Category Archives: Wealth

A Great Budget is… YOUR map

A Great Budget is all about you

Part of the reason I created this blog is because I am starting to use a family budget again. I wanted to have some accountability, so I’m sharing my personal journey. I also wanted to help others who are considering a budget for their family.

On a long trip, especially if you have never been to your intended destination before, it is a good idea to have a GPS or map. A great budget is like a GPS or map for your financial journey through life. A well made budget can enable a person to be more financially responsible over the long haul. A great budget directs your finances in the most efficient path to your destination. A winning budget keeps you on the right road to success, no matter how you define “success”.

On a long trip, to be sure you stay on track, you must review the map frequently, adjust for detours or traffic, and watch for road signs. Let’s look at some of the traits for a great budget.

Individualized – A great map is individualized. Your destination may be different than mine. If you are going from New York City to Houston, and I’m going from Savannah, GA to Atlanta, GA, we will need different maps.

Likewise, a great budget is individualized. If you are a single, mid-20 something living with the Parental Units, your budget will be different than your married, father-of-four, mortgage-toting brother’s budget, or your retired grandparent’s budget. Your budget should be specific to YOU. It’s ok to start with someone else’s budget, or a generic budget from some website, but over time, consider customizing it to fit you and your situation.

Detailed – A great map is detailed. Your map needs to show road names, turn directions, and distances to be traveled on each road. It should show approximately how long you will be on each road, in case you forget to check the odometer. On a long trip, a printed map and turn-by-turn directions may take several pages.

Similarly, a great budget is detailed. Your budget should reflect ALL income, and ALL expenses. I like doing my budget in an Excel spreadsheet. If something changes during the month, I can immediately adjust.

Your budget should have expense categories, based on your life.  A great budget will let you see how much you are spending in dollars for a specific category. It should also let you see those categories as a percentage of your income. Within each category, you can add specific lines for more detail. For example, on my budget, the category “Utilities” includes a line for each of the following: Electricity, Water, Cell phone, Internet. The total for each line is added together to give me the total expense for Utilities.

Simple – A great map is simple. If your map is 14 pages, front-and-back, in 9-point font size, with hand-scribbled notes all over the margins, and a coffee stain, you will have a hard time following the map on the open road, much less when you are in rush-hour traffic in a big city. Consider a condensed overview page for a quick glance in traffic.

A great budget is detailed, but it should also be simple enough that you can understand what you are looking at. Budgets can generally be one page. You could show a great budget to a teenager and have them understand the basics of your budget. If your budget is too complicated, you will find excuses to put off using it.

Try to keep a simple overview, even if at various times you need more detail. You can always drill down to get more information if you need it at that time. For example, I keep my budget simple by having the Categories bolded, and all the Categories add together (since I use Excel) to provide the total expenses right next to the total income.

Realistic – A great map is realistic. If your GPS said your trip time from New York City to Houston will take one hour, is approximately 43 miles, and requires 6 gallons of fuel, you would probably look for a new GPS. Even if you haven’t made the trip before, you would probably know that is not realistic.

A great budget is realistic. It should address all of your needs, priorities, income, and expenses. It should have every dollar allocated somewhere, to a specific purpose. Otherwise, any additional income simply “vanishes”, and you are left wondering what happened to it.

If you are trying to pay off debt, a great budget will show approximately how long that will take. If you use a computer spreadsheet, you can update the budget easily and quickly, so it stays realistic and current throughout the month.

Using these four tips can help you to have a great budget that works great for you!
How is your budget? What tips do you have to help me (and others) to develop a great budget?

 

How to Win the Lottery

Today could be the day you win the lottery!

Not even a mouth-breathing, inbred country bumpkin who just fell off a turnip truck realistically thinks they will win the lottery **. Years ago, a well-known radio host said something that has stuck with me. I don’t remember his exact quote, but he basically said that “the lottery is a tax on stupid people, poor people, and people who don’t understand math”.

