Wednesday, December 30, 2009

Old Age Is Something To Save For And Look Forward To

Tip#219 - Old Age Is Something To Save For And Look Forward To. Many people do not want to save for the future because they either do not know what the future will bring or because they think the future as an elderly person is not worth saving for. But with people living longer and longer, old age is not what it used to be. Seventy years of age today is what 50 years of age used to be a long time ago.

Have you ever looked at pictures of your grandparents or great-grandparents from 50 years ago? If you are lucky enough to have photographs that are dated and notated you may be surprised that people who look like they are 75 years old are actually only in their 50s. Now compare those photographs to pictures from today of people in their 70s. Besides the hair dye and stylish clothes on the people in today's photos making them look much younger, today's elderly are generally much more active. In fact, look at all of the active adult communities springing up around the country for people 55 and older. With people's lives being extended, their active years get extended too.

So what does all this have to do with finances? If people are living longer, then they have to have money to live on when they are older. And while many people are still active well into their 70's and 80's, many are unwilling or unable to work or if they are able to work they may not be able to work full time. It is this last quarter or fifth of our lives that we are saving for. Statistically, most of us will live to our 70s and beyond. And conceivably many of us will be living active lives - going out to eat, playing tennis or swimming, traveling, and doing many of the same things that we do today. So there is no reason to deny that it is necessary to save for the old age. And it's not something to dread but rather to look forward to.

In Real Life (IRL) - I mentioned last week that we are spending our spontaneous winter vacation in Florida. Although I tried, words cannot adequately describe the people we meet, the activities we participate in, and the conversations we have. But all exaggerations aside, it is actually quite refreshing to watch octegarians who are playing tennis and spend time with people in their seventies who go dancing weekly. Observing these eldery folk living their lives to the fullest has made me realize that their lives are evidence against all of those naysayers who think we'll all be sitting around doing nothing when we're old so we shouldn't bother to save for our future. In addition to anecdotal evidence, actuarial tables show that most Americans will be around until their 70's. So we really should begin saving for our life after our working years.

This week I talked to two women in their 80s who just came back from taking a cruise. I observed women and men playing with their grandchildren in the pool, on the beach, and on the playground. I saw elderly folk going on nature walks. I saw old people taking photographs and working on stained glass artwork. I saw pictures of a couple's first great-grandchild. But the highlight of my week was meeting a gentleman who was celebrating his 70th wedding anniversary with his wife. Just watching these folks has renewed my dedication to saving money for my retirement. Getting old is not something to dread. But instead it can be a time to look forward to - to slow down and enjoy life. And having the money to spend during that last quarter of our lives will only make our elder years more enjoyable.

Wednesday, December 23, 2009

While You See A Chance Take It...

Tip #218 - While You See A Chance Take It. I've been going around singing this Steve Winwood song lately in regards to this post. I'm not usually one to be spontaneous - even when I was single I wasn't - especially with three kids and a husband who has a job. But this time I saw a chance and we're taking it.

Several years ago, when my parents were in their mid-fifties, they were deciding what to do in their retirement. My dad was not yet retired but was planning to do so in the next few years. My dad really wanted to do some traveling when he was no longer tied down to a job. My mom wasn't so sure as she likes to be closer to home. Then they agreed to look for a small place in Florida that they could visit every winter - a home away from home - a compromise of sorts. So for about 7 years they would take a two-week trip in early December and drive down to different cities and towns in Florida on the East Coast and West Coast. While they loved the beauty of the West Coast, they had more friends on the East Coast and settled on a 1-bedroom condominium in South Florida where some friends of theirs already lived. It wasn't big; it wasn't fancy, and it wasn't expensive. But it was just right. So now every December they make their journey south and spend the winter in the warmth and sunshine.

The characters that live in their development, along with the goings on of thousands of seniors playing golf, heading to the early-bird specials, and running condo boards makes for some humorous stories. In fact, I wrote a story several years ago about my parents' experiences in a retirement community in South Florida. It's an exaggerated profile of life in the golden years. I've been slowly posting my story chapter by chapter, part by part, on my other blog called "Start Packing; We're Retiring To Florida.

