Organize Your Papers for This Year's Taxes

Tip #286 - Organize Your Papers for This Year's Taxes. Every year when January 1 or so rolls around, we start to think about our taxes. We begin to get envelopes in the mail on a regular basis that say "Important Tax Return Document Enclosed." And we start a pile of our tax documents. Then around February 1, the more ambitious of us start working on our taxes. And as we progress, we start searching for that little slip of paper the neighborhood trumpet player left with us that says we donated $10 to the high school band. And we start looking in our checkbook for all the checks we wrote to little Sadie's preschool. And inevitably at some point as we work on our taxes we have a nagging suspicion that we donated a desk chair to a local charity but never got a receipt for it, and we are suddenly making phone calls to organizations asking for slips of paper or lost statements. At least some of us are.

But why? It is so easy to start a folder or envelope for next year's taxes that everything tax-related gets put into as it comes in. It does not have to be sophisticated - a folder will do but something with sides like an envelope is better, so there is less chance of a small piece of paper falling out. Write on it "2011's Taxes" in big letters and keep it in an accessible place. What should go in it? Of course, each person's tax situation is different. And those who itemize their deductions would need to keep more receipts. Things that may need to be included are:

--Any donation slips you receive for donating material goods
--Any receipts you receive for donating money to charity
--Copies of your statement or checks that show you paid childcare
--Receipt of payments made to higher education
--Copies of medical payments not covered by insurance
--Travel expense receipts or a log of mileage for work you did for charity
--Receipts for home improvements that may qualify for energy-saving deductions

If you keep these all together throughout the year, it will be much easier when you sit down at tax time to do your taxes (or even if you hand over your paperwork to a tax preparer). The best time to get organized is as soon as you finish last year's taxes when tax paperwork is fresh on your mind. So if you have just finished your taxes or are about to sit down to do them this weekend, get a folder or envelope together for this year's taxes and start collecting the necessary paperwork.

In Real Life (IRL) - Organization is not one of my strong points. I tend to "keep things in my head" such as dates, activities, and such. And while I do pretty well with that system, my memory is nowhere near perfect, and I have forgotten several things from time to time. When it comes to taxes, a paper trail is more important than using one's memory, especially if it comes to getting audited. Fortunately, I have a husband who tends to be more paper organized and keeps all of our donations slips together. But there are other activities that my husband is not involved in so much (like writing checks to the kids' preschools) that I must take the lead in being in charge of.

Once I started selling enough on eBay to call it a business and declare my income I have had to be much more stringent on keeping all of my receipts and price records of what I purchase. Forgetting about trips to a yardsale or not keeping receipts from a thrift store only makes my job more difficult when it's tax time and causes me to miss out on legitimate business expenses. Having said that I am still not perfect when it comes to keeping track of all my personal charitable donations - the one I make in haste online for a friend of a friend or keeping track of my expenses that I have while working with a charity.

When I sat down to do my taxes this year, I found myself having to look up statements online to see if in fact I did make a donation to my college this year as I thought I had (I did, but misremembered the amount). And while I was looking up the statements I found another donation I made that I had completely forgotten about. Then I had to call the bank to have them send me old copies of statements that were not available online. Because of my lack of organization of paperwork, I had almost lost out on some decent tax deductions.

Also, if I had just kept track of my donations and expenses more thoroughly in the first place, I would have saved myself a lot of time and extra work. So for 2011's taxes, I have already set up a folder, and I am starting to add in receipts and log expenses in a notebook that I will keep inside so next year, my work at tax time will be much easier and more accurate.

How about you? Are you good at keeping papers organized for your taxes? Or do you wait until April to gather everything together and do some last-minute scrambling?

