7 Unnecessary Purchases to Avoid

It is hard to save nowadays with virtually any impulse purchase you have at your fingertips being able to shop online and buy with a click of a button.  Before you hit “submit”, try and avoid some of the biggest unnecessary purchases that you can make.

Four-Course Restaurant Meals

Unless it is a once a year special occasion, there is no reason to splurge this much on a dinner.  For one, having an appetizer, salad, entrée, dessert is not healthy, it is also a huge strain on your wallet.  If you do need to eat out, make sure you are not starving when you go out, so you can avoid temptation and just get an entrée.

Too Much House

I’m not sure if it is a sign of status, but I see far too many people buying huge houses for a couple or small family, that being “house-poor” is not worth it when you figure how much you are losing out in putting in savings, or having life experiences.  Try getting a house that you can comfortably fit in instead of hearing echoes.

Overseas Vacations

Not a knock against any of the beautiful countries overseas from the United States, but the problem is the plane ticket.  With a going rate between $1,200-$1,600 at any given time, that could be the price of a mortgage payment.  While it may be a bucket list to travel abroad, save that for your later years when you can afford it.

Expensive Art

These days you can see every day on Pinterest how creative we are these days, reclaiming old wood into furniture, and buying cheap bookcase and adding molding to create an entire wall of storage that looks expensive.  There is no need to blow money on expensive art when you can create something decorative and trendy for pennies compared to what you would spend on fancy art that no one will know the difference anyhow.

Lottery Tickets

I am sorry to point out the (hopefully) obvious; you or anyone you know are not going to win the lottery.  Office teams pool together, senior play the same numbers every week, and what does it bring?  Lots of wasted money.  Give up the scratch-off’s and the easy-pick’s and invest in something that will make you interest, which will equal money.

Pet Clothes

I will keep this short and sweet.  Pet clothes look stupid, your dog does not enjoy and feels funny, and they are a complete waste of money.  Save the embarrassment to yourself and your pet, and keep the money.

Outrageous Wedding Dress

We see the wedding dress shopping reality shows on TV where the spoiled bride gets a budget of $5,000-10,000 for a dress that she will hopefully wear for only one night in her life.  Sure, it is an important day, don’t get me wrong, but although it is a great party, the memories will fade of what your dress looked like and you could have spent on a cheaper but elegant dress that still made you look beautiful.

5 Ways to Save While on a Strict Budget

Whether you are living off of wages that you feel could be higher, or do not have much leftover due to being on a strict budget, there are always ways to reduce spending so that you can gain a few extra bucks at the end of the month.  Once you have accounted for every dollar that comes in and goes out, you may have to think outside the box when it comes to saving extra money if you feel that you have reached your limit in getting rid of unnecessary expenses.

Pay Off Debt First

It may seem like common sense to pay off dent, and you might be thinking to yourself that you are already doing that but where do you get more money to do that?  Well basically any money that you have besides a necessary expense such as your mortgage, utilities, or food should go towards debt before anything else.  When I say food, I also mean grocery shopping for the necessities, not eating out or impulse purchases at the register.

Look for an Alternative to Daycare

Being a new parent I never paid attention to the prices of daycare until I had to enroll my child into one, and for those of you that do not know, it is ridiculous.  The daycare at my wife’s work is $63 per day which includes food and diapers, but for a newborn, diapers, maybe.  Let’s say this is every work day for a month, that is over $1200 a month.  If you can find a trustworthy family member to do it for say even $40 a day, that is around $800 a day, which gives you an extra $400 a month!

Sell Unused Items

If you are looking for extra money, look no further than what you probably have packed away in your house.  Try coming up with a rule of thumb, if you have not used the item in the past year, sell it, and see how that works.  If you do not have any high-priced items to sell online, then gathering your household items together for a garage sale might be a good way to get some extra cash together.  You can probably scout out items from family members too that they want to get rid of and have you sell.

Three’s Company?

A good way to bring in an extra few hundred a month, not to mention sharing utilities, whether you bring that into the overall cost or not, is getting a roommate.  Sure, you may think you left that behind in your college days, but back then your parents were paying, and now if money is tight it may be a great way to come up with some extra cash.

Trade Down

Take a look at your house and car.  Is your house too big for what you need and can you downgrade to say, a ranch?  Then maybe it makes sense to sell.  For your car, if you need a new car every few years with a lease, can you take a step down that may save a hundred or two a month?

