organize your finances

Organize Your Finances


By: K.H. Smith

There are so many ways to organize your finances and different ways work for different people.  If you are looking for a system that will work for you, maybe I can help.  In order to find your system, you need to know how much time you are going to spend on it and how much technology you are comfortable with.  If you tend to check your accounts regularly (daily or every other day) you can use debit or credit cards since you are tracking your spending regularly and are less likely to go overboard without knowing it.  If you hate checking your accounts (which you should do at least weekly) it may be better to use cash.  You are less likely to overspend if you have cash and there shouldn’t be surprises if you are only spending what you have. Of course, you can always do a combination of both cash and credit.

 

 

Track Your Accounts

 

I use Mint to track my spending and monitor my accounts.  It is a free app/website that tracks your accounts.  It doesn’t have access to move money from your accounts, it just tracks balances and such. I have used it for about 8 years without any issues.  I like that I can track multiple banks from the same site. Mint helps me create goals and tracks my progress.  It also helps me with the budget feature.  Even though I haven’t used that feature consistently, I like that it is there.

 

I have also just used a simple Excel spreadsheet to plan for future purchases and help me plan my debt payoffs.  I like using Excel since some months have variables in income and that helps me know how much I plan on saving vs. debt payoff each month.  Excel is a little more hands on since you have to update your own balances etc.  But it has worked well for me and I am no Excel expert.

 

Use Separate Accounts

 

I have 2 checking accounts and 5 savings accounts! My husband also has a checking and savings account that is separate.  It seems like a lot, but for us, it helps keep our finances more organized.  I have my main checking account where paychecks are deposited and bills are paid. Then my second checking account I use for things like a gym membership that requires a bank account or PayPal. I don’t want to allow them access to my main account, so I use my side account for that.

My 5 savings accounts are broken into a joint account with my son, so essentially his savings account, one for my emergency fund (it has about 4 months’ worth of expenses saved right now), two for expected expenses (link) like our new car and septic field, a rainy day fund that is less accessible for some amazing vacation someday.  I like knowing that I have X amount saved for this vs that and knowing that my emergency fund won’t be accidently dipped into by expected expenses.

My husband’s accounts are for his rental property and let us keep those expenses separate. These accounts are all free, so there are no added fees.  This may be too many accounts for you or too few depending on your needs.  The important part is to have enough accounts that work for you and your needs and be able to keep up with them.

 

 

Use Automatic Payments

 

I have most of my bills on automatic payment, so I check my accounts regularly to ensure that the money is being deposited and the payments are made. With auto payments because I never have a late fee and I am not paying for stamps and checks as often.  I don’t have any fees from my credit union to do this so it works for me.  I also have scheduled different bills to be paid at different times of the month so that one paycheck is not crushed with all the bills.  You must change the due dates with your creditors before changing your pay date on your payment or you will be late and charged fees!!  These automatic payments are easily tracked in Mint.

 

Credit Cards

 

Credit cards can be a necessary evil in this financial world.  They are convenient to use and allow you to rent cars, hotel rooms, and such without big deposits.  Some even have great rewards.  The obvious drawback is if you spend more than you can pay off in a month, you will be charged interest on your purchases.  In essence, paying for your purchases in installments and eventually paying more than they are worth. My husband and I use 1 credit card for the cash rewards.  It is paid off each month so no additional charges.  Use credit cautiously.

My credit card has been open for 26 years, so that also helps my credit score.  The longer an account is open the better it looks on your credit! I don’t apply for random store credit cards, unless I make a significant purchase and the savings is well worth the ding to my credit.   And I  only do this if I can pay it off without finance charges.  I have done this 3x in my life for a savings of nearly $3000.  Be very cautious with this!

I don’t apply for random store credit cards, unless I make a significant purchase and the introductory savings is well worth the ding to my credit.   I also only do this if I can pay it off without finance charges.   Be very cautious with this as well.  It is easy to forget about it and end up with a large finance charge as these cards usually have high-interest rates and fees! However, when used judiciously, it can be a huge money saver. I have done this 3x in my life for a savings of nearly $3000.

Consider a Line of Credit on Checking Accounts

 

I have a line of credit on my checking account for emergencies.  I have this line of credit just in case I have some bill come through my checking account that I forgot about or something.  It prevents me from bouncing a check or payment.  I am careful to not use it because it is treated as a cash advance which has a high-interest rate that compounds daily.  However, it is not a substitute for an actual emergency fund. I tend to keep my savings out of my checking account and in savings accounts so they can earn interest, so my checking account balance sometimes gets low.  That is the reason for the line of credit.  I think I have used it 2x in the past 4 years, but it is a safety net for me.

These are just a few options on how to organize your finances.  Find a system you are comfortable with and make it work for you.  You will never regret organizing your finances.  It is a great first step towards financial success!

