My Personal Finance Journey

5 Ways To Save On Your Monthly Bills

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The following is a guest post by Lewis Murphy. Enjoy! 

For most people, paying bills each month is a fact of life. However, there are many ways that you can reduce the amount of money that you have to send to your lenders and other creditors.

Here are five ways to help you save money on your monthly bills.

1) Look For Refinancing Options

If you have an auto loan or mortgage, you may want to look at refinancing options that will lower your interest rate as well as reduce your monthly payment. This can work to your advantage if your credit score has recently improved or if interest rates have gone down across the board due to the economy. The good news is that you can refinance your loans whenever you want.

2) Cut Down On Miscellaneous Expenses

There are plenty of smaller expenditures made each month that you can cut back on or eliminate. For example, you should cut coupons to lower your grocery bill or eat dinner at home instead of going out for dinner. These small cuts will add up to major savings each month.

3) Get Rid Of Extra Features That You Don’t Use

Take a look at your cable and cell phone packages to see if there are any features that you are paying for but not using. If you have a smart phone, there is a good chance that you have to pay for a data plan. However, if you downgrade to a regular phone, you can save anywhere from $15-$30 a month or more. Instead of buying the most expensive cable television package available, you can use services such as Hulu or Netflix to watch your favorite shows for less each month. While a digital cable package can cost upwards of $100 a month, Netflix only costs you $8 a month for streaming service.

4) Reduce Your Energy Usage

Turning off the lights can save you a lot of money each month. Additionally, you can unplug your computer, cell phone, and anything else that may be plugged into the wall. If you spend a lot of time outside of your house or apartment, you can turn down the thermostat to reduce the amount of money spent on heating and cooling bills. You have the potential to save hundreds of dollars each month by taking these simple steps.

5) Look For Better Deals On Insurance

At least once a month and/or year, it is a good idea to shop around to see if you can save money on your insurance policies. It is an easy way to save $50 or more each month just by spending a few minutes comparing quotes online. The best part is that you can switch insurance providers at any time without penalty.

In these economic times, it is important to save money whenever you can. By reducing your energy usage, refinancing your current loans, and shopping around for cheaper insurance, you can reduce your monthly bills by a significant percentage. When you see your savings account grow rapidly, you will be happy that you took the time to find ways to cut your spending each month.

How about you all? If you are trying to save money in a certain month, what methods do you you employ to squeeze through?

Share your experiences by commenting below!

Jacob’s Thoughts – Listed below are my random thoughts as I was reading this article.

  • For me, if I am trying to save more money in a specific month, the thing I usually try to cut back on is eating out at restaurants. By simply cooking at home and preparing meals in advance, you can really save some serious dough! 🙂

***Photo courtesy of http://upload.wikimedia.org/wikipedia/commons/thumb/5/55/Twenty_dollar_bills.JPG/640px-Twenty_dollar_bills.JPG

A Review of My 2012 Income Tax Results and 2013 Tax Planning

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This past week, I finally received my completed 2012 federal and state income tax return documents from the accountant.

In general, the results were very good. However, I feel that by analyzing some of the finer details/numbers, I can better plan for how to approach my tax planning for the 2013 year.

Specifically, the questions I am interesting in answering are as follows:

  • How much of my un-taxed income should I be saving each month in order to pay taxes when the time comes?
  • Should I use an accountant for filing my 2013 taxes next year?

Let’s get started! 

2012 Income Breakdown

My 2012 gross income can be broken down in to the following components:
  • 2.3% from dividends and interest from investments (meaning that I can likely ignore this contribution for planning purposes since it is so small).
  • 68% from untaxed fellowship income for my work as a graduate student. 
  • 29.7% from Schedule C self-employed business income.

After subtracting out the deductible part of self-employment taxes and my contributions to my Individual/Self-Employed 401k account, I arrived at an Adjusted Gross Income (AGI) that was 20% lower than my overall gross income, so that was nice! 

2012 Deductions

Since the standard deduction was greater than my itemized deductions, I took the standard deduction of $5,950 for 2012. After subtracting the 1 personal exemption I get for myself (with no kids, filing as a single person), I arrived at a taxable income that was only 57.4% of my original gross income that I started with (so a ~23% reduction from the AGI above).



2012 Federal Taxes

Having established my taxable income, my total personal federal taxes were computed. Next, self-employment taxes were added on top of the personal taxes. 
This resulted in my total taxes owed for 2012 being ~11% of my overall gross income. Nice! I am surprised this percentage is so low! 
If we calculate this based on my AGI or taxable income, the percentages become 13.9% and 19.2%, respectively.

2012 State Taxes

For my Virginia State Income Taxes, the form starts out with my federal AGI mentioned above. From there, the VA standard deduction and my personal exemption reduces my taxable income to 71% of my overall gross income.
Having obtained my VA taxable income, my 2012 total state taxes owed was calculated to be 3.5% of my overall gross income. If we calculate this based on my federal AGI or federal taxable income, the percentages become 4.4% and 6.1%, respectively.

2012 Total (State + Federal) Taxes

If we put everything together from both state and federal taxes, we can find something useful for planning purposes going forward:
  • I paid a total tax amount for 2012 equal to 14.6% of my overall gross income.
  • For 2011, I calculated this number to be 17.8%.

2013 Estimated Tax Payment Schedule

One of the nice things that my accountant does do for me each year is to calculate/prepare my estimated taxes for the following tax year (so 2013 was prepared during the 2012 tax preparation round).
For both the Virginia and federal estimated taxes for 2013, the accountant scheduled my payments to be ~$20 more than the total tax I owed for the 2012 (I’m not sure why they made it be $20 more and not just 100% of the tax amount from the previous year).

Target Question # 1 – How much of my un-taxed income should I be saving each month in order to pay taxes when the time comes?

For 2013 tax planning purposes, the important question I have at this point is what percentage of my un-taxed fellowship and un-taxed self-employment income should I be saving to pay the tax man this next year? 
On one hand, I do have the requirement that I need to pay the scheduled estimated taxes set forth by the accountant, primarily based on my 2012 tax amounts. This part I really can’t change. 
At first glance, I was guessing that since I am paying $700-$800 per month for staff writers to help build some awesome content for the site, my overall 2013 gross income will be lower than in 2012. By the same token, I have something else counter-acting this decrease in income by the fact that I won’t be contributing pre-tax dollars to my self-employed 401k this year since I set up a Roth 401k option (since my current tax level is so low, it makes more sense to pay the taxes now instead of on the withdrawal side). This could cause my taxes owed for 2013 to be about the same as 2012.
One problem that occurred with my saving method for 2012 taxes was that I was saving 33% of my total un-taxed. As we discussed below, in reality, it ended up that I only paid ~15% of my gross income in taxes. In other words, I had saved about 2x the amount of cash that I needed to save in 2012 for my taxes! 
Now, I’ll admit that having saved some extra cash throughout the year isn’t the most terrible thing to have happened to me ever. In fact, I am glad now to have it since 1) I used some of it to pay my 1Q and 2Q 2013 estimated taxes, 2) I used it to purchase my fiance’s engagement ring, and  3) I set aside another portion of it to help pay for things for our wedding coming up in 2014. 
However, it is likely that if I had known that I only needed 1/2 of the cash that I was stashing away, I could have put that money to better use by investing it at a higher rate than the 0.55-0.75% it was earning in my online savings accounts.
In order to optimize this for 2013, I think that I will approach the tax savings process as follows:
  • To be conservative, I will save 20% (so slightly higher than the 15% and 18% taxes I paid in 2012 and 2011, respectively but lower than the 33% I was saving for last year) of my un-taxed gross income each month in order to pay taxes/estimated taxes for 2013.



