Wednesday, December 12, 2012

Payroll Tax Holiday Expiring

Currently, those of us who have income from earnings are experiencing a tax holiday. At the beginning of January 2011, Congress decided to grant us a tax holiday by reducing the FICA/Social Security tax rate from 6.2% down to 4.2%.  It was to last just one year, but last year Congress extended it for another year. As it stands now, the rate will go back up to 6.2% on January 2013.

If you were unaware of this change it would be a good idea to look at your pay stub and determine the amount of tax you are paying now. Then calculate how much that amount will be with the increase. It is always better to know what to expect. Right?

We are using our extra payroll savings we have now to pay down our truck. You could consider saving this money as a way to get used to the new amount.

Wednesday, October 31, 2012

Saving For Christmas

My previous post was about goals. I have spent the last year working on several goals, but the one that has been the most fun is our Christmas Fund. It is the first time, ever, that I set aside money ahead of time for Christmas. I think it is going to make shopping much more fun this year, too.

At the very beginning of the year, I decided that I would accumulated at least $750 towards Christmas. I would not fund this goal with my husband's paycheck, but finding free money online or selling items we already owned.

As of today, I have set aside $1,301.71. Clearly I have met the goal I set out to accomplish, averaging $130.17 per month. Want to know where I found this money? Of course you do!

I would say most of the money has come in the form of gift cards that I earned through Swagbucks which is primarily a search engine that rewards you with points called Swagbucks. The swagbucks can be redeemed for gift cards. I have over $200 in gift cards that will come in real handy when I shop on CyberMonday!

I participated in surveys with Swagbucks, MyPoints, MySurvey and Pinecone Research also. Pinecone actually pays cash that is deposited in my Paypal account.

I did have some occasional rebates from product purchases, as well as, Target gift cards earned for making purchases I make anyway at the store.

My husband found a $20 bill in the yard...yep, true story. That money went to this Christmas fund!

We sold things. We sold outgrown clothes and shoes, no longer needed electronics and cameras, and books, moving boxes and probably more. We sold things on Ebay,, a local used book store, Craigslist and a garage sale. ALL the proceeds were saved in our Christmas fund.

All the small amounts of cash these sales, surveys, spending and searches brought in were saved. The little bits of cash, that I call snowflakes, added up to one giant snowball of cash known. If I can do it, so can you.

Do you think you might use this method? Will you save for holiday spending, paying down debt or another goal? Do you have another way you save for goals? Tell me about it!

If you are interested in earning gift cards towards your goal through Swagbucks, please click on my affiliate link. It is free to sign up and use Swagbucks. No obligation to buy anything, and I highly encourage you not to.

Wednesday, October 24, 2012

Goals: Got Us Where We Are

I haven't been writing this particular blog long, but we have had goals for years. For 2012, we made about five financial goals. It wasn't clear if we would make them all because we did move two hours east this year, but so far we are on track to meet them.

Our 2012 goals are:
Contribute 7% of basic pay to Thrift Savings Plan (TSP). This is on auto pilot with automatic withdrawals from my husband's paycheck.

Contribute $5000 to each to our Roth IRA's. We did get a late start since we didn't start working on this years goal until July. We still each need to contribute another $2400 before the year end. I will send in  a couple lump sum contributions in the next two months.

Contribute $500 to each of our daughter's college funds. We put these on automatic savings in July, so this goal will be met by year end, too!

Pay extra to our truck loan, getting loan balance under $8,000. We met this goal recently. Our only debt besides our mortgage is my husband's truck. The balance of this loan taken out in April 2011, is now currently $7,219! We have plans to make some additional principal payments before the year ends.

Save $750 for Christmas. This has been a fun one. I've been looking for small amounts of cash and gift cards, generally earned for free, to accumulate all year long. As of today, I have saved $1285.71! I'll write more about this goal in future posts.

Looking back, I feel pretty confident that we would not have met all these goals had we not laid them out at the beginning of the year. The goals gave us a road map to point us in the direction we wanted to go. Did you make financial goals for 2012? Are you on track to meet them? If not, can you get closer before the end of the year? Have you thought about next years goals?

Friday, September 21, 2012

We Have A Slush Fund

We have a slush fund. Not sure where I got that term. Maybe Dave Ramsey.

For us a slush fund is stash of cash in our second account that is a bit seperate from our emergency fund. We don't touch the emergency fund, unless it is an emergency (or we can pay ourselves back in like 12 seconds)!

