Mrs Teh Bagder’s Blog

Its a new year, which should mean a new start.  In December 2007, I graduated from school with a Bachelors of Science in Human Ecology.  My focus was Family Financial Management.

We have several new things happening to us this year as well.  A 'New' addition, coming in April.  Made for a lovely surprise in August and a very interesting last quarter at school.  Going to class with morning sickness is NOT fun.

We got approved for section 8 vouchers.  These vouchers give help to those who need it for rent.  This means we get to move out of my parents house, you guessed it, in April.

With these two huge changes, its no wonder that we've been really stressed out and not posting like we should.  Both are significant life changes.  Our other kids, Munchkin and Buddy, are both excited about both, but I don't think they realize how much change these two things will bring.

Because of these changes, we've examined our finances under a microscope and found that we're going to have to run a tight ship to keep making our ends meet.  

Extra expenses for the baby include the need to buy a new crib.  A very expensive prospect, that is needed before the arrival of our bundle of Joy. At least the state and Teh Bagder's union will help with a car seat, so we don't have to come up with the $80+ for that.

Cribs are expensive! We want to get a good quality crib, NOT made in China.  You know how hard that is to find?  Right now, we're pricing them anywhere from $350-$700. When we're running currently very close to what we bring in, and we're being pretty frugal, how do you come up with that kind of extra money?  Let alone money to buy a new high chair, swing, diapers, clothes, etc for a new baby?  Buddy, our current youngest is 6 1/2 yrs old, so we don't have anything left over from him.  Even buying second hand for what we can, we're still looking at over $1000 extra (with the crib) just to start out.

Let alone money for rent and utilities?  We're lucky with the section 8 vouchers.  Our rent and such will only be about 30% of our take home pay.  Teh Bagder is currently working 40 hours a week at his job (with no chance at over-time), and since I'm on "Take it as easy as possible" until I pop, there is no way I can get a job to help bring in extra money.  

Below, you will find a button for our paypal account.  If you feel so disposed as to donate anything, it would be greatly appreciated.  The money will be used first to buy a crib, then the other things needed for baby.  The minimum we need to come up with is $500.  Our goal is $1000, just to be on the safe side.  Anything you can give would help, even $1.  Thank you in advance.

Jon Stewart’s Daily show has a “Trendspotting” segment. On 6/26/2007 they had this clip on Credit.

It does have some adult language.

Continue reading ‘The Daily Show on Credit for College Student’s and Graduates’

Most of us adults drive a car. All that do noticed something this month - gas prices reached over $3 a gallon. I heard that in California they’re even over $4.
That’s money right out of your pocket.
How to conserve gas:
- Don’t Idle your car for more than 10-15 seconds. If you know you’re going to be waiting for someone, TURN OFF YOUR CAR. With fuel injected engines, it doesn’t use a lot of gas to turn your car back on. Not only will you save money at the pump, you will save on polution. (examples are drive thru lanes. Usually you have to wait 30 seconds to a minute for the car in front to move.)

- Plan your errands. If you can, try to consolidate them into trips. Example: if you need to go to the grocery store, and you know later you’ll have to go to the post office which is past the grocery store, do them both in one trip. (Do the post office first, then the grocery store, it will help save your groceries)

- Car maintainence. I know, you’re looking at me like I’m off my rocker. It costs MONEY to get my car serviced! Well, a well running car uses less gas then a car that is not well maintained.

-A/C or windows? Truthfully, there isn’t much difference in gas consumption when you have the A/C on compaired to having the window’s opened (windows opened makes more air friction on the car, thus bringing down the gas mileage.)

-Another thing about A/C, Turn it on and open the windows for a minute or two (or before getting in your car and starting it, open at least 2 doors) this will allow the hotter trapped air out of your car, making it easier for your A/C to work. Also, when you’re about a minute or two away from your destination, turn off the A/C button but leave the fan on. It will still blow coolish air around, but not be running the A/C unit.

-Take the first available parking space and walk the extra few feet if you can. Driving around a parking lot to find the perfect spot is a waste of gas, as well as a waste of time. Don’t wait for a spot unless you have to (because there is no other spots available!).

-Keep your car clean. HUH? how can this save you gas? Cuts down on wind resistance a little bit. The air doesn’t have to go around bugs and dirt, it can just slide right over your car with ease. Plus with summer coming on, give the kids a big bucket of water and let them have fun with a sponge and your car. It doesn’t even have to be soapy water, even rinsing your car will remove dirt.

Budget!

One of my professors asked that at the beginning of every lecture. “What is the key to financial freedom?”  He wanted us to yell out Budget!  Didn’t quite work out that way but it still got the point across.