Now back to seeing a chance and taking it. Every year, we head down to Florida ourselves to visit my parents and my mother-in-law and to get out of the frigid cold. A week in sun is just what we need to make it through the rest of winter. This year, the plan was to leave on January 23. But a few days ago mother nature decided to dump a foot and a half of snow in our city, and I was starting to get the itch to go away. After all, we don't celebrate Christmas. Our plans for winter break were pretty nil, our New Year's plans were to stay in, and the schools decided to add an extra three days to the already long break. What's a mom to do? See A Chance And Take It. I saw the chance to hop in the car and head down to Florida ourselves and leave a foot and a half of snow behind - no school or activities to be missed and sunshine and warmth to be gained. All that was standing in our way was my husband's job. He knew he couldn't take off work for a week, so we looked into flights and saw that he could fly home for the short week of work between Christmas and New Year's and then fly back for only $269. And after about 10 minutes of deliberation, I called my parents to tell them of our plans, booked my husband's flight, and started packing.

So for the next 12 days I will be in Florida - probably with no access to the computer. If you want to visualize what we will be doing while we are there, feel free to check out my other blog. (Yes, it really is like this there!) When I get back we can do a final review of how we did in 2009 and go over making our financial plans and a budget for the upcoming year. And in the meantime, if you see a chance, financial or otherwise, take it...

Tuesday, December 22, 2009

Don't Stay The Path If It's The Wrong One

Tip #217 - Don’t Stay The Path If It’s The Wrong One. Have you ever started a project such as painting your living room and as you watch the paint go up on your walls you realize that the color is all wrong? But because you just bought two gallons of the stuff and you've already invested 45 minutes into the project you think maybe, just maybe it will be okay, and you keep forging ahead with the same paint color that you don’t care for? A week goes by and you realize you really don’t like the paint at all but now you tell yourself that it was several hours of hard work over a couple of days and you're not going to do anything about it now and decide to live with it. Years go by and you finally decide to repaint the living room and announce to anyone who is in hearing distance, “I should have done this a long time ago. I’ve always hated this paint!” You repaint the living room and love the new color and all is well except the several years you lived with a paint color you hated.

Well, finances are like that, too. We make decisions such as investing in a CD that comes due in five years. Or we put our money in a stock hoping it will go up over the next 3 years. Or we pick a bank that is convenient for us to bank with. And sometimes after we make the initial decision we realize we made the wrong one. But what do we do about it? Nothing. We live with the consequences of not making any changes even thoug we know the initial decison wasn't necessarily the best for us.

For example, we buy a 5-year CD for $1000 that is paying a 4% rate. We realize after 3 months that 5-year CDs are paying a 5% rate at a neighboring bank. We can cash out the original CD for just the penalty of interest paid so far ($10) and invest in the new CD that will earn us $250 over the course of the 5 years (assuming no compounding) versus $200 for the original CD. So for the cost of $10 you will earn you an additional $50 or a net of $40. Now $40 might not sound like a lot. But what if it was a $10,000 CD, and we’re talking about the difference of $400? Why not go for it? Why stay the wrong path just because at the time it was the right one?

How many times have you invested in a stock or mutual find thinking it would be a good one only to find out month after month or year after year that it’s just not performing to expectation? But you keep the money in that stock or mutual fund because you initially had high hopes for this particular stock or you keep it in there because it’s gone down in value and you don’t want to sell it until you’ve made your money back. The phrase, “cut your losses and move on” comes to mind with this example.

Lastly, suppose you choose a bank that is down the street thinking you can walk there any time and that the convenience outweighs other factors. But after banking there for a couple of months you realize that the tellers aren’t very friendly and the rates aren’t competitive. And frankly you drive by three other banks on your way home from work five days a week that you can stop at just as easily. But you never bother to switch banks because your direct deposit is set up with them and it’s a hassle to go through the paperwork of opening up a new bank account again. So you stick with a bank that you don’t like. And when you finally do change banks years later when you finally have had enough of the bank you don’t like you realize it’s the same amount of work to change banks now as it would have been to change years ago. And you would have saved yourself a lot of heartache and unhappiness if you had done it much earlier.

