Budgeting

5 Items Worth Spending Your Money On

July 22, 2020 By Trey LaRocca Leave a Comment

When trying to save, it is easy to go a little overboard. Sometimes, being too hesitant to spend leaves you even more broke than when you started. While it is important to be frugal, it is even more important to emphasize value. the idea isn’t just to spend as little as possible, it is to get the most value out of your money. This means knowing things worth spending your money on, and going for quality when the need arises. This can not only make your life better, but it can still increase your financial security. Spending a little extra on these items will save you some costly emergencies in the future.

Nutrition and Fitness

You only get one body, and you need to treat yours right. This means buying quality ingredients, and some tools to cook at home. Going out isn’t some cardinal sin of frugality, but it can put a damper on your finances and your health. Make sure you always have the ability to make something delicious and nutritious, and you’re never stuck going out because you have nothing at home. Also, get yourself a gym membership. Working out outside works if you’re on a really tight budget, but having somewhere to go and work on yourself is the best way to do it.

Tools

Having even the most basic tools handy can go a long way. Not only do they save you money on routine car and home repairs, but they can make sure these repairs actually get done. No more waiting until the very last minute to get your oil changed, fearing a big bill. You’ll have the tools, and the know-how, to get it done cheaply on your own.

Mattress

Sleep is such a massive part of your life. Not only do you spend almost one third of your life doing it, it also sets the tone for everything else you do. Your energy level, your mental health, and even your metabolism rely on getting quality sleep. You will be far less productive if you are stuck on that old spring slab you’ve been working with lately. Spend a little on a decent bed-in-a-box mattress online if you have to, and you’ll at least get a reasonably comfortable mattress for a great price.

Healthcare

Back to the old “you only get one body” subject; make sure you are getting regular check-ups at your doctor’s office. Take whatever health insurance you can get, or pay out of pocket. Either way, you should at least get a routine physical once a year to ensure you are in good health. The insurance will also save your butt in an emergency, so don’t consider it wasted money. even healthy people get injured, after all.

Vision

Living life without proper vision can lead to many issues. You can end up in a car accident, get stuck with headaches, or experience chronic eye strain if you work with a computer. If you feel you might need glasses, or your prescription may be a little outdated, get yourself a new pair.

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5 Tips For Better Money Habits

June 18, 2020 By Tamila McDonald Leave a Comment

For many of those who get ahead financially, it doesn’t happen by accident or chance. Instead, they develop amazing financial habits, allowing them to make progress toward their goals and secure their futures. Luckily, regardless of where you are today, anyone can embrace their routines. With a bit of effort and diligence, you, too, can create better money habits. If you don’t know where to begin, here are five tips to get you started on the road to a more secure financial future.

1. Always Pay Yourself First

The principle behind paying yourself first is simple; if you transfer money into your savings account before you do anything else, you’ll always do it. You’ll never end up in a situation where there isn’t enough to make it happen, as bolstering your savings will universally be your first move each and every payday.

For many, this is the best approach. It’s easy to have good intentions, vowing to save whatever is left over when the pay period comes to a close. However, when you go that route, the chances that you’ll choose to spend that money instead rise dramatically.

By moving your cash into savings right away, you avoid temptation. Plus, you make saving (and, subsequently, your future) a priority, and that can make a big difference.

2. Practice Mindful Spending

Many people spend money on a whim. They see something intriguing and decide to toss it in their cart, all without giving it much of a second thought.

While the occasional splurge isn’t a bad thing, it is problematic if you’re doing it without any consideration. Complacency can come back to haunt you, especially on the financial front.

Instead of making a purchase reflexively, strive to be mindful of your spending. Before you get anything that isn’t a genuine need, reflect on the item or service. Consider whether buying it moves you toward your larger goals or aligns with your priorities. If the answer is “yes,” then it could be alright to proceed. But, if the answer is “no,” you may want to skip the purchase.

3. Tracking Is a Must

Trying to live without a basic budget or insight into your spending patterns usually leads to trouble. A lack of understanding about where your money needs to go as well as where it’s going can be detrimental, especially if you are falling short of your financial targets, frequently miss payments, and aren’t moving toward your goals.

