The Free Financial Advisor

You are here: Home / Archives for budget tips

The Financial Responsibilities of Sharing Your Life With Someone

by Leave a Comment

Living as a couple changes one’s life in many ways. It is not all about you, but about ‘we.’ Money issues play a big role in many couples’ arguments. Misunderstandings occur due to a lack of communication, power struggles, or clashing ideas. Planning for financial responsibilities is vital from the start to enjoy a smooth life as a couple. Couples should understand each other’s financial needs and support each other.

 

Decide on Estate Planning

Estate planning is essential for retaining and protecting control of your property during your lifetime and determining how to transfer your assets after death. Without estate planning, your beneficiaries may face problems during inheritance. The process of estate planning is easy. First, gather basic information on real estate holdings or any other asset.

Estate planning is confusing; that’s why 74% of Americans postpone it. Next, establish your goals and choose your beneficiary. It can be your spouse, children, or anyone else who matters to you. That said, make sure you update your will, power of attorney, and beneficiaries.

Budgeting for Basics

It is common for one partner to handle the bills and investments and the other to cater to other basic needs. The best way to share financial responsibilities depends on the partner’s income. Couples should be open about finances and adopt a joint approach. This way, both partners will be responsible and avoid overspending. Financial literacy is vital for both partners, from making decisions about the future to handling emergencies. A financial planner can help you plan for your financial responsibilities.

Home Renovation

Couples commonly take the time to decide where to live together. One spouse can move into the other’s house or purchase a new home. Although, a couple can opt to renovate the house if it’s old or outdated. Most U.S. homes require renovation because 80% of them are at least 20 years old. House renovation depends on one’s budget and needs, and the first step is to make a budget for all the expenses. You can also decide on home improvement financing if your monthly income is sufficient. How long will the renovation take? How big is the project? A couple should consider all these factors before embarking on the project.

Investing

It is best to have investments as a couple. Learn about basic investment concepts and decide what’s right for your family. Seek advice from experts and talk with your partner about what investment plan will help meet your goals. You can invest jointly or separately. It will all depend on your financial flexibility and comfort.

Filing Taxes

A couple can file their tax returns together or separately. A joint filing is cost-effective, although the couple’s circumstances could be starkly different. Differences could arise if one owns a business and another works for an employer that sends a standard W2 form. Partners can file separately if they don’t want to be part of another person’s business or if they prefer their independence in that realm. If a partner has a loan, deciding on filing separately or jointly may affect the loan repayments and could lead to the partner taking on some of the debt.

Wedding Expenses

Before you say ‘I do,’ couples should disclose their financial status to one another. Let your partner know your debts, assets, liabilities, and responsibilities for extended or immediate family members. Once you know your partner’s assets and finances, sign a prenuptial agreement to protect premarital assets and children from previous marriages. Although one couple’s debt doesn’t become the other’s responsibility after marriage, that debt can still affect your joint finances.

Who pays for the wedding expenses? A couple should plan how much and who will finance the wedding. An average couple spends $22,500 on a wedding or a ceremony. If you are a young couple with little savings, establishing a wedding budget and sticking to it is advised. You can scale back your expectations since the cost can double what you expected.

 

Most people think of companionship and love when entering a marriage. But it takes more than emotional commitment. Marriage comes with legal and financial commitments. Once you tie the knot, the process will have financial implications. Therefore, couples should be on the same page on finance matters and how to handle them.

Five Financial Questions Women Should Ask About

by Leave a Comment

It’s no secret that women face unique financial challenges. From the gender pay gap, to managing household finances, it can be tough for us to make informed decisions about our money. To empower ourselves and make sure we’re on the right track financially, we need to ask the right questions. Here are some of the most important ones.

What Insurance Should I Have?

Insurance is a big (and often surprising) topic for women: we live longer, are more likely to experience a disability that impacts our earnings, and are more likely to support children or elders. We have a stronger need for a safety net.

As a high-level guide: max out any employer-sponsored coverage (like through your job) and then get an individual policy for the remainder of your need, as your budget accommodates.

Life Insurance

Life insurance is a tax-free gift you give the next generation, and term life insurance is inexpensive. Buy what you can afford, on the private market or through your employer.

Disability Insurance

Disability insurance is so important for women – it will replace a portion of your income if you can’t work, and you want to target 60% and 70%. Especially if you are a single mom or supporting family. To achieve this target, you will probably need a private policy in addition to any coverage from your employer (if available).