Target Question # 2 – Should I use an accountant for filing my 2013 taxes next year?

With my first 2013 tax planning question answered in the previous section, my attention now turns to whether or not I should use an accountant to help with preparing my tax return this coming year. 
As I mentioned in my post several days ago discussing my experiences doing my 2012 taxes 4 times using Tax Act, TurboTax, H&R Block, and through an accountant, I calculated that I would have made/saved $151 after fees and tax refunds by using Tax Act for my tax return instead of an accountant.

This got me thinking – does an accountant provide me with enough value to keep using the same one (or different) going forward?

Well, let’s start by first addressing the easy question of using the same accountant going forward. For the past few years, I have been using an accountant 1300 miles away back home in Arkansas because they were tying the payment for my taxes in with my Dad’s business tax return (essentially doing my tax return without much additional compensation). Since my Dad is no longer having business taxes done since he has switched to regular employee income, I have to now pay to use that accountant. Obviously, there is no reason for me to stay with that same accountant since they are 1) charging me and 2) so far away.

So, the question now becomes – do I find a local accountant here in Virginia or just do my taxes myself using Tax Act?

Since I have self-employed income/a home business, my taxes tend to be rather complicated. In addition to standard estimated taxes that I pay periodically, I seem to often have tax-related questions that come up throughout the year as I am reading about various issues related to personal finances. In my mind, it is rather valuable to have a certified tax professional that I can openly ask about these issues. In addition, using an accountant to do my taxes provides me with a certain amount of peace of mind that is hard to put an exact price on. However, the number is definitely higher than the cost of the $151 from the 2012 tax return.

Because of the two considerations discussed in the paragraph above, I will likely start seeking out a local accountant here in Virginia to help with my 2013 taxes based on recommendations of several people I know here in the community. I’ll be sure to share my experiences of screening CPA’s as I go through the process, but I will need to do this sooner rather than later since I will likely need to mail 1099-MISC’s to my staff writers from this site prior to January 31st, 2014 so that they can file their 2013 tax returns on time and I can avoid penalties.

How about you all? What lessons did you learn from your 2012 taxes that you will carry forward in the next year? 

Have you ever calculated what % of your gross income you pay in state + federal taxes (this is the first time I have ever calculated a percentage)?

 Share your experiences by commenting below!

    ***Photo courtesy of http://farm4.staticflickr.com/3067/2592570286_b213acd1de_z.jpg?zz=1

    Three Biggest Benefits of Holding a Bank Account

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    Welcome to My Personal Finance Journey! If you are new here, please read the “About” or “First-Time Visitor” pages to find out more about us. If you would like to receive free updates on articles like this by email, then sign up here or you can subscribe to the RSS feed. Also, check us out on Twitter or Facebook. Thanks for visiting! Keep on learning!
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    The following is a guest post. Enjoy! 

    In the past, it was far more difficult to open a bank account than it is today, and the benefits would have been significantly lower. Nowadays, it is almost impossible to think about managing your money without a bank account. Listed below are three of their biggest benefits:

    1. Effective money management

    In today’s world, the largest transactions are made by electronic transfer, which means that even the most basic things, such as receiving your wages, will happen without any direct involvement from you. All you have to do is provide the necessary details of your bank account and the funds are automatically transferred on the agreed date – so you never even see it change hands.

    Managing your money is therefore far easier, as you only need to take out cash needed for day to day expenses, leaving a lump sum in the account to accrue interest.

    2. Safer access to your cash

    Only a few decades ago, it was uncommon for people to have a credit card, but today most of us have a range of plastic cards in our pockets. Using credit cards needs to be approached with caution as they can lead to debt, but using the debit card which comes with your bank account is completely safe, as you can only use funds that you already have at your disposal.

    Most people now carry very little cash and use their cards for purchases. Recent developments with near-field technology, such as contactless payment, are making it even easier to pay for goods and therefore even more important to have a bank account.

    3. Save money

    Having a bank account actually helps you save money too. Most companies, from energy providers to mobile phone firms, either give a discount if you pay by direct debit from your bank account, or add further costs if you choose to use another method of payment.

    Having your money in an account makes it easy to transfer a set amount each month into a savings account, pension or other type of investment, so the money saving potential is endless. Using your bank account sensibly will also help you build a good credit rating, which can be extremely important when it comes to larger financial matters, such as getting a mortgage in the future.

    How about you all? Would you consider having a bank account to be a “necessity” of modern life?

     Share your experiences by commenting below!

    Jacob’s Thoughts – Listed below are my random thoughts as I was reading this article.

    • Truthfully, I don’t know what my financial life would be like without my bank account.
    • I use my free checking account with Bank of America as the “hub” for all of my transactions, ranging from credit card payments to receiving my salary to disbursing money to savings and investing accounts. I really couldn’t imagine what I would do without a bank account that I could make electronic transfers with!
    • Aside from that, another major benefit that my bank account provides me is the access to guaranteed cashier’s checks when I need one for buying a house or moving.

    ***Photo courtesy of http://pixabay.com/get/0e74fac29191fba6666e/1364495837/money-29154_1920.png

    LendingClub vs. Prosper – Which is the Better Option for P2P Lending and Investing?

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    Welcome to My Personal Finance Journey! If you are new here, please read the “About” or “First-Time Visitor” pages to find out more about us. If you would like to receive free updates on articles like this by email, then sign up here or you can subscribe to the RSS feed. Also, check us out on Twitter or Facebook. Thanks for visiting! Keep on learning!
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    The following is a post by MPFJ Staff Writer, Jeff.  Jeff blogs about finances, health, and the environment over at Sustainable Life Blog.
    Over the last few years, LendingClub and Prosper have gotten a lot of press.  Both are “Peer to Peer” (P2P) lenders, which basically means that one person is lending money to another person.  It’s like lending your coworker a dollar to go hit the vending machine in the break room, but on a much larger scale.

