Friday, December 27, 2013

Tricks that Save Us Every Time at the Grocery Store

Just going to the grocery store these days can get expensive.  With product sizes decreasing and prices increasing, we seem to be getting less and less for our money.  However, this doesn’t mean that all is lost when it comes to cutting the weekly grocery bill.  In fact, there are some quite simple steps that may be taken to make significant cuts to food costs.  And our family has a few tricks up our sleeves that help us save each time we head out to the grocery store.

Go together
If your kids are anything like mine, their tastes probably change regularly.  Sometimes they change within a matter of weeks or even days.  One minute they love something, the next they won’t touch it.  This can be especially true when it comes to food.

Therefore, we tend to take our kids along with us to the store.  It’s a true family affair.  I like to go with my wife so that we don’t end up making educated guesses about what the other person wants.  And the kids (at least our oldest) can make selections regarding cereals, lunch options for school, and dinner menus so we aren’t left facing that, “I don’t want to eat THAT!” whining from him when it comes to his meals; and in turn, we aren’t left with costly food waste.

Buy before we need
I tend to take a regular inventory of our commonly used items.  This way, when we start to get low, I’m prepared.  This enables us to buy when such items are on sale, not when we have to have them.  From toilet paper and toothpaste, to cereal and croutons, I’m ready to buy before we’re completely out so that I can make a decision based upon product and price rather than necessity.

Understand consumption levels
I like to buy in bulk when and where needed.  However, buying in bulk can lead to excessive waste if we aren’t using what we buy.

This is where understanding consumption levels can play a key money-saving role in our trips to the store.  Understanding not only what we use, but in what amounts, and how long such products will last (expiration dates), can help us make educated purchases at low prices for the things we’ll use most of or that will last longest.  For example, we eat a lot of cereal, so we can buy in bulk when it’s on sale.  We don’t use much contact solution, but it has a substantial shelf-life, so again, we can buy in bulk when it’s on sale, getting the best bang for our buck.

Make and take a list
I know people who make a list and then forget it at home.  What’s the point?  A list is a critical element in our ability not to make wasteful -- in time, effort, and money -- trips back and forth due to forgotten items.  A list also keeps us on track for buying what we need, and it helps us avoid those impulse buys for what we don’t.

Utilize stores where we don’t need coupons
Coupons might seem like a good money-saving idea at the store.  And depending upon your location and available grocery store selection, they might be.  I used to be a big fan of coupons, and at stores that offer double or triple coupon days, they can still be useful.  However, most of our area stores don’t offer such days.  And many coupons are for name brand or higher priced products.  Therefore, we’ve found that utilizing stores like Aldi, Ultra Foods, Wal-mart, and Target, where grocery prices are already lower or store brands are offered can help us save more money than if we were to buy similar, higher-priced products paired with coupons.

And by using these tricks, we’re able to keep our grocery costs for a family of four between just $200 and $300 a month.



Disclaimer:

The author is not a licensed financial professional.  The information provided in this article is for informational purposes only and does not constitute advice of any kind.  Any action taken by the reader due to the information provided in this article is solely at the reader’s discretion.

Wednesday, December 18, 2013

Is a Dollar in Hand Worth Two in the Stock Market?

I know that there are people out there who do quite well and even make a living through the stock market, and I applaud them.  I wish I were so lucky.  I actually haven’t put a dime into my retirement account since September of 2007, which has helped me get a better gauge on my actual fund performance since it hasn’t been clouded by further contributions – my own or employer sponsored.

According to MarketWatch.com, “…taken in the aggregate, American 401(k) plans are largely back on track, according to the mutual-fund industry’s main trade group. In a report released this week, the Investment Company Institute (ICI) said that the average American 401(k) account balance reached $94,482 at the end of 2011, the most recent period tracked in ICI’s database of accounts.”

The article goes on to note, “That figure is up 89% from an average of just under $50,000 at the end of 2008, when the stock market’s recent tumble was near its nadir. Given that stocks have continued to rise steadily since the end of 2011 – the S&P 500 is up almost 40% over that stretch – the average 401(k) balance is likely to be considerably higher now.”

And while individual stocks or stock portfolios can certainly vary in their levels of success, this pinpoints an issue I have with putting more of my hard-earned money into the stock market.

