Free is for Me!

January 27th  marked the beginning of the last year of my 30’s. Getting older and finding random gray hairs can be slightly depressing. Although, I was reminded of how joyous another birthday could be every time I opened my e-mail and found a special gift just for me. These gifts were coupons for free stuff! I got them from various corporations because I am enrolled in their membership clubs. The membership clubs offer reward programs which are usually based on a point system.  You accumulate points based on your spending totals. Once you have spent a certain amount of money you will receive a coupon for a free item or a discount on your next purchase. Many of the corporations will give you an extra bonus for your birthday by giving you something for free.  As the saying goes, “Free is for Me!” `

Since January is my birthday month, I have received coupons for free meals from IHOP and Houlihans, wings from Buffalo Wild Wings, ice cream from Cold Stone, a beverage from Dunkin Donuts, and my choice of an appetizer or dessert from Red Lobster and Olive Garden. I also received $25 in coupons from DSW and $15 from Best Buy. This is only a partial list of membership rewards I received. Signing up for membership clubs at many stores and restaurants is free and normally an introductory gift is given just for signing up.  The corporations use their membership clubs to keep customers aware of new product offerings and sales. The preferred method of communication is e-mail. If you do not want the store promotions intermingling with other personal or business e-mails, I suggest setting up a separate email account for your club memberships.

Receiving these coupons can be an extra little perk, but they can also save you a significant amount of money over time. I have a dog that eats expensive food that doesn’t go on sale often. I am enrolled in the Petco rewards club. Every time I reach $100 in purchases, I receive a coupon for $5 off my next purchase. That is an 8% savings on a $60 bag of food.

Being a part of these memberships clubs has shaped the way that I think about spending. I almost never want to pay full price for anything. I seek ways to find discounts and keep more money in my pocket! Below is a list of some stores and restaurants that offer membership club rewards. Go sign up and enjoy your savings!

  • Benihana
  • Best Buy
  • Buffalo Wild Wings
  • California Pizza Kitchen
  • Chili’s
  • Cold Stone
  • Dairy Queen
  • DSW
  • Dunkin Donuts
  • Houlihans
  • IHOP
  • Longhorn’s
  • Panera
  • Petco
  • P.F Chang’s China Bistro
  • Olive Garden
  • Outback
  • Red Lobster
  • Ruby Tuesday
  • Starbucks
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Don’t Spend Money You Haven’t Earned

It is that time of year again, when we gather with friends and family around a large feast and discuss why we are thankful. While you take this much needed time for reflection, know that there is a well-developed plot against you that is about to unfold. It is what many Americans have come to know as Black Friday. Black Friday is the day after Thanksgiving that marks what some say is the official start of the holiday shopping seasoning. The term “black” refers to retailers making a profit or “being in the black”.  The day was designed to separate you from your money.

Studies have shown that Black Friday is one of the busiest shopping days of the year. According to the National Retail Federation,  in 2013 consumers spent $57.4 billion dollars during the Black Friday weekend. What makes Black Friday so different from the other 364 days of the year? The lure of rock bottom prices, steals and deals that retailers claim you will only see on this one day. People line up and camp out at stores, hours even days before the Friday store opening, to ensure their chances to purchase that “must-have”.

I am not sure if this is capitalism at its best or at its worst. I don’t think I need to say (but I will), that $57.4 billion dollars is a heck of a lot of money. I wonder how much of that was actual money that consumers had versus credit they used. I know it is easy to be lured in and to think that you are actually saving money with Black Friday deals, however it is only a deal if you have the money to make the purchase.

Get out of the habit of spending money that you have yet to earn. That is exactly what is happening when you use credit cards with the intention of paying them off at a later date. After paying the interest that accrued, I guarantee you that the purchase wasn’t much of a bargain when it is all said and done.

I say this from experience because I would shop on Black Friday religiously, and used my credit cards without hesitation. I would swipe my cards without any immediate consequences and rave about the money I “saved”. Once I received the credit card bills, reality set in. I, like many other credit card holders, didn’t have the money to pay off my balances. I then struggled to figure out how to pay these new bills with my existing expenses.

As the saying goes, “When you know better, you do better”. I no longer make this common financial mistake.

Going into debt to get more “stuff” simply isn’t worth it. Being able to sleep at night without financial worries, is far more valuable than the last electronic or a new pair of jeans.

Remember, if it is not in your budget, you can’t afford it.

Happy Holidays and remember to be financially responsible!