    The Borrower

    LendingClub and Prosper each have borrowers looking to borrow money for all sorts of different things: Wedding expenses, small business loans, home additions and new cars, but by far the most common reason that people turn to the sites is because they are looking to consolidate their credit card debt.  For the borrower, it’s something of a no-brainer – they can pay off their credit cards that they were paying 18%+ interest to, and get a loan with an interest rate dependent on their credit profile.  Some of these rates can be as low as 6-7%, and some can be as high as 12-14%.  Either way, the borrower generally comes out ahead.  The borrower is the first “peer” in the transaction.

    The Lender/Investor

    The second “peer” of course, is the lender.  Savings rates are abysmal right now, with even high quality accounts paying at, near, or slightly less than 1% interest.  P2P lending offers the chance at a far greater return than a traditional savings account (though with more risk).  A small fee is charged by LendingClub or Prosper to administer the loan and facilitate payments, but the rest of the interest charged to the borrower is yours.

    The lender can choose the term that they would like to invest in (typically 36 months), and the company will send the borrowers payment to you every month.  You can choose to lend whatever amount that you like, though most investors lend in $25 increments so that they can further diversify their P2P portfolio.

    Now that you know the basics of Peer to Peer lending, lets look at the two major players:

    LendingClub

    LendingClub is based out of San Francisco, CA.  Though you can use LendingClub in most states, it is not approved in all states (It’s approved in CA, CO, CT, DE, FL, GA, HI, ID, IL, KY, LA, ME, MN, MO, MS, MT, NH, NV, NY, RI, SC, SD, UT, VA, WA, WI, WV & WY).

    If you’re not reading from one of those states, you’re unable to invest in the origination of LendingClub notes, but there is a secondary market that you may purchase the loans from called foliofn.  I personally have never used foliofn to trade any of my notes, but I have heard good things about the service, which is run by LendingClub.  

    LendingClub has a prospectus on file with the SEC, and has people reviewing each borrower individually before they disperse money to them to make sure that they aren’t just going to take out a large loan and walk off with it.  Lending club also reviews each borrower’s loan and assigns a grade and a number to the loan.  The grades range from A-G and are accompanied by a number.  For instance, the top rated loans that will get the lowest interest rate are A1 grade, while the lowest grade loans that will get a higher interest rates are G5.

    When viewing loans, you are able to see quite a bit of relevant information about the borrower: their credit score, where they live and work, estimated costs of living in their area, whether or not they have any previous bankruptcies and more.  In addition to the information provided, you can ask the borrowers questions, either pre-canned questions such as “what is the purpose of this loan” or a question that you write yourself, in order to gain more information about the borrower.

    In addition to this, LendingClub also estimates your probable rate of return, adjusted for the risk of default for the loan grade that you selected.  Loans graded A have a lower default rate than loans graded G, so the chances of default will be lower, but so will your interest rate.  They use historical loan data for notes graded similarly to determine the possibility of default for all notes in the system.

    My Personal Experience with LendingClub

    I’ve been a member of LendingClub for about a year now, and things are going well.  
    I initially invested $300, but about 2 months after that, I was liking what I saw and invested another $700, to bring my total investment in the service to $1,000.  I am getting an 11.77% interest rate, and have not had any charge offs or late payments to date.  I have had four notes get paid off early, but everything else is going well so far.  It’s generated a nice little passive income stream for me, to the tune of $36.75 per month.  When the payments come in, I wait until I have enough to invest in a new note and reinvest the proceeds.  
    My cash is spread across 50 notes, all with a 3 year term.  Most of the notes that I picked initially were A and B grade, but lately I’ve been investing in a bit lower grade C & D notes to juice up the return a bit.  Once I counter balance everything, I’d like to get about 25% A grade, 35% B grade, 15% C grade, and 15 % D grade and 5% E grade notes.

    Prosper

    Prosper works essentially the same as LendingClub.  A person posts a loan out for something that they need cash for like credit card refinancing or a wedding, and they are graded by Prosper.

    Once those are graded by prosper, the investor has a chance to purchase/invest in a note that comes with an interest rate set by prosper.  According to Prosper.com, they have a seasoned return rate of 9.28%, which is far better than you’ll get investing in a traditional savings account, but comes with a lot more risk as well.  

    Like LendingClub, prosper has a prospectus on file with the SEC.  Prosper also isn’t available in all states.  Prosper is available to lenders from Alaska, California, Colorado, Connecticut, Delaware, District of Columbia, Florida, Georgia, Hawaii, Idaho, Illinois, Louisiana, Maine, Michigan, Minnesota, Mississippi, Missouri, Montana, Nevada, New Hampshire, New York, Oregon, Rhode Island, South Carolina, South Dakota, Utah, Virginia, West Virginia, Wisconsin and Wyoming.

    While there were major problems at Prosper when the company first started that involved the default of lots of loans, things seem to have settled down and gotten a bit more normal.  It looks like there are far less defaults than there were when Prosper started.

    One important thing to note about both LendingClub and Prosper.  The key to both of these services is diversity.  You’ll want to make sure that you diversify your funds across as many notes as possible to avoid 1 default causing a problem with your whole return.  This typically takes a rather large sum of cash to properly diversify across multiple notes.  However, it could be done with a sum as low as $1,000.

    How about you all? Have you ever invested in P2P loans with either of these companies? If so, what type of return did you achieve? Was it worth any risk of default you were exposed to?

     Share your experiences by commenting below!

    How Can You Save Money When Purchasing an Engagement Ring? – Lessons from Personal Experience

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    Welcome to My Personal Finance Journey! If you are new here, please read the “About” or “First-Time Visitor” pages to find out more about us. If you would like to receive free updates on articles like this by email, then sign up here or you can subscribe to the RSS feed. Also, check us out on Twitter or Facebook. Thanks for visiting! Keep on learning!
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    According to a report from TheKnot.com, they put the average price of an engagement ring around $5,000. In my opinion, this number seems about right after going through the ring-buying process recently (we got engaged on Friday, March 15th, 2013!). If we assume the average household income in the US is $50,000 per year, this equates to ~1.2 months salary spent on the engagement ring.

    The Engagement Ring Markup

    Have you ever stopped to think about why alcoholic beverages at bars and restaurants cost $8 when you can go out and buy an entire bottle of the alcohol in the drink for $15 or eat a dinner at that same restaurant for $10?

    The answer is actually quite simple – it’s because we as society over time have allowed the price to be set this high. Think about it – if we didn’t continue purchasing drinks like this, the price would go down (supply/demand curves, right?). However, the truth is that we are OK to pay this price because an alcoholic drink is more than a simple mixture of raw materials – it’s an experience, both of the taste buds and of the mind (because the alcohol makes us feel a certain way and we often enjoy these drinks in the presence of friends).

    Similar to how we routinely pay for the large mark-up in alcoholic beverage prices, we have also grown accustomed to paying the markup associated with engagement rings. It’s the same sort of reasoning. The engagement ring is more than just a compilation of raw materials, it’s an experience, a symbol, and something that will be worn for a very long time. Thus, people often are willing to pay an arm and a leg for the ring of their dreams. According to one of my friends that is a diamond wholesaler, the stores that he sells to mark up the price of the rings at the retail point 3 times! That’s quite a business, right?!

