Finance and Fat » Finance

You Just Realized You’re Spending More Than You Earn: 4 Things To Do Today

Eden — Mon, 27 Jul 2009 13:03:15 +0000

My financial turnaround began when I realized I was spending more than I earned each and every month. That’s pretty much the only way you can pile up more than $25,000 of credit card debt in a year (that’s about the rate I was going). For me, it came down to stupidity and lack of attention really.

If that sounds like you right now, here are four things you can do TODAY to stop the bleeding and begin to gain control of your financial life.

Stop using credit cards – Those little plastic jerks are ruining your life and you know it. Chop ‘em up! They aren’t cool, you don’t NEED them, and what good have they done for you so far? Life is possible without credit cards. I haven’t had one for more than a year now and I never miss them.

Make a budget – Honestly, making a budget is like getting a raise. It’s amazing what a little detail work can do for your finances. It’s hard work though. It takes time and practice to successfully budget. Don’t give up after your first try and don’t expect to get it right in the beginning. Just trust that it will work and give it a chance. This step alone will dramatically change your financial life.

Sell some of the stuff you bought that you knew couldn’t afford anyway – Video games, DVDs, golf clubs, whatever unnecessary junk you bought that you don’t need. Face it, almost nothing that we buy is truly a NEED. Be ruthless. Start listing some stuff on Craigslist or Ebay. It can be a pain, but consider the hassle to be part of your therapy. This will put some cash in your pocket quickly and give you some small victories on the road to turning your cash flow positive again.

Create more income – This could be overtime at your current job, finding a part-time job, or my personal favorite- finding some freelance work of some kind. Anything that allows you to use your existing skills to provide a valuable service for someone is your best bet for some quick side money. This is the best choice because you’ll start to get a taste of how to create your own path to income in your life.

These are just a few tips and there is more you can do, but you have to start somewhere and this is as good a start as any. You need to dedicate extra time to working right now, but don’t neglect education. Read some blogs, and read some books. Start talking to your friends and see if any of them are trying to change their financial lives too (you might be surprised, this is more common than you probably think). Try listening to the free Dave Ramsey Show podcast (or his radio show if it’s on in your area). The podcast is only 40 minutes long, it’s free, and it’s a great way to get a daily boost of inspiration and keep fighting the battle with debt.

Even if you can only do one thing today, it’s a start (if I had to pick one, I’d start with budgeting). The most important part is realizing there is a problem and starting to take action as soon as possible. Once you get the ball rolling, this will get easier. Good luck!

You Just Realized You’re Spending More Than You Earn: 4 Things To Do Today

---
Related Articles at Finance and Fat:

Lazy Money Mistakes and the Importance of Automation

Eden — Mon, 20 Jul 2009 15:02:55 +0000

J.D. at Get Rich Slowly recently published an interesting article on lazy money mistakes. I’ve made several of the lazy money mistakes he writes about and one in particular just about a month ago that really bugs me. I foolishly sent in a student loan payment late and lost a 1% interest rate reduction.

There is no way to explain this other than pure stupidity and laziness. I had the money in my checking account to make the payment early. I had a reminder set on my computer, as I do for all of my bills. All I had to do was write a check, put it in an envelope, and mail it. I had never been late with a payment before (as evidenced by the interest rate reduction I suppose), but life just got busy and I lost focus on my finances long enough to miss this payment. That cost me a small late fee and probably a fair amount of money in extra interest over the life of the loan.

It seemed that I had everything in place to keep making this payment on time, yet I still failed. Apparently, automation really is one of the most important things you can do to manage your money well. David Bach writes about this in-depth in the The Automatic Millionaire.

I have to admit that I never really fully bought into the importance of automation before, but I think I’m sold on it now. Of course, this particular student loan company doesn’t offer automatic payments and I have to mail in a payment coupon along with a paper check. When automation isn’t an option, I guess you have to be extra careful to make payments early and hope that the non-automated business will get caught up with technology some day. A secondary reminder system would probably have helped too. As would have writing out the checks and stuffing the envelopes ahead of time so that all I had to do was toss it in the mailbox. Oh well, nothing to do now but chalk another one up to stupid tax and move on.

What about you? Do you have any lazy money mistakes or tips for preventing them in the first place?

Lazy Money Mistakes and the Importance of Automation

---
Related Articles at Finance and Fat:

Saying Goodbye to Cable TV

Eden — Thu, 06 Nov 2008 14:00:17 +0000

I’ve been tossing around the idea for a while now and I finally cut the cord on cable TV.

