It has been nearly two years since my wife and I were struggling to make ends meet. Luckily we had a large emergency fund, but that is about all we had going for ourselves. We both were working jobs that paid us little money and we were living in one of the most expensive regions in the country. Luckily, we both had a four year degree and some work experience. Many other young people face far worse in many respects, but that doesn’t mean what we went through wasn’t difficult.

It very much was. As a way to get through the financially difficult times, we had to cut back. This often meant passing up on opportunities to go out with friends, simply because we couldn’t afford it. It also meant sacrificing in many other areas. But, what we came to learn through this challenging time, was that it didn’t mean giving up on life altogether. It is easy to understand why many people think this – because this is often what it becomes, but there are creative ways to enjoy life to the fullest without breaking the bank.

Prioritizing

The first thing we had to do was prioritize our expenses. This meant taking a close look at our entertainment budget. Going to a movie and spending $30 did not mean as much to us as buying tickets to see michael mcintyre in concert. While everyone may not share the same passion for concerts, it’s all about setting your priorities. This also means that you have to cut some things out. It’s not a matter of saying which are most important, but also how far can your limited number of dollars reach.

Optimizing

After you have prioritized your spending, you can start to think of ways to make the most of your money. This means looking that those priorities and trying to make your dollars reach the farthest. This may mean cutting back on some more areas, but it may also mean that you spend more money in certain areas. For example, my wife and I learned that we enjoyed going to the movies (the few times that we went) when we got a giant diet coke. Yes, it was expensive, but it made the experience for us. It doesn’t mean you can’t be creative and bring snacks with you, but find out what is most important to you and optimize your experiences.

Create Memories with Others

The last and perhaps most important tip that I have learned is that creating memories with close friends is most important. While it may be cheaper to spend time at home alone, it is much more enjoyable if you do it with friends. The best part is that you can find creative ways to hang out with friends without spending money. This could mean board games, sports games, etc. There are many cheap and/or free things to do with a group of people.

While you may not have a lot of money, enjoying yourself is still possible. Be creative and see what you can come up with to save yourself some money while also enjoying life. The last thing you want to do is to live with regret.

Marriage is a big step in most people’s lives. Before you get married, buy a house together, etc., it is good to ask various questions in order for you to understand your other future half better. No matter how much you think you know someone, there are always new things to discover and figure out.

Figuring out things that may lead to future money problems is always a good idea. Talking too much with your significant other is not a real thing, talk about as much as you can!

Of course marriage is not all about money, but it is a good idea to talk about money. A lot of our lives involve money, whether we like it or not. Being prepared for anything that might happen is always a good thing.

1. How will money be divided?

This is a big topic that needs to be talked about before you make any big decisions with your significant other. Will all of your money going into one pot and you both share it? Or will bills be divided in half or by percentage according to how much each of you make?

If this is not talked about until after you get married or until after you buy a house, things might not turn out so well because there is the possibility that someone will be very surprised if its not something that they wanted.

2. How much debt do you each have?

Money may not be everything to you, but how much debt is too much? What if the person who you have been with for a couple of years secretly had been hiding debt from you? It’s best to talk about something like this before you get married or make any other big decision together.

If you found out that your spouse had $100,000 in credit card debt, would this change how you felt about this person?

3. Will there be a prenuptial agreement?

Many people think negative things out prenuptial agreements, such as how they are not “romantic” or completely defeat the purpose of getting married. However, in many instances, it can be extremely beneficial.

4. What are your goals?

Talking about retirement is important as well. Even though retirement is most likely far, far away for the both of you, you can never truly talk about it enough. How will the two of you save for retirement? If something does end up happening in the end where the two of you are no longer together, how retirement will be divided among the two of you or what will happen should be planned out.

Talking about when retirement will happen is important as well. If one of you wants to stay home when there are children, this should be talked about if you know for sure. Something big such as staying home can drastically change your family’s retirement goals.

5. Who will manage the money?

Managing money in the household is important. Usually one person does this in order to eliminate anything repetitive and to limit the amount of time doing household financial things.

