much expenses can balloon in December.

Now that the rush of the holiday season is over, like most people, you want to face the new year ready to make some changes. Maybe you want to lose some weight, pay off some debt, improve yourself.

But, let’s be honest, change is hard. If it wasn’t, we wouldn’t get stuck in negative ruts as we all sometimes do. It’s hard to give up old habits, especially if you overwhelm yourself with a big list of New Year’s Resolutions.

This year, try a different approach.

Find ONE thing that you want to change. ONE thing that will improve your life, and make changing that ONE behavior your goal for 2016.

Yep, just ONE thing.

But more importantly, take the steps necessary to prepare to change your life before you make the change.

My Life Change

Three years ago, I was a total soda addict. I started drinking Mountain Dew (yes, I know, it makes me cringe now to think about it) when I was 16. I didn’t stop drinking it until I was 32.

I thought everything would be fine once I finally gave up Mountain Dew, but instead, I switched to Pepsi. At first, I drank Pepsi in moderation, but then I started drinking two 24-ounce bottles a day. I was almost as hooked on Pepsi as I had previously been on Mountain Dew.

One day, I looked at my infant daughter and realized I would be leaving her a terrible legacy. If I didn’t kick the soda habit, she’d likely grow up drinking soda, and perhaps becoming addicted, as I was.

By consuming so many liquid sugar calories, I was literally drinking my way to diabetes. I was also making it very difficult on myself to lose weight.

I decided that since I couldn’t manage my soda consumption, I should give it up completely.

And I did.

I won’t say it was easy. In fact, for about six months, I always wanted to drink a soda, especially when we went out to eat. But then, after I got through those difficult months, I found that I didn’t even want to drink soda. Not even a taste. I have been completely off soda for three years now, and I know I’ll never go back to drinking it.

Changing a bad habit is hard, but if you can see the cravings through, you can make a lifelong change that will very likely improve the quality of your life. The key is to devote yourself to ONE change at a time.

How to Make a Permanent Change

Don’t automatically assume the perfect time to change your life is when the calendar turns to the new year. Instead, the best time is after you’ve taken the proper preliminary steps.

The following is what you’ll want to consider as you prepare to change your life:

What do you want to change?

The first step is to determine which behavior you most want to change.

Why do you want to change?

Then, you must give yourself valid reasons WHY you want to change. This is important because our natural inclination, when faced with a challenge, is to fall back on our old behaviors. A list of solid reasons why you want to change can help you fight this tendency.

Psychology Today explains, “If you aren’t sure why you’re changing, don’t fully believe you’re making the right choice, or question whether what you’re doing will work, you’re likely to settle back on your automatic behaviors. That’s why self-efficacy—the belief that you can make a change and overcome obstacles—is one of the best predictors of successful change.”

What routines cause you to partake in the behavior?

Another important task is to realize what routines are associated with the behavior. I had certain times when I wanted to drink a soda—at dinner time, with an afternoon snack, for an afternoon pick me up. In other words, I had made soda a natural part of my routine. After I gave up soda, if I ate a less healthy snack like popcorn or chips, I found myself wanting soda. So, I changed to healthier snacks like bananas and apples, which broke the association of a snack being soda and a salty treat.

What triggers cause you to partake in the behavior?

You may find that you have triggers that cause the behavior. For instance, maybe if you fight with your children, you find yourself reaching for a sweet treat to soothe yourself. Or, maybe you find yourself shopping online more than you should, especially after a rough day at work.

Know the ingrained habits and triggers that cause the behavior BEFORE you try to change your behavior. Then, when a craving is particularly strong, you’ll be able to determine what is causing the craving and fight it off.

Make access more difficult.

Once you’ve completed all of the above steps, make access to the item more difficult. For instance, once I decided to give up soda forever, I stopped buying it. I didn’t bring it in the house. (Luckily my husband does not drink soda, so it was easy to keep it out of the house.) If you spend too much money shopping on Amazon, for instance, change your notifications so they go to your spouse’s e-mail. Your spouse will know immediately if you’ve spent more than you agreed to spend.