I had a package deal that included digital cable TV, a DVR, high-speed Internet and digital telephone. Of course they sell you on the package deal and they give you a pretty nice discount for bundling everything together. Years ago when we first started with the bundle the monthly cost was about $110. Prices have risen, not to mention we added the DVR service, and lately our bill had grown to about $140 per month. I finally grew weary of paying so much, especially considering the lack of quality content offered by cable TV. I would be happy to pay for about 3 of the cable channels and that would be all I need. ESPN, The NFL Network, and The Food Network are the only stations I miss. I would happily pay a fee to have those 3 channels, but of course that isn’t an option. I felt it was better to stop paying for all of the crap I didn’t want to watch and give free TV a try.

Not that I was ready to give up TV completely however. Especially this time of year with the NFL going strong. With digital TV broadcasts becoming more popular and mroe and more content available online, I’ve found that I miss cable a lot less than I thought I would.

Here’s what I’m doing to replace the cable:

My first step was to buy a cheap rabbit ears antenna and see what kind of reception I could get. I’m about 20 – 30 miles from most stations in my area so I have a bit of a challenge right at the start. I did some searches on Amazon and decided to buy the Terk Technology TV-1 Passive Indoor TV Antenna first. I was pleasantly surprised by this antenna, considering its low price. I immediately picked up NBC, CBS, and ABC. However, I couldn’t get much reception from FOX and that really hurts when it comes to the NFL on Sundays.

My next step was to try a Digital TV converter box and see if I could do any better. I had already requested DTV coupons a while ago so I was ready to make a purchase. Next I went to the Consumer Reports DTV converter box guide to find the top rated convert box. I decided to buy the Tivax STB-T8 Digital to Analog TV Converter Box and I’m really happy I did. This is one of the more expensive boxes available, about $40 even after the coupon, but I think it was well worth it. I’m now getting NBC, ABC, FOX, CBS, and several more stations and the picture is crisp and clear.

Some of the great features of the Tivax STB-T8 are component cables output, a program guide that shows you the next 4 hours of programming on a given station, a signal strength meter, and a nice-looking small hardware profile. It does not have S-Video out, but that is the only feature this unit is lacking. From what I could find, it looks like you have to spend a lot more for S-Video so I’m okay with skipping it.

I’m really shocked at how much higher the picture quality is now. However, I think I can do better than the cheap rabbit ears I’m using, so I also ordered a more powerful indoor antenna. Finding an antenna is a big project in itself. I highly recommend starting at HDTV Antenna Labs to start your research. You’ll find reviews of antennas, features you need to look for, and a link to a map that will pinpoint your address and signal strength in your area. This step is critical as it will help you determine how powerful an antenna you need to buy and this site will even color-code signal strengths and match them to specific antennas.

I decided to rule out outdoor antennas- I just didn’t want to be bothered with the installation and I’m not crazy about putting a huge antenna on my roof. I’m somewhat limiting myself by only looking at indoor antennas, but based on my experience with the cheap rabbit ears, I think a quality indoor antenna will be sufficient for me. After much research, I decided to go with the Winegard SS-3000 Amplified Indoor U/V Antenna. This antenna is about $60 and based on the reviews I could find it should greatly improve my reception. It hasn’t arrived yet, but I will be sure to write about it after I have it set up. I found this antenna to be a good compromise between price and features. Take a look if you can’t get by with simple rabbit ears.

I’m only a couple of weeks into my cable TV free life, but so far I would say it’s a success. I’ve had to spend a little money getting set up to receive free TV, but these costs will quickly be recouped after just a few months of smaller cable bills. Overall, I’ve cut a nice chunk from my fixed expenses and I had to give up very little in return. If you have been considering quitting cable I encourage you to give it a try. I think the digital TV transition has made the switch easier than ever, not to mention the large amount of content available on the Internet. I’ll write more about what I’m watching online soon.

Saying Goodbye to Cable TV

---
Related Articles at Finance and Fat:

Taxes Finally Filed

Eden — Thu, 10 Apr 2008 19:03:02 +0000

Normally we have have the taxes done in February, but we procrastinated badly this year- mostly because we knew we would have to pay some money. Fortunately, the amount owed turned out to be about half of what I had estimated with some rough calculations in my head.

Between State and Federal, we have to pay about $1,100. I was expecting about $2,000, so while it’s more than I would like to pay, it is a sort of pleasant surprise. I earned a lot more freelance money last year and I lowered my withholding from my regular employer to help pay off debt so it’s not a surprise that I owe money. I’m going to try to make better estimates this year and be a little more prepared, but I am also planning to keep my withholding low until the credit cards are paid off. I’d rather have those out of my life and have to scramble a bit at the end of the year to handle the tax bill.

