Do We Need A Family Budget?
June 23, 2008 by Christina Lemmey · Leave a Comment
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You’ve been thinking about making a family budget, but so far you just haven’t gotten around to it yet. Making a family budget may not be the most fun thing to do, but it really isn’t all that hard and may help you save a lot of money.
Spend Less Than You Make
The goal of a family budget is to spend less than you are making. You don’t want to be living over your means, at least not on a consistent basis. A family budget will help with this by showing you exactly how much money you have coming in each month and how much money is going back out. The money coming in will be your and your spouse’s salaries, plus any other money you have coming in from investments etc. The money going out is everything you spent from your rent or mortgage to grocery money. Your budget should calculate a running balance of where you stand for the month.
Identify Where You Are Wasting Money
Listing every dollar you spend each month will help you identify you were you may be wasting money. Spending $4.50 on a Mocha Late in the morning may not seem like a big deal, until you realize you are spending it 20 days a month making your Mocha Late total for the month $90.00, more than your cable bill. Having your monthly expenses on paper or in a spreadsheet can be a real eye opener when it comes to identifying where you may be wasting money each month.
Start Saving
Now that you identified where you were wasting money and are spending less than you are making, you can start saving money. Set some money aside and pay off your consumer debt such as credit cards. Just imagine how much you will save each year by not paying interest on that debt. Once your consumer debt is paid off, start setting up an emergency savings account. You should have enough money in this savings account to keep you going for at least 3 months. After that use your savings for a family vacation, your kid’s college education, and of course your own retirement.
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25 Easy Money-Saving Tips
June 16, 2008 by Christina Lemmey · 1 Comment
1. Cut out the soda and drink more water! You’d be surprised how much you will save.
2. Go over your grocery list. Try buying more off-brands. Most of the ones I’ve tried are just as good as their more expensive counterparts.
3. Buy clothes and shoes for you and the kids from the clearance racks. I have been buying my sons’ school clothes this way for years!
4. Get movies from the library instead of renting them.
5. Same with books, borrow instead of buy. We usually only read them once anyway.
6. Go on a picnic instead of going to the restaurant. It is more fun and much cheaper!
7. Toss all your change in a “piggy bank” of some kind and let it accumulate for a few months or longer. You will think you struck it rich! (Not really, but it does add up)
8. If you have all the movie channels, cut them down a bit. Most of the movies rotate through them all anyway.
9. Do your laundry at night. The rates are cheaper.
10. Give your clothes an extra spin as it costs less to run a washer than the dryer.
11. Ask your credit card companies for a lower interest rate. Sometimes rather than lose a good customer, they will grant your wish!
12. Buy your holiday decorations AFTER the holiday. You can save up to 75% or more.
13. Turn down your heat a couple degrees more at night and throw on an extra blanket.
14. Clean behind your refrigerator at least once a year to get out all the dust and dirt that can cost you more money.
15. Save empty bread bags and grocery bags instead of buying box after box of storage bags.
16. Keep your car tuned and your tires properly inflated to save money on gas.
17. Buy inexpensive fabric for cloth napkins, doilies, etc.
18. Be creative when it comes to decorating. Use sheets to make curtains. Use an old quilt as a cozy wall-hanging. Create an artful display with family photos.
19. Save the new, convenient plastic coffee cans with handles. Paint them, decorate them and use them for organizers for kids art supplies, your CDs, pens & pencils, food envelopes, recipes, craft supplies, etc.
20. Turn unused stuff into money. If you have a gift you haven’t used or that shirt you bought and never wore, take them back to the store. You might not get full price, but some is better than none.
21. Use petroleum jelly to remove make-up. It is much more economical then beauty products made for
removing make-up.
22. Hydrogen peroxide can be used to kill germs in cuts and sores rather then expensive antibiotic medicines.
23. Make windowsill or container gardens and grow herbs and fresh vegetables.
24. Instead of a night on the town, send the kids to Grandma’s and have a romantic night at home.
25. Make and STICK TO a budget!
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Top 7 Ways to Reduce Your Income Taxes
June 9, 2008 by Christina Lemmey · Leave a Comment
Are you paying too much in income taxes? Are you getting all the credits and deductions you are entitled to? Here are 7 tips to help you minimize taxes and keep more in your pocket:
1. Participate in company retirement plans. Every dollar you contribute will reduce your taxable income and thus your income taxes. Similarly, enroll in your company’s flexible spending account. You can set aside money for medical expenses and day care expenses. This money is “use it or lose it” so make sure you estimate well!
2. Make sure you pay in enough taxes to avoid penalties. Uncle Sam charges interest and penalties if you don’t pay in at least 90% of your current year taxes or 100% of last year’s tax liability.
3. Buy a house. The mortgage interest and real estate taxes are deductible, and may allow you to itemize other deductions such as property taxes and charitable donations.
4. Keep your house for at least two years. One of the best tax breaks available today is the home sale exclusion, which allows you to exclude up to $250,000 ($500,000 for joint filers) of profit on the sale of your home from your income. However, you must have owned and lived in your home for at least two years to qualify for the exclusion.
5. Time your investment sales. If your income is higher than expected, sell some of your losers to reduce taxable income. If you will be selling a mutual fund, sell before the year-end distributions to avoid taxes on the upcoming dividend or capital gain. Also, you should allocate tax efficient investments to your taxable accounts and non-efficient investments to your retirement accounts, to reduce the tax you pay on interest, dividends and capital gains.
6. If you’re retired, plan your retirement plan distributions carefully. If a retirement plan distribution will push you into a higher tax bracket, consider taking money out of taxable investments to keep you in the lower tax bracket. Also, pay attention to the 59 ½ age limit. Withdrawals taken before this age can result in penalties in addition to income taxes.
7. Bunch your expenses. Certain expenses must exceed a minimum before you can deduct them (medical expenses must exceed 7.5% of your adjusted gross income and miscellaneous expenses such as tax preparation fees must exceed 2% of your AGI). In order to deduct these expenses, you may need to bunch these types of expenses into a single year to get above the minimum. To achieve this, you might prepay medical and miscellaneous expenses on December 31 to get above the minimum amount.
The most important thing is to be aware of the tax deductions and credits that apply to you and to plan for taxable events. And don’t be afraid to ask for help. The benefits from consulting an experienced tax professional far outweigh the cost to hire that professional.
Article by: Kristine A. McKinley, CPA, Certified Financial Planner®, and founder of Beacon Financial Advisors, teaches people how to invest and plan for retirement, college, and other financial goals. Kristine offers financial and tax planning on an hourly, fee-only basis. Learn how improving your credit score can save you hundreds to thousands of dollars each year by signing up for our free ecourse Boost Your Credit Score in Five Easy Steps.
