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Posts Tagged ‘Budgeting’

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Why generics are awesome…

Monday, July 12th, 2010

I have said many times before, that buying generic will save you lots of money, but today I have a very good example  of how a couple of little things can save you lots of money.

As our regular readers are aware, your favorite southern couple now has a daughter.  At around a month old, her requirements are mainly food, diaper changes and sleep (and the pacifier, haha).  Another requirement, we have learned, is that of gas relief drops, like Mylicon.  The stuff is like liquid gold.  We go through an ounce a week, for crying out loud, and at about $13 an ounce, buying that stuff at the grocery, frankly, hurts.  The good news is that while at another local grocery store, we found their generic brand drops for only $4 an ounce!  That’s a savings of $9 a week, or $468 a year!  For those of you looking for a good start on your vacation fund, saving on generics like this is a fast track to making it a reality. 

Review your weekly expenditures and try and find the name brand things that can be swapped for generic.  It doesn’t have to be all of your weekly expenses, but $10-$15 a week adds up, and will be a nice boost to your savings, or a good start on a vacation (or at least a nice long weekend)!

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Father’s Day gifts for the frugal shopper, and neat ideas for the NEW DADDY!

Wednesday, June 16th, 2010

Last month we posted some ideas for the frugal shopper looking to get mom something special for Mother’s Day, and now, with Father’s Day fast approaching, we’ve decided to post several links to websites that have some great tips for the gift givers!  For ideas on inexpensive gifts for Father’s Day, check out the following links:

  • Better Budgeting - Some great ideas here!  My favorite is the idea of yard service.  This is great for the father who doesn’t relish the idea of getting out in the heat and working in the yard.   A truly thoughtful gift.
  • About.com - As for this website, I personally like the “week of special lunches”, since Jerrill takes his lunch to work everyday.  I think this might top my list for next years Father’s Day!
  • iVillage.com - This has some good tips for the 1st Father’s Day for a new dad!  The big idea here is keeping it simple and inexpensive, and I wholeheartedly agree, since most men I know wouldn’t want you to break the bank on their Father’s Day gift anyway.  Men are men.  If they want something for themselves, they generally go get it!
  • Associated Content - This has some sweet ideas and some funny ideas for the new dad.  I LOVE the “new dad diaper changing survival kit”!  This is a great little funny gift for the dad with a sense of humor!

So, with my baby about to be born any day now, you might be asking what your favorite southern woman has done for her man on Father’s Day.  Well, I have 2 presents in store for him (I don’t mind sharing…he’s a little busy with baby stuff right now, and won’t likely be reading this week’s posts, haha).  The first is a picture frame that will have our first family picture in it, that he can take to work.  The second is my favorite however.  I have had his wedding band inscribed, something personal from just me to him, because even though it is Father’s Day, the joy of our baby would not have been possible without our love and devotion to each other, and it’s always good for couples to remember that.

Hope these links help you find the ideal and frugal gift for your dad!  Good luck!

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AAA is more than just for flat tires…

Monday, June 7th, 2010

Today I wanted to talk about the advantages of a AAA membership.  The cost of the “Classic” membership, AKA the cheapest membership runs between $65 and $85 a year (for the first person, with additional members costing a small additional fee), and comes with many more advantages than just flat tire repair. 

Along with the companies distressed driver services (roadside breakdown, flat tire, a dead battery and car keys locked in the car, to name a few), they also offer features like Triptik, their online travel planner (which my mom has used for years and loves it) maps and apps for your GPS and your iPhone, and tour books!  On top of all this, some local AAA offices are affiliated with your local DMV and can allow member drivers to take care of vehicle registration, lost license plates and car stickers and transfer out of state vehicles (a serious pain in the neck, if you’ve never had to do it)!  Another benefit?  They have recently added identity theft monitoring with specialized people in their fraud relosultion support department, which is a free program included in your membership…all you have to do is sign up!

The other great benefit to a AAA membership?  All the discounts!  Discounts can range from 10%-30%, depending on the location, and can include locations like hotels, rental cars, gym memberships, restaurants, sporting events, prescription medicines etc.

With all of these benefits, a Classic AAA membership seems like a great deal, and, if you have your budget on track (i.e. no debt except the house), this should be a great way for you to save some money!  Now, if your lifestyle dictates that you’re on the road a lot (salesman, for example), then you should consider this service, out of debt or not!

On a personal note, your favorite southern couple is fast approaching the due date of their first child, and therefore, will likely miss a post or 2 in the upcoming weeks.  If, you, our wonderful readers, visit the site and find no post for the day, please be assured that we will be back soon, and will post pictures of the newest addition to our clan as soon as we get the chance.

