Learning to Behave, Financially

Personal finance bloggers give a lot of advice on what to do to save money or how to set up a budget, but it is a well-known fact that personal finance success is mostly reliant on your behaviors and patterns.  We all know that we should be saving some money for retirement and that a “rainy day” is coming sooner or later, but how can we put mind over matter?

Start small.  You may be gung-ho on getting your financial life turned around, but it often isn’t realistic to implement your plan in one day, one week, or even one month.  Instead of planning to do it all from the start, incrementally work your way towards success.  For example, if you eat out for lunch every day, start bringing your lunch one or two days a week.  If you spend substantially less than when you eat out, such as bringing a $3.00 frozen meal instead of spending $10.00, transfer $7.00 to your savings, or allocate that amount to your debts.  If you equate your behavior to actual money in the bank, you are likely to keep it up as you see your progress. 

Track your progress.  How many times have you made a perfect budget only to get so busy that you don’t track what you spent money on?  Let’s face it; not all of us are accountants with a love to tracking every cent that comes in and out.  Automate by using Mint or Everydollar, which sync bank and card accounts using a phone app and a web login.  Couples can stay in sync on income and spending by merging finances.  If a couple can get on the same page with money, you likely can conquer most other marital spats that come up over the years. 

Personally, I love tracking changes in my net worth over time.  If you have software that lets you download your finances, you can do this in Excel or run a report.  I use Quicken, but I am a dinosaur and now have to pay for Quicken, and I will give a crash course in a post later this month!  An alternative is to list all your assets on the top of a page or spreadsheet and list all your debts below.  Add up both assets and liabilities, and then take the difference of the two.  This is your net worth. Hopefully your assets are more than your liabilities, but I too once had a negative net worth.  It takes time and focus, so don’t let this number stop you before you start.

Net worth Report from Quicken Desktop 2020

Set attainable goals.  Instead of only making one big, fat, hairy goal, break it down into baby steps.  We all want to have a net worth of one million dollars when we are just getting started, but it takes years of good behaviors.  If you set out to save a million dollars for retirement, work backwards to figure out how much you will need to contribute at a historical rate of return that matches your investment risk levels.  Most retirement fund websites have calculators that you can plug in the number of years you have to work and the amount you want to retire with.  If you are paying off debt, list them out and make a game plan.  When you pay one off, celebrate a little and look forward to the next win!

Reward thy self.  If you set savings or debt reduction goals, and you meet them, be sure to splurge a little on one night out or a new clothing item.  You should set a limit for yourself, say $50, for a monthly treat, or maybe as much as a few thousand when you meet a major goal such as saving up three months of expenses or paying off all your consumer debt.  Of course, don’t go into debt or reduce your emergency fund to have fun, make sure you earmark new cash for this purpose.  Just as you sacrifice to complete a degree or get your kids through school, changing money behaviors is just as much of an accomplishment.  Change your behaviors slowly and they will become habit, which will show in the long run.

What’s your worst money habit?  Leave me a comment on my blog page!  

Easy Tips for Making Your Savings Goals Achievable

For many people, saving money in a bank account is a real struggle.  Everyone knows they should save, but many are confused on techniques to be successful.  Questions such as “should I save for retirement or an emergency fund?” or “how can I save in my already strained budget?” are common.  I will touch on a few roadmaps and strategies I have used to become successful at saving money.

The first technique I use seems pretty simple.  I just use my workplace 401(k) plan to scrape my retirement savings off the top before I even see my net pay.  Think of this like a tax payable to you at some point in the future.  While Social Security is somewhat of a safety net, it likely won’t provide enough for a comfortable retirement, especially with the rising costs of healthcare.  Saving something, especially in your younger years, will pay off big because the money has more time to grow.  If you start saving later, then you will likely end up having to more to retirement, with less time to let your investments compound.