However, both you and your partner should know how the money and financial events are ran in the household. This is so that if something happens to either of you which would limit your financial life and bills being paid, then at least the other person knows how to do so. Disruptions can be expensive!

What did you make sure to talk about before you got married?

What Will You Do In Retirement?

Michelle —  November 6, 2012 — 6 Comments

Have you figured out how much you need in order to retire? Have you adjusted this for how you actually want to retire? Retiring young would require you to start saving more upfront. Maybe you want to work part-time because you could never see yourself with empty hands. Or maybe retirement to you means finally doing things that you love, whether you make money from it or not.

Retirement may be awhile away for you (it sure is a long time away for me), but I’m sure all of us have thought about how we would spend retirement.

Yes, at first all you might want to do is lay on the beach for hours and hours, but what about after that? I’m sure most of you want to keep busy at least some-what, I know I do. So have you ever thought about how you would fill your time?

Ways that you can possibly spend your retirement:

1. Volunteer.

Volunteering might be on your mind right now, but maybe you’ve been putting it off since you don’t have enough free time. But what about when you retire? You will have a lot of time available, and you can finally spend your time dedicated to organizations that you believe in.

There are so many organizations that need your help, so open up your phone book or your laptop and start calling places when you have time. This is something that I definitely want to do when I retire, but something that I should be doing now. Giving back to your community has so many positives, so why would you not volunteer when you have so much free time?

2. Travel.

Love traveling? Travel the whole time in your retirement! Some countries can be insanely cheap to travel in, and thus you can stretch your retirement dollars in these areas. Of course some areas and countries are more expensive, so you should save and budget accordingly.

Since you won’t have a job tying you down, exploring new countries when you are retired is a great time to do so. You can do adventurous things such as go on safaris, skydive, try exotic foods and so on. Being able to travel without something or someone to tell you to come home would be my dream.

This is something that I definitely want to do, but not full-time. Maybe for a couple of months (maybe even a year, depending on my health and how old I am) since I know that it would be exciting. Having a stable place to call home in my actual home town is something that I love.

3. Have a part-time job.

You’ve been working your WHOLE life most likely, and some of you might not see yourself being 100% jobless. You can find a nice part-time job that is stress free and still allows you to interact with others. The extra income is another positive! Some part-time jobs even offer full benefits such as health insurance.

Part-time jobs could include dog walker, store greeter, customer service, nanny, instructor, tour guide, translator, blog owner, etc. The list is really endless, so of course don’t think those are the only jobs included.

4. Start new hobbies.

Do you have a long list of things you want to try, such as knitting, painting, teaching, collecting, DIYing, etc.? Well now you finally have more time! Maybe create some kind of list and cross things off as you complete them. Is having too many hobbies a bad thing? I don’t think so :)

5. Start a new business.

Have you always wanted to start your own business? I’m sure a lot of us have dreamed of what our personal businesses would be. If you aren’t as reliant on income, then this can be a fun and stress-free way to begin your dream. And you never know, without the extra stress, you might become extremely successful!

How do you want to spend your retirement?

Saving Money in Colder Weather

Michelle —  October 29, 2012 — 9 Comments

Lately, we’ve been having some cold days where I live. Just the other day it was almost 90 degrees, then the VERY next day it was only 35 degrees. What?! This crazy weather is most likely hurting my wallet. One day I have the air conditioning on and then the next day I have my heat on.

Some of you probably don’t do this and would tell me just to adjust myself to the temperature, but I like to feel comfortable in my house :)

If you’re like me, all you did was flip the switch to turn on the heat but didn’t think of anything else that you could’ve been doing. However, every year my gas company gives me a comparison of my usage and costs compared to the year earlier, and this year I would like to beat that and use less heat and spend less money on my bill.

There are many things that you can do to save money on your heat bill this year. All of the tips below are really quick and easy things that you could be doing, but maybe you haven’t thought of them yet since we are so early into the cold weather season so far this year.

1. Curtains.

There are curtains that you can buy that can help keep the heat in and keep the cold drafts out. They might be fairly expensive near you, but they can be a good investment. Also, opening curtains on sides of the house where all of the sun’s heat comes in is good also. Open up those blinds and soak up the sun!