Long-Term Care Insurance

And finally, if you’re approaching retirement, long-term care insurance is important if you want to make sure you don’t have to spend all of your savings on health care in retirement. It can be very expensive, so don’t purchase this til you’re older and approaching the need for it.

These are just general guidelines – there’s no one right answer when it comes to insurance. It’s important to talk to an expert (like a financial planner) about what kind of coverage makes sense for you given your unique circumstances.

What is the Best Way to Budget?

There’s no one right way to budget your money – find the method that works best for you and stick with it! Consistency is much more important than perfection.

The Envelope Method

Some people use the “envelope system” where you put a certain amount of cash into an envelope for each category (like groceries, entertainment, and transportation). That’s all you get for that category for the month. This is great if you have to be very careful and want to stay away from credit cards entirely. It’s also a great system if you like using a physical planner over software/apps.

Budgeting Apps

If you prefer using technology to manage your finances, there are a number of great budgeting apps out there that can help you track your spending and set goals. Some popular options include Mint, You Need a Budget (YNAB), and EveryDollar.

Spreadsheet Budgeting

For those who like having more control over their budget (and who are comfortable with Excel or Google Sheets), creating a budget in spreadsheet form can be a great option. This method gives you a lot of flexibility to track your spending in the way that makes the most sense for you.

Pay Yourself First

One of the best ways to make sure you’re saving enough money is to “pay yourself first.” This means that as soon as you get paid, you put some money into savings before you spend any of it. This can be difficult at first, but if you make it automatic (i.e., set up a direct deposit from your paycheck into your savings account), it will become easier over time.

What is the best way to save money?

Again, there is no one right answer to this question – it depends on your goals and financial situation. But the upshot is that you can build an emergency fund or improve your generational wealth. Here are some general tips that can help you get started:

Increase Your Income

It can be very challenging, but to save money, you need to bring in more money than you spend. You can lower your costs and watch your spending, but you can also increase your income through a side hustle, a raise at work, or a promotion. You could sell extra things around your house. You don’t need to make a huge commitment – even small improvements in your earnings can make a big difference.

Automate Your Savings

Set up automatic transfers from your checking account to your savings account so that you’re automatically putting away money each month. This is a great way to make sure you’re always saving something, even if you don’t have a lot of extra money.

Join a Savings Challenge

A savings challenge is a great way to encourage you to save more money and get some community support. There are all kinds of challenges out there (like the 52-week challenge, where you save $52 in week one, $51 in week two, and so on), but the important thing is that you find one that works for you and stick with it. Dasha Kennedy at the Broke Black Girl runs a great year-long savings challenge to help women save $1000.

How Much Do Women Need to Save For Retirement?

As much as you can.

Women retire disadvantaged: we generally receive lower social security benefits due to lower earnings. We also tend to live longer (which means more years in retirement), and we’re more likely to experience a period of disability. All of this points to the need to have a larger retirement nest egg.

Target 20% Savings

Controversial opinion: I encourage all women to target 20% of pre-tax household income for savings. That is a lot. But most of us are playing catch up, and starting from lower earnings. Build up to it by increasing your savings rate little by little, and remember that even small amounts add up over time.

Invest Your Savings

You want to make sure your money is working hard for you, and one of the best ways to do that is to invest it. Investing can be intimidating, but on average, female investors outperform by 1% because we are less likely to panic. 1% is what professional investment advisors charge. Set up auto investment, choose low fee index funds and increase your contribution little by little. Like saving, successful investing is about consistency and patience.

What Biggest Money Mistake Should Women Avoid?

The biggest mistake you can make is to hand your finances off to a partner and ignore them. Women are socialized to do this (and it’s changing, slowly) but we pay for it. If you are widowed or experience divorce, you will be adding a terrifying and steep learning curve to a personal crisis.

Additionally, and I say this as Chief Financial Officer of our family, financial decisions will be better with your input! Even though I do this for a living, my husband often has great insight and our decisions benefit from his involvement. Don’t discount your ability or perspective, especially given that women are better investors.

Try These 5 Apps If You Need Help With Your Budget

by Leave a Comment

5 budgeting apps

Keeping your finances on track isn’t always easy. Even if you have the best of intentions and proceed strategically, coming up with a functional budget often involves some trial and error. However, you can simplify and speed up the process by turning to technology. Many amazing apps can make budgeting a breeze, allowing you to account for your bills, spending habits, and more, often with just a few taps on a screen. If you need help, here are five budget apps that can help.

