Monday, July 29, 2013

Building and Maintaining a Financial Schedule

Having a financial schedule to keep various activities on track is an important way we manage our personal finances.  It acts not only as an important checklist but as a way to keep us on track with a variety of financial events and duties that we must handle throughout the year.

However, building and maintaining our financial schedule is more than just a one-and-done duty.  It’s a continually evolving process as our family grows and our finances change.  So using the following breakdown helps keep us on track and better organized in a fairly efficient manner when it comes to our maintaining our personal finances.

Monthly or sooner
As our lives supposedly become easier due to technology, and we make use of things like automated bill pay or direct deposit to take some of the strain of doing such things ourselves, it doesn’t necessarily mean that we can just take for granted certain regular financial responsibilities.

Of course there are the regular bills that still arrive on a monthly basis no matter how we pay them.  Beyond this aspect of our regular finances though, there are other things that I check on a “monthly or sooner” basis.  One such area is our bank accounts -- especially our checking account.  While we still pay the majority of our bills with checks, even if we didn’t, reconciling our accounts is something I typically do on a weekly or bi-weekly basis.  This helps ensure that checks are getting where they need to go, are clearing in the correct amounts, and that our accounts balance.

I also tend to check our retirement accounts on at least a monthly basis, not necessarily because I need to, but I find it an interesting gauge of how these funds are progressing -- or not progressing -- and I like to see their correlation with the stock market and economy in general.

Quarterly or tri-annually
Then of course there are the items that are handled quarterly.  Items like free credit reports and password updates are the main items that I tend to handle each quarter.  By updating account passwords every three months, I feel it changes things up often enough that I avoid leaving them unattended too long, but not so often that the process become overly burdensome, since I’m often astounded at just how many accounts we have and how many user names and passwords there are to keep up with in our family.

Running free credit reports from each of the three major credit reporting agencies through www.annualcreditreport.com was something that I initially started doing on an annual basis, running all three at the same time.  However, I eventually began to run one every four months, preferring to break up the reports (from Equifax, TransUnion, and Experian) throughout the year so that I could get a more frequent accounting of our credit status.  This avoided a lengthy period without any supervision over our credit should something happen that would require our attention.

Annually
Finally, we get down to the stuff that is typically handled annually.  It’s not that these items aren’t important, but I tend to find that sometimes the less I fiddle with them the better.  And in some cases -- such as vehicle or home insurance -- they just aren’t items that I need to update or adjust more often.
 
The following are the main items that we find it helpful to review on an annual basis:

  • Auto insurance
  • Homeowner’s insurance
  • Retirement investment allocations/portfolio diversification
  • Social Security estimated benefits and annual earnings review

I also tend to update our itemized home content video recording every year or so -- or when we move -- just to keep it current with changes to our living location or our additions to our home furnishings or possessions.

By sticking to this financial schedule, I find that we’re better able to organize our financial affairs and then keep them organized without too much effort.  While everyone’s situation is different, and adjustments might be necessary based upon personal preference or financial needs, we find that having a schedule that we can break down into time segments makes it much simpler to stay appraised of our personal finances.

Saturday, July 20, 2013

Money Habits that Have Saved Me Thousands

We all have money habits -- good and bad.  For me, sometimes I wish I didn’t have so many good ones as they sometimes tend to encroach on my enjoyment of life.  However, in the process, many of these habits have served me well in a number of ways; and while I might have to sacrifice in the near term, I hope that my delayed gratification will pay off down the road.  Here are some of the money habits that have served me best throughout the years.

Exploring Purchase/Usage Options
I’m not one to jump the gun when it comes to purchases -- especially bigger ticket purchases.  Not just going with the first option or product we come across has saved our family thousands of dollars over the years.  And having the Internet as a money-saving tool has helped us in this area as well.

For example, we were recently in the market for a new set of tires for our SUV.  My wife was all set to go with the place we had purchased them from last time, but I told her to hold off for an hour or two while I checked around for deals.  We ended up finding the same tires we had purchased last time at a location closer to home and with whom we had previous work done to the vehicle.  These tires were about $300 less than the other location.  Taking that extra hour to explore our options and call around ended up saving us big time. 

