Friday, October 5, 2007

Setting Up An Emergency Fund

At the end of last month my emergency fund was down to $191! I hope that I never allow that to happen again.

This month I'm trying an experiment. I'm going to be taking all income in excess of our salaries and placing it into an emergency fund. My goal is to get this fund up to approximately $1500.

So far, my father sent me a birthday check $75, my husband had an unexpected residual check $377, I requested money rather than a "reward" on my MBNA credit card $120. Another acting check for $450 came in. And its only the first week of the month!

I'm not certain that I'll be able to keep it up, but, I'm thrilled that we've had so much come in already. The account is back up to $1300 and I feel I can breathe a little bit easier. Because our house payments are $5000, and one of us is self employed, I feel like this account needs to be larger, but, $1300 is better than it was last week.

I've begun tithing again (I'm sure this has something to do with this added income), this is something I've done off and on for the past 15 years. Its been difficult for me to stick with it, but, I have always prospered incredibly when I am tithing.

One of the reasons I continued to stop and start is because I don't know what I'm making, I don't know what my husband is making since we have it set up on automatic deposit, I have bills coming out of my business account that are automatically paid and I'm not seeing the "income" as personal to tithe off of. Currently I am working out a system to be more aware of my income and this will give me to ability to tithe appropriately.

The other reason I stop and start is because sometimes I begin thinking that I'm not going to have enough, forgetting that God is my source! It drives me crazy when I begin to operate out of fear and not out of trust. Whenever I am not tithing I am always afraid, when I am tithing I am still sometimes afraid no matter how many times I've been shown prosperity. Without tithing I have no sense of hope, with tithing I know that God will provide.

I say a prayer of thanks when I write this tithe check, because I really am grateful for everything I've been given. I then send my tithe off with love and gratitude.


Thursday, October 4, 2007

Thinking Like a Tightwad

After having signed out from the library books one and two of the Tightwad Gazette, I decided to purchased the hardback copy of the "Complete Tightwad Gazette; Promoting Thrift as a Viable Alternative Lifestyle" by Amy Dacyczyn.

Its hard to describe what this book has done for my thinking process regarding saving money. It makes the process of saving more of a game for me than a chore. I feel excited to save money. It's really a lot of fun. For my husband it seems he's feeling deprived, for me, I feel the opportunity to be creative and to prosper. I love the way my mind needs to analyze situations and their impact on the bottom lime. I recognize how on the surface it may appear I'm saving money, yet, in reality I may not be.

Today I ended up shopping at three different stores. We had run out of contractor bags and I didn't know where to purchase them. I didn't find contractor bags at the first store, but, as I was going through the store I thought I saw good prices on some of our regularly purchased items. However, I began to realize that unless I'm purchasing something on a weekly basis, I don't really know what a good price is for these items. I know what I usually pay for meats, fish, and produce, however, I don't know what I pay for other items like toilet paper, bleach, laundry detergent, etc.

I next went to Target, and, while I was there, I began to write down prices and ounces for things like laundry detergent, fabric softener, toilet paper, coffee, etc. I recorded prices for items that I buy on a regular basis. Again, no compactor bags.

Later I ended up at Kroger's. While there I wrote down the prices for the same items I wrote down the prices for at Target. By this time I'm beginning to realize that there are some substantial price differences between the three stores. Had I bought Bleach at Aco, I would have saved $1.00 per jug (sorry I don't know the ounces) . Had I bought 5 jugs I could have saved $5.00. But, since I don't know the price of bleach I didn't buy any.

Earlier in the day I had purchased ketchup at market because I believed $2.99 for 44 ounces was a really good buy. After seeing that Ketchup costs $2.19 for 36 ounces at Target I started to think it wasn't a great buy, but, it wasn't a bad one either. When I saw I could have bought 64 ounces at Kroger for the same $2.99 though I began to realize that I could save a bit of money if I'm aware of pricing.

When I actually did the math on that bottle of ketchup, Krogers ended up to be about .46 per ounce, the markets price worked out to .68 an ounce, and targets was .60 an ounce. I paid the highest price!

