Year-End Financial Check-Up

Tip #26 - At year end, figure out where you stand with your finances and set your goals and budget for next year. Over at Money Saving Mom they are doing a year-end financial check up to see if they met their goals for 2008. This is a great idea. At least once a year and even better twice, you should check on your finances. See how you are doing. See what the balance is in each of your accounts - both savings and checking. Move things around if you must to get you back on track where you want to be. And at the end of the year, set financial goals for next year. Figure out how much you want to save or how much debt you will pay off. And set your budget so you can do these things. You can't save money if you don't know where you stand. Since it's November, it's a great time to get started for next year. Write out your expenses, prepare a budget, and set your goals for 2009. Time to get started!

In Real Life (IRL) - We have a budget set for each year and I know how much I want to save for the upcoming year. Each year for the past few years, our financial goals have been the same - save $2000 in each of our children's college funds and the maximum amount in our Roth IRAs (this year it is $5000 each). We also save 10% of my husband's income in a 401K. Beyond that nothing gets saved because the rest of my husband's income goes toward our budget - our mortgage, food, utilities, etc. I make a small income at home selling things on ebay. That money generally covers the cost of preschool and dance and piano classes. As my children get older I will probably get a part-time job that will cover higher expenses that we can expect as children get older such as braces and summer camps. We'll see how it goes. We'll sit down and do a formal budget later in the year.

How to Have a Birthday Party for Under $100

Tip #25 - How to Have a Birthday Party for Under $100. It's easy to have a birthday party without spending a lot of money. First thing is to have it at home. This way you are not spending any money to rent a room or paying an outrageous per person entertainment fee. Next thing is to come up with food. You can have lunch if you wish. It doesn't have to be expensive. It can be pizza, sandwiches, chicken nuggets, etc. To make it even cheaper, have it after lunch and just serve dessert and cake. Next you want to come up with activities for the kids. Girls love crafts and they are fairly cheap to do. Depending on the age, you can do beading, painting t-shirts or tote bags, making princess crowns, etc. Boys can do crafts if they are young. They can make dinosaur dioramas or policeman hats. If they are a bit older, you might want to skip crafts unless you know your son and friends are into making things. Next you want to do a game of some sort. There are the typical musical chairs, hot potato, etc. Or you can make a treasure hunt, carnival games, bingo or whatever matches the theme of the party. Two or three games are usually fun to play at a party. Next is cake and ice cream. Final is open presents if you wish and then down time - can read a story until kids are picked up. Hand out goody bags. All of that should be well under $100.

In Real Life (IRL) - My daughter's 7th birthday party is tomorrow. She is having a "mock" sleepover. Which means 10 girls are coming over at 5 PM and are going home at 9 PM. I will go through the costs and point out where it could have been even cheaper. We sent out invitations to 11 girls. Cost was $1.00 for the invitations and $4.50 for the stamps. Even cheaper would have been to call the girls or hand out the invitations personally. At 5:oo all of the girls are showing up. My husband will pick up pizza at 5:15 and be back by 5:30. Cost of pizza is $45. We could have done this cheaper. I could have made pizza - much more work and I have a baby at home. I could have gotten frozen pizza - not as good. We love this NY pizza place where we're getting the pizza so it's worth it to us. Paper goods were $4 for plates and cups. We had the silverware and tablecloth. We bought plain colors to keep cost down. After the pizza, we are doing the craft. A neighborhood girl is coming over to help. We are going to pay her $10 to help us. The craft is making lip gloss. We spent $3 for containers. $2 for petroleum jelly, $1 for
Jell-O. After the craft we are polishing nails. We bought nail polish and glitter set for $3.50 at a yard sale. Next is games. We are playing hot pillow - prize cost $1. And we are playing bingo. Prize is $1. Then is Make Your Own Sundaes - Cost of ingredients is $15. Cupcakes were made from a mix for a cost of about $2. Open presents is free. Goody bags cost $1 each and will be filled with lip gloss, nail polish, note pads, pen, and nail file. Everything was bought throughout the year on clearance. Thank you notes were 50 cents and another $4.10 to mail. Total cost of party is about $107.50. So I went over the $100. This is IRL after all. But it easily could be cut down by cutting out hiring the neighbor, doing the food from scratch or having fewer sundae ingredients. Also, we will probably have leftover items that we can use.

Dream Big - Work Small

Tip #24 - Dream Big. It is fine to have big dreams. Dreams that one day you will own your home. Dreams that one day you will have a boat. Dreams that one day you will retire without worrying about money. It is good to have dreams. Dreams are goals. Goals that you set for yourself in your mind. Don't dream that one day you will win the lottery. That is a fantasy - not a dream.