I don’t know why humans are like this, at least some of them anyway. Once we make a decision about something we have a need to follow through with our decision even if we realize it was a wrong one. It’s as if we can't admit to ourselves that we may have made a bad decision. I know I do it, and I’m sure others do to. But let’s stop that behavior. When we realize something can be improved or changed, then let’s change it. Why go down the wrong path just because at some point we thought it was the right one? If it will improve our bottom line or the ease with which we’ll get there, then make the change. You’ll probably change it eventually anyway so why not take full advantage of benefits by make the changes early on?

In Real Life (IRL) – In our family's efforts to review our finances before the end of the year, I was looking over some CDs (share certificates) that we own in our credit union. At different times we have rolled over money sitting in a regular savings account into a certificate to earn a higher interest rate. And we have also taken advantage of some 1-year specials they have had with much higher rates than their normal certificates. As some of these certificates roll over (become renewed) they may not get a competitive or special rate the second time around. When I looked over our CDs recently I noticed two in particular that were earning less than 1% interest, and they were 3-year CDs! What a terrible rate. One (worth about $500) had renewed in April and one (worth about $700) had renewed in October. I missed the renewal notices that were sent out because these particular ones were set up by my husband and the notices went to him. As he doesn’t have as much interest (read obsession) in finances as I do, I guess he ignored them. In any case, the interest being earned on these CDs stunk. And I realized this same credit union is offering 3-year CDs (really share certificates) that are paying 2.2% as long as we invest at least $1,000.

At first I was tempted to do nothing (the easy course) because I figured they were small dollar amounts, and we could just make the changes when they came due in 2 ½ to 3 years. But then I did the math. I checked the policy on cashing out a share certificate and found out the penalty is the amount of dividends paid to date since the renewal (or in the past 180 days, whichever is less). That amounted to about $4 in our case. By keeping the money in their current CDs, we would earn about $36 (not even) over the course of three years. By switching them to the minimum $1,000 CD, we would earn more than $79 over the course of 3 years minus the penalty it cost to switch, which was $4. So we would earn more than $75 with the new CD versus less than $36 if we kept the course. Now, it’s a small dollar amount difference for sure. By switching we would have an extra $39 dollars in our pocket in three years. But you know what it took to make that extra $39? A phone call that lasted not even 5 minutes. Believe me, I was tempted to do nothing because the amounts were so small. But when I looked over all of our CDs at that credit union, they were all getting relatively good interest rates except for those two, and it was bugging me.

By paying a penalty I was admitting we made a mistake initially, but the outcome was so much better. I wronged our mistake and we are on the right course again – earning a better interest rate and leading to more money in our pocket by cutting our losses early on. What is keeping you from changing the course of some of your paths that might not be the right ones?

Sunday, December 20, 2009

Some Fun Snow Pictures

Our area was dumped on with a foot and a half of snow yesterday! Lots of fun times staying indoors with the family. Sometimes it's fun to take a brief break from all of the financial stuff and just take in all the beauty life has to offer. Here are some pictures of our snow. Enjoy!

Friday, December 18, 2009

Review Your Year's Financial Goals

Saving Money Tip #216 - Review Your Year’s Financial Goals. It’s that time of year again – the end of the year when everyone wants to wrap presents for the holidays and wrap things up for the year. Added to the craziness of holiday activities are all of the last-minute things we need to get done by year end – getting all of the doctors’ appointments in to finish off your Flex Plan, losing those last 5 pesky post-baby pounds, making the last of your donations to take advantage of tax write-offs, and trying to meet all of the other goals you set almost a year ago.

One of those goals should have been a financial goal – whether it was paying off the half of you debts, saving $5000 in a retirement account, starting an education fund for your child, or simply following your budget and your overall financial plan. With only two weeks left until year-end, it is time to start reviewing the financial goals you had set for this past year. How well did you meet them? Were your goals realistic – too pie-in-the-sky or perhaps, not high enough?

When you review your goals, look at what you accomplished and try to analyze those goals you were not able to meet. Pull out your budget and study it. Were your budget categories and amounts realistic? Or do they need to be adjusted? The only way to have a good financial plan is to improve on the one you have. If most of your goals have been unmet, analyze why that is so. If you were way off on budget estimations, adjust them. By reviewing this past year’s financial plan you can be better prepared to make realistic financial goals for next year.