    Even though we as ordinary consumers do not have much control over the global price movements/markups of engagement rings, we should focus on what we can control – trying to optimize our own engagement ring purchase so that we save the most amount of money while obtaining the most value. 

    In an effort to help others, I thought I would share 8 cost-saving strategies that I employed recently while negotiating a path through the world that is engagement ring purchasing.

    Money-Saving Idea # 1 – Have an Idea of What You can AFFORD vs. What You Can Comfortably SPEND Prior to Going to the Ring Store? 

    For me, an important distinction in the ring-buying process was drawing a clear line between what I could AFFORD based on my salary and savings and what is an INTELLIGENT amount to spend based on my financial goals.

    Because of the magnitude of the engagement ring purchase, I think that a lot of guys have these lines become very blurred. In other words, since they are only going to complete this purchase once, they think about the maximum amount they can AFFORD (utilizing credit cards, savings, payment plans, etc) instead of thinking about a comfortable amount they can spend while still working towards their long term goals and not racking up more debt. This is the same sort of logic that goes in to buying an appropriate “amount” of house; the lenders will give you a house payment that is 40% of your salary, but most the time, an intelligent amount is only 28-30% max of your monthly salary.

    When I first started thinking about purchasing an engagement ring, I loosely defined my comfort/intelligent spending level as $1,000. This was a good number to have in mind/establish internally before actually going out and being influenced by salespeople, my girlfriend/fiance, etc.

    Money-Saving Idea # 2 – Ask For a Discount and Search for Better Offers Elsewhere

    In my specific situation, my fiance had done the bulk of the “shopping-around” for an engagement ring on her own with one of her friends. They went to maybe 4-5 jewelry stores in town, and the rings that my fiance liked best were at a chain jewelry store, Zales.
    Having never been to a Zales before in my life, I didn’t really know what to expect. However, I was pleasantly surprised with the kind and low-pressure sales staff, the Lifetime Diamond Guarantee, and the value that was on offer for the price points at Zales. All in all, it seemed like a good place to buy a ring! 
    Having nailed down the specific store that we would look for rings in, I then went with my fiance to pick out a couple of rings that would be “acceptable” options, with the intention of coming back later to actually purchase one of the rings to at least have some element of surprise. 
    Prior to physically going to the local Zales store, I did a little research online to see what sort of discounts people tended to get at Zales. To my surprise, the consensus in the Internet discussion forums was that large chain stores like Zales do not really offer discounts, even if you ask for them specifically. 
    However, I figured that this wasn’t going to deter me all that much. Since I knew there was such a large markup on diamond rings, I figured that it was likely that if I asked for a discount, they would give me one. And sure enough, after trying on a few rings, I simply asked, “Can you please give me a 10% discount on this ring?” The saleswomen politely replied, “Yes, but only if you purchase it through me because we’re really not supposed to give discounts like this.” Now, I’m not sure if she was telling a white lie or not, but it was good to hear that I could at least get a 10% discount on the ring to take care of some of the taxes! 
    After defining the general level of discount I could obtain from the local Zales store, I then reached out to other jewelry stores (included other Zales locations) in the area and region (within a 1 hr drive or so) and asked the following questions:
    • Do you have the XYZ ring that I want to purchase?
    • Can you beat the price and 10% discount being offered by my local Zales location for this ring?

    Unfortunately, for the specific ring I was looking at buying, the other stores I called either didn’t have the specific model or offered similar pricing as the local Zales store. However, it never hurts to ask and shop around, right?!


    Money-Saving Idea # 3 – Don’t Forget to Consider Outlet Store Versions of Jewelry Vendors 

    The next idea I came up with to try to save some money on my engagement ring purchase was to try to purchase the model ring that I was wanting from a Zales Outlet Store instead of a normal retail-priced store, since outlet stores generally have lower prices. 
    However, in my specific case, the closest Zales Outlet Store was 3 hours away, and since I didn’t feel like driving that far, I decided not to pursue that option any further.  But hey, it never hurts to think about it if you have outlet stores in your area!!! 🙂

    Money-Saving Idea # 4 – Wait to Buy Until There is a Sale

    As we mentioned previously, the markup on diamonds and jewelry is crazy! Because of this, I found that there ALWAYS seemed to be sales going on in order to move product. 
    Because of this, a good mode-of-operation to go by is to never buy an engagement ring unless you are getting some sort of sale. 

    In the 1 month period that I was closely monitoring discount and sales promotional offers at Zales, I think there were like 5-6 different sales that came up:
    • 15% for Valentine’s Day.
    • $50 off for signing up for free email updates from Zales.com
    • 15% off store-wide online only sale, for no particular reason other than having a sale! (haha!)
    • 75% off clearance items.
    • 25% off clearance items.
    So, even if there is not a sale going on at the moment you’re reading this/looking for a ring, just wait two weeks and you’ll likely have one pop up! Just be patient!

    Money-Saving Idea # 5 – Consider Shopping Online After Trying on Rings at the Jewelry Store

    In the end, I actually purchased my engagement ring from the Zales.com online website. You can see a picture of it at the top of this blog post. 
    Since a lot of rings I saw (including the one I ended up buying) looked a lot different in real life than in the online pictures, I wouldn’t advise anyone to buy a ring until they have seen it in person with more natural lighting. There’s something also to be said for physically going to the store in order to try rings on as well! 
    However, after trying on rings at the store and having the saleswoman write down the exact model numbers of the rings that I was interested in, there are some significant benefits that can be realized by buying a ring online. 
    Several of these benefits for my specific situation (and hey, maybe yours when it comes time!) are listed below:
    • No pressure sales. 
      • Even though the saleswomen at Zales was very nice, in my mind, it is always a good idea to spend some time by myself prior to making a large purchase just to double-check that everything is good to go.
      • By purchasing online, you can buy an engagement ring at any time of the day or night, at your speed, in the comfort of your home.
    • No pressure to buy extended warranties (which more than likely, are not needed – see more about this below).
    • More sales/promos being offered to online shoppers only.
      • This was really the biggest factor for me. When I purchased the engagement ring, I bought during a 15% off sale that was only available to Internet shoppers. Pretty good in my book! 
      • In addition to store sales, you can also take advantage of cash back websites (see more on this below).

