Should I put my money in to...

In response to the overwhelming questions I've been asked in recent weeks in regards to the various social media "investments," I wanted to share a few things to consider before someone should decide to put their money into one of these "systems." 

I will not discuss the details about the actual "opportunities" floating around on social media and personal networks (i.e. You give a certain amount of money, with the promise to receive an amount higher than that at a later date or even the newly popular buying of cryptocurrency). I will not discuss the legitimacy or legality of these, nor will I try to convince anyone to put their money in to it or NOT put their money in to it. 

Here are 8 things to consider BEFORE you buy-in to one of these systems: 

1. Am I taking money away from being able to make on-time payments for my important living expenses such as rent/mortgage, utilities, transportation, food, etc. in order to put money in to one of these systems? 
2. Do I have an Emergency Savings Fund established for myself (and immediate family)? [$500-$1000 minimum] 
3. What is my investment risk tolerance? Am I in the financial position to be risky with my monies or should I be more conservative in the way I invest? 
4. What does my current investment portfolio or long term financial plan look like or does it even exist?
5. What kind of financial protection do I have in place for myself and those who depend on my income for survival? i.e. Life Insurance products 
6. Am I willing to risk personal relationships in the event the system does not work out in a friend or family member's favor that I introduced to system? 
7. What is my plan in the event I do increase my cash flow from the system? Will I use it for important obligations such as bills, debt or savings goals? Or do I plan on just blowing through the money since I wasn't really expecting the "windfall" in the first place? 
8. What is my plan in the event I do NOT get the monies I was promised? Will I still be able to pay my living expenses and live comfortably? 

Take from this what you will, I have experienced both success and failure with a variety of different investment opportunities, however I always made sure I was in the right financial position to make the initial investment decision in the first place. 

For more tips, advice and information about strengthening your finances, subscribe to the Money Mana'o Blog for updates or visit the blog archives for past discussion topics.

Also, feel free to comment. Please be respectful in your comments as this is meant to be a safe space for people to share experiences and questions about their path to financial prosperity. 

Lastly, share this blog to your family and friends who might benefit from the information provided. 

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.

[Please follow me on Instagram @moneymanao]

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.