Friday, June 29, 2012

How We’re Saving now that our Mortgage is Gone

We don’t make great money, but we are great savers. This means that when it came time to buy a condo, although we had lost a bundle on our first home, we could still afford to purchase the property outright. This also means that we don’t have a mortgage.

Now don’t get jealous. It’s not like we’re living a life of luxury in a huge mansion and driving fancy new cars or anything like that. We live in a modest, two bedroom one bath condo and live a regular lifestyle. However, being able to live without a mortgage, begs the question, where does our money go now that we don’t have to pay the bank?

Rebuilding Emergency Savings
Our first move will be to begin rebuilding our emergency fund. After putting most of our available cash toward our home, we are going to be left a bit short in this area initially. We like to try to have at least a $5,000 emergency fund on hand as a reserve in a checking account since we feel that this number can cover a variety of unexpected events and costs.

However, this rebuilt fund likely won’t last long due to the following expenses on this list, and which will once again drain our coffers.

Baby Costs
With a new baby on the way, we are planning to be hit with medical and baby preparation expenses in the range of $6,000 to $7,000 come this fall. Pair this with a property tax bill coming along to the tune of about $1,400 or $1,500, and we’re looking at a sizeable chunk of change. This means that our rebuilt (hopefully) emergency fund will be put toward these costs. Thankfully, without mortgage costs, we are hoping to be able to save an additional $400 to $500 a month until this time, which will be put solely toward these costs.

Schooling/College Savings for Kids
After the baby and property tax costs have been put behind us, it will be time to start looking ahead toward the future. Of course, our first son will be heading off to elementary school soon, which means additional costs, and of course with a new baby, there will be continued supply costs there as well. However, we hope that even with these additional expenses to be dealt with, we will still be able to put a little extra cash each month toward saving for our kids’ eventual college costs.

What little is left after the aforementioned expenses will be put toward our retirement savings. At this point, once those larger lump sum costs I mentioned previously have been paid off in full, my wife (who recently started a new job) may begin to contribute to her employer-sponsored retirement plan. And since I’m self-employed, I will likely be putting any extra cash (which there won’t be much of) toward those college savings for the kids and again, attempting to rebuild our emergency fund.

Monday, June 25, 2012

A Mid-year Update on New Year’s Resolutions

I’m guessing that many New Year’s resolution setters out there have forgotten all about those plans, goals and aspirations that were set six months ago. Granted, such items aren’t always goals that might seem all that important as we move further into the new year, but if we’ve set resolutions that are pertinent to our personal lives, jobs or careers as I have, this might not be the case.

I ensure that each year, I set New Year’s resolutions that are relevant to my life, situation, and personal goals so that I don’t have to be reviewing them constantly to know what they are. This makes it easier to achieve such goals.

Here is how I’m doing so far on this year’s resolutions.

Increase Annual Income By 20%
Sadly, I haven’t realized this goal as of yet. As a freelancer without regular and stable paychecks, it can be difficult to know exactly where my income level will fall each month, let alone each year. Currently, I’m at only 45 percent of where I was at this point last year with my income, but with six months still to go, there’s room for improvement, and with the following goals on my list still works in process, I might be able to achieve this particular income increase resolution by year’s end.

Explore at Least Two New Forms of Income
I am currently working on finishing up several eBooks that I should have ready and online within a few months time. I’m hoping that these little jewels could garner me a bit more income, but to this point, I’m still uncertain as to the results of such a venture and how it could affect my annual income.

I’ve also recently been testing the waters with a nearby consignment shop. While I’ve done consignment style sales before with a local eBay store, I’ve never tried it through an actual, physical store. While we’re starting slow, and aren’t really looking for much in the way of regular income from this particular money-making option, we have started off with a West Elm chandelier and a large mirror to test the waters to see where it takes us. The one downside to this form of sales though, is that the store commission is 50 percent, which is a pretty big chunk of our possible profits

Meet or Beat My Budget
Due to our purchase of a condo outright, our cost of living has dropped dramatically from where it was at this time one year ago. Therefore, I’m currently on track with the budget I laid out at the beginning of the year and – with the exception of the last few months of the year in which our second child will be born – we have actually been able to cut several hundred dollars a month from our budgeted expenses.

Look for a Good Real Estate Investment
Little did I know at the beginning of the year that we’d own a condominium outright just five months later. With our move back to the Chicagoland area, we found a nice little vintage condo, in a historic area with plenty of shopping, restaurants, and nearby access to the commuter rail system for a great price, and we were able to purchase it without the aid of a mortgage.

