Who are you trying to impress?
With the American mentality the way it is, living within your means is especially challenging. Everyone is trying to compete with the Jones’. They buy a new home and then you get to thinking that your home is isn’t big enough anymore. They buy a new car and then you feel like you have to buy a better one. Not only is it hard to keep up and compete, there is also pressure that you need to make these decisions right now no matter if you have the funds saved up for them or not. This can turn into one slippery slope really fast, without you even realizing you’re on the hill. It just seems natural and the way of our culture to always be getting new things and keeping up with the latest trends.
Now after saying all that, “Who are you trying to impress”? Honestly. I’m not trying to be rude at all but I think everyone needs to answer that question when it comes to material things. I struggle with this a lot, as my husband will attest to. I would love to have a new car. (a new Saturn Sky to be exact) I also would like to revamp my closet. By that I mean go on a shopping spree to buy clothes that are more in style then what I have now. A friend of mine always dresses great and has the new trends when it comes to clothing. I would love to be her and be able to afford those things. Sometimes I even feel inferior because I don’t have everything she does. But, if we are really that great of friends do I need them for her to still like me? Who am I trying to impress? The clothes, the cars, the houses, do not matter. In the end those things will be meaningless and trivial.
How can you handle it when the urge comes to try to keep up with your peers?
1.) Don’t ever let anyone pressure you. It’s the way of our culture to make you feel like you have to make a decision right now, and you have to purchase that car right now. That simply is not the case. I would also argue that all those people you are trying to keep up with, aren’t as well off as they make it out to be. I have found this to be the case more often then not. Yeah, they bought the new car, but are they really happy about that decision later down the road when the high monthly car payment get overwhelming? Probably not. That’s why it is SO important to really think long and hard before buying a big ticket item. If you give it a month, I would bet that you wouldn’t even want that item any more.
2.) Answer the question, “why do I want it”? If the answer is because the Jones’ bought it, DON’T GET IT! That is not a good reason by any stretch of the imagination. That’s like when you ask a child why they did something and they respond with, “everyone else was doing it”. It didn’t work with your parents when you were a child and it doesn’t hold water as an adult either.
3.) Consult your checking account: This one should be obvious but there are a lot of people who just assume that they can afford the monthly payments without really checking how much money is in their account first. Whenever you’re making a big purchase it is vital to know realistically if you can afford it or not. And when I say afford, I mean that you have the money up front to pay for it. (Unless you’re buying a house. Then I would encourage you to save 20% for the down payment.) Most people will put it on their credit cards and take for granted that they can keep up with the payments when they really can’t. That then starts the downward spiral. If you miss a payment or are late you are socked with fees and interest. If you couldn’t afford it in the beginning with “normal” payments, what makes you think you can afford it with extra interest added on top?
I understand that this is something that is hard to deal with. Many Americans go into debt for this very reason; trying to compete with what everyone seems to have. But, this really does get out of control really fast. If you are married, this can be especially difficult. If you started buying outside of your means, you quickly discover you are way over your heads without a way out. When both people are stressed out about finances and how to cover just their basic bills, it starts to cause major issues within the marriage. If this scenario describes you then seek help. Look for a volunteer financial adviser, a pastor, or trustworthy friend who is good with finances.
Free E-Book - Financial Principles That Work
September 29, 2008 by Aaron
Filed under Newsy News
The following is an excerpt from our new e-book: “Financial Principles That Work”. You may click here to download a copy for yourself or continue reading an introduction below…
There are always options in life. For one task there are two ways to complete it. Both options may complete the task, but there is always one that has an advantage over the other. This is because it has been tried, “proven”, and is now THE WAY to get that task done. But what about the other method? Can’t it still be used? Sure, but it is not recommended, nor is it the way everyone else is doing it. Will someone try and prove the other one? Most likely, but they do not have a good chance. Why? Because someone already said that the OTHER way is the BEST way. Plus, this is how it has been done for a very long time. But just because one guy said this is the best way to do something does not mean that the other can’t be better than his, right?
Correct.
This is my point exactly.
In the world of personal finances, we have been told that there is nothing wrong with having to borrowing money and using multiple credit cards is fine as well. It seems that using debt has become the way to get things done. Borrow, borrow, borrow; spend, spend, spend. It is all about now and how you want to feel NOW. Do not worry about tomorrow, and you know what, while you’re at it, do not even begin to think about 5, 10, even 20 years into the future.