My husband is paid twice per month. Each paycheck is allocated to bills, investments, $900 cash for groceries, gas and miscellaneous. Left over cash gets put towards our goal...which is the truck now! It basically comes down to a zero based budget...every dollar goes somewhere.

However, I don't track every budget category known to man. It's too much work! So sometimes we do spend more than our paycheck, or more than that $900 that I allocate to variable expenses for the pay period.

Where does that extra money come from? The slush fund. I just transfer what money I need from there from time to time. Sometimes it's less than $20, sometimes it is more. The slush fund only have a few hundred dollars in it. If it gets down to zero or close to it, then I add some funds from a paycheck. Right now that would mean a little less to send into the truck loan.

We do pretty well keeping our spending within the limit we have given ourselves, but is nice to have a slush fund to dip into for those expenses that one doesn't always forsee.

Do you have a slush fund? Do you keep it in cash, another account, or right with your other funds?

Wednesday, September 19, 2012

An Escrow Account: Funding for Irregular Bills

Mortgage companies normally set up an escrow account with a home loan so they can be assured that homeowners insurance and real estate taxes are paid on a property. The collect a set amount each month that is kept in account until the insurance or taxes are scheduled to be paid. It can be good for you as the homeowner, so you are not hit will one large bill.

We have found it is helpful to set up our own escrow account for other irregular bills. We save a set amount each month, usually from one paycheck, but sometimes from both.

These are the items we escrow each year:

Van registration fees 330
Truck registration fee 150
Auto insurance premium 890

Total annual amount is $1370
Total monthly amount is $114.17

Currently rounded up to $121/month to account for an earlier shortage. I have this money auto drafted from our primary checking account into our second account. When it is time to pay the registration fees or insurance, I either pay directly from the second checking account or make a transfer to the first account.

If you go to establish your own escrow account, it is a good idea to run through the year with the deposits and payments you will make. It is possible for there to be a shortage of funds in a month that you need to make a payment. To make it up, you can start your account with that amount, or be prepared to make up the difference out of your paycheck that month to pay the remainder of the bill. You can also increase your monthly allocation to your escrow account to make up for the shortage, too.

I generally review our escrow account once a year in October when auto registrations renew. If there is a significant change to any of these during the year, I adjust the amount at that time. Any body else escrow or save up for irregular bills? Any other tips or advice?

How We Budget Our Paychecks

Mr.CCF gets two paychecks a month on the 1st and the 15th. They are virtually equal.

I first pay all bills and investments that are due during that time frame. Many of these are automatic, but I record them all in the checkbook on payday.

Second, I mentally pull $900 from the remaining checkbook balance. This $900 is for auto fuel and groceries. We use it to pay clothing, kids lunches...whatever comes up during that pay period. Sometimes this isn't enough. I'll explain that later.

Finally, the remaining amount after bills, investments, funding for irregular bills and our $900 is the amount I should have available to allocate to any debt or goal I might be focusing on at the time. Currently, we are focusing on paying off the loan on our truck. The extra does vary between the two payperiods within a couple hundred dollars.

This is the basic plan each pay period.

We have a second checking account that holds our escrow funds, which I will explain in a seperate post, and a small cushion of cash. Generally, this cushion is relatively small, $200-$300. If the $900 runs out we attempt to curb spending or dip into the cushion in our second checking account. We also can dip further into our emergency fund for large car repairs or medical bill. If we do borrow from the EF it gets paid back with the extra funds we get the following pay period, or as many pay periods as it takes. This is instead of putting money on the truck goal if necessary.

I hope it helps someone out there. It works for us. Please feel free to ask questions in the comments, and I will respond as best I can!

Tuesday, September 18, 2012

Large Refund? Check your Withholding

Most people in the US love their large tax refunds. It is like winning a small lottery. Unfortunately, that is your money that the government has their hands on all year long and they aren't even paying you interest! You can change this, so that the money is in your pocket now.

First go to the IRS Website, and use their withholding calculator to determine their suggested number of withholding allowances for your income. Compare this to what you already withhold. It generally will be a higher number than what you are already claiming. Some people only claim allowances based on the number of people in their family. We have four members, but we claim 9 allowances.

If the withholding calculator on the IRS website is confusing, you might consider looking at an actual copy of a Form W-4. It has written instructions, that tell you based on your situation what number of allowances to claim. This is the same form you will fill out at your employer to change the number of allowances want to claim.