In the tightwad gazette the author recommends keeping a notepad with you and recording prices. When I first read that statement I thought that was ridiculous, then I found myself in a situation where it wasn't too outrageous for me to check on just a few prices. Now, I'll be taking a notebook with me so I can be more educated about what I'm spending my money on.

I'm not the type of person that would even consider shopping at all these different stores just to save a buck though! But, if, while I'm at the hardware store and I see a bargain I can at least know to buy it. Finally, since I don't plan on making a special trip to the hardware store, I can decide whether I want to buy the item in bulk because I KNOW it's a savings.

In the past my husband and I spent up to $1000+ per month for groceries. Because of all the changes I've made in the past few months, I have reduced this months budget to $400. Again, I'm not obsessed as to whether or not we make this budget, but I'd like to keep an eye on it so I can see the progress we're making.

Since changing our light bulbs, turning off lights when not in use, drying clothes on the clothes line (one of us is doing this), our electrical savings were 23% this past month.

I don't like rigidity, it sets up a situation where I feel deprived, so, rather than forcing myself to follow all these restricting rules, I'm allowing myself to create situations where I can succeed.

Setting Up a Household Budget

In order for me to set up a budget I need to know how much I make and how much I spend. Right now. . . . I still have NO idea. Because I have no idea, I just keep striving to make more money. I truly have a black hole that I just pour all this money into, and, in the end, I still never really know if I've made enough, spent too much, or broke even.

Being self employed and taking care of both work and home finances has proven very difficult for me. After I lost my storefront to a flood, my routine changed, I moved out of my office and into my home. What worked at the storefront doesn't work at my home office. I don't have a secretary who performed a portion of the procedures for each payable and receivable. I don't have a consistent system at all.

Worse, while I used to invoice the client and purchase the product with their payment, I now pay whatever I can and hope there is money enough to order the product. Again, its those damn automatic payments! Rather than paying the bills when I have the money, they are automatically removing the money from my account.

I'm committed to building my emergency fund. I've set an initial goal of $1000. I feel terrified not having money to access in case of an emergency.

I do have $80,000 in a 401K fund, and, I've borrowed against it three times since losing my store. Once I borrowed $40,000 for the renovations on our condo (which was supposed to be my new office space), $50,000 to buy my husband five years of employment when he began working under a political appointee who makes his life (and mine) fairly miserable (a strange thing the state does for their employees, he can now retire 5 years earlier and there's no penalty from taking it from your 401k account), and the last loan was to make sure our home didn't go into foreclosure when our house payment exceeded $4000 per month - and we were 3 months behind.

I know its a horrible financial decision to borrow from this account, but, it was an emergency, I hadn't planned on losing my business and I had already gutted the condo. Many, many expenses from the business drained our financial resources completely. Yes, I had insurance, but it took me three years to collect. My insurance company was Hastings Mutual, and, since I can't say anything nice about them, I won't say anything at all.

In talking with my husband about finances it's pretty obvious that he and I have a different philosophy about how to save money. Its proven to be quite frustrating and our learning curve together is enormous. I'm certain this is part of the reason that he and I don't pay attention. Working on our financial picture together is painful. I do hope it gets easier because I'm getting too old for this. I need this to be the last time that we're going to be this out of touch financially.

Monday, October 1, 2007

It's Time I Start Christmas Shopping !

About this time every year I start feeling the urge to begin my Christmas shopping!

Throughout the year I listen to what my kids offhandedly mention they want or need. One of my sons doesn't like to receive gifts. In the past I upgraded my used laptop, made candles with his favorite scent, and recently, for his birthday, I made dinners and froze them, gave him a large salad bowl that I learned he needed, bought him a water filterer that can be used in the wilderness, and I purchased a very nice sleeping bag (60% off!). He loved these gifts. He really keeps me on my creative gift giving toes.

My other son has expensive taste and is a bit more difficult to find gifts for. I bought a sweater on last Christmas that I thought he might like (my kids know they can return anything they don't like without hurting my feelings) and it ended up being his favorite sweater - he wears it all the time. It was $250 reduced to $14!