2. Wear warmer clothes.

I’m still running around in my warm weather clothes and pajamas around my house, when I should be bundling up. Wearing an extra layer of clothes such as a cardigan or pants can help a lot once it starts getting colder. Wearing socks and slippers definitely helps as well.

3. Thicker blankets.

Instead of cranking up the heat when you’re about to go to bed, buy a warmer blanket! Seems like a no brainer right? I’m sure you have extra blankets around the house, get them out of storage and put them on your bed. Heated blankets work wonders as well and they usually don’t cost too much.

4. Adjust the temperature for when no one is home.

If no one is home for hours and hours during the day, then turn the heat down so that you can save more on your bill. However, if you will only be gone for 1 or 2 hours, then it’s probably best just to leave it where it’s at, as your furnace will have to work extra to get it back to where it was before you left (thus eliminating any gain that you could’ve made).

5. Monitor the thermostat.

Do you notice a big difference between 68 degrees and 72 degrees? Your body may not notice that big of a difference, but your wallet definitely will. Adjust the thermostat to see what you are comfortable with. Higher temperatures of course equal higher bills. Lately we’ve been keeping it at around 68 degrees and I believe last year our bill averaged around $150 a month.

6. Change your fan setting/direction.

A tip that I didn’t know of until last year was that you should be adjusting your fan setting. Usually there is a “winter” setting that is located right on your fan. Just click it over and that will help you save money as well.

What do you do to save money on your heating bill?

Everyone who is human has struggled financially at some point. It may not be to the same degree as others, but the statement still holds. Everyone makes mistakes and everyone is always learning new things. While many people will try to convince others that they have it all figured out, it is a lot of deception.

When lies are unveiled and the truth is not hidden from sight, we all begin to realize that personal finance is complicated. Not only do unexpected expenses pop up out of nowhere, but we also face difficult financial times that are beyond our control. This recent recession is evident of that idea. While managing your personal finance is often difficult and challenging, forcing you to make decisions without certainty of success, there some basic principles to managing your personal finances.

1. Spend Less Than You Earn

The one way that you can alleviate much of the stress associated with finances is by reducing your spending. In fact, the less you spend the better. Start with spending less than you earn. Not just some months, but all months. This will prevent you from financing your current situation on hopes of future pay raises and will keep you in the black. If there is one thing that I have learned over the past few years, it’s that life is much better in the black than in the red.

2. Create an Emergency Fund

The second thing that I have learned is that expenses pop up. Some people may have no other choice than to use payday loans, but you should do everything you can to give yourself a cushion. If you have a little extra money coming in each month, do yourself a favor and save that money in an emergency fund. Establish a certain amount and promise yourself that you will only touch it in an emergency. Some emergencies may be unexpected unemployment, car repairs, etc.

3. Invest Aggressively

Investing regularly is one of the only ways to build wealth. Unless you plan to live off of the minimal payments you get from social security, you will need investments in order to retire. While it may be hard to eliminate the lifestyle inflation, it will be worth it in the long-term if you can prioritize your savings and investing now.

4. Help Others

One of the core tenets of this personal finance blog is to do everything you can to help others. Our wealth that we build is a privilege. We need to use this wealth to help others who are less fortunate than ourselves. If we ignore this aspect, we run the risk of losing sight of what is important and becoming obsessed with money. While money is nice to have, it’s a means for something greater – it is not the end result.

While these are some of the basic principles of managing your personal finances, these are only the beginning. They help us with the basic framework, from which we can overcome some of the greater challenges that come our way.

Is going back to school in your future? Maybe you can no longer move up in your company and a degree with help move you up, you want to brush up and increase your skills, increase your professional network, etc. However, what else should you think about when you finally decide to go back to school?

Your finances!

Your finances will be effected of course. Now that you’ve decided (or are planning) to go back to school, there’s a lot of planning to do, especially if you’ve been out of school for some time and have many bills to pay. Just quitting your job and going back to school isn’t a plan for most people. Those bills need to be paid and your debt that you currently have needs to be paid down. Also, what will happen to your retirement?

With the right amount of financial planning, going back to school doesn’t have to kill your budget and your goals for retirement, savings and paying down debt. If your financial plan is well thought out, then hopefully you’ll come out ahead after you graduate.