When you don’t have a budget or track your spending, you may not realize what is happening to your income. Often, once people take a look, they are startled by how much they are spending in certain categories.

By tracking your obligations and spending, you are creating opportunities for positive change. You’ll know where your money should be going and where it’s actually ending up. If something isn’t aligning with your objectives, then you can choose to handle the situation differently.

4. Automate What You Can

Automating your finances is usually a smart move. If you set up an automatic transfer from your checking account to your savings that aligns with every paycheck, paying yourself first becomes easy. You won’t have to worry about remembering, which removes a significant burden.

Then, if you set up automatic bill payments, you can ensure that you don’t forget to pay a critical bill. Not only can this give you peace of mind, but it also preserves your credit. A single missed payment can reduce your credit score dramatically, potentially by 110 points initially. Plus, that stays on your report for seven years. To make matters worse, you may also owe the lender a late fee, adding insult to injury.

Automating means you don’t have to worry about whether your bills are being paid. As long as you have enough in the bank to cover the cost, your payments will handle themselves.

5. Send More to Your Debts

Paying even a little bit extra to your debts can make a massive difference over time. If you have any cash to spare, send it to your highest-interest debt. That way, you can chip down the balance faster, allowing you to pay less in interest over time.

Once you get that debt handled, redirect that payment (including the extra amount) to your next highest interest debt. Then, repeat that process until you are debt-free. That process is called the debt avalanche, and it’s an incredibly popular method for handling debt while paying the least amount in interest along the way.

If you need a quick win, then the debt snowball method is a viable alternative. You’ll pay a bit more in interest along the way, but you’ll conquer your first debt faster. As a result, you might have an easier time maintaining momentum, and that can matter both in the short- and long-term.

By overcoming your debt, you are improving your financial life. When you have fewer obligations, you need less money to live. Then, you can send more to savings, get a house faster, or even retire earlier. Achieving your financial goals will be easier, making it worth the effort it takes to pull it off.

Do you have any other tips that can help someone develop better money habits? Share your thoughts in the comments below.

If you enjoy reading our blog posts and would like to try your hand at blogging, we have good news for you; you can do exactly that on Saving Advice. Just click here to get started.

Making Use of “Extra” Unemployment Money

June 10, 2020 By Trey LaRocca Leave a Comment

Due to the coronavirus epidemic, unemployment payments have seen a pretty hefty increase. The CARES act implemented an extra $600 per week for unemployment recipients, making the weekly payouts go up as high as $1,050. This is much more money than many of these unemployed workers were making while employed, and this calls for some discussion.

While many sites are talking about the moral implications, we aren’t here to drag you down with that. Rather, if you’re one of these lucky people, we are going to show you the best uses of your extra cash. With all of the stress surrounding you right now, it is time to figure out how we can better your life through it all.

Emergency Savings

First things first, the main takeaway from this epidemic has been the importance of liquid savings. Retirement funds are great, but if you don’t have liquid cash for emergencies, you could end up in some seriously sticky situations. So, start by making sure that you can get at least $1000 in savings.

If you are already there, or pretty close, you should try to load up the savings until you have enough to cover 3 months of rent and bills. This will ensure that you don’t have to fear for your livelihood if emergencies come up later on down the road when you are back at your normal pay. The peace of mind itself is worth the effort here.

Pay Off Debts

If you have a couple thousand on credit cards, it is time to take care of that. Got a car that is almost paid off? Let’s get that handled as well. If you are making more than you made at work, then dedicate all of that extra to paying off your debts. It may seem like a bit of a buzzkill, but getting these payments off your back will make your regular salary feel bigger. This is because it won’t be bogged down by monthly expenses related to your debts.

There is nothing like the freedom of finally being out of debt, and the extra money in your pocket each month is a sweet bonus. The cherry on top of it all is the interest you won’t have to pay on things such as credit cards. Do yourself a huge favor, and get the debtors off of your tail.