 

What are some tips you have for organizing your finances?

organize your finances

student loan debt

Take Charge of Your Student Loan Debt

It is 2017 and I have been out of grad school just over 6 years.  Now, I am getting excited about another milestone… paying off my student loans!  I took out about $78,000 in student loans for physical therapy school.  It is a three-year full-time doctorate program, which included summer internships, so there were very few opportunities to work while in school.  At the conclusion of physical therapy school, I was up to my eyeballs in student loan debt. I am sure I am not alone in this.  Higher education is expensive and more career paths are demanding certain degrees.  How do you recover from this mountain of debt, so fresh in a new career?  I will share my personal journey and hopefully give you some ideas along the way!

 

As many of you know, there is a few month grace period from graduation until that first loan payment is due.  If you can afford to start paying immediately, do it.  That will mean less interest is accumulating.  But, if you are like most recent grads you have a few things to take care of before that first paycheck is headed your way. The first thing is to get a job!  You may need to pass a test, like the boards for physical therapy or the bar exam for lawyers, so get to that as soon as it is allowed. But, start interviewing and getting a job lined up for after.  Time is ticking.  Fortunately, I got a job lined up quickly, so I was working full time when that first loan payment came due.  I wasn’t prepared however for the almost $1000 monthly payment for my five student loans! Ouch! Look ahead at what your minimum payments are for each loan, so you can be prepared. I also was not impressed with the 8.5% interest on my grad plus loan. That seemed a bit high to me.  How was I going to get ahead and pay these loans off?  I needed a plan.

 

The first thing I did was to refinance my graduate plus loan to a lower interest rate.  I was able to get it down to about 3%APR. That helped to lower my minimum monthly payment by almost $70 as well.  I did not extend the repayment period, I wanted these loans gone!  I focused on paying my biggest loan first. It may have been better to pay some of the higher interest loans first, but my focus was trying to reduce my monthly obligation and ease my cash flow a bit.

 

I took on an extra job teaching at the university and I put every extra penny I could towards that loan.  I am proud to say I lived frugally and was able to pay the biggest loan off in 18 months. It was a huge relief!  That one loan was just over $25k!  It was hard to continue to live that frugally, especially since I had been pinch pennies through grad school and just wanted to enjoy my income. However, I can say paying that first loan off felt amazing!  For me, it was worth the penny-pinching. I was determined to keep paying those loans off fast.

 

At this point, almost 6 years into my repayments, I am down to 2 loans with a total of $12,000 left to pay off.  My goal is to have them gone by the end of 2017.  I hope even sooner!  I have done many things over the past 6 years that have helped with this process. I want to share these ideas with you, so you can also get rid of your student loans, or really any debt!

 

Earn More Money

 

The first way to get student loans paid off is to pay more each month.  The easiest way to do that is to earn more money.  Maybe you can work a part-time job in addition to your new job.  You could house sit, dog sit, or babysit for more money. You could even try blogging or freelance writing. It takes time and hard work, but it is possible to earn money online. Every little bit helps.  All the extra money you can send helps to pay down the principle and decreases the interest you are paying in the long run.

 

Live Frugally

 

Live like you are still in college!  You have lived like a pauper for years, what is a little longer?  Maybe you allow yourself a few new luxuries, but delaying the lux life now will save you thousands in interest.  Maybe you can hold off on that new car, or maybe living with a roommate for another year isn’t that bad.  Consider what you can live with and keep your living expenses low.  I’m not recommending a Ramen noodle diet, but keeping that frugal mentality a little longer can pay off!

 

Consider moving in with parents, grandparents, or others to reduce or eliminate your housing bills.  I know it’s not fun, or glamorous, but housing is expensive and not having a huge housing budget can free up a lot of funds. Imagine how much less debt you would have if you lived rent free for 2 years?  Just a thought.

 

Some things I have done to reduce my expenses and increase my payments are cooking at home, not purchasing a new car, not buying a new house, and I have taken fewer vacations. I also took in a roommate for about 7 months.  None of these have been fun, but the reward of eliminating my student loan payment is worth the sacrifice!

 

Consider Refinancing

 

There are some good refinancing options out there.  Consider the APR, loan repayment period, new monthly payment amount, and any repayment penalties if you pay ahead.  Also if you refinance the loans the tax deduction on your interest paid will likely go away.  That should not be a reason to not refinance, just another consideration.  Refinancing is a good idea if your monthly payment is higher than you can afford or like me you have a loan with a very high interest rate.

 

Employer Payments or Loan Forgiveness

 

There are programs out there, some federal programs that will forgive part of your student loan debt for service.  These are sometimes available for those in the medical field who agree to work in underserved areas.  Look into them to see if you are eligible.  It is not a bad way to slash that debt.  Generally, they require 2 years of service, so make sure you know what you are agreeing to! But some public sector employers will also assist with loan repayment so look around as you are job hunting.  Especially if your field is in demand.  Here is info on the government forgiveness programs.

 

I tried many of these options and have managed to pay off $65,000 in 6 years!  Some years I was able to get further ahead than others.  Life sometimes gets in the way, and you just adjust and keep plugging along.  I also worked on my retirement and savings as well.  You don’t want to neglect your future when dealing with your debts. It is a fine balance with limited funds, but you have to consider time as your friend with investments. More on that in another post!

