Happy Mother’s Day!

Giving gifts on Mother’s Day doesn’t have to be a great expense.  Especially if you can tap into what really matters to that special woman in your life.  According to Gary Chapman, author of the Five Love Languages, there are different ways that people receive love.

1. Does mom respond well to words of affirmation, praise, and compliments?  Try decorating a jar and filling it with paper hearts, each one listing a reason why you love her.
2. Does she appreciate quality time together?  Plan a day together doing her favorite things.
3. Does she need a gift to hold in her hand and feel loved?  Homemade gifts can be real treasures.  Use your talents to create something unique and personal.   
4. Do acts of service fill up her love tank?  Maybe there is a project around the house that she’s been on her mind, but needs help with.  If not, plan to cook or clean while mom puts her feet up today. 
5. Does physical touch help her feel adored?  Create a warm water footbath out of a plastic dishpan and Epsom salt.  Then find the nicest lotion in the house and give her a foot massage.  Not sure how to do that; check out a book from the library. 

Knowing which language mom best receives love can help you tailor a gift that will be really meaningful to her.  Keep in mind, the language she receives love may not be the same language you give love.  So if by doing something different this mother's day you do not feel filled up; remember the focus is to be on her, not you.  It is better to give than to receive.  Have a wonderful Mother's Day!

What's in the Pantry?

Here’s another spring-cleaning tip for your home and finances.  Something we do about every 6 months is clean out the pantry.  By this I mean, we eat everything up from the freezer and cupboards.  We meal plan around the items that are stored and only buy what is needed to complete a meal based on what is in the house.  

As winter turns to spring, all those canned beans I stocked up on for chili can now be in mexi wraps or salads.  I also like to make pizzas and banana bread to use up the flour so it does not sit in my pantry during the hot, humid summer months when baking is banned from our house.

Old or spoiled items (rare) get thrown out.  If we will never use it, the food pantry donation bin gets it, along with a few other things.

If you bring the family together on a Saturday, planning meals around what you have can be a fun and creative game.  I did a similar exercise this week in my Financial Peace class.  I held up a can of great northern beans and a bag of rice.  The participants were in teams and had to come up with as many recipes using the beans, rice and two other ingredients (not including water and spices).  My winning team came up with 8 recipes!  Answers ranged from a stir-fry, soup, casserole, wraps even rice pudding with refried beans!

It was a fun exercise, and amazing to see the possible combinations.  But what does this have to do with finances?  Living off the excess we have accumulated lightens our budget. It allows us to get a little more intense with my student loan payments.  Or we can set the extra money aside for a fun summer trip so we don’t have to diminish the amount we already put toward the loan.   

Having discipline with money and making lots of little changes really pays off in the long run.  Do you have a favorite inexpensive recipe or kitchen tip to share?

On Paper, On Purpose.

Last week I started my third Financial Peace University class.  I really enjoy walking people through the steps, and watching their eyes light up when they “get it.”  There are many who transform their finances through this 13-week class.  There are others who listen, agree, and still don’t quite get their behavior to act in alignment with their new “values.” 

You have to do more than just want change, you have to make steps toward that goal and act each step of the way.  With money this can take willpower, boundaries, a paradigm shift, and sometimes a cultural one as well.  Everyone wants financial freedom, but it is unrealistic to desire your money do the right thing, when your body and mind do not have the discipline to do that.

A crucial first step is making a budget, or a cash flow plan.  I like how Dave Ramsey describes a budget as “an on paper, on purpose plan for your money before you get paid.”  I can always tell who has done their cash flow plan.  They are the ones who are excited because they took control and created wiggle room in their finances.  They are seeing progress now and have more progress projected into the future.  They feel empowered because they have a plan and are winning their life back. 

It all starts with the budget.  Forget what you think a budget is, or all the times you tried and it didn’t work.  Start with a piece of paper or an excel sheet.  Click here for a budgeting tool

• Put your monthly income at the top.  If your income is irregular click here.
• Start listing all your known monthly bills.
• Check the calendar for holidays, events, and out of the ordinary expenses coming up. List those.
• Then calculate any non-monthly bills, those that come quarterly, bi-annually, annually.  Divide the total by the number of months to figure out the monthly amount, and set it aside for when the bill comes due (6 months of car insurance for $600 would be $600/6mo = $100 month).
• Subtract the expenses from the income as you proceed down the list.

Don’t forget to include what step or goal you are working on (saving for emergencies paying off bills, or investing for retirement etc).  Stop when you hit ZERO.  This is called a zero based budget.

If you hit zero before you are finished, go back and reevaluate some of the categories.  We will discuss more ways to shave down the expenses.  I would love to hear from you!  What strategies have you used to balance your cash flow plan?