Buy a Cheap Car With Cash

If you don’t have a vehicle right now, then you may want to get one. As we have discussed before, all you need is a few grand to get yourself a great ride. There are vehicles that are reliable, comfortable, and even fast in the $2,000-5,000 range. This shouldn’t be too hard of a range to afford if you’re making almost $1,200 more each paycheck. Once you have done this, you will be one of the lucky few to get out of this with a new (to you) ride. Even luckier, you won’t even have a car payment! This one is really only if you need a car, or can get rid of your old one without losing money. For example, I sold my 2011 BMW 328i during this quarantine so I could ditch my payment. What I ended up with was a beautiful $4,000 1996 Corvette.

If you enjoy reading our blog posts and would like to try your hand at blogging, we have good news for you; you can do exactly that on Saving Advice. Just click here to get started. If you want to be able to customize your blog on your own domain and need hosting service, we recommend trying BlueHost. They offer powerful hosting services for $3.95/month!

Here’s How to Use a Weekly Savings Plan to Improve Your Budget

June 9, 2020 By Kathryn Vercillo Leave a Comment

I recently attempted a no-spend month challenge. However, I didn’t succeed because I made several money planning mistakes. I considered trying it again for June. Then I changed my mind. Instead of doing a no-spend month, I’m trying something different. I’m using a weekly savings plan to improve my budget. This seems like a more practical approach for me given my current financial state.

What is a Weekly Savings Plan?

I should note that a weekly savings plan is very different from a no-spend challenge. However, in both instances, the point is to save money.

My goal with the no-spend challenge was essentially to spend as little as possible. Therefore, I would save as much as possible.

Similarly, a weekly savings plan is all about saving money each week. However, it may or may not be about “saving as much as possible.” Rather, it’s about setting a weekly savings goal and sticking to it.

This allows for more wiggle room than the no-spend challenge. After all, if I have $500 left at the end of the week, after paying bills, then with a no-spend challenge I wouldn’t spend any of that. If I’ve set a weekly savings goal of $300, I would have $200 left for spending. If it’s a struggle to not spend any money at all, that extra spending money can make things easier.

Benefits of a Weekly Savings Plan

Obviously, then, the benefit of a weekly savings plan as compared o a no-spend challenge is that you can still spend some money. Not having any frivolity throughout the course of an entire month can be daunting. It’s easy to fall off that horse, as I did last month.

In contrast, a weekly savings plan is a positive goal. “I’m trying to save this much” vs. “I’m not allowed to spend.” The positive twist makes it feel more doable. It is easier to stick with.

Of course, this would be true of any savings plan that’s framed as a goal. So what specifically makes the weekly savings plan a great idea? What’s most true for me, particularly as a freelancer, and particularly during pandemic time, is that it’s a very short-term goal that keeps resetting at the start of each new week. This is great because:

I don’t currently know exactly what I’m going to earn each month. Between changing jobs and clients making late payments due to their own COVID hardships, my income just isn’t clear. It’s a lot easier to see what I made last week or even to predict what I’ll make next week than it is to look at the entire month ahead. Therefore, a weekly savings plan makes a lot of sense right now.
I only have to meet a one-week goal. Therefore, the actual amount of savings could be tiny. It’s doable. And yet, it adds up. I get to save money for an emergency without feeling the pinch of setting aside too much at one time.
If I fall off course, I can easily reset the following week. Once I fell off course with my no-spend month, it felt like, “well, that didn’t work” and I kind of gave up. But this plan resets every single week. Hopefully, I’ll save the money each week. However, if I don’t, I can start again the next Monday.
The weekly reset also means that I can consistently recalibrate my goal. If it turns out that I’m not realistically able to save as much as I thought, I can review my budget. I can see where to make changes. And, if I’m lucky, and it turns out that I could save even more, then I can make a new plan in that direction as well.

How to Create a Weekly Savings Plan

So, does this sound good to you? Great. But how do you do it? Here’s my approach:

Where Do You Want to Put Your Savings?

What savings accounts do you already use? Is this where you want to put your money? I have two major savings accounts: a small one trough my regular bank and another high-interest savings account through WealthFront. I intend to put my weekly savings into the WealthFront account. But do what works for you, depending on how easily you do (or don’t) want to be able to access your savings.

