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Archive for March, 2008

Saving For The Large Bills

March 31st, 2008 at 10:25 am

I mentioned in a previous post that I learned quite a bit from Mary Hunt, author of The Cheapskate Monthly Total Money Makeover. Her advise about a freedom account is what I now call my escrow account, because it works just like the escrow account attached to our mortgage.

Planning for large annual bills or expenses is key to keeping our budget intact each month. It really does give us freedom!

I have a page on the left sidebar explaining a little about our escrow account. We only have 5 items in ours at this time. If you are just beginning it may make more sense to pick one or two to convert to this escrow system.

An escrow account can included anything that you pay less frequently than monthly. Some examples are: life and auto premiums, auto registration fees, annual gym memberships, tuition, holiday gifts, birthday gifts, and vacations.

To begin total up the annual amount that you expect to pay for the items you wish to escrow. Divide this total annual amount by 12 (for the number of months in a year). This monthly figure gives you a starting point for how much you should put aside each month.

It's important to then evaluate that monthly number against actual outflows. I have one month where I need to pay auto registrations and insurance premiums equal to $643.00 Obviously, this cannot be covered by one months escrow deposit.

I find it helpful to go month by month, starting with the current month, looking at inflows and outflows and each monthly balance. Some months will be positive and some months are negatives.

If you start escrowing without some money already set aside and come to a month where the net balance is negative you would need to find additional money in your current month's budget to fund that particular bill.

The other option is to start the escrow account with an amount equal to the largest negative balance you arrive at when evaluating inflows and outflows.

In the first year you could also divide negative cash balance by 12 and add it to your monthly escrow account. You still may have negative months, but by the end of the next year you should have a balance to begin you escrow account with. And as a result your monthly escrow amount should go down.

I know this was a little long on the explanation. I hope it helps someone out there in blog world with their budgeting, planning and debt payoff. If you have questions let me know. If I made an error in explaining, it would be helpful to know that too. We're all here to work together after all.

My Ebay Listings...

March 30th, 2008 at 10:20 am

are going up this evening. I only have a few items ready to go this week. Mostly children's book series, and a pair of girls sandals that are like new!

It has been since early December since I've had this many items up for sale at one time. It must be my spring cleaning mode that is getting me motivated.

I should be able to get more on ebay than I would at a garage sale for these items. Last year I sold over $700 worth of stuff on ebay. All of it was just laying around our house!! You would think that I would have run out of things to sell, but with growing girls and changing interests there is always something.

My goal is to see how much I can earn in the month of April. I'd be happy with $100. I'll let you know how it goes.

What I Learned From A Cheapskate

March 29th, 2008 at 08:39 am

We began our marriage almost 12 years ago with over $10k in credit card debt. Around that same time, I heard of a book called The Cheapskate Monthly Money Makeover by Mary Hunt.

This began my quest to pay of our debt quickly using her snowball method. At least that is what I think she called it. Many of you already know the concept. You list your debts smallest balance to largest. You pay the maximum dollar amount to the first or smallest debt. You simply pay the minimum to the remaining debts. Once the first debt is paid off, the amount you had been sending in as a payment gets added to the next debt while continuing minimums on the rest. The total amount sent towards debt remains the same during the entire payoff, unless you find MORE to send in. That then would speed up the debt repayment process.

I also learned how to escrow and save for annual, semiannual,and unexpected expenses. It was nice to read a book where someone was honest about their debt and how they got to that point. Even better, she found a way out of the debt and was able to convey that to others.

The book is older and not as popular now, but it still has relevant information. I looked it up on Amazon. It can be purchased used for one penny and a couple dollars in shipping!! Of course, there is always the library. If you are just starting out, this may be a resource you'll look to often. Debt payoff can be done!!

We paid off that credit card debt in less than two years on very limited salaries using the snowball method.

Things I Don't Do - Number 5

March 28th, 2008 at 12:56 pm

This is the last and final post in this category of "don't do's." This one will be a list of several things I don't do...that some people might. Most of these save my family money.

I don't...

