Money Relationship » Saving

The Root of Our Money Problems

Adam — Mon, 14 Jun 2010 12:00:24 +0000

We finally found the root of our money problems. Want to know what it is? According to my wife, it’s me.

When she said that in the car to me the other night, I laughed it off. But as I sat there and thought about it, she was absolutely right. I brought the most debt into the marriage and I probably would still be racking it up if I wasn’t with my wife. I was the most reckless with money before we got married.

But there are still things I do today that damage our finances. For one, I always seem to suggest eating out. Actually, my wife said “I was the problem” after I suggested grabbing something quick to eat. We have a ton of food at home and yet I always seem to want to eat out no matter where we are. What the heck is wrong with me? I really want to be debt free and yet I always want to spend.

I mentioned before that we want to still enjoy some “finer things” while getting out of debt. We would like to eat out once or twice a month and go to the movies occasionally. It just helps us from going insane. However, I have taken the eating out to an extreme. If I had to guess, I would say we ate out about a dozen times in May. Most were the fast food variety but still expensive none the least. About 90% of those occurrences were my idea.

I guess you could say that I have been a big consumer for most of my life. I grew up on a family farm and started earning fairly good money (for a kid) by the age of 10. I did what most kids would do at that age with money. I spent it and I spent it ALL. However, I earned way more than most kids my age and I got to buy the more expensive items that many other kids only dreamed about or begged their parents for. Life was good.

What I guess I am trying to say is that old habits die hard. I would imagine that many of you are having this same problem. It’s hard to go from one extreme to the next and I’m finding that out that hard way. I once spent with wreckless abandon and now I am trying to pinch every penny. Life is hard.

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What would you say has been the toughest for you? Cutting spending? Setting up a budget? Opening up the lines of communication between you and your spouse?

The Root of Our Money Problems

Packing Lunch For Work Just Got Easier

Adam — Wed, 10 Mar 2010 11:00:17 +0000

Over the past two years of reading personal finance blogs, I’ve seen plenty of articles on packing lunches to save money. As much as I love the idea, I just couldn’t make it work. I absolutely HATED packing my lunch. Every time lunch rolled around, my sandwich was the soggiest thing I ever touched. It was disgusting.

It was so disgusting, I often found myself heading out to Subway or the local pizza shop for lunch (even with a soggy sandwich in the fridge). I was averaging about $7 a day and that added up to about $140 a month. Talk about a budget buster! Peer pressure also played a role but that’s no excuse.

Well, I am here to say that I found a solution. I started taking everything for my lunch in separate pieces. In other words, I assemble my sandwich at work and not at home. Wow, does that make a huge difference! I love packing now. I’m not sure how much my colleagues like the mayo, cheese and ham in the fridge, but they will have to live with it (and hopefully not eat it).

All I know is, we will now be saving about $140 a month on me not eating out for lunch. Also, I will be able to take leftovers to work once I start working in DC. You always need some variety!

Have any tips on motivation for packing your lunch? Sometimes it’s not as easy as you think….

Packing Lunch For Work Just Got Easier

5 Motivational Tips to Start Saving Today

Adam — Tue, 02 Jun 2009 13:00:33 +0000

One of the hardest things in a person’s financial journey is saving. We are a nation that lives in the now and saving for something more than 6 months away can be difficult. Heck, most of my financial regrets have to do with not saving enough money. All I can say is that it’s just hard and sometimes you just feel like the kid in the picture below.

That got me thinking about some ways to help motivate myself to save. Just like any other goals, if you do not think about saving constantly and strive to do it, you just won’t save.

1. Visualize the Prize

One of the easiest ways to save for a particular goal is to include visual reminders of that goal around your house.

Want to retire to a remote island at the age of 55? Place some pictures of exotic beaches on your refrigerator or bathroom mirror. The picture will stick out like a sore thumb and constantly remind you of what you are saving for. This tactic can work for almost any of your financial goals including cars, homes, college education, bags full of cash, etc.

2. Write Your Savings Goals Down

I wrote a post last week that gave a step-by-step guide to creating a financial mission statement. I think this is a very important step in taking responsibility for your family and finances. Sitting down with every member of your household and explaining your financial goals will get everyone on the same page. With everyone on board with the financial mission of the family, things will run a little smoother.