In Real Life (IRL) –
I’ve been reviewing my budget lately. And what I have come to realize is that I grossly underestimated spending in the gift and “unexpected” categories. Our family’s budget for gifts is $100 per month. We don’t follow budgets strictly to the dollar in any sense of the imagination. But the budget is there to give us an idea of how much money approximately is allocated to each category. One hundred dollars per month was supposed to cover birthday gifts, Hanukkah presents, and gifts for any other special events such as weddings, bar-mitzvahs, graduations, etc. This year seemed to be the year for every one of our relatives to get married or do something special. We were invited to an out-of-town bar-mitzvah and two out-of-town weddings that we didn’t know about (we didn't attend all of them). This not only dug into our gift category but also other categories since celebrations entail other expenses – driving to the event, hotels, clothing, etc. These were all expenses that we didn’t plan for this year.

In addition to the family celebrations, my husband’s only aunt found out she was dying of cancer and had only months to live. Of course he wanted to see her one last time, and she lives in Germany. But no budget would hold him back from that trip. So he and his mom made last minute plane reservations and flew to Germany. Along with the airfare, came gifts for cousins and other relatives he rarely sees. This trip entailed a big expense that we didn’t plan for.

One of our financial goals was to make a $5000 contribution to our Roth IRA plans and a $2000 contribution to each of our children’s Education Savings Plans. The children’s plans are complete. We are a bit short on our Roth IRA contributions. (I’ve made $4000 to mine and my husband has made $3000 to his). We actually have until April 15 2010 to make 2009 contributions, so we will do that. But some of these extra expenses we incurred came out of moeny that we were going to contribute to these plans.

Over the next week or two I will continue to look at where my budget categories were realistic and where they were off the mark. And then I can use the notes I make to prepare our budget for next year. Have you reviewed your financial goals and expectations from this past year? How did you do? For other financial tips, check out Frugal Fridays.

Tuesday, December 15, 2009

Get E-ZPass

Tip #215 - Get E-ZPass. If you drive along I-95 frequently, you know how bad the backups can be, oftentimes right near the toll plazas. To help avoid some of this backup, you should purchase an E-ZPass electronic toll transponder card. You put money on the card and when you go through the toll plaza, the system subtracts the correct amount of money for the toll. There’s no looking for coins, no dealing with a person at the toll booth, or waiting in line for the person in front of you asking directions. Instead an electronic sensor “reads” your transponder card as you zip through the tollbooth, and you are on your way in a flash.

E-ZPass is one of the biggest electronic toll systems in the USA – It covers the entire Northeast corridor from Maine to Virginia and also the Midwestern states of West Virginia, Ohio, Indiana, and Illinois. There are also some smaller statewide systems in other states such as the SunPass in Florida, K-Tag in Kansas, FasTrak in California, and TxTag in Texas. In the past many of the states now in the E-ZPass system were in their own state systems but integrated themselves into EZ Pass. Hopefully, in the future, E-ZPass will start to cover more states so there won’t be a need to have more than one transponder card on your windshield if you drive through many states.

The benefits of E-ZPass besides being a time-saver driving through the tollbooths is that some toll plazas give a discount on the toll charged if you use E-ZPass. The other savings come from the amount of gas and wear and tear on your car you save by not waiting in long lines with your engine running.

There can be costs associated with E-ZPass, however. The way the system works is that many state highway systems offer the E-ZPass and each one offers it for a different fee schedule. Sometimes there is an initial fee to buy the tag, an initial deposit for each tag, and then a minimum balance to establish the account. As the balance is used up, it is automatically replenished from your credit or debit card. Some places have the subscriber pay a $1.00 monthly fee or a $3.00 annual fee while others don’t place fees on the subscriber at all. Paying a $1.00 fee per month may not result in a cost savings for you so when you sign up, make sure you do so with one that has lower or no fees. When you go to E-ZPass’s site, it will ask you for your state of residence or where you drive most frequently. Then it will take you to that highway’s site and have you sign up there. Rather than do that, sign up through the following sites, which offer E-ZPass with no extra fees. Then you can enjoy the financial- and time-saving benefits without paying for them.

