Category Archives: Zero Based Budgeting
For a family of five on a single income, we are constantly evaluating how we spend our money. We live very lean and save a lot of money. However, I felt there was still one cost that I thought I could improve… our cell phone bill.
Over the years, we had switched from Sprint to Verizon. Our bill when I started looking into this was around $170/month. This included only one smart phone and a dumb phone with 500 texts. We spit 700 talk minutes between the two phones.
Note that when I signed up for my plan, I signed up for $129/month. I have no idea how it got to $170. I never could figure it out.
That’s a terrible deal. I started looking around the other plan options with all the major carriers. My preference was to end up with two smart phones for around $120/month. What I ended up with was way better.
After talking with and studying major carrier plans, I started to consider third-party providers like Virgin, Straight Talk, Page Plus, etc. It turns out you can get some serious deals through these providers. There are some compromises you make.
An emergency fund is the most important and the most boring aspect of personal finance. It is important because it provides a sense of security knowing that you have money in place to take care of almost any problem. It is boring because it takes so long to build, it has to sit in a place that does not put it at risk, and it really sucks to look at that much money and not be able to do anything with it.
Increase Your Checking Account Balance
Even before I knew what the term meant, I always had an emergency fund. This concept is something I do without thinking. With my first job, I stocked up two hundred dollars and kept this amount as the bottom floor of my checking account. Basically $200 became my $0 balance. To this day I still do this same concept. The amount has just increased. My checking account constantly carries $1,000 as my zero balance. This concept was the start of my emergency fund. To figure out your amount, balance out a number that you can afford to keep and that will cover most immediate expenses. An added benefit of keeping a small emergency fund in your checking account is that you offer your own overdraft protection. There are no fines for using your own.
Saving for the holidays is an interesting proposition. What makes it really interesting is that it comes every year at the same time. Everyone knows the holidays are coming and yet, most people still do not save. The shopping becomes a strain on your budget and an added stress for having to complete your shopping in a short amount of time.
My wife and I are no exception to this rule. Here we are less than two months away and we literally have $109.12 saved. Considering we typically run a $1000 holiday budget, one could say we are a little behind. What are the consequences for this behavior?
- Have to pull from other savings to make up the difference
- For November and December, no contributions to our IRA
- November and December will be cash poor
This happens every year. This year is particularly bad on our part. Now that we’ve seen how things work in the worst way. Let us look at how saving for Christmas should work.
Over the last few months, I have taken time off from Free Zero Based Budgeting to work on another project called Find Mu. Now that I have Find Mu launched and stable, I am able to start back up with the FZBB blog. I left off with our family decision to get a credit card for use online and for major purchases.
In my last post, I left off talking about our struggle to fit credit card use into our rock solid zero based budgeting habits. The reason the credit card was causing the turmoil lies in its reactive payment structure. You buy something on the credit card and do not have to pay for it until a month later. In typical zero based budgeting terms, this is completely backwards. In zero based budgeting, all expenses get accounted for before you have the money in hand. Having a credit card can break this delicate cycle.
In 2006, my wife and I cut up every credit card we owned. My wife even shed a tear after cutting up her Navy Federal card (it was her first). We had over $8,000 in credit card debt and having the cards was not going to allow us to tackle the debt. Our goal was to get debt free besides our mortgage(s). This is Dave Ramsey step 2.
Over the last 6 years, I can say that I didn’t miss having a credit card one bit. Sure there are all the bonuses for travel and cash back that we were missing out on. But we also reached our debt goal. Zero except for mortgages.
We used our debit card for online purchases and any situation were convenience of a card mattered. This year though debit card liability started worrying me. I wanted to discuss the differences between the two and tell you what conclusion I came to.
Debit Card Pros
- Use of a debit card is not a loan, it is money that you already have
- If Visa or MasterCard, accepted almost anywhere
- No separate account to manage
Over the last ten years I have gone back and forth whether to manage my investments on my own or go through a financial adviser. At the start I thought that it couldn’t be that complicated. I figured I was smart enough and it would just take a little of my free time. I was also naïve. There was one huge reason I was not considering, my interest. You will not make the time if you do not have passion.
Finding sound investments take a lot of time. Not a little time. Not some time. It takes a lot of time. There are so many factors that one must consider when looking at mutual funds, individual stocks, real estate, etc.
This week my family and I are spending a week in Cape Cod with my wife’s family. We are a family of 5 and we had to make a choice about our mode of transportation for the trip from Virginia. Flying has a few major advantages mainly that it is so much faster. Driving on the other hand is cheaper and more flexible. In this post I’ll explain how we came to our decision and the effects it has on our family financially and psychologically.
The thought of spending 12 to 13 hours in a van with three children under the age of 6 will leave many adults screaming and running for the hills. I will be the first to admit, my wife and I had the same apprehension. The noise that three children so small can generate is almost unimaginable.
To figure this out we had to look at a few different factors. Time, expense, patience level required and what we wanted to get out of the trip.
The budget tool now allows registered users to customize which budget categories display on the budget. This is a useful feature to cut out any categories that do not apply to you.
If you have not created an account and would like to take advantage of this, you can create your account on our Create Account page.
This week I want to finish up my take on personal finance. You should read part 1 of my philosophy first, if you have not already. In part 1, I discussed getting out of debt, building an emergency fund and saving heavily for retirement. In part 2, I am going to talk about insurance, saving for kid’s college and giving to others.
- Get out of Debt
- Build an Emergency Fund
- Save Heavily for Retirement
- Get Insured
- Save for Kid’s Education
- Give to Others
Part of responsible personal finance is carrying the proper insurance. This is responsibility you owe to yourself, your family and anyone that might be a beneficiary of your coverage. Navigating the world of insurance is overwhelming. Keep things simple and you will get the coverage you need without too much hassle.
So what insurance policies do you need? The answer to this question is can vary widely based on personal situation, but we will start with the basics.
Today I completed another successful transaction using Craigslist. Over the years I have sold several large ticket items and many smaller items through their free classified service. My experiences have always ended well. I think my luck with this so far is great. I also know that not everyone is so lucky.
The real question today is whether selling items are worth the hassle of the Craigslist coördination. What sale price makes them worth it? Especially if you have to drive somewhere to meet someone (highly recommended for safety on all items that you can move around easily).
If you factor in the cost of gas, use of your vehicle or other mode of transportation, time and the hassle of meeting and dealing with new people, selling a $10 item is not worth it to me. What about $20 or $50?
Today I sold a vanity light from my bathroom remodel. It was nice enough, but not really our style. Vanity lights in the big box stores and even online have a huge variance in price. I have not found one of decent quality for under $30 on average. I sold mine for $20. The guy was very nice. He did ask if I would meet him somewhere further south. I just told him the Wendy’s 2 minutes south of my office. I did not think it worth a trip to another city, taking time off of work, etc. to sell a $20 item.