Don’t Be Afraid to Negotiate

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Negotiation is a powerful tool that consumers do not use enough. Salespeople know the majority of buyers would rather not engage in haggling over price. Initially, it can be uncomfortable talking about cost and your unwillingness to pay the stated amount. I would shy away from negotiating because I didn’t want to appear as if I couldn’t afford the item I wanted to buy. I was actually concerned about how the salesperson would view me. One day I realized this was a bunch of psychological nonsense. There is a psychology to selling and I was playing right into the hands of the person that wanted to take me for every dime possible. I will offer you this useful advice, if you are scared of negotiating….get over it!

You work hard for your money, don’t give it away easily. As I said, there is psychology to selling goods and services. It is all designed to create a transaction that is most beneficial for the seller. Use the tool of negotiation to make the playing field a little more even. Negotiating is a skill but anyone can master it. It will require that you do a little homework, but the small amount of time you spend doing research can potentially save you a significant amount of money. You will need to gather information from a few different sellers/providers about the price of the goods or services that you are looking to purchase. If the seller/provider that you choose to do business with doesn’t have the lowest price, use the information you gathered to negotiate a better deal.

There are a few rules to remember when negotiating. First, have a predetermined amount that you are willing to spend. Always exhibit confidence and stand firm in your decisions. Lastly, if you don’t think you are getting the best deal or what you want, don’t be afraid to walk away.

There are certain situations that are notorious for negotiating, like buying a car. There are other situations where negotiating can be used as well, such as having work done around your house. I recently tried this myself and was very happy with the outcome.

I needed to have the fence that surrounds my backyard replaced. When having any type of work done it is best to get three estimates so that you can make an informed decision. That is exactly what I did.   I was shocked by the huge difference in the estimates I received, but decided to use it to my advantage.

The three estimates were:

Company A-$3,008

Company B-$2,554

Company C- $1,925

I ruled out the estimate from Company A, because it was significantly higher than the other two. Even if I negotiated a lower price I thought it would still be inflated. I wanted to contract with Company B because I believed they would do the best work. Despite that, I couldn’t  ignore the $629 difference between them and Company C. I wasn’t going to do business with Company B unless we negotiated a lower price.

I contacted Company B via e-mail and attached the estimate I received from Company C. I explained I would like to do business with them but I received another estimate that was significantly lower. I asked that we split the difference between the two estimates and contract for $2,239. I received an e-mail back from Company B, stating that Company C neglected to include the $150 cost of a necessary permit in their estimate. Based on that Company B stated they would do the job for $2,314.

This prompted me to do a little more research and I found out my township didn’t require a permit for the type of fence I was going to have installed. I e-mailed Company B back with this information and requested that the full amount of the permit be removed from their estimate. My request was granted and I was very pleased when we agreed on a final price of $2,155. That was $399 off the original estimate I was given.

I saved all that money because I wasn’t scared to negotiate. I did my homework and I went into the discussions prepared. I did not cave when I received resistance to my first counter-offer. Like with any skill, you will get better and more comfortable with negotiating the more you practice. So don’t hesitate to use negotiation when you can. Don’t forget to share your stories with me. I would love to hear them!

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Creating A Monthly Budget

Now that you have an understanding of where your money is going each month, it is time to create your monthly budget. The term monthly budget doesn’t always spark positive thoughts. A budget may be looked at as being restrictive or a hindrance to your lifestyle. I don’t want you to view it that way. A budget is a tool used to help you maintain your standard of living and meet your financial goals.

What are some of your financial goals? Is it to pay off your credit card debt? Save for a down payment on a house? Or increase your emergency savings fund? Whatever your goals may be, budgeting will help turn them into a reality.  Create a chart similar to the one I have below. List your goals and figure out how much money you need to obtain them. Then determine the timeframe in which you want to achieve each goal. . Give your goals a priority, because you may not have the funds to accomplish each goal at the same time. Therefore, you may have to wait before you can add a goal into your monthly budget. Below is an example of the worksheet:

Goal Total $ Amount Need  # of Months to Reach Goal  $ Need Each Month Priority
Vacation 1000.00 12 83.33 3
Laptop 500.00 12 41.67 4
Six months of Salary in Savings 18000.00 60 300.00 1
Create fund for Home Repairs 5000.00 36 138.88 2

Now we are going to construct your monthly budget. Use a spreadsheet application to create your budget. If you don’t have access to software, you can construct a chart similar to the one I have below.  You will add the following sections:

  1. Net monthly income
  2. Monthly expenses
  3. Lifestyle Expenses
  4. Financial goals

Subtract the total of your monthly expenses, lifestyle expenses and financial goals from your net monthly income. Below is an example:

