The Mom Crowd

Okay, I know times are tough (are you tired of hearing that?) and we are all looking for ways to be frugal and save money.  I have come across a few things that I love so I thought I’d share–from one mom to another .

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Happy New Year!

“Marilla, isn’t it nice to think that tomorrow is a new day with no mistakes in it yet?”
-    Anne of Green Gables

I am sure by the time you have read this on New Year’s Day that you may have made a mistake or two. It’s okay. But there is still time to work on the year and save us from paying Stupid Tax with our finances. Making some clear financial goals for your family will empower you to feel in control of your money. Money is fluid and needs to be told where to where to go. Otherwise it just runs through your fingers like water.

There are several bloggers who are bold enough to share with the world their financial goals. One of Heather’s goals at Dime Savin’ Diva is opening a Christmas Club Account. 

“Open Christmas Club account for Christmas money. This would be in addition to our savings and debt snowball, and our goal is a minimum of $40 monthly.”

I would love to save all year for Christmas. Rather than squeaking it out of our budget in December. Really, Christmas isn’t a surprise. It comes at the same time every year!

Tiffanie at We Like Money wants to pay off two credit cards and get her total credit card debt under $10,000.  My husband and I paid off our cards in order of the smallest amount up. While we were paying them off I called to have the APR lowered. They weren’t very kind to me and it gave me more motivation to get them out of my life. Paying off credit cards is an awesome goal.

Megan at Counting My Pennies wants to “Save at least half of this year’s “extra” paychecks plus half of any work-related bonus checks.” If you get paid bi-weekly and base your budget on two paychecks a month, then a few months a year you get paid a third time in the month. Saving money from these “extra” checks is a great idea.

Frugal Babe is saving $200 a month into their car savings account. I know this is something that we are going to need to do soon, if I want to buy a Sequoia in cash. How awesome will it be to walk into a dealership with cash in hand and haggle? No arguing over APR rates while hoping you get a good “deal.” Frugal Babe is also saving for solar panels!

I’ve Paid For This Twice Already… is working on Student Loan Debt. She shares some great advice about their efforts, “As long as we keep focused on moving forward.” I agree! We just need to stay focused and moving forward in our goals even if we mess up.

Here are 14 goals that I came up with that may help you pick your financial goals for 2009!

1. Make a plan to pay X amount of dollars per month towards your debt all year. Stick to it!

2. No Insufficient Fund (NSFs) charges for 2009.

3. Start an Education Savings Account (ESA) for each child.

4. Track your spending for 3 months using Quicken or Mint.com.

5. Create a written budget before the 1st of the month and list it in priority order to get paid.

6. Create a Christmas fund and put at least X amount of dollars a month into it.

7. Have a monthly budget meeting with your spouse before the first of the month.

8. Only use a cash system for groceries, dining, and clothing.

9. Change your W-4 if you are expecting a large return, then you can bring more money home each month.

10. Create a Love Folder before the end of March.

11. Read a financial book such as: The Millionaire Next Door, The Wealthy Barber, Richest Man in Babylon, Your Money or Your Life, Dave Ramsey’s Total Money Maker Over or Financial Peace Revisited.

12. Reduce fixed expenses by 10% per month. Look at your mobile phone bill or cable options, shop around insurances, save on electricity in your house by weather stripping, etc.

13. Create a Giving Fund and give to causes that you believe in.

14. Attend Financial Peace University class or a Dave Ramsey Live Event.

Hopefully a few of these will give you a jump-start in your goal planning. My husband and I will be finalizing our goals soon. One of our goals is to finish our last debt item, Sallie Mae. Although, I am not sure she will be completely gone at the end of this year, but we can set a goal to have that debt to a certain number and take chunks off of it. I also have a goal to stick to our cash system and not to slip up with our debit card.

Let’s start 2009 financially fit! It is a new year with no mistakes in it… yet!

Are you setting any financial goals this year?

We all show our family that we love them in different ways. Another way that you can show your love for them is to show them that you care about them even after you are gone. The hard reality is that we are all going to leave this earth and we don’t know when. I have a friend whose husband unexpectedly passed when they were 27 years old and she had 3 month old twins to take care of. It doesn’t matter what stage of life you are in, you need to be prepared.

Each person makes their own decision how to prepare for the end from an emotional and spiritual aspect, but here are some practical steps to be prepared from a financial and administrative perspective.

1. Have a will.

Even if you don’t think you have a lot of assets, you need to have a will because you don’t want the State to dictate what happens to your property after you are gone. You have the opportunity now to take that responsibility. It will save your family a lot of time and grief knowing your wishes, because getting an estate in order after someone has passed can take a lot of time.  You may be surprised by how many possessions you own after completing a will.

It is good to discuss whom will care for your children if something should happen to both parents. It is certainly a hard decision and there are many factors to consider. I know one couple who does not tell anyone who the “godparents” are, because it isn’t a family member and they don’t want to hurt anyone’s feelings. This is one decision I DO NOT want left up to the State’s probate laws.

Myth: I have to go through a lawyer to get a will.
Fact: Right now you can download a state specific will from USLegalForms.com for $20. Then all you have to do is fill it out and have it notarized.

