The next quarter starts September 30 so I need to register for the next segment of the class.  I’ve been slacking and never bothered to take the necessary steps to get the $120 refund I’m owed from the school for cancelling a class.  I guess that money will transfer over for the next class I’m taking.

Biting off more than I can chew has cost me.  I was taking an online course as well (a bad idea, I know) and that course is set to complete this Friday.  However, I am nowhere near finished so I will have to pay $100 to extend the course for three more months.  I can’t afford to procrastinate again.

Mr. Savvy and I are contemplating starting another small business.  I haven’t done all the necessary research yet but if we do, it definitely won’t be until after the beginning of the year.

As to why I was out of town for two weeks – a much needed vacation.  Mr. Savvy and I went to New Zealand and Fiji.  Though the weather was horrid the first week (cold and rainy), we made the best of it.  We had great fun but it was definitely a hit to the finances.  Needless to say, budget talks are on the agenda for this weekend.

What’s going on in your financial world?

Travel is really the budget buster but anyone who knows me knows how I love to travel.  I travel as economically as possible (using FF miles and hotel points and searching out deals) but we still spend large amounts on travel.  I’m thinking the solution is to refocus my efforts to pay off my car early.  Once that happens, I’ll have more money left over for traveling and for saving.  I have had a couple of abnormal expenses this year (tuition for two classes, unexpected medical expenses while on vacation and the purchase of a netbook) but I’ve got to do better.

Have you started putting together your budget for next year?  I know it’s ‘only’ August but fall will be here before you know.  Next are Thanksgiving and Christmas and you know you won’t get anything done then.  So pull out your records and a piece of paper this weekend and get started!

I recently read the book Living Rich for Less.  It was a quick read and had many useful tips for those still trying to pare down their budgets.  Therefore, instead of letting the book collect dust on my bookshelf, I’ve decided to give it away to one of my fabulous readers.  Simply leave a comment detailing one of your own budget tips and you’ll be entered.  You can leave as many tips as you want but only one entry per person.  I will announce the winner on Saturday morning.

photo credit: Richard Faulder

It’s been my experience that very few expenses are truly unexpected. Therefore it makes sense to plan ahead so that you don’t find yourself scrambling to pay bills. I like the technique a lot of people call a “freedom account” or “freedom funds”. If you look at your spending for the past year, I’m sure you can identify many irregular expenses, expenditures that don’t necessarily occur on a monthly basis. These are things like auto registration, auto insurance, HOA fees, termite/pest control, annual dues/memberships, etc.

The first step to getting a handle on ‘unexpected’ expenses is to determine the general amount. Add up all the irregular expenses you incur then add ~10% just in case. If you don’t already have a savings account you can use for your “freedom fund”, consider opening an online savings account. I prefer ING because it allows you to set up sub-accounts.

Next take the yearly total you established in the first step and divide by your number of pay periods (i.e. 52 if weekly, 26 if biweekly, 12 if monthly). Each pay period, transfer that amount into your freedom fund. Then when one of those expenses arises, you can simply transfer the money to your checking account and not have to worry about how to pay that bill.

Some of you may be thinking that you can’t ‘afford’ to make those regular transfers to your freedom fund. I say, those are expenses that you will incur, like it or not. Therefore, if you can’t afford it, you’re living above your means (spending more than you make). If that’s the case, you should take a good look at your budget and see where cuts can be made. Can you lower the costs of your cellphone bill or cable bill? Can you bring your lunch to work a few times of week instead of going out to lunch? For most people, there will be numerous ways to cut spending. By taking these steps, you’re that much closer to achieving financial freedom. Doesn’t it feel good?

1. Create a budget – Know how much money you bring home and how much you spend. If you are unfamiliar with how to create a budget, many credit unions offer free financial literacy classes.
2. Vow to spend less than you make – Nothing makes more sense than living within your means. If you are constantly overspending, you will never have enough money to save or invest.
3. Watch every penny – Dropping unnecessary services and avoiding ATM fees are just a few of the ways you can find some extra savings. Many credit unions offer free access to thousands of ATMs through participating networks.
4. Review your credit record/financial statements regularly – Request a free copy of your credit report once a year at www.annualcreditreport.com. Scrutinize your financial/credit card statements regularly to ensure that identity thieves are not running up charges in your name. Report any questionable charges immediately.
5. Reduce your debt – Assess your outstanding debt and make a plan to reduce your balances. You might also consider consolidating your debt. With consistent payments above the minimum, you can reduce your debt significantly.
6. Plan ahead – In everything from vacations to holiday shopping, it pays to plan ahead. How about starting a vacation or holiday account to fund those big purchases? At many credit unions, you can open an account with as little as $5.
7. Start an emergency fund – Unexpected events like an illness and an auto or appliance repair often require big money. Most financial advisors recommend saving three-six months’ expenses to fund these items.
8. Make your money work for you – Credit unions offer competitive rates and great service in a broad range of products including savings and checking accounts. Many credit unions also offer online services. Go to www.culookup.com to find a credit union you may be eligible to join.
9. Use credit cards smartly – Get a credit card with a low annual fee or with rewards that suit your interests and remember to pay your bills on time. Consumer Reports recently found that credit unions offer some of the best credit card rates. For example, credit cards and all loans issued by federal credit unions cannot exceed 18 percent. In fact, the average interest rate was about 11 percent on credit cards from federal credit unions in December.
10. Protect your family and your assets – Make sure you have enough insurance coverage for your property as well as yourself and your family. Make a will if you don’t already have one. Shred financial documents and/or credit card offers before throwing them out to avoid revealing personal information unnecessarily.

