Making Your Money Work
This section is really a work in progress, but if you haven't already had the chance, get a copy of either "Money Mastery: How to Control Spending, Eliminate Debt, and Maximize Your Savings" or "Lower Your Taxes--Big Time!: 137 Wealth-Building, Tax Reduction Secrets from an IRS Insider" both by Sandy C. Botkin. Chesapeake Public Library has both, or you can get them from buy.com (I've personally sent copies of the second book to several people as gifts--that's how powerful I think the information is.
- Get out of debt.
- "Getting Out of Debt" published online by Virginia Tech and the Virginia Cooperative Extension
- "Husbands and Wives: Getting Out of Debt" published online by family.org
- Thrify Fun
- Stay out of debt.
- Don't spend more than you earn.
- Plan (budget) for future expenses.
- Refinance your mortgage.
- Buy a Home.
- Track your donations.
This is critical to your financial well-being! Debt not only keeps a strangle-hold on your finances and budget, but causes unnecessary stress in your life. Money-related problems are the number one reason so many marriages end in divorce.
I'm not an expert in this field, so I won't begin to try to advise you, but will instead point you to some outstanding resources on tackling this problem.
This one is easy! What it boils down to is two basic rules:
This means saying "no" to non-essential purchases. This could mean "no" to the cell phone, "no" to the luxury vacation, or even "no" to the new pair of darling new shoes you saw in the mall. It also means saying "no" to the kids!
I think it's easy, but I've had years of attitude adjustments. It takes motivation and diligence, but eventually you will find yourself asking, "can I live without this?" before you make each purchase.
If you have a tendency to over-spend, train yourself by using cash only for purchases. Don't carry a credit card, or even a debit card if you lack the self-control or tend to justify purchases.
To get some perspective on your spending, I highly recommend "Your Money or Your Life: Transforming Your Relationship with Money and Achieving Financial Independence" by Joe Dominguez, it really helps you get a reality check on your relationship with money.
You can't expect a car to run forever or never need repairs. Ditto for home repairs and other major expenses. Ideally, in addition to saving for retirement and other non-liquid investments, you should have six months living expenses in an easily-accessible savings account.
If you haven't refinanced your mortgage in the past few years, you should really consider it. I was on the fence until I ordered and read the report by Doris Dobkins of Creative Marketing Solutions "Refinance Secrets Revealed." I used the information in the report to refinance very inexpensively and immediately started saving over $200 a month--and I did NOT extend the life of my loan or take any equity out of my house. And just to ease your mind, I'm not an affiliate and do not get paid for referrals. Has to be close the the best $17 I ever spent!
There are some people who would argue the benefit of home ownership. And, there are some instances where it would be a bad idea. But for most folks, buying a home is one of the best investments in their long-term financial health they can make.
When you rent, you are paying somebody else's mortgage! They are earning all the equity in the property. What do you get for renting? Well, obviously a place to live, but nothing else!
Unfortunately with the housing boom here in Chesapeake, buying has become much more difficult. There are very few homes left under $150,000. There are certainly options for first-time home buyers, though. Fixer-uppers (few around, but they exist) are one option. Townhouses are a small-scale place to start. Duplexes, condos and HUD-owned property are also available. You might be able to find a rent-to-own option if you look hard enough.
One thing to be careful of is not to over-borrow and pay an inflated price for a house or buy more house than you need in this volatile market. Especially with the potential closing of Oceana, the upward swing on prices won't last forever. That said, paying more than the house might otherwise be worth is only a problem if you can't afford the payments and/or you plan to sell in a couple of years.
The decision to buy a home is a personal one. Perhaps you don't want any maintenance responsibilities. Renting might be the way to go. Military? Now certainly would be a bad time to buy if you're stationed at NAS Oceana.
I didn't used to be particularly careful about tracking my non-cash donations to charity. In fact, a few years ago I donated the left-overs from a garage sale, which amounted to a very large truck-full of clothing, toys and household items. I valued the stuff at about $175 (figuring that's what I would have got if I'd sold it at my garage sale). A few months later, I decided to go ahead and purchase Intuit's "It's Deductible" software (it was on sale with a rebate and guarantees you will accrue at least $500 in deductions). Sheesh! If only I'd known. The stuff I'd valued at $175 was legally closer to a value of $2000!!! Now I track everything. The software is pretty comprehensive and the companies that make "It's Deductible" and it's competition by H&R Block "DeductionPro" both guarantee their valuation numbers. You just enter in the quantity and choose from a list of easy-to-use categories and verify the condition (good, average, poor) and the software calculates the value and prints a report for each deduction. You can even export the report data to your tax software, as well as the required IRS forms.
One of my favorite programs for keeping detailed records of my finances is Quicken. I've been using it since the first version and can tell on a moments notice how much my family is spending on just about anything.
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