• Going to college has become expected (even if you cannot afford it)
• Driving a new car has become the norm
• Buying a big, beautiful home (that you cannot afford) has become a “wise investment”There are other ways to do finances, and better ways to manage your money. If you were shown these at anytime in your life it was probably said in a negative tone: “…but this is too much work, and really not even worth the hassle.” This is simply not true.
I am going to talk to you about three financial principles that actually work and are better than what everyone else is doing at the moment. They are very basic, very easy to practice, and quite honestly, they are common sense.
The first principle we will cover is “Planning Ahead”. In this section we will cover topics such as budgeting and setting goals. The second principle is being “Selfish About Your Personal Finances” because no one else will. And the final principle is the simple act of “patience”.
As you can see already, all of these truly are common sense. It is my hope that after going through each one you will become encouraged that you can achieve your financial goals and also be challenged to make changes RIGHT NOW. No one is going to do this for you, if you want change to happen, you need to be the one making it.
Click here to continue reading.
On Tap for This Week
September 28, 2008 by Aaron & Lindsay
Filed under Newsy News
Every Sunday, we will give you the posts that we have scheduled for each day of the coming week. Be sure to grab our RSS feed and/or subscribe to have new posts sent directly to your email!
In the meantime, check out the FREE TOOLS we have made available to you or drop us a line just to say “hi” or to tell us what you would appreciate reading here.
Aaron & Lindsay
Where You Are Now writers
Weekend Review
September 27, 2008 by Aaron & Lindsay
Filed under Reviews
This past week gave us a good variety of content. We talked about Lindsay going back to college and how we decided that it was now or never and also covered what we are doing with the additional income we are receiving as Lindsay is now working full time. Lots of changes in our personal lives that are very applicable to the content of our website, which is exciting for us! The best way to teach and learn is through personal experience.
Without further adieu:
When Coupons do not Save you Money
…just because it is a coupon does not mean it is really saving you money. Be careful; when you start reading fine print that tells you you have to buy more than what you were planning, in order to “save”, take a step back.
Can we really afford it? That was the main question we kept asking ourselves as Lindsay looked further and further into going back to school. Could we 100% afford to pay off the loans six months after the is finished and still take care of our original goals? The answer was yes, but it was not that simple.
Going to events and activities is supposed to be a fun thing but if you’re spending a crazy amount of money in the process it can take the joy out of it, especially if you’ll be getting a bill for it later. We planned a great day together and it didn’t break the bank. If you have the opportunity to do something, like a game, for free don’t see it as a way to be able to spend whatever kind of money you want while you’re there.
As with all things having to do with personal finances, the best thing you can do for yourself is to plan ahead. Doing this will stretch out the life of your bonus and will help you out in more ways than you can imagine. Be smart, think about the future, and enjoy your bonus wisely.
Living on One Income While Making Two
By only budgeting the money from one income for our expenses we are able to save a great deal of money. We have been doing just great living on one income so why would we up the amount of money in each category just because we now have the money available? It would make no sense.
So another week is in the books. It is our hope that as always, the content was helpful and easy to read. Hope you all have a safe and enjoyable weekend!
Living on one income while making two
So you’ve read the title and now you’re confused. Up until now we have been talking about how we are living on one income because my husband is the only one working. Well, I just recently got a job. I am actually a nanny for a wonderful couple with the cutest little girl. I absolutely love children so this is the perfect job for me! It was a very big decision for me and has changed our lives a lot in a short amount a time. The big question for us was, “what are we going to do with the extra money that we make”? The answer actually came very quickly to the both of us and thankfully it was the same thought. We decided that we are still going to live off Aaron’s income as if we aren’t actually making any more money. So what are we doing with the extra income? We are using to pay off the remainder amount of debt that we have and are saving for future expenses. This decision was obvious to us both for the same reasons. They are listed below:
1.) We can aggressively pay off our debt. We told you last week that we have $4,394.26 in debt. We even went as far as to explain just how we are going to pay it off and how we track our process. Since getting this job we both realized that it would make so much more sense if we would put the money that I made to pay off our debt more quickly. We both feel strongly about getting rid of any debt as soon as possible so this was an obvious choice for us. We are hoping to have all the debt payed off well before our goal date of May 1, 2009.