These jurisdictions offer the lowest fees that I could find:
Massachusetts Turnpike Authority Fast Lane Program
New York State Thruway Authority
Peace Bridge Authority (New York – must be a NY resident or Canadian resident to use this)
Triborough Bridge and Tunnel Authority (New York)
Virginia Department of Transportation
West Virginia Turnpike

None of the above had an initial cost to buy the transponder and had no monthly fees. Some of them had fees for monthly statements sent through the mail, but I’m guessing they could be waived if you do the statements electronically. Each state has a different fee structure and they seem to change with some frequency. I was able to obtain some of this information from the bottom of the Wikipedia entry on E-ZPass so if you want to read more about the E-ZPass system, check it out.

In Real Life (IRL)
– Our family often takes the scenic route without tolls to get to our destinations. We like the slower pace, the lack of tolls, and the ability to pull over easily. But the tolls are hard to avoid everywhere so on a given car trip we often pay at least one toll per way.

With my family in Pennsylvania, my husband’s extended family in Massachusetts, and us living in Virginia, we drive through toll plazas pretty frequently. Having three little children, the time and sanity the E-ZPass system saves when we drive through the tolls cannot be underestimated. When we signed up for the system many years ago, we did it through the New York State Thruway Authority. At the time, Maryland and Virginia weren’t even part of E-ZPass. When we told my parents about it the system tried to have them sign up through Pennsylvania, because when my dad went to the E-ZPass website and it asked him where he lived, that’s what he said. However, the Pennsylvania Turnpike Commission charges $3 per year for the privilege of having E-ZPass, and while I still think it would be worth $3 for all of the time savings involved, why pay $3 per year if you don’t have to? We had him sign up through the Peace Bridge Authority.

We LOVE using E-ZPass. In the past, more discounts were given through the tollbooths if you used E-ZPass – not so much anymore. But when we see a backup by any of the toll plazas, and we go through a dedicated E-ZPass lane, the discount becomes secondary. The discounts are still given in certain places in Massachusetts, New York, and New Jersey, however, so if you drive in those places often, E-ZPass is even more worth it.

If you live in anywhere from the Northeast to the Mid-Atlantic, I cannot imagine not get an E-ZPass, the time savings are great, and if you sign up smartly to avoid fees, the money savings are an added benefit.

Thursday, December 10, 2009


Tip #214 - Regift. There I said it. Regift. Ha, I said it again! In today’s overly-materialistic and ultra-crammed-with-stuff society, if you tell me that you did not receive something in the last year that you did not need I would be surprised. I would be very surprised. So what should you do with that sweater that is the wrong size but came with no gift receipt or the bath salts that you are allergic to? Uumm, why not give them give them to someone else? Is there really something wrong with that? Perhaps Emily Post or Amy Vanderbilt thinks so, but I don’t. Yes, the purpose of giving a gift is the thoughtfulness, I agree. And for someone’s special 50th anniversary or for someone who just graduated from college, I wouldn’t expect you to regift a present. But seriously, if you are doing a gift swap for your daughter’s third-grade class, a duplicate game your child received at her last birthday party works just fine. And those bath salts you received that you were allergic to would be perfectly suitable for a hostess gift for a luncheon your friend (whom you know loves bath salts) is having.

Aren’t we all just buying too much anyway? What’s wrong with spreading around what we don’t need? And while giving stuff away would work just fine that still leaves us with having to buy even more gifts when the need arises. And think about it, if you donate to a thrift store the gifts you receive that you don’t need, and then you go shopping at said thrift store for a gift for someone else, then all you are doing is buying someone else’s gift that they parted with. So you are regifting in a way anyway, just not with your gift. So why not just use one of the gifts you received in the first place, if it would work just as well. Besides, it will save you money.

The landfills are already filled up with too much Made in China junk anyway. Let’s not add to it by buying more when it’s not necessary. Don’t be ashamed to regift; lots of people do it no matter what Emily Post says.

