Budgeting for 2011

Have you made a resolution to stick to your budget in 2011? So far this year, I have overspent in my budget category of snow removal.  I am sure I am not alone.  What do you do when it’s only January 20 and you have overspent? You have some tough decisions to make.

You have several options.  If you decide that you want to continue having your snow removal done by someone else, you could find another way to pay for this expense.  You would have to give up something else that would free up the money for more snow removal.  You could do it yourself, if you are physically able.  You can access your emergency savings account.  Remember that savings account that I have been asking you to build up so you have one year’s worth of expenses to spend on life’s “what if’s” – now could be one of those times.

Budgeting is only as good as your projections and sometimes we project too little.  That is why you need to be flexible with your budget, so that when you have unexpected expenses or more costs than you have planned, you can deal with it.  Overages in one category mean shortages in another.  Determine what you can lessen to have the extra money for the overages.  Build that emergency savings for those overages so you have a cushion to fall back on.  Because you never know how much snow we are going to get in a season.

Increase Savings and Reduce Expenses in 2011

What are your New Year’s financial resolutions?  Is it to save more?  Reduce your expenses?  We all have good intentions in January, but what happens to them in the coming months?

If your resolution is to save more, start by saving a small amount each week.  The amount should be something you think you can easily do without a problem.  If you are thinking that there is no money left over after you pay your bills to do this, you are thinking about this backwards.  Savings needs to be your first priority and not your last.  Take the amount you can afford to save weekly and take it off the top, before you pay your bills.  This way, you will ensure that this will happen.  Lots of people don’t keep their resolutions because they goals are too much for them.

If you have never succeeded in making this resolution in the past, start small.  By small I mean start with $5 per week.  If you can do this easily, then increase the amount for next month.  Then increase again and again until you get to an amount that you were originally thinking you wanted to save in the past.  This is much easier for you to accomplish with baby steps than if you said I want to save $100 a week and then fail to do so.  You are building your success with small steps and sticking with your resolution.

To reduce your expenses, think baby steps again.  Look at one category of spending and figure out a way to reduce that category by 10%.  Once that is done, go on to the next.

Resolutions / goals are something that you can do any day of the year. There is no need to only do them in January of each year.  Remember, anything that you want to accomplish will take effort on your part.

Paying the Holiday Bills

Now that the holidays are over, it’s time for the bills to start to come in.  This time of year is when you need to be extra careful about your finances. I know that this is a resolution that many of you made on January 1.  You need to be carefully checking your statements (both your bank and credit card accounts) for accuracy.  In my experience, this is when the most errors occur.  So check those statements to your receipts, balance your checkbook and immediately call to dispute any discrepancies.  Look for unfamiliar transactions that you are unsure of.  Sometimes a charge will appear with a different company name than the store you made the purchase from.  Call to get more information to determine if it’s your transaction.  The longer you wait, the less protection you have.

In addition, now is the time of year to read the inserts in your statements.  You know those pieces of paper that you automatically toss.  Banks and creditors will inform you about changes to your accounts – increased fees, new requirements etc.  You need to know about these before they take affect and it’s too late to do anything about them.

Be proactive with your finances by staying on top on what is happening with your money, will benefit you in the long run.  You will be able to make choices that are right for you and possibly save you money on fees.  Wishing you a happy and prosperous new year.

Financial Goals for 2011

With the new year approaching, it’s time to think about your finances.  What do you want to accomplish in 2011?  Whatever you want to accomplish, you need to have a goal.

Remember that a goal needs to be specific, with a timeframe and measurable.  You wouldn’t write “I want to save more” because that isn’t specific enough.  You would write “I want to save (amount) per (timeframe)” or “I want to reduce my expenses by (percentage or dollar amount) per (timeframe).”  Write down your financial goals this week, so that you are ready for the start of 2011.

You can’t achieve your goal without knowing where you are now.  It’s like starting a diet. You need to know where you are today and where you want to be at the end (the goal).  Next, you need to make a plan to get from today to the goal.  What steps do you have to do?  Make your list now.  Then start working towards your goal, by making the changes on your list.

Periodically, you need to check your progress to see how you are doing.  If your goal is to save $25 per week,.  then you need to go back and check how you are doing.  Did you do this every week? If so, you did it and continue the great work.  If not, then you need to review your goal and why it didn’t work.  Do you need to make adjustments to your goal to make it work?  Then implement those changes.  Remember that anything is possible if you put your mind to it and follow your plan.

Careful Giving

With the end of the year coming up, people are being asked to make donations to many organizations.  While others are planning ahead for the end of the tax year.  Either way, you need to make sure the charity that you are donating to is legitimate.

With many people out there to scam people, choosing a charitable organization can be challenging.  Here’s what you need to look for:

• Find out whether they have a 501(c) tax status if you are planning to deduct this on your IRS tax return.

• Find out how much of each dollar is used for the cause, versus how much is used for administration expenses. The higher the dollar amount used for the cause the better.

To find out this information go to www.Give.org to do your research before making your donation.  Once you have decided to make your donation, then you need to make sure you have the proper documentation for tax purposes.

