Weekly Roundup: How Often Do You Grocery Shop?

The last three nights I’ve found myself in the grocery store after work. Three trips in as many days is highly uncharacteristic for us, but I forgot something after my first trip, and a menu plan change sent me back last night. Naturally, I was guilty of picking up a couple things that caught my eye (that weren’t on my short list).

Normally, we shop for groceries once a week. With the exception of things like bread, milk, and produce we could probably stretch that to two weeks. I’m told you can freeze milk and bread, but I’ve never had much luck with it.

How often do you shop for groceries? Do you find you spend more money if you shop more frequently?

The Frugal Roundup

Debt Update: February 2010. Adam and his wife managed to pay off over $2,500 in debt last month. Head over and check out their progress. (@Money Relationship)

To Succeed Financially, You Must Know Yourself. Here are some great questions to sit and ponder about. (@Million Dollar Journey)

8 Effective Ways to Raise Frugal Kids. A great guest post over at Man vs Debt about raising frugal kids – a subject near and dear to my heart. (@Man vs Debt)

How We Manage Our Money. Patrick Ryan from Cash Money Life recently came out from behind the anonymous curtain. One of his new goals in transparency and this post is a great first step. Congrats on the change Ryan! (@Cash Money Life)

Where Do All Our Taxes Go? As a follow up to the guest post earlier in the week on this very topic, TurboTax has published an interesting infographic at their blog. (@TuboTax.com)

Best of the Rest

9 Ways To Save Money On Car Insurance

Ask someone how much it costs them each month to drive their car and they will likely quote their monthly loan payment. Most of us forget other expenses incurred such as maintenance, fuel and one of the biggest expenses, car insurance. Saving money on car insurance is a relatively quick way to lower the cost of your commute, and can be accomplished with a quick phone call to your insurer.

junkyardcars030510
Photo by jboy daniel

Biggest Bang for Your Buck, or in this Case, Your Time

1. Increase your deductible. I only recommend this step if you have an adequate emergency fund in place to cover the cost of the deductible. While raising your deductible can significantly reduce your premiums, the last thing you want to happen is to go into debt after an accident to cover repairs.

2. Drop unnecessary coverage. Comprehensive or collision coverage for older vehicles may not make sense financially. Consider the annual cost to insure older vehicles compared to their potential sale value. It may be that it costs more to insure an older vehicle than it costs to replace one. On the other hand, if you have little savings, insurance may be a relatively inexpensive way to replace an asset worth a few thousand dollars.

3. Buy car insurance and homeowners insurance from the same provider. If you already have a homeowners policy in place, contact the insurer and ask if they offer auto insurance. Chances are you’ll receive a multi-policy discount for purchasing both from a single provider.

4. Shop around, and don’t be afraid to take your search online. Do a little comparison shopping by getting two or three quotes from multiple sources. Esurance.com is a great place to start your online search.

5. Inquire about other discounts. When discussing your policy quote with an insurer, specifically ask about any other discounts you may qualify for, such as low-mileage driving, the installation of car alarms or the successful completion of defensive-driving courses.

6. Look for group discounts. I received a small discount on my car insurance by signing up through a link provided by my credit union. The insurer partners with them to offer credit union members an opportunity to save through a group discount. Ask your employer, professional organization or financial institutions if they have any similar partnerships.

Keeping Auto Insurance Costs Low: Maintenance Mode

7. Maintain a clean driving record. One of the quickest ways to increase your car insurance costs is to have an accident or get a ticket for a moving violation. Tickets add points to your license and increase your insurance costs. Accidents increase your risk profile to current and potential insurers and increase premiums.

8. Clean up your credit report. Those not fond of the FICO score may find it objectionable that insurance companies use your score, in part, to determine your premium. However, statistics show a correlation between bad credit and a propensity to receive more tickets and be involved in a crash.

9. Drive “low-profile” cars. That is, drive cars that are not typically a target for thieves or radar guns. Annual reports are available that list the most popular stolen cars each year. Studies have also show certain models and colors are more likely to be stopped for speeding (red sports cars, for instance). In their prime, the two cars shown above would have definitely been high-profile cars.

Saving money on car insurance is a quick way to make a significant reduction in your monthly expenses. Shopping around for quotes and making a few phone calls could be well worth the effort, so I’d encourage you to make this a priority.

Do Something You Love, Before You Have To Do Something For Money

This was my recent advice to a family member who still has his entire adult life ahead of him. Thankfully, he’s still debt free, which means he has plenty of options. He can choose to spend his income, pile up debts, and eliminate these options, or remain free. It really is that simple.