Be Vigilant When Buying Secondhand

Tip #285 - Be Vigilant When Buying Secondhand. One of the best ways to cut down on expenses is to buy used (rather pre-owned which sounds so much nicer). Other than consumables such as food, gas, cleaning supplies, most items have a life span that can transcend two or more people. And for most things out there, the cost of the item is most expensive in the first half or less of its life than the rest of its life. Of course, we all know that's true for a car. But it's also true of electronics, movies, books, furniture, clothing, household items, and other things. This is generally the case because people pay a premium to be the first to use something, the item is the latest and newest out there, and because the chances are close to 100% that the item works, and if not, you can usually get a full refund. On the other hand, if you buy used, er, um, secondhand most people expect a discount. They know they are not the first to use the item. They are aware that it is not the most recent edition or latest fashion, but what they may not be aware of unless they are vigilant is whether the item is fully usable, fully functional, complete, and unbroken.

If you have been trying to cut down on expenses and have started to embrace buying preowned items, make sure you are not wasting money buying things that seem to be a good deal only to find out the item is damaged. In other words, do not be so excited by your screaming good deal that you forget to check the item over. What looks like a great deal instead may turn out to be a waste of money that could have been spent toward something else. Therefore, be vigilant looking over your items before you pay. Look over everything once and then do it a second time. Here are some common things to look for when buying used:

Clothing:
--Make sure that zippers zip properly
--Check that buttons (snaps, hooks, etc.) are present and accounted for
--Make sure elastic is not stretched.
--Inspect that there are no stains (or you are comfortable with the ones you see)
--Check if stitching is not coming unraveled (or you know you can fix what you see)
--Make sure the size is accurate. Preowned clothes have often been washed numerous time and may have shrunk. A preowned size 12 may be different than a new 12, for example.
--Check that no part of the item is stretched out

Electronics:
--Do not buy unless you can test it or it's returnable.
--Make sure all parts are included (blade is in bread machine, chain is in light fixture, etc.)
--If you are at a yardsale, ask the owner how it works and then ask to test it. For example, ask for a CD to test a CD player, plug in a tv or radio, test out a video game player. If you are at a thrift store, there are usually outlets to test things. And there are often DVDs laying around that you can use to test it. Lights should light up, the motor on the blender should purr, the blade in the bread machine should spin.
--If it's a battery-operated device, battery covers should be present and not corroded. Ask for batteries to test it or better yet carry batteries in your car so you can test things.
--Make sure cords are not moth-eaten or worn and are fully intact.

Furniture:
--Make sure all legs are sturdy for tables, dressers, etc.
--Check that upholstery is not ripped or stained (unless, of course, you are planning to recover it)
--Make sure drawers slide easily, doors close
--Inspect that all pieces are presents (shelves, handles, hinges, screws, etc.)

Household Items:--For glassware, run your finger around the rim to feel if there are any chips. Run it along the handle (for mugs) and along the bottom, too. Feeling is more accurate than looking
--Look for fading on pictures, decorated kitchenware, or the color on general items.
--Look for cracking of pottery, ceramics or other breakable materials such as lamp bases, vases, dishes, glass in a picture frame, etc.

Books:--Check that the spine is not cracked
--Make sure there are no missing pages or loose pages
--Check for stains or mildew
--Inspect books for curled pages that indicate it may have gotten wet

Lastly, I would be remiss if I did not add that when you get home with your purchase, look on the consumer product safety commission website to see if any of your items have been recalled. Stores aren't supposed to sell these items, but I'm sure some squeak through. And recalled items probably abound at yardsales.

The list above is not meant to be comprehensive but just some suggestions on what to look for when buying used. All of the above are typical flaws you may find when buying items secondhand. Some of the flaws may be acceptable to you or may be easily fixed. As long as you are aware of them, there are no problems. It's when you impulsively buy something secondhand only to come home and find a flaw that the purchase becomes a disappointment and a waste of money. So please when you are buying things that are preowned, allow extra time to inspect what you are buying before you pay for the item.

If you cannot check everything to your liking because you do not have the time or the right tools to do so, then only spend money on the item that you can afford to waste. Think of it as something you are willing to take a chance on.

In Real Life - I've mentioned in the past that I have joined the "buying used" bandwagon. And I have become an enthusiastic secondhand buyer. I buy most of my kids' clothes secondhand, their toys, some of my clothes, furniture, dishes, books, and, um, pretty much most everything.

This post comes from, unfortunately, a lot of experience buying preowned things that were not up to my expectations. I bought a boxed set of books at a thrift store that turned out to be mildewed and curled inside - the whole thing went in the recycling bin and about $4 in the trash (well in the thrift store's cash register). I've bought dishes that had chips that I didn't realize until I got home. They went in the trash. I've bought my children pants where I could not zip the zipper and skirts that didn't hook. I've purchased clothes that have light stains that I didn't notice. We bought a radio that we assumed would work but did not. We bought a swing that had been recalled (we were able to get a replacement through the company, though). We've bought furniture where the drawers did not slide smoothly, although it was such a good deal we didn't care nor expect it to be perfect.

And that is the key to buying used, I think. You shouldn't expect it to be perfect, because most of the items have at least been handled before or possibly used extensively. As long as price is commensurate with the wear and tear on the item and you are aware of any non-functioning or broken parts of the item before you buy, then all is good. Just make sure you look everything over before you pay.

PS. I have to apologize about my long absence. I thought I put a post up a few weeks ago explaining but I see that it is not here. I'm sure I wrote it, and thought I hit "publish post" but it's not here. Hmmm...I don't know. Anyway, I had some personal issues I needed to deal with but hope to be a more regular blogger (at least weekly) from now on. Thanks!

Set It And Forget It

Tip #284 - Set It And Forget It. Once you have a plan in place for your finances, it is okay to take a step back and let the plan unfold. You do not have to think about finances for an hour every day or even spend weekends making plans about your money.

If you set up some financial goals at the beginning of the year, along with a budget then you set the stage for a good financial year. If you direct deposited your paychecks (is there any other way these days?), as well as set up money to go into a savings account or to automatically pay off your credit card debt then the process is even better. If you have your bills automatically being paid then you are probably in good shape.

Let your investments take care of themselves. Follow your budget as closely as possible, keep up with your savings and your bills and step back. Then check back in a couple of months to see how everything is going. I like to check in on my finances near the following dates: March 31, June 30, September 30, and December 31. Any more often than that and people tend to micromanage themselves. They overspent one week at the grocery market so they try to fix it the following week only to find themselves with not enough food. Or they watch their mutual funds take a dive one day and transfer their money that only to find the funds have climbed back up the following day.

That's not to say that kinks don't need to be worked out the first time you set a budget. Or that perhaps you are overspending at the supermarket on junk food that you can eliminate. But give it time. One week or horrid spending should not be bad enough to upset your financial plans. Check what you are doing over a three-month period to reevaluate whether you are consistently wasting money or if you truly set the budget too low. For investments, tracking too closely can make you crazy and generally makes for some hasty buying and selling decisions.

Instead trust that what you set up at the beginning of the year is working. Follow it how you planned and then do an evaluation in another month or so. You can make adjustments at that point based on a longer-term financial activities. In the meantime, go out and enjoy your life. You set up your finances to do what you want, so let it go for a short while.

IRL (In Real Life) - Sorry I have been away for so long. I've taken a step back from finances over the past few weeks. I think it began with our beloved rabbi passing away. And I began reevaluating my life and that of my family's. Then my interest in my finances and writing about them on this blog fell further behind with some personal issues. And the more I let it fall behind, the less time I thought about it. Sometimes planning ones finances, thinking about it all the time, reading about it, writing about it, trying to save
money or put away money can become an addiction or take control of ones life.

Of course for someone new to managing their finances, it tends to take over as one learns about saving, investing, and so forth. But once you have the basics under control and have a plan in place for you and your family, it's okay and probably preferable to put them back in their place, taken out to be reviewed from time to time but not to be obsessed with or idolized.

It is healthy to take a step back and let the plans and processes that you have in place for your finances do their work. And then there should be infrequent checkups (I like once per quarter but even semi-annually is okay) to make sure that everything is proceeding according to plan.

I took a break and have been letting the process that I set up take over. I will be sitting down with my taxes in a few weeks and then doing a re-evaluation of our budget and goals at the end of the quarter. But lately, I've been trying to just enjoy my family and our lives. And it has been okay.

When Buying Used, Compare to Other Used Prices

Tip #283 - When buying Used, Compare to Used Prices. I am a big proponent of buying things used. Most of the time, buying things used will cut the cost of an item by at least 25% and sometimes as much as 95%. As long as the item is in acceptable condition and has enough life left in it, it is preferable to buy this way in order to save money. You have to find what is acceptable to you for buying used. It may include household items, furniture, clothes, toys, cars, or other things.

As with any item you buy, make sure you do the research first to find out exactly what it is you want to buy and secondly find out if you are paying the best used price for it. Most of the time, the used price will be better than the new price, but you really want to find out if the price you are paying is better than buying the item used elsewhere if it available elsewhere used.

For example, suppose you want to buy a small clock. You do your research and decide you want to buy a brand called LaPort (made up name for example). The best price you can find in the store is $79 and that is when it is on sale. However, you decide you really want to pay less than that and you scour the Craigslist ads. To your delight you find one listed on there for $40 and are thrilled. You check it out, find out that it is 3 years old and in pretty good shape. You buy it and are happy that you paid half price for this clock. So did you get a good deal or not? Well, it's really hard to say. Sure you paid 50% of retail but the item has some wear and has three years' of use on it. It would be expected that it would cost less than retail. The truth is, it's hard to tell if you got a good deal because you are comparing a used item to a new item. The best way to see if you got a good deal is to compare it to prices of the preowned items.

A good place to check out used prices for things is eBay. If you can beat eBay's price, then you are doing pretty well. Because eBay is such a large marketplace you can get a good idea of the value of the item. However, sometimes there is a bit of auction fever on there, and prices go unrealistically high. So the best policy is to look at several of your item and take the typical price your item sells for. If you are buying locally, the price should generally be a bit less than eBay's price not including shipping. So suppose after you buy the clock, you look on eBay and see that most of the used clocks are selling in the $50-$55 range plus $5 shipping, then you can feel confident that you got a good deal on your used one. But supposed the clocks are mostly selling for $25 then it appears you have overpaid a bit.

It may not have seemed that you overpaid at first because the price was better than if you had bought it new. But if you can get it elsewhere used for an even lower price, then it isn't a good deal. The reality is, used items should cost less than new ones, so the best way to tell if you have gotten a good deal is to compare it to prices on used items, not new ones. If the item is somewhat uncommon or hard to find used, then you have no choice but to compare it to new items and see if it is worth buying it at a lesser price for an item that has some wear or use on it.

Also, when buying used, there are other things to consider, how quickly you need the item, whether you can touch the item and test it out, how convenient it is to pick up the item, and the item's condition. Take all of those things into consideration, too when deciding if a used price of an item is fair. But just make sure you don't fall into the trap of only comparing the item to new prices, if it is available used elsewhere, as that is a better gauge of the true value of the item.

In Real Life (IRL) - As most of my posts come from circumstances and experiences I have had in real life, this one is no different. I am an experienced thrift store, Craigslist, and eBay buyer. I an generally a smart shopper and can gauge whether I am getting a good deal on things I buy. So I don't know what happened to me last week when I got caught up in the buying fever and overpaid for something used. Here is the story...

My son is a HUGE Thomas the train fan. All along he has been collecting the die-cast metal trains with plastic tracks. But at friends' houses and other places he has become enamoured with the wooden sets. And I was starting to see the value in the durability of these sets. So for the first night of Hanukkah I bought him a small wooden starter set (new and on 1/2 price sale) as his big present to open. I wasn't yet convinced I wanted to switch over to the wooden tracks completely but I had no other "big" gift for him, and I knew he'd enjoy it. Then one day a couple of weeks ago, my husband took my son to the thrift store. And while they were there a staff member put out a big tub of wooden Thomas tracks, bridges, and building. The price was $16 and absolutely was a steal. Needless to say, my husband bought it, and when they came home we set up all of the track on our train table.