Where Can You Pull Money From?

Before asking yourself how much you want to save each week, first ask: where could I stop spending? I combed through all of my subscriptions and spending habits to discover where it would be extra easy to cut back. For example, I was paying $19.99 per month for Lyft Pink. However, under quarantine, I’m not using Lyft as much. So, I can easily pause that account. Instead of spending that money elsewhere, I can put approximately $5 per week into my savings account.

Check to see if you can cancel the following things and redirect that money to savings:

Delivery service subscriptions including those associated with Amazon and Postmates
Streaming TV services such as Hulu or Netflix
Other monthly streaming services such as Audible or iTunes
Gym and spa memberships, especially if you aren’t attending during shelter-in-place
Online storage systems that you might not be using such as Dropbox or Google Drive

Similarly, it’s a great time to review where you might be able to reduce spending. For example, have you checked for discounts on your phone bill or cable bill recently? If you can save $10 or $20 per month, that’s money that can go into your weekly savings plan.

In other words, look at every single monthly subscription that you pay for. Cut out what you can. Divide the number you were paying monthly by four and add that to what you put into weekly savings.

Automate Your Weekly Savings Plan

As long as you aren’t on the brink of running out of money in your checking account, I highly recommend automating your savings. Once you’ve figured out how much you can save each week, set it up so that your checking account automatically transfers that amount weekly into savings. For example, if you can save $20 per week, change your account settings to automatically transfer $20 from checking to savings every Monday.

Do a Weekly Review

This part really helps. At the end of each week, review your money. Did you earn what you expected? Did you spend what you expected? As a result, did you save what you expected? If you have to adjust your weekly savings plan accordingly, do so.

Most importantly, check if you have any more money at the end of the week than you anticipated. If you do, set aside a portion of that as bonus savings for the week. You might want to create a rule. For example, “I will add 10% of any extra money for the week to my savings account.”

Can You Earn More In Order to Save More?

Whenever you create a savings plan, it’s important to also look at where you might earn more income. What could you do this week in order to have more money next week? Could you do a quick freelance gig? Maybe you could declutter and sell some items? You might put all of your extra income into your savings. Alternatively, you might put a percentage of what you earn aside each week.

Other Weekly Savings Plan Ideas

My approach is only one way to do a weekly savings plan. Here are a few other options:

Set a specific savings goal for the year, quarter, or month. Then divide that accordingly to figure out what your target weekly savings goal is. Plan your budget to accommodate this goal. This is especially helpful if you’re saving up for something specific such as a wedding or a vacation.
Try an incremental weekly savings plan. Save $5 in week one. Save $10 in week two. Then, save $20 in week three. You can keep adding it up throughout the year. Alternatively, you can start over at the beginning of each month. This is a low-key way to challenge yourself to save more. There are many variations on this. Check out the 26-week savings challenge and the bi-weekly savings challenge as two examples. The Daily Nickel Challenge is yet another variation on this.
You can also do the reverse of the incremental plan. You can start by setting aside a higher amount each week for one month and then a little bit less per week the following month. Here’s an example of this kind of plan.
Use a physical calendar to mark down what you get paid and what you “owe” yourself each week for savings. Here’s more info on that.

Do you prefer to budget by the week, the month, or the quarter? Why does it work for you?

How to Use a Retirement Withdrawal Calculator to Retire Sooner

June 3, 2020 By Tamila McDonald Leave a Comment

When you plan your retirement, there’s a lot of math involved. As a result, many people turn to retirement withdrawal calculators to estimate what they will have available when the time comes based on their actions today. However, by using a slightly different approach, you can actually figure out how to retire sooner by using a retirement withdrawal calculator. If you want to see how that works, here’s what you need to know.

Choose a Robust Retirement Withdrawal Calculator

Not all retirement withdrawal calculators are created equal. Some have more options and features, allowing you to tweak various inputs, adjust certain assumptions, and make other changes. That will enable you to experiment by altering your scenario, making it easier to visualize how specific adjustments to your investment strategy could pay off.