What is a budget you say? Basically its a plan, usually involving money. (you can budget your time, but thats a completely different topic) A budget is a plan for spending and saving (Bajtelsmit 7).

If you are curious, Wikipedia says its a finance plan that allocates future personal income toward goals, such as expenses, debt and savings (like retirement, a house or something smaller)

How do I set up a budget? That’s the easy part.  Sticking to the budget is the hard part.There are several steps you can use to get a skeleton of a budget together.

First thing is get an old pad of paper, notebook, or other piece of paper.  Make at least 4 columns. First column is for a description of the item or service you buy, the second column is the cost, the 3rd column is the type of item/service you bought — like car costs (gas), eating restaurant food (dining/take out) or groceries (food)  how you paid for the item/service that you got — like cash, debit/credit or check.  If you have a spreadsheet program, make a file just like this as well.  I suggest you have a pocket notebook or keep one in the car so it is handy and you can write down what you bought and how much you spent just after you did it.  It will help make things easier if you have a spreadsheet program.

If you can’t do that, Keep all your receipts in an envelope, that will help you keep track.

Now, for 2-4 weeks (you chose how long you want to do it for, I suggest a month because most bills repeat monthly), write down EVERYTHING you do with money — pay bills, buy gas, pay rent/mortgage and groceries.  Do not alter your spending habits at all.  That would skew the budget.  REMEMBER this is for YOU.  So if you cheat, you only cheat yourself.

After the time period is done, pull out your notes and or receipts.  Get out another clean sheet of paper, cause if you’re anything like I am, the first draft will be hard to read and understand.  Pick a category to start with — I suggest rent/mortgage or utilities, because everyone I know puts a majority of their monthly spending into those categories. Cross out on your first list (or mark your receipts) as you move them to the new sheet.  After you do that, pull out a calculator and add up all of the figures.

If you have a spreadsheet, just highlight all the data and sort ascending alphabetically by the 3rd (category) column. Add up the second column, thats how much you spend this period.

Now you have how you normally spend your money. 

Next, pull out your pay stubs and see how much you netted after tax (take home pay).  Did you spend less then you brought in? if you did, pat yourself on the back.  If you didn’t, don’t be too hard on yourself, cause you aren’t the only one living beyond their means.

Ok, now total up each category individually.  At the bottom of the page (or a new page if there is no room) make a list of all the categories that you have vertically.  Next to each category name, put the total amount you spent on that category. (put a mark next to each item after you them up in the category so you don’t mistakenly add something in two times.) So it should look something like this:

Rent                      $800
Utilities                  $149.96
Gas for Car            $50
Credit Cards           $300
Groceries               $95.74
Dining/Take out    $200
Bar                         $40
Movies                   $25
Cleaning Supplies  $20
Dry Clean/Laundry $50
etc..

Now comes the hard part.  Look at all your expenditures (the items and services you bought).  Can you cut some of them out?  Maybe pack a lunch to take to work instead of going through the drive thru at the closest fast food joint.  Or eat in more instead of going to your favorite restaurant. Only go out once every 2 weeks with your friends instead of every weekend — or suggest renting a movie and buying snacks at the grocery store instead of going to the theater.  Are there impulse buys on there (like you see a new gadget you just have to have right now)?

You should now have an idea how much you spend, and where it goes. 

What comes next takes discipline.  Try to stick to your budget for a few months, keeping track of what you spend and how you spend it.  Every month look at how well you did and evaluate.  Tweak the budget as you go.  Remember, things change, so your budget should change with you.

Also, open up a savings account, and the money you meant to spend on things but you held back, put it in there. $2 a week is more than $100 a year.  If you can’t remember to do that, you can set up an automatic withdraw into a savings account through your bank.  If its not in the account you look at, you can sometimes fool yourself into thinking that you don’t have the money to spend.

In Personal Finance: Skills for Life (Bajtelsmit(7)) (pg 47) Time Value of Money (TVM) is “[t]he principle that money received today is worth more than money to be received in the future because of the power of compounding.” There are several ways to figure out the time value of money, but the least confusing way requires either a financial calculator or the TI 83+.

Compounding is the process that interest is not only charged on the original amount, but also the interest already earned.

A good rule of thumb: The Rule of 72.  This will give you an approximate time that it will take to double your money in an investment.  All the information you need is the interest rate.

If you have a 12% interest rate= 72/12=6 so about 6 years to double

if you have a 4% interest rate 72/4=24 so about 24 years to double.

Most people out there are unsure how much life insurance you need.  There are many ways to figure that out and many rules of thumb that all seem to contradict the others.

In one of my Personal Financial Planning books (Dalton (1)) they list several ways to figure out how much you should tell a client to get, depending on circumstance. Individuals, who have no dependents, do not need as much as a married person with 2 children. 