Make your resolve public.

Many people find that telling others about the behavior they want to change helps them accomplish their goal. A friend I know recently gave up gluten and dairy for health reasons. As gluten products made up a large portion of her diet, this was quite difficult for her. She recently posted that she has now gone six days without either gluten or dairy. Sharing publicly like this helps her keep her resolve, and she also gets encouragement from all of her friends cheering her on.

Michael Hyatt, blogger and author of Platform: Get Noticed in a Noisy World, states, “When I decided to run my first half marathon, I decided to announce it on my blog. For me, this was like Cortez burning his ships off the Veracruz coast. Once I did it, there was no turning back. I was committed, and I was going to follow-through. It’s probably just pride, but ‘going public’ has proven to be a great lever in moving me toward my goals.”

This strategy may not work, however, if you’re largely surrounded by people who hope you don’t accomplish your goal. (Sadly, that is the case for some people.)

However, keep in mind that you have to find the strategies that work best for you. Dr. Nora Volkow, director of NIH’s National Institute of Drug Abuse notes, “There’s no single effective way to break bad habits. One approach is to become more aware of unhealthy habits, then develop strategies to counteract them: avoid walking halls where there’s a candy machine; avoid places where you’ve usually smoked; stay away from friends and situations linked to problem drinking or drug use.”

Resolve this New Year to change one habit and improve your life. Just remember that you don’t have to start on January 1^st. Instead, take the time to first understand your bad habit and why it exists. You’ll likely be more successful. Good luck!

How about you all? Have you kicked a bad habit? If so, what approach worked for you?

Share your experiences by commenting below!

Five Steps to Recover from Holiday (Financial) Overindulgence

The following is a post by MPFJ staff writer, CJ, who blogs at thesingledollar.com about personal finance, budgeting, frugality, and debt repayment.

I don’t know about you, but I woke up on December 26 to a budget bursting at the seams. At Christmas 2014 I was finishing up a year of debt payoff and I was very strict about buying presents, going out to brunch, and so on. But I got a little too relaxed this year; I bought gifts for more people, went out several times with friends, and generally had a hard time saying “no” to myself.

Luckily, I have a plan for what to do next. Just like after you eat too many Christmas cookies (I may have done that too this week, not saying!), recovery and restabilization is key.

Assess the Situation

Just how bad is it? Did you go into debt, or did you just spend all your “slush” money? This isn’t the time for regrets; even if you bought too many presents for your kids, or spent $30 on a meal out that wasn’t delicious, you can’t undo it now. Just make a list of any debts you have to pay off (credit card balances, money you borrowed from relatives or friends…) and prioritize them. If you don’t have debt, heave a sigh of relief and list your upcoming expenses.

Raise Cash/Store Credit

You’ll need to find some spare cash. You may have received gift cards or cash, or you can do some quick freelance work at sites like Swagbucks, Fiverr, or Usertesting. But one of my favorite ways to get back on track is to return unwise purchases to stores. If you bought presents for yourself (guilty!), do you still have the receipt and is the item unworn/unopened? Go get that money back! If you were given gifts that you won’t use, that can also be helpful. If you can tell where it came from (for example, a sweater from a specific retailer) then you can often take it back for store credit which you can use for things you really need. It’s nice if this is Target or Walmart so you can use the store credit for groceries.

Slim Down (Your Budget)

If you overindulged at Christmas, you’ll have to spend the next month or two tightening your belt. Look for places that you can cut back. The easiest way for me to do this is to cut down on food purchases: either I don’t go out as much, or I focus on making very cheap meals at home. If your family eats a lot of meat normally, try eating more pasta, rice, and beans. Or skip going to the movies and watch DVDs you already have. There are lots of places you can cut back a little for a month or two.

Follow Through

This step is simple: take the money you recoup from steps #2 and #3, and use it for the priorities you came up with in step #1. Pay off debts in order of importance, and pay necessary bills. Cross each item off your list as you pay it, as a great motivational tactic. When everything is crossed off, you’re back on your feet.