Different calculators offer different benefits, so you may want to explore a few along the way. Here are some great starting options that are worth exploring:

If your goal is to potentially retire before you are eligible to make withdrawals from your retirement account without a penalty, then you may want to explore the Wells Fargo Early Distribution Costs Calculator. It helps you assess the tax implication and fees if you take distributions from a 401(k), 403(b), 457(b), or similar plan before reaching full eligibility age.

Define What Early Retirement Looks Like

For many, early retirement doesn’t involve fully stepping away from the workforce. Instead, it’s a transition into a different kind of professional life. For example, it may include leaving a full-time, high-stress job and shifting into a less demanding part-time role. Alternatively, you may want to freelance occasionally, only picking up projects that feel like a great fit.

Before you do any additional calculations, define what early retirement would look like for you. Determine whether you could have a source of income aside from your retirement savings. That way, you can factor that into your math, allowing you to get a better idea of when walking away from your current professional paradigm is viable.

Assess Every Figure Carefully

When you use a retirement withdrawal calculator, you have to make some assumptions. For example, you have to estimate how much you’ll need each month and what you’ll pay in taxes. The issue is, many people get these figures wrong, at least to a degree.

For instance, when it comes to monthly income requirements, are you factoring in the cost of your mortgage? If yes, is that going to be an expense you’ll shoulder indefinitely? In many cases, your mortgage may disappear before or not long after you retire. That eliminates a major cost that you’ve incidentally assumed you are covering until death, dropping your monthly income needs dramatically for at least a portion of your retirement.

Similarly, using your current tax rate in the calculation might be a mistake as well. You need to see if your income needs will decline during retirement. If so, then you might fall into a different bracket.

Many people also forget to factor in Social Security benefits. As a result, they mistakenly believe they’ll need to pull out more from their retirement account than is necessary to provide their target monthly income.

It’s important to factor in Social Security when you plan for retirement. You can head to the mySocialSecurity portal to see a personalized estimate of what you’ll receive once you are eligible, making it easier to account for this income source while you’re planning.

Ultimately, you want to take a hard look at every figure the calculator requests. Make sure what you are inputting is an accurate reflection of how things will proceed. While being perfectly spot-on isn’t possible, as there are situations that are challenging to predict, you want to be reasonably close. That way, you can see how far your money will actually go.

Decide How to Make Early Retirement Possible

After going through the steps above, you may discover that you can already plan on retiring early. For some, no changes will be necessary to make that happen.

However, if it looks like you are falling short, you can make choices based on the data you’ve collected. You might determine that saving more in your retirement account, opening and funding a secondary account, or saving and investing separately is the best move. Securing a higher income could also be an approach, giving you more money to set aside. At times, finding ways to cut your expenses can be the simpler road, reducing your monthly income needs so that your account can support an early retirement.

In the end, multiple paths could be viable possibilities. And, with the retirement withdrawal calculator, you can estimate the impact of every decision. That way, you can select an approach that bests meets your needs, ensuring your retirement dreams can come true.

Can you think of any other ways people can use retirement withdrawal calculators to retire sooner? Share your thoughts in the comments below.

If you enjoy reading our blog posts and would like to try your hand at blogging, we have good news for you; you can do exactly that on Saving Advice. Just click here to get started.

5 Things I Did Wrong With My Challenge to Spend No Money in May

May 28, 2020 By Kathryn Vercillo Leave a Comment

Back at the end of April, I realized that I needed to save a lot of money really quickly. I decided to set myself a challenge to spend no money in May. Of course, I knew that I would have to pay certain things, such as rent. But I decided to try not to spend anything above and beyond the unavoidable costs of living. It seemed like a good idea. However, I failed at it. Here are the five things that I did wrong with my challenge to spend no money all month.

1. Failure to Set SMART Goals

If you want to make and stick to a budget, then one of your best bets is to use SMART goal setting. This would ave served me well with my challenge to spend no money. If I had been more specific, creating measurable goals for myself, then I might have stuck to the plan better. Instead, my plan was too vague.