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Photo by Justin Donnelly

It felt a little strange giving this advice since from the time I was his age I have largely done what I had to, or whatever I could do, to earn money. That included staying at a particularly lousy job for over six years in my early twenties while working my way through the rest of school. As bad as that job was, I couldn’t afford to quit. After all, I had a wife, a baby, and student loans to feed!

Yes, I jumped onto the debt bandwagon in college, accumulating debt for schooling itself and credit card debt for the little “perks” that came with college life (college textbooks, late-night pizzas, and a few Sony Playstation games I just HAD to have). I spent the next decade working to pay off my years as a spendthrift.

But my cousin has the chance to take a different path. I’ve joked with him before that if I knew what I know now at his age, I’d be approaching early retirement. He laughed, until I told him he wouldn’t be laughing when he’s my age with very little savings, and a list of monthly obligations for which he trades in his free time to be in an office 40-50 hours a week. I told him to simply do something he loved, before he had to something for money.

Do Something You Love

I’ve never liked the “Do Something You Love” mantra, probably because I feel a little like I missed my chance to take that advice. I suspect there are plenty of 30-somethings out there who share this same feeling. But there is still time to reinvent ourselves. There is still time to chase our own dreams of what we want to be when we grow up.

The first step is to free ourselves from the financial shackles we voluntarily placed around our own legs years ago. So many people think a framed diploma and a job offer entitle them to a new car, a big house and new toys. Not so. It is far more important to build emergency savings, begin to invest for retirement, and save cash to pay for large purchases. But try telling that to your average 23 year-old.

We’ve all heard this before from parents and grandparents, but life really does have a way of sneaking up on you. After college there’s some single life to be enjoyed, but soon a spouse and child come along with a whole new set of financial worries.

You get your wills done (the first real wake up call that yes, you are mortal), buy some life insurance, look for a home, scan the safety ratings of a potential car purchases, and open a college savings account. And that’s just in the first few months of being a parent!

Over the years, you’ll celebrate certain milestones, which have a way of coming quicker and quicker the older your kids get. Before long you’ll be worrying about them driving (and worrying about what they will drive), wondering if you’ve saved enough for college, and then hoping they land on their feet, financially, instead of landing back in their old bedroom.

All that to say, if you are young, please choose to live frugal and do something you love. It’s a decision much easier made at 25 than 35.

What Does Tax Money Pay For?

This guest post comes from Michael, a contributing editor of the Dough Roller, a personal finance and investing blog, and Credit Card Offers IQ, a credit card review site.

 

I’m willing to bet that if you turned on CNBC, CNN or MSNBC right now, within 10 minutes you would hear someone talk about how taxpayer money is being wasted.  Well in order to understand if it’s being wasted you would first have to know where your money is supposed to be going, then decide whether or not the venture in question is worth the change of course.  Most Americans would be able to tell you that tax money pays for schools and roads and protection, but do you know just how much of your tax money goes to these liberties?

Assuming that an American pays $100 in federal taxes a week, which are directly drawn from their paycheck, this is how the government would spend each and every one of those dollars.

  • INCOME SECURITIES – $22.00

The biggest chunk of taxes is spent on a category called “Income Securities”.  While it sounds somewhat exotic, the majority of this category can be broken down into four well-known sub-categories.

  1. Social Security ($11.50) – Hopefully, I will be able to cash in on social security when I become of age but there are no guarantees.  At $11.50, it’s the second largest tax expense today.
  2. Welfare ($4.60) – Welfare is a taxpayer-funded program that provides assistance to taxpayers that can no longer support themselves.  A heavily abused program.  Roughly 5 million Americans receive welfare checks on a regular basis.
  3. Disability ($3.50) – Disability is a government program that assists those who are physically or mentally disabled and are unable to earn enough money to support themselves.
  4. Unemployment Insurance ($1.70) – With the unemployment rate as high as it’s ever been, unemployment insurance goes to fund just that, unemployment.  When the unemployment rate rises, so rises the percentage of your taxes that goes toward this service.
  • MEDICAL – $20.30

No offense to the older population, but you guys are just gobbling up the tax money, aren’t you?  Medicare is the main component of this category, which provides discounted care for anyone over the age of 65 or usually anyone with a disability.  Another service provided under this heading would be Medicaid, which provides healthcare to low and no income families.