And it was clear at this point, that we were not going to get away from collecting the wooden Thomas trains and tracks. On the next free day, I went over to AC Moore, a craft store that carries wooden Thomas trains to check out their prices. Like Michael's, they have 40% off coupons (and sometimes 50%) in the paper and on their website. I was shocked at how expensive the wooden trains were - $12.99 to $16.99 for a single train and $19.99 to $22.99 for a train with a coach. Ouch, even at half-price the cost would be a minimum of almost $7 per train with tax. The next day, I looked on Craigslist to see what people were selling. Unfortunately, most people were selling tracks or a train table which we didn't need. But one woman was selling a set that included 25 trains among other things for $100. "$4 per train?" I thought. I figured it was less than half price of the ones I saw at the store, so I went over her house and purchased them.

But after I came home I got buyer's remorse. I don't know why, as I am an experienced buyer, that I did not look around at prices of used trains elsewhere. I just compared the prices of the new trains at the store. And I only was interested in the trains. The seller included tracks and some other things that I didn't need, so while $100 was an okay price for the whole set, it really wasn't a smoking deal for just the trains. And I realized that when I started searching eBay for lots of used wooden Thomas trains. Many were going for $3 or less per train including shipping. I got a sinking feeling in my stomach that I overpaid because even though they were less than half price of the new trains, they were also significantly used. Some were missing pieces; paint was peeling on others. They should have been significantly less than new.

I was beating myself up over this purchase. How could I have been so dumb to jump on the first deal I saw? Why didn't I research the prices of used wooden Thomas trains first? I know it's because I went to the retail store first and was comparing the used prices to those prices, and it wasn't a fair comparison. If I had looked at eBay first, I would have realized that I could easily do better than $4 per used train. I feel a bit better about my purchase now because over the weekend I was able to sell off the tracks and buildings that came with that lot for $35 which brings my cost of the trains to less than $3 per train which is more in line with the going rate of used wooden trains. And I've learned my lesson when buying used.

Entertain Your Family Cheaply With Parks

Tip #282 - Entertain Your Family Cheaply With Parks. Every summer and winter break I hear about my friends' visits to Disney World, Great Wolf Lodge (an indoor waterpark resort), local amusement parks, arcades, make-your own pottery places, professional theatre, and similar costly activities. All of these places are entertaining for children, are impressive to adults, and cost a fair amount of money. And if you have the money to do these types of activities every day of winter break or every week during the summer, then you don't have to worry about how your money is being spent. But if the idea of spending $60 per child per day for an amusement park or blowing $30 for an afternoon at an arcade doesn't appeal to you, look to parks for cheap entertainment.

No matter where you live, there are parks nearby, I am sure. They may be local playgrounds, county parks, state parks, wildlife areas, nature trails, or national parks. What they all share is that they all can provide low-cost entertainment and educational activities for you and your family. If you have young children, you probably know every local playground within a 5-mile radius of your house. And after a while, it might not seem like a big treat to go to the same playground over and over again. But what if you go outside your community and plan an outing to a playground in the next town? Look online for a town or city's website, and they will often describe the parks that are contained within their limits. A new place with different equipment can have a huge impact for entertainment purposes. Try to find reviews of playgrounds or talk to people who live nearby about which are the best parks around. I have found that most towns and cities have many average-type playgrounds, but there is often one playground that is a showcase of their town. It might include the latest play equipment, zip lines, water sprays, and other fancy features. Here is a town near my parents that has an amazing playground with a kids' castle in it. No admission required. My children would LOVE to spend the day here.