Easter Clearance Racks

Now that it is a week past Easter, the clearance racks are full of deep discounts.  While you don’t want to purchase candy a year ahead of time, there will be good buys on plastic eggs, dying kits, baskets, craft items, and décor.

I’m not a huge holiday buyer, but now that we have a bit more room in the budget I have begun picking up a few off-season items.  I purchased 2 of the fancy egg dying kits that were $3 each, for around $.65.  And saw beautiful $30 egg wreaths for the door marked down to $7.50!  That was tempting, but clearance shopping can either work for you or against you. 

If you pick up things you were going to buy anyway at a discount, you reduced expenditures.  If you see great bargains and buy stuff you don’t need, you are not saving any money (See the July 15, 2011 blog "Are you Really Saving Money?" for more on this topic)

My trick is to check the racks at the stores I go to anyway.  I check a couple days after the holiday to survey the selection.  It is usually 50% off.  If they have a large quantity of what I want, I do not buy it that day.  But I check back in another 5-10 days when it goes down in price again. 

I did the same thing with the boxed Valentine cards that the kids trade at school.  I bought a $1 box for the party.  Then after they were marked down two or three times I picked up 5 boxes of cards for .10 each.  I have enough cards to get him through 5^th grade! 

A few tips when buying a year ahead:

•  Only buy what you know you will use or need.  Don’t spend money just because cute!  Clearance racks can bust your budget if used improperly. 
• Make sure you store these purchases in a location that is designated for holiday items.  Otherwise you will forget and purchase things again later on. 
•  If you plan to hit the after 4^th of July, Halloween or Christmas sales, start putting a little spending money aside.  It always feels good to have cash to scoop up some great deals!

Track the Spending

Do you know where all your money goes?  Or does the paycheck come and go, leaving you wondering what happened?  The best way to get control of your money is to make a monthly written plan of where you are going to spend all of it, before you get paid.  Dave Ramsey calls this living on a zero based budget.  All the money in, minus all the money out, equals zero.  If you have a partner, you need to do this together.

People always ask, “what if I don’t know what is going to happen?”  The written plan can be flexible.  Here are some pointers 

• Pull out your calendar when budgeting:  Check for birthdays, oil changes, and other non-monthly items that may be coming up in the next 30 days. 

• Divide other non-monthly items by 12 and start putting cash aside for those due dates.  This is good for car tags, insurances, house taxes, quarterly bills and holidays. 

• Make sure you allocate some money into an emergency fund.  Dave recommends building up $1,000 starter emergency fund.  After all the non-mortgage debt is paid off, that can be increased to 3-6 months of expenses.

Before we started this program, we had no savings.  Now, I always keep 1-2 co-pays in an account and some money for minor car repairs in addition to our starter emergency fund.  The peace of mind is empowering!

If this seems way too hard, try tracking where every cent goes for a month.  The book Your Money or Your Life goes into great depth about tracking your spending.  There are many ways to do this from checkbook software to carrying a small spending journal with you.  Either way, keep a detailed record for a month.  At the end of the month, group expenses into categories.  You may be surprised!   Sometimes little expenses you don’t think much of, happen often enough to add up.  Look at each category and ask yourself some questions. 

Can I cut back?

Do I need this?

Did this purchase bring me fulfillment?

This makes it easier to see spending patterns and rerout them into more productive channels.  The next month you will have more confidence to create the written plan before you get paid! Knowledge really is power.  The longer you stay in the dark about the whereabouts of your spending, the longer it will take you to prosper.  Let me know how it is going for you!

Spring Cleaning Part 3: Sorting to Sell

So now that you have been cleaning out closets, cupboards and drawers.  It is time to create a sorting area in a dry corner of the house or garage.  Keep a box for clothing that does not fit or feels uncomfortable when you wear it.  Another for books and movies you have out grown.  And another for items you have not used in a long time or do not intend to use again. 

If you think there is enough items for a yard sale, start thinking of a date.  Maybe you have family or neighbors who would like to join you in this venture.  Advertising for multi-family yard sales often turn out more customers!

If you are shying away from a yard sale consider different possibilities for liquidating those spare items into extra cash. 
Look for: 

• Used bookstores that buy books. 
• Consignment shops that purchases clothing, furniture or house hold items.
• Mom2mom sales are very popular for selling (and buying) used children’s items.  Often you can google mom2mom sale and your city to pop up a list for your area.  There is a fee to rent space so you will want to have a lot of items to sell, or a friend to go in with. 