  • COUNTRY AND NEIGHBORHOOD DEFENSE – $20.00

A close third, the defense of the county is a heavy taxpayer bill.  If the country is not fighting or preparing to fight a war, you can expect this amount to be lower, but right now, the breakdown within defense is as follows:

  1. National Defense ($13.20) – As you can expect, the bill for national defense is the largest tax expense paid by the American public today.
  2. Police ($2.70) – Not as much money as you think would go to the nations police officers, but one of the most important and overlooked portions of your tax dollars at work.
  3. Prisons ($1.80) – Sadly, this number continues to increase each and every year as most prisons are grossly overpopulated.  The tax dollars going toward prisons may surpass the ones going to police officers very soon.
  4. Courts ($1.20) – Public defenders, judges, prosecutors and other legal occupations are classified under the courts category.
  5. Firefighters ($0.80) – Firefighters deserve twenty times this much, but for now they are on the low end of the tax totem pole.

 

 

  • EDUCATION – $15.80

Only ~16% of taxes are put toward education, and when budgets needs to be trimmed, the first place most politicians look is toward the education system.  There are two major components of education and one secondary component.

  1. Elementary and Secondary Schools ($11.70) – Grammar schools, elementary schools and high schools take up most of the funds.  Amazing that with that much money put toward education, there are still as many problems as there are.
  2. Public College ($2.80) – State Universities receive this portion of your taxes which helps reduce the annual cost of attending a public university.
  3. Libraries ($0.70) – With the Internet as popular as ever, public libraries continue to be shut down across the country.

 

 

  • RUNNING THE GOVERNMENT – $14.30

You didn’t think all of those politicians worked for free did you?  Running the US government carries a hefty tax price tag.

  1. Borrowed Money ($9.00) – Because taxes never foot the entire government budget, borrowed money means interest payments.  Seems like such a waste of money to have 9% of our taxes pay for nothing more than interest.
  2. Legislative and Executive Branches ($2.10) – The President of the United States certainly makes a very meager salary, but when you consider all of the politicians in Washington, it adds up fast.
  3. Collecting Taxes ($1.10) – The main component here would be the IRS.  Weird to collect taxes that pay to collect taxes.  Defeats the purpose a little bit.

 

 

  • MISCELLANEOUS EXPENSES – $7.60

With the major areas already taken care of, there are still a few decent size tax programs that do not fall into one of the above categories.

  1. Roads ($2.50) – The government should probably set up a pot-hole tax program as well, because it seems every time I move, I find bigger and deeper potholes in the roads close to my home.
  2. Air and Water ($0.70) – The purification of air and water has become big business over the last 20+ years and the government is always looking for ways to keep things even cleaner.
  3. Public Parks ($0.70) – Conserving what’s left of the great outdoors is a high priority in my opinion, and I hope when I finally get around to traveling, all of the major parks are still around.
  4. Space Program ($0.30) – Every time NASA sends up a new $20 billion satellite, give yourself a pat on the back.

So there you have it.  The next time you pay your end of the year taxes or think that Uncle Sam is screwing you, you know exactly where your money is going.  The realization is that most of the above programs are very necessary to keep the US of A growing, and it’s really hard to dispute any of them.

Newly Married? Here Are Some Financial Changes to Make

This article is by Adam from Money Relationship. Subscribe to his site to get updates about his journey out of $150,000 in debt.

My wife and I got married last July in what turned out to be an amazing day. She looked beautiful, I looked stunning and we had a great time. The last thing on our mind that day was opening up a joint checking account or consolidating our auto insurance. However, as soon as we returned from the honeymoon, the focus shifted to getting things done. We moved into a new apartment and the week after that, I was heading off for five weeks of training. We had little time and a lot to do. So, for all of you newlyweds out there, I will make it easy for you and let you know what you should get done financially.

Talk to Human Resources

One of the first things we did was to add me to my wife’s benefits at work. When you have a life changing event such as marriage or having a child, you are allowed to change your benefits. This can save your a good chunk of change. I estimate that it saved us approximately $100 per month since I was on individual health insurance.

You should also change the beneficiaries on your benefits. Change the beneficiary of your life insurance and retirement plans to your new spouse.

Change Your Auto/Homeowners/Renters Insurance

Changing your auto insurance (or any insurance) and putting both of you names on one policy can save you a substantial amount of money. When my wife and I did this, I estimate that we saved about $1,000 over a year. My wife had a couple dents on her driving record and if she were to get insured by herself, it would have cost about $1,200 a year. Add that with my $1,000 policy and you are up to $2,200. When we went to purchase a policy together and they said our premium would be $1,200, I was shocked. I guess being married shows some responsibility!

Combine the Cash

People have different opinions on this, but I recommend getting a joint checking account. It forces you to keep each other accountable for the money that’s being spent.

Marriage is a team effort and your finances should be no different.