4 Ways to Be More Financially Responsible

If you actually sit down and look over your finances, first adding up how much money comes in each month and then totaling the expenses and spending that occur, it probably will leave you sick to your stomach.  It is never too late to start being a little more financially responsible.

Set Up an Emergency Fund

Experts have said that you should have at least three, even up to six months of reserves sitting in an account just in case you have a sudden need of cash to pay for say an auto repair, or replace a TV or refrigerator, it is nice not to put on a credit card, especially if you are on a strict budget and this could take months to pay back.  Six months would be good to have, never know if there is an unexpected job loss.

Make Regular Contributions to a Savings Account

It can be tough to find extra money to put into savings, especially if you are having trouble making ends meet now, but if you have to manually transfer money over the probability that you will spend it on other things is far greater than if you were to make regular automatic deposits to a savings account.  Start with a couple hundred dollars a month if you can, gradually increasing as you get used to the money not being available in your checking account to spend.

Don’t Forget About Retirement

So, you have ample reserves for an emergency and are starting to put a little into a savings account for the future, but what about something that will grow with compound interest that you can contribute to that will take care of you in your golden years?  Well do not forget about your 401(k) account at work.  Like you have been doing with the savings account, start to give regularly scheduled contributions each paycheck, starting with say 1-3% for the first year, gradually increasing each year.  If you have the opportunity to have the company match any contributions you should take advantage of that, as otherwise it is just leaving plenty of money on the table.

Continue to Reduce Unnecessary Expenses

With a huge portion of your money now funding various accounts to leave you better prepared for the future, it may not leave much left otherwise, but that is the goal.  Now that you are an “adult”, you need to start being a little more financially responsible and stop splurging on unnecessary items.  My wife and I just went out to dinner the other night, we did not feel like cooking or grabbing unsatisfying carryout, so we went to a local favorite Italian restaurant and spent $60 on entrees, one drink, and tip.  While the food was excellent, we probably could have done without and found something to eat at home for free.  That is the mindset to start to have, how can you save extra money every week.  That savings added up every month, think of how much you can save in a year.

5 Things You Should Buy Using a Credit Card

For some may be a little leery about using a credit card, after all, all these years growing up it was always embedded into our heads that putting something on a credit card meant that you did not actually have the money and you were sort of kicking the can down the street, if you will.  That outlook has definitely changed over the years, and not only does putting charges on your credit card mean you do not have to pay until next month (and yes, make sure you pay off the entire balance by the due date to avoid interest), using the plastic is actually the financially responsible thing to do for making some purchases.

Basically, Any Online Shopping

Besides the giants like Amazon where they have pretty much a no questions asked return policy and almost instant refund as soon as the item is sent back, with free shipping back no less, there are plenty of sites that you do not know what happens when you put your credit card information in, so it would be nice to be able to dispute the charge if you do not receive the item, instead of paying with debit and waiting for the money to come back into your bank account, which could take a month.

Hotels and Rental Cars

Most hotels and rental car companies will accept debt cards at the time of reservation, but they will put a significant hold that can be upwards of a few hundred dollars on your account that will be reimbursed after completion, which then could take a week or two to be returned, a large sum of money to be missing for an extended period of time.

Big Ticket Items = Rewards $

I put everything on a credit card simply for the rewards dollars.  I do not go out of my way to purchase extra things, but the charges that I would have normally used my debit card for, like going out to eat, gas, and concert tickets, will now go on my credit card and I earn anywhere between 1-4% back on, which may not seem like much, until I received a $700 check recently for cashback on my previous year’s purchases, free to spend wherever.

Charitable Donations

I mention that it is nice to put charitable donations on a credit card simply for ease of keeping track.  When it comes to tax season you do not have to go searching for what you donated, you can check statements, instead of digging for cash receipts, which can be hard to prove if you are ever audited.

Monthly Bills

Not only will you earn rewards at the same time, but all of your monthly bills can come from the same source, and paid at once when the due date comes, instead of making sure you have enough at each pay period to spread them out over the course of the month, figuring out when the best time to pay is.  This way, you can set up automatic payments on the due date for everything and never worry about having insufficient funds or missing a payment.

