Posted in Blog

Money Planning Series: #6 Protecting Your Children’s Credit and Yours

Our county school district recently announced that multiple teachers and students had their data stolen and posted on the dark web. There have been few details shared and no indication of exactly who or what is now available for others to see or purchase online. No doubt, our kids’ identities are at a higher risk now of being stolen than ever before.

In the past I’ve sporadically checked my sons’ credit reports, just to make sure no one is using them. I’m now in the process of checking their reports again and then freezing their credit.

Credit Reports

Credit reports are documents that provide details about your credit, including your credit history, activity, and current status within your credit accounts. By reviewing your credit reports, you can see if others have opened credit accounts in your name or if any companies have mistakingly reported information about your accounts to the credit reporting agencies (e.g., like credit card bills or mortgage payments not getting paid on time).

You can check your credit reports (and those of your children) for free at annualcreditreport.com. According to U.S. law, you can get one free credit report from each credit reporting agency within a 12 month period. There are three major credit reporting agencies: Experian, TransUnion, and Equifax.

If you wanted to be able to regularly check on your credit throughout the year, here’s how you could do it yourself for free. Every four months, request a credit report for each member of the family from one of the credit reporting agencies. So, for instance, in January request reports from Experian, in May go to TransUnion, and in September go to Equifax. I’d have to put this to-do item in my Cozi calendar so I wouldn’t forget.

Requesting a credit report is easy at annualcreditreport.com. You fill out a form, request which credit reporting agency you want a credit report from, and then answer a few security questions. Then you can review the report online to make sure the information presented is accurate. There are further directions on the credit report explaining what to do if you find an inaccuracy. I just requested and reviewed my credit report, and it literally took all of five minutes.

Visit the Consumer Financial Protection Bureau for more information about credit reports and how to read them.

Credit Freeze

A credit freeze stops potential creditors (like loan officers) from accessing your credit file. By placing a freeze on your credit, you can stop a bad actor from using your identity to open credit in your name (e.g., like a car loan or a credit card). Now, a credit freeze stops ALL potential creditors from accessing your credit file, and it doesn’t distinguish between illegitimate and legitimate requests. This means that you will need to unfreeze your account to access your credit (like when you want to apply for a home mortgage loan or refinance your credit card debt).

The Federal Trade Commission gives guidance on how to place a credit freeze at all three credit reporting agencies. Basically, you must visit each credit reporting agency’s website to follow their process to request a freeze. I just did it for myself, and it took about 5 minutes per site (while being regularly interrupted by Mr. 5 year old during his virtual school time).

To place a freeze on the kids’ accounts, I need to mail a letter or form, like the Minor Freeze Request Form for Equifax, to each reporting agency along with proof of their identity and mine. The other two credit reporting agencies have similar requirements, so if you collect the needed information from one credit reporting agency, you should have what you need for the others. That’s a bit of a pain in the neck, but it is manageable.

I figure the boys aren’t going to be accessing their credit any time soon, so we better protect it for them. All in, I think this task of running credit reports and freezing credit for all four of us will take me an hour or two of my time. It’s a well worth it return on investment for me to protect the entire family and give me some peace of mind.

Photo by Clint Patterson on Unsplash

Posted in Blog

Money Planning Series: #5 Tips for Making Long-Term Savings Stick

Like so many faraway goals, it is easy to say that you’ll take care of it later. I’ll lose weight after this junk food is out of the house. I’ll see my doctor after I lose 10 pounds. I’ll write a novel when I get more free time. I can fall into this trap myself, and I have many times. When it comes to our financial health, I’ve adopted a few tricks along the way to help make our long-term savings plans stick.

Right now we’re saving for some significant long-term goals including our retirement and the boys’ higher education. Now, I need to preface this post by pointing out that I was not totally on top of starting these savings funds right away. We didn’t get serious about our retirement savings and significantly up our monthly contributions until we bought our first house (and had higher incomes), and we didn’t start 529s for the kids’ college funds until Mr. 5 year old came along. My point is, it is never too late to start. Anything you do today will help tomorrow.

Tip 1: Pay Yourself First

This has been a family motto since I started collecting an allowance. The best way I’ve found to pay ourselves first has been to never even see the money. For instance, our 401K contributors through our employers come right out of our gross paychecks. We never see the money, and we don’t count it in our budget. Our budget template only accounts for take home pay.

Another way to implement this tip is to make sure your savings are fully funded for the month before spending money on any extra expenses, like restaurants, entertainment, and clothing.