    Money-Saving Idea # 6 – Utilize Cash Back Website

    So, having found a way to save 15% through a sale/promo offer for my engagement ring, I was feeling pretty satisfied. However, I figured that in today’s modern Internet age, there had to be a way to save even MORE money! After all, I was about to spend around $2,000, and with the high mark-up on rings, I figured that Zales would likely be begging for my business! 
    In order to research available options to save additional money, I simply Googled, “saving money + the store I was looking to purchase the ring from.” 
    • When I did this, the search revealed that people saved money on their Zales purchases in three primary ways:
      • Sales/promo offers
        • Check – already done in my case!
      • Online coupons
        • Unfortunately, the coupons I could find for Zales were for very small amounts of savings such as free shipping, $30-$50 off, etc, and could not be combined with other sales.
        • So, coupons were out of the question for my case!  
      • Clicking through to the site you’re buying from through a cash back website
        • Now, this was a new thing for me to hear about! 
        • What happens with these cash back websites is that brands pay these sites a portion of affiliate income anytime someone comes directly from their site and makes a purchase at the brand. And, these referring sites pass on some of their affiliate income to you, the purchaser! Pretty cool, right?!
        • These cash back opportunities can be significant – anywhere in the range of 2-15% cash back, so they are definitely worth looking in to!
        • To find out what type of cash back websites and offers are available for any major purchase you’re thinking about, simply Google, “cash back website + the store you’re purchasing from.”
        • In my case, the best offer (which I took advantage of) was 7% cash back using the site, BeFrugal.com.

    Money-Saving Idea # 7 – Extended Warranties Make the Store More Money Than They Save You, the Purchaser

    Heaven forbid we make it through purchasing ANYTHING major these days without someone attempting to sell us an extended warranty plan! 
    On my post from 2012 about CarMax’s extended warranty plan on car purchases, we have had some really great comments! Someone mentioned that the salespeople make almost the same commission on selling an entire car as they do on getting someone to purchase their extended warranty. That gives you an indication of how lucrative these things are! 
    Let’s take a look and see how Zales’ extended warranty stacks up to determine how it is likely un-necessary. 
    On diamond ring purchases of $200 or more, Zales offers a free Lifetime Diamond Commitment limited warranty. Under this warranty, you have to bring your ring in every 6 months for cleaning and tracking (for free!), but in return, they will replace or fix any diamond that is damaged or lost from it’s original setting under normal wear and tear. It does not include loss due to theft or if you simply leave your ring somewhere due to user negligence.
    So, that’s the free option. Let’s now take a peek at the paid extended warranty that Zales offers.
    There are two extended warranty options from Zales, the Lifetime Jewelry Protection Plan and the Lifetime Jewelry Protection Plan with Limited Theft Replacement. The only thing that the Lifetime Jewelry Protection Plan gives you on top of the free warranty above is regular repairs. In my opinion, it’s unlikely that this will be used very often, so I don’t see this as being a good deal. Similarly, the Limited Theft Replacement is ridiculous because it only covers you for theft if it occurs less than 2 years from the date of purchase. 

    As you can see folks, do yourself a favor and just say NO to extended warranties. OK?

    Money-Saving Idea # 8 – Use a Cash Back Credit Card for the Purchase

    The final method I used to save some money on my engagement ring purchase was the use my Chase Freedom Cash Back Credit Card. 
    Since I was purchasing the ring online, I knew I would need to use a credit card since it provides me with purchase protection / fraud security if I needed to dispute anything in the unlikely event that I got screwed by Zales. Alas, this didn’t happen, and the ring came in record time and in great shape!
    However, an added perk was that I was able to get an additional 1% cash back by using my card.

    If you have multiple credit cards, check before deciding which one to use to see if any offer “rotating categories” that happen to be offering a larger amount of cash back for jewelry store purchases at the moment. Unfortunately, none of my cards offered that enhanced cash back category at the time I bought my ring. 

    Putting it All Together – Total Money I Saved

    The item pricing for the ring I purchased was $2299.99. The following price adjustments were then made:

    • +   $97.75 for sales tax
    • –    $345 for 15% off for buying during online-only sale
    • –    $161 for 7% cash back clicking through to Zales.com from BeFrugal.com’s cash back website.
    • –    $23 for 1% cash back using Chase Freedom Visa Card.

    So, the net cash outlay to me ended up being $1868.74. Not too bad at all since we are very satisfied with our ring purchase! 

    However, it’s pretty amazing that simply by doing a little planned shopping, I saved myself $529 (or 23% off in the end)! Nice! 

    How about you all? What techniques would you utilize to save money on your engagement ring? Have you used any of the ones discussed above?

     Share your experiences by commenting below!

      ***Photo courtesy of http://nominalnuptials.com/wp-content/uploads/2013/03/ring.jpg

      TurboTax, H&R Block, Tax Act, or a Certified Public Accountant – Who Can Do Your Taxes Better?

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      Welcome to My Personal Finance Journey! If you are new here, please read the “About” or “First-Time Visitor” pages to find out more about us. If you would like to receive free updates on articles like this by email, then sign up here or you can subscribe to the RSS feed. Also, check us out on Twitter or Facebook. Thanks for visiting! Keep on learning!
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      Well folks, the results are finally in – I have done the unthinkable by completing my 2012 personal/business tax return 4 times! 

      Ohhhh the horror, right?!!?

      Why on Earth Would I Do My Taxes 4 Times?

      I think we could agree that for most people, doing one’s taxes would not exactly be considered “fun,” and definitely not something that you would want to subject yourself to 4 times over in one year!

      However, my purposes for going through my taxes 4 times were two-fold:

      So, let’s get in to the results I saw by doing my taxes these four times and what I learned in the process!

      My 2012 Tax Return Results Using TurboTax

      As I mentioned in my comparison post of the three big players in the online tax preparation community, TurboTax is both the most established/well-known and also by far the most expensive option on the market. In my opinion, they also ranked last in ease of use because it is very confusing to determine when you actually need to upgrade to complete your taxes or if they are just trying to upsell you for the sake of making more money.

      Nevertheless, I was able to get through their online system pretty well when I calculated my 2012 tax return in TurboTax. Below is a summary of my experience:

      • Since I had business/self-employed income in 2012, I had to upgrade to the $75 Home & Business version of their software. 
      • I was prompted to enter my relevant expenses for a home office deduction.
      • They also prompted me to take a depreciation expense for my home office as well.
      • It was very hard to tell where I should enter my contributions to my pre-tax Self Employed 401k retirement account (results in tax deduction for current tax year). 
      • After entering all of my numbers, it resulted in the following return amounts:
        • $150 Federal Income Tax Refund.
        • Owed $352 in additional state taxes to the state of Virginia.

      My 2012 Tax Return Results Using H&R Block

      In my overall comparison of the popular online tax prep platforms, H&R Block was a very respectable option that featured middle-of-the-road pricing. In my opinion, it was the most straight-forward, easiest to use, and least confusing platform.

      Below is a summary of my experience when I entered my 2012 tax return numbers in to H&R Block:

      • As was the case with TurboTax, since I had business/self-employed income in 2012, I had to upgrade to the $50 Premium (most expensive) version of their software. 
      • For some reason that I could never figure out, the H&R Block system said that I could only contribute $4195 to my Roth IRA for 2012 (lower than the maximum contribution of $5000). 
        • I’m not sure why it stated this since I had made at least $5000 in income in 2012 and was below the maximum Roth IRA income limits.
      • After entering all of my numbers, it resulted in the following return amount:
        • $802 Federal Income Tax Refund.
        • It did not calculate my expected state income tax return/owed numbers. 