Avoid These 5 Things to Save a Little Extra Money

It can be tough to have a little extra money left at the end of the month after paying bills, contributing to savings and retirement accounts, while budgeting for grocery, gas, and spending money.  If you are even coming out ahead you are doing a great job, but there are a few, if you think about, really unnecessary expenses that we continue to shell out money of each month, draining our accounts.

Cable TV

If you think about how many channels you pay versus how many you actually watch, and how often you even watch those channels, it can be upsetting to see how much you are spending on your cable bill each month.  Not that there is anything wrong with watching TV, but cable companies need to figure out a way to make it cheaper before subscribers are totally gone in favor of $10 a month streaming services such as Netflix and Hulu.

Snacks

Not only for health reasons is it good to avoid snacking between meals, but you are essentially spending money on junk food.  Unless you are having the guys over to watch a game and you put out a spread of your favorite gameday snacks, you should avoid at the grocery store.  Not only will you save at the grocery store, but ever stop into a gas station to buy snacks?  Those little bags are triple the price what the full size would have been at the grocery store.

Energy Drinks

Trading one caffeine addiction for another (hey, at least coffee is cheap, and you can brew at home and take a travel mug with you), energy drinks have plenty of poison in them that should be avoided in your body, not to mention spending a few dollars per can, more than what 20oz of sodas would be.  Unless you are a high performing athlete (even that I doubt could be proven that they are more effective), you should stick to free tap water.

Online Shopping

Talk about something else that can be an addiction is online shopping, especially coming from someone who works from home and has access to the internet all day sitting at my desk.  It can be easy to be distracted to go on Amazon, order an item or two, and have it arrive at your doorstep in two days, not even having to leave the house to go to the store.  Do your wallet a favor, and stop the online splurging.

Eating Out

While it is a convenience to have someone else prepare your food, not to mention cleaning up, it comes with an extremely high markup that these days a couple cannot go out to a restaurant and get out for under $40 with a tip, and that is even on the low end.  While it is enjoyable to go out to eat, try only going once a week, or on special occasions and you will see how quickly the money will add up only sticking to grocery shopping and eating at home.

How to Improve Your Credit Score Starting Now

Your credit score is the first impression of you when it comes to lenders, and it can tell a lot about you, if you are a responsible borrower, or if you do not take your finances seriously.  Whether you already have great credit or you are in need of improvement, you should always strive for the best to take advantage of the best rates on the market.

Take a Look at Your Credit Report

The fastest way to improve your score may just be because of misinformation on your report that needs to be cleared up.  You should at least look at your credit report once a year to make sure that all personal information and accounts are up to date.  Keep in mind that reports are usually at least a month behind, so if you just made a large payment or closed an account recently it may not have caught up yet, so not to worry.

Pay Down Any Debt

If you have a spending issue now, the first plan of attack is to stop using a credit card to avoid continuing to rack up the account balance that you are currently not able to pay off, so why keep increasing it.  Cut up the card if you have to, whatever keeps you from spending, and really focus on paying down debt.  If you are carrying a balance over each month, you will be charged interest, so you will need to make large payments in order to see a reduction of the principal balance, instead of the payment all going towards interest charges.

Keep Accounts Open

A common misconception is that once you pay off an account, the first instinct would be to cut up the card and close the account.  While cutting up the card is not a bad idea so you can avoid using the credit card if you previously had a spending problem, but closing the account could actually hurt your score.  A portion of your credit score is based upon the overall debt to available credit, so if the account is closed, you could drastically be reducing your available credit and make your debt situation look a lot worse than it actually is.

Set Up Automatic Payments

The biggest advice to give, is pay on time.  Late payments that are thirty days past the due date can stay on your credit report for up to seven years, so to show lenders that you are a responsible borrower, make sure it is paid on time.  Not only to keep your credit report in check, but paying even a day late can incur late fees or hike up APR, which will make interest charges skyrocket.

Stop Applications

Although it is a small portion, credit inquiries do make up part of your credit score, so every time you apply for a new credit card, personal loan, or mortgage, when they pull your credit, it affects your score.  Try and make sure that if you are having your credit pulled, you are looking to proceed if it improves your situation such as a mortgage refinance to a lower rate, or a credit card with say 0% APR.

