Tips | Financial News

November 2, 2009

Top Family Budgeting Tips

Filed under: Finance — Tags: Budgeting, Family, Tips — admin @ 8:50 pm

Key Reasons for Managing Your Budget

- You Have Limited Income: Virtually everyone has limited or fixed income. Without budgeting you are being controlled by your environment. If you have a plan, you are more in control of your money. Without a budget, you may not really know you are spending more money than you are earning.

- So That You Know Your Limits: Knowing what your monthly expenses are projected to be and what they actually are will help you keep track of how much money you have left over for future goals and needs.

- You Have Unlimited Demands: There is an endless demand on your finances. Our commercial capitalistic society is constantly calling out for you to buy. If you have minor children, the demands are greatly increased by the things that they want, the activities they are in, and the schools they attend.

- You Want Freedom Not Bondage: Budgeting seems to be restrictive to some people. The reality is that we have to make choices between what we want at the moment and our regular bills and goals for the future. However, there is freedom in knowing what your limits are. Many people find this liberating, because it creates the opportunities to grow and mature.

- You Have Future Goals: If you are sacrificing today, it helps to know what you are saving for in the future. Obtain a financial plan so that you will know what your goals are and for what you are saving.

- You Want to be More Aware of Where Money is Going: If you do not have a budget, you may have no idea where your money is going. Knowing where you money is going will help you identify if you are spending too much money in specific areas.

- You Want Less Stress: Spending without a plan and a budget increases your stress because you do not have a well thought out plan for paying your bills and you may spend more money for fun than you can afford. Planning and budgeting will give you the peace of mind that you are on the right track.

Contract with Yourself (and between Spouse)

Budgeting is very hard for many people; therefore, it helps to have a contract with yourself. If you are married, this agreement should include your spouse. If you work together, you will usually accomplish more than you could on your own.

I hereby resolve to:

1. Start a budget, and pay attention to it weekly and monthly

2. Not spend more money than I make

3. Be in financial partnership with my spouse with no secrets between us

4. Not borrow to purchase items that depreciate in value

5. Not let my emotions make me purchase anything, including gifts

6. Not purchase something over budget unless it was unavoidable

7. Not purchase anything that I don’t really need, no matter how good the sale is

8. Not purchase something to keep up with the Joneses

9. Not apply for any new credit cards, unless lowering interest rates

10. Pay off all credit cards monthly (I will work toward paying them off)

11. Not spend money on fun things unless I have paid my monthly bills

12. My spouse and I will both be the “fun police”

13. Include children in the budgeting exercise to teach restraint

14. Not obtain high maintenance items like a pet or hobby if I can’t afford the expenses.

15. Not buy something that costs over $50 without consulting each other and the budget

Cash Flow Management Checklist

In addition to having good budgetary habits, it also helps to take advantage of money-saving measures. The following are many of the things you can do to help you save thousands of dollars per year.

- Employ tax advisors to you avoid overpaying taxes

- Use low cost investments that have low to no commissions, fees and expenses

- Shop your loans to find lowest interest rates

- Shop your insurance for the lowest prices possible.

- Buy smaller homes and cars since they require less money to maintain and insure

- Go on cheaper vacations

- Frugal travel to lower the already large consumption of your income for gasoline

- Eat out cheap, less often and at less expensive establishments and cafes

- Spend less on food by shopping at low price grocery stores and pack your lunch

- Lower home energy consumption by employing easy to find and low cost solutions

- Break smoking and excessive eating habits to save on tobacco and fast foods

- Monitor emotions to avoid depression or stress related purchases

- Obtain from the library resources about budgeting, financial planning and spending

- Go to the library for entertainment books and DVDs

- Reduce or eliminate cable TV

Budgeting Tips

Use technology or spreadsheets:

Obtain software (or use spreadsheets) that will help you pay bills and make and monitor a budget. Devote time to it by keeping track of all expenses and enter them into your software program or monthly spreadsheets each week.

Save all receipts, bills, household documents, and tax documents:

Organize these items by category into an accordion file or drawer: e.g., auto, bank, business, credit cards, dental, medical, grocery, income, insurance, mortgage, utilities, general receipts, school information, and taxes.

