Organization


This week, over at U.S. News – Money, there was a post by Sabah Karimi that we’d like to talk about today: “6 Worst Money Mistakes You Can Make In Your 20s.”

Your twenties are a very important time in your life. It’s the time where many people are finishing up their schooling and starting their careers. Some may be settling down, getting married, and starting a family.

Unfortunately, we often see people in their twenties neglecting their finances, to the detriment of both their current account balances, and their future retirement. Maybe it’s because they were never taught how to handle money responsibly. Maybe they just have the “I’ll deal with it later” mentality. Whatever the reason, there are plenty of mistakes people in the twenties make with their money.

Karimi gives her list of top mistakes:

  • “Fueling an overspending habit. Breaking an overspending habit during your 20s can prevent serious money problems later in life. Become a mindful spender and keep track of all your purchases.” – Overspending can be a dangerous habit at any age, and a habit you’ll likely carry over into your later years unless you break yourself of it when you are young.
  • “Living without a budget. Knowing how much it costs to live your lifestyle and what expenses you are responsible for every month can help you make better financial decisions throughout your 20s. Update your budget at least once a month, and track your weekly expenditures within the budget so you have a clear picture of where your money is going every month. Review your budget regularly to cut out extra expenses and contribute more toward your savings account when possible.” – If you have been following us for any length of time, you know we are firm believers in budgeting. Not only is it helpful for expense tracking, it can help you spot areas you may be able to save money in that you never would have seen before.
  • “Neglecting student loan repayment and forgiveness programs. About 1.6 million people are eligible to cap their monthly student loan payment at 10 percent of their income by enrolling in appropriate income-based repayment programs. In addition to income-based programs, there are several loan deferment and forgiveness programs designed to make your student loan payments as manageable as possible.” – It’s unfortunate that so many young adults have to start their careers (often with lower than ideal wages) saddled with so much debt. Making those student loan payments when you’re just starting out and not even sure where the money to pay for your rent is going to come from can be daunting. Be sure to look into what your options may be.
  • “Relying on credit cards to fill income gaps. If you’re counting on credit cards to pay for bills or take care of expenses you forgot to budget for, you will be setting yourself up for huge debt problems. Learn to live within your means by taking a close look at your finances with a realistic budget.” – Accurate budgeting can become important for this very reason. There will likely be times when using a credit card is unavoidable (i.e. for emergencies while you work on building up an emergency fund), but relying on them every month for your regular expenses (or to fuel an overspending habit), can cost you thousands of extra dollars in interest and years to repay. It’s just not worth the hassle.
  • “Living without health insurance. Medical bills are one of the biggest causes of bankruptcy in America. No matter how healthy you are, you must be prepared financially for a medical emergency.” – Obviously, health insurance is a major hot topic in the U.S. right now. Regardless of the upheaval, if you are lucky enough to find a job where health insurance is offered as part of your benefits, consider taking advantage. Not everyone has the opportunity, and even if it’s expensive, it can be a good opportunity.
  • “Trying to keep up with the Joneses. […] It’s easy to feel financially insecure in today’s social media landscape, where every major purchase is announced on Facebook and photos from expensive vacations are shared on Instagram. Don’t get lured into that spending frenzy. Your real friends will not care about what kind of cars you drive or whether you have the latest gadget. Figure out your priorities, and don’t let other people dictate your financial future.” – This is another problem that affects people of all ages. Feeling inadequate can cause people to make mistakes that don’t seem like such at the time. It can often fuel an overspending habit, and can cause you to make purchases that you could regret later.

Your twenties can be a time of new beginnings. It can be exciting and stressful at the same time. Don’t compound your stress by making these financial mistakes that could affect the rest of your life.

 

  • Disclaimer: The information on this blog is not meant for specific financial advice. The ideas/opinions stated are not suited for everyone, and readers should use their own judgment in applying them in their financial lives.
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This week, I (Dawn) read a post over at Get Rich Slowly by Lisa Aberle that really resonated with me: “Declutter and save your sense.” I’ve always thought of myself as an organized person, and in some ways I am. In other ways, not so much. The past few weeks, I’ve had the urge to declutter the house, but I’ve been at a loss for where to start. I look around and there just seems to be so much stuff, I can’t decide what goes, what stays, and if it stays, where should I put it?