There is no hard and fast rule about how much you should allocate to this, but the more the better.  Dave Ramsey’s retirement page suggests 15% of your gross household income, not including any company match.  While 15% is a great number to shoot for, this may be difficult for those just starting out in their field or those that have student loans weighing them down.  In addition to Dave Ramsey’s site, Fidelity also has a great set of calculators you can use for free to get an idea of what you need to save.  If your company has a match, contribute at least the minimum to receive the match because this is “free” money, or at least extra compensation that can grow and can be worth much more down the road.  If you are up to your ears in debt, then I would recommend stopping any retirement saving and putting every extra cent into paying down high-interest debt.  Another tip, don’t turn down your savings so that you can “afford” a new car with a high payment or a house that is too expensive.  The older you, at age 65 will thank you for having self-control!

The second technique is using a zero-based budget that includes a line item for saving.  Now that your retirement fund(s) are automatically accumulating, you don’t need to have a line item unless you have separate accounts that pull from your net paycheck or net income, if you are self-employed.  Start with your expected monthly net take-home pay and list out your expenses. 

You should have some room built in for savings.  I typically plan out my expenses for each paycheck and there is something left over.  Sometimes it is a small amount, other times it can be a good chunk of money.  Maybe you can’t save on some paydays but can save more on some others?  Either way, you should have savings for an emergency fund, then savings for other goals such as a new car, house down payments, college tuition, and so forth.  If you don’t have anything special to save for, really evaluate your future needs for big-ticket items and plan for something to need replacement.  There is always something that you can be saving for to avoid going into debt in the future. 

If you don’t have enough money for savings or extra debt payoff, you need to think about what you can cut to get more money in your budget.  If you have cut to bare-bones and are still coming up short, think about how you can grow your income.  Side hustles, or second jobs, are a good way to plug your budget holes, especially if the cash flow crunch is temporary due to paying off debt.  If the shortage is permanent, think about what you can do to increase your income permanently, whether applying for better paying jobs, or re-training for a more lucrative career. 

My last tip is to always be looking for “found” money, or windfalls.  These can be great ways to build up your savings faster than planned.  Income tax refunds, credit card cash back checks, birthday gifts, or refunds are all common and can boost savings quickly.  Also look around the house for items you no longer use and try to sell them on Craigslist, LetGo, NextDoor, or FaceBook Marketplace.  Social media makes it so much easier to sell things quickly while decluttering our homes.

Be sure to sock that money away in a safe, FDIC insured, high-yield savings account.  Some online banks are offering accounts with yields between 1.5% and 1.75% APR.  This is far better than the standard .05% paid by many large national banks.  You can visit NerdWallet.com for a review of the best savings accounts, plus ones with one-time bonuses for depositing larger amounts. 

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So, you want a Great Dane? Financial lessons learned in pet ownership, Part 2

This is a continuation of another blog post from March 25, 2020.  If you haven’t read part 1, please click here to brush up on the first part of the adventure.

Veteran’s day weekend was pretty eventful around my house.  It wasn’t planned that way, but things aligned and became interesting and a little exciting.  As you recall from part 1, I was begrudgingly watching Bolin, my friend’s Great Dane, while my two females were in heat.  I justified it in my head by telling myself that the dogs had all be together in the past while in heat and nothing happened, so maybe they just weren’t interested since they were all like siblings.  I was wrong! 

On that fateful Sunday afternoon, I was vacuuming the house and I overheard a yelping sound coming from my office.  I went to see what the matter was and found Spice and Bolin “locked” together.  I was a bit shocked and wasn’t sure what to do.  Then, I heard someone pull up in the driveway.  It was my friend Evan in for a visit with little notice.  I told Evan and his friend to stay outside for now and what was happening.  I went back inside and they had magically unlocked and seems okay, other than a nasty smell, which I found out is normal after this type of incident.  Well, I thought maybe nothing happened since it was under ten minutes.  I was wrong, again!

Life went on normally and I monitored Spice for signs of pregnancy.  The first indication was that she stopped bleeding from her lady parts within a day.  Then, a few days after, she had morning sickness a few time and was overly affectionate and very adorable with her neediness.  In mid-December, I noticed spice getting larger with her belly and teats protruding.  I made an appointment with the vet for confirmation.