If you want to go somewhere for the afternoon beyond a playground, check out state or county parks in your area. Features at these types of parks may include hiking trails, water activities, and beaches. Even if you are not the outdoorsy type or if it is winter, some of them may have indoor educational buildings to explore. Just doing a quick search of state parks in my area (Northern Virginia), I came up with a wide variety of parks within an hour or two of my home: State Parks of Virginia.

Talk to people at the state or town/city parks to find out if there are any other consortium of parks in your area such as by the region. Around here there is a Northern Virginia Park Authority which is a group of parks in multiple nearby counties. These also happen to be the parks our family use the most. These parks are so varied that you don't feel like you are doing a typical hiking trail in the woods. The parks included swimming pools and waterparks for low-cost, historic homes, miniature golf, gardens, in addition to the typical playgrounds and hiking trails. Going to just one park a week from this group of parks would take us half a year!

Of course, we all know about National Parks and how great some of them are - such as the Grand Canyon or the Smoky Mountains. But even if you don't live near a well-known national treasure, there may be some smaller parks, beaches, battlefields, historic buildings, or wilderness areas near where you live that are run by the National Park Service. The best thing to do is go to the National Park Service website and choose your location to find out what is offered. When I choose my state, I see such varied locations as the Shenandoah Mountains (probably the most well-known around here) to civil war battlefields to historic homes to beaches to colonial farms to waterfalls. Even if I am not an outdoor wilderness, hiking-type person, there is so much to see through the National Park Service. What I like most about these options is two-fold:
1. most of them have indoor interpretive centers which are wonderful and educational on colder days, and
2. admission is usually by the carload - either $5 or $10. For a day's worth of entertainment, it's hard to beat that!

In Real Life (IRL) - My family and I just spent about 10 days in Florida visiting our parents. While we would have loved to have been handed a vacation package to spend a week at Disney's parks free of charge, we were not. And we wanted to keep costs down on the entertainment portion of our trip. What we did instead was look at the parks surrounding the area where our folks live. We spent under $50 to entertain all 5 us for 10 days! And we had so much fun! Most of the activities we did were the types that I mentioned above - parks of various types. We were in the Palm Beach County area of Florida. And as a quick example to show how cheap you can entertain a family using natural resources, here is what we did for 10 days and their cost:

Day 1: Visited Jupiter Lighthouse and beach - we did not climb the lighthouse because we did not have time as this was part of our drive down. This would have cost money. Cost: Free
Day 2: Went to City of Boca Raton's Patch Reef park. This park had brand new playground equipment and a splash pad with cannons and spraying palm trees. Cost: Free
Day 3: Went to City of Deerfield Beach's beach. Spent all day in the sand and ocean. Cost: Free
Day 4: Went to City Of Boca Raton's Sugar Sand Park. Spent time in the indoor science explorium and outside in their oversized, amazing maze playground. Cost: $10 for the science explorium (donation).
Day 5: Spent the day at an indoor flea market. Cost: $5 in fresh fruit purchase
Day 6: Went to Boca Children's Museum and a farmer's market. Cost: $9 for museum (with coupons - would have been $15) and $9 for fruit and jam purchase.
Day 7: Swimming in my parent's condominium pool and playing at a City of Delray Beach's playground. Cost: Free
Day 8: Went to the beach and playground on Miami Beach. Spent the day walking around South Beach and playing on the beachside playground and the sand. Cost: $1.25 to park (person leaving parking spot still had time on meter so this would have been $4).
Day 9: Went to Arthur Marshall Loxahatchee National Wildlife Refuge taking a hike and spending time in the interpretive center. We saw alligators and turtles in their natural habitat! Cost: $5 per carload.
Day 10: Went to Palm Beach County's Wakodahatchee Wetlands. We saw lots of wildlife! Cost: Free

The total cost of our activities including purchases was: $34.25 for 5 people for 10 days! My husband and I, along with our 3 children saw alligators, turtles, and birds, picked fruit, shopped, swam, built sand castles, climbed playground equipment, sprayed water at each other, played pretend in a children's size boat, supermarket, and bank, took a hike, ran around, learned about Florida wildlife and flora, and enjoyed fresh air, exercise, and sunshine for less than $5 per day. Take that, Disney!