 

When I send my final payment this year, I will be out of student loan debt 3.5 years earlier than if I had just paid the minimums.  I have saved thousands in interest and I will have a huge weight lifted off my shoulders!  I can’t wait!  I will update this post when that magic moment happens.  Stay tuned!!

cutting expenses

When You Spend More Than You Make


By: K.H. Smith

One good thing about making a budget is that it shows you where your money is going.  (How to Make a Budget) However, if you  spend more than you make, then you know you have to cut somewhere.  Your budget can show you some places you can trim your spending.  Depending on how much spending needs to be cut, you may need to make small or large changes in your habits.

 

Chances are if you are reading this post, you are spending more money per month than you should.  So the question of what to cut or trim out of your budget comes down to what are my needs? Obviously, food, shelter, and bills are essential, but that doesn’t mean you shouldn’t take a closer look at those expenses.  Look at every part of your budget and consider what can be changed, reduced or dropped all together.

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planning for expected expenses

Planning for Expected Expenses


By: K.H. Smith

Finance bloggers and experts talk a lot about creating an emergency fund for those unexpected expenses.  And that is still a necessity.  However, there are big expenses that come up that you know are coming.  Things such as major car repairs, needing a new car, house maintenance items like a roof, furnace, or appliance replacements, etc. are expected expenses that you know are coming.  Don’t forget about birthdays, Christmas and graduation presents. These items should not cut into your emergency fund.  They should be planned for in advance and paid for in cash if possible.   The question is how do you go about that?

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financial hangover

Holiday Financial Hangover Cure


By: K.H. Smith

Well, your best laid plans of staying in budget for the holidays failed.  Now it is January and your credit card statement is here! Ouch!  Kinda feels like a hangover, doesn’t it? A financial hangover! Now what?  How do you recover from the damage done in December and start this new year off right? Well first things first…put a hold on any shopping, eating out, and unnecessary spending.  Not sure if it’s absolutely necessary, then it probably isn’t!
Now assess the damage.  How much do you owe? Don’t beat yourself up, just move forward.  Hopefully it is not as bad as you thought, but either way it’s time to make a plan. In order to pay off this debt you need extra money, either through earning more or spending less. Here are some suggestions on how to do both.

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free winter activities

Free Winter Activities


By: K.H. Smith

Even with chilly outdoor temperatures there are plenty of free winter activities to have fun and keep your entertainment budget low!  Free entertainment ideas are an easy way to trim your budget.  You and your family will still be able to find fun things to do.  You just might need to get creative! Here is a list of free winter activities to get you started!

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Eating at Home

Eat At Home Challenge


By:  K.H. Smith

 

Eating at home is a great way to cut expenses!  However, if you don’t like to cook, or don’t feel that you have time to cook, the idea of eating at home is less appealing.  I know how you feel! I am not a great cook, nor do I love prepping and cooking all day.  However, I AM a fan of saving money and I also like the added benefit of eating healthier that can come with eating at home. Below are some tips that have helped me enjoy cooking a bit more, as well as some easy recipe ideas that have lessened the stress of daily home cooking.

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financial goals

Financial Goals for 2017


By: K.H. Smith

As the holidays are wrapping up, we are looking into the New Year and deciding on resolutions.  What do you want to commit to this year? Most New Year’s resolutions tend to be short lived, but that sense of hope still drives us to make resolutions every year. What if instead of a resolution that we half-heartedly make, we make achievable goals.  We make short term and long term goals with a plan on how to achieve them. This plan would make it easier to reach those desired long term financial goals of being debt free, having a strong emergency fund, and healthy retirement accounts.

If this sounds like the future you want, then you have to commit to it.  But that commitment alone will not get the job done.  You need to set reasonable, achievable goals for yourself.  Maybe you need weekly accountability with your spending or just an amount to save from this paycheck.  These small goals will help you towards the bigger picture of financial freedom.   How do you make these goals?

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Make a budget

How to Make a Budget


By: K.H. Smith

So if you have reached the point where you are ready to take control of your finances, you are probably wondering where to start.  I personally believe that you have to know where you currently stand before you can plan anything else.  This self-assessment goes along nicely with making a budget so we will do both together.  There are many ways to go about this, but this is how I make a budget.

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The Frugal Mentality


By: K.H. Smith

The word frugal has a bit of a negative connotation, like cheap and thrifty, but I think if you look at the benefits of living frugally it starts to look more positive. I don’t remember when exactly I adopted the frugal mentality. It didn’t start at birth even though my Dad was the king of frugal living. He didn’t spend money on anything unnecessary when I was growing up. He and my Mom made good choices with their money and saved well and it paid off! My Dad taught me good financial planning and spending habits. I must say, I splurged a little in college and right after, but I was smart enough not to get too deep in debt before realizing this was a bad plan. I was able to fall back on those good lessons and recover in a matter of months. There was great value in having experienced that debt and also climbing out of it myself. I knew if I ever got in debt I could get out of it again. I adopted quite a few of my Dad’s frugal living habits and they are serving me well too!

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