Posts tagged as:

Budget

Are You A Sneetch?

by Jaime Thompson on October 1, 2010

The SneetchesA quick tour of my house and it’s no secret I’m a Dr. Seuss fan. I love his creativity and the life lessons he always manages to sneak into the story regardless of how zany the words and characters may be. One of my all time favorites is The Sneetches, a story about a group of silly looking yellow creatures, some with green stars on their bellies and some without. Those with the green stars are deemed “the cool crowd” and those without are sad and desperate to be included. One day a “fix-it-up-chappie” by the quirky name of Sylvester McMonkey McBean arrives and seeing the moping Plain Belly Sneetches, quickly sets up a star-on machine. For a mere $3 each, the Plain Belly Sneetches can take a quick ride through this machine and come out with a star on their belly, giving them the appearance of being “cool”. Well as you can imagine the original Star-Belly Sneetches are none too pleased, so Sylvester McMonkey McBean puts together his star off machine. For only $10 they can have that star removed so they can once again declare themselves to be the best kind of Sneetch on the beach. The Sneetches get so caught up in their appearance they keep running through both machines “until neither the Plain nor the Star-Bellies knew whether this one was that one or that one was this one or which one was what one or what one was who.”* While they finally came to realize they were trying to discriminate and/or impress each other based solely on physical appearance, they spent every last dollar they had doing so.

Are you trying to impress people with things and stuff? Are you living paycheck to paycheck (or worse going into debt) trying to be somebody you aren’t? Is this the life you want? Or would you rather your friends be people who love you for being you, not whether or not you have a star upon thar.

* Dr Seuss. The Sneetches and Other Stories (Random House, 1961)

(photo by B3OK)

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What’s In A Name?

by Jaime Thompson on September 18, 2010

Did you have a hard tinameme picking a name for your baby? Maybe you already have names picked out for your unborn children. What about your savings account? College fund? Vacation fund? Behavioral finance experts have found that earmarking your savings for a specific goal can have a big impact on your savings rate. In a 2009 study done by Amar Cheema and Dilip Soman, they found that labeling a college fund with a childs name nearly doubled how much was saved compared to those without a name attached. Cheema recommends opening multiple accounts and giving them labels to help motivate you to reach your goals. So, what will you be naming your savings account?

(photo by Vanderlin)

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How Many Hours Did That Cost?

by Jaime Thompson on August 31, 2010

Timecard

Getting ready to shop the upcoming holiday weekend sales?  Maybe you’ve already been busy with back to school shopping.  Have you ever thought to calculate how many hours of work those dollars spent just cost you?  It’s a powerful tool that might make you step back and reevaluate how you shop and what you buy.  I’m sure you have an idea of your gross salary, but lets look at what you actually take home after Uncle Sam, health insurance, and your 401k among other things take their share.  Go and get your most recent pay stub.  It’s in your organized file cabinet, right?  Divide your take home pay by the number of hours the paycheck covers.  What did you come up with?

Lets say your result is $20 per working hour.  So now we’ll apply that to your purchasing power.  Your $6 a weekday morning coffee and muffin habit means you have to work an hour and a half to pay for it.  The $60 video game, 3 hours.  Those must have designer jeans at $200 a pair cost you 10 hours at work.  $460 car payment is 23 hours in the office.  That one payment is over half a week of a standard 40 hour work week and we still need a place to live and food to eat.

Want another view?  Include the hours you spend commuting to and from work and any other work related activities you do outside of the hours that paycheck covers.  Sadly, that $20 just dropped even lower.  This isn’t a way to shame you into not spending your money, just a tool that might make you think about how hard you really work to make that purchase.  Remember it’s not just a dollar amount, but your precious time spent working to earn that dollar.

Photo: Time Card by flickr user TheGoogly, used under CC license

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Going Green to Save Green

by Jaime Thompson on August 28, 2010

We all know by now we should be using compact fluorescent light bulbs, unplugging electronics and appliances that aren’t in use, washing our clothes in cold water, and adjusting our thermostats when we aren’t home. These will all help save us money every month on our utility bills and it’s just better for our earth. But what other ways can we be green in our lives and help us keep more money in our pockets?

Some retailers will pay you to recycle! Office Depot and Staples offer a store credit for every ink or toner cartridge you recycle with them. M.A.C. cosmetics will give you a free lipstick when you return 6 of their primary packaging containers. Recyclingforcharities.com allows you to recycle electronics such as cell phones, cameras, and PDAs. You select the charity you want your unused product to benefit and then you can take a tax deduction (assuming you itemize your tax returns).