For monetary donations, a cancelled check would be your receipt.  For non-cash items such as food, clothing, household items, furniture etc, you will need to make an itemized list of the items and the value.  Make sure to get a receipt from the organization that you are making the donation to. Attach this to your itemized list and keep with your tax records.

Getting the Deals When You Need Them

Do you see those online daily deals for discounted merchandise and wish you knew about them before they sold out? Did you buy something to find out later that you could have bought it for less on a website? It seems as if many retailers are offering them. I see them from office supply stores, utility companies, credit card companies (so you use that credit card more) and I am sure that I miss most of them. They seem to be like the grocery stores that offer the really great deal on a few products to lure you in. They know that you will buy more once they get you to the store.

If you are looking for something specific and want to see if you can purchase the item at a discount, then you may want to look into these daily deals. Remember, it’s not a bargain if you buy something because the price is so good that you can’t turn it down. Retailers (and websites) are counting on you to make that purchase since it’s such a great deal. But, it’s only a deal if you were looking for that item before you saw it. Don’t impulse shop.

Since there are so many, how are you to keep track? There are a couple of websites that will help you with this. www.Woot.com, www.DealCatcher.com and www.DODTracker.com will consolidate deals from numerous retailers in one location. That way, you don’t have to track many different websites to find the item you are looking for, or worse yet, finding the deal when it’s already sold out. Shop wisely and within your means.

Holiday Returns – Restocking Fees

We are in our second week of December. Most of us are already thinking about the holidays and gift giving.  Many stores are luring you to spend with statements like “we’ll refund your money if you are not completely satisfied” and “try it and you can return it for a full refund”.  I bet you have heard these offers before.  It might sound good, but you need to be aware of restocking fees. (No, these don’t have anything to do with your Christmas stocking.)

Retailers charge restocking fees to cover the cost of selling an opened package at reduced prices. For example, if you bought a computer and opened the box and then returned it, the retailer cannot sell that item as brand new.  Therefore, you might be charged a restocking fee.  That seems fairly reasonable to me.  Many retailers are adopting restocking fees.  You could see it on mattresses, automobiles and other items that don’t have package restrictions.

Restocking fees can be expensive, as much as 25%.   First, ask the store what the policy is and ask to have it in writing before you make the purchase.  Once you fully understand the policy, then determine if you want to make your purchase at that retailer.  If the purchase is for a gift, you might want to consider a gift card instead, so that the recipient doesn’t have to deal with the restocking fee.

Holiday Shopping Tips

The holiday season is in full swing. Were you one of those out there at midnight shopping on Black Friday? It’s easy to spend money during the holidays. We shop to make the holidays special for those we love and also to look good and feel good during the darkest month of the year.

If you’re worried about spending too much, think about these things before you shop.

• Do you really need the item?  If not, don’t buy it.
• Can you (or the person you are giving this to) live without it?
• Do you have the cash to pay for the item? You don’t want to charge items that you can’t afford to pay off when the bill arrives.
• Is this a good price?  Do your research ahead of time to know that you can buy it for less.

This year with the economy we are in, I would suggest that you do some planning before you tackle the holiday season.  First look at your list – are there people that you can eliminate buying a gift for?  Maybe you could spend time with that person creating new memories instead of buying an item off the shelf .  For the people on your list that you will be buying for, think long and hard to determine what amount of money you have to spend.  This should be an amount within your budget (not  on credit cards that must be paid off later). Your holiday budget should include all the items you have to buy, such as hostess and/or food gifts for parties, tips for the service people in your life, additional gas and holiday clothing for yourself.

If you’re going to buy something (especially during the holiday season), do it wisely and within your budget.  Let the joy of the holidays extend in January by avoiding the stress of January credit card bills .  Remember, a bargain isn’t a bargain if you’re buying something you don’t need.

Happy Thanksgiving to everyone!

Happy Thanksgiving to everyone!

Fact-Checking Charities

With the holiday season coming up, charities are increasing their requests for donations.  If you want to give (and I’m sure you do), make sure your money goes to those in need.

Unfortunately, it’s fairly easy to set up a charity, and fundraisers can legally keep most of  the money donated to the cause.  Before you donate, find out whether the charity is legitimate. You should also find out how your money will be spent.

You can start your research at www.Give.org (associated with the Better Business Bureau). This organization researches charitable organizations to find out how they use the funds they receive.

Here are some tips to help in your research:

• Find out if the charitable organization has a 501(c) status (IRS code for non-profit organizations).  Non-profits have stricter requirements, and your donation will be deductible on your tax return.
• Find about how much of each dollar is being used for the cause versus  administration costs.  The more administrative costs, the less of each dollar is being used for those in need.  Look for the low administrative costs.
• For cash donations, request a receipt to use as documentation on your tax returns.  All donations over $500 will require additional paperwork, so speak with your tax preparer ahead of time.
• When donating non-cash items such as food, clothing, furniture, etc, You will need an itemized list of the items you donated and the total value.  Most charities will ask you to value your own items.  Make sure you get a receipt for your donations with the charity’s information on it.

Do your research and chose the organization(s) wisely.  This is a great way to help out others who are less fortunate than you during this holiday season.