So…if you are still waiting to file, you only have 6 more days so don’t wait too much longer! By the way, we use Turbo Tax to do our taxes. We have used it for at least 5 years or so. It gets the job done and helps to find some deductions that you would likely miss on your own. However, I am likely going to try using a tax professional next year. I want to see how good or bad a job we are doing with finding deductions and using Turbo Tax. I expect to do more and more freelance work as time goes on, so I think the cost for a tax professional will likely be well worth it. That being said, it’s hard to beat $20 for Turbo Tax (we had a rebate, I think it is closer to $40 now)!

If you have yet to file, be sure to check these helpful posts from the Personal Finance blog world for some last minute tips and tricks.

Best of luck to everyone with your taxes this year. If you had to pay like we did, at least you’ll be getting your money back soon thanks to those silly sub-prime lenders!

Taxes Finally Filed

---
Related Articles at Finance and Fat:

Saving Money on Car Insurance by Planning Ahead

Eden — Tue, 05 Feb 2008 14:00:47 +0000

I just saved $24 on my car insurance! Okay, that really isn’t very exciting, but I always wanted to write about saving money on my car insurance.

We actually didn’t change insurance companies or change our current coverage. Instead, we got smart about managing our money and stopped paying a stupid tax.

In the past, a semi-annual car insurance premium was a surprise event that we never had the money to pay for. Yeah, it wasn’t really a surprise, we were just so bad with our money that we couldn’t save enough to prepare for expenses like this. To solve that problem we switched to a monthly payment plan, but that cost us an extra $2 per month.

Now that we actually have the ability to look 6 months into the future (amazing isn’t it) we have changed to a semi annual payment plan (saving $2 per month) and I set up an automatic transfer to a savings account with ING, which will be used to make the premium payment when it is due. Not only are we saving the $2 each month, but we will now be earning interest on our money. We are actually getting paid to plan ahead and pay our insurance now!

I know this isn’t a novel concept for most people, but for people who were completely out of control with money and unable to plan ahead, we are entering new territory. I’m sure there is someone else out there who can benefit from our mistakes.

Think about your insurance or any other irregular payments for the year and start setting aside the cash now. You won’t regret it!

Saving Money on Car Insurance by Planning Ahead

---
Related Articles at Finance and Fat:

Another Fed Rate Cut, Hopefully the Last for Now

Eden — Thu, 31 Jan 2008 02:43:18 +0000

Today the Federal Reserve cut the federal funds rate 50 basis points to a new rate of 3%, the lowest since 2005. Personally, I think it is an overreaction, but I do like that the fed has remained proactive under Bernanke.

This doesn’t mean a lot for the average person, though if you are looking for a new mortgage you will likely see better rates soon. It does make holding cash less attractive, but I don’t have any cash ‘investments’ so it doesn’t matter much to me. I would like to look at maybe getting a better mortgage rate, but my credit is pretty weak right now so it may be too soon for that anyway.

In spite of the fear-inspired naysayers, there was no conclusive evidence that we were headed for a recession. However, with these rate cuts and the proposed stimulus package it would be really hard for me to believe that we will see a recession at all. On the other hand, we may already have entered a recession, the data lags behind and can be revised after the fact (FYI- a recession is defined as negative GDP growth for 2 quarters). Yes, that is confusing and a good reason why I don’t concern myself with macro economic factors. I am taking care of my budget, working to eliminate my debt, earn more income, and dealing with things that I can affect rather than becoming fearful of things that are not in my control.

If you are holding cash on the sidelines, this is probably a good time to start moving it into the market. I definitely would if I wasn’t focused on my debt.

Another Fed Rate Cut, Hopefully the Last for Now

---
Related Articles at Finance and Fat:

Personal and Financial Goals for 2008

Eden — Fri, 04 Jan 2008 14:58:49 +0000

I have some big goals and I have some small goals. I write about my big goals on this site all of the time, but I think it would be good to list them here along with some smaller goals for the calendar year so I can look back next year and see how I did in 2008.

Big Goals for 2008:

Pay off all Credit card debt — $18,504.78 as of January 1
Get body fat percentage under 25% — 39% as of January 1

Small Goals for 2008:

Increase our emergency fund to $5,000 — currently about $1,200
Earn $20,000 (gross) from side businesses
Start a Roth IRA with at least $1,000
Buy life insurance
Write a will

How to accomplish these goals

Pay off all credit card debt – If we look at 12 months, we need to average $1,542.06 of principal paid on our credit cards each month. That is just about $100 more than we have averaged since starting our debt reduction plan, however in our first two months of the plan we only paid about $1,000 total. Given our current rate, this should be easily achieved. My dream is to have it done by September.