1. Mint

When it comes to budgeting apps, Mint has long been a leader. It’s incredibly user-friendly, making it a solid choice for the tech-savvy and those who aren’t as comfortable with technology. Plus, it can sync with a variety of accounts. You can easily monitor your current bank account, credit card, loan, investment, and bill details, all from a single interface.

After you sync your accounts, you have a variety of budgeting tools at your disposal. Some of your spending is automatically categorized, reducing your workload. However, you can also make adjustments as you see fit.

Within the app, you have the ability to set category spending limits. Plus, you can sign up for alerts relating to the limits, ensuring you know when you’re getting close to the line. Then, you can adjust your spending accordingly.

Mint also makes it easier to achieve your goals. You can choose a target and monitor your progress, which may keep you motivated. You can also track your credit score and net worth, giving you more tools to put you on the path toward financial wellness.

Ultimately, Mint is a free app with a ton of features. Plus, it’s largely hands-off, making it a solid choice for anyone who wants to create and follow a budget without much legwork.

2. YNAB

If you prefer something a bit more hands-on, YNAB could be a better choice. This app uses a zero-based approach, ensuring you plan for every dollar of income every month.

When you get paid, you tell the app exactly where you want your money to go. Along with covering bills and expenses, you can direct money to savings and various goals. Essentially, YNAB aims to make sure you think about your finances regularly, increasing awareness and leading to more conscious spending decisions.

With YNAB, you do get the ability to connect various accounts to the app. This can simplify income and debt tracking, allowing you to allocate your money more efficiently. Plus, there is a slew of educational resources available, ensuring you have access to tips and helpful details that can improve your money management skills.

It is important to note that the learning curve is a bit steeper with YNAB. However, the time necessary to get everything set up can be a benefit. It ensures you take a close look at your financial picture, increasing the odds that you’ll make wise decisions about your money and are fully aware of your spending habits.

3. PocketGuard

If overspending is an issue for you, PocketGuard may be your best bet. The app isn’t as feature-rich as some others, aiming more for a simplified approach to money management. However, it does go the extra mile when it comes to curbing bad spending habits.

With PocketGuard, you can connect various financial accounts to make tracking your income and expenses easier. Then, the app helps you allocate how much you need to send to expenses, debts, and financial goals. Once it finishes those calculations, it factors in your spending habits and lets you know how much you have left over to spend.

Making the most of PocketGuard does mean you need to have an active plan for achieving various financial goals, such as saving for large expenses or paying down debt. That way, you can ensure they’re factored into the broader equation when the app determines what you have available to spend.

4. Goodbudget

Another hands-on option for budgeting, Goodbudget relies on a strategy that’s similar to the classic envelope system. It’s more planning-focused instead of tracking-oriented, too.

Overall, Goodbudget is far more manual. You actively portion out your income into various categories, allowing you to choose how much you want to allocate. Additionally, you’ll enter in each of your expenses and debts, as it doesn’t connect directly to your accounts.

While some may worry that the degree of work makes Goodbudget cumbersome, there are benefits to the hands-on approach. Since you’re logging every expense manually, it encourages you to think about every spending decision you make and lets you see its impact on your finances. For some, that can lead to smart financial decisions.

Additionally, for the security-minded, Goodbudget doesn’t require any connections to your other accounts. While such links are typically low-risk, having none is technically the safest option available.

5. Zeta

For couples, Zeta is a budgeting app that makes it easier for both partners to get insights into joint financial responsibilities while maintaining separation in areas they prefer to keep private. As a result, it’s a solid choice for couples in any stage of a relationship that share some expenses or bills but don’t have fully entwined financial lives.

You can reveal or hide financial data from your partner, ensuring they see what’s relevant without giving them full access to all of your information. That allows this app to work well for couples who bank separately but want to make sure that household expenses are properly covered.

Plus, you can set up joint financial goals, allowing you to work toward mutually beneficial targets together. The app will even send you reminders to have “money dates,” ensuring you sit down together regularly to discuss your financial picture, make necessary changes, and otherwise keep the lines of communication open.

Have you tried any of the apps above and want to tell others about your experience? Have you used a different budgeting app to help you get a grip on your finances and think it could help others? Share your thoughts in the comments below.