In Real Life (IRL) - My daughter had 14 girls at her last birthday party (and I cut down the list!). Therefore she received 14 gifts. Ugh, how many craft sets, Junie B. Jones books, and Webkinz does she really need? Until I can successfully get our friends to stop bringing gifts, I will keep using some of them as gifts for others. Yes, I try to be thoughtful in my daughter’s classmates’ gifts, but frankly out of 14 girls, a large percentage of them like Webkinz, all of them like crafts, and most of them read Junie B. Jones (not us, though; she is too sassy for my tastes). So it’s really pretty easy to regift in that crowd. Furthermore, my daughter does not need to be receiving that many presents in one day and she has no use for most of them anyway. Usually, we let her keep the few gifts that she likes best. Those that have gift receipts get returned, and the others go in a gift pile in the closet to be used for future events. I personally see nothing wrong with regifting and am happy when others do it to us. It means there is one less piece of plastic being manufactured and one more inch of space available in the landfill.

In this season of giving if you are not comfortable with regifting, then why not try to cut down on the number of gifts you exchange? We put money in a bank account for all of our nieces and nephew for Hanukkah. And we stress (and warn!) the doting grandparents that we really don’t need a thing – no, our 2-year old does not need any more cars. And the 4-year old does not need any more new dresses. But if they insist on buying, guess what? It goes in the re-gift pile. And we don’t feel bad because we warned them. How about others? Do you regift? Do you feel guilty about it? If so, check out others' money saving tips at Frugal Fridays.

Monday, December 7, 2009

Saving Money Is Different Than Getting A Good Deal

Tip #213 - Saving Money Is Different Than Getting A Good Deal - Many blogs are focused on getting a good deal - where to get a free ice cream on your birthday, how to get a box of cereal for 39 cents, and how to pick up some buy one get one free glasses, for example. But there is much more to saving money than getting good deals on things.

When getting good deals on things, the focus is still on buying whereas the focus should be on buiding up your savings. So rather than trying to find out where you can get the best deals instead concentrate on how you can keep more money in your pocket. It is a subtle difference, but it is a difference.

Pick a reasonable amount you'd like to have saved by the end of the month, the end of three months, or the end of six months. then figure out how you can meet those goals - by bringing up your income, going out less often, eating in more, shopping less, etc. And if getting good deals on things you would have spent some money on anyway, then use that as a means to the end with the end being having more money in your pocket. The goal is not just to get a bunch of good deals.

In Real Life (IRL) - I've always mentiioned that I'm not a big mall or store shopper. But the online deals I read about on a daily basis are more tempting to me. They are just so easy! And who can resist very cheap or free? The problem is that "things" are more appealing when everybody is talking about the good deals they get than keeping track of how much savings you as an individual are building up.

I find myseelf getting caught up in the excitement of getting a good deal before it goes away or being one of the lucky few who got something cheaper than some others. I have to remind myself that my goal isn't to get more doll dresses for my daughter, no matter how good of a deal they are. But, instead my goal is to build up my daughter's college fund. If getting a good deal on a birthday present is one means to building up her college savings, along with making some income selling one eBay, and eatin out at restaurants less, that's fine. But my focus shouldn't be on just the best deals I can get my hands on.

This holiday season when lots of excellent deals aboound, remind yourself that your goal is to save money not to spend it.

Wednesday, December 2, 2009

Pretend You Are Making Less

Pretend You Are Making Less – With all of my tips for saving money, ideas for making money, and lists of ways to make the most of your money, the bottom line is that the only way to accumulate money is to live on less than you earn. If you have no discipline with money - that is, if money burns a hole in your pocket - then you need to pretend that you don’t earn all that you do.

This is no different than having your spouse hide the Halloween candy so you won't eat it. If you have no discipline from pigging out on candy if it is in front of you, then you need to pretend it’s not there so you cannot dig into it. Obviously some people have more will power with money than others. And if you are one of those who will spend money it if it comes into your hands, then don’t let it come into your hands. Or put it away as soon as it does. There are several ways to do that:

Use Direct Deposit – Have your work direct deposit your money into a savings account. This way you are not actually receiving a check that is begging to be cashed. Once it’s in a savings account, you can transfer a fixed amount per month to your checking account for your use for the month. Everything that remains will become your savings. Some companies or banks may even do this for you – they may automatically arrange for a percentage to go into your checking account and a portion to go into your savings account. If your company does not do this, then do it yourself as soon as you get paid!