      My 2012 Tax Return Results Using Tax Act

      TaxACT
      As I concluded in my comparison post of TurboTax, H&R Block, and Tax Act, I thought that Tax Act was the best overall value because it is pretty easy to use and gives you all of the same functionality as TurboTax and H&R Block, but at 1/4-1/5 the cost! 

       You can get their Deluxe edition along with one state tax filing for only $19!! Pretty awesome in my book for doing your yearly taxes! 

       Below is a summary of my experience when I entered my 2012 tax return numbers in to Tax Act:

      • As was the case with the other two online platforms, since I had business/self-employed income in 2012, I had to upgrade to the Deluxe version of their software. However, it is only $19 and includes a state tax filing, so it’s hardly anything in the grand scheme of things!  
      • I was prompted to enter my relevant expenses for a home office deduction.
      • They also prompted me to take a depreciation expense for my home office as well.
      • As was the case with H&R Block, for some reason that I could never figure out, the Tax Act system said that I could only contribute a certain amount (I forgot to write down the exact number) to my Roth IRA for 2012 (lower than the maximum contribution of $5000). 
        • I’m not sure why it stated this since I had made at least $5000 in income in 2012 and was below the maximum Roth IRA income limits.
      • After entering all of my numbers, it resulted in the following return amounts:
        • $972 Federal Income Tax Refund.
        • Owed $35 in additional state taxes to the state of Virginia.
      I was pretty shocked at this result. 
      Not only is Tax Act the cheapest of the three online tax preparation options by far, but it also resulted in me getting the most money back from the IRS / owing the least amount of money to the State of Virginia! I love it!

      My 2012 Tax Return Results Using a Certified Public Accountant

      Because I do have self-employment income, I have used an accountant to file my taxes since I graduated from college. I have done this in part because I use the same accountant that my Dad used for his self-employed business tax return, and since they charged him so much, they would do my taxes more or less for free.

      However, since my Dad is now being paid as a regular employee, I no longer have this free service, and had to pay $200 for the accountant to do my taxes this year. Not too bad at all, but not free! Whether or not I will continue to utilize an accountant for my 2013 taxes will be the subject of a separate post all-together (on the way soon!).

      Below is a brief summary of my experience of doing my taxes with the help of the CPA (I’ll describe in more detail in a future post):

      • I was prompted to enter my relevant expenses for a home office deduction.
      • They did not prompt me to take a depreciation expense for my home office as well.
      • After receiving my return from the accountant after 1 month of waiting and a $200 fee, it resulted in the following return amounts:
        • $990 Federal Income Tax Refund.
        • Owed $23 in additional state taxes to the state of Virginia.

      Conclusions

      In reviewing all of the numbers above, we can make the following conclusions:

      • Assuming of course that I used the platform correctly (hopefully I did!), using TurboTax would have been an extremely costly mistake. 
        • It would have resulted in a loss of $1139 vs. using Tax Act. Crazy!
      • As is the case with their platform pricing, H&R Block again represents the “middle-of-the-road” return amount with a federal income tax refund of $802. Not too bad!
      • As I mentioned above, Tax Act, along with offering the lowest fees, resulted in me getting the most money back from the IRS / owing the least amount of money to the State of Virginia of all three online tax prep options. 
      • Looking solely at the federal return and state taxes owed numbers, I got a $30 net gain/improvement in using a CPA over the best online tax preparation option, Tax Act. 
        • However, this does not take in to consideration the $200 fee I had to pay the CPA and $19 fee to use Tax Act. 
        • If the fees of using Tax Act vs. a CPA are considered, the $30 improvement shown above turns in to a loss of $151 by using a CPA over Tax Act. 

      So, purely from a bottom-line numbers perspective, Tax Act delivers the highest value.

      However, there are some other non-numerical considerations that makes the Tax Act vs. CPA usage more complicated (and hence will be the subject of the future post described above). For example, you get a nice level of assurance when you use a CPA that your taxes are done correctly. They also reduce the amount of work you have to do, along with me as a business owner, being able to bounce questions off of them throughout the year. In addition, they calculated and prepared my 2013 estimated tax payment stubs and numbers as well, so that is a nice service!

      How about you all? How did you file your taxes this past year – an online tax prep platform, through an accountant, or filing out the forms directly?

       In general, do you feel the guidance provided by an accountant is worth the fees required for their services?

       Share your experiences by commenting below!

      TaxACT

      Extravagant Consequences: Lying on Your Health Insurance Application

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      Welcome to My Personal Finance Journey! If you are new here, please read the “About” or “First-Time Visitor” pages to find out more about us. If you would like to receive free updates on articles like this by email, then sign up here or you can subscribe to the RSS feed. Also, check us out on Twitter or Facebook. Thanks for visiting! Keep on learning!
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      The following is a guest post. Enjoy! 

      Health insurance is one of those added expenses that many of us dread being a necessity of our lives as human beings. We get sick, we get injured, and while paying out monthly premiums for health insurance is expensive, it’s even more expensive—not to mention dangerous—to go without it.
      Occasionally, you’ll hear from a friend, co-worker, or even family member about how they lied on their health insurance application to get a lower premium and they might even boast about how easy it was. As the saying goes, though, “It’s easy… until it isn’t.” 

       
       

      WHY LYING MIGHT NOT BE NECESSARY

      First off, let’s address the necessity of lying.Through 2014, individual insurance providers are actually not allowed to charge extravagant premiums, or refuse coverage, for most pre-existing conditions under the new health care reform.

      Due to this, you might put down a lie on your application and end up paying for it down the line—paying for it, literally—and you might have been able to avoid it entirely just by telling the truth.
      Before you make the very hefty decision to lie on your health insurance application, you should absolutely consult with a health insurance specialist who can break down for you what your pre-existing condition entails. You can even ask a few sly questions about how the insurance company will find out about your condition, just to be ahead of the curve. If your condition is present in your medical history, they will find out about it.

      WHAT WILL HAPPEN IF YOU’RE CAUGHT LYING

      Usually, this is either going to happen right at the outset of your application process, if the insurer decides to do a little digging right off the bat, or it’s going to happen when the time comes for your to file a major claim.
      Insurance companies want to save money, first and foremost, so they will pull up all of your records and cross check them against your application. If anything at all doesn’t add up, they’ll dig deeper, and as soon as they unearth a lie they will cancel your policy. In fact, they have reviewers on staff whose sole job is to try to discredit your application.
      Once they do find out about your lie, you will be subjected to the following:
      • Complete void of contract dated all the way back to its outset;
      • All outstanding claims still in processing will be dropped from coverage and the full financial responsibility of these medical bills will be placed at your feet;
      • Your insurance company may sue you for claims that they’ve previously paid out, requesting full reimbursement for the amounts paid out;
      • Future health insurance providers you attempt to sign with will be able to see this previous falsehood on your record and may choose not to cover you.
      Of course the best way to avoid being caught is to not be fraudulent in the first place! You should only deal with reputable companies, where you know they have a proven track record of satisfied customers. This is the best way for everyone to have peace of mind!