1. Buy very many brand name foods
2. Use a full dryer sheet in each load
3. Buy brand new cars
4. Pay for magazine subscriptions
5. Own more than one purse
6. Buy fast food...it is very rare that we eat out.
7. Pay any bank or ATM fees...EVER
8. Heat my house at night...I let the thermostat drop by about 10 degrees
9. Develop pictures...its all digital!
10. Make or eat dessert, except special occasions.
11. Send any bills through the mail...saves on stamps!
12. Buy many DVD's or CDs.

I'm sure there are more things I don't do. Many of these things I don't do, keep us from spending more money than necessary. Thanks for listening. Making the list helped remind me how well we do. In some cases, because of your responses, I have been reminded we could still do better.

Things I Don't Do - Number 4

March 27th, 2008 at 06:39 pm

I know I'm not going to be alone in this one either. I don't do cable TV!!

We have been married almost 12 years and have managed to live without cable all of those years. How much have I saved? At the low end cable probably costs $30 a month. I have avoided spending $4,320!! And that is the low end. What if I paid $75 a month? I would spent...$10,800 in the last 12 years.

Currently, we have just about 7 over the air channels. The girls watch PBS every morning. I can sleep in and know they aren't watching anything inappropriate.

I'm not a big TV fan to begin with. I don't watch ANY TV during the day. We all sit down and watch Deal or No Deal and Biggest Loser each week as a family.

If you have cable TV and can pay for it, that is great! I just feel free not having that bill to pay each month as well as the free time to do other activities. Trust me, I would never see DH, if we had cable. He watches too much TV as it is.

Our Stimulus Check Won't Be...

March 26th, 2008 at 06:04 pm

taxed here in Iowa. The Governor signed into law today that the tax rebate checks we are receiving will not be taxed by the state of Iowa in 2008. Nice to know now!!

Anyone else know how their state will handle the stimulus checks for tax purposes?

Things I Don't Do - Number 3

March 26th, 2008 at 06:53 am

A comment was left on my last entry about priorities with spending. My examples of things I don't do are just ways that my family has chosen to save. We began some of them out of necessity when our income was significantly less. Now that our income has risen, we continue to do these things while we splurge in other areas, wine seems to be one of those right now!! All the while we are saving almost 20% of our gross to fund retirement and college education.

My third "don't do" has to do with insurance premiums. We don't pay our premiums monthly. We pay them semiannually or annually. When we were on a tight budget I realized I could save by paying less frequently. As a result, I set up a way to put the money aside each month, so that when it came due I had the money available. I don't remember now how much the difference is in paying semiannually verses monthly, but at the time it was significant to us.

This system of escrowing our money to fund semiannual insurance payments led me to add more items to the list for budgeting purposes. I now have included auto registration, gym membership, and school registration fees in addition to the auto and life insurance. As a result I put away over $130 a month to cover these expenses as they come due.

I'm going to guess many of you do something similar. If you haven't considered paying less frequently, in any area, it would be worth looking into. It just might save you some cash that could be put to use elsewhere. When we first began, we put ours towards debt repayment.

Next week I hope to talk a little more about how to set up an escrow account for these types of expenses. Stay tuned!

Things I Don't Do - Number 2

March 25th, 2008 at 11:03 am

Turns out the last "don't do" I posted wasn't so unusual. I actually get my hair cut by someone else, but many of you responded that you cut your own hair!! I am so impressed. I've done some trimming occasionally, but never a full cut. I suppose with my curly hair I could actually get away with it. I'll let you know if I try it.

The second thing I don't do is pay for my kids to eat the lunch the school provides. They pack their lunch everyday. The school lunch is $1.80 per day. With two children that is $3.60 per day. If they took their lunch everyday of the school year I would spend about $650 on hot lunches. I would estimate that I spend about $0.85 per child per day. This means I spend just over $300 per year for school lunches. A savings of $350!!

Now, I can't say that this came about just to save money. My oldest just preferred to take her own lunch so she had more time to eat. This all began in kindergarten. She tried the school lunch, but the routine of it was just stressful on her.

My youngest daughter also tried hot lunch, but decided it was cool to have a lunch box with characters on it! So, packing our lunch is just the way we do it. I really think they eat better because they have more time and get a variety of different foods to eat.

My husband also takes his lunch. Turkey sandwich, banana, and granola bar washed down with his favorite diet coke. I won't calculate how much that saves us...but I know that it does. He also helps keep our fridge clear of leftovers.