Are you a member of a credit union?  If not, I would suggest looking into it.

photo credit: Leonid Mamchenkov

For several months, I’ve been debating whether or not to get a Blackberry. While it would definitely be a great convenience, it isn’t a NEED. While I can justify the purchase price by using my ‘fun money’, I can’t justify the increased monthly bill. I currently pay $30.80/month and the Blackberry plan would increase that amount by ~$27/month. So what’s a girl to do?

My own self-imposed solution is that I can’t get the Blackberry until I figure out a way to increase my income by that $27/month or decrease my current expenditures. I could pretend that if I got the Blackberry, I would decrease my clothing or dining expense by $27 each and every month but I know that’s not true. Therefore, I assigned myself the task of finding a FIXED and MEASURABLE expense to decrease. I decided to attack one of the ‘heavy hitters’ aka car insurance.

Somehow I discovered (I think it was through another pf blog) that AAA offers car insurance. I had no idea. I submitted a quote through their website and an agent responded to me the next business day. The AAA premium is a whopping 28% less than what we currently pay and the coverage is comparable. That would cover the change to my monthly cell phone bill and then some. I haven’t pulled the trigger yet though, because I want to verify that AAA can provide our umbrella insurance as well. We currently use the same provider for auto and umbrella insurance and I’d like to keep it that way.

What tips and tricks do you use to get what you want while keeping your financial ship on course?

photo credit: Roebot

Many people research ways to save money when planning a vacation such as airfare or lodging deals.  However, most fail to evaluate ways to save money while ON vacation.  Mr. Savvy and I recently returned from a week in Mexico.  Here are some of the tips we used to save money while we were gone.

• Set a budget before you leave – It’s easy to overspend if you aren’t careful.  Therefore I always set a budget for spending money before I leave.  I always have a notepad with me in general so I devote a sheet of this pad to my vacation spending.  I note what my budget is as well as how much of that is allotted for cash.  Then, as I spend, I jot down what I spent and when.  This also comes in handy when it’s time to reconcile your bank account or credit card statement.
• Don’t overpay for souvenirs – Souvenirs can pricey.  However, try to avoid the tourist areas and look for the same items in the areas where the locals frequent.  Also, only purchase items that you will truly cherish or use.  Do you really need yet another T-shirt?  On this trip, Mr. Savvy and I purchased a small sculpture for our home.  We’d been looking for an accent piece for our foyer and were able to kill two birds with one stone.  Now we have something memorable from our trip as well as home decor.
• Don’t bother with travelers checks or exchanging your money – Unless you’re going somewhere truly off the beaten path, travelers checks are of little use.  I prefer to use my credit card whenever possible as well as withdraw some local currency from the ATM for ‘walking around money’.  You can get a better exchange rate and avoid fees by making ATM withdrawals instead of exchanging money.  Also, if you withdraw more local currency than you need, don’t change it back to dollars (or your home currency).  The exchange rate is not as good.  Instead, apply your remaining local currency to your hotel bill and put the remainder on your credit or debit card.
• Consider the alternatives – Don’t be so quick to take advantage of the hotel offerings.  They’re often marked up.  As an example, instead of buying pricey snacks from the hotel shop, Mr. Savvy and I walked to a nearby convenience store and bought snacks and beverages to keep in our room.  Another couple in our hotel opted to take a taxi to Walmart to do the same.  Activities were also more expensive when booked through the hotel.  There was a snorkel tour being offered for $35 per person.  We took a cab to the same area (we had our own equipment) and snorkeled for $34 total.  We saved 50%.

Of course, this is not an exhaustive list but just a few ways you can save money while on vacation.  What are your favorite vacation money tips?

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.

People often wonder how they should go about making a budget.  In my opinion, CREATING a budget is easy.  It’s STICKING TO the budget that can be hard.  Here are the simple guidelines I used when I created a budget.  Of course, you can tweak these percentages as need be.

tithes or charity – 10%

retirement savings – 20%

savings (e-fund) – 5%

taxes (estimated effective rate) – 15% for homeowners, 25% for renters

housing – 30% (mortgage/PITI and maintenance) for homeowners, 20% for renters

everything else – 20%

I’ve found that using these amounts as a guideline will have you well on your way to financial stability/independence.