3. Save the Savings

This is something that I picked up over at MoneyNing. One of his readers saved his money every time he had the urge to spend. For example, if his urge was to eat out, he would eat in and then save the money he would have spent eating out in a jar. After a few weeks, it amounted to quite a large amount. It really let’s you know how much money you sometimes waste on things that are not needs. Give it a shot and you may be surprised at how much you can save by altering a few things in your financial life.

4. Automate Your Savings

This is a big tip that Ramit at I Will Teach You To Be Rich (a great author for twenty-somethings) talks about a lot. Obviously, if you do not see a certain amount of money in your account, you will not be yearning to spend it. That is how automatic saving works. You set up different accounts and have the money automatically deducted from your paycheck or checking account. Since it is done for you, you do not even have to think about it. You should do this with your 401(k), IRA, emergency fund, vacation fund, etc. If you have everything set up to automatically go where it needs to, it also eliminates the “I forgot” syndrome.

5. Keep on Learning

You are already on the right path by reading this blog and many other blogs on personal finance. Continue to educate yourself about the many different areas of personal finance and it will make saving so much easier. Whether you want to learn about frugal living or starting a budget, there is something out there for you to read and learn. You just have to go out there and do it.

Believe me, I know it’s hard to save. But if you put your mind to it and focus on the final destination, it will make attaining your savings goals that much easier.

Does anyone have any additional techniques that they personally use?

5 Motivational Tips to Start Saving Today

Create a Financial Mission Statement to Stay Focused

Adam — Thu, 28 May 2009 13:00:04 +0000

Lately, I have been thinking about ways to help my fiancee and I focus on our financial future. We are still young (in our mid 20′s) and have plenty of time on our side, but we seem to be lacking that urge to focus intensely on the task. The other week, I thought it would be beneficial if we created a financial mission statement. Every organization has a mission statement so why can’t a household have a financial mission statement?

What Is a Financial Mission Statement?

A financial mission statement outlines your households mission, purpose and reason for being financially secure. A good financial mission statement will accurately explain what your household wants to achieve financially in the future and how you are going to get there. It will also incorporate your values. In other words, if you want to thrive financially without sacrificing your charity donations, you should include that in your mission statement.

What Should Be Included In a Financial Mission Statement?

1. What problems or opportunities need to be addressed?

In this section, you should include the problem areas of your families finances and how you are looking to correct them. This is probably going to be the most important part of your statement. If your main problem is paying off debt, you want to include some motivational keywords to make you want to complete this task fast. Here is an example:

The financial mission on the Smith household is to remove the vicious hold that debt has on us. We will strive to not increase our debt and aggressively pay down our existing debt.

Have no debt? Good for you! You should also use this area to focus on financial opportunities that may be coming up in the future. Looking to fully fund your Roth IRA each year? Put that in this section! Here is an example:

The financial mission of the Jones household is to fully fund both of our Roth IRAs each year. We will also strive to place an additional $3000 into our 401(k)s after these are funded.

That statement got to the point quickly and stressed the areas that the household would like to focus on. You may even want to put additional motivational words in the statement to get you pumped up to save.

2. What are you going to do to address the needs of your finances?

Here, you will state the path you are going to take to meet the goals that you addressed in the previous section. If you said that you wanted to pay off your debt, explain how you plan on doing it. Here is an example:

We want to aggressively pay down our debt by taking on additional part-time work and put into place several frugal habits. We realize that many of our previous spending habits were hurting us and it is time to change those habits.

That statement focused on how you are planning on paying down the debt. It gives you things to focus on to ensure that you complete them.

3. What are the values of your household and how will they help you achieve your goals?

In this section, you should interject your values into your financial mission statement. Do you hate debt? Do you want to give 10% of your income to charities? Do you feel that all parents should pay for their kids college education? This is the section to include those things in. Here is an example:

While completing our drastic debt reduction, we will continue to support our local charities. Also, in our quest to retire at age 55, we still want to enjoy certain things in life such as traveling.