2. Have Term Life Insurance.

If someone depends on your income then it is best to take out a policy for 8 – 10 times your income. Then once the life insurance money has been issued, your family can invest the money in a good growth stock mutual fund and if it earns at least a 10% return, you can live off of the interest. Then the lost income is replaced.  Since I am a Stay at Home Mom, this gives me an enormous amount of peace knowing that I will be okay for money if something should happen to my husband.

For Stay at Home Moms a policy should be for about $250,000 to $400,000, because a mom’s work is valued at about $40,000 a year. (Although, it feels like it should be more!) The idea is that if something happens to the mother, then the father can afford a Nanny or Child Care while he continues to working.

Don’t assume you have life insurance through your work. Find out the details of any life insurance plan you or your spouse has through work.

Term Life Insurance is not that expensive. You can go to ZanderIns.com for a quote. Depending on your age and how much coverage you want it can be $30 to $55 a month.

Myth: Whole Life Insurance is a great idea, because I can invest my money at the same time.
Fact:  The truth is that the return on investments in a whole life policy are horrible and it is better to put that money in a mutual fund. Also, there is not a guarantee that your beneficiaries will receive the savings upon your death. For more information about Whole Life Insurance go here.

3. Make plans for your estate.

Making a will and planning for your estate go hand in hand.  Estate planning will allow you to decide who will get your house, cars, or anything else you want. Also, if you give your house as an inheritance to your kids, then you can avoid a high rate of gift tax. On daveramsey.com “The federal government allows someone to die and leave in their estate $2 million without any estate taxes. An individual can only give another individual $12,000 before getting gift-taxed out the ear unless they claim it as part of their estate before they die.”  You can read more about this here under the question “Is Inheritance The Way To Go?”

The estate planning process is also where you will set up any trusts that you want to leave for your kids. You can even make stipulations on whatever specific areas you want. You can specify the age that they get it and how much or that it be used to pay for college.

Myth: Estate planning is only for rich people.
Fact:  The truth is that you may be surprised by how much you have. You need to make plans for the term life insurance money or if you own a home.

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The American population is revved up for the elections in a couple weeks and the economy is on everyone’s minds.  While the candidates debate on how to best heal our economy, I thought it would be a good time to discuss our responsibility to ourselves, our families, and to our society to start living within our means.  Our society has  a “have it all-have it NOW” mentality and we are seeing firsthand what happens when individuals in our society and when our own government lives outside of their means.

Other than the good ole’ makin’-a-budget-and-stickin’-to-it plan, there are some small steps you can take to help yourself start living within your means.  Not only can you use these ideas to help yourself to start living within your means, you can incorporate these philosophies into your parenting strategy.  It is important for our children that we set an example of living within our means and that we teach them that they need to live within their own means.

Here are some philosophies we try to live out within our family:

“The Latte Factor”

• My husband discovered this term from one of the financial gurus he reads (I can’t tell you which one this phrase belongs to…).  The basic idea is that it’s the “lattes” that get us in trouble financially.  For some, it is literally the “lattes” (from Starbucks) that are making big dents in their budgets, but for others, “latte” is figurative for other little purchases made throughout the week.  Most people don’t know where their money goes after they get paid and it’s usually these small purchases that is the culprit of this disappearing money.  If you spend $1.18 a day on a diet coke (guilty as charged), that is $36 every month.  I’m not saying you should stop buying your diet cokes each day, however those small dollar purchases can really impact your monthly budget.  My husband is constantly grilling me about “the latte factor” and while it can be irritating at times, I appreciate that we are aware of where our money goes each month because we are paying attention to all of the transactions we are making.
• Parenting Tip: Encourage your children to keep a record of how they spend their allowance.  If you know they are really anxious to buy the new Guitar Hero game, you can help remind them that when they buy bubblegum from the machine, they are delaying their coveted purchase that much longer.

“Do I really need it?” and “Can I afford it?”

• Do you really need 1,000 minutes and unlimited texting on your cell phone?  Do you really need 150 channels on your television?  Do you really need that gym membership that you’re not using?  The answer will be “no” in most of the circumstances you ask yourself “do I really need this?”, however the follow-up question must always be “can I afford it?”  I’m not suggesting you live a life of eating rice and beans every night and I’m not suggesting you get rid of your internet and use the library computer, however if you can’t afford something, you can’t afford it.  There are many fabulous luxuries in our society, however there’s a lot of empty money spent on channels never watched, gyms never visited, and furniture never sat in.  In order to live within your means, you have to be able to tell yourself “no” at times.
• Parenting Tip: Be honest with your children about your family budget and explain to them that if you add an expense, you will have to take away another expense.  Explain to them that in order for your family to increase their cable channels, you will have to have dial up internet.  Allow them to share their thoughts and play a role in your family’s budget.