Tip 2: Increase Your Savings In Time with Pay Bumps

This tip assumes some stability in your income and would be harder to do when cash flow is unpredictable. My husband and I know what month our annual performance reviews occur each year, so we schedule our retirement savings rate to automatically go up that same month each year. This way, our savings increases before we’ve had the chance to spend any of the extra money. It helps us to avoid lifestyle creep, the effect of increasing your expenses as your income rises. Items that were once luxuries can start to be viewed as needs.

Tip 3: Set Up Auto Transfers

Our children’s college funds are paid into each month on a schedule that automatically occurs without any inputs from me. My husband and I set the amount, and then it is just paid, like a bill, every month. We, of course, have the option to throw in additional money when we want as well, but it’s nice to not have to think about it. This means money is added more consistently and is able to grow more over time.

Tip 4: Don’t Let the Pursuit of Perfection Be the Enemy of the Good

In part, I delayed in setting up college savings accounts for our sons because I was afraid I’d pick the wrong type of account that would somehow screw up our chances to save enough money for them to get a benefit from the fund. Well, you know what, we weren’t doing them any favors leaving money in a low-interest savings account. Once I figured that I should stop with my analysis paralysis, I made a choice and jumped in. It seemed like a daunting task to research, select, and start funds, but it wasn’t really a chore once I began.

My point to this post is that you don’t have to be perfect. You don’t have to have a large income to start (although that certainly helps). Any systems and tips you can implement now to start, even a little bit, will make a big difference in the long term. Experiment and find what will help you reach your goals for the future.

Photo by Aaron Burden on Unsplash

Posted in Blog

Money Planning Series: #4 Let’s Get Real on When Financial Planning Happens

Although I talk in earlier money planning series posts (1, 2, and 3) about our monthly budget and how we think about our expenses and income as monthly, I don’t personally look at our budget that often anymore. I used to do it religiously every month, particularly when my husband and I were engaged and living together. I would collect all of our receipts, sort each purchase into a category, figure out who paid for what, and then determine how much money one of us owed the other so everything shared was split 50/50. I’m pretty confident my husband thought it was a bit overboard, but we didn’t yet have merged finances and I didn’t want him to feel I was taking advantage of him. Plus, I was establishing baseline data of our spending and saving.

Now though, after over ten years of tracking our money, I look at our budget in detail every quarter. I may look more frequently if we want to make a big purchase and we need to determine if we have the finances available. Otherwise, once a quarter does it. Our spending is pretty predictable, so looking at our budget every month wasn’t changing our spending for the future. It just didn’t become worth my time to budget monthly.

You may be thinking, “But, Stephanie, don’t you have monthly bills? When do you pay those?”

I automate as much as I can: utility bills, credit card bills, cell phone, school lunch expenses, the kids’ 529 plan contributions, HOA dues, etc. Our paychecks are directly deposited in our bank accounts. Our 401K contributions are automatically withdrawn from our gross pay so we act like it doesn’t exist in our budget. In our minds, there’s no option to ever spend that money before retirement.

If I can, I put the bills on my credit card for the cash back rewards. If I can’t do that, then I have the money taken directly out of a checking account. Sure, I look at bills when they are sent to us to make sure I don’t see anything funny (purchases we didn’t make, unusually high or unusually low transactions, purchases in unexpected locations, etc.), but I’m no longer pouring through charges and receipts like I did in the early days of our marriage. Someone will contact me if my auto payment doesn’t go through, I’m sure.

Now, when I do review our budget, we tend to make financial moves afterward. We may determine to scale back house projects, make a charitable contribution, invest more, or set limits for ourselves on Christmas spending.

I think the trick here is to find a system that works for you. Create space in your life to look at the money coming in and going out at an interval that works for your family. Perhaps you want to look at your finances after every paycheck, before the first of the month, or every quarter. You do you. This quarterly financial review works for us, and that’s what counts.

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Posted in Blog

Money Planning Series: #3 Rundown of Our Provided Budget Template Excel File

Happy Wednesday! This is the third post in my money planning series. The first post covered our budget tracking system. The second post discussed how we integrate Mint into this system. Today’s post combines the two to some degree. I’ll start by sharing the budget template I created that models our budget tracking system.

The first thing my husband and I did when we set up this document was determine how much we wanted to have in each virtual envelope (Column B). These were definitely goal amounts in the beginning (like making sure we have a fully-funding emergency fund). It gave us goals though and helped frame our conversations about money and our priorities.

I also needed these goal amounts because I wanted to know when we should stop filling some of these envelopes. If we put a set amount of our income into our health: medical/dental virtual envelope each month, I wanted to know when it’s full and can stop putting money in there.