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What it truly means to live within your means!

Wednesday, May 26th, 2010

We all know that living within your means is, in its most basic form, living within your household budget.  However, I wanted to point out that there are many other ways that we overspend at work, for example, that can be adjusted and will help more people than just ourselves!

Let’s talk about being a teacher.  It’s a truly stressful job.  They have 100 students (at least) every day that need to be educated with not only the subject that the teacher is charged with teaching but also the life lessons that some of our more lackadaisical parents “don’t bother to” or “forget to” teach their children at home (FYI…it is NOT the job of a school teacher to teach your children the good morals and values of our society…that is in YOUR jurisdiction!).  Needless to say, it’s a little overwhelming.  What’s more, the money system set up around the education system (at least the parts I know about, as I am not an expert) is ludicrous.  For example, the school system allots each teacher a certain number of copies that they are allowed to make per year on the copy machine, and if they want to make more, they have to pay for them!  That puts added and undue pressure on the teacher, because let’s face it, toner and copy paper are cheap.

 However, silly as it is, it is the workplace version of “living within your means”.  But not all teachers do.  They will either spend money out of their own pocket to buy supplies, or send home a list of supplies that the parent MUST provide for all of the various projects the teacher wants to do.  All I have to say is, my oh my, what a mess!  Teachers are given a budget.  They should have to work within that budget (and yes, I am absolutely certain that their budget is too low and doesn’t help much, but it is what it is).  By buying supplies out of their own pocket, they are saying that the budget is meaningless, and that sets the wrong example for the students.  I love the generous nature, but they shouldn’t take the burden on themselves and set a bad example for the children.  And if they decide to pass the cost onto the parent?  Well, the parents at home have their own budgets and money problems to worry about, and the decision to have all of these wonderful projects impacts them too!

So, what is a teacher to do since they’re being squeezed on both sides?  Get creative!  If they figure out less costly projects and methods for teaching the same lesson, they will be able to stay within the budget the school set for them without passing the cost on to the parents!  I know that the replacement projects won’t be as full of bells and whistles, but the object of the lesson is to teach something, and that usually doesn’t require fancy projects.  Also, as long as the teacher has a computer with an Internet connection, she can show the students whatever she wants to show them!  For example…let’s say the teacher originally wanted to have the students build volcanoes for science class.  All she has to do is have them read the chapter, discuss it in class, then show the students this on the projector.  It’s not AS cool, but it works and it’s pretty much free!

I’m not trying to pick on teachers, just so you know.  I just wanted to give an example of how we have a mental disconnect between living within our means at home and at work.  We shouldn’t be frugal at home and a spendthrift at work.  Apply the same principles at both places, and get creative on your savings!

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Refinancing to save long term…

Monday, May 24th, 2010

Lots of people like to talk about refinancing your home to save money on your monthly payment, and it’s true that if you’re struggling to make your payment, this will help you in the short term, but what if you aren’t struggling to make your payment?  Should you refinance?  Well, if you’re on a 30 year fixed rate monthly payment, then yes, maybe you should.

Plugging in some numbers on Bankrate.com, a 30 year, 6% fixed rate mortgage on $150,000 runs about $899.33, whereas a 15 year 5% fixed rate mortgage (they will usually give a lower rate to a shorter term loan) on the same $150,000 is $1186.19.  Given this information, yes, it’s obvious that the 15 year mortgage is more money per month, even with a lower rate.   However, what I wanted to point out to you is that it’s a little less than $300 a month extra…to pay your mortgage off in HALF the time!  Not only will you be paying off your mortgage in half the time, but the total cost of that 30 year loan will be $323,757.28 versus $213,514.28 for the 15 year loan.  That means you save $110,243 over the life of the loan!  I bet you’d rather that money go toward retirement as opposed to lining the pockets of the bank!  I know I would!

So you say you can’t afford the extra $300 a month?  Well, what can you afford?  After making sure that you don’t have the type of mortgage that penalizes you for paying it off early, you should look into how much extra you can pay toward the principal per month (that doesn’t interfere with your retirement).  Every little bit helps, and you will save thousands more by paying it off early.  Another option, is that if you’re “Gung-Ho” about getting that 15 year mortgage, but can’t afford the payment on the loan amount, perhaps you should look at a less expensive property.  We all have to buy within our means.  This means that some people can afford a half a $500,000 house, and some can afford a $100,000 house.  You shouldn’t be upset or discouraged if you can’t afford the more expensive house…what you should be is excited when you pay off the house you can afford in only 15 years, and know that it is ALL YOURS!  I’d rather own a modest home then be drowning in debt in a nice home that I’ll never realistically own, and I bet most people would if they took the time to think on it.

