Spring Clean Your Finances

Itʻs the first day of Spring, so naturally everyone starts to think about Spring Cleaning. This year try these tips to Spring Clean your home and your finances.

1. The Little Things Add Up
While Spring Cleaning your home and/or car grab an empty jar or cup and collect the coins you find. Use this money to pay off a portion of any debt you have remaining or put it towards savings. Even if itʻs only $20 or less that you find while cleaning, thatʻs $20 less that will be accruing interest and adding to your debt.

2. Garage Sale
As you are cleaning you may find items that you donʻt need anymore, but that you could make a few bucks off of at a garage sale or by selling the items online. Again, designate the money you earn towards debt or savings.

3. Make Use of What You Already Have
Take an afternoon to clean out and look through your refrigerator, freezer, and pantry. See how you can get creative with what you already have to plan meals for the next 5-7 days. If you can manage to not have to buy anything at the grocery store for a week, use the money that you normally would have spent and put that towards debt or savings. Make this a regular practice (every 3-4 months or so) and you may be surprised at how much you can save in the process.

4. Clear Out The Mail Clutter
If you still receive paper mail, consider enrolling in e-bills and autopay. This will reduce the amount of mail you have coming to your home and is also eco-friendly. Going online also helps to organize your bills and having autopay helps you to not miss a payment and have to pay late fees or other penalties.

5. Organize Your Debt and Spending Online
I have used both Mint and LearnVest apps and online websites to keep my finances organized. Both of these programs link directly to your online accounts and keeps up to date records. Itʻs nice to see all the information in one place. The apps will also tell you how much total debt and total investments you have too. Itʻs a great reminder on how much progress you have made and how much progress you still have yet to achieve. These apps are FREE, however they will try and sell you credit watch services and credit cards/loans to help you consolidate. DONʻT fall for any of it! As it may seem they are looking out for you and trying to help you out, they are in the business to make money and will try to sell you products and services to do so.

6. Complete Your Monthly Budget 
Start working on next monthʻs budget. If you havenʻt already done so, start working out your monthly written budget for April. Be sure to take in to consideration any parties, special occasions or vacations you may have planned. Itʻs better to stay ahead of the game, instead of acting surprised about an expense you should have known was coming up.

Pick one or two of these tips to commit to in the next week. Share what you are doing with a friend and ask them to join you. Having an accountability partner to share successes and struggles with helps you stick to your goals.

Time to Evaluate your Savings and Spending

Typically, by now most people have either given up or revised their New Years Resolutions. Now that 2 months of 2014 is in the books. Itʻs a good time to evaluate how you are doing with your financial goals. Take this quick assessment to see how you are doing so far in regards to saving and spending:

1. Savings

A. How much have you saved so far this year? 

     Are you participating in the 52 Weeks Savings Challenge? Do you have a portion of you paycheck automatically deposited into a savings account? Do you put your extra change in a piggy bank or jar at the end of the day? No matter what you are doing to save money, keep up with it! Even if you only save $1.00 a day, youʻll have $365 more at the end of the year. 

B. Have you had to dip into your savings this year? What was it for? 

     Did a situation occur that made you have to use some of the money you saved? Was it that one pair of shoes that you had to have? Was it an emergency that came up and you didnʻt have enough in your checkings account to cover it? If it was an emergency, consider funding or using your Emergency Fund for these types of situations. 

C. Is your current saving plans working for you? Should you decrease your plan? Are you able to increase your savings? 

     Is the amount of money you are currently putting away for savings putting a strain on paying your bills? Consider, decreasing the amount. Although you should save or as they say "pay yourself first" you want to make sure you donʻt fall behind on your bills or have any late payments. If you end up with extra money at the end of the month and all your bills/expenses are paid in full, consider increasing your savings amount.

2. Spending

A. How many times have you overspent in the past 2 months? 

     Have you over-drafted at all this year? Was it an oversight on your part? Did you know that you were going to have to have an overdraft? To prevent overdrafts, create a budget and stick to it. Also, manage your bank accounts regularly. 

B. Have you tried an envelope system to control your spending? 

      An envelope system helps you to stay on budget. You put cash for your different spending categories. Once you have spent all the cash in the envelope, that is all you have to spend, until you refill your envelopes (weekly, bi-weekly or monthly). 

C. How many large purchases have you made so far this year? 

     How many purchases have you made over $500.00? Were they necessary purchases? Did you budget them in to your finances? Large purchases are inevitable, so make sure you have a plan to save for or work those purchases into your budget. 

If you could use improvement in any or all of these areas, choose 1 area to focus on during the month of March. Use these guidelines at the end of each month to help you make strides toward financial success.

Gift Giving Without Busting Your Budget

Reader Request:

How do you manage money and still honor family friendship obligations from parties to reciprocating gifts?

 

I've been asked this several times, so I figure I take a little time to share what I do along with some tips that might work for your family and financial situation.

1. Immediate Family Birthdays and Special Occasions

When I sit down to do my monthly budget and spending plan I make sure to look at who's birthdays, anniversaries, graduations, etc. will be occurring that particular month and be sure to work it in to my budget.

2. Invitations in Advance

If you are given invitations to parties in advance, meaning at least the month prior, again work it in to your monthly budget and spending plan. Even if you are not 100% you will be attending, work it in to your budget. If you end up not going, you now have extra money to put towards debt or have a little fun with.

3. Last minute invites

This seems to happen a lot to me, and I am a planner so this doesn't go over well with me. Nevertheless, if we receive a last minute invite we use our weekly spending allowance to purchase a last minute gift or if all else fails and I have something available I re-gift (See #6).

4. Set a spending limit

If you are on a tight budget, set a specific spending limit for gift giving. For children's gifts my spending limit ranges from $5-$15. For adult/family gifts my spending limit ranges from $10-$20. This may seem kind of frugal to some, however I try to put some personal thoughts into gifts (that's what counts anyways right?).

