Move Completed

That's right, our new .com (www.financingyourfamily.com) is here and it's ready! Go to www.financingyourfamily.com to continue with this site!

A BRAAAND NEW CAR!!

That's right, we made a big financial decision today, and got a new car... well not really new, it's a '94. New to us though, and we're the second owners. We bought it from my wife's aunt.

We needed a second car (relatives got sick of us mooching rides all the time) and we got a good deal. We bought it with cash, and it is very reliable.

Plus it's fun to drive.
I've been driving a car that is a high mileage car for a while now, and this new semi gas-guzzler really has some pep, which I am thoroughly enjoying. Other than that, I'll put some air in the tires and see how long she runs.

Anyone have any first car horror stories? Post them in the comments, especially if they will help others avoid making costly mistakes.

Make Room to Tithe

Free Money Finance just made a post that has me thinking about how my readers can free up room to tithe.

I won't go into the biblical reasons for tithing in this post, but I will try to cover some different strategies I've seen used to get people to the 10% mark.

Strategy 1: The BIG CHECK

This method is probably the least Biblical since you are not giving of your firstfruits. Rather, when you do your direct deposit you have 10% go into a separate account that you don't normally look at. At the end of the year you write a check for the account balance, and you've tithed your 10%. This one is the easiest to adjust your lifestyle to though, since you don't see the money ever.

Strategy 2: Month By Month

If you have a budget that tracks spending, this method is fairly easy. At the end of the month move the decimal on your total income to the left one space, that is how much you write the check for. EASY!

Strategy 3: Every Week

Same as month by month, but this time you do it with each paycheck.

Strategy 4: Help I'm in a debt crisis! I can barely afford 1%!

Now would be a great time to reevaluate your budget or spending habits. Remember, what is more important, God or eating out one more night a week?

Tithing is actually very simple, and it puzzles me why people find it so hard. If you just simplify your life, it should become easy to live off a smaller and smaller percentage of income, even now.

Prenuptual agreements?!?

Dual Income No Kids http://www.dinksfinance.com/2007/06/what-to-discuss-before-you-get-married.html Has a new article on premarital discussions by James.

His points about discussing debt, and money in point #1 are right on. Finance matters are a major player in divorce proceedings, so a happy marriage is easier if everyone is on the same fiscal front page.

Also, finding a new place to live for both people is, once again, great advice. The marriage is strengthened, both people feel a stronger sense of commitment, and you get to set up house together.

His advice about prenuptual agreements is where I take issue. It's not that it seems like one partner doesn't trust the other, or that it seems unromantic (although you wouldn't call it romantic). The reality is that if two people are at equal station in life, then they shouldn't need one. The premarital process should take care of the major issues better than a lawyer can, and most people would feel a whole lot happier if they never had to involve one in their marriage.

To go back to the original Greek, love is a verb, not a noun. You don't fall into verbs, you act them out.

The new site

The new web domain is giving me some difficulty in how I want to set everything up so for the time being I will continue to post here.

Oh, and if you are looking for a safe investment, try CDs or Certificates of Deposit, especially if you don't have a high tolerance for risk.

Why?

I just met a person who actually invested lottery winnings $120,000 worth after taxes. She has set it up in a CD a month laddered situation. In other words every month she opens a new 12 month CD for $10,000. All her money is insured because she shops for the best rates at every bank in town. I'm not sure what her tax situation is like, but when her interest becomes her income (She'll be retiring in 11 years) it will net her $855.17 a month, which isn't astounding, but if she needs it she will have access to over $17,000 a month.

Meanwhile the winnings haven't changed her lifestyle one bit in any other way, she loves her job and will do it for as long as she can (probably won't really retire for another 20 years).

Moving on up

Guess what?

www.financingyourfamily.com is my new domain name!

Bye bye blogger, hello World Wide Web!

The Series is over

Well, our most recent series is over, and so I'm debating taking this in several directions.

1. I could talk about monetization of this blog, and how I'm trying to make extra income from it.

2. I could start reviewing other people's blogs with links so that my readers will have a greater understanding of what's available to them.

3. (most likely) I will share personal stories and discuss what financial nugget I have gleaned from each one.

If anyone would like to read something pertaining to family finances, let me know. Or share your own story.

Do it Yourself!

One of the best ways that my wife and I have found to save money is to learn how to make and do things for ourselves, things that we would normally buy.

The best way to learn these things is by doing them, and my main example today is going to be cooking, because it's something that everyone can do, and food is a universal need. Also it is a skill that is easy to start, and can take a lifetime to master.

"So, what's for dinner?"

If you've never cooked before, don't start with a 4-course meal, you quadruple your chances that something will go wrong & you will become frustrated and disappointed. Instead, find things that are really easy to make and improve on them. (store-bought macaroni and cheese is vastly improved with a spoonful of salsa mixed in for example) You are trying to establish a base of knowledge, you should be able to judge how long things will take, and what will go well with what.

Be ready to learn from your mistakes.

There are two things you can do when you make a mistake, give up, or press on. Giving up means wasted food, time, and money. Pressing on could lead to a spectacular success or a spectacular failure, this will be okay though, because you've learned a lesson you'll never forget.

Learn from others.

Do you know someone who is an excellent cook? Ask them if you could help them prepare a meal, don't expect them to reveal secret recipes, but you should be able to observe certain behaviors that lead to success in the kitchen.

Get feedback.