So, my advice to you for saving on your mortgage is to consider spending a little more now on your monthly payment, as it will save you a bundle over the long run!

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Trimming home insurance costs…

Monday, May 17th, 2010

It’s time for spring cleaning, and in our opinion, that should include cleaning up your budget and bills.  Given that information, today I wanted to offer a few tips on cutting the cost of your homeowners insurance.  Here are a few ideas:

  • Raise your deductible to $1,000 – Let’s face it…if you ‘have to use your insurance for your home, you’re likely to have to spend WELL OVER$1,000 on whatever the repair might be , and you could save up to 25% off your yearly premium!  It’s a good choice!  Plus, if you have an emergency fund, like we suggest, of at least $1,000, then you would have the money to cover the deductible.
  • Use the same company for both your auto insurance AND your homeowners insurance – This is a no brainer!  Most insurance companies offer discounts when you have multiple accounts with them, which could amount to 10% off your premium.  No sense paying an extra 10% just to be able to use 2 different companies.  Find the company with the best rate for both policies and go with them!
  • Check with your insurer to see if they offer loyalty discounts – Not all of them do, but the insurance companies that do will give discounts up to 10%.  It’s worth looking into, although you might have to have been with them for several years (at least 5).
  • Install dead bolts and/or a security system – Not only is it a safety issue, but it’s a good way to save an extra 5% on the homeowners policy.  Check with your insurance company to see if other safety features can be added to your home to increase the discount even more!

Whether you implement all or just one of these tips, you will see the difference on your bill, and that money can be used as savings, debt payment or additional funds for another under-funded budget category.  “Trimming the fat” out of each bill is a key way to making your budget work for you!

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Tools to help you figure out your financial health!

Friday, April 30th, 2010

Today we’re not talking about an article, but a really cool tool I found on CNN Money‘s website.  This tool is a Financial Health Calculator, and basically you plug in your specific money and retirement plans, and it walks you through it’s process, telling you if you’re finances are on track to retire without any problems. 

I love this tool, but I should tell you that it slightly deviates from our views in a couple of places:

  • They suggest keeping your house payment under 28% of your gross income.  We suggest you keep it under 25% of your gross income.  I know it’s just 3%, but that can add up!
  • They suggest that you keep your debt under 36% of your gross income (including house payment).  We want your goal to be no debt.  First, we want you to become debt free except for the house, then we want you to pay off the house.  Given this view, there is NO percentage that it acceptable debt to carry on a regular basis.
  • We are in agreement on the emergency fund.  3 to 6 months worth of expenses is what you should aim for!
  • Their diversification “bubble” suggests being conservative in your retirement savings, and making use of bonds and other funds that are less risky.  When you’re older, it is wise to be conservative with your money…this is true.  However, we prefer diversifying into good growth stock mutual funds. 
  • Company stock is not something that we generally talk about, but we agree with CNN Money.  You shouldn’t hold too much of one stock, even if it is your employer.  Just because YOU have faith in your employer does not mean that they are doing well in the world market.
  • Regarding life insurance, they suggest having 5 times your yearly salary in life insurance.  We suggest having 10 times your yearly salary.  This is supposed to be for income replacement.  So, if you don’t need to replace your income for anyone, then you don’t need 10 times your income, and probably not even 5.  You do, however, need enough to cover any final expenses and debt you might have.
  • The last “bubble” of the calculator is about retirement savings, but doesn’t really tell what you should be saving…it only tells if you’re on track to retire at age 65.  As we have always said, you should save 15% of your gross income (minimum, if you can).  This should put you on track to retire with a very comfortable nest egg.

Use this tool as a loose guideline for your finances, but don’t forget to replace their information with our information from this post in the appropriate places. 

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House buying when you’re learning to be frugal.

Monday, April 26th, 2010

I always wonder why people buy the size/amount of house they don’t need.  They look for 5ooo square feet (minimum?), hardwood, chef’s kitchen, marble this and that with several acres (where you can find it) of land etc. house.  This is the silliest thing I’ve ever seen.  One of the things your favorite southern couple would like you to ponder is to buy the house you need, not the house you want!

If you’re in the market for a home (hopefully your other debt is paid off, like we suggest, and you have a down payment), then you should be aware of what your family truly needs.  If there are 3 of you (mom, dad and baby), then a 4 bedroom house IS overkill.  If no one in the house cooks (or likes to), then you don’t REALLY need the chef’s kitchen now, do you?  You should get just as much house as is required by your families needs, that way, you can save more for the future and have your “comfortable” home paid off sooner. 