At various points in my life, I have been stupid, poor, and I don’t generally like math. 🙂

However, I have resisted the siren song of instant riches via lottery winnings. I’m in my mid-40’s, and I have spent less than $20, in total, on tickets to win the lottery. I don’t remember ever purchasing a scratch-off or instant ticket. The only times I remember spending money for lottery tickets was when the power ball jackpot was in the 100’s of millions, and my co-workers would take up money for an office pool, buying many tickets together.

Of course, we all knew it was a long-shot, and none of REALLY expected to win the lottery, but we could all hope, right? We could also all afford to chip in $5 or so. I don’t think it is wrong to blow a couple of bucks here and there on a lottery ticket. Instead of, say, getting junk food at the convenience store, spend that $1 attempting to win the lottery. Either way, you are still out a couple of dollars, but at least you are less likely to be overweight too.

Unfortunately, rather than playing for fun, many low-income people play for money. “If I can just win the lottery, all my financial worries will be over”. The lottery is the lifeboat they put their trust and hope in, as their financial ship is sinking. Unfortunately, the lottery is not only a poor-quality lifeboat, it is not even a good life vest.

Business Insider published an article in 2012 that took a close look at lottery programs, and the problems with the lottery.

As I said before, I don’t really like math. However, if we want to win the lottery, let’s first take a clear look at the math.

Statistics show that you have a greater chance of being struck by lightning than you do of winning the lottery. According to this pdf, The Geography, Economics, and Politics of Lottery Adoption, by Coughlin, Garrett, and Hernandez-Murillo –  – “State lotteries have the lowest payout rate of any form of legal gambling…” Business Insider says simply, “The people who can least afford it are throwing away on average 47 cents on the dollar every time they buy a ticket.

Statistics show that the per capita lottery sales are being predominantly sold in low-income zip codes. The lottery is a punitive tax on the poor. Low-income, mostly uneducated people are the most prevalent buyers of lottery tickets. Even if they do win the lottery, because they are generally less educated, they are easier to take advantage of, and will usually end up squandering their windfall. They will often take the lump sum payout, so they wind up in the highest tax bracket for that year, and generally lose at least ½ of their winnings to taxes.

In some cases, they even wind up in worse financial condition than they were before they won. All their “friends” and “family” begin to come out of the woodwork, asking for help or to borrow money for a car or some “sure-fire” business venture. The winners will often buy luxury items on credit, such as fine automobiles, jewelry, and big homes, rather than purchasing the items with their new-found cash. Once the lottery winnings are gone, they still owe for the purchases made on credit, and now have no way to make the payments.

According to a 2009 survey conducted by UT-Arlington, instant tickets in Texas were more likely to be purchased by an unemployed person than by someone who was employed or by a retiree. Corresponding with UT-A’s findings, Indiana U’s study from 1994 which found that from 1983 to 1991, as unemployment rates rose, so lottery sales tended to rise.

In other words, those who had little to no income due to unemployment, who should be using their limited income for food, shelter, job hunting, etc, were more likely to spend it on the lottery. No doubt, they were hoping for a quick solution to their financial woes from unemployment. “If I can just win the lottery, things will be ok.

So, knowing that we are not likely to win the lottery, and knowing that winning the lottery is probably not even a good idea long term, you may be wondering why I titled this post, “How to Win the Lottery”.

Instead of the “instant ticket”, try this:

  1. Get a pickle jar, peanut butter jar, shoe box, etc. Make sure it is clean.
  2. Make a hole in the top.
  3. The entire month, put the money you would normally spend on the lottery, in the container. A $1 here, $5 there, $10-$20 if the jackpot goes high. If you are like many lottery players, you may average $15-$20/week on tickets. Whatever you would typically spend each month, put it in the jar. Throw your loose change in too… after all, you can spend coins to win the lottery too!
  4. At the end of the month, go to the bank, and deposit whatever is in the jar. Do not spend this money for anything. Once you give this money to the clerk to buy a lottery ticket, you don’t get the money back, right? Same idea here… Once you give this money to the bank teller, you don’t get it back (at least not right away).
  5. Each month for the next year, put your “lottery money” in the bank. One year after you start, if you average $20/week, you will have over $1000 in your account. If you were to do this for 20 years, you would have over $20,000. This of course does not include any interest you may have earned on that money.
  6. Best thing is… using my “sure-fire winning system”, you are “guaranteed” to “win the lottery”, by saving the money you would have normally thrown away playing the lottery.

