Preparing for the Worst

consent-clipart-pen_and_paper_legal_document_with_pen_signing_the_paper_0515-0909-2116-0233_SMUIn the last six weeks we have supported friends who lost their son and a friend whose husband died. Walking with my friend whose husband passed has brought about a renewed focus to make sure we have all our papers in order should anything tragic happen.

*DISCLAIMER – I am not a lawyer and am not offering specific legal advise. I am giving you suggestions of where to start.*

1. Make a Will – Visit a lawyer or buy software and make out a will. Include plans for what will happen with your children, your final expenses, your debt, and your money. You can specify who is presumed to have passed first if you both die within a certain time frame. You can give care instructions for your children. You can set up a trust to provide for your children in the future. You can also bequeath individual items to specific people and record your wishes for your funeral service.

2. Make a  Power of Attorney – Again, with a lawyer or software, make out a Power of Attorney that will allow your spouse to make decisions for you in the event you cannot. This will allow your spouse access to accounts and credit in your name only, as well as allow them to perform business on your behalf.

3. Make a Health Care Power of Attorney – Once again through a lawyer or software, make out a health care directive giving your spouse the right to make healthcare decisions on your behalf. Include your desires for life support and extreme measures, as well as your wishes to be an organ donor, if you so desire.

4. Make a file that includes birth certificates, marriage license, social security cards and other important identifying documents. Make sure you both know where this is and that it can be easily accessed. Include the kids identifying documents here as well.

5. Make sure both spouses know when and how to pay the bills. Even in today’s world, usually one person ends up managing the finances. Make sure you both know they system and how to use it.

6. Have all finance, insurance, and investment papers up-to-date and filled where you both can access them. Including banking records, safe deposit box keys, debt statements, mortgage information, auto loans, car or other vehicle titles,  and property deeds.

7. Have a secure list of your log ins and passwords. These can be kept in separate documents with a number code matching them up if you worried about security. You can also keep them in a hand-written notebook instead of on a computer file. Just make sure your spouse can access your online accounts or shared accounts.

8. Talk to each other. I know it is a subject no one wants to deal with, but the truth is that sometimes you do. Talk to your spouse about your wishes and their wishes. Will she stay in the current house/location or move closer to family if something happens? Will he have to put the kids into school (if you homeschool) or pay for additional child care? Do you want to be buried somewhere specific or do you just want your spouse to do whatever they think is best? Are there extended family issues that could complicate an already difficult time (e.g. Cousin Steve always pops up and asks for money when he knows someone has received something)? Talk about it all and then get it in writing.

Holiday Budgets

Cartoon_Decorated_Christmas_Tree_with_a_Star_Topper_Surrounded_By_Christmas_Gifts_Royalty_Free_Clipart_Picture_101115-016574-232053Budgeting for the holidays actually starts months before you ever buy a gift or serve a cookie. Planning your holiday spending into your monthly budget is the best way to ensure that you have the money you need and don’t overspend. You can get a jump on your 2014 Holiday budget with these tips from Christmas Planning: Money.

But what about now in 2013? If you have saved away money and now have some to spend on the holidays here is a great new tool from Dave Ramsey: My Christmas Budget Tool! This tool allows you to set up a total budget amount and then a line for each family member and other gift recipient. You can set a budget amount for each person and add gifts in as you purchase them to make sure you don’t go over your budgeted amount. This tool will keep your spending on track and function as a great way of making sure you get all the gifts you need.

Buying A Car

car_salesmanWe just purchased a new-to-us car. While the process never seems to be simple, there are a few tips and tricks that can make the process easier.