Combine to Get the Finished Product

Now that you have finished each section, you should combine your thoughts and goals into a complete financial missions statement. Keep in mind that the statement should be motivational. You want everyone who reads it in your household to want to remain focused on the financial tasks at hand. Here is an example of a finished financial mission statement:

The financial mission of the Jones family is to remove the vicious hold that debt has on us. We will strive to not increase our debt and aggressively pay down our existing debt without sacrificing our gifts to local charities. After we erase this debt, we will focus intensely on increasing our savings so that we may retire at age 55. We want to do this without becoming cheapskates. We also want to teach our children the ins and outs of money at an early age as we do not want them to have the same financial problems as us.

That mission statement gets to the point and conveys what the Jones household wants to achieve. It may not include all of the small things that will most certainly come around but it at least keeps them focused on the financial task at hand. This statement should then be placed in a prominent location in the house. I recommend placing it on the refrigerator in a bright color for all to see.

It’s time to get working on yours. Sit down with your family and discuss finances. There is no better time than today to get aggressive with your finances!

Create a Financial Mission Statement to Stay Focused

Money Genie: I Grant You 3 Financial Do-Overs

Adam — Tue, 26 May 2009 14:00:34 +0000

Today is your lucky day! The personal finance genie has graced this site with his presence. What’s he doing here? Well, he has come to grant you 3 financial do-overs.

photo by: tony newell

What Would You Change Financially If You Had the Chance?

The genie wants to know what financial decisions you would change if given the chance. Do you wish you began investing at 18? Do you wish you never set eyes on that guy giving away t-shirts in college if you signed up for a credit card? Here are my 3 wishes:

1. I wish I never saw a credit card in my life

I’ve never wanted to get too much into detail about our personal finances because some people who read this blog obviously know me. However, I will admit that I have made some bad decisions concerning credit cards over my lifetime. I received my first card at 18 and I could just feel the immense power that it had. That power caused me to feel financially invincible and it caused me much financial harm. Let’s just say that it will take me quite awhile to dig myself out of this financial hole that I have dug.

If this wish came true, I would live my life with MUCH less stress. As many of you know, debt puts a huge weight on your shoulders. You have to continually focus on the final outcome of being debt free. Having that vision helps you continue the battle and kill debt a lot faster. I cannot wait for that day to come!

2. I wish I fully funded my Roth IRA every year since I opened it 7 years ago

All I can say is that I started out on the right path. I opened a Roth IRA when I was 18 (actually, my uncle did it for me). However, over the years I completely neglected it and managed to only put around $1,500 into it. I know a lot of you will say that I lucked out because of the market collapse, but I do not see it that way. If I would have put the max in each year ($31,000 total) and invested it in an index fund (Vanguard Total Market), I would only have around $27,000 in the account. Frankly, that sucks. However, that would be $26,000 more than I currently have in it and if I had done that every year, I imagine my credit card debt wouldn’t be as high.

3. I wish I would have paid my way through college and not taken on student debt

Looking back, I know I would have been able to pay my way through college (undergraduate AND graduate). Yet what do I have to show for it? Many times the average debt of a typical college student. In plain english, I was stupid. I really have no idea where the money went that I earned while working during college. It could have easily went to my school and yet it didn’t. I just want to scream from the hilltops for being so dumb. Don’t get yourself in the same mess I did. PAY CASH FOR COLLEGE!

I really wish there was a money genie and he could take care of all my financial woes. Unfotunately, there isn’t and I will have to live with my decisions and learn from them.

What are your top three financial mistakes? Share them with us in the comments!

Do you have a blog? Share your financial do-over wishes with your readers! Link back to this article so we can have a collection of them all. Hopefully this can be a large resource for younger individuals (college students) on what NOT to do financially at a young age.

UPDATE:

The genie has been making his way around the blogosphere. Check out some of the places that he has been:

Give Me Back My Five Bucks

Punch Debt In the Face

Fighting Foreclosure

My Financial Recovery

Money Genie: I Grant You 3 Financial Do-Overs

I’m Addicted to Soda (and Spending Lots of Money On It)

Adam — Thu, 21 May 2009 16:00:49 +0000

Hello, my name is Adam and I am addicted to soda. Believe it or not, that was hard for me to type. Although, as I write this, I have gone 3 days without a drop of soda (or caffeine for that matter) and the headaches have begun. Wish me luck on this tough task!