2.) We have more opportunity to save. By only budgeting the money from one income for our expenses we are able to save a great deal of money. We have been doing just great living on one income so why would we up the amount of money in each category just because we now have the money available? It would make no sense. We obviously don’t need that money to live off, so we both feel like it would be foolish for us to spend the extra money just because we are making extra money. We can now put some money to save up for other big purchases. For example, some of the money that I will be making is going towards Christmas. Christmas is one of those holidays that seem to come up faster and faster each year. It is so important to plan ahead so you’re not paying off this holiday until next May. We figured out how much we are willing to spend on each family member and are saving accordingly. Come December, we will be all set to pay for every gift with cash.
3.) It will help keep our spending in check. This point goes with the previous point but I still would like to mention it. When you are bringing in two incomes and you realize that you can pay all your bills and expenses on the one income, the tendency is to use the other income as spending money. It is so easy to get in this habit but I encourage you to either not start this habit or try to break it if this is what you are currently doing. Yeah, you can live off of the other one, but you are not properly planning ahead for your future if you are spending the majority of an income on whim expenses. Usually this money goes without being tracked tracked and it’s hard to remember what you spent the money on. It’s all the little things that you buy on a regular basis that you don’t even think of any more. But, consider your expense. Then, think about what else that money could be going towards. Maybe you could put that money towards your retirement. Maybe you could give that money towards a certain charity that you are passionate about. The point is be careful what you are spending your “extra” money on and to think about what else that money could be going towards.
4.) It forces us to live well below are means. This one is really the overall key that we are trying live by. When you get into the habit of living beneath your means now, it will reap great benefits for you in the future. It is easy to add things into your budget and lifestyle then it is to take away. If you get into the habit of buying everything that you want, it will soon catch up to you in a negative way. You will be forced to drastically change your lifestyle and figure out ways to cut back. If you are constantly buying things on a whim and not tracking your expenses you will more then likely get yourself in to some amount of debt. This is exactly what you want to try to avoid at all costs. By living within your means now, you will save yourself stress and hassle in the future.
5.) If one of us would lose our job unexpectedly we wouldn’t have to change our lifestyle. Now, what do I mean by this? Everyone has a lifestyle that they choose to live by. As stated in the previous point, we choose to live well below our means. So, if one of us would lose our job without notice we would be able to get by without having to change how we live. How can we do that? Let me give you an example using Sam and John. These are two men that live to totally different lifestyles. Sam is a wealthy man that lives life to the fullest. He buys the latest and greatest of everything. From cars, tv’s, and gadgets. He loves being ahead of the trends. The drawback for Sam though is that he isn’t planning for his future. He has very little savings in his bank account. Now John on the other hand thinks long and hard before buying items. He has made some “big” purchases but not without thought. He has a certain percentage of money that he automatically puts in his savings account from each paycheck. Now what would happen if both of them would lose their jobs? Sam has very little saving and would instantly begin to panic. He didn’t really plan ahead in case something like that would happen. He immediately has to change how he was living and even looks into to selling off some of his recent purchases. John on the other hand has a couple months of living expenses saved up and would only need to get worried if that time was approaching. He has planned ahead and has a nice cushion of time to live comfortably while looking for another job.
How are you spending your second income, if you have one? Are you saving up for something in particular? Tell us in the comments below.
9 Things To Do With a Bonus
So you’ve put in the 6 months at work, or have achieved more than expected, or maybe you still have last years Christmas bonus laying around. What do you do with a bonus? A wise question that many people do not ask before they are wondering how they spent it so fast. Below we are going to dive into 9 things that you can do with your bonus this year.
Pay Yourself
I’ll give you some time to pick yourself up from the floor. I know a lot of our content here is save save save, but there are times when you deserve a little pat on the back. Now, mind you, I am not saying you should blow the entire amount on a new TV or some other high dollar item. I am thinking more on the lines of a nice dinner out, with a bottle of wine. Just something to help you relax and appreciate your hard work (which is why you received the bonus in the first place). So make sure you set some cash aside and treat yourself (and significant other) to a nice dinner out.
Pay Off Debt
You knew it was coming and here it is. This is what I am going to do after I have “paid myself”. I am going to be writing one big fat check to my father in-law which will eliminate our one and only car loan! A bonus payment is a great way to get ahead on debt repayment. This extra cash only comes up every once in a while so be sure to take advantage of this opportunity!
Add To Your Emergency Fund
I believe that there is no such thing as an emergency fund that is too large. If you don’t have any debt to pay off, or have extra after paying the debt off, put it into your emergency fund so that it can give you more cushion.