Read More:

Finance Lessons Learned from the Pandemic

by Leave a Comment

The Covid-19 pandemic changed life for two years and there are definitely still elements of what life was in the world today. No doubt there were some terrible things that happened. People lost their lives and their jobs. But there were also positives that came out of it. We’re going to highlight the lesson we can learn from this pandemic, particularly some personal finance lessons we can learn.

Working from home

This new type of work does not apply to everyone and I don’t like leaving people out, but this needs to be talked about. Working from home and articles about it took over during the pandemic and continue to be discussed.

Working from home, at least from some of those articles and studies, appears to be a net positive for employees and employers. Let time commuting, less overhead costs, more productivity thanks to no commute, increased job satisfaction, and improved work-life balance.

Thanks to the work-from-home setup, people who were able to do that moved out of the city or rented an Airbnb for an extended amount of time. In either case, those people were, likely, able to reduce their housing costs by moving to the suburbs or giving themself a little vacation/change of scenery.

Savings rate

A lot of people saved money during the pandemic thanks to stimulus payments. In April of 2020, the personal savings rate for Americans was 33%. In March of 2021, the personal savings rate for Americans was 26.6%.

The savings rate has fallen since then but is still above 12% which is higher than it was before the pandemic (less than 10%).

Stimulus payments

According to the National Bureau of Economic Research (NBER), most Americans either saved or paid down debt with the majority of their stimulus payments. 40% of the stimulus payment was spent, 30% was saved and another 30% was used to pay down debt.

Personal finance lessons

I think there were a lot of personal finance lessons that can be learned from the pandemic. Here’s a list of them below:

People saved more money

The future was very uncertain so people were more conservative with their spending and less conservative with their savings. That mindset shouldn’t change. The future, in principle, is uncertain. We do not know what tomorrow holds, so saving for a rainy day/goals/retirement is very important.

You don’t need to spend money to have fun

At the very beginning of the pandemic, you couldn’t go anywhere. Quarantine and lockdown orders came in right away. Instead of getting together in person, people utilized Facetime, phone calls, and Zoom. I, personally, had group Zooms with family members where we played and had conversations like we would if we were in person.

Diversification is important

Early in the pandemic, the market tanked. We lost over 30% in six weeks. Granted, it came right back up not long after, but that might not always be the case. If you don’t have time to ride out the ebbs and flows of the market, it’s important you get your asset allocation right. Talk with your adviser to make sure your investment matches your time horizon and risk tolerance.

Get rid of debt

You never know when your job and your ability to earn can be taken from you. Some people lost their jobs, some people were furloughed, and some people just weren’t able to go to work. If you don’t have an income, the only other part of the balance sheet you can affect is your expenses. Get rid of your debt. That’ll help you reduce your expenses in case that happens (you can also save more).

Protect your loved ones

Get life insurance. A lot of people passed away during the pandemic. If you contribute income to your household, you need to make sure you financially protect the people that rely on your income.

Related reading:

5 Personal Finance Tips from the Pandemic

How to Regain Control of Your Finances Amid the Pandemic

How to Save Money on Your Post Pandemic Vacation

Disclaimer:

**Securities offered through Securities America, Inc., Member FINRA/SIPC. Advisory services offered through Securities America Advisors, Inc. Securities America and its representatives do not provide tax or legal advice; therefore, it is important to coordinate with your tax or legal advisor regarding your specific situation. Please see the website for full disclosures: www.crgfinancialservices.com

How to Increase Your Net Worth

by Leave a Comment

increase-your-net-worth

Your net worth is a benchmark for your financial success. Notice that I said financial success and not just success. That was intentional because money doesn’t define your success. Money can afford you freedom, but I believe real success doesn’t involve money. That was free of charge, now let’s talk about how to increase your net worth.

What is net worth?

Net worth is assets minus liabilities. How much wealth do you have after you subtract what you owe versus what you have? It’s typically used to gauge your progress in your financial life. If you have debt, then when you pay it down, your net worth goes up. The same happens when you increase your savings.

How to increase your assets

Honestly, the only way to increase your assets is to save money. At least, that’s where it all starts. The more you save, the more you have to work with.

How do you save money? Decrease your expenses and/or make more money. That’s what it comes down to. Figure out what’s important – in terms of your budget and spending. Everything else that doesn’t fit on that list needs to either be removed or reduced.

Once you have money saved, then you can put it to work. Invest it in securities or assets that have a chance to increase in value. What kinds of things have a chance to increase in value? Stocks, bonds, mutual funds, ETFs, precious metals, real estate, certificates of deposit (CDs), and cryptocurrency/NFTs (though I would tread carefully here).