Where It All Began

I have been drinking soda for as long as I can remember. Both of my grandfathers drank it and I think that is where my addiction began. When I was younger, my one grandfather used to take me to the local distributor once a week to return his empty Pepsi bottles (they refilled them back then). While there, he allowed me to get a whole bottle of Pepsi and some Munchos (does anyone still eat those?) for the ride home. I used to drink Pepsi at both of my grandparents on a daily basis.

This trend continued throughout my life until Monday May 18, 2009. Since that date, I have pledged to stop drinking soda for my health and my wallet.

How Much Did This Addiction Cost Me?

I have never really thought about how much this addiction has cost me over the years, so I figured now was a good time to find out.

Past 5 Years

I would say that I have been paying for my own soda for that past 5 years. Now, let’s assume that the average price over those 5 years was $1.10 per 20 ounce bottle (that is usually what I drink) and I had 1 bottle per day for the entire year. That means I spent $2099 on soda over that time period! Sounds a bit ridiculous right?

Over a Lifetime

How much would I spend if I keep drinking soda over my lifetime? This requires a little time value of money but I will skip all of that and just give you the number. For this example I assumed that the average price of a 20 ounce soda is $1.25 now and it will increase by 3% (inflation) each year. I also assumed that I would continue to drink soda until age 75 (50 more years). Want to know what the final number is? I would spend just over $51,000 on soda alone!

Technically, I didn’t quit drinking soda because of money. I did it because I am starting to focus more on my health. As many of you know, soda is loaded with sugar and all of the caffeine cannot be good for you. All I know is that this is going to be VERY HARD as I have not gone more than 3 days without soda in over 15 years.

Anyone else have a costly “addiction”?

I’m Addicted to Soda (and Spending Lots of Money On It)

Car Wash Costs May Make You Think Twice

Adam — Fri, 24 Apr 2009 13:00:22 +0000

This is a guest post from the future Mrs Adam. As you will see, her writing style is quite different from mine and hopefully it will give you a break from my mundane babble. Hopefully, I can get her to post some more things in the future.

With summer time right around the corner, I felt it necessary to give some insight on the grand task of washing the car. Most of us lead very busy lives with hectic schedules, many places to go and people to see. This type of schedule often leads to slacking in certain areas like washing our vehicles. Since we spend a good penny on our automobiles and should want to keep them clean, most of us probably find ourselves saying, “Thank God for the car wash”! Right? After all, some of us do not want to go through the hassle of reeling out the hose and filling up the sudsy bucket to spend an hour scrubbing away on the car. Especially when in 5 quick minutes you can be through a car wash with a spick and span ride. I say, to everyone that is thinking they are very guilty of being sucked into the car wash all too often, wait a minute and at least listen to what I have to say. Keep in mind that I am in no means discrediting the local car wash because after all, it has been there for me when I needed it most.

As far as costs go, it should be very obvious to us that it is expensive to go to a car wash (I am mostly referring to the kind that has all the wishy-washy scrubbers that you drive through and has an air dry at the end). For instance, to go to the car wash you can pay anywhere from $5-$8 depending on the type of “wash” you get. The more expensive washes claim to wash extra areas and sometimes even include a clear coat rinse. We may never know if these items, worth more money, are truly worth it. Anyway, if you were to purchase one of these car washes twice a month for a year, and let’s say you purchase the most expensive one because you are easily persuaded by all the extras, it comes to a total cost of $208 dollars. $16 dollars a month may not seem like a lot, but I know I would rather have it in my wallet to use for other items like milk, eggs, and bread at the grocery store. Some of us would probably never use the car wash that frequently, but there are some out there that may even go as far as once a week to the car wash…which is $32 dollars a month (perhaps those of us more obsessed about having a nice looking ride all of the time). With things like rain and dirt appearing all too often, I would say it’s not worth going that often.

Let’s list some benefits of going to the car wash:

1) It’s a place to go for those who do not have a place to wash

2) It’s quick

3) It’s convenient for people who do not have patience or interest in washing their own car.

Some pitfalls to going to the car wash are:

1) It is expensive!

2) It does not clean all the nooks and crannies of your car. There are always spots that still need cleaned after paying at the car wash

3) You have no control over what is being used on your car (soap, scrubbers, etc)

4) The drying process. If you have gone to one of those car washes that offer the “blow dry” feature at the end, then you already know that it never really gets your car dry. What ends up happening is an $8 car wash that should have made your car look awesome leaves it looking mediocre because either dust clings to your wet car when driving away or you ended up with water spots all over your car.