I bet now you are worried or curious about how those increased allowances will change your paycheck, right? I've used this website, Paycheck city, for years to calculate our net paycheck. (I noticed this website also has a W-4 assistant, or another calculator to determine your allowances.) Play with it a bit. Try withholding the allowance the IRS suggested. Look at how much extra you will get added to your paycheck each pay period! Nice, huh? That's your money the government was going to hold on to for you until the next tax filing period. You want that money don't you?

If you still want a bit of a refund, consider lowering the suggested withholding by 1. Also remember to go back to the calculator at the very beginning of 2013. Your withholding may need to change because this year you are adjusting mid year. The number suggested now may be higher to make up for claiming less allowances earlier in the year.

Just messing with the calculators will give you lots of information. Remember to actually fill out the new Form W-4 with your employer to make it happen.
How much extra are you putting in your pocket by claiming the right amount of allowances?

10 Ways to Fund Your Emergency Fund

An emergency fund is an important financial building block. We should know because it is the first important financial decision we made in our marriage. It may be hard to know where to find the money when you are living paycheck to paycheck. Here are a few ideas to get you started:

1) Stop a service, such as cable, caller id, lawn service. Save the money you would have spent.

2) Save all your coins, or a specific type of bill. George Washington ($1) would be an easy start.

3) Sell your used cds, books and cell phones online for cash. Cash 4 Books is a great site to try.

4) Have a garage sale

5) Save birthday or holiday cash gifts you recieve.

6) Get a part time job or make cash providing services to others, such as lawn mowing or babysitting.

7) Sell something 'big'! Your motorcycle, boat, camper, car or collectibles.

8) Simply pick a dollar amount to save each pay period and have it automatically deposited into your savings account.

9) Save your tax refund!

10) Change your tax withholding and save the increase in your paycheck.

There are many more ways to find extra cash to fund an emergency fund. Take a look at your own situation and see how much you can come up with these ideas as well as your own and get started today!

Any other ideas you want to share that have helped you save money for your emergency fund or other savings?

Emergency Fund Beginnings

Technically, we didn't have emergency funds before we were married. Our first one began from cash wedding gifts. My parents gave us $1000. Truth be told we didn't really need anything after all the other gifts. So we saved it. Initially, we didn't even call it an emergency fund.

It seems that we didn't have lots of wants starting out. We worked a lot. We paid off failed business debt and student loans. When we would get a cash gift, tax refund or other unexpected money, we saved it. I mean just because someone gives you $25 doesn't mean you have to buy something, right?

We also used to save all of our change. Mr. CCF had lots of change. We would collect it in a cottage cheese container and take it to the bank for deposit in our savings account. Often the total was $25 to $30. This was nearly every month. Truth be told we use our debit card now and have an online bank, so coin collecting is in our past.

Our emergency fund did receive an inheritence windfall 5 years into our marriage after my father in law died. Yes, we did spend some of the money for a new furnace and carpet. The rest is still sitting in our emergency fund. Yes, really!

Actually, many of the emergency fund details are a bit fuzzy now. We have had one for our entire marriage and almost take it for granted. It has saved the day a few times: car repairs and deductible for a roof. Since I know several people without one, I know we are better financially for having saved that first $1000 gift.

Do you have an emergency fund? How did you start yours? If you don't have one, what is keeping you from starting one?

What I Learned From a Cheapskate: The Snowball Method

We began our marriage over 16 years ago with over $10k in credit card debt. Around that same time, I heard of a book called The Cheapskate Monthly Money Makeover by Mary Hunt.

This began my quest to pay of our debt quickly using her snowball method. At least that is what I think she called it. Many of you already know the concept. You list your debts smallest balance to largest. You pay the maximum dollar amount to the first or smallest debt. You simply pay the minimum to the remaining debts. Once the first debt is paid off, the amount you had been sending in as a payment gets added to the next debt while continuing minimums on the rest. The total amount sent towards debt remains the same during the entire payoff, unless you find MORE to send in. That then would speed up the debt repayment process.

I also learned how to escrow and save for annual, semiannual,and unexpected expenses. It was nice to read a book where someone was honest about their debt and how they got to that point. Even better, she found a way out of the debt and was able to convey that to others.

The book is older and not as popular now, but it still has relevant information. I looked it up on Amazon. It can be purchased used for one penny and a couple dollars in shipping!! Of course, there is always the library. If you are just starting out, this may be a resource you'll look to often. Debt payoff can be done!!

We paid off that credit card debt in less than two years on very limited salaries using the snowball method. And that journey has carried us far. Stop by read, learn, ask questions. We want you to succeed in money, too!