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.
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Here is August’s review of blog posts. We hope you find something you enjoy!

  • Good Financial CentsAre You Talking About the Sandwich Generation – More and more people are joining the “Sandwich Generation.” If you are one of them, or will soon become one of them, your financial life can become quite complicated.
  • U.S. News MoneyWhy Small Businesses Don’t Offer Retirement Plans – If you are looking to work for a small business, keep in mind you will likely not receive the same retirement savings benefits through your employer that you might at a larger company.

Please let us know if you have a favorite financial blog that you think we should be reading.

 

  • 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.

When do people start worrying about their retirement? Often, people don’t start worrying about it until the reality of it is right around the corner. Sometimes it takes a scare at work: an early retirement buyout, pressure from the company, etc.

Obviously, needing to worry about your retirement is not ideal. It would be great if everyone was in a financial position to be able to retire without stressing over whether their money is going to run out. But often, regardless of how much money you have, you will still worry, many times because you have no idea how much you need. So when you receive that early retirement package to review, you have no idea what you should do. The only real way to avoid this is to stay on top of your retirement savings throughout your career. It’s unfortunate that more people do not do so.

What happens when you reach the conclusion that you can’t afford to retire. You’re in your 50s or 60s, and you know that you don’t have enough. It’s not an easy situation to be in. In a post at U.S. News – Money by Joe Udo, “How to Salvage Your Retirement,” Udo makes some recommendations on what to do if you find yourself in this situation:

  • Run the numbers now.” If you aren’t tracking your expenses, know your potential Social Security income, or don’t have a grasp on where your other retirement income may come from, run those numbers right now. You should gain a better understanding of where you really are financially.
  • Cut your expenses now.” – This will help in two ways. Cutting your expenses now will help you be able to save more now while you’re still working. Also, it will help once you reach retirement and are living on a reduced income.
  • Start saving more now.” – If you are still working, you need to utilize what time you have left to save for your fast approaching retirement. Cutting expenses should help you up your savings amount, so don’t delay any longer.
  • Make money doing something you like to do.” – Some people have no choice but to keep working as long as they are able. If you are in this situation, try to find something you enjoy doing. While not always an option, if you can make money doing something you like, getting up for work each day will not be such a chore.

Don’t wait until it’s too late to salvage your retirement. It’s much too important to neglect.

 

  • 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 week, over at The Simple Dollar, Trent Hamm posted an interesting article on renting a place to live versus buying a home, “Renting Isn’t a Throwaway”. We thought it was an interesting take on the issue, and since we often hear the opinion that renting is just “throwing money away,” we thought we’d share some of Hamm’s ideas here.

It’s always been our opinion that the renting vs. buying question varies for every individual. Buying is not a financially sound decision for everyone, and the same goes for renting. Here are some of Hamm’s thoughts on why “renting isn’t a throwaway:”

  • “Insurance Rental insurance is significantly less expensive than homeowners insurance. Both provide similar protections – they make sure that in the event of catastrophe, you retain the value of your possessions – but homeowners insurance also insures the value of the home and many other things.”
  • “Property taxes Homeowners have to pay these. Renters do not.” – Depending on where you choose to buy, this can end up being a very major expense.
  • “What is the recent history of property values in the area I’m looking at? Has the area been rising in value? Holding steady? Dropping? To make home ownership worth it, your home will need to at least retain its value.” – Not all areas are conducive to buying. If you are looking to live in an area with falling housing values, buying is not likely to be a good idea.

A point that we would make that Hamm doesn’t is that if you are moving somewhere new from out of the area, you shouldn’t jump right into buying a home. Even if buying is ultimately the right decision for you, renting for a period of time to get to know the area (what neighborhoods you like, what amenities you enjoy, etc) can go a long way in helping you decide where the right place to buy is.

You should never assume that buying is the always the right decision. Take time to analyze your situation before ultimately deciding what is right for you.

 

  • 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.

There will be no post next week because we will be going on our family vacation. We usually take one every year, even though this year is not to Disney World! We thought we would share our previous post about taking family vacations with a larger group.

From 5/2/11:

As you know, we just went on a family vacation to Disney World. We traveled 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 traveling 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 traveling 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 traveling 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!

 

  • 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.

Here is July’s review of blog posts. We hope you find something you enjoy!

  • U.S. News MoneyThe 80 Percent Rule for Retirement – When you reach retirement, don’t push yourself too hard. Take the time to slow down and enjoy what you are doing.

Please let us know if you have a favorite financial blog that you think we should be reading.

 

  • 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.

The envelope system is a very easy, simplistic way to budget. It not be very sophisticated, but it can be very effective, especially when it comes to spending money.

For those who may not know, the envelope system is just as it sounds. You take the money that has been budgeted for various categories out of your checking account and put the cash in different envelopes, each earmarked for spending on the designated category. Again, maybe not very sophisticated, but simple and easy to use.

There could be a number of different reasons you may not like this system of budgeting. It can be inconvenient. Paying with cash can lead to awkward counting out of bills at busy checkout counters, or carrying around a pound of change in your pocket or purse. Also, it can mean an extra trip to the bank or ATM to pull cash out, especially with so many people able to direct deposit their paychecks. Maybe you would see it as embarrassing. After all, who pays with cash anymore, so when all your friends pull out their Visa’s, you are shuffling singles around trying to count out how much to leave for a tip.

Even with all the possible reasons you may dislike the envelopes system, it can be a very effective way of budgeting. Even for the most financially secure, keeping control of spending cash can be a challenge, especially when the credit card gets pulled out left and right to cover things.

Say you have a weekly entertainment budget of $100. You go out on Tuesday night with friends, armed with your credit card and the plan of spending no more than $50, since you know you’ll be going out again on Saturday. You go out to dinner, then a movie (with a drink and popcorn thrown in). Then it’s out for coffee after. You pull your credit card out each time, not really thinking. By the time you get home, you realize that you’ve spent $60, $10 more than you planned. No big deal, you’ll just spend $10 less on Saturday. But you don’t. You spend $60 again without really realizing it, making you $20 over budget for the week. Maybe not the end of the world, but that was $20 that you were going to spend on something else that you no longer can.

Now let’s take this example using the envelope system. You take $50 cash with you on Tuesday, leaving $50 in the envelope for Saturday. You skip the appetizer at dinner to make sure that you have enough cash for the coffee you were planning on getting after the movie. At the movies, you opt for the smaller drink and decide to split a popcorn with your friend to save a few dollars there. Then at the coffee shop, you decide to skip the pastry so that you have a few extra dollars to add back to the envelope for Saturday.

Both of these scenarios lead to a great night out. Using a credit card, you went over budget without planning to. Using the envelope system, you didn’t go hungry from being too frugal, and you still treated yourself to dinner and a movie with friends. Plus you still have your budgeted amount for your next evening out with a few extra dollars to add to it as well.

It can be very easy to lose track of spending when you are using credit cards. They’re too easy to use, and unless you sit there and count up all your receipts as the night progresses (which you most likely won’t), you won’t know that you’re going over budget until it’s too late.

This post was inspired by a post over at Get Rich Slowly by Kristin Wong: “Adventures in returning to the envelope system.” After leaving the envelope system behind because she felt “financially independent” and that she could do without it, Wong returned to using the system after deciding she had lost control of her spending, especially in the area of dining out.

 

  • 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.