5-year market returns
It’s amazing to me that even with as great as the market has been doing the past several years that my IRA is just now breaking past the point it was at nearly six years ago.  After I left the workforce in late 2007 to become self-employed, I rolled my 401(k) into an IRA.  Well, long story short, I’ve only just cracked the balance I was at toward the end of 2007 near the start of 2013.  In that five and a half year timeframe, returns were essentially flat although I was gaining a bit of share value through dividend reinvestment.

So it begs the question, if I put money that I might otherwise have sunk into the stock market into other areas, what would my return have been?

Credit card debt
According to CreditCards.com, which notes the TransUnion analysis of May 2013 credit files, the average credit card debt per U.S. adult, excluding zero-balance cards and store cards is $4,878.

Staying out of credit card debt is something that I put at the forefront of our family’s financial plan since there are few is any other options (with the exception of many stocks in 2013) that can provide the return on investment that comes with paying off credit card debt.  This is why every month I make darn sure our credit card bill is paid and paid in full.

So that dollar that I could have put into my IRA back in 2007 was instead put toward paying the family credit card.  With a 20 percent interest rate on that card, it means that single dollar paid toward our credit card may have saved us nearly an additional $1.50 in interest that we would have paid on it over that period.

Mortgage debt
Some of those investment dollars didn’t go toward consumer purchases and rather were put toward our mortgage.  Paying down our mortgage faster than necessary has been another financial goal that absorbed many of our investment dollars.  And while this might not seem the best option when mortgage interest rates are low, back in 2008, we locked into a 15-year mortgage with 5.375 percent rate, so it made more sense to pay this debt down quicker.

Therefore, we did this not only through the shorter term mortgage, which in essence, boosted our monthly payment but lowered our interest rate and overall interest paid on the loan, but also through additional payments.  Taking each dollar that would have remained fairly stagnant in the stock market over that five-year timeframe and putting toward our home saved us about 30 cents in interest.  Multiply that dollar – and the associated savings – by thousands and you can see how it made sense to keep our money out of the stock market.  And while things in the market have been great as of late, it doesn’t mean that I’m rushing to get back in, using the previous five-years as an example of just how volatile markets can be.



Disclaimer:
The author is not a licensed financial professional.  This article is for informational purposes only and does not constitute advice of any kind.  Calculations have not been verified by a professional.  Any action taken by the reader due to the information provided in this article is solely at the reader’s discretion.


Sunday, December 8, 2013

4 Hats to Wear in the Self-employment World

Running a small business may be more work than you think…much more.  And it can involve a variety of activities with which you may not have much experience.  Nevertheless, as a small business owner, it may be your responsibility to handle these issues whether you like it or not.

Having been self-employed myself for nearly six years now, I’ve realized just how difficult the small business or freelance world can be and how many different hats must be worn when trying to run your own show.

IT Director
I’ll admit that technology is not my favorite thing to deal with.  I don’t particularly like it, I don’t really enjoy it, but as a self-employed individual, I’m pretty much forced to interact and utilize it.  Gone are the days when I could pick up the phone and dial the IT department to solve my technology-related issues.

From fixing a computer when it crashes, to learning new technology and software, finding new apps, creating a website or blog, and utilizing social networking, there are a variety of facets of the tech world that a small business owner or self-employed individual may encounter. 

Personally, I find that doing a lot of research online and reading user reviews of different technology and tech-related applications is typically most helpful in finding solutions to issues or learning about more efficient or effective technology.  Networking with clients and colleagues is also a great way to find out about the experiences they’ve had and sites or technologies that they may be using or have had experience with.

Marketing and advertising exec
There is any number of marketing and advertising facets that might need to be handled by one who is operating a small business or is self-employed.  From simpler tasks like social networking through sites like Facebook and Twitter, to creating blog or website posts, communicating with or commenting on industry-specific websites, creating coupons and flyers, coming up with promotions, and handling public relations issues -- both good and bad -- marketing can play almost a daily role in certain operations.

Creating not only a schedule for handling such items, but also a budget can help put some order to what might otherwise be chaos.  Setting aside a certain amount of time each day or a particular day each week to focus on this aspect of operations can ensure that you are devoting enough time to the promotional aspects of a business.

CFO
Acting as the chief financial officer of your own operation may be one of the most important roles you take on as a small business owner or self-employed individual. 
While you don’t necessarily have to get fancy with the software and systems you utilize to handle the financial aspects of your work, ensuring that you’re tracking and organizing your finances in some way can be critical to the success of your operation.