Next, we had to set up a plan to get to these goals without surpassing our income. We accomplished this by documenting how much we wanted to spend or save each month within each virtual envelope (Column F). This was best guess, wish list level planning at this point. (For instance, if we want to go on vacation next year to Disney World, it’s going to cost about X. There are eight months left so X/8 is how much we need to save per month.)

Next, we wanted to compare our spending and savings plan with our monthly income. Luckily for us, my husband and I are both salaried, so we have set and regular paychecks, which is our only income. However, since we are paid every two weeks, most months we receive two paychecks each and some months we earn three. I wanted to look at our budget with and without those “extra” monthly paychecks. Once we entered our take home pay per paycheck into the budget (Column H), our planned monthly payments were subtracted from our monthly incomes and we saw how much was left over or overspent.

Armed with this information, we revisited our monthly payments (Column F) and made adjustments. We decided which expenses to eliminate or reduce or discussed how we could raise our income. When we’re saving for something in particular, like a new home project we’re planning, then we may decide to cut back or temporarily stop funding some virtual envelopes (like vacations or our fun money).

Personally, I like to plan to live off 24 paychecks from each of us per year so the two extra are surprise money we can drop into any virtual envelope we want, often more dinners out, paying down debt, or gifts/charity. So, at this point in the budgeting process, I’m making sure every dollar of our monthly income is allocated to one of our virtual envelopes (Cell H17).

The first time we used the Excel budget tracking document, we had to determine how much money to put in each virtual envelope to start. We could only put money in these virtual envelopes if we had actual cash or money in the bank for them. To figure this out, we documented how money we had (Cells B42-B51) and how much money we owed (Cells C42-C50). Whatever was leftover was free to put into any virtual envelope we pleased (summed in Cell C51). Some envelopes were easy to determine. We knew our cell phone bill would be X, so we better have X in that envelope for the month. Others were more variable, like groceries or restaurant spending. (Over time we’ve used Mint’s trends feature to see how much we spend in these categories to set better targets.)

Once our virtual envelopes were filled, we double checked to ensure everything balanced out. Every month, the money we have (Cells B42-B51) has to equal the money we owe others (Cells C42-C50) plus what we owe ourselves/what’s in our virtual envelopes (Cell C51). Mint tracks how much money is in each account, so I can easily grab numbers for the spreadsheet here. If the money we have doesn’t equal what we owe others and ourselves, then the amount in each virtual envelope has to be adjusted.

So, at this point, we have goals (Column B), a plan for monthly payments (Column F), and a way to track that the amount we have doesn’t exceed the amount we other others and ourselves (Row 53). Now we’re in execution and maintenance mode. Each month we track what’s coming in and out of each virtual envelope and how we’re tracking against our goals.

Some months will have no expenses but have a monthly payment plan. In those cases, you can decide what to do with this “found” money. For instance, some months our pet expenses are $0. We are well stocked on her food and meds and there are no vet appointments. However, every month we plan to spend $67 on her care. In this case, we keep that $67 in her virtual envelope until we get to the envelope cap. This covers us when her $350 vet bills come around. Once we meet the envelope cap, the extra money goes wherever we want (typically other virtual envelopes that overran or savings categories).

And, the best part is, when I know there’s money in the budget for it, I won’t hesitate to spend it according to our plan. I can enjoy an extra night of takeout when I don’t want to cook or splurging on a gift for someone. And I feel mighty proud of us when we meet a savings goal or pay off a major debt, even if no one else ever hears about it. As Hannibal often said on The A-Team TV show and is captured in my budget template, “I love it when a plan comes together.”

Photo by Sharon McCutcheon on Unsplash

Posted in Blog

Money Planning Series: #2 How Mint Helps Us Budget

Disclaimer: I’m not sponsored or compensated in any way by Mint.com. These opinions are all my own.

Mint.com is one of the popular tools out there to help people manage their budgets and plan their finances. We’ve been using it for 10+ years and have incorporated into our Excel-based budgeting system. And, the best part is, it is free!

Essentially, Mint is a way to connect all of your financial accounts in one location so you can get a comprehensive look at your financial status at a glance. Mint has a variety of features built into the site that help with tracking bills, setting financial goals, managing investments, analyzing savings and spending trends, and checking your credit score.

We have used many of these features, but I’ll focus today on how we use Mint to manage our budget. The first thing to do is to log in and link views of each of your financials accounts to Mint. By linking views of each of your accounts (e.g., savings, checking, investments, debts, etc.) and listing your assets (like real estate or vehicles), you can see your net worth.

NOTE: You are not able to manage any accounts through Mint, only view them. So you can’t transfer money from your savings account to your checking account, but you can see transactions in and out of each account.