Put the Money In a Separate Account Yourself – As soon as you get paid, whether you use direct deposit or not, put a portion of your money in a separate savings account. You can do this with every paycheck or on a monthly basis. On the day that you get paid, write out a check and send it to a savings institution, mutual fund, or other savings vehicle.

Invest In Your Company’s 401(k) – If your company offers a 401(k), then participate in it! The minimum you should put in is up to the amount that they will match. If you can swing it, put in the maximum into your 401(k) that the law and your company will allow. The 401(k) money comes out of your paycheck much like your portion of your health insurance premiums. When it comes out automatically, you don’t even miss it! Plus, because it’s coming out pre-tax (you don’t need to declare that money as income until you withdraw from your 401(k) fund so you don’t pay taxes on it), then the blow isn’t that bad.

Save Any Extras - Put any bonuses, extra paychecks, raises, or overtime pay directly into a savings account. If you are living on $50,000 per year and your budget reflects that, then any bonuses or overtime should not need to be spent. Put these extra payments right into your savings account. If you get paid every two weeks and have a monthly budget, then your two extra paychecks can be deposited right into a savings account. If you have been living on $40,000 per year and get a raise for next year of 5%, then try to put 5% of each paycheck right into a savings account.

Have A Budget Envelope For Savings – If you do an envelope system or something similar, have a budget for savings. It can be for any amount. When you put your cash into envelopes for groceries, rent, gasoline, you put a certain amount into savings, too. Then each month bring it over to the bank.

All of these plans won’t work for everyone, but you should be able to take away something to work for you. Many of us manage to find money to eat out, to go away for the weekend, or to buy a new dress, there is no reason why we shouldn’t be able to put aside money for savings. And it often works best if you take out this money before you spend it on other things.

In Real Life (IRL) – My family lives on 75% of what we earn. The other 25% comes out of our paycheck either through automatic deductions or at the beginning of a pay period before we spend it. Our budget, for all intents and purposes, is based on the remaining money.

We get the maximum allowed by my husband’s company deducted for his 401(k) contribution. Because we never see this money, we are not tempted to spend it, and we don’t even realize it is there or miss it. And at the end of each quarter we are thrilled to record that we are saving thousands of dollars toward retirement without any real sacrifice on our part.

While we don’t do an actual envelope system like some people do, I do have a category for each type of spending – true expenses categories and savings categories in our budget. If you were to see my budget, you would see a line for our monthly mortgage payment, a line for gifts, and a line for college savings, for example. For our children’s college funds – we save $2000 per year per child - $500 per month goes toward college savings. I usually like to invest in $1000 increments, so I often put the money in a holding account before I put it toward their college savings. We do something similar with our Roth IRA funds.

Currently we don’t have room in our budget for any “extra” savings anymore, but when I was younger and single, I sent away about $200 per month to a mutual fund company. As soon as I got paid on the last day of the month, I would write the check and send it off. Not only did that savings build up quickly without me every really getting a chance to see the money, it allowed me to purchase shares in a mutual fund at different points throughout the year so that I wasn’t putting all of my money in when the market was high. Years later, I haven’t touched that mutual fund and have nearly $20,000 in it just from putting a couple hundred dollars into it each month.

Lastly, because my husband's new company gives 26 paychecks per year, we take the two extra paychecks and use them for savings. This is a forced savings for us. We live on the same two paychecks per month, so those two months where there is one extra, it goes right into savings.

All of these types of forced savings are often advised by experts as paying yourself first. Wouldn’t you rather pay yourself the money than pay the guy down the street who is roasting gourmet coffee or give money to the the big box chain that is selling the latest electronics? Don’t you want and need the money more? Don't you deserve the money YOU earned? Then take the money out of your paycheck and put it in savings before you get a chance to give it to someone else for something you don’t really need. And you won't even miss it.