All criticism is good when learning a new skill. If your son tells you that the food was a bit too salty, you know that when grandma comes you leave the salt out on the table to season to taste. Even very negative comments do have a root of truth in them, and may hold the key to perfecting your skill.

...When all else fails.

You can always order a pizza, that's what you were doing before you started cooking anyways right?

Feel free to leave any recipes here in the comments section!

Learn to do without.

One of the best ways I’ve found to get an edge on finances is keeping myself consistently under budget. I do this by learning to do without. For example, there was a time when I would drink 3 fancy shmancy coffee drinks a day. Each one would cost me $2.00 so I was spending $6.00 a day just on coffee. That’s $42 a week, $128 a month.

And that’s just a cup of coffee.

Do you go out to eat with your spouse once a week? Going out every other week could save you $60 a month.

Do you buy name brand groceries? Trying some generic products could save you $10-$40 a week on shopping.

One big expense that saves people when they go without is alcohol. Depending on what you drink, you could save anywhere from $14-$200 a month by not buying alcoholic drinks, or even cutting consumption in half.

So how does one find out what they can cut?

This goes back to Knowing what you Spend. Save your receipts and really take a count of what you buy, what you use, and what just sits there. Does someone buy a magazine from the supermarket counter every month? It may be cheaper to get a subscription. I personally buy tools I don’t need and probably won’t use, but by making a rule that all tool purchases are a two-party decision, my wife and I save money by doing without.

I am interested in learning what other people have been able to do without, reuse, save money on, etc. If you have a good tip, post it in the comments below.

New Section! Goals!

Instead of just spewing advice all of the time, I thought I would post some of my own financial goals.

As a quick overview, the unsecured loan was used to pay for several wedding expenses and some credit card irresponsibility on both our parts (we don't use our card much anymore and have cut up most of them after we paid them off.)

Our total debt for the long-term goal was adding what we owe on my wife's car to the unsecured loan, however I don't know the exact amount on that car because she forgot her password.

Any other suggestions on how to improve this blog would be very much appreciated.

Rewards and Punishments

We are now on part five of this series: Rewards and Punishments.

This is a difficult thing for most heads of families to deal with. You need to give your spouse some control over you for a Rewards and Punishments system to work effectively.

First let's get some definitions for this particular system to work most effectively

• Reward Something that you like, which you receive for doing a behavior that needs to be encouraged. (i.e. I just cleaned the house before my wife got home so I was rewarded with a backrub.)
• Punishment Something that happens to you as a result of failing to do an action, or doing a wrong action, intended to discourage wrong behavior. (i.e. I left dirty socks on my wife's pillow, so I got to sleep on the couch.)

The key to getting rewards and punishments to work for your finances is to have preset rewards and punishments for each person in the family who handles family money. Whether that be just the parents, or the parents and a responsible child who can do the family grocery shopping, or other adults in non-traditional families.

So let's say that there are just 2 people who have some stewardship over the family money. Set up rewards and punishments for each person, here are some examples:

Michael (who loves watching football and hates doing the dishes)

• Reward for spending less than $30 a week on lunch is: 2 hours of uninterrupted TV time.
• Punishment for going over the $40 budgeted for lunch each week is: Dish duties every night for the next week.

Julie (who will buy any clothing if it says on sale, and doesn't like to wash the windows)

• Reward for spending less than $40 on clothing for 3 months is: $200 shopping spree during a holiday sale.
• Punishment for spending more than the $180 budgeted for clothing is: "earn back" the money spent at the price of $0.35 per window before she can go shopping again.

These should be tailored for each person, but also be adjustable so that any action that's an improvement will get some kind of reward. Also, generally the rewards that cost little to no money are better off than those that cost a lot of money.

What are some kinds of rewards that you might consider using, is there anything your spouse could use as a punishment which would help motivate you to avoid mistakes?

Eliminate the Debt Factor

I will start with a basic situation first with this one to show how crippling debt can be.

Imagine a family with 5 credit cards, and 2 car loans. We'll say that each card has a $1000 balance and minimum payments of 2% or $20 to each card every month, so total payments of $100 a month for the credit cards. The cars both have monthly payments of $300, for a total of $600, and a grand total of $700 a month.

$700 a month in minimum payments, and this doesn't talk about a mortgage or student loans which many people will also have.

Now the average family in America makes $40000 a year, so this family with $700 in debt is spending about 21% of it's income on minimum payments. Everyone should ask the question, What could I do with that extra $700 a month?

How do I get rid of that debt? after all I'm paying the Minimum.

The key is to pay as much more than the minimum as you can comfortably afford, lets say an extra $200. Simultaneously you stop using credit cards. This prevents your debt from increasing. With that $220 ($200 + $20 minimum payment) a month you will have one card paid off in 5 months. Now you have a spare $220 to put towards the next card $240 will pay it off again in 5 months with some change left over. Your third card gets paid off in 4 months with change left over and so on.

Reward yourself after you pay off a major debt. Take the family out to eat or something, thank them for their efforts. It is important that they feel good about eliminating debt so they don't make the same mistakes you did.

Once you have all your debt paid off, you are in a great position to save, set up a CESA (Coverdell Educational Savings Account) for your kids, or set it aside in a money market for a downpayment on a new home, or make an Emergency Fund. The more money you can put towards the debt, the faster it will be gone, consider cutting back on shopping, eating out, cigarettes, and alcohol if you want to see the most dramatic results.