Now that we are home, we plan to look into more of the local, state, and national parks in our area to find some more inexpensive, educational, close-to-home fun. What parks are near you that you can enjoy for low cost? For other low-cost ideas, check out Frugal Fridays.

Review your 2010 Year-End Financials

Tip #281 - Review your 2010 Year-End Financials. As I always recommend every quarter or at least semi-annually, review your financial status. If you keep track of your savings, loans on financial software such as Quicken or Mint.com, it could be as easy as running some final numbers. Or if you keep things on paper, it might mean calling up your bank and other investment companies and getting your balance on each of your accounts and tallying them up. However you keep track of your finances, it is a good idea to write down a data point of your balances twice or four times per year. Year-end is an especially good time to check out your status.

By reviewing your finances at year-end, you can check on whether or not you reached the goals you set at the beginning of the year. If you had hoped to have $8000 in your 401(k) account by year-end, then it's easy enough to check your balance to see if you met that goal. If you set a goal of paying down your car loan to $6000 then you can compare it to the amount you owe on December 31.

Your goals should hopefully pretty much match up with your final balances. If they did not, you need to analyze why they did not. Did you hope to have $20000 in a home downpayment account but instead only had $16000? Figure out what went wrong. Was it the stock market that tanked rather than you not saving enough? Well, then analyze whether your down payment money should really be in the stock market. Did you simply not put enough money away? Why not? Did the money instead go to frivolous things such as cute but unneeded shoes or quick, fast-food lunches for the kids?

After analyzing where you may have fallen short you will then have the information you need to set a realistic budget for next year or to adjust your goals. For example, you may decide you will slow down the rate at which you are saving for a downpayment on a house or you may resolve to cut out impulse buys.

Whether you find out you are meeting your goals perfectly or that there is more work to be done, it is important to get an accurate gauge of your financial picture. It will be the first step to completing your budget and goals for next year.

In Real Life (IRL) - At year end, I actually get excited to see if we made the progress that we had hoped to make. Sometimes when the market is doing very poorly, the news doesn't look so great. Or when we have large emergency replace-the-furnace-type bills. But other times, I am happy to see the progress we are making.

We actually just returned from our annual visit with my parents and my husband's mother in Florida. So we still haven't reviewed our year-end financial picture. It will come as soon as the five suitcases are unpacked and the house is in order. But I have glanced at the numbers and we seem to be on track with what our goals were from the beginning of the year. One big goal was paying off our mortgage on the condo in Florida (where my mother-in-law lives). We achieved that one even earlier than we anticipated. And this freed up money to put toward our other goals. We met our children's college fund goals and our retirement goals as well.

One big goal that we didn't achieve was having me get a part-time job or increase significantly the amount I was making selling on eBay. I have a bunch of financial goals floating around in my head for 2011 as well as many upcoming expenses that I discussed in my last post. With these in mind, we will be writing out our formal budget and 2011 goals later this week. And I will come up with our exact financial figures from 2010 once I attack our mounds of laundry.

Make Your Purchase And Savings Plans For 2011

Tip #280 - Make Your Purchase And Savings Plans For 2011. As 2010 is drawing to a close, it is time to start setting up your financial plan for 2011. I believe first you should come up with some general ideas of what new expenses you think you will incur in the next year, what big purchases you would like to make, and how much new savings you want to put away. These would generally be for things that were not included in your last year's budget. For example, if you are used to putting $300 per month toward home maintenance, you do not need to add this. However, if you want to add a new deck to your house, put in down on your list. During the next few weeks you can then make a formal financial plan and budget. For now, pull out a sheet of paper, and write down your general plans for next year.