  1. Get organized before you go. Before you even head to a dealership gather all your financial paperwork. You will need recent pay stubs or award letters, a bank statement showing where these are deposited, the correct name, address, birthdate, and social security number of anyone that will be on any financing. You can even apply for financing (if you must) and walk into a dealership with a check from your bank or finance company before you ever look at a car.
  2. Research! Research! Research! It is best to head to a dealership know what car your want and what options are must-haves and what you can live without. Whether you are buying a new or used car, putting together a list of what you want and don’t want can be very helpful. You should also research values and reliability of any car you are considering and your trade-in. Dealerships use NADA for used car values and pricing. Know what your car is worth and what the car you are buying should be priced at. Check out reliability and other reviews at sites like Edmunds. If you aren’t sure what kind of car you want prior to visiting a dealership (i.e. you need to see what good used cars they have), don’t sign on the dotted line until you have taken a day to pray, think, and research.
  3. Test real-life driving situations. In our family, my husband does all the dealership stuff and I do the organization and research. But whenever we are close to buying a car, he brings it by the house and we pile all the kids, car seats, and things we regularly use or keep in the car (i.e. our beach chairs) into the prospective car. Then we drive around town to places we regularly visit. This allows us to see if the kids really are comfortable in the back seat and if it is realistic for daily life. We also test out favorite suitcase and cooler in the trunk/cargo area to make sure those items that we travel with the most will fit.
  4. Consider gas and insurance costs when purchasing a car. Be sure you contact your auto insurance company to find out what your rate would be for the car you are considering. Understand the gas mileage on the new car and calculate the increased gas expense or savings from the new car.

Doing your homework and having information gathered before you visit a dealership will greatly improve the process.

TIP: Average cars will last 10 years or 120,000 without significant maintenance costs. Instead of buying a new car, when your car is paid off continue making “payments” into a savings account. Then, when you do need (not want!) to replace your car, take the cash you have saved to pay for a good, reliable 1-2 year old used car. Cars 1-2 years old are the best deal as they are generally still in good shape and have a lot of life left, but the depreciation that happens the second you drive off the lot has already happened.

No-Poo: Alternative to Traditional Shampoo

White-VinegarI don’t shampoo my hair. I know. You are thinking I must be crazy. But it is true. I haven’t shampooed my hair in over 2 years. While we were living in Taiwan a friend introduced me to the idea of using an alternative method to clean and condition my hair. Skeptical at first, I decided to give it a try. After all, I was living in a place where, just by the fact that I have curl hair and light skin, people stared at me on the street. If it was a total disaster I just wouldn’t take pictures of myself during my experiment. That was over 2 years ago and I am so glad I made the switch. Not only does this save me money, but my hair is actually healthier and growing faster than ever before. So the big secret… baking soda and vinegar. Yep, I wash my hair with baking soda and vinegar. It saves me a lot of money in shampoo and conditioner costs, as well baking_soda4x3___484x363as in styling product costs. I have very curly hair (my stylist described it as “ethnic” but actually I am just got all the Irish genes in the family). Using baking soda and vinegar to cleanse and condition my hair has actually reduced the frizz and lets me us much less mousse or spray gel to get the style I want, which saves money.

So, how do you do this? The “recipe” is simple. Keep a plastic measuring cup in the shower. Add 1 tablespoon of baking soda to 1 cup of water. (For those science nerds like myself, this will produce an alkaline solution that also results in cooler water than what you put in). Pour that over your head and massage into your scalp just like you do for shampoo. I usually comb through tangles at this stage too. Rinse with water. Then add 1 tablespoon of vinegar (you can use any type but I tend to prefer cider vinegar) to 1 cup of water. Pour this over your head and comb through. (Again for you science geeks, the vinegar neutralizes the pH of your head because it is acidic and you turned your hair basic with the baking soda). Rise. Dry and style as usual.

A few tips: I keep baking soda in an air & water tight canister in the shower and vinegar in a reused creamer bottle. I don’t actually measure 1 tablespoon, but just estimate.

To really save money you can buy vinegar and baking soda in bulk at warehouse clubs. I have a 15lb. bag of baking soda!

WARNING: Be prepared for a week to 10 days of crazy hair. Shampoos strip away your scalps oil, causing it to produce more. While your head adjusts to your new cleansing routine, there will be a few days of crazy, frizzy, and/or oily hair. So don’t start this right before a wedding or family picture! Once your head realizes that it doesn’t need so much oil, things will level out and your hair will start having shine and strength you never had before. Try to avoid styling products the first week or two (invest in a good ball cap!).

