Wednesday, March 19, 2014

How We Compensate for Expenses We Tend to Forget

I’m willing to bet that just about everyone has forgotten about an upcoming expense or bill that arrives suddenly, catching them off guard.  I know that we have.  However, over the years, we’ve learned what to watch out for and how to compensate to keep these costs from doing too much damage to our financial planning.  Therefore, while we’ll never be able to catch every expense before it hits, we’ve developed a pretty good plan to minimize the effects of such costs.

Items we tend to forget
We’re pretty good at remembering most regular monthly costs; however, it’s those more irregularly occurring expenses that tend to catch us by surprise…or at least used to.  Items like our vehicle and condo insurance, annual family zoo pass, oil changes and vehicle maintenance, vision/dental costs, and safe deposit box fees are some of the costs to make this list.  Those bi-annual property tax bills can also come as an unpleasant and costly surprise.

Our new budget reserve
We compensate for our surprise expenses in several ways.  First off, we have our emergency fund.  And while this fund provides cash if we need it, we don’t like to dip into it if at all possible.  Therefore, we’ve created smaller, monthly reserve funds that are built into our budget.

These reserves only total about $200 a month, but in many cases they do the trick in compensating for our forgotten expenses.  A wedding present, birthday gift, surprise bill, or minor home or car repair can often be covered by this amount and keeps us from having to draw upon our real emergency fund.

Expense tracking and regular budget improvement
We also try to compensate for our forgotten expenses by tracking costs and improving our budget as we learn more about it over time.  By tracking our expenses over months and years, we begin to get a better feel not only for our regular expenses but those surprise irregular expenses as well.  While such expenses might only come along once or twice a month, seeing them over and over again year after year will eventually have us prepared for their arrival, and in turn, budgeting more accurately.



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.

Sunday, March 2, 2014

Silver was Down More than 30 Percent in 2013, but am I Worried? Heck, no!

2013 was a tough year for silver.  Some might even call it a disastrous year. 

I’ve liked silver as a form of investment since I got my first Silver Eagle coin as a child.  I look at it as the “poor man’s gold”, since it’s much more affordable than its golden-boy brother.  However, I like silver in its physical form, not paper.  This is why the plummeting of silver’s price from over $30 an ounce at the beginning of 2013, to under $20 an ounce by year’s end, didn’t particularly bother me.

Buying the ‘right’ silver
Don’t get me wrong, I don’t have treasure chests of silver just lying around or anything like that, but when I have a little extra money at the end of the month (which isn’t often these days), I might pick up a few ounces at our local coin shop. 

But I don’t buy just any kind of silver; I tend to buy pre-1965, 90 percent silver dimes, quarters, and 50 cent pieces.  I’ve found that there tends to be more collector interest in such coins, which means a greater numismatic (collector) value.  This also provides a greater chance to discover mint flaws that can push the value of the coin even higher.

Understanding silver
More than gold, silver has many industrial and medical-related uses. 

According to geology.com, “Because it is the best thermal and electrical conductor of all the metals, silver is ideal for electrical applications. It's antimicrobial, non-toxic qualities make it useful in medicine and consumer products. Its high luster and reflectivity make it perfect for jewelry, silverware, and mirrors.”

The site goes on to say, “Its malleability, which allows it to be flattened into sheets, and ductility, which allows it to be drawn into thin, flexible wire, make it the best choice for numerous industrial applications. Meanwhile, its photosensitivity has given it a place in film photography.”

This means that even if investor value is tanking, demand may be propped up by industrial consumption, which can play a crucial role in silver recovering some of its lost value.

Knowing resale options
It’s not hard to resell silver coins.  If you don’t believe me, just take a minute to search “US silver coins” on eBay, and see how many thousands of listings are available.  Such research not only provides information on how to list such items (descriptive terminology, pricing, etc.) but can provide valuations on what certain coins are selling for dependant upon year, condition, mint location, flaws, and more.

Understanding where and how to resell such coins, whether it’s online or at the local coin or pawn shop, as well as what the costs involved are (commission, taxes, listing fees, etc.), makes it easier to sell if or when I want to and get the best price for my coins in the process.



Disclaimer:

The author is not a licensed financial professional or precious metals expert.  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.