Add To A Savings Goal
Invest
This is always a good option if done properly. I personally am not investing right now, not anything more than what my money market account can give me (which is not much). I believe that investing needs to come after you have established emergency funds, paid off debt, and just have a mortgage left or so. It is then that you have the financial room to invest safely and wisely. If you are at this point, use the extra cash and get ahead in your investments. Here is a good article on the subject.
Give some or all to a charity
You can’t go wrong here. This is something that we have not talked about yet, but giving is a big part of personal finances. If you don’t give money already (to a church, charity, non-profit, family member or friend without expecting it back) do so. You will not only benefit who ever you give to, but it is good for you to give, it does something for you. Take some or all of your bonus and give it to someone or some group that could really put it to good use. You can check out this website for a listing of non-profits and other charities that may interest you.
Make your home/apartment more energy efficient
Energy is a huge cost today and will not go anywhere but up in the future. It is important that you take the high energy cost into consideration when making improvements to you home/apartment. While apartment renters will not have as much as they may like (or not like) to do with their unit’s energy efficiency, home owners do. Put this money towards home improvements that will increase your efficiency and decrease your energy bills. Renters, put this lump sum of cash away and use it for your energy bills this winter! For either situation, this is a great opportunity to plan for the future.
Get a head start on gift buying
One category that always seems to get missed when creating a budget is the “gift” category. You know, that one that has money in it for buying gifts for friends and family members? Yeah, I forgot about that one too for a very long time. Birthday’s always seem to come up at the last minute, anniversaries, graduation parties, talk like a pirate day, you name it. These events that require gift giving always get missed. What ends up happening here is a unexpected purchase which most times throws the budget off and causes you to loose track. So, since you’ve forgotten about this part of your budget, use this money to get a head of the game. Write down all of the events coming up for the remainder of the year and what gifts you may have to get for them. Go buy them. It will save your budget from being wrecked in the future.
Put it TOWARDS a vacation
I want to emphasize towards. Do not 100% finance a vacation with your bonus unless you already have emergency funds set up, debt paid off, etc…For those of you that have these steps complete, go ahead and use it for the vacation, but for the rest of us who are still getting rid of debt and are adding to our savings account slowly but surely, just put a percentage of the bonus towards the vacation. Not the entire thing. Towards. Maybe take enough from the bonus to cover meals, or gas, or other small expenses that always seem to add up quick. Then put the rest into emergency funds and debt repayment.
The bottom line folks is to have a plan. As with all things having to do with personal finances, the best thing you can do for yourself is to plan ahead. Doing this will stretch out the life of your bonus and will help you out in more ways than you can imagine. Be smart, think about the future, and enjoy your bonus wisely.
We Are Penn State
I love going to football games! Not just any game though, Penn State games. I could probably go every weekend. But, that unfortunately is not possible because the normal ticket price is $52. I did however get to enjoy a wonderful game on September 6. They killed Oregon State 45-14. It was fantastic! But that is not the point of this article. I just had to get that off my chest first before we started. The point is that we only spent a total of $31, which includes the tickets, gas, and food. I know you’re thinking that I’m contradicting myself because I already told you the price of the tickets. My husband was able to get the two tickets from a co-worker at his job for free. This guy gets them from another friend and hands them out to people who want to go, when his schedule is not free to do so. So of course we jumped on the chance to go. We loaded up the car with snacks, water, and a lunch and headed out. The game started at 3:30 so we wanted to be able to get there on a full stomach so that we wouldn’t have to buy anything in the stadium once we got there. (We all know how expensive stadium food is even if it is just a college game.) Our plan worked out perfectly. The only thing we ended up purchasing at the stadium was a bottle of water for $3.00. After the game we were nice and hungry so we headed out to the all-American restaurant, McDonalds. Now I know it’s not the healthiest thing out there but it probably is the cheapest food out there. Our total for our meals came out to just over $6.00. That’s not too shabby if you ask me. The only other expense was our gas money which was the most expensive out of our trip. It’s a 97 mile trip one way so it’s not that close but definitely worth it.