      How about you all? Have you ever known anyone who placed a small or large lie on their application when they applied for health insurance? 

      Did anything bad ever happen to them?

       Share your experiences by commenting below!

      Jacob’s Thoughts – Listed below are my random thoughts as I was reading this article.

      • There’s some profound truths to this article above. 
      • In general, since there is so much money at stake, you can rest assured that insurance companies are VERY smart. They have professionals who spend their entire working lives optimizing the insurance company monetary streams to improve operations. How can normal people think that with a 2 min lie, they are going to get ahead this way? It really just isn’t worth it in the long run!
      • With finances, always tell the truth, even if the truth is painful at times!

      ***Photo courtesy of http://upload.wikimedia.org/wikipedia/commons/f/f0/PinocchioChiostri22.jpg

      Five Purchases that ARE Worth Breaking the Bank For

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      Welcome to My Personal Finance Journey! If you are new here, please read the “About” or “First-Time Visitor” pages to find out more about us. If you would like to receive free updates on articles like this by email, then sign up here or you can subscribe to the RSS feed. Also, check us out on Twitter or Facebook. Thanks for visiting! Keep on learning!
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      The following is a post by MPFJ staff writer, Kevin Mercadante, who is professional personal finance blogger, and the owner of his own personal finance blog, OutOfYourRut.com. He has backgrounds in both accounting and the mortgage industry.

      On nearly any personal finance site, frugality is the usual order of the day. We should save money anywhere and everywhere we can. But there are times – with certain purchases – that looking for the lowest price isn’t the best choice. Sometimes it can leave you with an inferior product or service. Other times, the purchase is for something so important to your life that it has to function and do so reliably.

      Here are some important purchases that you may want to think long and hard about before you go buying on the cheap.

      Computers and Internet service

      If you’re looking for service for your kids, or mainly just for email and light surfing for yourself, you might want to go with the least expensive computer and the cheapest Internet service provider you can find. But if you have a more significant purpose for having either, it may be in your best interest to go with a better computer, and a more efficient Internet service.

      This is especially true if you use your computer and Internet connection for work or for running your own business. If that is the case, you’ll need a very efficient Internet connection – complete with top-notch customer service – plus a computer that can handle whatever you will throw at it.

      A computer that is under capacity, or an Internet service that is interrupted frequently, can cost you clients and money. Think of your computer and Internet as part of your business infrastructure, and spend as much money as you need within reason.

      Mattress and box spring

      It’s often said – and it’s true – that we spend about one third of our lives in bed. That being the case, you’re better to spend a little bit more for a good mattress and box spring.

      Not only do you spend a lot of time in bed, but your bed is also where you recharge for the day ahead. If you’re unable to get a good night’s sleep, because of an adequate mattress or box spring, your days could be filled with fatigue, confusion, and even phantom aches and pains. Enough of that can take a toll on your job and on your productivity, and can cost you more money over the long run.

      One more factor to consider is the fact that a bed is usually an item that you expect to last for a long time. It might be better to spend $1,000 on a mattress and box spring that will last you for 10 years, than to spend $600 on a mattress and box spring that will have to be replaced twice in 10 years.

      Cars

      There are so many expenses associated with car ownership that it can take a flowchart to figure out what the best car for the best price will be for you. Certainly you should consider upfront cost, fuel efficiency and reliability. But unless you plan to buy new car every five years or less, you’re probably better off to pay a little bit more and to buy a car that will last longer.

      Some cars are built to last, and others…are more like throwing cars! (That’s the driving force behind planned obsolescence.

      Better quality cars not only last longer, buy they also tend to break down less and are generally safer to drive. Since these are all “bankable advantages” – the car will perform better, and cost less over the long run – they’ll be worth spending some extra money on.

      If you can’t afford to buy a better quality car brand-new, you may be better off buying one that’s two or three years old, rather than paying less money for a less efficient substitute.

      Furniture and appliances

      My wife and I bought a refrigerator freezer back in 1996, and we paid well over $1,000 for it. While you can easily pay more than that for refrigerators today, back then, it was on the high end of the range. We just bought a house, and we had a young family, so we broke the bank to buy a better unit, figuring would last us for at least 10 years.

      We were wrong. It has lasted for over 17 years and it’s still going. Had we bought a cheaper unit, we probably would not have gotten even 10 years out of it, and we would have had to replace it by now. But we haven’t had to buy a refrigerator in all that time.

      Appliances tend to be that way, pay a little extra and they’ll last longer.

      Furniture is less certain. The argument for paying more for better quality, is that a good set of furniture can quite literally last lifetime. You can buy it once, and never have to buy furniture for a room again .That’s a REAL investment!

      The counter argument however, is that your taste in furniture will change during your lifetime. The living room set you bought when you were in your 20s and first married may not match your tastes when you’re in your 40s. Children also have an effect on furniture. While they’re young and growing, it may be best to buy less expensive, lower quality furniture. The kids will mostly use it for trampolines anyway.

      Health insurance

      No one ever intentionally opts for cheap health insurance, but cost is a real problem. That can cause you to cut corners on your coverage either by taking very high deductibles, or by refusing certain coverage’s in attempts to keep the premiums to a minimum.

      For example, it’s OK to opt out of prescription drug coverage if you are not on any ongoing drug therapies. But if you or your family have several regular prescriptions that you need, refusing this coverage will be a real problem.

      Another example are high deductibles. If you are young and single, a $5,000 or $10,000 deductible may work well for you. But if you have a family you may need a much lower deductible, because more people means a much greater likelihood that you’ll actually have to file claims.

      This is of course is easier said than done when it comes to health insurance. As a rule, any insurance is better than no insurance, but you should still try to get the best you can based on your circumstances.

      How about you all? Can you think of any other products or services where buying on the cheap is probably a bad idea?

      Share your experiences by commenting below!

        ***Photo courtesy of http://www.flickr.com/photos/mikehamm/4799558967/sizes/s/in/photostream/

        I’m On My Own and So Are You: Financial Security for Women by Judy Resnick – A Book Review

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        Welcome to My Personal Finance Journey! If you are new here, please read the “About” or “First-Time Visitor” pages to find out more about us. If you would like to receive free updates on articles like this by email, then sign up here or you can subscribe to the RSS feed. Also, check us out on Twitter or Facebook. Thanks for visiting! Keep on learning!
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        book reviews, women and money, men vs. women investing, Amazon, financial planning, financial security
        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.