Now let’s take a closer look at washing the car yourself. You can go out and purchase all the items needed to wash a car for under $20. Once these items are purchased, you are as good as gold for a while, perhaps months, as long as you have access to a hose and a place to wash. This could end up saving you a lot of cash in the long run. Other than saving money, there are many other benefits to washing the car yourself.

The benefits of washing your car yourself are:

1) It gets you good exercise! Getting out and scrubbing the car is a great way to burn calories

2) During the nicer times of year it is a nice way to get outside to get some fresh air and sun. Even if it’s hot outside, just give yourself a mist with the hose. It actually feels pretty good!

3) You will get a much more detailed wash. Washing your car by hand gives you the ability to clean everything properly down to removing those pesky bugs that get plastered on the front bumper in the summertime. As mentioned before, the car wash will never remove all the dirt and grime, especially bug guts!

4) You have total control over the products used to clean your car. It is important to use decent car wash soap as well as a soft scrubber. Avoid scrubbers loaded with dirt and grime because the small particles could scratch the paint on your car. Ever wonder what kind of build up is in the scrubbers at the car wash?

5) The drying process. At home you can use a shammy to properly dry your vehicle to avoid water spots from appearing on your newly cleaned car

6) Pride. It is always nice to take a step back and look at a job well done after washing the car. There is nothing more satisfying than a nice shiny car

The pitfalls to washing your own car are:

1) You hate to wash the car

2) You do not have a sufficient place to wash the car

Now, I know that there are some of you out there that have read this, but still insist on using the local car wash for most of your washes and you have your reasons. But hopefully some of you that have been falling into the car wash routine will see the benefits to washing yourself and try it more often. I personally LOVE washing my car. It is a good stress reliever, I feel like I am getting some exercise, and I know that since I am paying a lot of my money for my car, I should be the one taking care of it.

Here are some tips for washing the car:

Many people may not know this, but DISH SOAP is VERY BAD for the paint on your car. Avoid using it at all costs. You can purchase soap specifically made to wash the car at any auto store and places like Walmart, Target, Sears, etc. I use soap by Turtle Wax that claims to put a waxy finish on your car. It’s nice.

If you truly want to keep your car in good shape, then taking care of the finish is important. Waxing the vehicle is essential in keeping the finish like new. Wax blocks harmful things from eating away at the paint on your car. You should wax your car AT LEAST once a year, but I would suggest every 6 months especially right after winter when your paint finish has been exposed to things like salt and calcium from the roads.

Lastly, Tires. To make your car have a complete clean look, cleaning your tires is important. Nothing compliments a clean shiny car more than a set of black shiny tires. Use a spray on foam from brands like Armor All after you are finished washing to make the tires look slick.

Any suggestions from other car washers out there on products that work for you would be great!

After reading this article are you more inspired to wash the car yourself, or will you continue to use the car wash despite of costs?

photo credit: pixel0908

Car Wash Costs May Make You Think Twice

Americans Starting to Save at the Worst Time?

Adam — Tue, 03 Feb 2009 14:00:46 +0000

Americans have been tightening the reigns on their money for quite a few months now. Just a few years ago we had a NEGATIVE savings rate. You know what that means? It means we spent MORE than we earned by using credit. Now, in the midst of this economic downturn we are beginning to save again and of course it’s at the wrong time.

Last Friday, the government reported that America’s savings rate rose to 2.9%. Of course, since savings is on the increase, spending is on the decrease. Many stores have already been affected by the decreased spending and it will only get worse. Just when this country needs us to spend our money, we are hoarding it.

Personally, I would love to see our country get out of this financial mess. I don’t think this new economic stimulus plan will get us out of it. The last one sure didn’t help. However, the fact that Americans are getting a financial awakening may help us in the long run. Americans have had a tough time saving in recent years and if we learn from our mistakes, this financial crisis may be the best thing that happened to us. That is for the future. The present is a different story.

Personally, we are saving money due to our wedding in July. If we were not saving for that, we would be paying down debt.

How about you? How has your personal savings changed over the past few months?

photo by: Daniel Go

Americans Starting to Save at the Worst Time?