Going to events and activities is supposed to be a fun thing but if you’re spending a crazy amount of money in the process it can take the joy out of it, especially if you’ll be getting a bill for it later. We planned a great day together and it didn’t break the bank. If you have the opportunity to do something, like a game, for free don’t see it as a way to be able to spend whatever kind of money you want while you’re there. We could have had the mind set that says, “we didn’t have to pay for the tickets so we have that much more money to spend while we’re here”. Instead we saw it as a blessing that we could go away for the day and not have to buy much of anything. We continued to be mindful of the money we were spending while we were there and were able to come home guilt-free knowing that we didn’t waste any money.
Going Back to College
Can we really afford it? That was the main question we kept asking ourselves as Lindsay looked further and further into going back to school. Could we 100% afford to pay off the loans six months after the is finished and still take care of our original goals? The answer was yes, but it was not that simple. I have outlined our reasoning for you below:
It is Now or Never
We took a close look at where we are right now in the large scheme of things and where we want to be down the road. We are both 22 years old, living in an apartment with very low rent and zero upkeep, only feeding two mouths, and have time to spare. We want to eventually move into a home, have kids, and begin to plan for our future. Right now is perfect. With no children to care for, and no career jobs bringing work home during the evenings, this is the perfect time for her to go back to school.
If we were to wait, say one or two years, we may or may not have children, may or may not have career jobs that demand a lot of time and energy, and let’s be real, we may or may not have the financial freedom to do this.
We Currently Have The Financial “Freedom”
Going back to school obviously entails obtaining loans. As we have stated before we are against loans (debt) of all shapes and sizes, but recognize that education is one area that may require a loan to be obtained. That is not to say that there are ways to go back to school without taking out a loan, but due to my first reason above, we felt that this was one of those exceptions. Her schooling is financed by one actual loan: one subsidized federal loan. This loan only covers one third of the tuition. The other two thirds was not borrowed nor will it be. We have opted out of taking a second loan, which we were offered, because it was an unsubsidized loan. The two thirds is payed to the school in monthly payments. This portion of the tuition will be paid off 100% by the time she completes her schooling.
Once that is eliminated we will immediately begin putting money away so that when the federal loan starts billing, we can wipe it out with one solid payment. This is, essentially, debt free schooling (if all goes to plan).
Our Other Debts are Right on Time
Other big factor in this decision was the other debts that we currently have (one to Lindsay’s dad for her car, the other to my grandparents for some schooling I had a few years ago). As I talked about
before, it is our goal to have these gone by May 1 of 2009. We are currently on track to have the car loan eliminated by the end of this month, and will then be on track to have the loan to my grandparents paid back by May 1, 2009. If this was not the case - if we would not be able to pay off the car this month, and if we did not see a way to have the other loan taken care of WHILE she went to school - we would not have moved forward with the thought. Part of setting a goal is sticking to the goal and not letting anything get in the way of achieving that goal. If you let things distract you from your goals, the likelihood of you getting anything complete is slim to none.
Lindsay is Working Full-Time
Working full-time and going to school part-time. This allows us to pay off the school loan, car loan, and loan to my grandparents at the same time. If she had not found a full-time job, she would not have gone back to school. We would have instead made it a goal to have the money saved up so that she could go in the future.
There you have it. The four determining factors that led us to our “yes” decision for Lindsay going back to school. It was not easy, but we made it and made it with the money to back it up with.
Are you looking to go back to school? If so, here is a summary that you can take away from today’s article:
- How does it fit into your BIG PICTURE game plan?
- What other financial obligations do you currently have?
- If you have debt, can you continue to repay while in school?
- Do you have a source of reliable income?
- Start plotting your payment schedule RIGHT NOW
- Look for any opportunity to make extra money that you can SAVE
- Stop all extra spending, focus only on NEED purchases
- Get on a budget
- Mentally get into “future” mode and not “present”. Take care of your money now, and it will repay you in the future.
When Coupons Do Not Save You Money
The picture on the left side of this article is an actual coupon that was in the bottom of a bag of assorted, individually bagged, chips I had purchased at the grocery store. If you can’t read it, due to the image size and/or clarity, here’s what the front of the coupon says:
On Tap For This Week
September 21, 2008 by Aaron & Lindsay
Filed under Newsy News
Every Sunday, we will give you the posts that we have scheduled for each day of the coming week. Be sure to grab our RSS feed and/or subscribe to have new posts sent directly to your email!
In the meantime, check out the FREE TOOLS we have made available to you or drop us a line just to say “hi” or to tell us what you would appreciate reading here.
Aaron & Lindsay
Where You Are Now writers