Growing your assets will help you increase your net worth.

How to decrease your liabilities

Pay down your debts. That’s it. Obviously, it’s more challenging than that. Ideally, what you’d want to do is pay down your debts before you focus on the saving aspect of it. If you have debts with high-interest rates, like credit cards, those should be your first priority.

We’ve gone into detail about the repayment methods before so we’ll only touch on them briefly, but what’s important is decreasing your expenses so you can make larger, more regular payments towards your debts.

The next step is developing a repayment strategy. The two we’ve talked about before are the debt avalanche and the debt snowball. The debt avalanche – you pay the debt with the highest interest rate off first before moving to the next one. The debt snowball – you pay the debt with the smallest balance off before moving on to the next one.

Paying down your debts will really help you increase your net worth.

Is there a net worth number you should hit?

At the end of the day, your net worth number is really a reflection of what you’ve saved for retirement. Ideally, you will not have any debts, including your mortgage. So there’s no math that needs to be done. What are your assets? Primary home, any rental properties, and then your retirement savings, with primary home and retirement savings being the two most common for everyone.

So the question becomes, how much should you save for retirement? Thankfully, we’ve created a guide for you to help answer that question (see below).

Related reading:

How much do I need to save for retirement?

Diving Deep Into Debt

3 ways to responsibly save money

Gig economy financial security

Disclaimer:

**Securities offered through Securities America, Inc., Member FINRA/SIPC. Advisory services offered through Securities America Advisors, Inc. Securities America and its representatives do not provide tax or legal advice; therefore, it is important to coordinate with your tax or legal advisor regarding your specific situation. Please see the website for full disclosures: www.crgfinancialservices.com

Retirement Costs to Consider

by Leave a Comment

retirement-costs

You save for years and years…decades and decades. When you’re saving for retirement, an important consideration to keep in mind when you set your nest egg goal is your retirement costs.

When determining and estimating retirement costs, you need to consider what the average expenses are in general and for the retired folks in your area/state. Once you figure out the generalities, you need to adapt it to your situation.

Some items to consider:

  • Travel – Will you stay in your current home? Will you move to a warmer state or a state without income tax? Do you have family spread around the country? Will you take vacations on an annual basis? If you’re planning on traveling every year, possibly multiple times per year, it’s important to factor those costs into your monthly/annual budget – so you can save for it.
  • Healthcare costs – When you get older, your body doesn’t typically work as it has in the past. You are also more susceptible to illness (as we’ve seen over the past two years). As a result, your healthcare costs go up.
  • Housing – There are a few things to consider when determining your housing costs. Will you stay put or will you move? If you move, will you downsize? If you move, will you move to a different state? Does that state have income taxes? What do you anticipate energy costs will be?

Typical retirement costs

People 65 and older have spent an average of $4,847. On average, utilities, public services, and fuel cost an additional $3,743.

On average, Americans spend $10,160 per year on transportation. Retirees spend a little less. Anywhere between $4,963 and $6,618.

The general American population spends $5,204 on healthcare. Retirees spend between $6,792 and $6,619.

American retirees spend $6,303 on food. They also spend, on average, $2,282 on entertainment.

Expect to spend between 55%-80% of current expenses in retirement.

There are 9 states without a state income tax – Alaska, Florida, South Dakota, Tennessee, Texas, Washington, and Wyoming.

These are the states with the cheapest monthly utilities – Idaho ($343.71), Utah ($350.17), Montana ($359.03), Washington ($369.18), and Nevada ($3376.93).

Conversely, here are the top 5 most expensive ones – Hawaii ($730.86), Alaska ($527.96), Rhode Island ($521.98), Connecticut ($496.07), and New York ($477.31).

Related reading:

Managing High Inflation in Retirement

5 Solutions for Managing Money After Retirement

Retiring Out of State

Disclaimer:

**Securities offered through Securities America, Inc., Member FINRA/SIPC. Advisory services offered through Securities America Advisors, Inc. Securities America and its representatives do not provide tax or legal advice; therefore, it is important to coordinate with your tax or legal advisor regarding your specific situation. Please see the website for full disclosures: www.crgfinancialservices.com

Managing High Inflation in Retirement

by Leave a Comment

 

Managing High Inflation in Retirement

Inflation is high. We all know that. I’ve been writing about it for months and it appears that it’s here to stay. With all of that said, I saw a question the other day about how to manage the high inflation when you’re in retirement, and I thought it was a good topic to talk about today. So we’re going to discuss high inflation in retirement, how it’s impacting retirees, budgeting strategies, investment strategy changes, and if inflation will be an ongoing concern for retirees.

