Archives For Budgeting

Budgeting is like potty training your child. For you singles out there,that might not mean much, but experienced parents will understand.

Potty training is hard work, messy, and frustrating. Just when you think you’ve trained your little Einstein, there is another accident and the process begins again.

I was inspired as we will begin potty training our son in the next year. This article has several tips on potty training that can be applied to budgeting.

**Warning there will be bathroom humor and language below, read at your own risk**

Budget Like You Are Potty Training

All About the Bribes- Just like you give your child M&M’s for a successful mission, give yourself a treat every now and then. When you make that $1000 emergency fund goal, give yourself a grownup treat. I like chocolate.

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Do you have a pet duck?

We all have pets although they might not take the form an actual furry animal. You’ve might have a financial pet that you feed and keep in the house.

I bet you’ve even taught him a few tricks so that he’d be housebroken. You might even keep him hidden from others, so you don’t have to explain why you still have that old pet around.

Financial Pets

  • Credit Card Puppy– For the majority of us, credit cards have gotten us into trouble and we don’t want anything to do with them. You might still be keeping your credit card around because he’s just so cute. Plus you get free airline miles, cash back, and an assortment of freebies. Did you know you’re probably spending more per purchase than the average debit card user and cash only spender? You’re also just one late payement away from a 26% APR. Perhaps it’s time put the pooch up for adoption?
  • Extra Insurance Duck– Do you take out extra insurance (beyond your life and health) for just in cases occurrences you fear most? Most likely your health insurance will cover it or a small rider on your current life insurance would cover that fear. That duck is costing you money each month, time to let if fly south for winter.
  • Cool Car Cat- You just love to drive a cool car, even if it isn’t the best financial decision. That fat cat is eating your retirement especially if you are leasing. According to Consumer Reports leasing is the most expensive way to operate a vehicle.
  • School Loan Elephant- Those school loans are big eh? The elephant is like a member of the family. I know what you’re thinking, “I’ll keep him around a bit, he’s useful and it’s only 4% interest. I’ll use the money I would have paid towards my school loan and invest it and get 8%…that’s a 4% return!”  Take a look at the mice (interest and risk) and you’ll be scared Dumbo into paying off that pachyderm. One. Bite. At. A. Time.
In the words of Bob Barker:

 

 

Do you have any financial pets?

Photo Credit Durindarda (Creative Commons)

Are you squirreling away for your wedding?

A wedding is a huge deal. It’s most likely the biggest party you’ll throw for youself. Women already know this and ya’ll have been thinking about your wedding since you could blink your long eyelashes.

Guys, we’ll has it even crossed your mind what your wedding will be like or how much it could cost? Parents have been thinking about your wedding and might have even saved a good bit for their daughter’s big day. Let’s hope so!

Wait? Save up? Yep, weddings can get fairly pricy. The Knot puts the average wedding at $27,800. Wow!

How Much Should a Wedding Cost?

Before we talk about how much a wedding should cost. You should look at what you can afford. Many of us won’t be able to afford a $27K wedding, nor could we even imagine such.

  • Rule #1 don’t go into debt for your wedding. Debt is stressful and your first year of marital bliss isn’t always so blissful. Putting debt and marriage together isn’t a good recipe for your first year of marriage. Follow this rule and you’ll be off to a good start.
  • Make a budget-Determine what kind of money the bride’s parents have been squirreling away or how much money you’ll put into the wedding. (sample Wedding Budget) Determine what you’ll spend together and stick to it or make adjustments so it equals 0. No debt nor putting your parents into debt.
  • Make Sacrifices- If you are doing a budget on a dime, then you’re going to have to make certain sacrifices. This will be easy for the guys, but ladies might have to give up some life-long dreams. Gents, be patient.
  • Do it yourself and get help- You’ll have to do some things yourself if you want to pull off a wedding under budget. We did the flowers ourselves, had friends and family help with pictures and videography. We strung up lights on the outside pavilion a few days before. I could go on, but you get the idea.
So how much should a wedding cost? Far less than you can afford. You can have ‘magic’ and memories without the financial strain if you work together and have a plan.