Have you ever played your state lottery? Have you ever played a national lottery? How much, on average, do you spend on the lottery? Did you ever win the lottery?

 

**No offense to mouth-breathing, inbred bumpkins who just fell off a turnip truck. 🙂

10 HABITS TO BUILD WEALTH

WILL YOUR HABITS BUILD WEALTH OR WANT?

Follow these habits to build wealth

I have been thinking about habits and wealth, and decided I would write an article listing ten habits to build wealth. We have two children, and have been trying to teach them about self-discipline / self-control, and the habits we build.

Habits are great things in some ways, as we can do things without having to really focus on what we are doing. They can be time savers. Unfortunately, they can also be hard masters when they are bad habits. They can trap us into doing “the same old same old”, and prevent us from seeing solutions and new paths to solve problems.

I will begin using a family budget consistently again. I also plan to begin using a budget for my small business. I believe living on a budget is one of the most important habits to build wealth. It is a habit I used to have, but life and busy-ness got in the way. I got out of the habit of using a budget. I would float from month to month, knowing approximately how much money was in the bank. However, I quit regularly budgeting.

I didn’t balance the checkbook. I never really planned for Christmas, vacation, birthdays, and other special occasions when we would need to spend extra money. I would move money from savings over to checking to cover, and I had a couple of bounced checks. The money was in the savings account to cover, but the credit union did not automatically move the money, so the checking account went negative and we got hit with an overdraft fee. No more.

If you are reading this blog, I am guessing you are interested in finances and in wealth creation. So, let’s talk about 10 habits to build wealth.

1. Budget – Prepare a budget each month, before the month begins. This is something Dave Ramsey preaches as a major habit to build wealth. This is the first month I started doing that again. I remember when I was doing a budget regularly; it felt like I had gotten a raise. I knew how much we had, how much we would need to spend, when we had money coming, and how much we should have left at the end of the month.

2. Self-Control – For those of us who believe the Bible, one of the fruits of the Spirit is self-control.

  • Be willing to say “no” or “not yet”. I waited three years to buy a new flat-screen HD TV because we don’t have cable/satellite, and we didn’t really watch much TV when we did have it. However, we do “rent” movies from the library, and we have a couple of game consoles. I had the money, and I went to various stores several times, each time, intending to buy. At the last minute, after walking the aisles, I would decide to wait.
  • Teach others self-discipline by example. I remind our children of that now… “It is ok to wait to spend your money. Daddy waited three years for a new TV.” Several times they were with us when I was looking at the TV’s. Frankly, I think they were shocked when we actually walked out of the store WITH a new TV. 🙂

3. Eat wisely – Don’t wreck your month’s budget for a few meals. Using your food budget wisely is one of my habits to build wealth consistently every month.

  • Most of the time, we choose to eat at home. We gave up a lot so that my wife is able to stay at home. One of the things we chose to sacrifice is eating out. Of course, when we were both working full-time outside the home, we ate out more often because of the convenience… we would both be getting home late, and starting dinner after we got home meant that we were eating right before bed. Now, she is home and has the flexibility to make healthy, filling, inexpensive meals.
  • Creating habits to build wealth require a little bit of ingenuity. I am only partially joking when I say we read the menu “right-to-left”… we look at the prices, then see what we will be eating. When we eat out, we do it inexpensively. However, we still spend roughly 2x as much per meal when we eat out, compared to when we eat at home. Of course, “nice” restaurants, or expensive meals would cost even more.
  • We usually eat at Mexican restaurants. Why? Because, first, coming from SE Texas, we love Mexican food. In addition, they generally offer free tortilla chips. We find ourselves munching on the chips before the meal arrives, and with our meal. We end up taking ½ our dinner home. I take leftovers to work for lunch during the week.
  • Often, R and I will split a meal. At a steakhouse, we each get a side salad (one usually comes with the entrée), and often, bread is included. By the time the steak is served, ½ is plenty for each of us. In fact, we usually don’t get dessert because we are comfortably full already.