The way to make your dreams real is to work at it. If you dream to own your home one day, then start saving for it today - even if that savings is one dollar. If you dream for a boat then start saving for it. If you dream about retiring someday then start planning for it. It takes a first step and small steps along the way to make that dream a reality.

In Real Life (IRL) - I dream about retiring early - hopefully when my kids are finished with college. I have started to work on attaining that dream. I've saved money from each paycheck. I've put away money for my kids' college account. And I've worked it that we will be done paying our mortgage before the kids go off to college. By the time they are done school, we should be okay to retire. I didn't do this by winning the lottery. I didn't do this by making a big sale on ebay. And I didn't do this by being handed a trust fund. I started saving when I was young. I bought a house in a good neighborhood and I scrimped on frivolous things like eating out and designer clothes. By working these small steps, I am able to dream big.

Another person had a dream. He dreamed that "...that my four little children will one day live in a nation where they will not be judged by the color of their skin but by the content of their character." Martin Luther King's dream came true yesterday. And it was a big dream. It didn't come easily. There were baby steps along the way. But when Barack Obama, an African-American was elected as the President of the United States, Martin Luther King's dream of social justice came true. If his lofty dream can come true, yours can, too. It just takes work.

Resist Temptation

Tip #23 - Resist Temptation. It's very hard to not spend money when everyone around you is. When your friends are eating out, you want to join them. When your family buys the latest things at the mall, you wish to go, too. When you hear about neighbors' vacations to Carribbean islands, it's hard to not want to fly away also. But try to resist temptation. He who laughs last, laughs loudest. The more you hold on to your money, the more security you will feel and the more you will have later to do what you want to do.

If you know that friends of yours are eating dinner out at a fancy restaurant and you wish to go along, try to resist by making a special meal at home. Or find a coupon 2-for-1 that makes the cost of eating out pretty cheap. You hear about your family's trips to the shopping mall buying the latest gadgets. Resist by telling yourself, most of them will be sold at a garage sale for 1/4 of the price within a year or two. If you have an urge to shop, go to the cheapest thrift store you know about. A lot of retail therapy can be had for $2 or $3. Or if it's yard sale season, spend the morning going to yard sales. And smile each time you pay $1 for an item that was $10 or $20 last Christmas season. When you see your neighbors come back with tans after Christmas vacation, tell yourself that you will be the tan one in retirement. Or if you really, really want to do a dream vacation, then forgo a vacation for a year or two to save up for a big, expensive one. Or find a cheaper alternative than an island at Christmas time. The Florida beaches in the first two weeks of December or during the month of January is much cheaper than the week of Christmas or in February. And if you can drive there, the vacation can be surprisingly affordable.

Try to resist the spending temptation. Stay home more. Find cheap or free activities. But if you can't resist, give in cheaply. You'll be thankful later on.

In Real Life (IRL). Shopping at the mall does not entice me. Not one bit. I am a mall hater. I hate the crowds, the indoor air, and the prices. Ugh. Give me a thrift store any day over a mall. I never know what treasures and bargains I will find. And the cost is a fraction of the mall. But I know that some people love the mall and the fact is, the more you shop, the more you spend. So if you love the mall or shopping in general, then you just have to stay out of the stores if you want to save money. Or learn to love thrift stores and yard sales. While it is sometimes tempting to buy things you don't need at a thrift store or yard sale because the prices are so good, you usually don't waste a lot of money doing it. And if you do, you can always use earlier advice I gave you and sell what you don't want.

Eating out is a temptation of mine. It's nice to not have to cook and even nice to not have to clean up. And frankly, the restaurant food usually tastes better than my cooking. But when I realize the mark-up on restarant food, I try hard to resist. We generally try to eat out (or take in) just once a week. It gives me a much-needed break and allows us to get the eating out need fulfilled. We always do something that is a good deal. Like we get coupons for Baja Fresh in the mail every few months. They have $5 off $15 deals. We usually get off by spending just about $12 for a meal for the 5 of us. It gives us a break and a change of food for not a lot of extra money. We usually eat Chinese about once a month or when our parents visit. We like it and I cannot recreate their food at home very well. With lot of people, the cost per person isn't too bad (usually about $5 per person) with leftovers for another meal or part of one. We do other deals when we see them - coupons for Indian food or pizza, etc. When a meal is $15 or less for our family, we usually do that for our one night per week of eating out. This one night of eating out is in our budget so it's fine for us to do it. The one thing I often resist is girls' night out events that some of my mom friends partake in. If I go, I know I end up spending much more than I'm eating and because I don't drink, I often pay for others' drinks. I end up not having a good time because I know the evening will be an expensive one, so I often just bow out.