Net Monthly Income 
Bi-Weekly Paychecks $3,000.00
Child Support $400.00
Total $3,400.00
Monthly Expenses
Mortgage/Rent $1,100.00
Car Payment $300.00
Utilities $250.00
Cable $100.00
Credit Cards $100.00
Car Insurance $85.00
Cell Phone $85.00
Total $2,020.00
Lifestyle Expenses
Groceries $250.00
Gas/Transportation $160.00
Clothes/shoes $70.00
Eating out $50.00
Hair Done/Cut $50.00
Total $580.00
Financial Goals
Six months of Salary $300.00
Funds for Home Repairs $140.00
Savings for College Tuition $200.00
Total $640.00
Net Monthly Income $3,400.00
Monthly Expenses+ Spending+Fin. Goals ($3,240.00)
Balance $160.00

After completing your budget, if your balance is positive, meaning you have money left, congratulations! You have created a budget that is within your means and have increased your chances of sticking to it.

If your balance is negative, meaning you do not have any money left, you will need to rework your budget. You have to reduce the amounts designated to your lifestyle expenses and your financial goals.

Remember the amount spent on each item within your monthly budget doesn’t have to be set in stone. You should always be looking for ways to reduce your expenses. Also once you accomplish one of your financial goals you can remove it from your budget and work towards the next goal on your list.

Keep your budget somewhere easily accessible so that you can refer to it and become familiar with it. If you are having trouble sticking to your budget you will need to re-work it or use greater discipline in your spending habits.

If you have any questions or need some advice, just ask. I would be happy to hear from you! Stay tuned for my upcoming posts on ways to save money and stay within your budget!

 

Why Don’t I Have More Money?

I know that I said in my last post I would tell you how to create your monthly budget.  Before we do that I want to address a situation that you, amongst many others, may be in. After calculating your monthly disposable income, (by subtracting your monthly expenses from your net monthly income) did it appear that you should be doing better financially than you really are? On paper, do you have money left after paying all of your bills but still fall short each month? If this is the predicament you find yourself in, we need to further exam exactly what you are spending your money on. You are spending more than you can afford and you need to be conscious of where your money is going.

I remember when I did a financial evaluation because I was starting the process of buying a home. I was happy with the final numbers and the amount of home that I could afford. I was also fully aware this was nothing more than my financial picture on paper. My financial reality was slightly different. I had a few bad habits that I knew I was going to have to get under control before I actually purchased my home. I ate out way too much and I was known to frequent the mall a little too often.

To tighten the reins on your spending habits, begin by making a list of things that you have a consistent cycle of spending money on. For example, how often do you go out to eat, to the club/bar, get your hair done/cut, buy clothes or engage in one of your hobbies? If you did not include food, gas (or transportation expenses) as a part of your monthly expenses from the last exercise, include them on your list.  Once you have the complete list, give a dollar amount of how much you spend on these items each month.

Being realistic about your expenses and your spending habits is key to being able to create a budget that works for you and will allow you to stick to it. If you are having trouble figuring out exactly where your money is going, then I want you to track every penny that you spend for one month. Yes, I really did say, every penny for one month. Remember, I said I would help you make your finances simple, however it will take some effort on your part.

To track your spending, you can use your debit card for purchases so that you can have an electronic account of your spending in one place. If you need to pay in cash, keep all of your receipts. To make it easy on yourself, I suggest tallying your receipts each week. Then add up the grand total at the end of the month.

Once you have this valuable information, prioritize how important these expenses are to you. Think of how you can begin to scale back or possibly eliminate expenses. Once again, make sure that you are realistic. If you eat out 3 to 5 times a week and spend about $50, don’t make your goal to stop eating out altogether. Instead make a more realistic goal like eating out once a week with a limit of $15. If you stop each morning before work to grab a $2 cup of coffee, you can start making your own coffee at home. You can save $40 a month on the store bought coffee.

After evaluating your spending and figuring out ways to cut back, if you still don’t have enough disposable income, you need to figure out how to increase your income. Keep this in mind though, for every dollar that you earn you only keep a percentage of it due to taxes that will be taken out. However, you will be able to use the full amount of each dollar that you are able to save by cutting back on your expenses. Therefore, cutting back on your expenses, if you can, will be more beneficial.

Thanks for reading and walking with me towards “Finances Made Simple”. Make sure to check out my next post when I help you to create a monthly budget.

What is Coming In and What is Going Out?

Every time I hear the phrase “living paycheck to paycheck” it makes my ears hurt. There are so many things wrong with this phrase for so many reasons. I can’t help but want to ask a series of follow-up questions, such as how much money is being made and what is it being spent on? Please, understand I am not being judgmental. Right now, there is a major debate in this country about people being able to earn a wage that allows them to live a decent life. I fully understand that trying to make ends meet can be difficult. However, I do think there are things that can be done so that people can start to break the paycheck to paycheck cycle. I want to help you create and manage your monthly budget. Before we do that, we need to evaluate your financial state.