Inflation right now

It’s high…no surprise to anyone. In January it was 1.4%, in April it was 4.2%, in July it was 5.4%, in October it was 6.8%, and in December it was 5.9%. That’s historically high. The highest it’s been in 40 years. Will that stay, only time will tell and we’ll get into that later.

How is it impacting retirees?

Things are getting expensive, so when you set a budget at the beginning of your retirement you account for the current price of the things you need. You should also account for increased costs of items as time goes on because there can be big or small increases…either way, prices costs will go up.

Groceries and energy are two prime examples of things that have gotten more expensive recently. So when those things went up in price, it probably pinched people’s budgets, and/or pushed forward costs that probably weren’t expected for several years. Odds are, they’re spending more money now on food and energy than they anticipated. Hopefully, people have been able to make adjustments already.

Budgeting Strategies

There really aren’t a lot of tips I can give you. The best thing I can really say is to cut costs where it makes sense to account for things that are now more expensive. The other tip, though this is more of a gamble, is to not make any changes now and make changes in the future when inflation comes down.

Investment Strategies

With your investment, you’ll need to reallocate some assets. I wouldn’t take any money out of stocks. What I would do is take some money out of your bond investments and put it into precious metals. The FED said that they plan on hiking rates three times in 2022. Bond prices will go down when interest rates go up. Increasing your stock allocation or putting some money in precious metals could be a good way to combat inflation.

High inflation here to stay?

No, I do think it will be here until the FED hikes rates, but my reasoning for that has to do with what happened in 2018. If the FED can raise rates without putting a cork in the recovery, then I think there’s a possibility that inflation and the federal funds rate will stay elevated until the bubble pops.

Related reading:

Why Asset Allocation Matters

The Factors Causing Inflation

How to Beat Inflation with Investment

Disclaimer:

**Securities offered through Securities America, Inc., Member FINRA/SIPC. Advisory services offered through Securities America Advisors, Inc. Securities America and its representatives do not provide tax or legal advice; therefore, it is important to coordinate with your tax or legal advisor regarding your specific situation. Please see the website for full disclosures: www.crgfinancialservices.com

5 Steps to Care For an Older Car

by 32 Comments

5 Steps to Care For an Older Car

As of 2019, the average car age is 11.8 years. People are driving vehicles longer (source). That’s great news for everyone’s pocketbook. When people drive their cars longer, the possibility that they have a loan payment for that car goes down. During that period between making their final payment and buying a new car, they can save more money! To improve the longevity of your vehicle, you have to take care of it. In this post, we’ll go over the steps to care for an older car.

Change Fluids And Filters Regularly

There are several different types of fluids your car uses. Oil, coolant, brake fluid, transmission fluid, etc.

It’s important to regularly change those fluids, and clean out the paths that those fluids travel in. You should change your oil and oil filter every 3,000 – 5,000 miles (depending on the car and the oil you use).

The recommendation for your transmission fluid is a full flush every 30,000 – 60,000 miles. You should flush your coolant every 30,000 miles.

Your brake fluid should get flushed every 20,000 miles. Bleed the fluid by removing the end that supplies the brakes and stomp on the brakes until nothing comes out. If the liquid coming out is an amber color, you’re good. If it comes out looking dirty, then a flush is in your best interest. (Step by step process provided by Brake Performance)

It’s also important to inspect your air filters during every oil change. You can probably go 2-3 oil changes until you have to change your air filter.

Another piece of advice I saw while doing research for this post was to use high-octane fuel once per year. High-octane gas runs hotter than normal gasoline but also has more additives and detergents that help clean out the engine.

Inflate Your Tires

It’s incredibly important that you keep your tires properly inflated. On the inside of the driver’s door, there’s a sticker that says what the desired tire pressure is for your car. The correct tire pressure will help with the handling of your vehicle and will also improve your miles per gallon (saving you money).

You should also regularly rotate your tires. How often you do this depends on the brand of tire you use, but the standard recommendation is every 3,000 to 5,000 miles.