Our kids use this too. First Born has always had dry scalp. When she started using baking soda and vinegar her dry, itchy scalp cleared up and no more flakes were seen. She briefly went back to shampoos when we moved back to the US because there were so many available but decided to turn back to this routine because her hair was healthier and it eliminated her dry scalp problem.

How Long to Save Records

file cabinetFiling and storing essential records is key to keeping your home organized. Filing is pretty simple – use the alphabet or if possible, scan records and save files digitally to save space. If you choose to use a digital filing system, be sure files are backed-up on an external drive.

But how long do you keep records? Here are some helpful tips:

Bills: Keep until you receive the next month’s bill showing your payment was appropriately applied. Be sure to shred all bills instead of just throwing them away because bills contain identifying information and credit card numbers. If the bill is for a large purchase (jewelry, home repairs, etc). keep the bill as long as you have the item purchased in a file relating to that item.

Bank Statements: Many of us get our bank statements online, so storage isn’t an issue, but if you get paper statements, keep the statements until your account has been balanced. Like bills, if the statement shows the purchase of a large item or anything that may relate to taxes or a business, file the statements with those categories and keep them as long as you have the item or business.

Tax Records: Tax returns should be kept for at least 3 years, but for your protection it is recommended that you keep the records for 7 -10 years.

Retirement Contributions: Keep these records indefinitely

Brokerage Statements: Keep these records until you sell the securities or close out the accounts. If there are tax implications file the records with the tax year they relate to and store for the recommended time for tax records.

Paycheck Stubs:Whether paper or electronic, save the records until you get your W-2 for that year and have verified that all the information is correct.

House Records: Keep records on the purchase, financing or refinancing, and any improvements made on a home until you sell the home. Save records relating to the sale of a home with the tax year paperwork that the sale effects.

Medical Records: See the article on organizing medical records for information about how to put these things together. Keep medical records permanently.

Receipts: If receipts have tax implications, file with the corresponding year. If the item relates to a large or warrantied purchase, file the receipt with other information about the purchase. Otherwise, once items have cleared you bank account for the correct amount, receipts can be thrown away.

Financial Fast: A Great Way to Put Money In Its Proper Place

Being that it is the season of Lent, there is a lot of talk about giving something up for 40 days. We are not Catholic and don’t practice a strict policy of Lent, but for several years we have used this season for a Financial Fast. This is something that can be done at anytime.

Here are the basics:

Pay your regular bills. Don’t ignore any of your regular monthly obligations.

Commit to not spending any money other than essentials – groceries and gas – for one month (or 40 days). This means no clothes, toys, items for the house, eating out…nothing that isn’t food to be cooked at home or gas to get you to work and activities to which you are already committed. Don’t schedule doctor or other appointments with co-pays during this time unless someone is sick. Of course, if there is an emergency, spend the money. But clothes, shoes, and accessories for people or homes are not an emergency!

Spend time that you would have used shopping and spending money praying and investing into your family with fun, free family activities. At the end of your fast period (21, 30 or 40 days) count up the money you have saved and put it into a savings account. At that point you will likely have a significant amount of money and a whole new perspective on what is a need versus a want.

Have you tried a Financial Fast with your family? What did you do and what were the results? Share your experience in the comments!

February Budget Blues

Piggy bankFebruary is a sneaky month, budget-wise. There are a number of tricky financial situations that come up in February. From higher electric bills due to colder temps, and those all-important Valentine’s Day gifts, money and feel extra tight in February if you don’t plan for it. Check out this post from Dave Ramsey on Budgeting in February for a good list of things to watch out for as you manage your money in February.

Christmas Planning: Money

It is the middle of September, so around my house that means it is time to start planning for Christmas. If you haven’t been saving for Christmas purchases now is the time to start. We set aside a certain amount each paycheck to go toward Christmas purchases, so that when the time to start buying rolls around we aren’t surprised by the expense. But if you have not been doing that now is the time to start saving in earnest.