If you are tech savvy there is always ebay, Amazon used books and many other sites.  But make sure you understand the shipping costs and fee structure before you jump into online selling for the first time. 

And if you remember what we have been talking about, this is not windfall to go spend on more stuff.  Use it toward the financial goal you are working on diligently, like paying off a debt or saving up emergency savings.  (see January 31, 2012: Pick a Goal, for details). 

Seeing progress and results, will bring more peace of mind.  Happy Selling!

Spring Cleaning Part 2: Pay it forward

Have you ever noticed phrases like “what you put out there comes back to you” or “what you reap is what you sow,” tend to be true?  

So why not be givers?  Giving is part of a healthy financial plan.  Every unloved item in your house is an opportunity to bless others, and that action will come back to bless you. 

When doing your spring-cleaning, there are many ways to give.

• Pass it along:  Gather clothing of the same size and pass them along to someone you know that could benefit from them.  This works especially well with children’s clothing, but can sometimes work for adults.  Make sure the clothing is not stained, or torn first.  Then have a conversation to make sure the receiver is open to experienced clothing.

• Re-gifting: Keep a storage tote or drawer for items in excellent condition that you would feel comfortable giving as all or part of a gift (birthday, Christmas, mother’s day, etc).  These items could be books, music cd’s, movies, picture frames, knickknacks, or any unloved still in the box item you have no use for.  You will want to carefully choose a gift the receiver will like.  I often go into my storage tote for random thank you gifts.  It is a nice way to give back and not spend a lot of money.

• Donate: There are many places in your local area to give to others in need.  You may also want to pick up a tax write-off form, because giving to a charity is tax deductible. 

Church thrift shops

Salvation Army thrift shops

Clothing and shoe donation boxes around town

 Clothing closet charities that help people with employment

Remember giving is one aspect of a healthy life and healthy finances.  It feels good to help others and you can move unwanted clutter back into circulation to benefit others.  Try it today!

Spring Cleaning Part 1

The sun is shining and plants are poking out of the ground in the Midwest.  Many people start spring-cleaning to get winter’s dust out of the corners.  In addition to that, I like to look for hidden treasures and stagnant belongings.  Every unloved item is an opportunity in disguise.  You can turn it into cash for your financial goal or gift it to someone else.  For now we will focus on liquidating… I smell yard sale season coming soon!

Cleaning does not have to be a one day event, mine is often ongoing.  As I make my way room by room, through closets and shelves, I keep a jar and a box handy.  The jar is for found money.  Sorting through drawers and under the couch cushions is bound to turn up some loose change, maybe a forgotten gift card or check.  You may be surprised! 

The box is for everything I find that does not fit, does not work, that I do not like anymore, or the likelihood of it being used is very low.  Look for big items that you can list for sale in a local free ad or online for quick cash.  That is a good way to see reward for your efforts and gain momentum.  There are many things we can do with the small stuff.  

To be continued... 

Are You a Vending Machine Victim?

Hunger happens.  But are you prepared?  Are you the type of person who will end up in a drive through or pushing buttons at the nearest vending machine to combat hunger and thirst?  If so that lack of planning and that can add up to unnecessary financial drain and you may not even realize it.  Calculate the cost of that snack or bottled drink per week and compare it to the same item bought in a multi pack at a grocery store.  How much money could you re-route toward your financial goal per week? 

Here is a better plan.  Next time you are at the grocery store, purchase 2 different kinds of fruit, 5 pieces of each.  Pack one of each Monday through Friday on your way to work or school.  Now you have a morning and an afternoon snack.  I like Bananas because they are very inexpensive and come in their own wrapper.  For my afternoon snack, I alternate between crisp apples and juicy pears.  Bringing a beverage from home costs less as well.

Planning ahead will keep you away from vending machines, impulse buys and unhealthy snacks.   
It may not seem like much, but once you start putting a few of these tips together the savings can add up quickly.  A goal that seemed so far away comes into fruition much sooner than expected.  So the effort is worth it.

Money Fasting for Lent

Many people observe the season of Lent by giving up something during the time between Ash Wednesday and Easter Sunday.  It is a religious practice that has gained popularity even among non-religious people.  I only mention this because it can be the perfect time to go on a money fast.  Money fasting is not buying anything but basic necessities for a period of time.  After the monthly bills are paid, only purchase items that are absolutely needed.  This includes food and toiletries, first aid or medicine that you run out of. 

For this to be effective a household must commit for a period of time (a week, month, or longer).  The purpose here is to squeeze additional money out of your budget and put it all toward the goal you are working on.  When fasting is a mutual decision, it minimizes arguments.  Family members can keep each other accountable.  It can also lead to a lifestyle shift toward simplicity.