To align Mint with our Excel-based budgeting system, I then created a “budget” for each virtual envelope we use and set a monthly amount to be spent within each. Then, as each transaction posts to one of our financial accounts, it shows up in the global list of transactions. I can sort through the transitions and assign each of them to one of the “budgets.” The best part is, I can establish rules that automize a lot of this by auto-assigning purchases from certain vendors to particular categories (e.g., Wegmans purchases are always classified as groceries). It’s to the point now that I can quickly scroll through the list of monthly transactions and just double check that it’s right in a matter of minutes.

As an aside, I used to sort through receipts from big-box stores and split transactions among multiple categories (e.g., part of a Costco transaction would fall under groceries and the remaining portion household goods). I’ve moved away from this because it was too time consuming and our spending wasn’t variable enough that we were changing our spending. I now put all of the Amazon, Target, Costco, etc. purchases into one generic shopping category.

Now, you may be asking, isn’t the act of having what Mint calls “budgets” with set spending and savings amounts that you track over time essentially a budget? Well, yes. You could exclusively use Mint for your budgeting purposes and be completely set. My Excel-based budgeting system came first though, so I’ve incorporated Mint into my system. I like my system better for tracking savings though.

I use Mint as a shortcut and grab totals. For instance, I take the total monthly amount spent listed in Mint for each virtual envelope (what Mint calls “budget”) and put that number into my Excel-based budget file. Back in the day, I would enter each receipt total manually in Excel, which would take a significant amount of time. Using Mint has saved me at least an hour a month.

I think I’ll leave it there for now. I highly recommend checking out Mint to see if it will benefit you and meet your money management needs. If you have specific questions, let me know!

Photo by Abby Boggier on Unsplash

Posted in Blog

Money Planning Series: #1 Our Budget Tracking System

I’ve given some thought and space here to time tracking, but money is another limited resource that gets a significant amount of my intentional planning efforts. I want to give this topic the attention it deserves, so every Wednesday for the next several weeks, I’ll cover a different aspect of financial planning and budgeting.

Now, I’m not a certified financial planner. This isn’t a place for me to discuss or offer advance on what you should do with your money. That’s not the point of the series and certainly not my expertise.

In this space, I will share the systems and planning we use to manage our financial resources, in case it is helpful to others. It is a bit of a look under the hood. (And I know I would naturally just be curious how another family makes it happen!)

To start the series, let me share how we set up our budget. Our budget is organized in an Excel file that is managed essentially like a set of virtual envelopes. All of our envelopes (a.k.a., budget categories) are listed along Column A. There are about 40 envelopes capturing all of the regular expenses we’re paying (from homeowners association dues to utility bills) and things we’re saving for (including Christmas presents and retirement). Anything we can think of that costs a “significant” amount of money that we can anticipate and reoccurs gets its own envelope. There’s an emergency savings envelope for those expenses you can’t just plan on.

Then, each month gets its own column (Column B through infinity). For each month, we denote how much money is in each envelope. Every new month starts out with amount the previous month ended with, and we subtract any expenses and add any additional money we put in the envelope. For example, we know our mortgage payment is X. We make sure to end each month with X in the envelope.

Some budget categories are more variable, like automobile gas. We start out with what is in the envelope from the previous month, subtract out receipts for gas purchased, and add a set amount each month. Basically, since I’ve tracked our expenses for years, I know our average amount spent per month on gas, so I always put at least that much in the envelope every month. Some months we have extra in the envelope, which just carries forward to the next month in case we need it (like months with long road trips or heavy commuting).

Many of our budget categories are for various items we’re saving for. Now, we could always have one pot of money called savings and then spend it on whatever we wanted if and when we have enough money saved. That’s a fine strategy, but I like saving for something specific. It allows us to better set savings goals and see how long it will take us to save for it.

For our savings budget categories, there’s typically not much money coming out of the envelope. We just keep adding a designated amount month after month. This is how we pay for our vehicles. We act like we have a car payment and pay ourselves every month. We don’t buy a new car until we have enough saved to buy it with cash.

The key to the entire budget is all of the money in the envelopes has to equal the total money we have available. To check this, I compare the sum of all of the money in our virtual envelopes to all of the money available in our financial accounts. Luckily, in Excel, I set up simple formulas to do this comparison for me.

So that’s the basics. I’ll cover additional topics later in the series, like how we leverage Mint and how we use this budgeting system when an emergency occurs.

Photo by Fabian Blank on Unsplash

Posted in Blog

2020 Goals and Progress So Far

As much as I identify as a planner, I never used to be into creating personal goals and New Year resolutions. But, I gave it a try at the start of 2019 and kept it simple. I had goals to drink so many ounces of water a day, cut out evening snacks, and other small steps to lead to healthier life choices. On the whole, I stuck to the plan and am happy with the results.