5. Make a list of Go-To Gifts

This is especially helpful for those last minute invites. Make a list of gifts that you can give just about anyone. For example, board games or books are an easy go-to gift for kids, especially if you don't know what new character or toy they are in to or what size clothes they wear. For adults, a bottle of wine or a small gift basket with goodies is always easy to pick up and who doesn't like a nice drink or snacks.

Super Saver Tip: If you see these items on sale and you have the extra money to purchase them, stock up, that way if you get a last minute invite you don't have to make a special trip to the store, which saves you even more time and money!

6. Re-Gifting is Ok

I am totally ok with re-gifting items that were given to me that are still new or that I bought extra of and have no personal use for anymore. Just be sure not to re-gift the same gift back to who you originally received the gift from. Or to someone who was there when you received it.

7. Handmade or Pinterest Inspired

Again, it's the thought that counts. Pinterest has a huge amount of DIY and handmade gift ideas that can be done inexpensively or even with items that you have around the house. If you have kids, get them involved in the gift making, who can get disappointed with a gift that has the special touch of a keiki. If you are good at baking their favorite treat, make them a batch. Not only are you not showing up empty handed to the party, but you are showing them that you took the time to make something you know they will enjoy.

The main things to remember when gifting on a budget are:

-Do not overspend to try and impress the recipient

-Plan ahead if at all possible

-Budget, Budget, Budget! Stick to your budget! No exceptions!

5 Wise (and responsible) Ways to Spend Your Tax Refund

Many of you have probably already filed or are getting ready to file your taxes. And majority of you are anticipating a tax refund. If you owe taxes, be sure to read my previous post: Ways to Prepare If You Own Income Taxes

For those of you who are expecting a tax refund, have you started thinking about what you are going to do with that money? Some of you have seen this Meme (or one similar) going around on social media.

As funny it is, it's even more funny because it's absolutely true. If you haven't noticed it's around tax return time that you see lots of ads for sales on TVs or you see an abundance of ads for those Rent-to-own stores. You might also see an increase in Used Vehicles posted on Craigslist or parked on the side of the road. I'm sure Jewelry stores also love this time of year, because they get an increase in orders for Hawaiian Jewelry. Although, it is nice to enjoy money and get things that you want. You must first make sure that all of your financial obligations are met and that you are in a financial state to spend money on things that aren't necessarily a necessity or things that won't bring you closer to a state of financial peace or success.

Whether your tax return is large or small, you should carefully consider how you will spend your tax return. Here are some responsible and wise ways to make use of your tax return:

1. Starter Emergency Fund 

If you haven't done so already, establish a starter Emergency Fund. This amount ranges between $500-$1000 depending on your income level and martial status.

2. Pay Off Debt Smallest to largest balance

Regardless of the interest rate for your outstanding debts, pay off the smallest balance you have. This will do 2 things immediately, (1) give you a sense of accomplishment, small wins help to provide the motivation needed to keep attacking your debt and (2) reduce the amount of debt accounts you have, which will help to better your credit score.

3. Put Money Aside for Annual Expenses

Many times we are so focused on our monthly bills that the annual expenses sometimes creep up on us even though we know that they should be coming. For example, car registration, insurance premiums, gym memberships, etc. This includes any big vehicle services that you might anticipate this year, for example if you know that you will need new tires this year, put aside what you think it will cost you, that way when you do need new tires it's not a Financial Emergency, as well as a Car Emergency.

4. Invest in Life Insurance

Use your taxes to pay for a life insurance policy. Invest in the financial security of those you love.

5. Start a Savings/Investment Account for your children

If you've been meaning to start a savings account for your children, use the money from your tax return and get them started. Depending on how much money you have to save/invest you might want to consider opening an UTMA or 529 Plan.

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Sticking To My Budget

I follow a fairly strict Zero balance budget, which includes a weekly spending allowance. For all my cash expenses, meaning those expenses that are not paid through automated payments, I use a cash envelope system. These expenses include my weekly spending allowance, weekly gas budget and weekly grocery budget.

Since my paydays fall on a Friday, my week runs from Friday-Thursday. Yesterday (which was a Thursday), I was tested on my will to stick to my budget. I wanted to treat my son to Jamba Juice since he'd had a long week at school and I had to drag him to an event that I was working at for the evening. 

Of course, prior to going to Jamba Juice, I double checked how much cash I had left to spend for the week. I had $8.00 left in my weekly spending allowance envelope. From previous trips to Jamba Juice I knew that $8.00 wasn't going to be able to buy both of us our normal Jamba Juice order. (Small Orange A-Peel for him and a Medium Aloha Pineapple for me). I contemplated just getting his drink, but I wanted something to tide me over until we could get home and eat dinner. 

I could have taken out cash as an advance for my weekly spending allowance for this week that started today, but I wanted to stick true to my budget, especially since my purchase was more of a want than a need. Instead I remembered that you can get a large and split it into 2 small smoothies. This would only cost me $6.00 for both of our drinks. So I compromised to fit my budget and got a large smoothie of my son's favorite flavor that we split.

You can call me cheap, frugal or a penny pincher. However, I don't mind any of those names at all. I know that the behaviors that I practice today will help me to reach my financial goals and eventually financial freedom. 

So here are a few lessons from this short story that you can apply to your personal finances: 

1. Stick to a budget.
Take control of your money and don't let your money control you. You earned it, you tell it where to go and when. 

2. Use a Cash Envelope System to manage your spending.
By using cash you can visually see how much money you have allowed yourself to spend on certain things. If you just swipe your debit or credit card, chances are you will overspend and maybe even overdraw your bank account. 

3. Save where you can.
If I purchased 2 Small smoothies, it would have cost me about $9.00. Instead I ordered a large and had them split it in two for only $6.00. That's a $3.00 savings and didn't cause me to break my budget. 

4. Assess your purchases as a need or want.
Although to felt like I "needed" to have a Jamba Juice to tide me over until dinner, it was a want. I could have found something else to snack on that wouldn't cost me as much. However, since I'm pregnant, when I have a craving for something I tend to do whatever I can to get it. So I compromised and came up with a solution that was a win-win. 