Have a Financial Meeting

Hopefully, you did this BEFORE getting married. Either way, you should sit down again and come up with a game plan. I recommend creating a financial mission statement. In it, you can set your financial goals, determine how you are going to achieve them and find ways to stay on track.

If you are bring debt into the marriage, the new living arrangements and two incomes can help free up a good amount of cash. Use that extra cash to pay off debt fast!

Update Your Wills

If you have a will or are bringing children into the marriage, make sure you update your will to document your new wishes. Obviously, as things change, so does your need for proper estate planning.

Well, there you have it. Those are the things that I came up with (and did). Can you think of other things that may need to get done or should be change with a new marriage?

Weekly Roundup: Vacation From Vacation Edition

Last week our family took our first trip to Disney World. It was a great time, and while I’d like to tell you about all the frugal lessons we learned, honestly, there is little frugal about Disney. We did learn a few tricks that could help shave money off our next trip (and I’ll share a few of those in a later post). My only complaint about vacationing at Disney is that I now need a vacation to recover from vacation! Lots of walking, not much relaxing.

The Frugal Roundup

Small Human Regrets. Here is a great piece on how to raise your children without regrets. (@Brip Blap)

Can America Learn to Save From a Dog? Just click the link. I don’t want to spoil it. (@Lazy Man and Money)

How To Handle Requests For Financial Advice. Flexo shares some insight into how he handles dishing out financial advice to friends. (@Consumerism Commentary)

Manage Your Money Challenge. Brad is running a new feature over at Enemy of Debt. Head over there and check it out and learn how to win some great prizes while you are at it. (@Enemy of Debt)

Best of the Rest

The Art Of Saying No

When was the last time you stared down something you really wanted in the store and walked away? Were you able to tell yourself no? How about the last time someone asked you for help, but you didn’t really have the time or money to help? Did you turn them down?

I struggle mightily with both scenarios – saying no to myself, and to others, but it is something I have vowed to work on. Not because I am mean, or unwilling to help, but because no is a powerful tool to protecting my family’s finances, and at times, my own sanity.

Saying No to Yourself

Much of the economic problems our country faces can be attributed to our inability to say no to ourselves. No to more spending. No to a bigger home we cannot afford. No to accumulating more debt. Why is it so hard to tell ourselves no?

As kids, we are quite accustomed to hearing the word no. I went through a very curious stage myself where I’m told I tried to get into all sorts of things. My mom joked that she was afraid I’d grow up to think my name was “No Jason.”

Then we reach a stage in life called the teen years, where we are told to still say no to bad things, but occasionally say yes (and work hard to keep it from our parents!). But the older we get, the less accountable we are to others, and the more accountable we are only to ourselves.

I’m reminded of a famous quote on the subject of integrity: “Integrity is doing the right thing even when no one is looking.”

Well, to me this describes our decision-making process as young adults. After all, if young and single, chances are you are accountable to no one regarding personal decisions. This is why continuing to say no to yourself is so difficult.

The problem is before we wake up by the age of 30 with a spouse and two kids, we can do a lot of damage. I know; we squandered much of our 20s over-spending and accumulating debt on cars, school and other more frivolous things.

Looking back, I recognize we missed a great opportunity to get a jump on building wealth, and providing a more stable financial foundation for our family to come. If only we’d said no more often.

Saying No to Others

For some, saying no to others is infinitely more difficult than telling themselves no. These people are often categorized as “pleasers.” They put their own needs aside to please others. They are unselfish, to a fault.

There are plenty of good reasons to tell others no. Whether it is to protect your schedule, your sanity, or your wallet, the simple act of saying no often creates healthy boundaries in relationships with others.

In the personal finance world, one of the biggest problematic relational situations I see people get themselves in involves cosigning loans, or outright loaning money to friends and family. Obviously, when approached for a loan from someone you care about, it is hard to turn them down. However, if you are not in the financial shape to help others then saying anything other than no is to put your own financial well-being at greater risk.

Personally, I don’t loan money to anyone because I don’t like the idea of creating debt for others. We worked hard to experience debt freedom, and the last thing I want to do is enable others to owe money – especially when I might have to be on the collecting end of that relationship.

So, instead of loaning money, I give it away (when appropriate, and when I can afford to). This is a little softer approach than flat out denying someone help, and allows us to help a loved one with no strings attached.

I encourage you to resolve to say no more often – to yourself and to others. Do not allow yourself to become over-committed by saying yes to everyone, because that leads to stress. It also makes you less effective at the few things you really do care about. Identify those few things that are most important to you, and build your “yes” responses around those, while blocking out other distractions.



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