Here is what a sample plan might look like:

Plans for 2011

1. Buy new dishwasher - $500
2. Preschool for son in the fall - $1200
3. Redo middle daughter's bedroom including furniture - $3000
4. Save toward older daughter's wedding - $2000
5. Start an IRA for wife - $5000
6. Put money to youngest son's ESA plan - $2000
7. Start a beach vacation fund: $600

Now that you have your new plans for next year written down, your next step will be to create a formal financial plan and set up a budget based on expected 2011 income. Both of these links are what I wrote about this topic last year, but frankly the ideas don't change from year to year, only the amount that we put in them do. This year I added this additional step of writing down your new expenses and savings as a way to get you thinking of where this money will come from when you start your formal budget. Either other line items need to come down, you need to make more income, or you need to revise your plans (decorate your daughter's room with furniture from Craigslist, for example, so the amount is only $1000 versus $3000).

Doing a simple exercise like this also starts you thinking about next year's finances and gets the ball rolling to write up your formal financial plan and budget. So why not come up with your list?

In Real Life (IRL) - Over the past few weeks I've been thinking about expenses and savings for next year. What prompted it initially was a trip to Philadelphia for my friend's daughter's Bat Mitzvah. I always knew we would have this expense down the road with our children. But the road is getting shorter now that my oldest turned 9 in November. And the reality hit home when I attended the Bat Mitzvah - a DJ, cha-ching, flowers, cha-ching, clothing, cha-ching, lunch for 100+ people, cha-ching. I am not one to go overboard with events, but even with a simple affair, Bar- and Bat-Mitzvahs cost in the thousands of dollars. And we haven't started saving a dime for it yet!

So the first thing on my list for next year's expenses is starting a fund for daughter #1's Bat Mitzvah. I haven't yet come up with an estimated amount (I think I'm scared to figure it out). But off the top of my head I'm guessing we will need about $15,000 so $3000-$4000 might be a good amount to save next year for a 2014 Bat-Mitzvah.

Next on my list is joining a synagogue. Right now we belong to one but it is not really an ideal fit for us. We went synagogue shopping in the fall but put off joining since we were unsure if we'd even be living here in a year. The good news is my husband's boss told him the plans to close the office have been pushed off a few years (YAY!). That means it's time to join a synagogue where we really fit in. We're going to wait until the summer since my girls' Hebrew school is paid off through the rest of the school year. Anyway, the cost of a synagogue for a year including Hebrew School is about $4000-$5000. Ouch! Gosh between Bat-Mitzvahs and synagogue membership, being Jewish is not cheap.

Our last big expense that we might have for next year is braces. The dentist told my daughter that she needs to visit an orthodontist for a consultation. We don't know whether that will result in her getting braces yet - I hope not! - but we know it's an eventual expense anyway. We're hopeful that the costs are spread out over a few years. Plus we have expanded dental insurance that should cover some of the costs, so I am estimating a $600 cost to us next year. Hopefully, that will be put off, though.

Oh, and one more thing, we really need to start saving for another car. Our van is pushing 150,000 miles, and we've been having work done on it more frequently. And it runs fine, knock wood. But we know it's only a matter of time before we will not be comfortable driving that thing to Florida. I hope we can hold on to it for 3 to 4 more years, but only time will tell. We really should be putting a couple thousand towards saving for it per year. Oy.

Just glancing at my list above tells me we will need to bring in about $10,000 more in income to fund these new goals. All this leads me to finding a job in 2011 as my husband's job has a pay raise freeze, so the money won't be coming from there. And I don't believe our other expenses will be going down by much. I've been talking getting a job for a long time, and I was hoping to go back to my old job this past fall, but that did not pan out. Ebay selling is going very well, but there is only so much I can make that way. I can make much more somewhere else. I have something in mind, but it might not happen until spring or summer. After the holidays I will pursue that path. In the meantime, we have a couple more weeks to formalize our financial plan and write up a budget. I hope you will do it, too. Happy planning! For other financial ideas check out Frugal Friday.