5. Check before you spend.

I remember when I first started using an envelope system and I went to the checkout and realized I didn't have enough money. As embarrassing as it was to ask the clerk to take off an item or two, that mistake could have been avoided if I had just checked how much money I had before I started shopping.

Stay tuned for more blogs on Using an Envelope System. It's a lot easier than you think!

10 Credits/Deductions I Learned About While Doing My Own Taxes

Disclaimer: I am not a Tax Professional. Please see a Tax Professional for exact information regarding any Tax Credits or Deductions that may be applicable to your specific personal tax situation.

I have always done my own taxes, thankfully in all the years that Iʻve had to file my own taxes, the Internet was around to make it a lot easier. I remember when I was growing up, it was this time of the year my mom would take us to the public library, not for us to borrow books but so she could pick up the current years tax forms and instructions. Back then my mom would do her own taxes, but after awhile my parents started to use a professional tax service.

Online Tax Preparation Services make it convenient to complete your taxes on your own time. By doing my own taxes, I also have learned a few things in regards to what you can claim and what you can't claim. Here are 10 Things I've learned from doing my own taxes:

1. Savers Credit
If you contribute to your 401K, 403B or other similar retirement account you may qualify for a Savers Credit.

2. Child Care Credit
If you pay someone else to watch your child so that you can go to work or school, you may be able to write off those expenses. We sent our son to Summer Day Camp at the Kroc Center and he started attending A+ After School Program in the Fall. So we spent about just about $1,000 on child care costs. When I did input this tax credit information in to my taxes, my refund increased about $300.00.

3. Tax Preparation Fees
If you paid for tax preparation fees when you filed your prior years taxes, you may be able to write-off this amount as part of a Schedule A Itemization. For 2013, it was more beneficial for me to take the standard deduction. I spent on average $150-$200 to file my taxes in previous years because I do personal and business together. This year I discovered www.myfreetaxes.com and was able to file my taxes at no cost to me!

4. Lifetime Learning Credit
Whether you are in an Associates, Bachelors or Graduate program, the institution that you attend should supply you with a Form 1098-T: Tuition Statement. This can help to determine whether you qualify for the lifetime learning credit.

5. State of Hawaii - Refundable Food Credit
This credit is specific to the State of Hawaii Taxes. This is the first year that I noticed this tax credit when doing my taxes, and I'm happy that I did, because I was able to claim it for me and my son.

6. Charitable Donations
I try to do quarterly purges of clothes and items that we own and we donate to a local donation closet that serves those in need. I used www.itsdeductible.com to figure out the value of the items I donate and that is the amount that I claim on my taxes. In addition, I am able to claim all the donations I make to other smaller non-profit organizations as well as my Tithes to the church.

7. Car Registration Fees
Unfortunately for those of us who have their vehicles registered in the state of Hawaii we are not able to claim our car registration fees because they are determined according to the weight of the vehicle and not the value.

8. Medical Expenses -
If your out-of-pocket expenses for medical (including dental) is more than 10% of your adjusted gross income, you should consider itemizing your medical costs. 2013 was a pretty big medical year for us in regards to the amount that we had to pay that wasn't covered by my insurance. I started off the year at the hospital having gall bladder removal surgery, a couple months later I had to have a colposcopy done, then right after that I had my wisdom teeth pulled. And of course I started my prenatal appointments towards the last half of the year. And that was just my medical costs. We paid a lot for my son's medical and dental premium as well as having to pay for his tooth extraction, a spacer and a few fillings for cavities.

9. State of Hawaii - Car Seat
If you purchased a child safety seat, you can get a tax credit. Just make sure to keep your receipt because you have to submit it when you file your state taxes.

10. Miles Driven for medical purposes
I had always seen that I could claim the miles driven for medical purposes, like Dr's Visits, picking up prescriptions or trips to the Emergency Room. Even though I had a huge medical expense year in 2013, I did not track my mileage. Looking ahead at this year and the fact that I already have prenatal doctor appointments every 2 weeks and will have to travel from Waianae to Waipio for those appointments, plus giving birth at Moanalua Hospital and not to mention taking the baby to his well-baby appointments, I am making sure that for 2014 I am tracking my medical miles.

These are just a few of the things that I was able to claim for 2013 and ones that I can prepare to be able to claim for 2014. Knowing now, helps me to prepare and keep my documents in order so that come this time next year I will easily be able to file my taxes. Remember that I am not a tax professional and cannot offer any advice or information about the exact details of these credits and deductions.

Sinking Fund Approach for Vacations and Big Ticket Purchases

I'm pretty sure many of you have already started thinking about taking a vacation this year or maybe you are thinking about buying new furniture or other big ticket item. Whatever it is that you plan on buying, plan early enough where you don't have to use a credit card to make that purchase, and end up paying more for the trip than you should.

If you know my family well, you know that we travel quite frequently (especially Sam). In the past 3 years we have been blessed with the opportunities to travel all over the country as well as a nice little vacation in the Bahamas. Although for most of these trips we did not have to pay for the travel expenses (airfare or hotel) there were a few trips that we had to fund ourselves and even if the airfare or hotel were paid for, we still needed money to eat, ground transportation, for entertainment, and of course to shop!

Sinking Fund Approach
When planning for a trip or to purchase a big ticket item (meaning costing more than $500.00) I ask myself these three simple questions:

1. How much money do I need?
2. How long do I have to save it?
3. How much do I need to save each month?

This is called the Sinking Fund Approach.

Sinking Fund Approach Example
Let me share an example with you:

This year in August, we have a family reunion to attend on Hawai'i Island. Which means we need airfare for three (thank goodness the new baby will fly for free), we will need hotel/vacation rental accommodations for 4 nights, car rental for 5 days, money for food, entertainment, etc. I did a little preliminary research to find out how much all of this would cost and this sets our baseline budget. If I am able to find better deals from now to then great, if not then I have to adjust our budget to accommodate.