Set a budget. Include items like new household decorations, neighbor/teacher/gift-swap gifts, wrapping expense and costs of hosting or attending parties and other Christmas outings. Figure out your total amount needed and then start saving. Don’t go into debt for Christmas. Pay cash!

Once you have your total budget set and savings started, get detailed. Assign an amount to each person you will buy for and the other categories, and stick to that amount. If you want to give more to someone (your kids for example) get creative. Make gifts for others (lots more on this in coming weeks!), buy good condition used toys so that you can get more for the kids, or sell items you have but don’t use to raise cash for your Christmas purchases. But stick to the budget. You are not helping your kids or teaching them anything good by giving them everything they want (but don’t need) and by going into debt for Christmas purchases.

Do you have a great way to save money for Christmas? Share your thoughts in the comments or Submit Your Tip!

Keep the Change: Easy Savings Plan

We have saved cash for a lot of cool things (and some that I wish we didn’t have to buy). The magic trick to saving money is to spend less. (I know, clever.) But we have found a neat little system that works really well and we don’t even miss the money we are saving – Keep the Change.

Here’s how it works:

Use cash as often as you can. I know, we are tied to our check card too, but whenever possible we use cash. I prefer using cash when I can plan ahead…like for groceries, the occasional (one a quarter) meal out, clothing purchases, etc.

Whenever you use cash, pay only with the next largest whole bill. For example, if the purchase is $15.99 pay with one $20 bill. If the purchase is over $20 go up to the next $5.  For example, pay for a $36.23 purchase with two $20 bills. If the purchase is $41.50 pay with two $20 bills and one $5 bill. Never pay with ones or coins.

After a cash purchase, put the change (ones and coins) from that purchase in a separate place in your wallet or in an envelope in your purse. When you get home, set that money aside in a canister or jar (we use an old canister that used to be at my grandma’s house when I was a kid). Watch the money pile up.

When the canister gets full, roll the coins and take all the money to the bank. Open a savings account that you cannot access with your ATM/Check Card and put the money in it.

To really motivate yourself to save, set a goal. A vacation, computer, TV…whatever. Make the goal something you will do in the next year. We have paid for 2 vacations  to Disney World (for 4 people – including food, souvenirs and one year plane tickets) this way. While in Taiwan, we saved enough money this way to hire movers to pack everything for our move to Taipei.

TWIST – When you use coupons put the amount that you saved with the coupons in the fund. Or do this with the amount you saved by using your shopper card.

Getting Out of Debt

Last week’s poll indicated that people wanted more information about finances, specifically debt reduction and saving money. On that note I want to give you the tools you need to get out of debt.

The method I recommend is called the Debt Snowball and was made popular by Dave Ramsey, though many budgeting courses teach it. The basis of this system is that you start by getting $1000 into an emergency savings account. This is your first goal (or Baby Step). Once you have $1000 in your emergency savings account, start working to pay off your debt using the Debt Snowball. Follow the link for the detailed steps but here is how it works…

  1. List debts from smallest balance owed to largest. Use the Debt Snowball Tool.
  2. Begin paying as much extra as you can on your smallest balance while still paying the minimum payments on other debt.
  3. Once the smallest debt is paid off, take that payment plus any extra money you can and pay on the next debt on your list from #1.
  4. Go through this process “snowballing” the payments onto the next largest debt as you pay something off until you have paid off all your debts.

The real benefit of this program is that you get fast results because you start with the lowest balance. This allows you the satisfaction of paying things off plus frees that money to work on the larger debts.

TIP – If your debt is to the IRS you may need to deal with that one first instead of going by balance.

If you find that you cannot pay your minimum payments do not just give up and ignore the situation. Read this helpful guide I wrote for the Willow Creek Association’s Good $ense Budget Course.

I can tell you that this system works! I have personally seen the results. I have friends who have used this system to payoff over $60,000 in debt in 3 years. Get $1000 in an emergency savings account and then start paying off your debt so that you can be free to use your money in ways that you want!