Plan For Next Year

Once you and your bank accounts are back on your feet, make sure you don’t make the same mistake again. Open a sub-account or a new line in your budget and name it “holiday.” Then set aside a pre-determined amount every month — say, $25 or $50. When December comes again, you’ll be able to have a good time without the yearly regret-filled reckoning.

How about you all? How did you do financially over the holidays? Any good tips for pulling yourself back together?

Share your experiences by commenting below!

***Photo courtesy https://pixabay.com/en/savings-bank-christmas-savings-pig-919859/

How to Buy a Car From a Car Rental Company

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.

Most people think that there are two places to buy a used car – a used car dealer or an individual. But there’s actually a third, and that’s a car rental company. They sell thousands of cars each year, offering many of the same advantages that you get in working with a car dealership, except you’ll usually pay thousands of dollars less for the car you want to buy.

We’re going to cover the basics of buying a car from a car rental company. We’re going to use Hertz as an example. Hertz has a dedicated web page for car sales, appropriately titled Hertz Car Sales. From that page, you can browse hundreds of cars in your area that are being offered for sale. Within 100 miles of Boston, Hertz has over 1,400 cars available, but you can pick any large city near you.

Lower Prices than Used Car Dealers

Car rental companies are not car dealers, so they aren’t looking to maximize the profit on the sale of their cars. They also don’t have commissioned sales people who need to be paid out of the proceeds. They mostly want to sell off their large fleets of existing cars to make room for newer models. Car rental companies generally use a car for two or three years, then it’s time to replace it. All of that works to your advantage when it comes to price.

Most of the cars offered for sale on the Hertz Car Sales page are one or two years old, and typically have between 30,000 and 60,000 miles on them.

Some examples of what’s available:

• 2014 Volkswagen Jetta SE with 46,000 miles, $10,375
• 2013 Chevrolet Cruze LT, 56,000 miles, $9,475
• 2015 Chrysler Town and Country Touring Van, 40,000 miles, $21,779
• 2014 Ford Fiesta SE, 41,000 miles, $8,900
• 2014 Honda Accord Sedan LX, 42,000 miles, $14,700
• 2014 Hyundai Elantra SE, 48,000 miles, $10,475

If you click on the link for each vehicle, you’ll be looking at a page that looks very similar to what you will see on a dedicated used car dealership page. They list all of the details of the car, including options, and provide multiple photos of the vehicle. You can also book a three day test rental, ask a question, or apply for financing – all on the same page.

Wider Selection than Used Car Dealers

Used car dealers typically have small numbers of cars of a certain model and make. Selection is limited by what ever type and number of vehicles that come to the lot. Car rental companies however buy fleets of cars. That means that they may have dozens of similar makes and models of the same car, almost the way new car dealers have new cars.

That means you will have more options than you will have with a used car dealer. If you don’t like the color, you can choose another (though admittedly, car rental companies have limited color selection as a general rule). Don’t like the sound system in one car? Move on to the next.

Car rental companies are almost unique in their ability to offer multiple options on used cars within the same make and model. The Hertz Car Sales page conveniently groups similar makes and models in the same place, so you can choose the car you like best.

And if you don’t see the option package in the make and model that you want, you can wait a few days. More inventory is always coming in.

Rent2Buy – A Chance to Test Drive the Car You May Buy

Hertz has a program called Rent2Buy that gives you a three day trial period to test drive the car. You rent the car for three days at the going rate, and if you decide you like the car, you can buy it. The three day rental charge will be waived upon completion of the sale.

This is a big advantage. Test driving a car for 15 or 20 minutes, as is the custom with used car dealers, is not nearly enough time to become familiar with how a car runs and feels. But with three days, you’ll have a much better idea if the car is right for you. You can even use that time to have the car thoroughly checked out by your mechanic to see if there are any hidden flaws. In fact, Hertz recommends that you do just that.

Warranties and Extended Warranties

Just as is the case with used car dealerships, cars sold by car rental companies come with remaining factory warranties. So if a car is two years old and has 40,000 miles on it, and the manufacturer warranty is seven years or 100,000 miles, it will be good for another five years or 60,000 miles, whichever comes first.