$525.00 Total Airfare Cost for Three Round Trip Tickets
$400.00 Total Hotel/Vacation Rental Accommodations for four nights
$350.00 Total Car Rental for five days
$250.00 Total budget for food, entertainment, and misc. expenses
----------
$1,525.00 Total Trip Budget

This answers the question: How Much Money Do I Need?

From now until the trip, we have six and a half months to save. So, this answers the question: How Long Do I Have To Save It?

Now to answer the final question: How Much Do I Need To Save Each Month? It's simple math (and I almost always use a calculator) Divide the total amount that you need by the amount of time you have to save it.

So for this example:

$1,525.00 divided by 6.5 months = $234.62 per month

Next Step: Savings Plan
Now that I now how much I need to save each month to be able to go on this trip, I need to make a savings plan. We already operate on a zero-balance budget, which means we allocate every incoming dollar to pay a bill, living expense, or to pay down any outstanding debt. Now how can I squeeze $234.62 out of our monthly budget?

To make this amount easier to swallow, I like to break it down to smaller amounts. To achieve this savings goal we need to save $59.00 a week or about $8.50 a day. Now that amount doesn't seem so bad when you look at it this way. We now have to look at our current savings as well as other opportunities for us to earn/save money (i.e. garage sale, selling old items on cragislist, couponing, etc.) in order to save the amount we need by the time the trip comes up.

Other things to consider, especially when it comes to travelling is booking reservations early enough to save money. As we save the money needed for each travel expense we will book the reservations. For example, in about 2 and a half months from now we will have enough to book our airfare, which is a good amount of time to still get a good deal.

Don't Resort to Using A Credit Card
As easy as it would be to swipe our credit card and just pay for the it and get it over with, we have other financial goals that will be affected if we do that. And no vacation or TV is worth pushing back our goal of owning a home this year. It's all about opportunity costs, we know we want to go to the reunion, so when it comes down to spending money from now until then, we have to ask ourselves do we buy this item that we kind of "want" or do we save the money to put towards the trip.

So start planning for those larger purchases early and try the sinking fund approach for your next vacation or big ticket item purchase.

Ways to Prepare If You Owe Income Taxes

Special Edition: Tax Time Tuesday

 

As W-2's and other tax documents start coming the the mail, it's that time to begin thinking about and completing your tax returns. I am not a tax professional, however I wanted to take some time to share some smart ways to use your tax refund this year or offer some advice on how to tackle a looming tax bill.

If you owe taxes for 2013: 

No one wants to have to write a check to Uncle Sam, however there are times where it is necessary. One of the most common reasons people owe taxes is because they have an increase in income and do not adjust their withholdings to accommodate for being in a new tax bracket. Another common reason is that the income received is not taxed at the time it is paid out, therefore leaving you with the taxes to pay when it comes time to file your taxes. 

As stressful as having to pay taxes is, you don't want this tax obligation to loom over your head and cause prolonged stress over an extended period of time. For 2012, We had a fairly large tax obligation, which we knew would be the case. As network marketers the income you make is not taxed when paid out to you. As an independent consultant it is your responsibility to pay the taxes. We knew this of course and started to put a portion (about 20%) of the checks into a savings account so that we would have the money to pay the IRS when tax time came. However, we were not diligent with our finances during a period of the year and had to dip into this savings to pay for other things. This left us with a smaller balance that we knew would not cover our entire tax bill.

When we figured out how much we owed, we paid as much as we could, but that still left us with a large amount outstanding. We applied through the IRS to make incremental payments over the course of 6 months. We buckled down and revised our budget to be able to pay off the large tax debt in about 4 months. We were happy when that was over and hope to never have to experience that again.

Ways to prepare for an overwhelming tax obligation:

Being proactive with your finances is a great way to keep your money in your control and not in the control of others. Here are a few ways that you can prepare yourself for an overwhelming tax obligation  in future years.

1. Pre-Pay the taxes quarterly through the IRS. We did this option the year prior and this helped reduce our tax obligation. If you anticipate that your income will be the same or higher in the next year and you know you will owe taxes, the IRS will estimate the taxes owed for the next year and break that up into 4 quarterly payments throughout the year.

2. Put money away through the year. When you receive an income where the taxes are not taken out automatically, it is smart to put a percentage of that check away to be able to pay your anticipated tax obligation. Depending on your tax bracket, you want to put away anywhere between 10-30% of your income away.Be smart and don't dip into this money. Even if you don't owe as much as you have saved throughout the year, think of that extra money as your tax return.

3. Adjust your withholdings. Again, I am not a tax professional, but if you sit down with one and show them your situation, they can suggest what to claim for your tax withholdings if you receive income that is taxed at time of payment.

Join me on the next Special Edition: Tax Time Tuesday blog where I will discuss smart ways to use your tax refund.

(Hint: I will not suggest taking a trip to Vegas or buying a brand new big screen TV!)

How I feed a family of 3 on a $50.00 Weekly Food Budget

I posted this money saving tip on my FaceBook and was asked how I am able to feed my family of 3 breakfast, lunch & dinner on a $50.00 weekly food budget.

So here is how I do it. 

1. As mentioned in the FB post, I plan my meals around what is on sale. For example, if there is a really good deal on Chicken Thighs then I make sure to plan a meal using chicken thighs. 

2. I make one dish last for several meals. With the chicken thighs example from above, I will make enough let's say Shoyu Chicken to be eaten for dinner the evening that I cook it, lunch for me and Sam the next day as well as dinner for all 3 of us the next evening. Sometimes I'm lucky enough to squeeze another lunch for at least me for an additional day. I also try to keep the cost of one dish around $15.00 and no more than $20.00. 

3. We never skip breakfast and I try to keep it simple. Since my son's school is not close to our house, Sam and him have to leave at 6:30am to get to school by 7:45am. Which means I don't have a lot of time to cook breakfast for my son, however I do let him choose what he'd like to eat. A typical breakfast on a weekday is anything from Cereal, pancakes, eggs/rices/spam, or an egg and turkey bacon breakfast sandwich. 

