Monthly Archives: May 2009

Frugal 51 Weeks A Year

I’m on vacation with my wife and our kids.  The weather is glorious – 85 degrees, sunny, slight breeze.  The beach is beautiful and the kids are really enjoying the pool.

When I’m on vacation, I’m ON vacation.  I try not to check my email or worry about work.  Instead, I focus on hanging out with the kids and enjoying the week off.  The past few months – years really – I have been very, very busy.  (You have probably noticed a drop off in the number of articles here on the blog.)  The truth is, I need this vacation.  The rest of this summer is jam-packed with work, much of it stress-inducing, so this week is a time to relax, unwind, and recharge for the months to come.

This is the only week of the year where I ignore the frugal part of my brain.  Throughout the year, we budget for our vacation, but when we are on vacation, we just enjoy ourselves.  I don’t pinch pennies and I don’t worry (too much) about the high cost of vacation fun.  Instead, I try to just go with the flow.  Put another way – I’m frugal 51 weeks a year so that I can be free not to be frugal 1 week a year.

I hope you all are having a great week.  I’ll check in soon, and let you guys know how the vacation is going.

Continue Reading

The Day It Clicked

I had a very interesting conversation with a good friend yesterday.  We were talking about our finances (he reads No Credit Needed and I asked his permission to share a bit of our conversation with you guys) and he said -

I think that the most important thing, no matter the system that you use for managing your money, is that you have to have a day where it just “clicks” – a day when you decide to take control of your finances.  After that, it’s all a matter of finding a system that works for you.

I think there is a lot of merit to what my friend said.  For me, it clicked more than four years ago, when I decided to put my credit cards in my wallet and get out of debt.  Since then, I’ve learned a lot about personal finance management, but nothing that I have learned has been as important as that initial decision to actually do something about my situation.

In a strange way, even though it took me nearly a year to get out of debt, I was already free that first day.  Just knowing that I had decided to make a change – and that my life would be different from that day forward – was powerful, in and of itself.  Now, of course, I had to actually go about the business of getting out of debt, but that was the easy part.

When I look back, I’m shocked that it took me so long to get my act together.  I’m sure that some of you feel the same way, about yourselves, as well.  Thank goodness for second (and third, and forth) chances!  At this point, I’m just happy that it finally did click!  The system may change, over time, buy my commitment, born that day four years ago, never will.

Continue Reading

10 Things To Do Before Creating Your Next Budget

Before you create your next budget or monthly spending plan -

1.  Track your spending for one month.

Use a spreadsheet, pen and paper, or online software, and track your spending for one month.  Track all payments – including those made by check, debit card, cash, (and credit card, if you choose to use one).  Remember to also include any payments that are automatically withdrawn from your checking / savings accounts.  (My wife and I use the You Need A Budget software to track our expenses and manage our monthly budget.)

2.  Create a detailed list of non-monthly bills / expenses.

Remember, for a budget to really work, you need to plan for non-monthly (irregular) bills and expenses.  For instance, you may need to pay annual life insurance premiums, twice-yearly automobile insurance premiums, and property taxes.  These bills do not arrive in your mailbox each month, but they still need to be included in your budgeting plans.  Click here for several options for how to deal with annual / irregular billing cycles.

3.  Open a free checking account with free online bill pay.

I could not manage my finances without a free checking account and free online bill pay.  Instead of writing several checks a month, I can go online, schedule payments, and be done with paying bills in a matter of minutes.  It helps to bank with an institution that integrates with your budgeting software of choice, or one that allows you to download transactions in several different file formats.

4.  Open a savings account.

I use an online savings account – one that allows me to quickly transfer money, via it’s transfer system, to and from my online checking account.  (If you would prefer one account, consider an interest-bearing checking account, like the ING DIRECT Electric Orange Checking Account)  You need an account where you can earn interest, while temporarily saving money for non-monthly bills / annual expenses.  I happen to have three accounts – a checking account at a local bank for day-to-day transactions, the Electric Orange account for online bill pay, and the online savings account for stashing cash until annual bills are due.

5.  Consider a cash-management system that will work for you.

I am comfortable carrying cash, but some may not be.  Find a cash-management system that you like and use it in connection with your budget.  My wife and I us the envelope system.  (Click here to watch a video tutorial, outlining how we use envelopes to manage our cash.)  You may choose to use a debit card, or even write checks, instead of using cash, but be sure you have some sort of system set up that helps you account for how much cash you need and spend.  Learning to properly handle cash, without wasting it, is one of the first steps in the life of a maturing home-finance manager.  Stop using the excuse that you “spend more with cash”.  If you can learn to be responsible with the $20 in your wallet, you can learn to be responsible with the $200,000 in your retirement account!

6.  Establish a budget-creation routine.

Determine when you will create your monthly budget.  Determine when you will discuss the monthly / weekly budget with your spouse.  Be specific and write the date / time on your calendar.  Instead of paying bills “whenever you have the chance”, build some time into every week for handling personal-finance related chores.

7.  Balance your checkbook / reconcile savings account.

It almost goes without saying, but before you can create a budget, you need to know how much money you have on hand.  Also, consider taking a look at any other accounts you might have – retirement, education savings, etc. – just to make a note of current balances.

8.  Determine your next financial step / goal / plan.

If you are trying to build an emergency fund, you need to have an emergency fund category in your budget.  If you are trying to get out of debt, you need a debt reduction category in your budget.  If you are trying to fund your Roth IRA, you need a Roth IRA category in your budget.  You get the picture.  Also, remember, after you get out of debt, you can then remove that category from your budget, and replace it with some other category.  The point is – Incorporate your current goal within the budget.

9.  Prepare yourself to succeed (and fail).

If you have never lived on a budget, prepare to be amazed by how in control you will feel, once you start using one.  Also, be prepared to fail, and feel frustrated, once your “perfectly” detailed plans fall completely apart.  The truth is, none of us can tell the future, but we can make some pretty decent predictions, based on past expenses.  For some, budgeting is easy, and becomes easier.  For others, budgeting can be a struggle, and it takes time to find the groove.  Be patient and enjoy the process!

10.  Understand how to budget with irregular income.

For most people, even those with regular monthly income, it’s a good idea to learn how to budget with irregular income.  For instance, most will need to know what to do with year-end bonus or a tax rebate check.  For many, especially those who work on commission, it’s critical to learn how to budget when on an irregular income.  Click here to read an in-depth article about how to create a budget when you have an irregular income.

I have used the above when creating my own budget.  My wife and I have been living on a budget for more than four years.  I will remind you, I am not a financial planner, and the above simply outlines what works for us.  Before making any financial decisions, consider consulting a qualified financial adviser or planner.
Continue Reading

The NCN Podcast Is Back!

I sat down last night and recorded a new episode of the No Credit Needed Podcast.

For those who are new to the podcast, or podcasting in general, a podcast is an Internet radio show.  The show is free, and you can download it to your computer, listen to it via iTunes, or listen to it directly from the NCN Podcast website.  If you own an iPod, you can subscribe to the podcast via iTunes, and new episodes will be automatically downloaded to your computer.  Confused?  Don’t be!  Just head over to the NCN Podcast website, and press play.

New episodes of the podcast will be available once a week – and the new episodes will be 10 to 15 minutes long.  Instead of rambling on and on, I’ll TRY to stay on topic and stay focused.  Thanks for stopping by, and I hope you like the latest episode of the NCN Podcast.

Continue Reading