Body fat percentage under 25% – My current number varies a bit with the scale I am using now. I think the real number is closer to 37%, but whatever the case it is way too high. 25% is on the upper end of the ‘normal’ range for a man, so that is my first goal.

You may wonder why I focus on pounds so much on this blog. I guess I’m not exactly sure myself except that I started out that way and it makes for an easy to track number. I chose body fat percentage for this goal rather than pounds because body fat is a more realistic indication of health and fitness. I can only achieve this by committing to regular exercise and making a complete overhaul of my diet. I need to do this if I want to live a long and healthy life, so there is no excuse for me to fail this year.

Increase our emergency fund to $5,000 – My first thought was to fund an IRA to $5,000, but given the weakness of a $1,000 emergency fund and the fact that I actually want to live without credit cards, this needs to be my top priority. If possible, I will fully fund an IRA as well. If we can pay off the credit cards by September, it will be easy to shift that money to the emergency fund. If not, we are going to need alternative income sources to make this happen.

Earn $20,000 gross from side businesses – I have half of that number expected already through a web maintenance contract in ‘08, although that is not a guaranteed contract so I need to be working on adding other projects anyway. My wife will make a little money doing standardized test grading a couple of times during the year and some occasional tutoring. Since she is a teacher she will have the summer off, but I’m not sure what sort of income opportunities she will be able to pursue then. I hope to make a little money from this blog some day, but until then I will be focused on growing my freelance web development business.

Start a Roth IRA with at least $1,000 – I really want to get started on this ASAP. I know I have neglected it for too long, but I am also in the difficult position of being buried by debt so I have to balance the timing of this. If we have a great year, I will fully fund at least one IRA in 2008.

Buy life insurance – long over due, should have been done ‘yesterday’. I need to set aside a few hundred bucks and get some quotes. Need to get on this ASAP.

Write a will – I don’t think we have to rush out and do this today, but it should definitely get done this year. We have no assets and no children so if both of us die things wouldn’t be too complicated (though I do admit that a will would make life easier on our loved ones who have to deal with the mess). It will get done this year!

That’s it for the plan in 2008. I will be thrilled if I can look back 12 months from now and see all of these things accomplished.

Personal and Financial Goals for 2008

---
Related Articles at Finance and Fat:

About this blog and how it earns money

Eden — Fri, 04 Jan 2008 02:17:02 +0000

I have to admit that I started this blog with dreams of getting rich and becoming debt free simply by writing a blog about getting out of debt. Seems silly, I know. Well, it turns out that writing this blog has become very valuable to me, but in an unexpected way.

I have learned a lot, I have made some great friends and contacts in the ‘blogosphere’, and I honestly credit this site with keeping me motivated and keeping me on track with my finance and fat goals. Most of that credit goes to you, my readers. The comments, advice, and ideas that have come from many different people are very valuable to me and I appreciate every one. It’s because I value that relationship so much that I want to share with you how I am compensated for my work here.

No one pays me to write any of the content on this site. I do not accept ads from products or companies that I can not personally endorse (why I dropped my ads). I will never write paid posts or be otherwise compensated directly for writing anything on this site (if someone sends me a book or product to review I will state how I received it, give my opinion, and give the item away when I am done).

I don’t want to ask for anyone’s money, but if you find yourself in an excellent financial position and would like to donate, of course I would greatly appreciate your generosity. However, please do not send me a donation if you are in debt. That being said, don’t forget about me when you become debt free thanks to the great content on this site.

There are a couple of other ways you can help support this site. If you visit regularly but have not subscribed to my RSS feed yet, please do so. RSS subscribers are very valuable when it comes to selling ads (I do intend to sell a few ads some day, but only for products I believe in). You can also help me if you shop at Amazon.com. Just follow this link and I will earn a commission based on what you buy (no personal information is sent to me).

The other Amazon.com links you will find on this site are ‘affiliate links’ meaning I will earn a commission if you click the link from the site and buy the item. However, you will not find me promoting these products in order to earn money. I am simply sharing information about products that I have tried or recommend. If you feel uncomfortable using affiliate links, simply type the item names into a search engine and find information about them on your own.

Thanks for taking the time to visit my site. Blogging doesn’t pay much, but that won’t stop me from putting in the time to write content and do my best to help others who are struggling with the same things I am.