• Account for every dollar in your budget.  Put the excess on the goal your household is working on (emergency savings, debt pay down, saving for large purchase).  This amount is in addition to what you already pay.

• Start with a manageable amount of time.  The purpose is to allow an opportunity to think outside the box or break bad habits; not to torture people.  If a week is the agreed upon time, it can mutually be renewed for another week later.

• Do not go on a spending splurge as soon as the fast is over.  Resume a regular budget and continue to track spending.

This type of fasting can be done anytime through out the year, but Lent is an opportune time.  The sacrifice made carries with it the reward of progress.  If your family makes it through the 40 days, your Easter celebration will be even more joyful.

Is a Tax Refund Coming Your Way?

A tax refund can feel a bit like winning the lotto.  There is a rush of euphoria, followed by a shopping spree of ideas where that money could go.  If you expect a refund this year; instead of going on a cruise or buying a new TV, decide to create a more stable foundation with the windfall. 

• Plan where the money will go before it comes in.  This allows you to sleep on it for a while.  If something does not feel right, change your decision and sleep on it some more. 
• Use percentages.  If the actual refund amount is unknown, decide where the money will go based on rough percentages.  One year we decided to put 50% on debt, 25% in emergency savings and 25% toward all holiday gifts for the coming year.
• Do what feels comfortable to you.  Do not put all your money on a debt because it seems like the right thing, only to worry all year because there is no cash if a big medical or car bill were to happen.  Wait until your head and your gut (and your partner) are all in agreement before you act.

A tax refund is not free money.  It is money you worked for and loaned the government (interest free).  This irregular income is an excellent time to get ahead on a goal.  Investing in financial goals, rather than the newest gadget, will always lead to building a more secure future. 

What Can You Live Without?

Now that you have identified a financial goal, the easiest way to start funding it is to find something you can give up.  Maybe you have a membership you never use or a subscription you really don’t have time to read.  You can get rid of both, the expense and the guilt of not having time, by canceling it. 

If we all dig deep enough, we can find an expenses we pay for but get no real benefit from.  For us it was cable.  I gathered the family around the dinner table one evening.  We discussed other ways to get our entertainment needs met.  Then we took a family vote and decided we could all live without it.  That was over five years ago.  During that first football season I had to remind my husband that this decision was temporary.  But after seeing progress on our goals, even he is not ready to start paying for TV again.

Here’s the trick:  after the unnecessary items(s) are located, figure out how to move its monetary amount directly onto your goal before it disappears.

• Mail a check to the bill on payday.  Get it out of your account as soon as possible to avoid temptation.  Have a stack of envelopes addressed and ready to go.  Write the dates you want each payment to be mailed in corner where the stamp will be placed.  This helps to avoid confusion and is easier to keep track of.  You can set up months of payments in a short amount of time and then just cruise on autopilot.

• Set up direct deposit or automatic bill payments.  Most bills and savings accounts can be managed with out paying the stamp.  Make sure you account for these automatic transactions in your checkbook register, budget, or personal finance software to avoid a mathematical catastrophe.  Software makes it easy with the memorize transaction feature.

No matter what financial goal you are working on, keep your eyes open for a regular habitual expense you can live without.  Turn that money drain into an opportunity to get ahead.

Pick a Goal

How are the New Year’s resolution coming along?

Did you have any financial goals this year?

Even if finances did not make your list, don’t wait until next January to start.  Maybe you need to pay off a loan, invest for retirement, save for next semester's tuition, a special purchase or an emergency fund.  If you are like me, you may want to do it all at the same time!  Trying to fund multiple goals leads to low progress on each one and discouragement.  It is a good idea to prioritize financial goals and focus on one at a time. 

1. Pick a goal.  Think about which one is most important to work on first.  How would the projected progress affect you at the end of the year or further down the road?  Dave Ramsey recommends saving up $1,000 emergency fund and then paying off all your debts, except the house.  This lays a foundation and frees up the outgoing cash flow to work toward other things.   

If you have multiple debts to pay off, check out Dave Ramsey’s Debt Snowball article.  http://bit.ly/V5mma

2. Break down your goal into monthly, weekly or daily steps so you can make the kind of progress you desire. 
3. Decide to commit and start working today.  You may want to keep a financial progress journal.  Also tell your partner or a trusted friend what your plan is so support is available when needed. 
4. Keep the faith even if progress is slower than you would like.  Any movement is better than none, and definitely better than going backwards.

Picking a goal is the first step toward change.  Committing to it in our hearts starts opening the channels of possibilities toward us.  Allow yourself to imagine this journey turning out better than you expect it can.  I look forward to hearing how things go for you this year.