I wanted to build on my momentum, so at the start of 2020 I created seven personal goals and put them in my planner. I thought about what I wanted to do outside of work that would bring me personal fulfillment that relates to myself and my family. (My professional goals are a separate list.)

Again, I kept them simple or fun. I actually want to do these, not challenge myself so much I get disappointed or feel guilty for breaking them. Here are the goals and my progress so far.

  1. Take a family trip to Florida – On the books, as long as this coronavirus business doesn’t get more out of hand.
  2. Read 25 books – I’m 18 books in already. I’ve cut out a lot of wasted time scrolling online (goodbye, Reddit app!) to read instead and “magically” found the time to devour books. I’ll probably up this goal to 50 later on, if I feel like it.
  3. Donate a set amount of money to charity – This is a fun one! Our family has been discussing what efforts we want to support but haven’t made any final decisions yet.
  4. Go on at least 25 dates with my husband, with at least four of them being to new locations – We are at least seven dates in already, mostly to restaurants. We both work from home on Wednesdays and make lunch a date by going out to eat. So far, we have tried a new Italian restaurant nearby and visited The VOID (an immersive virtual reality experience). Side note, Matt loved The VOID. I was less impressed because it was short and expensive.
  5. Complete two home projects – No progress here yet. At the very least, I want to remodel our half bath and stain our deck.
  6. Complete a 5K race – I have a couple of race options for May. I just need to pick one and register, then I know I’ll train and actually do it. I need a goal to work toward or it will never happen. I’m not super interested in running or exercising in general, but I’m a fan of being healthy.
  7. Floss daily – I have a daily habit tracker (shown above) hanging in my bathroom to remind me to floss. The visual cue is essential or I’d totally forget. I’ve only missed a few days so far!

I review these goals about once a month, just to see how I’m doing and whether I want to focus on any of them for the month. For instance, this month I know I need to actually register for a race and start training. I haven’t run a mile in ages! It should be interesting….

Posted in Blog

Is Grocery Delivery Worth It?

My time is valuable. I prefer not to waste it doing tasks I don’t particularly enjoy, like filling a cart full of groceries in a crowded store with two young kids buzzing around me like bees. How lucky we are to live in a time where I can outsource this task and get back more quality family or personal time!

Our preferred grocery store chain (shout out to Wegmans!) recently started providing curbside pickup and delivery options near us, so I researched the costs.

I started by creating a list of 12 items:

  • Store-brand loaf of bread
  • Family pack of ground beef
  • Large pack of strawberries
  • Bunch of bananas
  • A dozen eggs
  • Family pack of store-brand pasta sauce
  • Gallon of 2% store-brand milk
  • Store-brand almond milk
  • Family pack of Cheerios
  • Large container of coffee creamer
  • Half pound of bologna
  • Package of pasta

If I picked up these items in the store, it would cost me $60.41 and at least an hour of my time to drive to the store, pick up everything, and then come home.

If I wanted curbside pickup, meaning someone else shopped for me then met me outside the store to help me load my car, then the price jumped to $69.59 (a 15% increase). However, I’d definitely be adding a tip on top of that of at least $5. So, the total comes to $74.59 (a 23% increase) and 30 minutes of my time to drive to and from the store.

If I wanted these groceries delivered, it would cost me $72.98 (a 21% increase) plus tip. I’d tip at least $10 for this service, so that’s $82.98 total (a 37% increase). Having someone else shop and deliver my groceries would save me an hour of my time.

So let’s compare the options. Shopping for myself is the baseline, and it costs $60.41 and one hour of my time. In this scenario, how much more money does it cost and how much time is saved by these choices?

  • Curbside pickup costs $14.18 more than shopping myself, but I save 30 minutes of time.
  • Delivery costs $22.57 more than shopping myself, but I save an hour of my time.

In this case, to save myself an hour of time, I’d pay $22.57. I could use that time to play games with my kids, read a book, or work an extra hour. (I’d pretty much like to do anything other than grocery shop.)

But, deciding if the price is worth it may depend on the quantity of items purchased. There’s certainly some economies of scale at play here. If you order just a few groceries, many services will add a flat fee to your price, making the markup greater than my example above.

I recognize the privilege I have to be able to say that an hour of my time is worth more than the cost of having groceries delivered. If I enjoyed the task, I may do it anyway. I wouldn’t pay someone $20 to fold laundry. I kind of like that task. (Yes, I realize I’m strange. Just roll with it.)

So, there you have it! I’m sure each store and grocery-delivery option is somewhat different, but here’s an exploration of one option for your consideration.