This post came at just the right time. Aberle discusses this very topic, and has some great tips that I plan on implementing right away in my quest to declutter. Her stand is that when she declutters her life, her finances get decluttered as well. Here are her thoughts:

  • “Easier is the goal” – Basically, you have to make the decision on what is easier for your life. Is it easier to have an overflowing basement or garage filled with stuff you may never use, may not even want? Is it easier to keep things “in case” you may need them in the future? In most cases, if you really think about it, holding on to all that stuff does not make your life easier; it often just stresses you out (like it does me!).
  • “Just say no” – You can probably think of plenty of times that you brought something into your house that you didn’t want or need. Something you got for free, or bought on a good deal. Often, those items just sit around, taking up space, and not enhancing your life. So, Aberle says, “just say no.” You likely won’t regret not bringing it home.
  • “Purge” – This is my favorite one. There is something very liberating about purging. Just getting rid of the stuff, no contemplating where to have to store something, just tossing it. There are plenty of ways to do so. If you have the determination, you could try to sell your old items (through a garage sale, eBay, Craigslist, etc.), however, I wouldn’t recommend this course of action if you are prone to holding on to anything that doesn’t sell (get rid of what doesn’t sell!). Your best bet is likely donation or even the trash if the item is not worth saving.
  • “Be systematic” – This is always where I’ve fallen flat in the past. I purge and organize, and get everything cleaned up, and I feel proud of my work. But then things start to pile up again. The basement starts to look like a mess, and I have piles of paper everywhere. Once you go through the process of decluttering, you need to set up a system for all the stuff that is going to come into your house going forward. Where is it going to go? What is going to be trashed automatically? Once I go through this round of decluttering, I will definitely implement this step in hopes of keeping the house organized moving forward.

Aberle also recommends some sites to check out to help you get started. I would definitely check out her post if you are looking to do some decluttering yourself.

 

  • Disclaimer: The information on this blog is not meant for specific financial advice. The ideas/opinions stated are not suited for everyone, and readers should use their own judgment in applying them in their financial lives.

This past week over at U.S. News – Money, there was a post by Philip Moeller: “6 Key Steps in Retirement Planning.” Each one of Moeller’s steps constitutes great advice, but we want to concentrate on one in particular: “Keep solid records.”

Keeping records is not only important for your retirement planning, but for your finances in general. Do you know where all your important financial documents are? Insurance policies, trust documents, house deed, car title, etc? It’s unfortunate that many people do not keep these records in order, and many may not even know if they have copies available to them.

Getting everything in order should be the first step for anyone trying to get their finances on track (as we discussed in our very first blog post!). But keeping solid records must go beyond just keeping everything in order; it also must include who else knows your financial details.

It may not seem important to you now, especially if you are younger, but if something were to happen and you were not capable of handling your finances (disability or death), would your spouse or children be able to step in and take over?

Of course the process would be difficult, often for emotional reasons, for your spouse or children (or whoever your beneficiary is) to step in with your finances. But you have the ability to make the situation much easier on them.

Here are some of our thoughts on how you can do so:

  • Keep your spouse/beneficiary up to date on your records – This is especially important if the person is not actively involved with your finances. Make sure your beneficiary know where you keep all of your important documents, and if you make any changes to that location, update them on the change.
  • Make sure your beneficiaries know who they are – This becomes more of an issue if you don’t have a spouse or child to fill this role. Maybe you select a sibling or niece or nephew. If your relationship with your chosen beneficiary is not as obvious as a spouse or child, you may want to have a talk with them to ensure that know they have been chosen to be your beneficiary.
  • Make sure to include records for online accounts – This has become a real problem today with the popularity of online accounts and paperless statements. If you do all of your financials online, please be sure to let your beneficiary know your login information for those sites, including any email accounts you may keep important information. Otherwise, there is no guarantee that your beneficiary will be able to find that information.
  • Be open about your finances with your spouse and children – We know many people hesitate with this, and that such openness is not an option for some families. But if you are open with the truth about your finances with your family, they will have a much easier time of it if they ever have to deal with taking over for you.