The next week, the vet confirmed little puppies were growing inside Spice.  Cost of this quick appointment was $200.  I then made the announcement via Facebook and Instagram in case anyone was interested in a puppy.  Luckily, I had a few people express interest.  About a week later, Christmas had almost arrived and I had plans for a family gathering on the big day.  I was out with the dogs in the yard and watering the yard during our dry December, and suddenly Sugar and Spice were in a fierce fight with blood drawn.  My heart raced and my first instinct was to yell.  That did nothing, so I tried pulling them off each other.  After about ten minutes, I managed to separate them and get Sugar in the house.  She was torn up pretty bad.  Spice fared a bit better but still had cuts and wounds. 

Great Dane with day old puppies
Spice with her day-old puppies by W. Vance

The vet was booked, so I took Spice to an emergency vet and about $400 later she was okay.  It was Christmas Eve, so I couldn’t get Sugar in as well.  The day after Christmas, I got Sugar in and her wounds were starting to get infected.  After $700, she was okay and on the mend.  Now I had to separate them in the house.  In between I took Spice to the vet and she had an x-ray to verify the number of puppies I could expect, costing a cool $200.  Low and behold, January 10th, 2020 came and the pups were born.  Everyone was okay for a few weeks.  Then came January 31st.  The pups and Spice were vomiting and had the runs.  Back to the vet for another $1,100 round of treatments.  I was relieved that they were okay while my credit card was feeling the pinch.  Luckily Citibank offered me 0% on my card for 10 months with only minimum payments.  I figured I could just pay it back with the proceeds of selling the puppies.

Fast forward to February and all was good.  No fights, no sickness, just a lot of poop, puppy food and pads.  At one point I had a box of puppy pads coming from Amazon every five days.  All of the supplies and food ran well over $500.  At the end of February, it was time for the puppies to get their first shots.  That went alright, except one pup had a slight heart murmur, and she was reserved. Luckily the new owner felt a connection to her and still wanted her for the full price.  I was relieved, but not after another $475 bill for the shots and exam.

Then came March 6th, 2020.  My old friend Kate, from my high school days in the 1990s, came out to pick up her puppy.  By this time I had reunited Sugar and Spice after testing the waters with muzzles and all seemed okay, so we seemed to be getting back to normal.  My judgement was a little premature.  There was a great deal of excitement when my friend arrived and the girls got into a big fight again.  It was in the house this time and I tried to grab Spice by the collar and get them apart.  In an instant I was bit and my hand was squirting blood.  I still tried to get them apart and managed to get them in separate rooms in a couple of minutes.  There was blood on the walls and all over the dogs.  The puppies were okay as they were separated in a separate room.

I cleaned up my hand and thought I’d be okay, so Kate and I went to dinner.  My hand began to throb more and more and the glass of wine didn’t seem to help much.  I got back home and Kate went on her way with the puppy.  My roommate washed up the girls and cleaned their wounds since my hand was in paid and not very usable.  It was so bad I could barely type and ended up missing an assignment.

Saturday, my hand didn’t get much better.  In fact, that night it got worse.  Sunday morning, I got up and went straight to urgent care.  After about an hour of waiting, the doctor said you need to go to the ER.  I went to the ER, and they saw me.  It was bad.  It was infected and my hand was swelling more and more.  They decided to admit me after sticking an IV with antibiotics in me. I had an MRI and went to a room where I waited while they decided what to do.  About 7:30 that Sunday night, the doctor came in and said we would likely need to operate.  My swelling went down a little and the paid was somewhat manageable. 

The next day I awoke and waited to hear what was happening.  Around 9:00 am they came in and told me they would for sure operate.  I mentally readied myself to be knocked out and have my hand cut open.  At this point I just wanted to feel better.  I worried about the costs, but I do have insurance, so I knew the worst it could be was my co-pay.  After a successful surgery and several days of healing with IV antibiotics, they released me from the hospital. 

Now that a few weeks have passed, the bills have rolled in and I will hit my out-of-pocket max of $3,500.  Couple this with another $700 in vet bills to clean up the girls after that fight and I’ve managed to lose about $2,800 on having a litter of puppies when you consider my out-of-pocket medical costs. If I didn’t have insurance, the retail value of my treatment was well over $40,000, and I’m still going to physical therapy to regain full use of my left hand.  I always did say I was doing this for the experience of raising puppies and not for money, and I sure did get my money’s worth, didn’t I?

Leave a comment explaining a time your gut was saying “NO” to but you said yes against your better judgement?