Well I had plans to work on updating my all budget spreadsheets and such this weekend but I got distracted but more pressing issues.  That said, I did do my monthly spending update.  I hit my target of 19% of gross income to date for retirement savings.  However, I don’t know if I’ll be able to sustain that and/or hit my target of 20% for next month.

We’re in the middle of a home improvement project that is costing more than planned (35% over and we’re still not done).  Our pickup may be having some mechanical issues.  Hubby’s birthday is coming up and we’re having a party.  I promised SavvyBro that I’d come visit him (requiring a plane ticket and hotel stay) this summer.  And last but not least,  there’s a fantabulous trip that I’d love to take next August.   It would require a massive outlay of cash so I would need to start saving NOW.  So much for my finances being on auto-pilot..

photo credit: Irene2005Often much attention is given to the topic of saving money. What can be just as, if not more, important is earning more money. While living below your means is good, it’s definitely easier when you have more means to work with. So to that end, here are eight ways to earn extra money.

1. On the job - If your job allows it, work a few hours overtime each month to help supplement your income. If this isn’t feasible, consider working a second job for one or two weekends a month. Companies like UPS and FedEx often need people to work nights/weekends and compensate well.
2. At home - Clean out your closets and get rid of all that stuff you no longer use or need. For electronics or big ticket items, eBay or craiglist will garner the most money. For other items, consider a yard sale. You won’t get as much money but you will get rid of the clutter.
3. In the neighborhood - If you have free time and don’t want to be tied down with a second job, figure out if your neighbors have tasks you could help them with. Perhaps you can babysit once a month or walk dogs for owners who are out of town. Neither would be too time-consuming but the additional funds can help your bottom line.
4. Share your knowledge - If there is a particular topic that you have knowledge of, consider tutoring or even becoming an adjunct instructor at a community college. Both have flexible hours and a nice hourly rate.
5. Share of yourself - Though I’ve never tried it, I’ve heard that selling plasma (as in part of your blood) is an easy ~$50. Of course there are limitations as to how often you can give but where else can you get paid to read magazines and eat cookies?
6. Share your opinion - Companies are willing to paid money to find out what people think about products, trends, etc. Depending on the time requirements, you can be compensated $75-200 for participating in focus groups. You can do a web search to find groups in your area. Be on the alert of scams though. No company should ever request payment of any sort from you.
7. Share your talent - Become an extra in a movie. Though the pay is not the greatest, it can be fun. Not to mention you can force all your friends and family to buy the DVD to watch your 30 seconds of fame (just kidding).
8. Share your space - If your home or apartment will accomodate it, consider getting a roommate. For those who don’t want to permanently give up their space/privacy, consider interns or summer school students who only need to stay for a few months. Every year my company hires summer interns and I know someone who took advantage of this opportunity. He got a few hundred dollars every month and the intern got safe and comfortable housing near the job.

What are YOUR ideas for making extra income?

photo credit: Paul Keleher

I can’t believe that the year is almost half over already.  However, now is a good time to do some preventive maintenance regarding your taxes.  Rather than being surprised with a huge refund or even worse, a huge tax bill, next April, take a little time this week to get a rough estimate of your tax situation.

One way to do this is an easy, ‘back of the envelope’ calculation.  Add all your income (wages, interest, freelance income, rental income, etc.) then subtract your deductions, either the standard deduction or itemized deductions (i.e. mortgage interest, charitable contributions, state and other taxes).  Also, subtract personal exemptions (one each for you, your spouse if you’re filing jointly and any dependents).  This gives your taxable income.  You can the tax tables at the IRS site to find out how much your tax liability will be.  Then compare this to the amount of taxes currently being withheld.

