How do you make decisions when a major purchase is looming?
Sometimes you have a month or a few weeks to collect some information and cost totals. Sometimes it is a more of an emergency situation. Your car breaks down and there is no other way to get to work for example. You may not have a lot of time to collect the information to go ahead with such a purchase. Often I hear that individuals go to a dealer and take whatever is offered. They often ask to see something in a practical price range, but often are steered to something pricier that they can not live without. In getting the vehicle home, they find that the payments have far exceeded their ability to pay monthly. Often enough, they take whatever financing is available as well as a warranty.
So what should you do? It is important to know what your FICA Score is before doing any financing. This score determines your interest rate. You may notice a disclaimer on an advertisements, "well qualified buyers" for the low rates. This is what they are referring to. You should contact your bank or credit union to see what type of a loan they will offer you. Also try AAA. They will also assist you in the purchase. The car dealership will steer you towards their financing as they get a cut. They also get a cut by selling you the extended warranty. Here is where you set the limit for the cost of the vehicle. Never exceed this cost and keep it affordable. Next, consider a used vehicle with low miles. Many dealers certify previously leased vehicles at a great savings. These vehicles have low mileage and are certified for the remainder of the warranty. They often have many "bells and whistles" for you to enjoy.
Dealers... They make their living from commission. They will do whatever it takes to get you into that car immediately! Be ready, take your time. They will try to make every car affordable to you by extending the terms of the loan. For example, you plan to spend $15,000 for the vehicle. You should not go more than 36 months with the term of the loan, 48 if it is the only way. (thus the used vehicle). The dealer may offer you the brand new model loaded. He will make it affordable and keep it within your budget, BUT the term of the loan is now 60, 66 or 72 months! Walk away. Stay your ground. Hopefully you have looked up a vehicle on Edmunds.com to find out the expected price. It is tempting to take that offer when you are in the moment, much more difficult when the monthly loan is due.
In conclusion; Take your time, do your research and get the loan facts before you go. Even if it is inconvenient for a few days, take a cab and take your time!
If the idea of creating a budget is too overwhelming, start small.
Begin by planning a budget for a special event. It can be an overnight trip, a day at the zoo, a Red Sox game or a day hiking. What ever it is, start by planning out you time. If your event is a day at the zoo, we will need to plan for a day.
First, let's set a goal for what you are able to spend on this day. How much are you able to spend for a day of fun? Be realistic.
Plan out your transportation. How will you travel? A car will need gasoline, a bus or train will need a fare. Plan an amount for that item in your budget. Next we will need to plan for lunch and snacks. Will you buy lunch and bring snacks? Does the zoo allow outside food inside? You will need to find out what your options are here. Maybe you can grab a snack at the zoo and grab some fast food outside the zoo. Do some research and plan that amount in your budget. What is the admission to the zoo? Do they offer reduced rates at certain times? Do children get in free? Plan that as a budget item. Another consideration if you are driving is do they charge for parking. Budget this as well. Lastly, you will need to discuss if you will be purchasing souvenirs or extra shows or events held at the zoo. Budget for this if necessary. This will involve an understanding before you arrive so you are all on the same page and avoid a breakdown on your fun day!
Now review all of the items in your budget. How does it look? Is it more than you originally planned for? If it is just as you had expected, great! If your budget exceeds your original expectation, how will you adjust? Hopefully, you will review your budget and make adjustments to bring it down to your goal.
Congratulations! You have created and managed a budget.
Does the idea of a creating and maintaining a budget make you break out in a sweat?
Do you argue about money or lack of it?
The Budget Coach has some helpful ways to keep your finances in shape.
The first place to begin is to get a sense of your spending. What types of purchases are you making, how are you paying for these things, do you plan for this spending? Begin by keeping a list of your purchases. This can be done throughout your day. Either keep a notepad or electronic notepad with the type of purchase and the amount. If you use a debit or a credit card, keep the receipts. Keep them in a basket by your door. When you arrive home each day, add them to the basket. At the end of the week you can add them up and you will have a good sense of your weekly spending. Weekly spending often includes groceries, gasoline, pocket cash, lunches and such.
Your bills require a different tracking. First, you will need to arrange them as they come due each month. Many bills are a consistent amount and due at the same time each month. Arrange them into a biweekly stack, some due at the first of the month and some due after the 15th of the month. Make sure to check the due dates and date they will accrue interest! Paying your bills on time will save you unnecessary fees and interest. Some bills come less often such as local taxes, water/sewer, memberships, life insurance and such. Keep a calendar to note non-monthly bills such as those that come quarterly or annually. Note how often they come and what months they are due. Now make a calendar page and plot out the bills due on the first half of the month and those on the second half of the month. If you have any bills enrolled in an auto pay from your checking account, do not forget to include these on your calendar.