4. The fact that we are promoters of Visalus, helps out a great deal, although even without it I don't see us spending any more on our weekly groceries. We get our meal replacement shakes for free because we shared our challenge with 3 of our friends who also are on the challenge. This is what Sam normally has for breakfast and a snack or post-workout meal and our son chooses this as his breakfast choice sometimes as well. If we have to buy any ingredients for the shakes it's mostly almond milk that we purchase in bulk from Costco that lasts awhile. Note: After I have the baby, I will be jumping back on the challenge full time, which may help us save a little more since I'll be replacing 2 meals with the shakes. 

5. I challenged myself to doing a Financial Fast at least 2 days a week. This helps keep me from buying lunch during the week for when I'm at work and forces me to prepare lunch, which if it's not leftovers from a previous night's dinner then I make a sandwich or a quick pasta to take to work. Sometimes it's hard when I see a co-worker pick up a plate lunch or fast food for lunch, however if I bring my own lunch it's typically healthier than buying food elsewhere. 

6. We don't qualify for free or reduced lunch for our son. So we let our son pick and choose which days he brings home lunch and which days he eats school lunch. (Note: our $50.00 grocery budget a week does not include any school lunch that he eats, which if he ate all 5 weekdays would cost us $11.25 a week). On the days he brings home lunch, he has a choice of chicken nuggets, pizza rolls or a cold cut sandwich. He typically take home lunch 2-4 times a week. We put $50.00 on his lunch account at a time and that lasts him 2-3 months. 

7. Although I stick to a strict budget for our groceries, I always try to include some kind of treat, such as ice cream, cookies to bake as a family, or since it's been cold lately hot cocoa and marshmallows. 

8. Lastly, I take advantage of store ad prices and reward card programs. I typically shop at either Tamura's to support local, Sack-N-Save/Foodland (using the Maika'i Rewards Card) and Safeway (using the Safeway rewards and personalized deals that you add online). I look at all three ads prior to meal planning and look for which store has the best deals. I make my list for one store only. Instead of wasting time, money and mileage on going to multiple stores I shop at only one store for the week. 

I would probably save a lot more money if I was an extreme couponer, but this system works for me and I still save money by trying to buy mostly what is on sale. 

Other ways you can save lots of money on groceries is by growing your own vegetables and fruits as well as fishing or hunting for your protein. Once in awhile we are blessed with vegetables, fruits or fish from friends and family. And this helps out on the grocery budget a lot. 

My weekly grocery budget will have to be changed once the new baby arrives and starts eating food other than breast milk. But as I did with our first born, I will make my own baby food. But I don't anticipate having to adjust our grocery budget any more than $10 a week to feed an extra mouth. 

We do eat an occasional meal out, the money that we use for those meals comes from our weekly spending allowance that both Sam and I have each have. We try to plan a meal out based on our always busy schedules. 

If you have a larger family, I would suggest doing a monthly bulk shopping at Costco or Sam's Club and supplement with once a week shopping at a smaller grocery store to buy the things you can't get at a Warehouse store. 

The Hidden Paycheck

In a previous blog I wrote about the importance of knowing and understanding your income. A part of being able to understand your income is to know and be aware of your "Hidden Paycheck." A hidden paycheck includes your hourly wages or salary along with the other benefits that your employer provides.

The past 2 companies/organizations that I have worked for have been very transparent with the benefits and the costs associated with those benefits. In my previous job, we would receive annual "Hidden Paycheck" statements that would outline what our total compensation is worth for that year. In my current job a couple years ago, we received a Benefits Statement that outlined all of our benefits, including cumulative benefits that we have received over the length of our employment.

As an employee, this is beneficial to me because although sometimes it seems that the pay isn't that great, when you see all the other compensation that you are receiving, makes you realize that your employer is taking more care of you than you think. For employers, it is beneficial because it shows your employees the amount of money that is spent on each employee above the traditional paycheck.

The following is a list of some of the benefits that are included in a Hidden Paycheck:

The list continues of different benefits that you can receive from an employer. The ones listed above are some of the common one's and one's that I have personally received over the course of my employment at different companies/organizations.

To illustrate let me provide an example:

Let's say your hourly wage is $14.00/hour. Which means your annual base salary is $29,120.00.

In addition to that your employer pays 100% of your medical insurance premium which costs $290.00 per month. They also cover 50% of your dependants costs for medical insurance premium which costs the company $145.00 per month. This totals $5,220.00 that your employer pays for your medical coverage.

Your employer also provides life insurance that has a coverage of 2.5 times your annual salary if you were to die unexpectedly. Your coverage would total $72,800 and the yearly premium costs the company $150.00 a year.

Your employer contributes 5% of your wages into a pension plan for you regardless of whether you make personal contributions or not. The company pays out $1,456.00 a year on your behalf towards your retirement plan.

To keep this example simple, we will leave the company sponsored benefits to these three areas. So although your paycheck will say Gross Pay = $29,120.00 the company is actually spending a total of $35,946.00 a year to keep you as an employee. When you calculate this to an hourly wage you are actually making $17.28.hour.

When you look at your income from this point of view, it looks a lot better. You may feel less taken advantage of by your employer or it may reveal that you truly are not being paid the amount that you should be based on your experience, education and skill set.

Keep in mind that not all employers will be transparent about all the benefits that they provide, but there are ways you can estimate your Hidden Paycheck. Take some time to figure out your "Hidden Paycheck" this can help you evaluate if you are being compensated enough or too little and can help you make decisions especially when thinking about finding another job. Your next job may pay you $16.00/hour but not provide any benefits, meaning although it looks like you are getting a raise by changing jobs, in reality you are taking a pay cut because you are losing out on other benefits that are paid for on your behalf.

Knowing and Understanding Your Income

I work with families that come from all income levels, and I often have to ask them what their estimated annual gross income is, so that I can check eligibility requirements for different programs and services. It amazes me how many people do not know what their annual income is. If they don't know their annual, then I ask for their monthly and simply multiply it by 12 myself. However, many times they still do not know what their monthly income is.

Being in control of your finances starts with KNOWING your finances. In order to be able to make sure that the money you have going out to pay bills, go shopping, save, and invest you need to know how much is coming in.

Even if you receive government assistance or other forms of income not from a traditional paycheck, you should still consider that monies as income. For IRS purposes, you do not have to include SNAP (food stamp) benefits as income. However, for the purposes of understanding the inflow and outflow of the money you spend, it is important to include SNAP benefits when doing your monthly budget. The benefit of receiving monies for your groceries through SNAP is meant to be temporary. Meaning, when you no longer qualify for SNAP benefits, you will need to budget in grocery monies from your income. Better to practice now, than to be in the dark when you have to start paying for your groceries without any assistance.

Many people get confused with Gross and Net Income. Here is a little breakdown to help you understand the difference.

Gross Income is the amount that you make before any tax or other deductions are made. For example, if you work a full time job at $14.00/hour then your annual gross income would be:

40 hours per week x $14.00 per hour x 52 weeks per year = $29,120.00

 

Net Income is the amount that you make after taxes and other deductions are made. Common deductions that are made from a typical paycheck are Federal Taxes, State Taxes, Health Care Premiums, Flexible Spending Accounts, and 401K or other retirement plans. In other words, net income is the amount that you take home or the amount you see on your paycheck or through direct deposit.

 

Be aware of your gross and net income. Understand the deductions that are taken from your gross pay. Know your income so that you can control the outflow of money. Smart money management begins with making sure that you don't have more money going out than you have coming in. And the only way you will be able to do this is to KNOW YOUR INCOME! 

"Swiper No Swiping"

Are you a swiper? Meaning do you make most of your purchases with a debit or credit card. Many people use their plastic to make purchases because they say it's convenient, safer than carrying cash, etc. Whatever the reason is, if you always wonder where your money went or if you have already accepted that you have a spending problem...the best advice I can give you is to STOP SWIPING! 

The convenience of the debit card or credit card is a retailers dream. Customers come in, swipe away and leave their place of business with things they need as well as things they probably don't need. Sam and I have been on a mostly cash system for a few years now, and it really helps us keep our spending in check. If you give yourself a "spending allowance" and use strictly cash, you force yourself to be aware of the price of the items that you are purchasing and you have to make sure you have enough money to cover your purchase. Even big successful corporations pay attention to the prices of the things they purchase, so don't feel that if you look at the price that you are "poor" or "penny pinching." Be smart with your money. And in the words of Dora the Explorer "Swiper NO SWIPING!" 

Financial Date Night

Communication is key in any relationship, especially when it comes to finances whether they are shared between a couple or not.

Financial Date Nights are a great way to set aside a time to discuss the current state of your finances and future plans. Once a month, set a Financial Date Night with your partner. Typical Financial Date Night's last about an hour or two depending on what needs to be discussed. Find a quiet place (which means NO KIDS around) to talk with your partner about your finances. Create a spending plan or update your budget. Set financial goals and an action plan to get it achieved. Share financial worries and provide support and reassurance to your partner if needed.

Be sure to take notes about what is discussed during your date and email it to each other if there is follow-ups that need to be completed.

When you are on the same page with your finances you may find yourself closer and will notice that arguments may decrease especially arguments related to finances. So talk to your partner and set your Financial Date Night for January! 

Daily Financial Check-Up

You wake up, brush your teeth, eat breakfast, get ready for work/school. These are all a part of your daily routine. What if there were something that you could do that wouldn't take any more than 5 minutes of your morning routine, that would help you be organized with your finances and could
possibly save you some money?

I do a daily financial check-up every morning. I reconcile our spending plan with our online bank statement before I head off to work. This enables me to make sure that there is enough money in the bank to pay for any upcoming bills that are made via automatic payment and to ensure that I pay any obligations that are not taken out automatically.



How this saves me money
1. Making sure there is enough money for auto payments helps to reduce any overdrafts and the high fees associated with them.

2. Paying our bills on time helps us avoid any late payments and the charges that come with not paying on time.

3. Another way that this practice can help you save money is that by regularly reconciling your bank statement you will be able to notice any unauthorized charges. For example, a couple weeks ago I noticed that I was double charged a bank fee for my bank card. It may have only been $3.00 but that's $3.00 that belonged to me and not the bank. I quickly contacted the bank and they reversed the charge because it was their error. However, if I didn't call them they would not have reversed the charge on their own and I would have been out of $3.00.

You can adjust the way you do a Daily Financial Check-up to fit your personal financial situation. Anything that helps you be aware of your current financial situation would qualify as a Financial Check-up. Being up to date and aware regarding your personal finances helps you stay on top of things, let's you understand where you need to go to reach any financial goals, and can reduce stress related to your finances.

Emergency Funds Give Peace of Mind

If you have been following my blog and facebook posts or have attended any of my workshops, you know that I am a huge fan of Emergency Funds. I cannot tell you how much peace of mind even a small Emergency Fund can give you.

Starter Emergency Fund

The rule of thumb for a starter emergency fund is $500 Starter Emergency Fund for Single Individuals and $1,000 Starter Emergency Fund for Couples and Families. A starter emergency fund should only used for real emergencies that cannot be fit in to your regular budget or for larger unexpected expenses that arise. For example, your water heater breaks and you need to replace it as soon as possible or your car breaks down and you need $800 to fix it in order to continue to get to work. A new purse on sale or a quick getaway to another island does NOT qualify as an emergency.

Fully Funded Emergency Fund

A fully funded Emergency Fund is for larger Emergencies, such as a loss of job or other source of income, loss of an immediate family member or other extreme hardship to the family. This fund should total 3 to 6 months of your expenses. For example, if your expenses total $3,000 (including rent/mortgage, debt, utilities, etc) then a fully funded Emergency Fund should be between $9,000-$18,000. This may seem like a lot, but don't rush to get your fully funded Emergency Fund if you can't afford to do so at this time. You should make sure you have paid off all your debts (with the exception of a mortgage) prior to saving for this fund. A good thing is, once you've paid off your debt (with the exception of a mortgage) your expenses shouldn't be as high so your fully funded emergency fund total may not be too scary.