Living Below My Means
Even after graduating college and getting my first job -- when I was only making $9.25 an hour while at the same time paying off student loans -- I lived below my means largely because I had to.  However, once I was promoted several times and making significantly more money, I continued to live below my means.

I didn’t do this because I had to; I did it because I wanted to.  Continuing to live below my means when it came to food costs (avoiding name brands), utilities (keeping temperatures higher or lower to cut costs), transportation (driving used vehicles), vacation expenses (vacationing with family), clothing (buying resale), and similar budget areas allowed me to save money, stay out of debt, build up an emergency fund, and even eventually quit my regular job to become self-employed.

Thinking Long-term
So many people get caught up in the moment when it comes to money and finances, and I don’t blame them.  With bills, work, family, and all the rest, just making it day-to-day can be hard.  However, I’ve found that by forecasting and budgeting for the year, as well as multiple years, I can in a way, see the financial future. 

While it might not be an exact financial future since so many things can come into play -- medical emergencies, car repairs, home repairs, etc. -- I can at least get a general idea of where our finances are headed and what bumps in the road we might encounter along the way.

I also use my tracking of things like income, expenses, utilities, home costs, and similar financially-related items to allow me to reference the past in order to better plan for the future.

Aiming for Happiness but Not Satisfaction
I want to be happy and financially secure.  However, I don’t necessarily want to feel satisfied with my situation.  Being satisfied tends to lead me to complacency.  And complacency leaves me in a rut.  Therefore, when it comes to things like my money and my work situation, I am continually looking for ways to learn and improve myself as well as for new money making endeavors and opportunities

Again, by using the Internet as a resource to help me network, learn, and explore new work and money-making opportunities, I can look for ways to aim for happiness but not necessarily fall into that rut of routine.

Monday, July 15, 2013

Cashing in Paper Government Savings Bonds. What a Pain!

Over the years, our family has accumulated a number of savings bonds.  While this might sound like a good thing, many of these bonds are worth relatively little because they were childhood birthday or holiday gifts with low associated values.  This means that they got stashed away in the safe deposit box where they were safe and out of the way but not completely lost or forgotten about.

However, with cash flow low lately and interest rates on the bonds rather pitiful, I decided to cash some of them in.  I’d never done this before, and while I wasn’t looking forward to the process, I did my best to look at it as a learning experience.  I even took our five-year-old son along so he could see what it was like.  I’d heard stories about the process of cashing paper bonds being a tedious one; and afterwards, I realized why I’d been avoiding it.

Filling out the Bonds
The first step in the process -- after I retrieved the savings bonds from the safe deposit box -- was to fill out the information necessary on the back side of the bond.  I had to do this with each and every bond, 10 in total.  This information included a signature, my address, and Social Security number if it wasn’t on the front of the bond, which thankfully it was.  This took about five minutes and wasn’t that difficult.

Documentation
Thankfully, I had my bonds stored at and cashed them at a bank branch with which I do the majority of my banking.  It was also my correctly spelled first and last name as well as Social Security number on each of the bonds, which made my driver’s license and bank account the only information the bank representative needed to verify my ownership and begin the cashing out of the bonds.

However, should my last name have changed (as my wife’s has since she received her bonds), I didn’t have an account with the bank, the Social Security number on the bond(s) had been incorrect or other there had been other issues that made verification of bond ownership more difficult, I might have needed further documentation.  There is good information regarding what is (or might be) necessary for redeeming savings bonds at the government’s website at: www.treasurydirect.gov.

Pricing, Cashing and Tax Documentation
So next up in the cashing process, the banking representative had to put in the bond dates and serial numbers to get their exact worth since they had not yet hit full maturity yet.  I however was one step ahead, having already priced them on the Treasury Direct website’s Savings Bond Wizard ®.  This way I could ensure that the bank representative was getting the correct numbers.

Once the bank representative had verified and completed his side of signing off on the bonds, he provided me with documentation for my records of the transaction by way of a federal income tax information sheet that showed the redemption values, original cost, interest received and savings bond serial numbers.  This was the lengthiest portion of the process taking about a half hour.  Then I was issued credit to my account for the value of the bonds and I was on my way, having lost about an hour of my life in the process.