Tracking both your weekly spending as well as your regular bills will give you a good idea of your expenses. To begin a budget, add up all of your income and subtract all of your expenses to get your net. Ideally you should make more than you spend. It may take some tweaking to get to that ideal net. Do not forget to make a contribution to your savings! If you have more income that expenses, roll it over to the next month’s income. You will need that for the months with quarterly or annual bills. You can also put it to savings in the meantime.
Splitting your bill paying into twice a month will help you to maintain a more manageable cash flow. This also helps with the stress of paying the bills randomly and sometimes being late with a payment. Set up a regular spot in your home to collect and pay your bills. Tracking your expenses and keeping to a budget requires the teamwork of the entire family. Make sure to meet weekly to discuss the coming weekly spending budgeted for the family. This is a crucial step to keep everyone on the same page and to prevent surprises during the week. Make sure everyone understands the cash flow and payment method to use for the week.
Plan for spending
We all have needs and wants. In planning for your spending, you will have to determine the difference between these two things. You need food, shelter, water, electricity as well as some of the creature comforts of day to day life. You need to have yourself and your family properly dressed each day. You need to have transportation to work and school.
Your wants often get mixed into your daily life and are sometimes confused with your needs. You may want a new phone, to go out to eat, to buy that giant television on sale!!! For goodness sakes, you will save $100 if you buy it today! The wants have a powerful pull. We live in an instant society. Take it now and pay us later. Often times, you purchase your wants with a credit card. I would like to suggest that instead of giving into this urge to buy unplanned for items, and never use your credit card for such, you develop a list and schedule and savings plan for these purchases.
Credit cards have become a normal part of our finances. Credit cards are easy to get and easy to use.
You can use them to get instant purchases, automatic payments and even cash advances. In this cashless society, they have become our “go to” in many situations. You can accumulate a balance
very quickly. This balance can greatly interfere with any budgeting you may be doing. Save your credit cards for items such as travel, online purchases and fastlane accounts. You should add these expenses to your calendar as well and make sure you have a zero balance each month.
Last but certainly not least, you need to contribute to your savings each pay period. Ideally, you should be putting away at least 10% to a savings account and 10% to a reserve or emergency savings. In addition to this, you should be contributing to your retirement account. The percentages are ideal and you may not be able to reach them immediately. You can at least begin with the intent to increase your contribution as time goes on. For example, if you get a bonus a raise or a tax return, take that money and put it into savings instead of adding it to your spending. You won’t miss it.
Many clients ask me about college savings. The reality is that young families have a difficult enough time saving for retirement, emergencies, repairs and reserves. While it is nice to set up college savings, leave that for last. Fund the others items first.
The Budget Coach can help you through this process and help you plan a playbook for financial success! It’s time to meet with the Coach! Call now 508-792-9087 or
When purchasing a home, many banks provide additional credit with home equity loans. Most common are the ones you can draw on in increments over a number of years and then pay back later. Often these loans have a floating or adjustable interest rate that is tied to the federal rate, plus a percent or two. You can use this money and only pay interest on the initial draw period. This makes it a very tempting offer that is difficult to resist.
It becomes very tempting to use this money for a variety of needs as well as wants. Knowing when to use this money and on what can take much discipline. Many families use this as a loan on home repairs or remodeling, room additions or landscaping. I have heard of many families using this as an advance on trips, new cars, campers or vacation options. Whatever you use this money for, make a plan to pay it back.
The good thing about the home equity loan is that the interest it is usually tax deductable. This makes it more enticing as credit cards no longer have that benefit. The other inviting piece is that you usually have 10 – 20 years draw and can put it on a back burner for another day.
The down side of these loans is that whatever you by usually depreciates before you begin to pay it off. If you did some remodeling or added a room, you may see an increase in the value of your home, if the market bears the value. If you took a vacation or bought a new car, the value passes almost instantly.
If you must use equity loans, have a payback plan. Plan in advance as to how you are going to make the payback, how much each month until it is paid off. Plan to make the entire payback in 12 – 24 months and stick to your plan. Have heard of the “slippery slope”? Here it is.
What do you teach your children about the value of money? Do you set a good example in handling money? Do you require them to earn it? Do you hand it over to them at their request? Do you buy them things because their friends have them? Or do you explain the value of money, how you earn it and your plan to stay within your budget?
Many parents provide children with an allowance. Some parents require the completion of a chore or two, others simply hand it out each week. Whatever you do, remember you are teaching them how to value money. You impress upon them the habits that they will have throughout their lives in dealing with money. The best example they have observing your relationship with money.
When a parent shows responsibility in making purchases, doing a good job for pay, or using credit with a plan, the children will learn these habits as well. If a parent spends recklessly, uses credit cards for anything or collects a pay without doing a good job, the children will acquire these habits as well. Teach your children to keep a bank account and to save for what they want to buy. Teaching them to have a healthy relationship with money is essential to their future as responsible adults.
Does the idea of a creating and maintaining a budget make you break out in a sweat? Are you running a home or small business and not sure how to keep your financial records? Do you control your money or does it control you? Would you rather enjoy your weekends and have someone else analyze and watch over your expenses and spending and report back to you? Do you need to spend more time on your business and less time on the books?