4. Treats in moderation – Treats are nice, but moderation is one of the habits to build wealth.

  • Drink water (usually free, and better for your health), instead of paying for sodas.
  • Instead of paying $5-$8 each for a dessert at the restaurant, go buy a ½ gallon of ice cream and some toppings. Bake some cookies or brownies, add your ice cream, and make your own “lava brownie”. You can have dessert once a week at home for the next month for what you would spend on one dessert per person.

5. Garden – Besides producing food, gardening teaches patience, which is one of the best habits to build wealth. Just as you can’t pull up the plants after a week and look at what is going on underground, you shouldn’t pull your investments out and mess with them on a whim.

  • Start a garden. Food from your garden is better quality, better tasting, and better for you. Once you overcome the initial startup costs, the food is also less expensive. Research Square Foot Gardening.
  • If you can’t garden (apartment dwellers, etc), find a local farmer’s market.

6. Have a side hustle – Working hard is one of the best habits to build wealth.

  • I got the term “Side Hustle” from Michelle at Making Sense of Cents. She began her “side hustle” blog in her spare time, built it consistently, and eventually, her part time work grew into a more-than full-time career. Michelle is now in business for herself, and does blog management, website management, ghost writing, web design, and freelance writing, among other things. You can hire her if you need those services.
  • Another blog I like is ClubThrifty.com. Holly is another hard working entrepreneur. I have learned a lot about blogging and ways to earn additional income from her site.
  • Long before I had heard the term, I have had a side hustle. At various times over the past decade, while holding a full-time day job, I have delivered pizza nights and weekends for Dominos, delivered newspapers seven days per week before going to my day job, and picked up many extra shifts at my current day job employer. I often worked 12+ hour days, sometimes seven days a week, sleeping in my car on my lunch hour. Not what I wanted to do long-term, but it can really help provide additional money in the short-term.

7. Start a business – Currently, in addition to my full-time day job, I also have a small business. I guess it could also be considered a side hustle.

  • I am a mobile DJ. I average over 100 events per year. It is something I am very good at, and I make excellent money doing it. I have considered doing it full-time, but I’m the sole breadwinner, the industry is feast-or-famine (at least in my geographic area), and I need to provide health insurance.
  • Finding legal ways to have a business pay for things you need is a habit to build wealth. Many things in your personal life can be tax deductible if you have a business. In my case, for example, I am able to use business income to pay for my cell phone, internet service, alarm monitoring, part of the rent & utilities, some fuel & maintenance on my vehicles, office supplies, music (as a DJ, I have to purchase music), and other things. Obviously, check with your tax professional for details for your individual situation. … Actually, having a professional to help guide you with tax and legal matters is also a habit to build wealth!

8. Give – Giving is one of the most important habits to build wealth.

  • Give your treasure. Give money and help meet the needs of others.
  • Give your time. Your time is important also.
  • Give your talents. Use your abilities and bless others.
  • Give to a local charity, where you can see that they are using the money well.