Things I Don't Do - Number 1

March 24th, 2008 at 09:26 am

If any of you have read The Millionaire Next Door, you know that millionaires are millionaires because some of the things they don't do...such as buying brand new cars and so on.

We are not millionaire's yet, but I thought I'd share a few things I don't do that would qualify me as a future millionaire.

The first one is that I don't get my haircut every month. I have naturally curly hair, so it is not as noticeable when my ends are uneven. I visit the local Great Clips with a coupon about every two months. I get a cut only. No styling or blow drying. I say no to all their attempts to sell me special curl shampoo. My use of a coupon, saves me money and allows me to leave a fair tip.

I tend to only take my girls about every two months as well. My husband gets his cut every three weeks, but how his hair looks is important to his job. The Army has some standards you know!! I get the joy of shaving the back of his neck once a week so that he doesn't have to get a haircut that often.

This has been our routine all of our married life. The only change I see is that someday I might need a little color to cover up some gray. I'm sure I'll find a way to save on that too!

Feel free to share your "don't do's" and stay tuned this week for more of mine.

Will She Show Up?

March 20th, 2008 at 01:36 pm

This will be the second day that I have attempted to arrange for pickup of our old TV. I advertised on Freecycle. The woman responded right away. I named a time on a day she was available. The time came and went...no response.

I offered today at 5pm...another day she was available. Will she show up to claim her free TV?

If she doesn't show, I have three other people that are interested. Who knew it would be so hard to give away a TV?

It would have been easier to take it to Goodwill!!

Basement Makeover Equals Garage Sale Pile

March 19th, 2008 at 02:33 pm

It's a beautiful day here! I decided to work on my basement. It is unfinished and was pretty organized, in that I knew where everything was. However, it wasn't set up quite the way I wanted.

We bought a metal shelf yesterday that we set up as two shorter shelves. I set these up parallel to the two taller shelves that line a wall. There is now a path between the two on the same side of the basement as my furnace.

I have most of my things in plastic storage bins of varying sizes and colors. I have written the contents on an index card and taped it on the bins.

As I loaded the shelves, I came across numerous items that can be sold at my garage sale this spring. These items are now in a pile. Do you want to know what I'm getting rid of?

The pile has a student desk, gum ball machine, games, two children's sleeping bags, snow boots, paints, McDonald's Happy Meal toys, end table, torch lamp, outgrown children's toys, VCR movies, a microwave, and many of the old style camouflage uniforms of my husbands. Some of these may end up going on ebay.

I have found enough to trash to fill a large garbage bag, too.

So, now my basement has two zones...storage and play area for kids. For now, there is also a temporary garage sale zone.

Spring always inspires me to clean and declutter!! Anyone else working on a room makeover or decluttering?

More Spending

March 18th, 2008 at 07:22 am

As I stated in an earlier post, we will be doing a bit of spending. We've had a significant increase in pay. We are saving along the way as well. Here's what were buying:

We bought the girls new bikes to the tune of $148. We are looking for some for ourselves as well. More than likely we will buy them new, though I've looked at craigslist to see if there were any there. Not yet!

Easter is coming up and I will have company at my house for Saturday night and Sunday. That means a large food bill. It's actually my first time hosting!! I'm kind of excited about that. They will help out and bring a dish or two for Sunday brunch.

There's more...it's spring break. DH and girls are home, so we are treating ourselves to some local activities, indoor swimming, roller skating, bowling and a movie. We are having such a good time being together, but the activities make it even more fun.

Am I Irish?

March 17th, 2008 at 08:32 am

I'm married to a man who is half Irish, so I have a Irish last name. Am I Irish?

I like to think that I am. I can't say that we have maintained any traditions. I do wear green, but we don't attend parades, or eat any special meals. I've recently learned that cornbeef and cabbage is more of an American tradition.

At any rate, Irish or not, I want to share one of my favorite Irish blessings:

May love and laughter light your days,
and warm your heart and home.
May good and faithful friends be yours,
wherever you may roam.
May peace and plenty bless your world
with joy that long endures.
May all life's passing seasons
bring the best to you and yours!

Happy St. Patrick's Day!!

Our Cars Are Paid For

March 16th, 2008 at 07:32 am

I always find it interesting to know what type of cars people have, how they paid for them and if they owe any money. So I'll share mine.