Saturday my two sons and I took my granddaughter birthday shopping for a new bike. We went in on the bike. My oldest mentioned that she needed a helmet, which we hadn't budgeted for, but, it really is a necessity. I agreed to pay for that in addition to a half the price of the bike. My granddaughter has everything from her other side of the family. My side of the family is a bit in shock and overwhelmed by all the things she has. She owns every new video gaming system that comes out, many of the games, every dvd imaginable, etc. She's already difficult to buy for and she's only 9! It's awful.

While we were shopping though I heard my oldest say he needed a bike helmet too. He wasn't asking me for one, it was just mentioned in passing. The next time I was at my computer I pulled up my word document called Gift Ideas and added it to the list. Later, I mentioned to my youngest son that I was trying to find a punching bag on Craigslist for my new gym. His eyes lit up, "that's what I need! When I'm playing poker and feel like punching the wall I would love to have a punching bag that I could beat on!" Whoa, I heard that one! It went right onto the gift list and I'm already searching Craigslist for it.

My third (step) child is obsessed with clothes and fashion. Each year she receives a special hardcover book related to her favorite designers. Hopefully she's use these as resources for her college studies of fashion design. Again, here is another child who gets just about everything she wants, yet, her mother is broke. She can't hold a job, a residence, an auto (she parks it at her older daughters houses), yet my step daughter has a subscription to every fashion magazine, buys new clothes weekly and has more on layaway, and recently her and her mother "won" the opportunity to get electrolysis on their face for "only $1700"! It's just a bit too insane for me to comprehend. One of her favorite gifts from me a couple of years ago was a box of custom designed "fashion" business cards with her cell number and email address. I was able to put this together so easily it was surprising. This will be her first year receiving a "used, like new" fashion book - but I think its good for her and I doubt she'll even mind. She also collects crosses so I'll keep my eyes open for a unique, possibly vintage, cross.

By keeping my gift list, and listening throughout the year, I'm able to get gifts that I believe they truly will appreciate, I can purchase the gifts when I see them at the best prices, and I NEVER have to enter a shopping mall after Thanksgiving.

Caring for Myself: Shopping for Groceries

Caring for Myself: Shopping for Groceries

Comparison Shopping

I'm becoming a bit fascinated now with all the ways I can save money.

The most recent efforts I've made are. . . comparison shopped my auto insurance policies and learned I could be saving $520 a year by changing from esurance to progressive. I would, however, need to pay the full amount for 6 months which would be about $820 twice a year. Still, I'd be saving $520 a year! Add that $520 to all those other areas I've adjusted and I'm up to about $23,000 in savings a year! (Wow, I'm stunned at how much fat there's been in my spending)

Another area I've researched is my bank. I pay a lot in bank fees. I've applied for a free checking and savings account at Charter One and should be getting the paperwork in the mail shortly. This is a savings of approximately $120 per year or greater.

This is a riot - I love it! I want to find more areas to cut back on.

I've been so strapped financially lately that I don't have the $820 right now. I can, however, set that amount of money aside and just make it the next priority payment.

Right now I have about $200 in a savings account and about $80,000 in a 401K account. I have $13,000 in credit card debt and I own two homes with a balance owed of $470,000. I owe $10,000 to pay off my auto loan and I have a second car which is paid off. The auto loan is at a 0% interest rate so I won't be paying that off early. I also owe $12,000 in student loans which are at a 4.5% interest.

I know that as long as I can see what is going on financially for me than I will be able to get back on my feet. The biggest problem for my husband and I has been that we are completely out of touch with our bills and have no idea what we even need to make on a monthly basis to pay our bills.

Having once lived with very little I am actually looking forward to getting this situation turned back around. The way I got into this position is that I felt I needed to put everything on automatic because I needed to focus my energy on building my business. Well, I built my business and it was crazy prosperous, then, one day, almost everything was lost in a flood. For the next three years the insurance company played their games and essentially put me out of business.

Regardless of past circumstances, I find myself in a position where I am needing to reduce my monthly debts, increase my income, get an emergency fund in the bank, and eliminate my credit card debts.