We hope to be able to stay put here for at least the next five years or so, hopefully giving our property the chance to appreciate in value a little, as well as give us the chance to relax and enjoy the convenience, safety, and great schools the area affords. With our smaller condo, we are also enjoying a savings of over 200 percent in housing costs compared to the larger suburban home we sold last year.

Leave Room for Fun
Even though income is not where I hoped it would be, and I haven’t yet got my new forms of income fully underway just yet, we’ve still managed to fulfill our “leave room for fun” New Year’s resolution. Our reduced cost of living from our condo purchase has allowed us to free up a little extra cash for entertainment options. While we aren’t over-indulging or anything like that, we have still managed to keep between $200 and $300 in our entertainment budget each month. We have been able to enjoy occasional dinners out, some go-karting, trips to the zoo, some smaller road trips, and similar fun summer family activities that keep us entertained.

Tuesday, June 19, 2012

The Internet as a Valuable Learning and Money Saving Tool

I think that some people fail to realize just how valuable a tool the Internet can be. Especially with the economy faltering, the Internet can provide a wealth of self-improvement opportunities for just the cost of Internet service, and in some cases (such as when using the library or other public space Internet), absolutely free.

If you’re willing to spend a little time and search the Internet, there are all sorts of ways it can help you save money and teach you things you never expected to learn.

Fixing Things
Just the other day, my son’s Scooby-Doo DVD started skipping in the middle of one of his favorite episodes. Not only did this upset him, but it upset dad as well, since I was forced to sit there and watch annoyingly repetitive skips and jumps between scenes. There had to be a remedy to this dilemma, so I hopped on the Internet.

In a matter of minutes I had found numerous repair offerings, one of which was advice regarding using toothpaste. Since toothpaste is a light abrasive, the site noted that it could be great for removing scratches from CDs and DVDs. The person offering this piece of advice had successfully tested it on 3 out of 5 CDs. I then watched a quick two-minute video on the process and gave it a shot.

Since our DVD was severely scratched, the toothpaste repair it didn’t fix it perfectly, but at least repaired it enough to make it through the episode without too much aggravation. Now, I’m almost looking forward to testing this method again the next time a scratched disc rears its ugly face.

Learning New Things
I haven’t worn a watch in nearly eight years. While there were several reasons for this; the main reason being that I got tired of having to take it into the mall or a jewelry store to get the battery changed. It was time consuming and I didn’t like having to pay $20 for a tiny watch battery and the labor involved in the process.

While cleaning up the bedroom the other day, I found my watch sitting in my bedside drawer. I decided I wanted to know what was so tough about changing a watch battery that I’d been paying someone else to do it my entire life. After a quick Internet search and another two-minute video, I found there was no reason why I couldn’t do it myself.

After seeing how to make the switch, I dropped by the local dollar store where they were selling the size of watch battery I needed, eight for a dollar. It took me about five minutes, and 12.5 cents (per piece price for the battery) to get it changed. That’s much better than $20, and I now have the knowledge and confidence to do the job myself not only for myself but for family members as well.

Want to know what your mortgage, credit card, home equity loan, or other major purchase or debt is going to cost you over the term of the agreement? Want to know what how much interest a particular rate of investment return will earn you? Want to know how long it will take to pay off your credit card debt?

All these answers and much, much more are at your fingertips in only moments through a variety of free online financial calculators. Such devices can help put you in control of your own finances and break free from the reliance upon others when it comes to understanding and handling your money.

New Techniques
Have you ever thought about a great movie or television show idea but then reconsidered since you have no earthly idea of how to write a script? And you might not have the time or resources to take a whole class dedicated to the trade. But does that mean you have to let the dream die?

With the Internet as a tool, you might have the ability to teach yourself. Whether it’s how to write a movie script, how to do your own taxes, or whatever, the information is out there.

I decided that I wanted to write a screenplay, so I got on the Internet, printed off a bunch of examples, rules and techniques, studied them, practiced, and started writing. If I came to a point where I was lost, I got back on the Internet, looked up my question, noted it for future reference, and moved on.

It made me realize how great (and affordable) a teacher the Internet can be for those looking to improve themselves and try new things.

Thursday, June 14, 2012

Tools for Tracking Our Finances

The other day, my mother made the mistake of showing me the utility tracking notebook she keeps. After five minutes of me opening up various spreadsheets of my own creation on my laptop she said, “I shouldn’t even open my mouth, should I?”

That’s because I love spreadsheets, and I find them extremely helpful for all kinds of aspects in my life…especially financial aspects. I use them in a variety of personal and financial aspects of my life. They help me watch where my money is going, in what amounts, and help me to make wiser decisions as to where and how I’m using that money.