Another great idea is Freecycle.org where you can find items other people no longer need and get them for free! No, you aren’t going to find a brand new stainless steel fridge, but if you want to try your hand at camping, you can probably find someone who has an old tent lying around that they no longer use. In fact, it’s a great way to help clear out some things you no longer need but are still in usable condition. After all, we want to enjoy life, not just a garage full of clutter.

(Photo credit aussiegall)

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Bed, Bath, Boundaries & Beyond

by Derek Sisterhen on July 15, 2010

My wife and I were in Bed, Bath & Beyond last weekend for a particular set of cups we’ve had our eye on for a while. The place was crawling with people (which usually bothers me – I don’t like to shop with 800 new friends), but I found myself observing them like little mice in a social experiment.

Did you know that you can get any kitchen utensil you could ever dream of at BB&B? There are even some utensils aliens probably dreamt about, because I can’t see any benefit of having them. Why would anyone need a lazy Susan for a cheese grater?

Pots, pans, cosmetics, sheets, pillows, fine china, crystal, shoe insoles, gourmet candy, and – wonder of all wonders – a 20-foot high wall of Tassimo beverage cartridges. Because making coffee with a filter is so last millennium.

What struck me as I observed the mice was the apparent randomness with which they shopped. Some stopped in the pots and pans, got distracted by the inflatable mattresses, and wound up in the smelly candles. Others made a beeline for bedding, only to later be spotted with the latest “As Seen On TV” contraption in their buggy.

When going into stores like BB&B, recognize that the marketing powers that be have studied the mice. There is a reason the bed and bath items are at the rear of the store: you have to go beyond everything else to get there.

Everything else that you didn’t know you needed (and that they’d love you to buy).

I always recommend having a list when visiting a grocery store. Boundaries aren’t a bad thing and a list provides them so you get what you came for and don’t wreck the grocery budget in the process. Now that so many of the big box stores are offering everything necessary to human existence – and alien existence, for that matter – setting boundaries with a list for these shopping adventures will help you avoid the mousetrap, too.

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Termites and Economics

by Derek Sisterhen on June 8, 2010

Ever wonder why your dining out budget has a tendency of blowing up in your face? Or how that nebulous “miscellaneous” category in your budget inflates to two or three times what you planned?

Before you get to supply and demand in an economics class, there are two concepts you must understand. First, you live in a world of scarcity. That means that you have a limited set of resources to work with. Sounds like your paycheck; you have a set amount of money available to use.

Second, you live in a world of opportunity cost. That means that if you spend any money on any item at all, it not only costs you the price of that item, but it also costs you the opportunity to use the money elsewhere. Thus, if I save $100, that’s $100 I can’t use to buy groceries. If I spend $300 on groceries, that’s $300 I can’t use to go on vacation. If I spend $500 on a vacation, that’s $500 I can’t use to get out of debt (or buy groceries or save).

So, in essence, every decision I make with money has a ripple effect across all of my spending categories.

I met with a couple recently who felt so compelled to spend money on their children – because they loved to see them happy – that they weren’t making their mortgage payment. I told them they were living with financial termites: to the kids everything appears just fine, but the insides are rotting to the core. There would come a day when the money for “happiness” would run out and they wouldn’t have a home.

In their case, the opportunity costs of happiness spending are keeping the roof over their heads, being able to fund emergency savings, contributing to retirement, taking a family vacation. The list goes on and on.

Ultimately, a budget is nothing more than a list of decisions we make that will have a positive impact on our financial situation. In the execution, though, we tend to forget that overspending anywhere in our budget means we must underspend elsewhere just to get back to even. The consequences of this brand of forgetfulness are quite negative.

Kind of like termites.

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One Roast Beef Sandwich, Hold the Kids, Hold the Parents

May 6, 2010

Once upon a time, people would go to work for a company for many years, retire with a nice pension and health care benefits to last the rest of their lives. Once upon a time, kids could go to college without incurring mortgage-sized student loans.
The good ol’ days.
“Sandwich Generation” is the term used to [...]

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Save Your Marriage, Spend Some Money

April 13, 2010

Ever wonder how to preserve peace, love, and harmony in your marriage when talking about money?  Check out this idea for defusing the communication timebomb:

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The Dark Side of Dave Ramsey’s Baby Steps

March 30, 2010

Yes, if you’re getting legalistic with them, they won’t work for you.

Click here if you can’t view the video

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All I Need to Know About Money I Learned from Proverbs: Budgeting

February 19, 2010

I joke often that, in spite of my degree in finance and career in the banking world, had I just read the Book of Proverbs I would have gotten a much better – and much cheaper – financial education.  In this series I’ll highlight a few key principles from Proverbs that you can apply to [...]

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