Our Wedding

My wife and I (along with a ton of help from friends and family) pulled off our wedding for less than $5,000. We had a budget of the money we had to work with and we had to negotiate, bargain, and do it ourselves to get a great wedding.

Each week we had a budget and planning meeting to see where we were at.

Our honeymoon and her engagement ring was paid for with my cashing out my 401k (I’ll tell that story another day). Rehearsal dinner was paid for by my parents per good ole’ southern tradition and home cookin’.

It wasn’t a small wedding either. I think close to 200 people came and even ate appetizers for that amount. The most expensive item was the photographer since we wanted the CD and rights to our pictures.

Prenuptial Agreements

This is a touchy subject and many of you won’t even have to deal with this topic. If you are dealing with prenuptial agreements, this topic could be a deal breaker for moving forward with your potential spouse.

What is it? A prenuptial is basically a legal document that determines what will happen to property and money in the even of a divorce. Romantic right? Here is a more legal explanation if you want to read here.

So do you need one? Probably not. If you are wealthy or own a successful business ($ 1 million +) or will be wealthy (your last name is Zuckerburg or Vanderbilt) then you should have a prenuptial agreement in place.

Why? Both you and your potential spouse might live happily ever after, but being wealthy attracts a lot of fruit cakes and distant relatives. You don’t want them ruining your wedding bliss or causing division.

For the rest of us, there isn’t much reason to get a prenup. In fact it could be a red flag that signals future problems (additional red flags). The only exception might be 2nd marriages or having children from a previous marriage.

What was your wedding budget and did you stick to it? Any thoughts on Prenups? 

[This is part of the Premarital Financial Series]

Photo credit John K

A woman walked into a bank and told the teller “Your ATM ate my budget!” The teller just laughed and asked how.

“You see-I never planned on all those $20 withdrawals, but you see I needed them.” “Can you do anything about my fees?”, she asked.

The teller became a little more serious and pulled up her account. It showed 13 ATM withdrawals for the month; 11 over the 2 withdrawals allowed.

This amounted to $27 in overdraw fees (9 x $3). Plus she used out of network ATM’s on seven different occasions which amounted to another $21 in fees (7 x $3). The teller explained she had a total of $48 in fees that he couldn’t reverse.

The woman was now $48 over her budget in fees, not to mention the $260 she had withdrawn. The ATM had indeed eaten her budget.

Think this is just some story?

This is an excerpt of a guest post I wrote at Money Talks. Read the full article here

Huddle up at the end of the month

How did you do? By this point you should have completed your pre-budgeting activities and completed your first monthly budget. What now?

At the end of the month or 1st day of the new month it’s time to huddle up with your money buddy (spouse or accountability parter if you’re single) and review how things went. This activity should only take 5-10 minutes once you get in the groove.

Huddle Around Your Budget in 4 Steps

1. Gather your budget, bank statements (online or paper), envelope system, open up your personal finance software, and sit down with your spouse or money buddy. (Reconcile your accounts if you haven’t done so yet.)

2. Celebrate any financial victories. If you never celebrate the small victories in life, chances are you won’t do much celebrating. Do a dance!

3. Did you go over budget?

  • Stayed in budget? Great! I knew you could do it!
  • Got money left over? Cool! What are you going to do with it? Roll it over to the next month? Put it towards debt or savings? Transfer it now.
  • Overbudget? That’s o.k. we all do sometimes. It will take several months to get a budget running smoothly. Now try to figure out what went wrong. Review some common budgeting mistakes you might have mande
4. Readjust your budget with what you learned for the coming month. If you’re able to pay off more debt or save a greater amount, then make it a priority.

Photo by joncandy

Action: Plan a post budget huddle. Go ahead and set a reminder for the rest of  year on the day you’ll  have your post budget huddle.