I was able to track things like our mortgage payments (with an interest/principal breakdown), extra mortgage payments applied to principle, property taxes, homeowners insurance, repairs and maintenance, and miscellaneous items with my “Home” spreadsheet.

This allowed me to gauge my annual expenses when it came to homeownership, as well as know to the penny, just how much money our home was costing us. I could also determine our profit/loss (which was most certainly a loss) after closing costs and realtor commission when we sold.

Having a spreadsheet to gauge both income and expenses is a great way for me to track my financial progress over time. I can watch how much I earn and how much I spend on a monthly and yearly basis. This can be extremely beneficial when it comes to looking for ways to cut costs, areas in which I might increase my income, year-over-year progress, and personal inflation rates.

Net Worth
I like knowing where my assets and liabilities lay and in what amounts. Being able to determine how my investments are doing, whether they’re advancing or declining, the interest rates they are earning, and what percentage of my portfolio they comprise at a moment’s notice makes my financial life easier and quicker to evaluate on a regular basis. Just one page -- copied and continued each following month -- is enough to give me an overall picture of where I’m standing financially and how my overall net worth has performed in relation to previous months.

Amazingly, my utility tracking may have been my most valuable of all my spreadsheets. Following our natural gas, electric, water/sewer/garbage, cable, Internet, and phone usage over a multi-year period, helped me find ways to cut costs in these areas and reduce our consumption and waste. It also made for some interesting article topics over the years since I’ve been able to come to certain conclusions regarding our consumption and figure out how to adjust our rates and save money accordingly.

Retirement, Moving…and More!
Recently I used a spreadsheet to plan our cross-country move. I used it to budget for our trip, budget for costs upon arrival to our new location, list items that needed to go into storage, plan which items would be sold in a garage sale, and calculate costs that helped us decide whether it would be cheaper to move ourselves or pay a professional.

Even more recently, I’ve used a spreadsheet to come up with a retirement plan for my mother that figures her expenses, income, and assets. I am even using a spreadsheet to plan our upcoming vacation and Christmas costs and budgets.

Spreadsheets are just an integral part of my life, one that helps me stay organized, save money, and make my life more efficient, effective and economical.

Wednesday, June 6, 2012

Security Tips for an Indoor Yard Sale

We are typically quite careful about the people we let into our home; yet all our efforts may be for naught when a yard sale moves indoors. Having people you don’t know and likely won’t ever see again tromping through your most private of spaces can lead to a few issues. My mother found this out when she lost several television remotes (at least this was the worst of her losses) during one of her indoor sales.
Here are some of the steps our family takes when having such a sale to help increase security.

Don’t Have an Indoor Sale
One of the best ways to secure yourself from losses and security issues due to having a yard sale inside your home may be to keep it outdoors. We tend to do all we can to keep our sales limited to the garage, driveway and yard. From checking the weather forecast ahead of time, to having a backup plan (such as quickly moving everything inside the garage) should rain or inclement weather hit, we do our best to keep people out of our private spaces to begin with.

Create Barriers
While we don’t want guests to our home tripping or having to navigate awkward obstacles, using barriers to block off certain areas within our home can come in handy. A doggy gate, large chair, or similar item, accompanied by a sign reading something along the lines of “private”, “restricted”, or “no sale items past this point” can keep sales attendees from wandering into private spaces and help keep confusion about what’s for sale and what isn’t, to a minimum.

Lock or Close Doors
We tend to keep doors other than the one or ones that we’re using during the sale closed, and if at all possible, locked. We try to keep extra doors leading into and out of a home locked. Doors inside the home that might not be possible to lock, or lock from the outside, we tend to close in order to provide an additional barrier against unwanted entry. Who knows? Someone might be sleeping in there! And a sale visitor with ulterior motives might not be willing to chance opening that door in search of valuables.

Hide or Secure Valuables
Even though it’s nice to hope for the goodness in people to stand out when they’re inside your home, I figure, why temp them with valuables scattered around. We tend to secure valuable items that aren’t for sale -- especially smaller ones that can easily be picked up and slipped into a jacket or pants pocket -- to keep the temptation for a five-finger discount to a minimum. And just slipping them inside a drawer or cabinet might not suffice if you’re working out of multiple rooms and won’t be able to supervise all areas at all times. Keeping smaller valuable sale items close to the checkout or where someone will be most of the time may help to reduce theft of sale items.

Use the Buddy System
I almost always try to have someone with me during a sale. This can help to keep people from entering private spaces, but also help with assisting customers, answering questions, making sales, and keeping an eye on the cash drawer. If nothing else, having a sale buddy can just act to provide someone to talk to and keep me company during those boring down times during the sale.