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How to Start Your New Year Out Right, Financially

Every time a New Year begins it’s a great time for a fresh start. While a lot of people make New Year’s resolutions to do better than they have in the past, the majority of them fail. So, we don’t do that around here. Instead, we work on consistently creating better life habits to live a more financially freeing life. Of course, not all of these are easy to do all of the time, but with practice, they can really make a big difference. Therefore, here are my favorite ways to start the New Year out right from a financial perspective.

Create Overall FInancial Goals

Setting your financial goals is a very important piece of the overarching plan. This is because it can be extremely difficult to be disciplined about money if you don’t have clear cut goals lined up. So, we have created a habit of having a budget meeting every Sunday to go over every aspect of our financial goals.

Some of the most common things we discuss during these meetings are:

  • The status of our emergency fund (which is in a high yield savings account)
  • Our credit card statement balance
  • Any upcoming social events that will need to be paid for
  • Upcoming recurring bills that will be coming out
  • Any big ticket items that we’ll need to pay for (such as medical, dental, car maintenance, etc.)
  • Small household projects we may need to fund
  • Upcoming family vacations
  • Status of our retirement accounts

Staying Focused on Financial Goals During the New Year

Once you’ve figured out how you want to structure your budget meetings, then determining how to stay focused is the next big hurdle. There are many different ways you can go about this, obviously. But, I’ve found Personal Capital to be a great tool to have handy to make my life a bit easier. This platform lets you connect all of your accounts in one place so that it can consistently monitor everything for changes. And, as a huge bonus, it gives me a bottom line as to what our overall net worth is. This number is something we look at regularly to help propel us and keep focused on our financial goals.

The types of accounts that Personal Capital lets you connect for monitoring are:

  • Auto loan(s)
  • Checking account
  • Credit card(s)
  • Investment account(s)
  • Medical debt account(s)
  • Mortgage
  • Savings account(s)
  • Student loan account(s)

Needs vs. wants

Setting up your financial goals and a way to track them are the first steps. But staying on track with both of those can get tricky sometimes. This is where determining your needs vs. wants is important. While there are always going to be things we want to have, these are the things that can throw us off track really quickly.

Therefore, we use the budget meetings to help keep us reined in regarding this category. We discuss whether something we are considering spending money on is a need or a want and then determine if we’re going to pull the trigger or not.

Some good examples of needs are:

  • Fixing the car
  • Dental work
  • Medical appointments
  • Household emergencies (plumbing, electrical, HVAC, etc.)
  • Vet appointments

Some good examples of wants are:

  • Clothing in more colors or patterns
  • Eating out with friends or family
  • Vacation
  • Coffee at the coffee shop (it’s so much cheaper to make it at home!)
  • More toys for the family pet

Avoid peer pressure this new year

While peer pressure may not be as tough as it is during the holiday season, it’s perpetually there. Typically, we find our friends to be the biggest instigators of our increased spending on wants. Of course, it’s not entirely their fault. We make the choice to spend money on things we don’t need, but the extra push from outside forces doesn’t help us make clear decisions sometimes.

A great example of this is going out to eat with friends. Since there are two of us adults, a dinner can easily be $100 or more. That extra money could have gone into our emergency fund or our investment accounts to help boost our retirement faster. Therefore,  something that sounded so innocent may have now completely derailed our budget for the month.

But, we all want to be able to have a good time with friends and family sometimes. So, it’s important to ensure a part of your budget is for things like this. Fun money, if you will. However, once you determine what this amount is, sticking to it for the month is key. A good way to do this is to limit how many drinks, appetizers, movies, etc. you choose to engage in.

This will also help you narrow down who you really want to spend time with as opposed to just burning your budget within the first few days or weeks of the month on everyone who asks you to do things. I have found that this has helped me to strengthen and solidify the relationships I really want to have in my life at the same time.

Start the New Year Out Right Summary

Overall, a New Year is a great way for a new start. It’s a good time to work on creating more beneficial, long term habits that can help you out financially. We have done this year over year since my spouse and I have been together and every year ends up being better than the last. In fact, the two of us together have done so much more together than we have ever been able to do apart financially. Even if you don’t have someone to share the financial load with, you can still hold yourself accountable. Creating healthy financial habits now will only help you year over year to get to where you’ve always wanted to be.

Unfortunately for many, it means lots of debt. Here are some tips for tackling holiday debt.

Tips for Tackling Holiday Debt

The holiday season is an exciting time of year for many people. It’s a time to spend quality time with family and friends, enjoy delicious food, drink eggnog by the fire, and exchange presents with loved ones! But it can also be a stressful period for some people because they often overspend during the holidays. This article will provide tips for tackling holiday debt so you can have peace of mind this holiday season.

Read more

Home Updating: Area Rugs and Runners

When you think of doing one thing at a time in your home, you have to plan. You must add one thing at a time to make a scene once you have a plan. Then when you are at the end of the vision and it has come together, you will be proud to see the planning came together. You might want to consider new interior French doors. When you do this in your home, you want to make sure that the updating you are doing will be worth it.

Money is needed to update a home and there are so many things you could do to your home to update it. That is why planning is important. Read more

Facing medical bills, home purchase opportunities, loss of a job, or have a business idea? Learn how to get money now.

In Need of Cash? Here Are 5 Ways to Get Quick Funding

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Whether you are facing medical bills, home purchase opportunities, loss of a job, or have a business idea- money is essential, especially right now. However, not everyone is fortunate enough to have enough cash on hand for emergencies.