Where to put your Emergency Fund

You should make sure your Emergency Fund is liquid and easily accessible. Meaning, don't put it in a bank that you have to wait 3 days to get the money out. Also, don't make it too accessible that you can dip into it for small expenses. My suggestion is to put it into a savings account that you have access to through an ATM machine or keep the cash in an at-home safe.

Savings Account Gift for Kids

Do you struggle with what to get kids for their birthdays? If you are like me, you notice that a niece or nephewʻs birthday is coming up, and try to think what size clothes they wear or what kind of toy they are in to. For me, I have 15 nieces and nephews on my side of the family and on my other halfʻs side we have 4 nieces and nephews. Their ages range from 1 year old to 21 years old.

This year we decided to do something a little different for birthday and Christmas presents. We are going to start Savings/Investment accounts for the kids. We will manage the accounts and make deposits for their birthdays, Christmas and other special occassions throughout the year. Once they turn 18 years old, they will be able to have the money plus any accrued interest and earnings; only once they make a plan with us on how they will invest or spend it.

This takes the guess work out of gift shopping for us and saves us on time and travel to go to the store to buy a gift. We will also be sharing with other family members what we are doing just in case other family members would also like to contribute to their savings.

Note* Be sure to budget any type of gift giving into your finances.

From Old School Savings Bonds to New School UTMA

My parents didn't set up a huge trust fund for me for when I went off to college, however my parents were forward thinkers and did purchase U.S. Savings Bonds for me as I was growing up. Before I left my parents home to head to college in California my mom handed over a few thousand dollars in U.S Savings Bonds. I used most of this money to pay for textbooks and other school costs and of course some of it to have a little fun while in college.

Naturally after I had my son, I wanted to purchase U.S. Savings Bonds for him. It was one of the only investment products that I was personally familiar with and knew that they were low risk and I could afford them with my income. Through my previous employer they even had a program where they would automatically take out from my paycheck to purchase U.S. Savings Bonds. This was great because it was easy and they would send the bonds directly to my house, which I would put away for safe keeping.

After my son's first birthday party he had a significant amount of money that he received from family and friends, so my first thought was to purchase U.S. Savings Bonds for him. My other half; Sam, had just started online banking and suggested investing in a Certificate of Deposit (CD). At that time, the interest rate was about 4.0% for a 5 year CD so we decided to put majority of his birthday money ($2,000) into that CD and let it sit there to accumulate interest. Last year we celebrated my son's 6th birthday and the CD was due to expire shortly after. His money had earned a little over $400 in the 5 years it was in the CD. We were happy with that and knew we wanted to reinvest those earnings for him.

We had the option to let the money roll over into a new 5 year CD, however the interest rates have plummeted over the years and his money would only earn 0.90%. I asked my Life Insurance Agent/Investment Advisor for some other options that would give us a higher return since this money is intended for our son's college education and he doesn't need to touch if for at least the next 12 years.

My Investment Advisor gave us a few options, and we chose to go with a Uniform Transfer to Minors Act, better known as an UTMA. He showed us a few different options with different levels of aggressiveness. Since our timeline is at least 12 years out, he suggested that we go as aggressive as we feel comfortable with. So we decided to go very aggressive.

My advisor showed us some illustrations if we had put the money into an UTMA instead of the CD back in 2008. If we had left that same $2,000 in the UTMA, the new total would be about $7,000 meaning our son's money would have almost quadrupled with this type of investment. Sam and I looked at each other with a little disappointment at the amount of money that could have been made. But knew that we were making a smart decision with moving that money now and letting it sit there for the next 12 years, where the earnings potential is great.

We are happy knowing that we are setting up our son to have sufficient finances to go to college and/or pursue his dreams when he gets older. We will continue to invest his birthday/Christmas/savings money into this account over the next 12 years and look forward to see how much he will have at that time.

I still have the U.S. Savings Bonds that I purchased with my previous employer and plan to look into other investment options to diversify or add it into his UTMA account this year. Now that we have our son pretty much set up financially, we now know how we can save for the new baby once he arrives.

I often tease my son that he has more in his savings than I do, which actually isn't that bad. We always want better for our children and knowing that my son will be financially secure right when he hits adulthood is one of the best feelings. Now it is my responsibility as a parent to nurture his personal finance skills so that he is best prepared to manage that money as an adult.

If you have young children, I encourage you to start some kind of savings and/or investment accounts for them. Even if you can only afford putting away $1.00 a day, that is better than nothing. If we were to just save $1.00 a day for my son over the next 12 years, when he is ready to go off into adulthood he would have $4,380.00. Not bad for just a $1.00 a day.

Financial Fasting

Just as much as I enjoy sharing information and tips about Personal Finance, I love learning new things as well if not more. A friend of mine shared this great financial challenge with me. And I am committing to it. Itʻs called a "Financial Fast". This is where you donʻt spend a single penny for two days out of the week. This helps you become aware of your spending habits. This also makes you more conscious of unneeded spending.

Happy Fasting!

Budget does not mean Boring

Today we took our son out for a fun day before his Winter Break from school ends and he goes back to school on Tuesday. He had been asking to watch the movie Frozen for awhile, so we finally took him and let him choose from 5 other fun activities (Chuck E Cheese, Dave and Busters, Ice Palace, Jungle River Mini Golf or iTrampoline). He chose Dave and Busters, which was actually a last minute addition to the choices thanks to his dad suggesting it. I wasn't too thrilled that he chose Dave and Busters because I knew that out of the 5 options this was pretty much the most expensive choice.

Before we left the house I had estimated the amount that we would spend between going to the movies and Dave and Busters and made sure I had enough cash in my envelope to be able to pay for it all. I knew that if we were to resort to using our Debit card to pay for everything, we probably wouldn't have been very conscious of how much we were actually spending. But because we were using cash, it was very obvious how much money we spent as the envelope began to become lighter after each transaction. I'm happyto report that we actually came home with a little extra cash left over.