        Women on average live longer than their husbands, sometimes decades longer if the husband dies young or the woman marries a much older man.  In fact, according to the Center for Disease Control, American women can expect to live 80.1 years, while American men only live 74.8 years (WebMD).  Yet despite the likelihood that many women will live perhaps decades longer than their husbands, they still often remain blissfully ignorant about finances. 

        Judy Resnick, a financial planner in Los Angeles, seeks to educate all women about their finances and empower them to make their own financial choices rather than relying on a man in her book titled, I’m On My Own and So Are You.

        About Judy Resnick

        Resnick came of age during the 1950s, and her mother made it clear that her job as a teenager was to look her best and attract a worthwhile mate.  Instead, much of Resnick’s youth was spent rebelling against her parents and finding “bad boys”.  She settled down with one, had two children, and soon found herself divorced.  Even after her divorce, she continued to rely on men until the 1980s when she learned to care for herself financially and emotionally.

        Who Should Read This Book?

        This book is written for all women (and even for the men who love them).  Taking care of money shouldn’t be solely a man’s job. 

        Even if a woman is happily married and never faces divorce, she needs to be involved in the family finances and understand how money works.  Resnick’s own mother was blissfully ignorant about the family finances.  When her husband died unexpectedly, she found out that her husband had much less money than she had always thought.  In addition, she had no idea how to handle finances on her own and relied on Resnick to pay her bills and take care of her.  Resnick believes that no woman should be in this position, and I agree with her.

        For other women who get divorced or are widowed or never marry, learning how to handle their own finances is essential.  In her work as a financial planner, Resnick has seen many women who rely on men to support them and take care of them.  When one man leaves or dies, these woman are on the hunt for the next man to take care of them, which, not surprisingly, gets more difficult as the woman ages.

        Strengths of the Book

        The main strength of this book is that Resnick explains finances in plain English, in a way that anyone will understand.  Investing can be particularly intimidating and overwhelming to some women, but Resnick does an excellent job explaining the various investments as well as investing terminology.  Her thought is that even if a woman isn’t going to invest for herself, she needs to understand investments enough so that she understands how others, like a financial advisor, invest for her.

        Additionally, this book isn’t just a dry financial book.  Resnick weaves stories from her own life throughout the book, giving the book a human touch.  In fact, her personal story is so compelling that I kept reading just to see what would happen to her next.

        Weakness of the Book

        Overall, I find the book very valuable.  However, some women may be annoyed with the way Resnick always expects the worst.  Women who are married to trustworthy men will likely be annoyed when Resnick seems to present men as enemy number one.  However, in Resnick’s line of work, she has seen women in a variety of circumstances, and many of the women end up in bad spots because they blindly trust the men in their lives.  Resnick’s motto is expect the best, prepare for the worst.

        If you are a woman or if you’re a married man or father of a daughter, I’m On My Own and So Are You should be recommended reading.  Empowering women to be involved in the family finances is Resnick’s goal, and she presents a very interesting read explaining how to do just that.
        How about you all? Have you ever heard of or read this book?

         Do the women or men in your life tend to take more responsibility for the finances, or is it shared?

         Share your experiences by commenting below!
          ***Photo courtesy of Amazon.com

          Creating Our New Budget Plan

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          Welcome to My Personal Finance Journey! If you are new here, please read the “About” or “First-Time Visitor” pages to find out more about us. If you would like to receive free updates on articles like this by email, then sign up here or you can subscribe to the RSS feed. Also, check us out on Twitter or Facebook. Thanks for visiting! Keep on learning!
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          The following post is by MPFJ staff writer, Travis.  Travis is a customer blogger for CareOne DebtRelief Services, and also appears weekly at Enemy of Debt.  Travis candidly shares his personal journey to pay off $109,000 of credit card debt and the tips he’s learned along the way. As a father and husband, he provides a unique perspective on balancing debt, finances, and family.
          Have you ever spent so long working on your budget that your head felt like it was going to explode?
          That happened to Vonnie and me last weekend, but I’m glad we did it.

          Before Vonnie and I joined our debt management plan, our budget consisted of a piece of paper that resided behind the packet of checks inside the checkbook.  When it was time to pay bills, I’d take it out and unfold it.  After the bills were processed, I’d fold it back up and put it back in it’s spot.  It had aged so much from being folded and unfolded so many times it looked like it could have been a historical document.  On it were written the major bills of the month, as well as my paycheck amounts.
          It didn’t include my wife’s income, the list of expenses was incomplete, and it was never updated.

          When we finally decided to take control of our finances, we struggled to find a budgeting method that worked for us.  I came up with something I called the whiteboard method in which I would write on a whiteboard when each bill was due.   Both Vonnie and I are visual people, and this would seemingly work well.  This method gave us a complete picture of our recurring bills,  but it left us rudderless with our discretionary spending, and the whiteboard was cumbersome.
          We then tried a variation on the envelope method in which we would pay our bills, then divide the money left over into amounts to spend during the week on things such as groceries, entertainment and gas.  The cash would be put into their respective envelope.  The problem with this method was that we didn’t save anything.  The entertainment envelope was the catchall for any remaining funds, and we always said that we’d save whatever was left over. 
          Of course, there was never anything left over.

          The other major problem with the methods we tried was that they were too short sighted.  They didn’t include any planning that allowed us to set and work towards any long term goals. So over last weekend, we spent many hours putting together a budget proposal of congressional proportions. 
          Monthly Budget

          I constructed a monthly income statement and recurring expense report (including due date) for the next five months.  We have some changes that needed to be taken into account as we transition through the next few months such as our daughter’s dance class breaking for summer, as well as our car being paid off.   We decided on a constant amount of funds to make available for the weekly budget, which then generated the amount that would go into savings each month.  This information along with the projected savings account balance is included in each month’s statement.
          Weekly Budget:

          Weekly spending is very fluid, but there are some general categories that will always be there.  We put together a template from which we will start each week.
          Scheduled Budget Discussions

          ·           On the last day of each month, Vonnie and I will sit down to review the next month’s information in the long term budget package and make any necessary changes.
          ·           We do most of our spending on the weekend:  cars get filled up with gas on Friday, groceries on Sunday, and entertainment.  Therefore, each Wednesday night we will create our spending plan for the upcoming weekend, take cash out of our checking account and put the money into the categorized envelopes.
           Cash only keeps us from overspending!

          ·           Finally, we will review the weekend spending on Sunday night to ensure we’re on track, make any needed adjustments, and discuss any spending that needs to occur during the week
          This is the most detailed budget plan that we’ve ever put together.  It accounts for recurring monthly bills, weekly discretionary spending, as well as long term savings goals.  We’re both on board, and committed to making it work, or continuing to make adjustments until we find something that does. 

          How about you all? Are you continually tweaking your budget method, or have you found one that works for you?

           Share your experiences by commenting below!

            ***Photo courtesy of Image courtesy of Ambro / FreeDigitalPhotos.net

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