We've owned an '89 Nissan Truck, ,89 Geo Metro, '97 Plymouth Breeze. We leased a '96 Nissan Sentra for two years for $132/mo. Currently we own a '97 Dodge Caravan and a'02 Ford Taurus.

Our current vehicles are paid for and were bought used. We've always bought used knowing that autos depreciate quickly in the first year or two. We took out four year loans and paid off within two years in both cases. Both vehicles have over 100,000 miles. We have a significant EF to cover repair costs when they arise, which has been less than once a year.

It is a relief not to have a car payment. But that may change soon. The van is still reliable. My husband drives it 30 minutes to and from work each day. It has $122,000 miles and the transmission MAY be going out. That's what it seems like to me...he disagrees.

So, with our raise in income we are considering getting a used Honda Odyssey. That will mean a car payment unless we can hold out long enough to pay cash...I just not sure if I'm that patient. I know I can wait long enough to have money for the down payment, taxes and tags.

I'll keep you posted.

Addiction Leads to Ebay Sales

March 15th, 2008 at 07:48 am

My husbands diet Coke addiction makes me a little money. The coca-cola products are running a promotion called My Coke Rewards. Each package or bottle contains a code that can be entered online for points. A consumer can then redeem the points for products or coupons.

Personally, I like CASH...so I sell the unused points on ebay. These are in high demand and they sell every time.

I put this earned cash into our slush fund. It adds up pretty fast!!

Who else has unusual ways of earning a little money on ebay?

What Gardening Can Teach You About Money

March 14th, 2008 at 06:17 am

I recently went to my local indoor botanical garden. That experience made me think that gardening has many aspects that relate to money, budgeting and investing.

1. All plants start small...a seed.

It's okay to start saving with small amounts, because one day those savings will bloom.

2. A garden requires maintenance.

Just like pulling weeds to help the plants to grow, a budget needs to be tweaked to cut expenses or increase savings. Money maintenance comes in all forms, including reading your bills, bank and investment statements. Investments need to be rebalanced from time to time to keep your portfolio diversified.

3. A garden doesn't grow overnight.

Paying off debt or saving for retirement take time and patience. Little by little the garden flourishes.

4. A garden requires more than seeds.

A flower needs soil, water and sunlight. For money to work well in our lives, we need to have the right spending attitudes, cash flow, communication with our partner as well as the ability to know what our goals are.

5. Flowers and vegetables can be shared with others.

Some of your money is available to be given away. The smile and appreciation of others is worth the effort.

What else does a garden teach you about money and your budget?

Some For Now

March 13th, 2008 at 09:14 am

My blog is Some For Now, Some For Later. My goal this year and always is to find the right balance between spending and saving. So while I will tell you about our savings habits, I will also mention some things we spend money on. This is one of those for now.

Background first:

My husband was promoted recently. This means a huge raise!! His first paycheck is tomorrow with funds backdated to February 8. We have doubled our income in 1 1/2 years! How did we do this?

My husband went from working three jobs to working full time for the Army Reserves. It did require us to move and move away from our entire family. While the Army has it's downsides, we felt it was a great opportunity for our family to see new areas of the country and meet new people. He loves the job most of the time...except when bureaucracy gets in the way!

So my point, now with this raise we will be spending some of that new earned money. We have already increased our retirement and education contributions, too! We're saving 20% of our income in one way or another.

Guess what the first luxury item is? It's something most women could care less about, but many men drool over. It's a plasma TV!

It so unlike us to buy something like this. Our current TV is going out. It's getting close to black even with the brightness on high. We also don't get very good reception with our bunny ears. In 2009 everything goes digital anyway. So, because BIL sells electronics, were getting this item at cost, minus a $200 manufacturers rebate. We are paying half of the retail value!!


Thrifty Ray This is For You

March 12th, 2008 at 01:10 pm

At the urging of Thrifty Ray, I, creditcardfree, do hereby release myself as a "lurker" and commit myself to blogging!

We started our marriage with credit card debt from a failed business. That's where we began our journey with spending less than we earned. We continue to do the same today. We are debt free except our home at the present!

I look forward to seeing what topics I write about...at the moment I feel clueless. Smile