With Hertz, all vehicles come with a 12 month/12,000 mile powertrain limited warranty. And you can purchase extended protection plans from the company as well.

Yes, You Can Even Get Financing

Car rental companies don’t extend financing directly, but much like car dealerships, they work to match you with lenders to get the best rate and loan for you. Hertz even has an auto loan calculator tool on the site.

And once again, you can apply for financing directly from the Hertz website. The financing and all the paperwork will be handled online, which will also reduce the tension that often comes from face-to-face negotiations.

Accepting Your Car as a Trade-In

One other point worth mentioning: Hertz will accept your current vehicle as a trade-in toward the purchase of one of their cars. This is one of the primary reasons car buyers go to used car dealers, so that they can trade in their current vehicle hassle-free, or not have to sell it themselves.

The Hertz site doesn’t give details as to the terms of trade-in acceptance. For example, they don’t list any limits as to age, condition or mileage. But if there are any limits, you can always sell the car to CarMax (trust me, they’ll buy a car in any condition, year or mileage!) or a used car dealer in your area that buys cars even if you don’t by one from them.

So there you have the basics on buying a car from a car rental company. We’ve used Hertz as a model, but you can find similar opportunities at other car rental companies. Check them out when it’s time to buy a new car, I think you’ll be pleasantly surprised.

How about you all? Have you or someone you know purchased a car from a car rental company? What other tips do you have for purchasing a car from a car rental company?

Share your experiences by commenting below!

***Photo courtesy https://www.flickr.com/photos/44603071@N00/8135713685/sizes/q/

Two Important Strategies for Successfully Earning (and Living) on Just One Income

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.

From the time I was little, I knew I wanted to stay home and raise my kids when I eventually had them. But life doesn’t always turn out the way we plan.

Instead, when our first child was born, I was working full-time while my husband worked part-time and attended graduate school full-time. It would take another long six years and two more children before I was able to realize my dream of being a stay-at-home mom.

But, like so many people who drastically cut their salaries when one parent decides to become a stay-at-home parent, my husband and I didn’t change our lifestyle. We still lived as if we had my good full-time salary and his part-time salary. We had lost at least 50% of our old income, but we spent like we hadn’t lost any income.

We continued to pay for our oldest child’s last year of private school, we went out to eat, we had cable, I bought adorable outfits for the babies (on sale and with a coupon, but still, we didn’t have the money for them).

In the first 18 months after I quit my job, we racked up so much debt, we’re still paying it down. (Though to be fair, that amount does include my husband’s student loans during that time.)

Here’s the simple truth—if you want to have one person become the stay-at-home parent, you have to learn to live on one income. The sooner you do this (even while both partners are still employed) the better.)

I don’t have a time machine to go back and change those early years of living on one income (though I wish I did!). However, we’ve now been primarily a one-income family for five years, and we’ve learned to live within our means. Better late than never.

If you’re new to learning to live on one income, successfully doing so depends on two factors.

Finding Contentment

Like I did for so many years, you may dream of being a stay-at-home parent. Then, once it happens, you might find yourself fighting discontentment.

At first, I found myself a bit bored staying home all day. I tempered that boredom by spending. No, I didn’t go out on a clothing spree or anything like that, but I went to the grocery store too often so I’d have something to do.

I also found myself a bit disgruntled at our lower income. I’ll be honest here—I was spoiled. I wanted the privilege of staying home with my kids without the sacrifice of losing my income. I wanted to stay home, but I didn’t want to change my lifestyle.

What I should have done then, and what I try to do now, is find contentment in my situation. Many, many parents want to stay home with their children but don’t have the opportunity to do so. I am lucky.

Over the years, as I’ve practiced contentment, I’ve learned to appreciate things that would have bothered me when I worked and we had a higher income. For instance, our minivan is 11 years old, has 160,000+ miles on it, and has a broken back door handle on one side and a broken coil on the other back sliding door. I can’t get the kids in the car unless I open up the driver’s side door and reach behind and open the back door from the inside.