Vacations are a big temptation for me. I hate the cold, and the thought of a warm island in winter sounds very good to me. But Florida is even better - financially, that is. We always go in January when our kids have a 2-day school holiday. For some reason, "high" season in Florida is February. We usually drive to Florida from our Virginia home in about 15 hours. We usually spend one night on the road at a decent hotel for in the $60 range. We've also stopped in Orlando for a day or two and gotten hotels for $75 per night. We just spend one day at the park and then go on our way to visit family in South Florida. Hotels there cost about $100 per night including breakfast. For activities we go to the beach which is free. Swimming at the hotel is free, too! We go to some nature preserves - also free. Flea markets - free or can be money-making if you find some goodies to sell on ebay. We even just enjoy going to playgrounds in the sunshine. That is a big treat in January! For a week's vacation to Florida in January, we spend about $300 in gas (if it's $3 a gallon). We spend about $125 for hotels on the ride down and back. And $500 for hotels while we are there. Breakfast is included in the hotel cost. Lunch is often sandwiches that we buy at the local supermarket and dinners are eaten out. I will admit that our family usually treats for dinner, but even if we pay, restaurants are very cheap in South Florida. There are diners and delis and all-you-can-eat places that are $6 per meal with kids even cheaper or free. Our whole vacation costs about $1000 to $1200 for a family of 5 for a week. Not bad when you consider it's a getaway to sunshine in the dead of winter. Plus we get to keep our heating bill down back home (we lower the thermostat but don't turn it off). This vacation is in our yearly budget not just because it's a getaway for us but because both sets of our parents are there so we like to visit them once per winter.

By taking a cheaper way of doing things you enjoy, you can resist more expensive temptation. You will fulfill a need but not spend a lot of money. Make sure that even these "cheaper" items are in your budget, too.

Find Extra Ways to Make Money

Tip #22 - Find Another Source of Income - If you have a full-time job or if you are a stay-at-home-mom, there are extra ways you can make money. Perhaps you have some debt and your budget won't allow for you to put away much savings. Then earn some extra money instead. There are many easy ways to earn money. You can babysit children, walk neighbors' pets, clean houses, sell on ebay, mow lawns, rake leaves, work at a local supermarket, etc. If you have a need for some extra income, ask around for a part-time job or create one yourself. Be creative and look inward to what your talents and interests are.

If you have a full-time job, try not to do this as a way to keep up with your expensive buying habits. You will find yourself worn out from working all day and keeping an extra job at night. Do this to help your finanacial situation. You want to get out of debt or pay off that car loan so you can start building your savings. Then take on some work for a few months. Once the debt is paid off, then you can keep to your budget and just live on your regular income. This is not an ideal situation but many of you are not in ideal situations financially. If you are a stay-at-home mom, then maybe this is the right balance of staying at home and a small amount of work for you or a way to add to your spouse's income.

Start small and slowly. Find what you like and take it from there. You may even find that you have a new career in the making. Good luck!

In Real Life (IRL) - I am a SAHM. I have stayed at home since my daughter was born 7 years ago. And while we mostly live on my husband's income, I have done part-time work for almost all of those 7 years. When my oldest was 1, I offered my services to my old job on a part-time basis. Since they had a lot of work, they were happy to pass some off to me. I never worked more than 10 hours per week, which was great for a mom with a baby. I continued that until I had my second child. And then when she was about 1 year old, I did the same thing. Now that I have 3 children, I really don't have much time to devote to that job so I haven't offered my services to them.

I did decide however to sell more on ebay. I have sold a few things here and there on ebay for about 7 years but not steadily or in any great quantities. When my last child turned 1, I decided that selling on ebay might be easier for me to add to our family's income than working part-time at my old job. I started slowly. Umm...I am still going slowly. I set a goal of selling 5 things per week, hoping to make $50 per week. It's not much, but it's something and I enjoy it. I sell things that I already own, toys that I want to get rid of, and things that I find at yard sales and thrift stores. I already shop at them anyway so it's easy enough for me to look for things to sell on ebay, as well. I sell what I know, so I limit buying things that I don't know about. I've been doing pretty well with it. Find what you like to do, and maybe you can earn some extra income, too.

Use What You Have

Tip #21 - Use What You Have. There are many times that we are tempted to buy something new because it looks better, works better, or simply because we want it. But if you are trying to save money, you should avoid any unnecessary purchases. Look around your house and use what you have on hand. The floor needs to be cleaned but you don't have a mop? Use a rag and get down on all fours. You have a party to go to and want new shoes? Wear old ones. You would like a four-course dinner at a restaurant? Look in your fridge and freezer and make a fancy dinner yourself! Most of us have so much stuff lying around that we are sick of looking at, bored of using, and ready to change at any given time. But don't! This stuff was new to us once and we paid for it or were given it, so we might as well use it. And it doesn't cost a dime! If you can get away with using something you have, then you won't be laying out money. And that is money that can go into savings.

In Real Life (IRL) - We have a lot of stuff in our house. Some of it we use and some is sitting there collecting dust. But I find if I have a need for something, I try to figure out if there is something we own that can do the job or fit the bill. I'll give some examples.

Halloween was last night. I really did not feel like purchasing costumes for three children. At about $20 per costume in most stores, that's $60 I didn't want to spend. And I really didn't have to. I just looked around our house. Someone had given me a pumpkin costume a few months ago in a size 2T for my son who is 15 months old. I thought it might be a bit big, but you know what? I rolled up the pant legs and the sleeves and it looked just fine for the few minutes he went trick-or-treating. My middle child loves princesses and since we have lots of dress-up clothes in the playroom, I told her she could be a princess for Halloween. She was happy about that. I thought I'd have a harder time with my oldest child. Then I remembered a pair of American Girl pajamas I found at a consignment sale last year. I asked her if she would like to dress like her American Girl doll (found at a thrift store) for Halloween. She loved the idea. I braided her hair and we had a pair of Dollar Store glasses and voila - instant costume that was cute and original. All costumes were put together from items we had at home and we didn't spend a dime extra.

My other example isn't as much fun. I backed out of my driveway the other day and put a dent in my rear bumper - oops! My husband said it wasn't a big deal because the bumper was hollow in that spot. He said he'd take it to a place near work and have them bang it out. Umm, now much will that cost? I asked. The answer was $100. Eek. Then he said, well I can try to bang it out. He first used compound that we had lying around in the garage to wipe off the scrapes. Then he used a hair dryer I've owned since college to soften the bumper, and he banged out the dent. It's not perfect but it's 90% better. And frankly, we have 115,000 miles on this car and we hope to keep it another 2-3 years. I'm sure when we sell it, people will expect a few bumps and scrapes.

Anyway, those are just two examples of how we used what we have. You can do it too and cut back on your buying.

Save Early

Tip #20 – The younger you are when you start saving, the better. Or, take advantage of the magic of compounding. Whatever age you are, the best time to start saving money is now. This gives you time to have the money grow. If you wait to save, then your money won’t have time to earn interest and it will be harder to accumulate a large sum. If you are in your 20’s, it is the perfect time to save. Don’t say that you will save when you are older and making more. If you save now, then you won’t have to save much when you are older. And if you are in your 30’s and 40’s then you definitely want to start your savings. If you are in your 50’s or 60’s or older, it’s never too late. Let’s look at some numbers.

Say you are 20 years old and you want to save $1000 each year (less than $100 per month!). If you put $1000 away at the beginning of each year for only 10 years in a bank account (after 10 years you stop putting away anything) earning 3% interest, then you will have :**

End of Year 1 - $1030 ($1000+ $30 interest)
End of Year 2 - $2090.90 ($1030 from year 1 + 30.90 interest + $1000 from year 2 + 30 interest)
End of Year 3 - $3183.90 (2090.90 from the end of year 2 + $63 interest + $1000 from year 3 + $30 interest)
End of Year 10 - $11,808
End of Year 20 - $15,869
End of Year 30 - $21,327
End of Year 40 - $28,661

That means when you are 60 years old you will have $28,661 for only saving $1000 a year for 10 years! Without interest or compounding interest (interest on the interest), you would only have $10,000 after 40 years. This is why the earlier you start to save the better, you have time on your side to earn interest.

However, if you are 20 years old and wait to start saving until you are 50 years old then you would need to save $2,400 per year for 10 years to accumulate about the same amount ($28,339) by the time you are 60.

The differences are even more dramatic at higher interest rates. If you put that money in a CD earning 5% interest, you would build more savings even faster.

The key here is to save early. Now of course you cannot go back to your 20’s. (Don’t we wish?) But you can start saving NOW! The earlier you do it, the more it will accumulate.

In Real Life (IRL) – When I was 21 I got my first job. I think I saved $250 per month – although it could have been $200 or maybe even $300, I really don’t remember exactly. After 1 year I became eligible for a 401K at my work. And I started putting money away in that as well (10% of my salary I believe). The 401K money came out before I even saw it, so I didn’t miss it. The other money I mailed off to a mutual fund each month. (I already had money in a safe savings account so I wouldn’t recommend a mutual fund for first-time savers). Over time, that money just grew and grew. I am now 41 years old. It has been 20 years since I started that savings. I haven’t been working for 5 years or mailing off money to a mutual fund for at least 10 years, but I know I have over $100,000 in those accounts that I stopped contributing to years ago. Now that I have 3 kids and no income, I'm glad that I scrimped and saved when I was young and had fewer expenses. The earlier you start, the better. Take advantage of the compounding.

**I used this website to help me make the calculations: deposits.interest.com.