Personally, I prefer to be as close to zero as possible but would rather pay a few hundred than to get a refund (an interest-free loan to Uncle Sam).  If you find that you’re on track to get a large refund, consider lowering your withholdings to have less taken from your check.  If you find that you’re on track to owe a large amount, consider making IRA contributions (if they would be deductible for you) as well as increasing the amount withheld.   While I don’t advocate large refunds, a large tax bill isn’t good either.  In addition to the possibility of not being able to come up with the funds, you run the risk of an underpayment penalty.  So play it safe and don’t run afoul of the IRS.

photo credit: tompagenet

Part of keeping your financial house in order is preventive maintenance / nipping things in the bud.  Small issues, left unchecked, can turn into big problems.  Case in point,  I spoke with an acquaintance over the weekend who wanted to pay me to ‘fix’ his credit.  Of course I declined because there’s no need to pay anyone to fix your credit.  There’s only so much ‘fixing’ that can be done and you can do that yourself, for free.

That said, I asked him what the problem was.  He let a number of small bills (under $100) go to collections.  They were all medical bills.  When I asked how the accounts went to collections, he stated that the insurance company had notified him that they didn’t cover the full cost of the procedures but he simply ignored all those notifications.  He felt the insurance company was in the wrong and should have covered the total costs.  However, he never bothered to communicate that to them or make arrangements with the doctor’s office.

As a result of failing to make a few phone calls, now he has several collection accounts on his credit report.  So now, his credit score has dropped and it’s going to take more than a few calls to get the issue resolved.   He’s found himself in a predicament that could have been very easily avoided.  Simply put, he let a molehill turn into a mountain.

Using an online random number generator, the winner of the giveaway is commenter #4.  So congratulations to Product Junkie Diva!

photo credit: Pacdog

Yesterday, one of my coworkers asked me which brokerage I used for my IRA and if I was satisfied with them.  I told her I had two - one with TD Ameritrade and one with ShareBuilder - and I was happy with both.  I also told her that ShareBuilder has a $25 annual fee if you don’t enroll in their automatic investing plan.  Her response was that it’s just $2/month.  And she’s right, but…

I think those small expenditures can trip us up.  Sure it’s only $2/month.  But then, HBO is only $10/month, stopping at Starbucks every once in a while is only $15/month and those extra features on your phone are only $5/month and before you know it, you’ve squandered $50-100/month.  Why not reclaim some of those funds and put them where they count - on things that are important to you?  Being frugal doesn’t mean depriving yourself but it does mean evaluating how you spend your money and how to make the most of what you have.

I subscribe to a number of financial magazines - Smart Money, Kiplinger’s and Money Magazine.  I think Money is the best for the average consumer, someone who needs good advice but doesn’t have a particularly complex financial/tax situation.  Therefore, I’m giving away a free one-year subscription to one lucky Ms. Money Savvy reader.

All you have to do to enter is leave a comment (with valid e-mail address) on this post.  On next Friday, June 13th, I will announce the winner, which will be chosen at random.   Only one entry per person please and the winner will have three days to contact me with their mailing address or the subscription will go to a ‘runner-up’. 

photo credit: »Philo

Consumer Reports published an article on the eight benchmarks of borrowing.  I must say that I don’t agree with all of their benchmarks.  For example, they state that non-mortgage debt (i.e. auto loans, credit cards, etc.) shouldn’t be more than 20% of your gross income.  If a person has a gross income of $45K (close to the US median), that’s $750/mo.  That’s definitely a bit bunch and an indicator that you’re probably living above your means.

The article also lists 28% for mortgage payments (PITI) which I feel is reasonable.  However if you’re spending 20% on non-mortgage debt, 28% on your mortgage, 25% on income tax, you can see where this is headed.  Not much left to pay other bills or save.

Last but not least, they give a benchmark of 650-700 for your FICO.  I consider 650 average at best.  700 is a much better bar to set.  Once you reach that level, you’ll be able to obtain the best rates for loans and credit cards (though I hope you won’t carry a balance).

How do you compare to Consumer Reports’ benchmarks?

Well, I just finished doing my monthly update.  As you may recall, I set a stretch goal of saving 25% of my gross income (from all sources) for retirement this year.  At the end of April, I was at 17.69%.  At the end of May, I only increased to 17.74%.  However, this week I will add more to one of my retirement accounts to get me to 18% of my income through May.

The plan for the rest of the year is as follows - 19% by the end of June, 20% by the end of July and so on until I reach 25% by the end of December.  How are you progressing in whatever challenge you set for yourself?