5 Smart Ways to Use a Tax Refund

Tax time can be a little stressful.  It is when you take a look at all the documents, expenses, and hopefully receipts, over the past year to see where you fall.  The goal would be to have a $0 refund, which meant that you paid enough taxes during the year and received the most in your paycheck, but if you are lucky to get money back, try and spend it wisely.

Home DIY Projects

If you have not already been thinking what you wish you could do around the house if you magically came across some money, well this is your lucky day, so spend it wisely.  With buying some higher-end paint, you can bring new life to a room, and adding a fresh coat of white for the trim and doors to really made it pop.  Replacing the worn-out carpet can be fairly inexpensive to do as well.

Build Up an Emergency Fund

If you ever heard your parents say “put it in the bank”, this is one of those times when you get a little money that you want to spend, but need to hold onto it.  Experts have long said that you should have between three and six months’ worth of expenses on hand in case of a job loss or event where you need money to fix an appliance or car repair.

Decrease Debt

If you are carrying a credit card balance over month-to-month there is plenty of interest being charged that could have been used elsewhere, so it is always good to pay off the balance each month, but in the event, that you have not been able to, then you should pay down debt with a tax refund.  Some cards can have an APR of 16%, so most of your monthly payment could just be going toward interest and not putting a dent in the principal balance.

Take a Vacation

I am cautious saying this as it seems that I may be giving a nudge to blow the money but that is not it at all.  If you stick to a budget and live frugal the rest of the year, then you may be in for a long overdue vacation that you are able to take for free with a tax refund.  After all, it is important to save, but life experiences are as important to others as well, so make sure to still live life, without breaking the bank of course.

Donate to a Charity

Sure, this may not be the first idea that comes to your head when you see a check made out to you come in the mail and get you excited, but your donation could go a long way for those in need.  There are endless numbers of charities that are out there, so give to one that you are most passionate about, whether it be child, animals, or research.  If you are wondering what is in it for you, besides given to someone less fortunate, you will be able to write-off on your tax return, getting a little back when you file next year.

5 Hidden Fees to Watch Out For that Could Be Adding Up

As if we do not have enough everyday expenses that add up to huge monthly costs that eat up our paychecks and hold us back from building up that retirement savings.  Sure, it is our own fault it we splurge on spending and not focusing on sticking to a budget, but some are just unavoidable that are not displayed in the beginning, but give a huge shock when the final total is added up, so keep your eyes peeled at some of the common hidden fees.

Event Ticket Purchases

Take it from someone who attends a lot of concert and sporting events, that most of the ticket charges are extra fees.  Whether it is from the venue’s site, Ticketmaster, or third-party sites such as StubHub, it is nothing but fees, charging upwards of 30% of what the face value of the ticket is, by the time you add in service fees, delivery costs, and even added-in parking costs.  Do yourself a favor and try and buy all tickets in-person, directly at the venue’s box office to avoid any extra fees.  This way you are able to attend more events, and it is comforting seeing the ticket say $25, and it is not actually $40 by the time you add in all of the extra charges.

Extra Hotel Charges

Speaking of extra charges, when it comes to booking a hotel room, the actual room rate is not bad, but by the time you add in the taxes, it really boosts the price up.  If you are looking at rooms in Las Vegas, for example, keep in mind the extra “resort fee” which can be upwards of $30 per day added to the daily room rate.  Since all of the sites have their own fees, try and get the best final rate between the hotel’s website and all of the various travel sites.

Inflated Cable Bill

You see the ad for cable where you get it for $20, but add in a decent cable package, HR, DVR, not to mention internet and you quickly build up a hefty monthly fee.  Wait until the promotion period is over and you will really see your bill skyrocket, reaching $200 a month, and you will start dialing customer service right away to lock you into a better deal, just make sure you continue to escalate the call to someone that will give you the best deal, even if it is sending an email to the CEO’s office to help.  Most locked in periods are for two years, so savings over 24 months can really add up.

Banking Fees

This is the reason that I switched to a credit union.  There are no monthly “maintenance fees”, or minimum balance requirements that can see $10-20 a month in unnecessary charges to your account that can otherwise be avoided going elsewhere.

Airlines

When you book a flight, do not ignore the extra $30 each way to add in baggage, not to mention if you want to select your seat beforehand.  A $200 deal you think you can be getting on a flight quickly turns into $300 after taxes and baggage.