Keep It Clean

Frequent wash-and-wax of your paint job keeps the car sparkling and prevents rust. It also helps hold up the resale value for that day when you’ll finally sell the vehicle. Don’t forget the interior. Catching spills quickly, vacuuming the interior, and shampooing carpets can keep your older car looking like new.

If gauges fail, have them repaired immediately. For someone caring for an older car, checking engine gauges often is your key to successfully keeping your ride on the road.

Find A Good Mechanic

Similar to visiting a doctor for a yearly physical, you should take your car to a qualified mechanic regularly to check out and avert any potential problems. Remember the key here: the longer your older car runs, the longer you’ll avoid costly car payments.

Paying a few dollars to the right mechanic is a small price to pay to keep your vehicle healthy and avoid much more expensive new car costs.

Spark plugs

The last piece of advice, with regard to taking care of an older car, I’ll leave you with is to replace your spark plugs. The recommendation for this is to replace every 30,000 to 90,000 miles (depending on the make and model of your car).

A bad spark plug can lead to a misfire in one of your cylinders. If you have a 6 cylinder car, but only 5 are firing, your engine is working harder than it needs to. That can lead to problems down the road.

By practicing good care for an older car, you’ll help your dollars stretch so you can use them for more important items on your agenda.

If you’d like an in-depth breakdown of repairs and costs, Edmunds has a fantastic article.

Related reading:

Saving Money with Regular Maintenance

 

**Securities offered through Securities America, Inc., Member FINRA/SIPC. Advisory services offered through Securities America Advisors, Inc. Securities America and its representatives do not provide tax or legal advice; therefore, it is important to coordinate with your tax or legal advisor regarding your specific situation. Please see the website for full disclosures: www.crgfinancialservices.com

Why Are Fixed Expenses Difficult to Reduce?

by Leave a Comment

When you’re making a budget, there are two columns: income and expenses. A large majority of those expenses don’t change from month to month or change very little. These are fixed expenses. If you’re trying to cut costs, you may find that the fixed expenses are difficult to reduce. Why is that? How do you reduce fixed expenses?

We’ll explore the answer to those questions, among others, in today’s post.

Types of expenses

There are two types of expenses. Fixed and variable.

As the names suggest, fixed expenses don’t change or rarely change. Generally speaking, fixed expenses are the largest, recurring expense. Things like your rent or mortgage, utilities, internet, streaming/cable, debt payments, and insurance are all part of your fixed expenses.

Variable expenses, on the other hand, are constantly changing. There isn’t a bill or invoice you get every month. A variable cost is paid by your own directive. Things like groceries, “fun money”, and the like are variable expenses.

Fixed expenses rarely change or vary slightly, and someone or some entity is looking for a payment. Variable expenses constantly change and are voluntarily paid.

Why are they so difficult to reduce?

When you first “sign up” or “agree” to these expenses, more often than not, you’re already shopping for the lowest price for that item.

What else? Internet, streaming, and cable have a pretty standard rate when compared to competitors. Debt payments are structured by the length of the term, interest, and (when referring to credit cards) minimum payments.

Basically, the costs are what they are, and they don’t vary a whole lot.

Methods for reducing fixed expenses

Mortgage payments could decrease if you refinance at the right time. Utilities could go down if usage goes down. Insurance premiums could go down if you mess with coverages and deductibles, but I advise you to talk with an agent first.

Cable/dish generally increases after one year. Often, you get an introductory rate for the first 12 months. If it goes up too much, call and complain or threaten to leave. Normally, they’ll oblige and agree to lower your monthly bill.

If you have a debt to pay and money is tight, talk with your lender or credit card company. Let them know about your situation and they might be willing to work with you.

Related reading:

Financial Mistakes to Avoid

Your Go-To Budget Guide

Save Money on Your Household Expenses

 

**Securities offered through Securities America, Inc., Member FINRA/SIPC. Advisory services offered through Securities America Advisors, Inc. Securities America and its representatives do not provide tax or legal advice; therefore, it is important to coordinate with your tax or legal advisor regarding your specific situation. Please see website for full disclosures: www.crgfinancialservices.com

What Is The Difference Between Bookkeeping And Accounting?

by Leave a Comment

It’s very important to keep track of your books. It’s the only way you’ll be able to measure the profitability of your business. In other words, there are only two reasons that a business can go bankrupt. First is when the owner doesn’t have enough money to pay the bills. The second is when there’s a discrepancy in the books. That being said, bookkeeping and accounting are critical things to consider as a business owner. [Read more…]