Balance your checkbook:

Many people don’t balance their checkbooks each month. Budgeting software makes reconciling simple, but you can read the back of your statement or make an appointment with your banker if you need to learn this skill manually.

Tax Time:

If you use budgeting software, you can run a tax summary report before you work on your taxes. If not, and if you itemize your taxes (Sched.A), you must total the appropriate columns in your spreadsheets, e.g., Medical expenses (Your accountant may provide you with an organizer to help you get ready for tax time.) Remember to place quarterly and yearly expenses on the appropriate month in your budget so that you do not overspend. For example, annual insurance payments, quarterly tax estimated payments, annual homeowners association dues, etc.

Summary

Good cash flow management is key to implementing any financial plan; commit to doing this well. No one likes self-discipline, but it is actually good for us. With proper management of your finances, you will become more confident and less stressed about your future. Remember, one bad financial decision can sometimes take years to undo. Be very careful with all decisions you make.

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October 26, 2009

Landlord Tips - Avoiding the Huge Costs of Tax Preparation

Filed under: Finance — Tags: Avoiding, Costs, Huge, Landlord, Preparation, Tips — admin @ 4:51 am

As a landlord, your tightest months for cash flow are usually at the end of the winter and beginning of spring, in March, April and May. You’ve just finished paying for the extra costs that winter brings; sky-high utility bills, snow and ice removal, heating issues and so on. Not only that, but any vacant units probably took longer to fill because people are less likely to move during the winter. You might even have had damage from ice dams or frozen pipes.

The end of the winter is the worst possible time to get a huge unexpected bill. And yet here it comes; hundreds or even thousands of dollars due to your tax advisor.

Fortunately, there are ways to really reduce this bill without adding a lot to your workload. The key is to organize your tax documents in a way that will let your CPA or bookkeeper (or yourself, if you do your own business taxes) prepare your return in a lot less time.

I use property management software to organize all of my income, expenses and assets, and make sure that my bank account statements match up with my own personal accounting. It’s faster than maintaining my records in Excel, and it only takes a little longer than the method used by lots of old-school landlords; stuffing all their records into a shoebox and hoping for the best.

Because you?re organizing your landlording income and expenses in your property management software as they occur throughout the year, they are completely organized and ready for you at the end of the year, at tax prep time. Somebody?s going to be doing a lot less work then ? either your tax advisor (which means you pay him less) or yourself (which means you get to bed earlier).

You want your records to be organized along the categories of the IRS Schedule E form, which you use to report rental property income and loss, along with income and loss from related investments such as partnerships and trusts. You’ll need to submit an IRS Schedule E along with your 1040 tax return. You’ll also take the summarized results from the Schedule E and incorporate them into your 1040 calculations. You can do all this with the correct property management software.

There are two Schedule E categories for Income and 14 for Expenses. For Income, any time you receive rents, you’ll record them in your rental property program as a deposit; thus updating both your bank account records and your ledger account records. For Expenses, any time you spend money on anything related to your properties, you’ll record those Expenses either through the check register or a journal entry. Your property management program should let you enter any Expense under a category that matches a Schedule E category; they are Advertising, Auto and Travel, Cleaning and Maintenance, Commissions, Insurance, Legal and other Professional Fees, Management Fees, Mortgage Interest, Other Interest, Repairs, Supplies, Taxes, Utilities, Other, and Depreciation. Some of these property management expense categories will make perfect sense to you, but others may need explanation.

? Advertising: this is really all of your marketing expenses, including things like signs and web postings.

? Auto and Travel: this is an easy Expense to miss because you won’t pay it with a check or something else that’s easily tied to your bank accounts. One option is to record all the actual expenses such as gas, oil and depreciation. The other, simpler way is to just record your mileage spent on business travel and multiply the total times the current per-mile expense rate (48.5 cents for 2007).

Not only is it simpler to record expenses this way, it may also be a better deal for you. That 48.5 cents per mile applies whether you are driving a new Hummer H2 or an old Toyota Corolla. Obviously you spend a lot less than 48 cents a mile driving that old Toyota (and it makes a better impression on your tenants).