How to Financially Plan for the Birth of a Child

The birth of a child is said to be a miracle, but it is a miracle that we can even afford children in this day and age.  If it is your first child, you are in for a rude awakening.  According to a recent study by the U.S. Department of Agriculture, the cost of raising a child born in 2015 until the age of seventeen is $233,000, or $13,000 a year, and that does not include the cost during pregnancy or the whopping costs of college.  Before your little one is born, try and plan for what will likely to be a huge hit to the wallet.

Budget

Having a household budget is important no matter the size of the family.  It may be a little easier to budget if you are solo or even married, but throw in children to the mix and you will begin to adjust on the fly.  Babies bring extra expenses that come with medical bills, but as the child gets old you will need to factor in food and activities to monthly costs.  It is no wonder that two-thirds of American’s fail at a successful budget.

Start Saving for Day Care

As soon as you find out you are having a baby, it would be a good time make sure not only that emergency fund is built up, but that you begin to save for day care.  With most day care centers charging upwards of $60 per day to care for your child, for working parents that will add up to huge costs over the course of a month.  Figure around twenty working days, you can plan on spending the cost of an extra mortgage payment a month.  Maybe you have a relative or friend that is retirement age that wouldn’t mind being paid a discounted rate.

Try and Make Other Sacrifices

Like any successful budget to work, you will need to reduce unnecessary expenses so that at the end of the month, there is more money coming in than going out.  Well throw in having a child, and you will need to continue to cut spending even further, most likely reducing some of your priorities.  If concerts are your thing, maybe you go to a few shows a year instead of all of your favorites.  Eating out is probably the biggest money saver, so if you really try and stay strict on going grocery shopping and only going out to eat once in a while, you will see the savings add up.

Life Insurance Premiums

If you are looking to leave your spouse and baby with a comfortable means to live on for a while due to your unfortunate passing, then setting up a life insurance policy right away is a must.  Premiums will begin to go out the older you are, so if you are young, healthy, and free of tobacco, then you could probably get a good thirty-year policy for around $40 a month, which is not bad knowing that at least your family is taken care of if something were to happen.

New Homeowner’s Be Sure to Take Advantage of These Tax Breaks

Owning a home is exciting, gives you a sense that you have “made it”, but that soon wears off as the constant home improvements start to kick in.  While you start to contribute much of your take home pay towards your new home, at least make sure you take advantage of a few tax breaks to net you a little more in your pocket during tax season.

Mortgage Interest

If you wonder what most of your monthly mortgage payment goes to, take a look at your account statement and you will see that a majority goes to interest and little goes to principal.  As the years go by, less and less will go towards interest, but the good news is at least you can write-off mortgage interest.  Your lender will send you a 1098 form that will show the total interest paid for the year.  It might make you sick.

Property Taxes

Also on the 1098 statement from your lender you will find what you paid in property taxes for the year, and this can also be deducted on your tax return.  The trick is you will have to itemize, but given that you have not added a few extra deductions by being a homeowner, you will most likely benefit from itemizing.  If you have purchased the home throughout the year, you are able to deduct the taxes paid from the date of the sale on.

Energy Efficient Upgrades

Good news and bad news for this beneficial deduction.  The good news is that deduction for energy-efficient improvements will return you 30% for installation renewable energy sources, or 10% back for energy-efficient products purchased between $50 and $500.  Now for the bad news.  Hopefully you had plenty of upgrades completed in 2016, because the credit expires as 2017 begins, so anything completed this year will not be able to be deducted going forward.  For those receipts that you do have for 2016, you will include in the 5695 form.

Home Office Deduction

With so many companies allowing work-from-home, you can not only take advantage of avoiding getting dressed for work and sitting in rush hour traffic, but get a little back on your tax return.  The simplified method would be to take the square footage of your home office and get a calculated deduction.  The regular method would be to figure out what percentage of the home office takes up the total home expenses.  Will be easier to use the simplified option, just be sure that you can prove you use the home office for 100% of work use.

Donations to Charity

Although you do not have to own a home to get a donation to charity credit, but I wanted to make sure I included to be sure that you do not forget this, especially if you owe taxes this year.  If you have had any life changes such as marriage or buying a house it can take a year or two to figure out your optimal tax situation (per paycheck tax payments or getting too little or too much tax return).

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