Having to deal with your disability or death will be difficult enough for your family without adding the additional pressure or having to clean up your financials and put everything in order. Please try and make that process easier by ensuring everything is organized now.

 

  • Disclaimer: The information on this blog is not meant for specific financial advice. The ideas/opinions stated are not suited for everyone, and readers should use their own judgment in applying them in their financial lives.

Happy New Year! Now that it’s 2013, we’d thought we’d do a quick review of a post we first did in January 2012 (updated for 2013). We think everyone should take some time to review your finances at the beginning of every year.

Throughout the year, it’s easy to get distracted from your finances. Other things in life take up your time and energy, often leaving your finances in the background. As 2013 gets underway, consider setting some time aside to make sure your finances are in order. Working on the following now can help you avoid problems throughout the year when time gets away from you.

  • Review your budget – Take the time to review your budget, checking for any obvious changes that may need to be made. Research lower cost alternatives to expenses that seem to have crept up over time. Reallocate dollars that went unspent to expenses that had a shortfall. And if you don’t have a budget yet, create one!
  • Review and update your financial goals – Review the progress you made in the past year on your financial goals and add any new goals you may have. Take time to consider what your next step might be in advancing those goals. If your goals are no longer relevant in your life, think about what you want to do with any funds you may have collected for that goal.
  • Review your credit report – Help ensure that your identity is safe and that your credit report reflects accurate information. (www.annualcreditreport.com)
  • Prepare for tax filing – Even if you know you will be filing an extension, start collecting all the relevant tax information and documents as they start coming in. Ensure everything is ready and in order before you sit down to do your taxes or send the information to your tax preparer to avoid delays and mistakes. Also, if you find that you are getting a large refund or owe a large amount, take the time to review and adjust your withholding to put more money in your pocket throughout the year or ease the pain of a large tax bill next year.
  • Set up automatic bill pay – If you have not done so already, and it’s a service your bank offers, you should look into automatic bill pay. This will give you some relief during the year by paying your bills for you, so you won’t have to worry about setting aside time monthly to do so.

Obviously, doing the above will not make working on your finances during the year optional. You will still need to spend time on your finances, even if it’s just to make sure you’re avoiding mistakes and problems. But, the above steps will help set up your 2013 finances right.

 

  • Disclaimer: The information on this blog is not meant for specific financial advice. The ideas/opinions stated are not suited for everyone, and readers should use their own judgment in applying them in their financial lives.

 

Throughout the year, it’s easy to get distracted from your finances. Other things in life take up your time and energy, often leaving your finances in the background. As 2012 gets underway, consider setting some time aside to make sure your finances are in order. Working on the following now can help you avoid problems throughout the year when time gets away from you.

 

  • Review your budget – Take the time to review your budget, checking for any obvious changes that may need to be made. Research lower cost alternatives to expenses that seem to have crept up over time. Reallocate dollars that went unspent to expenses that had a shortfall. And if you don’t have a budget yet, create one!

 

  • Review and update your financial goals – Review the progress you made in the past year on your financial goals and add any new goals you may have. Take time to consider what your next step might be in advancing those goals. If your goals are no longer relevant in your life, think about what you want to do with any funds you may have collected for that goal.

 

  • Review your credit report – Help ensure that your identity is safe and that your credit report reflects accurate information. (www.annualcreditreport.com)

 

  • Prepare for tax filing – Even if you know you will be filing an extension, start collecting all the relevant tax information and documents as they start coming in. Ensure everything is ready and in order before you sit down to do your taxes or send the information to your tax preparer to avoid delays and mistakes. Also, if you find that you are getting a large refund or owe a large amount, take the time to review and adjust your withholding to put more money in your pocket throughout the year or ease the pain of a large tax bill next year.

 

  • Set up automatic bill pay – If you have not done so already, and it’s a service your bank offers, you should look into automatic bill pay. This will give you some relief during the year by paying your bills for you, so you won’t have to worry about setting aside time monthly to do so.

 

Obviously, doing the above will not make working on your finances during the year optional. You will still need to spend time on your finances, even if it’s just to make sure you’re avoiding mistakes and problems. But, the above steps will help set up your 2012 finances right.

 

 

  • Disclaimer: The information on this blog is not meant for specific financial advice. The ideas/opinions stated are not suited for everyone, and readers should use their own judgment in applying them in their financial lives.