 

Some people do not like the idea of borrowing money and resort to getting additional jobs or selling their things. They fail to realize that borrowing money is also helpful in making big purchases or paying for big-ticket expenses.

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Value of a dollar

How We Are Teaching Our Kids About the Value of a Dollar

As our two oldest boys are 13 now, it seems like a great time to really help them figure out the world of money. Since we have 5 children, at all different ages, teaching them about money can get tricky because they are all at different stages. That being said, we are working diligently to teach our kids about the value of a dollar. Read on if you want to hear more about our most recent adventure with kids and phones! Read more

Vacation

Was I Able to Keep Our Vacation Frugal?

If you read my last post, then you will remember that my two children and I were getting ready to head out on our annual birthday summer trip. I always try to make the trip a ton of fun, but also on the more frugal side. So here is the big question: Was I able to keep our vacation frugal? And did I do it cheaper than last year?

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Working with Lenders to get the Best Loan

These days, getting a loan isn’t always a walk in the park. Most lenders have tightened their requirements for qualifying for a loan because of the losses they incurred during the economic downturn a few short years ago. More stringent qualification criteria means individuals with past credit blunders, those who have unstable income, or those who have several other monthly debt payments may need to put in more effort to secure the financing they need. Not all is lost in the loan market today, but it’s important for prospective borrowers to understand what it takes to get approved. Here what borrowers need to do when it comes time to get a loan.

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10 Brilliant Ways to Keep Young Kids Active and Entertained for Free

Enjoy this guest post from fellow blogger Sandra Cobain. 

Kids need plenty of exercise for good health. It’s a no brainer, right?

Along with preventing health complications from obesity, exercise has a ton of benefits including strong bones, better endurance, deeper sleep, better focus, less stress and an improved mental health, among others.

So how do you get your kids to exercise? Probably not by taking them to the gym and putting them on a treadmill. I doubt they’ll get excited about that. Read more

Got Clutter? Use It to Lower Your Tax Bill with a Charitable Donation

clutter

It’s a fact of life — the more time goes by, the more stuff you accumulate. Much of this stuff outlives its usefulness quickly, so decluttering becomes a necessity. But what to do with the clothes, miscellaneous household items, toys, furniture, and other things that you no longer need, use, or want? When you donate them to an IRS-approved charity, you can take a tax deduction for the fair market value of these items and easily calculate it using online taxes software.

That deduction can add up, especially if you’re donating big-ticket items like large appliances, furniture, or a car or boat. But what is the fair market value of your old stuff and how can you determine it? What kinds of noncash items qualify for donation, and what documentation will you need to take the deduction?

Most charities make it easy to determine the fair market value of noncash goods; you just need a receipt for the donation, some photos of the donated items for your records, and appropriate forms to file with your tax return.

Donate Your Stuff

You can take a charitable tax deduction for almost any kind of noncash item. Big-ticket items like cars, furniture, large appliances, boats, and designer clothing will obviously net you the biggest deductions. But you can also take deductions for miscellaneous household items, toys, used clothing, books, DVDs, CDs, games, small appliances, and other less valuable items as long as they’re in good condition.

While you can only take a charitable deduction for donated items that are considered in good condition and working order, the IRS itself doesn’t determine what that means; you’ll have to refer to the guidelines of the charity to which you’re donating. The only exception is if you have a single item of clothing, or a single household item, that has been appraised at a value of at least $500. You may take a deduction of such an item even if it is in poor condition.

Keep Your Documentation

When you donate noncash items to a charity, it’s a good idea to take photos of the items first, just in case you need to prove to the IRS that the stuff was in good condition. You should also receive a receipt for the donated items from the charity in question. This will stand as proof of your contribution. You’ll need to file IRS Form 8283 with your tax return. You should be able to find a free tax calculator online that can help you accurately fill out the form.

Determine the Fair Market Value

According to the IRS, a noncash item’s fair market value is whatever a “willing buyer” would give for the item and a “willing seller” would take for the item, when both are engaging in the transaction freely and have “reasonable knowledge of the relevant facts.” If you’re donating items worth less than $5,000, you can determine their fair market value yourself without the help of an appraiser.

Most charities offer online guides to determining the fair market value of items like used clothing, small appliances, used books, toys, and other small-ticket items. For example, according to the Goodwill’s online donation value guide, a used floor lamp is worth $8 to $34, while a used sheet is worth $2 to $9, and a used woman’s blouse is worth $4 to $9. You can also consult IRS publication 561, Determining the Value of Donated Property.

If you want to donate an item worth more than $5,000, you will need a professional appraisal of that item. If you donate a boat or car, however, the charity in question will most likely sell the boat or car at auction for cash rather than keeping it for sale in a thrift shop. In that respect, donating a boat or car is similar to donating cash to a charity, since the organization in question will let you know how much they were able to get for the sale of your item.

Thanks to a 2005 rule change, you’ll only be able to deduct the final sale price of the car or boat, rather than its fair market value. That means if your boat or car has a fair market value of $5,500, but the charity to which you donated it sells it at auction for $5,000, you will only be able to deduct $5,000 from your taxes. The IRS implemented this rule in response to taxpayers overvaluing donated cars and boats.

Donating noncash items to charity can knock thousands off your tax bill, and help you declutter your home at the same time. Free up extra living space, organize your things, help the less fortunate, and protect the environment by keeping your unused items out of the landfill. You could find that deducting noncash donations from your taxes is so simple, you’ll want to do it every year!