9. Education – Never stop learning. Learning is one of the most important habits to build wealth.

  • College can be a great investment in yourself, if you do it the right way.
  • The first two years of most college degrees are primarily a re-hash of the last two years of high school. If you are/know a high school junior/senior, take a CLEP test as soon as you finish a course. The material is still fresh in your mind, and if you pass the CLEP, you now have a college level credit for the class. That is one less class you will need towards your degree, one less semester you are stuck in a classroom. CLEP tests are also less expensive than the course and books for college.
  • Consider earning your Associate’s degree first. Many Associates degrees pay as well as or nearly as well as a Bachelor’s degree. If you decide later you want the Bachelor’s, the credits will generally apply, so you are already half way there. You are potentially earning an income two years earlier, and have two years more “hand’s on” experience.
  • See if your employer will cover or reimburse some of your expenses for education. Taking advantage of programs offered for free education can be a great habit to build wealth.
  • Intern for a local business. You don’t have to be in college. Do you know someone in your future career field? Offer to work part-time for/with them for 3-6 months. See what they do on a daily basis. Make sure this is REALLY the career you want, and gain practical experience in the field.
  • Educate yourself. If you know you are not interested in climbing the corporate ladder, you may not need a college degree. You can still take college courses. I am a sophomore, almost a junior, based on the number of college credits I have. I simply took courses I was interested in. You can take online courses. You can check out relevant books from the library. You can learn from YouTube. You can just roll up your sleeves and jump in for on-the-job learning.

10. Under promise and over deliver –  Surprise those you work for, whether your boss, a client, or a co-worker. Do more than you promise to do. Come in earlier than you are expected to. Stay a few minutes later. Instead of only providing 10 habits to build wealth, throw in a few additional bullet points. 🙂

What are your top three, top ten, top twenty habits to build wealth? What habits are you weakest in, and how do you plan to change? What habits are you strongest in?

Budgetopolis, a budget blog!

Welcome to Budgetopolis, a blog about budgeting!

And… we are live!

Image related to a blog about budgeting

Budgetopolis – a blog about budgeting for families

I welcome you to join our community. We are a brand new personal finance and budget blog, started in August, 2014. I got the idea for this blog from Michelle at Making Sense of Cents, and Holly from ClubThrifty.

Budgetopolis is intended to become a lively, fun community for those who are interested in personal finance, family businesses, and more. As the name implies, this is a budget blog, to talk  about budgeting. I am just starting to use a budget for our family again. I want to see how others use budgets in the “real world”, and I hope you will share real life examples.

This budget blog is run by me, Andrew. This is my very first blog of any kind, so I’m learning how to run a blog. 🙂

I am a 40-something husband, father of two, small business owner, and employee. We live in the SE USA.

I am the primary breadwinner for my family; I have a corporate day job with a very large flooring manufacturer. In addition, I have a mobile DJ business. I have been a DJ for about eight years, and in business for myself for three. Once I figure out how to “do” this budget blog successfully, I plan to add a blog for DJ-related topics to my DJ business website.

My dear wife is the backbone of our home, as a stay-at-home mother, scheduler, and “domestic engineer”. I jokingly say she was a “certified Early Childhood Teacher” for 12 years. Then, after teaching kindergarten for two years, she was “certifiable”. 🙂 She is now a “recovering” public school teacher, and traded her classroom with thirty kids for a classroom with one student, our youngest daughter.

I started this budget blog in part because I am trying to learn to use our personal budget better. I am also trying to learn to use a budget for my small business. I want to share budget and financial tips with you, and to learn tips from you. I hope to gain a better understanding of how to live within my means, and how to increase those means to better provide for my family.

You are welcome to share this budget blog with others of like mind. I hope you will share comments, tips, and suggestions on this blog. Budgeting, personal finance, coupons and other money savers, small business, family business, increasing income, decreasing expenses… anything related to money and wealth building for families. Please let me how to make this site better.

I plan to share real life examples of family budgets, both from “budget gurus” and from “us regular folks”. I would also like to share ideas for small family businesses, cottage industries, “side hustles”, legitimate work-at-home systems, blogging for profit, and other ways for people to make money in their spare time, from their home. I love the idea of being in business for yourself, especially if you can share the business and work with your family!

Again, welcome to Budgetopolis! Thank you so much for visiting. I truly hope you will stay with us!