Is this embarrassing? Yes. And a few years ago, I would have just focused on how old and decrepit the car is. Now, I’m grateful that the car is paid for and that it still runs and gets us around town.

Gratitude can make all of the difference in how you feel about staying home and living on a limited budget.

Be Frugal and Know that You Can Always Cut More

While we weren’t frugal the first 18 months after I quit my job, we had to rein in our spending when the debt started accruing.

We now do many frugal activities that we should have started five years ago:

• We air dry clothes instead of drying them in the dryer,
• We go out to eat for birthdays only,
• We cook at home,
• We don’t buy convenience foods,
• We buy secondhand clothes and homeschool materials,
• We drive an 11 year old paid for vehicle with 160,000 miles on it,
• We only have one car,
• We buy groceries that are on sale and plan meals around those items (rather than buying what we think sounds good for the week)
• We have flip phones instead of smart phones which we use only in emergencies.

Living this way has allowed us to avoid accruing any new debt and to make headway paying off debt we have.

Yet, we don’t have a lot of wiggle room in our budget, and we want to buy a new-to-us car without taking out a loan. I started searching for ways to cut our lifestyle even further, when it occurred to me. We should live like we’re in the 1950s.

The 1950s—Living on One Income, without Debt

Why the 1950s? That is probably the last era when one-income households were common. Families then had relatively little debt outside of their mortgages. Credit cards weren’t frequently used.

While we may romanticize that time in history, the lifestyle back then was much different than we are accustomed to now. Consider what life was like for a family of four or five in the 1950s:

• They lived in a house that was likely less than 1,000 square feet. They all usually shared one bathroom, and if there were three children in the family, at least two of them shared a room through their entire childhood.
• There were no cell phones.
• There was no Internet or cable television (or even televisions period for much of the 1950s).
• Vacations, if taken, were usually within the family’s home state or within the United States. Elaborate trips to Disney or Europe or any other expensive destination was rare.
• Two-car families were unusual.
• Long commutes were unlikely. Many families lived close to where the family breadwinner worked.
• Families rarely ate at restaurants.
• Parents cooked at home with natural ingredients and did not have convenience foods to rely on.

Wow. Looking at this list, life in the 1950s doesn’t seem so romantic. Can you imagine life without your cell phone or the Internet?

Probably not.

Some things we have now like the Internet are necessary to function in modern life. Still, most of us could look at this list and find ways to scale back.

When I really researched how people used to live even just sixty to seventy years ago, I once again realized how truly blessed we are.

Rather than feeling sorry for myself because we bought a house that need cosmetic fixes that we haven’t been able to afford to make yet, I find myself grateful that we not only have a house but one that is 1.5x bigger than the houses most families had in the 1950s.

Many houses back then didn’t have central air. How lucky we are to have that.

There are many conveniences and luxuries that we have today that people even just a decade or two ago didn’t have. We all need to take the time to realize how much we do have, even when it feels like we don’t have enough.

If you want to stay home and successfully live on one income, take the time to realize how truly lucky you are and understand that your lifestyle will likely not match the neighbors’ who have both spouses working full-time. That’s okay. You just made a different choice.

How about you all? Do you or your partner stay home with the kids? If so, how did you adjust to the difference in income and lifestyle compared to what you were used to or wanted?

Share your experiences by commenting below!

***Photo courtesy https://pixabay.com/en/happiness-kids-mom-sye-987394/

Make These Moves Now To Lower 2015 Income Taxes

The following is a post by MPFJ staff writer, Toi Williams, who is a professional personal finance blogger of Fine Tuned Finances. She has backgrounds in personal finance, sales, and real estate.

As the year draws to a close, there are still many opportunities available to lower 2015 income taxes. Taking these steps before the end of the year has the potential to lower your tax bill by hundreds or thousands of dollars, depending on your income. It is important to act fast since once the year is over, it will be too late to do much about your tax bill. Fortunately, there are no significant tax changes looming as 2015 winds down that could trip you up.

Here are some effective ways to lower 2015 income taxes before the end of the year.