-Individuals, who have no plan on marrying in the future or having kids, basically need to have enough life insurance to cover their bills and final expenses.

-People with dependents - such as a non bread-winning spouse or children, need to have more than just enough to cover debts.  They also have to have some money to help fill the gap where their income was.

In this book there are 3 approaches to figuring out how much life insurance is needed for those with dependents.  They are : Human Life Value, Financial Needs, and Capital Retention.

-Human Life Value (pg 294) Approach: projects the income of the individual throughout the remainder of their life. Basically, this approach uses Time Value of Money to calculate their total earnings should they have lived to retirement, in a lump sum value.  This includes what they expect to get as an APR on a mutual fund, so guessing to high on that interest rate would leave the family short.

-Financial Needs Approach: (pg 295)This approach needs the amounts of debt and other needs to be paid off in a lump sum, such as the Mortgage, College expenses account(s), one for each kid, Other Debts (like credit cards, car loans, or student loans*), cost of the funeral and other associated medical costs, a period of time to let the survivors grieve, to fund 6-12 month emergency fund, pay for the spouse’s retirement fund and Support for a period of time (like to replace the lost income).  These time periods could be for grieving 6 months, maybe a year, giving full replacement income — including the other spouses wages, support could be until the youngest kid reaches 18 or until the surviving spouse reaches 67 or retirement.

-Capital Retention Approach (pg 298) is the most in depth approach to figuring out life insurance. It takes into account all the assets available to put toward the survivors.  This approach is best done by someone who knows exactly is supposed to go on your balance sheet and what are your liabilities.

My preferred way is the Financial Needs Approach.  Most people know about what they owe on their mortgage and other debts, as well as what they would like to have to make the future easier.  Being liberal on the calculation - ie thinking you need more than you actually need is best.  I’ve never heard anyone complain that they have too much money!

What about a stay at home spouse who doesn’t bring in any income?
-They do work, probably a lot harder than the spouse that goes out to work. Housecleaning, child-rearing, cooking and other household tasks don’t stop when the whistle blows at the end of the day.  The tasks are 24/7 responsibility.  What would happen to the kids if Mommy wasn’t there anymore?  Daddy would have to either take off work (FMLA allows 12 weeks grievance time I believe, but unpaid), or sent the kids to day care.  As a mother myself, I never want to see my kids in a day care center.   My suggestion here is cover the stay at home spouse for the same amount as the working spouse.  Insurance companies usually don’t blink twice when they have a couple insuring the other at the same amount they’re being insured.

TAXES! If done right, there is no tax on the principle life insurance sum (the payout sum) If you had picked a savings life insurance like whole life, you would have to pay taxes on the interest you earned. 

*some student loans - especially the ones through government programs can be canceled at the person’s death.  Putting that amount into your needs and finding out later that (after the loved one is gone) is always better than finding out you need to pay them off and don’t have the money.

On Saturday, the 5th,  our school district held its last annual Carnival.  Its a fund raiser for the PTA of the districts 4 elementary schools.  This was the last year because there will be a 5th elementary school next year and the people that put it together do not think its feasible for 5 schools.

Well, Munchkin, Buddy, Badger and I went and had a blast.  The last hour of the carnival, Badger volunteered to man a station in the games area. He really enjoyed it.  One thing that really stood out was one kid, I’ll call him Sam.

Sam started playing - and winning! - Badger’s game, so Badger jokes with him.  Sam jokes right back and keeps winning. Sam tells Badger that his friends and him  found 40 or so tickets laying around and tried to find the kid they belong to.  When they couldn’t, they split the tickets up between them and used em. What really impressed Badger and me was the fact that he gave his winning tokens to Munchkin and Buddy!  Sam said it was because he already traded in his winning tokens for prizes.

Well, Badger decided to find out Sam’s real name and which school he went to, so he could email the principal and tell them that one of their kids did something good.  We got a response today from the principal:

“Thank you for taking the time to write this message.  I will send your e-mail home in the mail along with a certificate for free movies and a drinks which we able to use in recognition of students.”

Cool.  A kid getting recognition at school for doing something good.

One of the things I will use this blog is to give out some basic finance information. When I find interesting story, I’ll post it with a general description of what is on the page.  I have categories enabled to allow faster searching of my blog posts.

When I do have a link posted, I’ll try to make sure I put a Link category attached to it, along with the main category (so if it is a finance link, it will have the categories Finance and Link).  I cannot guarantee that I will do it every time, but I will try.

I am currently trying at teh Bagder’s suggestion, ecto, which is an off line blogging tool.

This is from one of my favorite sites, I Can Has Cheezburger

Today is May 4, 2007. Hopefully this coming month will be better than the beginning of this year.