Struggling with your current home’s mortgage payment?  Maybe it’s time you downsized!  Many people get into houses that they can’t really afford, and then think there isn’t anything they can do about it, but this isn’t true.  If you bought more house than you can afford, chances are, you’re struggling.  Now, many people like to blame the banks (and there are some at fault), but they are not the only place to lay blame.  It’s easy to find and attack a scapegoat, but in reality, many people who bought more home than they could afford should have known they couldn’t afford them.  I know that the interest only loans and the ARM’s made it difficult to understand the EXACT terms of the loan, but let’s be honest…if you were approved for a $200,000 home, and you make $20,000 a year, sirens should have been going off in your head.  You should have been confused as to why you could afford so much.  You should have paused during your jumps for joy…if you were jumping for joy, saying “WOW, look what I can afford”, that WAS the warning sign! 

So, now you have more home than you can afford.  Sounds like it’s time to downsize!  I know that it can be hard to sell a home in this market, but as long as you keep your price competitive, and keep the home looking great, then you’ve got a good chance.  And something else of note?  Even if you have to take on a small personal loan to get out of the house, you’re still better off.  For example:  Let’s say your house is worth $225,000, and you put it on the market for $230,000.  Someone offers you $215,000, and they pay closing costs.  Well, after looking (really looking) at your finances, you realize you can’t afford more than a $150,000 home.  It’s better to sell the house for the offered price, take on a $10,000 personal loan, and find a house for $140,000.  You’re going to be better off, even if you did have to “take a hit” on the other house, because you will actually be able to make your mortgage payment now!  Sometimes, you just have to look at the bigger picture!

Remember, sometimes saving money IS the obvious choice.  Don’t buy more than you should.  Sounds simple, so try and live by it!

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And, once again, the savings rate is falling!

Friday, April 23rd, 2010

I cannot even begin to tell you how disappointed I was to discover that the savings rate for the United States has begun to decline again! Today we have a blog post about the United States savings rate, and how it has begun to decline. Visit this website to see the current rate, which is even lower than the rate stated in the blog post. Trending downward I’d say.

As most of our readers know, just a few short years ago, the savings rate in the U.S. was in the negatives, and had been for a few years. That doesn’t even seem possible, does it? No, but unfortunately it is. So, what does it mean? It means that as a nation, we were spending more than we were bringing in. We were living beyond our means. Then, the economy started to tank and many of us woke up and started to save for the future. Out of all of the bad things that came with a down economy, this was a bright point. Now, however, we’ve decided that we were saving more than enough and that it is time to blow through our money again! WHY would we be convinced of this? Did we all suddenly wake up rich? I don’t think so! We need to realize that the more we save now, and the earlier we start saving, the more we will have when we retire!

The recent 1.5% decline in savings, if continued over 30 years could mean the difference between retiring comfortably and retiring on “just enough”. It could mean the difference between taking trips to fun locations when you retire, or having a need to have a part time job when you retire. I don’t know about you, but I’d say that it’s worth a few sacrifices now to get to retire without the stress of money problems. Getting out of debt now and saving for the future should be a top priority for all of us. Read the article. Get motivated. Then get started on saving, or try and do more than you already are!

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90 days same as cash…what a ripoff!

Wednesday, April 21st, 2010

Anything that sounds too good to be true is too good to be true.  Of this, I am sure.  The 90 days same as cash gimmick definitely qualifies as something that sounds great, but really isn’t.  Never ever fall for it.  Why?  I’ll tell you…

When a person agrees to a 90 days same as cash gimmick, they are saying that they will pay the full amount (and not a penny less) within the 90 days allotted.  How many of these people actually do that?  Well, according to Dave Ramsey’s website (and a few others), only 12% of people who do 90 days same as cash financing actually pay it off within that time frame!!  Hello!  9 out of 10 people don’t do what they say they’ll do!  This means that you shouldn’t even think about doing this!  But you say, “Oh Emily, I will be the one that pays it off in time”.  Oh really?  Well, if you can make such a guarantee, then you should just pay cash in full in the first place! 

IF, however, you decide that you want to fall for the gimmick, and you don’t pay it off on time, the company will backdate the interest on your purchases to the 1st date of purchase.  And how much interest will you be charged from day one?  Probably around 24%!  So, you went from no interest to 24% over the entire length of time you have the loan (it is a loan, even if you didn’t realize it).  What a ripoff!

What you should know as a consumer is that there is NO financing option offered by any business that is a “good deal” for you!  They will always find a way to part you from your money.  Do the smart thing and just say no to their gimmicks!

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