Boost Retirement Plan Contributions

If you haven’t maxed out contributions to your 401(k) or 403(b) retirement plan, consider doing so before year-end to lower your taxable income. The maximum amount of money you can sock away in these plans this year is $18,000. If you are not already contributing to a workplace retirement plan, you may be able to reduce your 2015 income taxes considerably if you set up a 401(k) plan through your employer by December 31.

Minimize Adjusted Gross Income

Make your adjusted gross income for 2015 as low as possible by making pretax contributions to health, dependent-care or retirement plans. The 3.8 percent surtax on net investment income and the 0.9 percent Medicare surtax typically only applies when the adjusted gross income of a married couple exceeds $250,000 (or $200,000 for a single filer). Itemized deductions on Schedule A, such as for mortgage interest or charitable gifts, generally cannot be used to lower your adjusted gross income because these write-offs are taken after your adjusted gross income is calculated.

Maximize Your Deductions

You can lower 2015 income taxes considerably by taking everything that you can as an expense and making sure that deductible payments are made by the end of the year. Qualified expenses may include payments for rent, mortgage payments, phone bill payments, and car payments. If you pay your January 2016 mortgage bill in December, you can deduct that mortgage interest on your 2015 income taxes. Second mortgages, home equity loans and lines of credit can also be used for deductions, but those deductions are limited and depend on a number of factors

Don’t Neglect These Medical Deductions

Many people are surprised by the number of medical deductions allowed by the IRS. You are currently allowed to deduct unreimbursed medical costs that exceed 10 percent of your adjusted gross income (or that exceeds 7.5 percent for people 65 and older). In addition to doctor’s bills, hospital charges, and expenses for prescribed medical devices, you can also deduct a portion of assisted-living expenses, most skilled-nursing-home costs, and certain expenses for special education. IRS Publication 502 has the full list of qualified medical expenses.

Split Large Taxable Gains

Large taxable gains have the potential to raise your adjusted gross income into phase-out or surtax territory. You can split large taxable gains over two years by selling or donating shares this year. The resulting savings could be considerable for investors facing this choice.

Offset Capital Gains With Capital Losses

Tax-loss harvesting involves selling securities in your portfolio at a loss to offset capitals gains, thereby lessening or eliminating that tax burden. Before the end of the year, examine your taxable accounts for gains and losses that can be used to offset each other. Taxpayers are allowed to use realized capital losses to offset realized capital gains, plus $3,000 of ordinary income such as wages, annually. Taxpayers are also allowed to carry forward unused losses for use in the future.

Make Charitable Donations

You can lower 2015 income taxes by making charitable donations by year-end. These charitable donations can be in cash, in property, or in stock, according to current IRS rules. Donors who make a charitable donation of stock often get a deduction for the full market value of the shares while avoiding tax on capital gains.

Make A Tax Free Gift

Each taxpayer is allowed to make tax-free transfers of up to $14,000 annually to recipients. One partner of a married couple can make $28,000 in tax free gifts if the other partner doesn’t make any. Givers can typically take the full deduction for the gift in the year it is made. If the gift is made to a qualified 529 college-savings account, federal law allows givers to bundle five years of annual $14,000 gifts, or $70,000, in a single year.

Pay Estimated Taxes Before Year End

If your taxes aren’t withheld through payroll and you are paying estimated taxes, which are due each quarter, falling behind can result in interest charges and penalties. If you settle your tax debt in the last quarter of the year using IRA distributions, you can avoid paying any additional fees.

One Last Note:

If your taxes are complicated, you can benefit from talking to a tax professional who knows what they’re doing. These tax professionals can help you develop a strategy that fits with your overall financial plan while helping you lower 2015 income taxes. It is important to use someone who is familiar with the tax laws in your state, as state tax laws can vary considerably. Choose someone that comes highly recommended and who won’t charge you an arm and a leg for their advice.

How about you all? Have you tried any of these items and have been successful in lowering your income taxes? Do you have other tricks that have worked in the past?

Share your experiences by commenting below!

***Photo courtesy https://www.flickr.com/photos/86530412@N02/8266136492