Calculate your monthly income

First, figure out exactly how much money you make and/or receive each month. This is a fairly simple process. If you work the same number of hours each week or you are salaried, add up the net amount of your paychecks for a month. The net amount is the actual money that you receive after taxes and any other payroll deductions you may have. If you are paid hourly and your hours worked fluctuate each week, use three months of pay stubs. Add up the net amount of all the paychecks, then divide by three. This should give you a good estimate of the amount of income from work you can expect to have on a monthly basis. Also consider any money that you rely on from sources other than a job. This could include funds from a Social Security check, disability check, alimony or child support.

Calculate your monthly expenses

Once you have calculated your monthly income, make a list of all the bills that you pay on a monthly basis and the amount you spend on each. The list should include expenses such as your monthly mortgage or rent, car payment, electricity, water, credit cards, cell phone, etc.  No bill is too small. If you pay $15 a month to have the paper delivered to your house, include that as well. For utilities that fluctuate such as gas and electricity, take a six month average of what you pay. Add up the total bills for six months and then divide by six. Use this number as your monthly amount. Personally, I like to include food and gas for my car as part of my monthly expenses. I include them because they are necessities that I spend roughly the same amount on each month. However, since they aren’t actual bills, for this exercise it is your choice to include them or not.

Determine your disposable income and what to do next

Now, that you have your net income and monthly expenses, you can determine your disposable income. Disposable income is money that you have left to spend on whatever you choose.  Subtract your monthly expenses from your net monthly income and the amount left is your disposable income.

Below is a sample chart of an income and expense comparison.

 

Income Source Monthly Amount
Net Bi-weekly paycheck-$1500 $3,000
Child support $400
Total $3,400
Monthly Expenses Amount
Mortgage/Rent $1,500
Car payment $350
Utilities $300
Student loan $100
Cable $100
Cell phone $80
Car Insurance $80
Credit Card $75
Total $2,585
Monthly Income-Monthly Expenses Disposable Income
$3400-$2,585 $815
*This example does not include food or gasoline, because they aren’t fixed debts. Include them if you want a more precise representation of your disposable income.

Now that you have this very important information, how do you feel? Are you surprised, shocked, happy or was it what you expected?

If your net income was lower than your monthly expenses, you have no disposable income. You are in a deficit each month and living above your means.  A deficit is the amount by which something, especially a sum of money is too small. You need to review your expenses and figure out which ones can be reduced.  Target the expenses that are luxuries and figure out how you can cut back. For example, if you are paying for the premium cable package discontinue service or at the very least downgrade.

If you fall into the category of having some disposable income but not as much as you would like, go through the same exercise. If you conclude there aren’t areas where you can cut back, then you need to focus on ways to increase your income.

Finally, if you are pleased with the amount of disposable income that you have, congratulations on being a good steward of your finances. Creating a monthly budget can still be beneficial to you. A budget is a plan about how you are going to spend your money. It is important you have a plan to help you achieve personal financial goals.

In my next post I will give details and instructions on how to create a monthly budget that will work for you. My hope is that the information I have supplied was helpful and just the first step in our journey of making your finances simple!

Start Managing Your Money

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There are many conversations that take place around money. The topics range from making money, not having enough money and all the ways we find to spend money. Another topic that needs to be added to the conversation is managing money.  I have a Bachelor of Science degree in Finance and Marketing from Drexel University, and I understand that thoughts of managing money can be scary. For many the phrase “managing your finances” sparks thoughts of investing in stocks, bonds and other financial instruments. Some believe that this is a science that they will never master and usually shy away. There is no reason to be scared.

You can take small steps in your journey of understanding and mastering your financial situation. You don’t need to aspire to be the next Wall Street superstar, but you can be a successful manager of a household budget. In the past 20 years I have gone from not having 65 cents in my pocket to buy a soda on a hot summer day, to being a financially stable homeowner with a luxury car parked in the driveway. I have learned a lot during this time and I want to share it with you.

I want to start with having you evaluate your current financial state. If you are making more money than you can spend, this blog may not be for you. For the other 99% of America, I have practical tips that can improve your financial situation and increase your quality of life. Yes, I am saying that improving your financial outlook can make your life better. Think about it, what if you could decrease the stress in your life that is associated to money? Wouldn’t your life be better?

I want to help you learn about managing money in a way that may be new to you.  It will take some effort but I assure you that implementing some practical techniques will pay off. So let me help you, make your finances simple!