My plan was simply not to spend money unnecessarily. I defined necessary as: “

2. Ignoring the Strength of My Cravings

The number one thing that I consistently spend too much money on is food. I spend money on farm food delivery, ordering takeout, getting stuff at the grocery store, shopping at the farmer’s market. I buy high-quality, local, small batch food. It’s not cheap.

I told myself that I was going to be able to just “shop the fridge” for the entire month of May. Technically, I have plenty of food in my pantry and my freezer. I got a big farm food delivery right at the start of the month. I should have been able to stick to my challenge to spend no money on food.

Nevertheless, I broke down within the first third of the month. I got bored of the food I had at my house. I developed stronger and stronger cravings. Tasty, satisfying food sounded too good to pass up. In this instance, I think I should have budgeted for a certain amount of treats. I didn’t, so I just let the entire plan fall by the wayside.

3. Giving Up Too Quickly

My big failure, truly, was not getting back up on the horse once I fell off. For example, once I ordered takeout once, I gave in. I didn’t try all that hard to stick to my challenge to spend no money all month. I let myself fall into that pattern of, “well, I already messed up, so I might as well not bother now.” I didn’t go crazy spending money on everything, but I did stop trying to restrain myself on food spending. Inevitably, that led to other slip-ups as well.

The lesson here is that as soon as you make a “mistake” in any plan, you should get right back to the plan. Don’t wait. If you’re on a diet, and you eat a bite of chocolate cake, that’s okay. Be gentle with yourself. However, don’t use it as an excuse to eat the whole slice, then the whole cake, then cake every day for a week. The same thing is true when it comes to money challenges. If you spend, it’s not a license just spend more. It should be incentive to start anew with the original plan.

4. I Let My Puppy Change My Plans

What can I say? I have an adorable young puppy who currently dictates a lot of the choices that I make. It’s hard raising a puppy! It’s also expensive.

Of course, I accounted for some of the puppy’s costs in my original challenge to spend no money in May. I spend a lot of money on my dogs’ food. I knew I wasn’t going to “shop my fridge” for the dogs. Therefore, their food costs were part of my “must spend” exceptions. That’s okay.

However, there were a lot of costs I didn’t anticipate. I could have resisted most of them, and yet I opted not to. For example, I decided that my puppy needs to start going out twice per week with a dog walking pack. I just can’t give him the exercise that he needs without compromising my own work flow. I did consider fee-free options. For example, I thought about partnering with another local pup owner, offering to take their dog twice a week if they would take mine twice per week. But ultimately I decided that the ease and convenience of an established pack made the most sense.

They don’t invoice me until the end of the month. Therefore, I technically didn’t break my challenge to spend no money. I won’t pay them until June. However, I’m aware I’m accruing unplanned costs. Moreover, it led to additional immediate spending. He didn’t have a good collar or a tag with his phone number on it. I didn’t want him going out without me if he didn’t have those things. So, off to the puppy store we went.

And we are actually going to have to go again, because I just realized today that this chews-everything puppy chewed his collar to the point that it won’t work anymore. Speaking of chewing things, I also paid to replace my phone charger cords because he chewed through those. Ah, the unexpected costs of a puppy.

5. Failure to Tie The Challenge to My Deeper Values

Ultimately, I think the real problem is that I wasn’t truly committed to my challenge to spend no money. I didn’t pay attention to the “R” part of SMART goal-setting, which is the rule that goals must be “relevant.” In other words, you are most likely to stick to a goal if you find that it ties in to your deeper core values. I do think saving money is important. But I hadn’t really done the deep work around this.

I wanted to save money because I was feeling the strain of financial changes. However, I suppose that deep inside, I resented those restrictions. Since I hadn’t tied the goal to things I believe in, it was easy to slide off track. Once I had, it was easy to just keep sliding.

So, I’ll have to rethink things. I do still need to save money. Should I try another challenge to spend no money in June? If I incorporate what I learned here, I might be able to make it work. But perhaps a stricter budget with some freedom to spend a little might work out better for me. I’ll have to think on it.

What most often holds you back from sticking to your financial goals?