What you should financially think about when you decide to go back to school:

1. How often you’ll work.

Working while attending school can be tough. Will you attend school full-time while working still? Attend part-time and work full-time? Will your work allow you to do both at the same time? I’ve heard of companies that will not allow you to attend school full-time while working at their company because they don’t want you to have to choose which one that you’ll give more effort towards.

I did my whole undergraduate and graduate degrees while working full-time. It was definitely hard, and I only did it that way because I had things to pay for. Working part-time wasn’t really an option, but maybe if I had a better plan then it would’ve worked.

You can also majorly cut expenses and try as hard as you can to live like a student. You can find somewhere cheaper to live, find a better fuel efficient vehicle, eat cheaper, coupon, and so on. The list is really endless. Cutting expenses can really help you financially if you are unable to continue to work the same amount of hours while attending school.

2. What the costs are.

There are many costs to think about when going to school besides just the college tuition. How much will food cost between classes? Will you be able to go home and grab a snack? How much will the added cost of gas be? If you’re driving from work to class (or vice versa), then your gas costs will most likely increase.

Some people fund all of their costs by tacking it all onto their student loans, but I don’t think this is always a good idea as you will be adding a lot of unnecessary debt which will be a burden after you graduate.

3. Your budget.

Now that you’ve finally decided whether you’ll attend full-time or part-time, and whether you’ll work full-time or part-time, now is the time to decide your budget. You need to calculate how much you need every month, and also estimate how much you’ll be earning (if you’ll be working).

Also think about whether you will work on paying down debt (including any student loans that you may be adding toy our current debt) and if you’ll be saving any money towards retirement.

 

How were your finances affected when you decided to go back to school?

Credit cards can be a good thing, or they can be very bad for a person. If you’re looking to build your credit score, then you probably look forward to doing well with your credit card.  However, if you find that you have many spending temptations, then credit cards are probably not the best thing in your life.

I personally have 3 credit cards. I pay them off every month (I’ve never carried a balance) and I use them mainly for credit card rewards. I earn a decent amount and right now I have around $200 in credit card reward points saved up for Christmas presents that I plan on buying.

Most of my friends have no credit cards. When I tell them that I have 3, they usually think I’m crazy and that I must be in major debt. There is a correct way to use a credit card! Anyways, how do you know whether you should have any credit cards though? Maybe you should even close one?

A lot of people have credit cards for many different reasons. The cash flow from month to month is nice to have, the credit card rewards can add up nicely, and you can build your credit. However, many people are scared to close their credit card because they are afraid that they will destroy their credit score.

Your credit score is important in certain situations, but if you don’t know how to properly manage your credit card or credit cards, then closing them might be a better idea for the moment for you.

Reasons why you might want to close your credit card:

1. You can’t control yourself.

Do you see your credit card as free money? The other day my friend told me how she only had a $400 limit on her credit card, BUT that she could still go out to eat because she still had around $50 left to use on it. This makes no sense of me! She also said that she’s only been paying the minimum payment since she’s gotten it because she thought that was helping her credit score.

If you see yourself going to mall just because you have credit left on your card to use, then credit cards may not be good for you. Credit on your credit card is not something that you should just be spending and racking up just because it is there and available for you.

2. You don’t want to rely on credit.

One of my friends pays for everything with cash and refuses to have credit cards. While I wish I could say that this is the way that I live, some people actually DO (of course) pay for everything with cash so that they aren’t forced to rely on money that they don’t actually have.

Be Careful.

There are things to keep in mind if you do decide to close your credit cards. The effect of closing a credit card on your credit score can vary greatly. It all depends on your credit score now, how long you’ve had the specific card and your credit limits.

Maybe just hiding your card from yourself is a better idea, so that you can keep that long standing card that you’ve had. Freezing your credit card (such as putting it in ice in your freezer) may not be a good idea because the credit card company may close your account because of inactivity.

Also, if you close an account that had a high limit, this can affect your utilization ratio. If your ratio becomes too high, then this will negatively affect your credit.

Have you ever closed a credit card? Why?