If you answered yes to any or all of the above, then help is on the way for you! The Budget Coach provides a unique service for small businesses and individuals to get and keep their finances in shape. This new service offers professional help for your small business and personal finances. The Budget Coach, Mary Ellen Regele, head coach, has successfully managed business and personal budgets for over 20 years. The Budget Coach works with you to develop a personal plan, using simplified business approaches. Best of all, you are provided with coaching on a weekly or monthly basis to keep you on track. The coaching is what makes this service so valuable. Small business need to have their bills and invoices in order to keep a cash flow. Families may set up budgets with good intentions, however without the support and coaching part, many fail. It is much like going on a diet without regular support and coaching from an outside source.
Small and home based business owners are great in their expertise; however, few can also manage the bookkeeping side of the operation. The Budget Coach can set up and maintain cash flow, invoicing, bill paying, set up a third party payroll, keep tax and capital records, and much more. Go ahead and concentrate on your business, The Budget Coach will manage your finances. You will get monthly reports and recommendations to help you to achieve your true potential.
Most people would not think of taking a trip without some sort of plan or map, yet many individuals and families go about their financial journey without a clear plan. The Budget Coach will guide you through the initial set up of your budget, as well as coach you each month to keep your finances fit and work towards your goals. The Budget Coach will work with you to analyze your spending and help to identify the needs and wants of your financial future. You will be secure in knowing you are in control of your money.
Many small businesses and households are in need of a budget tool to help in tracking expenses as well as planning for future expenses. Software programs for money management can be difficult to understand and take up your valuable time with data entry and are cumbersome in analyzing information relevant to your weekly needs. Often they track expenses and offer no help in planning for emergencies or future spending needs. They are good as a checkbook, but not much else.
If you feel as though you make a sufficient income, yet have nothing to show for it, then you need to meet with the coach. The Budget Coach will set up a personal and confidential conference with you to provide an easy to read annual and monthly budget. The Budget Coach will provide monthly reports and coaching to guide you through to your goals. Simple and clear coach’s reports will help you gain your financial freedom.
The Budget Coach takes this timely task and makes it simple and manageable. You will have time and finances to enjoy your weekends with the activities you choose. No more guessing if you can afford something. You will start saving and prepare for your future. You will be in control of your finances.
It’s time to meet with the Budget Coach! Call or email the Budget Coach now!
10. Review all of the benefits offered to you by your company
Your company may offer many or just a few benefits to its employees. Review them each year and take advantage of as many as possible.
9. Take advantage of a Flexible Spending Account for Health Costs
A Flexible Spending Account (FSA) provides you the opportunity to pay for health and dental related expenses pre-tax. You can use this
for co-pays, prescriptions, dental care, glasses and more. This can save you 10 to 25% in your spending as it is not taxed as income.
8. Take advantage of a Flexible Spending Account for Dependant Care
A Flexible Dependant Spending Account (FDSA) provides you the opportunity to pay for dependant related expenses pre-tax. Elect this option to save on childcare or elderly day programs.
7. Contribute the maximum match that your company offers towards your IRA Account
Find out the maximum contribution that your company will make towards your retirement fund. Make sure you match to that limit to receive the full contribution of your company. This is free cash that will grow!
6. Review the Health Care Options each year
Review with your HR Department all of the options available to you for health care. Some plans offer larger deductibles or co-pays that can save you significant premiums upfront. Keep track of your expenses to choose the best plan and cost for your anticipated needs each year.
5. Fill out a W4 each year to maximize your net pay
Get in the habit of going to the IRS web site each year after completing your income taxes. With your pay stubs and tax forms in hand, fill out the online withholding calculator to discover the correct withholding amount for you.
4. Take advantage of Life Insurance offered through your company. Your company may offer life insurance to employees for little or no premium.
3. Keep receipts from expenses not reimbursed to you by your employer. You may be entitled to a tax deduction for unreimbursed expenses such as uniforms, safety equipment, dues and more.
2. Keep track of contributions to IRA’s you make after tax. Contributions you make on your own to IRA’s may be tax deductible. Keep track of your contributions each year.
1. Get help. Meet with The Budget Coach to plan a budget, organize your spending and plan for your next tax year in advance!
Families come in many sizes and types. Some are small, some are large, some have two or more “breadwinners”, and others have just one. Whatever your family type, you need to work as a team. Your family finances are no doubt limited. The family has many needs and wants day to day. Learning to evaluate the difference between wants and needs and how to” live within your means” takes practice. Learning to work together as a team in dealing with your finances can make you a success!
To accomplish good teamwork skills, the family must set up some short term and long term goals that are realistic and attainable. This takes patients and a lot of compromise and good communication from everyone.
Once your team has the goals set, it is time to start looking at your current finances. Developing a budget and sticking to it will take the support and “teamwork” of everyone in the family. Most likely your money is stretched to the limit each month and you will have to make choices as a team as to how you will succeed.