These financial aspects can run from handling tax payments and document retention for future tax filings, to creating and retaining receipts, tracking income, tracking expenses, creating and maintaining a budget and/or forecast, ensuring proper cashflow, collecting upon receivables, and sending out payables.  While it might seem like a lot to handle, such issues can be integral to having and maintaining a good financial grasp upon a business.

Manager and staffer
In a small business setting, an owner can find himself or herself not only managing the operation, but jumping in and getting their hands dirty too.  From setting goals and tracking productivity, to learning about productivity enhancers, motivating staff, handling human resources issues, hiring, disciplining, training, and sometimes terminating staff, and dealing with legal and workplace safety issues, a small business owner can be charged with a variety of management issues while also sparing time for all the other duties involved in running an operation.

So, while running your own show can sound like a dream come true, and can actually be quite rewarding in many ways, it’s important to understand the full capacity in which an owner might be serving and just how many roles he or she may be undertaking in the process.


Disclaimer:

The author is not a licensed financial or career professional.  The information provided in this article is for informational purposes only and does not constitute advice of any kind.  Any action taken by the reader due to the information provided in this article is solely at the reader’s discretion.

Sunday, December 1, 2013

Financial Lessons to Learn Early in Life

As I look back on my financial life, I find that I’m kicking myself now for certain moves I made -- or didn’t make -- regarding my personal finances.  I only wish I had some things that I could to do over as I can see so much more clearly now that I’m older.  With experience now on my side, I wish I could pair the lessons I’ve now learned with the time that was on my side 20 years ago.

The following lessons would likely have made my financial life easier and my current financial situation better had I learned them sooner than later.

Dividend reinvesting
Having a DRIP (dividend reinvestment plan) is something I wish I’d known about much earlier in life.  As a more conservative investor, it really used to bother me when the stock market would take big dips, taking my retirement plan along for the ride.  With dividend reinvesting though, while my fund price tends to correlate with market trends, it also purchases me extra shares each month at current market prices and that continue to earn for me. 

So when the market goes down, while my fund price might follow, I’m continuing to add shares at a lower price, so it doesn’t hurt as bad.  Had I recognized the benefits of such a plan at an earlier age, I could have taken much of the stress out of stock market investing and built up significantly more shares over a period of nearly a decade.

Dollar cost averaging
One of the main things my dividend reinvesting taught me was the value of dollar cost averaging.  Being able to purchase shares at high prices, low prices, and places in between spreads out my risk of buying too many shares all at once and at too high a price.

I’ve found that while shares of stocks or stock funds are most commonly associated with dollar cost averaging, it can be done with a variety of things like commodities or even real estate as well.

Time and patience can be valuable partners
As I age, I begin to realize the true value of time and patience when it comes to investing and personal finances.  Getting overzealous or impatient can lead to poor investment decisions or unnecessary risk.

For example, I sold the company stock I held in my 20s unnecessarily, pulling in a small profit from its increase from a $10 per share purchase price to $14 per share.  My reasoning…the stock wasn’t doing much and I was tired of watching it.  I didn’t need the money, and I wasn’t loosing money.  Several years later, the stock price went to around $45 a share when the company was bought out.  I lost out on thousands of dollars in potential profit because I got antsy and sold too soon.

A job is more than just a paycheck
I couldn’t wait to graduate from college.  Not because I was excited about a career but more because I was excited at the prospect of earning money and getting a regular paycheck.  But over time and as I advanced in my career, I began to realize that a job can be much more than just a regular paycheck.  Sure, that’s certainly a part of it, but there is -- or at least can be -- more to a job.

It wasn’t until I actually left the regular workforce to become a self-employed individual that I began to fully comprehend just what a job could be.  There is the opportunity for networking, possibly building connections that can lead to career advancement or better placement.  There can be a variety of benefits related to health care, transportation, retirement planning, and things like free meals, uniform or clothing allowances, company awards, bonuses, and functions, and numerous other perks.  And of course there may be opportunities for growth potential through learning on the job skills or continuing education programs.

Had I realized this earlier on in my young career, I might have stuck with regular employment a bit longer before venturing out on my own.  This way I could have absorbed more of these benefits for longer, making my position stronger once I eventually moved on to working for myself.

 

Disclaimer:

The author is not a licensed financial professional.  This article is for informational purposes only and does not constitute advice of any kind.  Any action taken by the reader due to the information provided in this article is solely at the reader’s discretion.