As you know, we just went on a family vacation to Disney World. We travelled as a group of 8 people, 6 adults and 2 kids. And we thought we’d use our experience to give you some tips on how best to travel as a family.

  • Plan ahead – We know some people are planners while vacationing, and others would rather take it as it comes. It shouldn’t be a surprise that we’re planners. However, even if you aren’t, the more people you are travelling with, the more important planning becomes. Make sure everyone has an input on what they’d like to do and see. This will help eliminate wasted time and money while vacationing because you will already know what everyone wants to do ahead of time.
  • Save ahead – Estimate any potential expense you will have for your family vacation, plus extra, especially if you’re travelling with a larger group. Then, once you decide on your potential budget, save everything up before you go, or even before you book anything if you want to be completely safe. It’s too easy to plan and book a big vacation using credit to cover any short fall. Even if your intention is to pay if off right away, it can be dangerous territory. Also, if you go on the trip knowing that you still owe on it, your vacation won’t be as enjoyable.
  • Pay ahead – If possible, prepay for what you can (transportation, hotels, etc). Prepayment gives your vacation budget a better chance at being followed because it reduces some of the risk of unexpected expenses. Also, since food is such a major expense, if you happen to be going on a vacation to a place that allows you to prepay for food (like Disney or a cruise), look into taking advantage of the option.
  • Be flexible – We know we just told you to plan ahead, but that doesn’t preclude being flexible. When travelling with a group, there will be things that someone else wants to do that you won’t (especially when kids are involved). Just go along with it. You may not want to do it, but your overall vacation will be much more enjoyable because you won’t be at odds with other family members. There is probably something you want to do that the others don’t, so hopefully they will be flexible as well!

If you’re currently planning a family vacation or thinking about it, hopefully these ideas will give you a head start!

Starting out, both for our blog and your finances, we’re going to begin with some basics you may or may not know.

Whether you’re just starting to figure out your finances or you want to overhaul your entire financial situation, one of the most important things to do is get yourself organized. There are questions you will need to be able to answer to move forward. Do you know where all your money is (banks, mutual funds, stocks, etc)? Do you have all the relevant information you should have about your money (statements, account numbers, balances)? How much debt do you currently have?

If you are looking to get a hold of your financial situation, getting organized is a simple first step, especially when you don’t know where to begin. If you don’t know the ins and outs of what you currently have, you won’t be able to plan for the future. Also, if you’re not a naturally organized person, it will be even more important to take this first step.

Start by collecting the information about where your money currently is. If you receive statements, all the relevant information should be included on them. If not, call the financial institutions or find them online and retrieve the info that way. Do the same for the debt you have. You may be surprised at what you find. Also, you may find this first step easier if you start with the current month’s information. You can always work your way through the rest of your financials as you move through the process.

Once you gather all the information, decide on a filing method. Do you have a filing cabinet or a plastic filing bin? File folders? A three ring binder? If not, buy yourself some supplies, which can be found for cheap at any office supply store or large retail outlet.

Then decide on an organizational method—some way of easily distinguishing sections. Maybe it’s color coding and labeling, maybe just labeled dividers.

Create files for important receipts and warranties, and for unpaid bills. If you pay bills online and don’t receive paper statements, create reminder notes about when the bill is due and for how much. How many files you create is a personal decision. The important thing is that you create a filing system that makes sense to you and that can be maintained for the long run, but not “organized clutter.”

One of our favorite ways to organize financial papers is a three ring binder. A binder is a great choice because it is easily accessible, easily updated when changes are made, and you can fit a lot of information in a small space. Just make sure you have a three hole punch before you start!

Make copies of important documents (insurance policies, wills, trusts, etc.) and place them in the binder for reference. Originals of these types of documents should be kept in a safe place, like a safety deposit box or fireproof lock-box. Also, gather information on all the bills you pay, receipts on any major purchases, and warranties. Information on accounts (companies, account numbers, etc.) can also be kept in this binder.

Obviously, how difficult this task is going to be is based on how much information there is to organize.  Just be sure you gather all the information relevant to your financial life. Once you know what you have, it becomes much easier to decide what to do next.