About this blog and how it earns money

---
Related Articles at Finance and Fat:

Reader Tip Roundup – How to Change Your Life

Eden — Wed, 19 Dec 2007 01:31:35 +0000

I received a lot of great comments in response to my post, What I Have Learned Since Starting My ‘Finance and Fat’ Turnaround. Here is a compilation, in the order they were posted, with links to the bloggers who shared their wisdom. Enjoy these tips and be sure to visit these sites as well. I read them all regularly and highly recommend them.
Single Guy Money – I’ve learned that I in order for my financial position to improve, I must get rid of DEBT!

Mrs. Micah – I’ve learned a lot, including that I’m going to be in debt for years (but I can influence how many) and it’s hard to attack debt when you’re in an flexible income situation.

Making Money Journal – If you are part of a couple, both have to be on board the get our of debt bandwagon, otherwise the climb will be nearly impossible.

Quest For Four Pillars – What have I learned? Maybe not to over-analyze too much. Most bloggers do this (that’s why we are bloggers) but it doesn’t necessarily help us in our decision making.

I’ve Paid for This Twice Already – Don’t define your journey by your setbacks but by your triumphs.

Dawn @ Iowahippiechick – I think what I’ve learned the most since starting financial blogging, is to make every dollar count. Making that a mantra of some sorts, helps me think a little, before spending it frivolously.
Also, as savingdiva does, putting the bits of money that I may earn on the side towards a specific goal.
In other words—making every dollar count
I think there is a lot of financial power to that frame of thought!

Debt Diet – I’ve learned that I’m not the only one in this situation, and that I have what I need to be able to change it.

It’s not too late to share what you have learned on your journey- whether that be with a financial or ‘fat’ turnaround or any other tips for breaking bad habits and starting good ones. Thanks to all who have participated!

Reader Tip Roundup – How to Change Your Life

---
Related Articles at Finance and Fat:

A Billionaire’s Thoughts on Taxes

Eden — Wed, 12 Dec 2007 15:14:18 +0000

Mark Cuban, the owner of the Dallas Mavericks, happens to be a billionaire and a blogger. His public persona comes across as a bit wild at times, but I think he has some very solid wisdom behind that. His blog is worth reading (usually) and he wrote a really interesting article yesterday, Warren Buffett, Taxes and the Presidency.

Warren Buffett has been all over the business press recently suggesting that the very rich, those on the Forbes 400 list, are taxed advantageously to the rest of the workforce. That it makes no sense that his tax bill as a percentage of income is lower than that of his secretary or housekeeper.

He is absolutely right.

Is this a fair system? I don’t know if that is the right question, but I think it would be hard to make a case for the above scenario being the right way to do things.

Its also wrong that those who must live paycheck to paycheck find themselves paying the same amount of taxes on consumables as the super rich. That 8pct sales tax on life’s basic necessities is real time cash out of pocket, a far greater percentage of income and much more expensive money than the federal taxes we pay the following April 15th.

This is a brilliant point. 8% on every purchase for people making under $30,000 a year is going to hurt the wallet quite a bit more than it does for the person making $300,000. A consumption tax is often touted as the most fair tax system, but I think it clearly is not (at least not a flat consumption tax without considerations for income).

Right now I hate paying taxes because I feel like I’m giving money to a known crack addict. However much you give, its not enough. They will buy their crack, get a short term high and soon be back asking for more.

The federal government , whether in Republican or Democratic hands is the same way. No matter how much you give, they are always asking for more, more, more. Always spending on the ridiculous, without remorse and without the ability to restrain itself. Just like a drug addict.

If you are going to raise my taxes, I want somethings in return.

Raise my taxes by 1 pct, by every 1 pct you cut federal spending. Your choice of raising taxes on luxury items, or on annual income of 10mm dollars per year or more. Cutting spending means the government needs to raise less which allows you to raise the income threshold on which you charge this “Forbes 400 surcharge”

This is really the problem. Our government is simply out of control with spending money and nothing can change for the better until that problem is solved.

I also have one more tax suggestion that I think will create so many jobs in this country that it really wont matter what else our politicians do.

If we really want to stimulate job creation in this country, take the same approach to small business with fewer than 25 employees that we take to Internet taxes. Outlaw them.

No taxes of any kind on small businesses with fewer than 25 employees. No employer payroll tax. No state or local taxes. No taxes on earnings. Nada. The business owners will pay income taxes on their personal income they pay themselves, but not corporate earnings

Wow! I really like that idea. Mark Cuban for President anyone?

There is a lot more in the article worth reading and I recommend you check it out. How often can you get the opinion of the super-rich on taxes and things that could actually affect their bank accounts in a big way? Kudos to Cuban for taking the time to write this.

A Billionaire’s Thoughts on Taxes

---
Related Articles at Finance and Fat: