This article is the third in a series on how to get out of debt. If you haven’t already, you should check out the previous articles:


Step 3 – Create a Budget & Stick to It

       I’ve said it a million times (OK, at least five times on here for sure) – you need to have and use a budget to achieve personal finance success! This is true whether we’re talking about paying off debt, saving for the future, planning for retirement, or becoming a generous giver. The budget is an essential tool for personal finance.

       But it’s especially true if you want to pay off your debt as quickly as possible! Knowing how much you spend will help you see where you can cut back and save the most money. Aiming for a specific amount in your budget will enable you make sure you have enough money left over every month to put extra payments toward your debt. If you don’t take the time to create a budget and stick to it, you’re putting a major hurdle in your path toward paying off your debt.

It Doesn’t Need to Be Complicated

       Now I want you to understand that budgeting is not complicated. It simply means writing down your income and expenses. It doesn’t matter how you do it – as long as it works for you. In fact, there are many ways to create a budget and track your spending. My favorite way right now is to use Mint. It’s easy, intuitive, and nearly automatic. You can have alerts sent to your email or phone when you approach certain thresholds in your budget (even for individual categories).

How to Get Started

       If you want to get started creating a budget but aren’t sure how (and you’re not going to use Mint or other software), then you’ll need to start tracking your expenses for three months. It’s not fun or exciting, but it will help you see exactly where your money is going every month. From there, you can build your budget and begin to set goals for how much you spend in each category every month.

Remember – It’s Only Temporary

       Finally, for those of you who hate the idea of a budget, I want you to remember that this isn’t forever. There will come a time when you won’t need to track every penny you spend. You will eventually gain control of your spending, have an emergency fund, and be paying all your bills on time. But to live without a budget, you must first live within one. Even after you’ve gained control of your situation, I think you’ll find that you’ll continue to keep updating your budget because it’s such a useful tool. If the idea of creating a budget and sticking to it drains all the joy out of your life, remember that it is only a temporary situation.

Get Free Updates!

       If you want to keep getting tips on how you can get out of debt and manage your personal finances well, make sure you sign up for free updates to Provident Planning! I’ll be continuing this series throughout the year while I also explore other aspects of personal finance.

       Let me know how you’re going to create a budget & stick to it in the comments below!

       8 Remove far from me falsehood and lies. Give me neither poverty nor riches. Feed me with the food that is needful for me; 9 lest I be full, deny you, and say, ‘Who is Yahweh?’ or lest I be poor, and steal, and so dishonor the name of my God.

Proverbs 30:8-9 (WEB)



       These two verses from Proverbs give us wonderful insight into our need for contentment and Jesus’ purpose behind praying for “our daily bread”. First, we see that contentment is important because it helps us to remember God in all things. When we become rich, we can easily be tempted to ask why we even need God’s help any more. We have our money – why do we need God?

       But it’s also equally interesting that we should be praying to have the food that is needful – just enough. If we are poor, we’ll be tempted to steal and that would dishonor God’s name. It would be a sin that would grieve Him. So we see that it’s not outside of God’s will for us to pray for our needs to be met.

       Jesus makes this point in His example for prayer:

       7 In praying, don’t use vain repetitions, as the Gentiles do; for they think that they will be heard for their much speaking. 8 Therefore don’t be like them, for your Father knows what things you need, before you ask him. 9 Pray like this: ‘Our Father in heaven, may your name be kept holy. 10 Let your Kingdom come. Let your will be done, as in heaven, so on earth. 11 Give us today our daily bread. 12 Forgive us our debts, as we also forgive our debtors. 13 Bring us not into temptation, but deliver us from the evil one. For yours is the Kingdom, the power, and the glory forever. Amen.’

Matthew 6:7-13 (WEB)



       Jesus teaches us that it’s important to remember God knows our needs before we even ask Him. But it is still appropriate for us to pray for our daily bread – the things we need to get through each day. Again, showing that we are seeking contentment and not personal, worldly riches. We are praying for just enough – not for things that far exceed our needs. But we’re also praying that our needs will be met so we won’t be tempted to steal and thus sin.

       This idea of daily bread also ties into the Israelites’ journey through the wilderness where God provided them with manna. The Israelites could only collect enough manna to feed themselves for one day. Anything extra would rot. They were in complete dependence upon God’s provision. That’s what we’re praying for when we ask God for our daily bread. We’re saying, “God, I need your provision. I know I can’t do this on my own, but I know you can meet my needs.”

       So the next time you’re praying, remember to praise God and thank Him for the blessings He’s provided. But don’t hesitate to ask Him to continue to meet your needs. Ask Him for your daily bread – for just enough. Don’t be lead away by the deceitfulness of riches and begin praying for wealth. Ask God to give you what you need so you can serve Him faithfully, according to His will. God will answer such a prayer given with the right motives.

       After 9 months and over 200 posts, Provident Planning has had 20,000 visitors! To celebrate, I’m giving away $20 in cash to you, my readers. Without you, I wouldn’t have gotten this far. Thank you so much!

       Since this isn’t a huge giveaway, I’m not going to make it difficult for you to enter. But I’d also like to get some feedback from you. So here’s what you can do to enter:

  1. Fill out the form at the end of this post. – 3 entries
  2.  

  3. Tweet about this giveaway. Your tweet should say “$20 Giveaway at Provident Planning – http://bit.ly/bZP14s @providentplan”. (The link points to this post.) – 2 entries
  4.  

  5. Include a link to this giveaway in a blog post. If your blog doesn’t send pings or trackbacks, make sure you email me (paul@providentplan.com) with a link to your post so it will get counted. – 3 entries



       You can only do each of those things once, but you can do all three of them to get a total of 8 entries in this giveaway. Duplicate entries will not be counted (e.g., you fill out the feedback form below more than once).

       All entries must be made by 5:00 P.M. Eastern Time on Monday, March 1, 2010. The winner will be chosen through a random drawing using the integer generator on random.org. I’ll update this post on Monday evening to announce the winner. The winner will also be contacted by e-mail to receive the $20 cash via PayPal, so be sure you use a valid e-mail address in the form below. If the winner is via a Twitter entry, I’ll send a direct message to get your e-mail address. The winner must respond by 9:00 PM Eastern Time on Wednesday, March 3rd, or I’ll select another winner. If you have any questions, let me know in the comments!

And the Winner Is…

       With only three entries, everyone’s odds of winning were quite good. But congratulations are due to Donna! She won the random drawing, so I’ll be emailing her to confirm. If she doesn’t reply by 9:00 PM EST on Wednesday, March 3rd, then I’ll select another winner through a random drawing. Thanks to everyone who participated (all three of you!), and make sure you enter the next giveaway. If I keep getting so few entries, you have great chances to win!!! :-P

Uncle Sam says,        Making sure you claim all of your eligible dependents is an easy way to lower your taxes. Each dependent you claim will increase the total amount of exemptions you can apply to your tax return (a benefit of $3,650 per person for the 2009 tax year). Additionally, the number or type of dependents you can claim will affect your eligibility for certain tax credits. It’s also important to make sure you’re not claiming ineligible people as your dependents so you don’t get in trouble with the IRS. Here’s what you need to know:

Who Are Dependents?

       Dependents are either a qualifying child or qualifying relative who depend on you, the taxpayer, for at least 50% of their support (among other qualifications). The key phrase is “qualifying”, which means that they qualify according to the IRS definition – not yours. Just because someone lives with you doesn’t mean they’re automatically your dependent. There are specific requirements they must meet before you can claim them as a dependent on your tax return.

       While the requirements for a qualifying child and qualifying relative are similar, there are some tests that are specific to each type of dependent. We’ll look at the tests for a qualifying child first, and then we’ll look at the tests for a qualifying relative. This can get a bit complicated, so I’ll try to keep it simple and link to IRS resources for the exceptions.

What Are the Tests for a Qualifying Child?

       Use this series of questions to determine if a person can be considered a qualifying child for your tax return.

  1. Was the person younger than you or permanently and totally disabled?
     
    If YES, go to question #2. If NO, go down to the tests for a qualifying relative.
  2.  

  3. Was the person your son, daughter, stepchild, adopted child, eligible foster child, brother, sister, half brother, half sister, stepbrother, stepsister, or a descendant of any of those?
     
    If YES, go to question #3. If NO, go down to the tests for a qualifying relative.
  4.  

  5. Was the person under age 19 at the end of the year? OR Was the person under age 24 at the end of the year and a full-time student for some part of each of five months during the year? OR Was the person permanently and totally disabled (regardless of age)?
     
    If YES, go to question #4. If NO, go down to the tests for a qualifying relative.
  6.  

  7. Did the person provide over half of their own support for the year? Click here to read through the IRS definition of support.
     
    If NO, go to question #5. If YES, you can’t claim this person as your dependent.
  8.  

  9. Did the person live with you as a member of your household for more than half of the year? Note: There are special exceptions for kidnapped children, children that were born or died during the year, certain temporary absences, and children of divorced, separated, or never married parents. Click here to read about the exceptions.
     
    If YES, go to question #6. If NO, you can’t claim this person as your dependent.
  10.  

  11. Was the person a U.S. citizen, U.S. national, or a resident of the U.S., Canada, or Mexico?
     
    If YES, go to question #7. If NO, you can’t claim this person as your dependent. Answer YES if you are a U.S. citizen or national and your adopted child lived with you as a member of your household for the year.
  12.  

  13. Was the person considered legally married as of the end of the year (December 31)?
     
    If YES, go to question #8. If NO, go to question #9.
  14.  

  15. Is the person filing a joint tax return for this year?
     
    If NO, go to question #9. If YES, you can’t claim this person as a dependent. You can answer NO if the person is filing a joint return to claim a refund and no tax liability would have existed for either spouse if they had filed separate returns.
  16.  

  17. Is the person a qualifying child of any other person?
     
    If NO, go to question #10. If YES, you can’t claim this person as a dependent unless you are the person entitled to claim the person as a qualifying child (read the IRS guidelines for the special test for a qualifying child of more than one person – you’ll have to scroll down to it).
  18.  

  19. Can you or your spouse (if filing jointly) be claimed as a dependent on someone else’s tax return this year? Note: This applies even if the person chooses not to claim you. You must answer YES if they have the option to claim you (or your spouse) as a dependent.
     
    If NO, you can claim this person as your dependent. If YES, you can’t claim anyone as your dependent – no exceptions.



Well that was fun! Now let’s look at the tests for a qualifying relative.

What Are the Tests for a Qualifying Relative?

       Use this series of questions to determine if a person can be considered a qualifying relative for your tax return.

  1. Is the person your qualifying child or the qualifying child of anyone else?
     
    If NO, go to question #2. If YES, this person is not your qualifying relative (you should go back up to the tests for a qualifying child).
  2.  

  3. Is the person your son, daughter, adopted child, foster child, or a descendant of any of those? OR Is the person your brother, sister, or a son or daughter of either of them? OR Is the person your father, mother, or an ancestor or sibling of either of them? OR Is the person your half brother, half sister, stepbrother, stepsister, stepfather, stepmother, son-in-law, daughter-in-law, father-in-law, mother-in-law, brother-in-law, or sister-in-law?
     
    If NO, go to question #3. If YES, go to question #4. Note: None of the relatives listed in this question have to live with you in order to qualify as your dependent.
  4.  

  5. Was the person any other person (besides your spouse) who lived with you all year as a member of your household? Note: There are special exceptions for kidnapped children, children that were born or died during the year, certain temporary absences, and children of divorced, separated, or never married parents. Click here to read about the exceptions.
     
    If NO, you can’t claim this person as your dependent. If YES, go to question #4. Note: A person doesn’t meet this test if at any time during the year your relationship with that person violates local law.
  6.  

  7. Was the person a U.S. citizen, U.S. national, or a resident of the U.S., Canada, or Mexico?
     
    If YES, go to question #5. If NO, you can’t claim this person as your dependent. Answer YES if you are a U.S. citizen or national and your adopted child lived with you as a member of your household for the year.
  8.  

  9. Did the person have gross taxable income of less than $3,650 in 2009?
     
    If YES, go to question #6. If NO, you can’t claim this person as your dependent.
  10.  

  11. Did you provide more than half of the person’s total support for the year? Click here to read through the IRS definition of support.
     
    If YES, go to question #11. If NO, go to question #7.
  12.  

  13. Did another person provide more than half of the person’s total support for the year?
     
    If NO, go to question #8. If YES, you can’t claim this person as your dependent.
  14.  

  15. Did two or more people together provide more than half of the person’s total support?
     
    If YES, go to question #9. If NO, you can’t claim this person as your dependent.
  16.  

  17. Did you provide more than 10% of the person’s total support for the year?
     
    If YES, go to question #10. If NO, you can’t claim this person as your dependent.
  18.  

  19. Did the other person(s) providing more than 10% of the person’s total support for the year provide you with a signed statement (Form 2120 – Multiple Support Declaration) agreeing not to claim the exemption?
     
    If YES, go to question #11. If NO, you can’t claim this person as your dependent.
  20.  

  21. Was the person considered legally married as of the end of the year (December 31)?
     
    If YES, go to question #12. If NO, go to question #13.
  22.  

  23. Is the person filing a joint tax return for this year?
     
    If NO, go to question #13. If YES, you can’t claim this person as a dependent. You can answer NO if the person is filing a joint return to claim a refund and no tax liability would have existed for either spouse if they had filed separate returns.
  24.  

  25. Can you or your spouse (if filing jointly) be claimed as a dependent on someone else’s tax return this year? Note: This applies even if the person chooses not to claim you. You must answer YES if they have the option to claim you (or your spouse) as a dependent.
     
    If NO, you can claim this person as your dependent. If YES, you can’t claim anyone as your dependent – no exceptions.



       That covers all the tests for a qualifying child or qualifying relative. I can’t say that was particularly fun for me, and I’m sure it wasn’t for you. But like I said before, it’s important to make sure you’re claiming all the people you can and only those people you’re allowed to claim. If you have any questions, leave them in the comments and I’ll do my best to help you!

More Free Tax Saving Tips!

       If you want to learn more ways to (legally) reduce your taxes, sign up for free updates to Provident Planning. It’ll only cost you a minute of your time, but you might just learn how to save yourself hundreds or thousands of dollars!

Yummy Bread!       Few foods can top the smell or taste of freshly baked bread. But making it yourself is often time-consuming and requires skill if you don’t have a bread machine. And most of us don’t have a local bakery where we can pick up delicious bread at any time. Enter Blitz Bread – an easy recipe for a focaccia bread that takes 10 minutes or less of hands-on time. With this recipe, you can go from the mixing bowl to the table in less than two hours. And did I mention you don’t even have to knead it?! Just a good stand mixer will do.

       I’m not going to reprint the recipe here. You should go the the Blitz Bread recipe page to get it. But I’ll share some notes with you after making it myself.

       You’ll find a lot of helpful hints, pictures, and ideas on this page. Here are my tips:

  • The recipe calls for 1 tablespoon of instant yeast. If you only have active dry yeast, use two packets (or 4 1/2 teaspoons) and make sure you proof it first. Proofing just means that you dissolve the yeast in some of the warm water that you’ll be using for the recipe along with a little flour. Give it 10 minutes and see if it’s bubbly. If not, throw it out and use some different yeast (because the stuff you had is dead).
  •  

  • You can substitute your own flavors for the optional ingredients of pizza dough flavor, cheese powder, and pizza seasoning. For example, I made a rosemary garlic parmesan focaccia bread with 1 tablespoon of garlic powder, 1 tablespoon of rosemary leaves, and 1/4 cup of grated parmesan in the batter. I topped it before baking with a drizzle of olive oil and a sprinkling of rosemary leaves, parmesan, and kosher salt. But this is a versatile recipe, so try your own combination if you want. Next on my list is a sun-dried tomato and basil combination.
  •  

  • Make sure you have a good mixer, because this is a tough dough to mix. It’ll kill your little wimpy hand mixer in no time, and I wouldn’t want to mix it by hand. It bogged down our KitchenAid Artisan mixer, which is pretty heavy duty.
  •  

  • Make sure you give your pan a good coating of vegetable oil spray or shortening before you drizzle olive oil in the bottom. I didn’t spray enough and it stuck a little on me. I was still able to save the loaf intact though.
  •  

  • Expect the dough to be very sticky. It’s normal. Just put some oil or spray on your hands before putting it in the pan or poking it prior to baking.
  •  

  • Make sure you turn the bread out of the pan five minutes after you bring it out of the oven. If you don’t, the bottom will get soggy.
  •  

  • It makes great sandwiches! (But it’s good by itself, too!)



       I really want to encourage you to try this recipe – especially if you’ve never baked bread before or if you’ve always had problems baking bread. It’s extremely delicious, extremely easy, and hard to mess up. It doesn’t take much time either, and I’m sure you’ll enjoy the results.

       Try it out for yourself and let me know how it turned out for you! I’m especially interested in different flavor combinations, so let me know if you’ve got some good ideas.

       According to insurance companies and their agents, you have an 80 percent chance of becoming disabled during your working years. I’m not sure about you, but that statistic just doesn’t mesh with my experience in life and the experience of people I know.

       Ron Lieber, author of the Your Money section of the New York Times, has a great article about the true odds of becoming disabled. I can’t do a better job than him in sharing the info he learned, so I recommend you check it out for yourself. I also want to share a link to a graph in the article because I want you to see it.

       I found this article from The Oblivious Investor who wrote about it on Twitter.

       What do you think about the true odds of becoming disabled and your need for disability insurance? Let me know in the comments.

Raising a Cow for Beef: Month 6

Corey —  February 22, 2010 — 7 Comments

       Last month, I posted an update about how my wife and I are raising a cow for beef. This is a summary of our activity and costs for month 6. As always, let’s first check Bambi’s growth. Here he is at five months old:


Paul & Bambi - 5 Months Old


       And here he is today at 6 months old:


Bambi - 6 Months Old


       It might be hard to tell, but Bambi is still growing steadily. He should be somewhere between 300 and 400 pounds. (I can’t weigh him to know for sure.)

Costs & Time

       Again, there haven’t been any huge changes in the amount of time it takes to care for him. It’s pretty easy right now.

       We didn’t spend much money this month because I had stocked up before we left for Haiti in mid-January. We only needed to buy a little medicine. (You’ll find out why in a minute.) We’ll have to spend a bit next month to buy more feed and hay. Here are our costs for this past month:

  • Medicine – $5.00
  •        

  • Total Spent this Month – $5.00
  •        

  • Time – 7 hours



       And here are our total costs over the past six months:

  • Cost of Bambi – Free!
  •        

  • Castration & Dehorning – $16.00
  •        

  • Milk Replacer – $45.54
  •        

  • Miscellaneous – $46.87
  •        

  • Calf Feed – $160.35
  •        

  • Hay – $52.00
  •        

  • Straw – $15.00
  •        

  • Medicine – $5.00
  •        

  • Total Spent – $340.76
  •        

  • Time – 56 hours



       So after six months we’ve spent a total of $340.76 and 56 hours raising a cow for beef. We’ll need to buy feed and hay next month, but that won’t cost too much.

       We had a small scare with Bambi this month. He didn’t eat or drink anything for 3 days. I called our friend, Konrad, who gave us Bambi back in August. We checked Bambi to see if he was sick, but he seemed as healthy as ever. Konrad had some medicine for gastrointestinal problems, so we gave that to Bambi for two days in a row. He finally started eating again after the second day on the medicine. This just highlights the risk you have when you are raising an animal. It could get sick and die on you at any time. Yes, medicine or a vet could fix some things, but there’s always the chance that the animal can’t be saved and you’ll lose it. Lucky for us, the medicine we gave Bambi only cost about $2 total (but I gave Konrad $5 though he didn’t want anything for it).

       Also, we’ve had a lot of snow this month. It’s not especially fun to go out to the barn in 15 MPH winds and blowing snow to feed Bambi. But it has to be done. This relates to what I wrote last month about finding someone to care for the animal when you are gone. Unless you can automate the feeding and watering, someone has to be there every single day. Even when that can be automated, someone should be checking in on the animal to make sure it’s still healthy. These are factors that aren’t easily figured in to time and costs.

       That’s it for this month. If you have any questions or comments, please leave them below. And make sure you sign up for free updates to Provident Planning if you’re interested in knowing what it takes to raise a cow for beef!