Keeping up with the Jones’

• Right now, the Jones’ are facing foreclosure because the Jones’ were not wise with their money.  Being the Jones’ may be fun for a while, but it will inevitably catch up to you.  If you are unwise with your money because you are trying to have it all, you will eventually wind up not having anything.
• Parenting Tip: Remind your children that “stuff” is not what is important in this life.  Volunteer as a family at the food bank or homeless shelter.  Expose them to families who do not have very much.  For Christmas, have your children give presents to children who are less fortunate than they are.  Set an example to your children by not complaining about what you don’t have. Being around people who are less fortunate than you are will not only impact your children, but it will impact you and remind you of all of the things you have.

Stinky debt

• There are some debts that I feel can be classified as investments.  School loans, mortgages, etc… can be considered investments, when under control.   Buying a house that you cannot afford or pulling out as much in school loans as you can are not wise investments and can easily put you in a place where you are living outside your means.  However, the stinky debt I am referring to is stinky credit card debts.  If you are using credit cards and not paying them off each month, you are not living within your means.  There’s not much more to say about that, other than stop using your credit cards.  If you can’t get by without using your credit cards, eliminate other expenses in your life (cable, cell phone, move into a smaller apartment, etc…) so you can afford your bills and not be consumed by the credit card monster.
• Parenting Tip: The best gift you can give to your children is your example.  Explain to them how credit card debt works and how interest can consume your monthly payments.  If they ask to borrow money in between their allowances, show them how interest works and charge them interest on that loan.  The main thing is to teach them why credit card debt is so difficult and show them the freedom of a family not living in the chains of debt by not being consumed by it yourself.

Delayed Gratification

• If you want to purchase something that is not a necessity, sleep on it.  A lot of times you will not feel as urgent about purchasing that item the next day.  Another great idea is to have those splurges be a reward for yourself.  Set goals (financial, weight-loss, etc…) for yourself and promise yourself that you can buy that item once your goal is met.  This practice of “delayed gratification” will not only help your wallets, it will also help you to be a more disciplined person in general.  However, if you cannot afford to purchase a non-necessity, then you have to tell yourself to wait until you can afford it.
• Parenting Tip: If there are things your children really want, tell them to add it to their Christmas list or birthday list.  This will not only make these celebrations more exciting, it will also help steer your children away from a “have it all, have it NOW” mentality.  You can also use these items they want as rewards for them.  Buying them whatever they want, whenever they want will not only be bad for your checkbook, your children will never learn how to live within their means or discipline.

These are just a few tips I have for you. What areas do you struggle with living outside of your means?  What steps have you taken to help yourself live within your means?  How are you teaching your children to live within their means?

Mothers have a security gland and when that security glad is beeping it is hard to ignore.  Some of us may fear for the future of our family and our nation, because the media is constantly over sensationalizing our nation’s current economic downturn. Here are 7 facts that you may not hear from the news outlets that will help decrease your fears of the future.

1. Today’s economic crisis is NOT like The Great Depression. Historians have deeply studied the problems leading up to the Great Depression in 1929 and we don’t have same problems today. The FDIC did not exist yet, we are now a service based economy versus a manufacturing economy, farming is not our main source of jobs, and trading between countries has become easier. In 1929 the unemployment rate was 25%. This past July it was 5.7%. For a more in depth look at how we are different today I would highly recommend reading this 1-page PDF.

2. Think long term when you look at your 401k and your investments. A lot of us have seen our retirement accounts and mutual funds take a dip. My only comfort is that investing is over a 5 year period. The market naturally goes up and down. We have seen bear markets in the past and on average they last 10 months. The only people who get hurt on a roller coaster are those who jump off midway through the ride.

3. The DOW only represents 30 companies. So when you hear that the Dow Jones Industrial Average is down, remember that it only measures 30 of the thousands of publicly traded companies.

4. The FDIC insures your money in the bank up to $100,000. As long as your money is in an account at a bank that is FDIC insured, then your money is safe. There is no need to pull it out and hide it under the mattress. Who of us has more than 100,000 dollars in one bank account anyway?

5.  There ARE companies who are winning in this economy. We keep hearing about Wachovia, Washington Mutual, AIG, and other companies that are going bankrupt or being bought out, but smaller banks and companies are gaining from their downturns.

6. Buying single stocks are risky. According to Dave Ramsey, ” Looking back at the last 78 years, the performance of the stock market as a whole has averaged near 12 percent annually; yet the average return of the single stock investor is closer to 7 percent annually. “  If we play the single stock game, then we inherently have more risk to lose our money. Honestly, I don’t know any of my friends who are playing the stock market. If we keep to a good growth stock mutual fund then we will be alright.

7. You have more effect on your destiny than Washington. We live in a land of opportunity. We get to chose our own career paths. According to ‘The Millionaire Next Door’ 80% of America’s millionaires are first-generation rich. We have our personal responsibility to take charge of our lives and care for ourselves. Washington may not spend our tax dollars with wisdom, but we do have a say in our spend and earn our own money. When you have goals and plans for your money, you have a lot more peace about the future.

Additional Resources:

Putting ‘Panic’ in Perspective: 6 facts to help dispel the fear and 10 key reminders for investors
The 2008 credit crisis: A step-by-step look at how we got here
Investing a Bear Market
Having a Monthly Family Budget Meeting
We Are Not Headed for a Great Depression
A new Great Depression? It’s different this time
5 Myths of the Financial Crisis