How We Saved Money

Throughout the day we made a few choices that helped us save a little bit of money. First, instead of paying for mochi crunch and candy to eat during the movie with our popcorn, we made a quick stop at Longs. There we only spent $7 and was able to each get candy that we liked. If we had purchased the mochi crunch and candy at the theatre's we would have spent well over $15.00.

The second way we saved a little money on our day of fun was through the use of the Consolidated Theatres Rewards card. Since we frequent the movies we make sure we use our card when purchasing tickets and food at the concession. On a previous visit we had earned a free movie ticket. We were already attending a Matinee savings us a few dollars, however since we had the free movie ticket, that saved us $9.25 for one of our adult tickets (On a sidenote: Ward Theater prices are a little higher that other Consolidated Theatres). When we purchased our tickets today, we received another reward of a Free Value Meal at the concession stand, however we chose to save that for a subsequent visit).

The next way we saved some money today was unplanned, when we went to Dave and Busters to reload our Power Card to be able to play some midway games, the cashier mentioned that if we were Military or affiliated with UH that we could get 20% off. I said no but told her that I am HPU affiliated and she said that's good enough for her and she gave us the discount. This saved us about $6.00.

After we played for awhile in the midway we had dinner downstairs in the restaurant and we ordered off the Eat and Play combo menu which gave us $20.00 on our Power Card and 200 tickets with our entrees. We decided to keep this money on our card for the next time we decide to go to Dave and Busters. Overall, we saved over $30.00 today.

Important Personal Finance Concepts

The reason I share this story is that there are a few personal finance concepts that I wanted to point out:

1. Plan ahead to ensure that what you want to do is within your budget
2. Using cash instead of cards helps to keep you aware of your spending
3. Using an envelope system helps you keep on track with your budget & keeps you from overspending. 
4. Use reward cards for things that you do often, what you earn can help you save lots of money over time. 
5. Take advantage of any discounts you can. 

The main point to this story is that even if you are on a budget doesn't mean you have to restrict yourself from having fun and treating your kids to a special day out. Of course we could have chosen fun activities that had little to no cost, however we were able to find the money in our budget to give him and us a little family fun.

The Case of the Classic "Rags to Riches"

Congratulations to Max Holloway, Dustin Kimura & Russell Doane for bringing home Three W's from UFC Singapore. It is always heartwarming when we hear of our local boys making it in the big time. We celebrate these hometown heroes and share in their success.

My wish for these young locals boys as well as other local boys who have made it big in the NFL, MLB, NBA, etc. is that they be smart with their money. Many of these young local boys go from making maybe $20-$30,000 a year to making well over 6-7 figures in a year. I know from my personal past experience that in my early twenties I made the most financial mistakes of my life and I wasn't making nearly as much as these guys at that age.

It is common for the financial mentality of twenty-somethings to be "What can I buy with all this money?" or "Where can I travel to with this kind of money." Of course, this money is well earned and they deserve to enjoy the fruits of their labor. However, we often see local stars in trouble for tax evasion or still see them struggle with their finances even when they are making significant income. It all comes down to financial literacy. Understanding the implications of making more money, what is they best way to make all that money work for you, ensure that you have enough to meet the lifestyle you want to live, and investing for the future when that kind of income is not a guarantee.

'Ohana is a huge thing here in Hawaii. Making it common to want to share your wealth and spoil your family who has supported you along the road to success. I'm sure these young local talents also have family members coming out of the woodworks trying to get a piece of the pie. It's great to share your prosperity with others, however they must make sure that they are financially secure for themselves and their immediate family before they go around town treating their friends to an open bar tab or handing out money to family members and friends.

Financial advice will come from all angles for these young guys. I hope that the advice that they are given is genuine and has their best interest at heart. I provide one-on-one personal finance consultations mostly for those who have extreme outstanding debt and low income, however I extend my services out to these young men (and women) who need a little guidance on how to best make their money work for them and be truly financially well.

Financial Fitness for 2014

A common New Years Resolution is to lose weight and get fit, what about your financial fitness?

What daily habits are you willing to change to get fit with your finances. Just like physical fitness, small changes give you large results.

Follow these steps to start on your journey to financial fitness for 2014:

1. Know your starting Financial Fitness level

When you start a fitness program, you often have to do a fitness test to see where you are starting at so that you can get fit safely and at the level that best meets your personal goals. The same goes for your financial fitness. This step includes the following:
     - Check your Credit Report and Score (I personally use www.CreditKarma.com)
     - Write down all sources of income
     - Write down all expenses (include due dates and payment amounts)

By doing this, you will better understand where you are financially and know where you are starting therefore revealing what you need to do to increase your financial fitness.

2. Create a Budget

A budget is a plan for your money. Those who are serious about being physically fit, create a regimen. It is no different to get financially fit, your budget is your workout and meal plan for your money. There are many smartphone apps that help you to make a budget. You can also refer back to my previous blog "The ʻBʻ Word-Budget" for detailed information about creating a budget.

3. Set Financial Goals

When trying to get physically fit, you often set a goal of a certain amount of weight to lose or specific percentage of muscle to gain. Set financial goals that are just as specific. Remember that each persons financial situation is different, no two are exactly alike. Create your Financial Goals for 2014 and remember to reflect on your goals often and measure where you are at on achieving them. If your goals need revision throughout the year, change them. Things always change, so don't think your goals are set in stone. Set yourself up for success, however challenge yourself at the same time.

Take the month of January to complete these steps. This will lay the foundation for your finances for the rest of the year. Feel free to share your successes and challenges along the way. 

Welcome to Saydee's Money Manaʻo Blog

Hauʻoli Makahiki Hou Kākou!

Welcome to Saydee's Money Manaʻo Blog. This is where I will share information about personal finance; writing about tips, answering questions and updating everyone on my non-profit work regarding Financial Literacy and Education. 

For those of you who followed my blog last year, you can still find that content at www.saydeepojas.blogspot.com. I look forward to sharing information with you this year and welcome any questions about personal finance you may have. Please email me any questions or suggested topics at saydeepojas@gmail.com.