You should record auto expenses by mileage every time you take a trip related to your investments; these include every time you drive to a building. Once per month, if you can do so, pay yourself for the mileage or any other expenses from personal funds with a check from your business account. Record that as well. You can also expense tolls and parking fees, but not tickets or other legal fees from parking or driving violations.

? Mortgage Interest: new landlords often think they can expense all of their debt service, which is your mortgage payments plus any other money paid toward retiring the loan. But you can’t expense the money that goes toward principal because it’s not really an expense. For example, suppose you make a $1,000 mortgage payment, $200 of which goes to principal and the rest to interest. By doing so, you spend $1,000 from your checking account, while increasing your equity in the property by $200. The correct transaction will be a $1,000 credit to the checking account, an $800 debit to the Mortgage expense and a $200 debit to the Building Equity Asset account. Your rental property program should calculate this automatically.

? Depreciation: this expense relates to the natural deterioration that happens to almost any long-lasting asset. Most landlords think of depreciation in terms of buildings. For example, most residential buildings have a depreciation period of 27 1/2 years. This means that you can take 1/27.5 (3.63636… percent) of the building’s value as an expense each year; until you’ve owned it for 27.5 years or sell it, whichever comes first. How are you going to determine the building’s value? Multiply the purchase price by this ratio: building assessment / overall assessment. You can usually get the assessments from the town or county.

It makes a lot of sense to depreciate items in a building separately from the building itself, because such items usually have shorter recovery periods (meaning you can take more of the value - as much as 20 or even 33 percent - each year until the end of the period).

Depreciation is tricky - one reason is that the federal government frequently changes depreciation rules in esoteric ways. For example, they changed the rules to make investing in New York City more appealing after the 9/11 attacks. It may make sense to get some additional help from your tax advisor here.

Around February 1st of the new year, print out a profit and loss report and all of your bank reconciliation reports for the previous year. All of this information will be neatly organized by your property management software. Review the reports carefully and either send them to your tax advisor or enter the information into tax forms yourself. If you send them to your tax advisor, include the actual bank statements as well. He’ll want these records to prove that you recorded all of your financial transactions honestly.

At the same time, make sure your CPA or bookkeeper knows that you’re NOT expecting him to do your Schedule E calculations all by himself. You don’t expect to be charged for all that work, either.

Last point - even though property management software is going to help you with your recordkeeping and calculations, don’t throw out your paper records. You’ll need them if you are ever audited.

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October 11, 2009

8 Tips for Self-employed Taxpayers

Filed under: Finance — Tags: Selfemployed, Taxpayers, Tips — admin @ 8:52 pm

Bookkeeping Software
When you are self-employed it can be easy to lose track of all your bills, invoices, checks, and receipts amongst your other business related documents. To keep on track with your bookkeeping I would suggest trying bookkeeping software like QuickBooks.?

Keep Good Records
In addition to investing in bookkeeping software, you will also need to keep all of your receipts and other tax-related documents together. If you do not already have one, purchase a filing cabinet and designate certain folders for tax receipts and papers so you can stay prepared.

Business Expenses
Remember while you are making your day-to-day purchases to keep any business-related receipts. These expenses are tax deductible, and even the small meetings with colleagues at coffee shops add up! Also, taking the time to add up these receipts once or twice a month will save you a lot of time later on.?

Home Office Deduction
If you have a home office in your house or apartment, you may qualify for a home office deduction. As long as you have no other stationary place where you do business and the office is used exclusively and on a regular basis for business, you should qualify.

Check in with the IRS
From time to time, check in with the IRS website to make sure you’re taking advantage of all the self-employed tax breaks you can. Also, check the guidelines and rules and make sure you’re doing everything correctly and legally. Having a financial advisor should be enough, but doing some of your own investigating never hurts.

Child Care
You can deduct childcare costs for your children, as you are self-employed and may need some help. This is an important deduction that too many self employed individuals miss out on, so make sure you take advantage of it if need be!

Retirement Plans
Setting up a retirement plan is not only good tax-wise, but also a great idea for saving towards your future. The SEP IRA retirement plan is designed especially for the self-employed, and taking advantage of these special programs can be very beneficial both now and later!

Defer Income
Depending on your situation, income deferral may or may not be advantageous for you. If you have made a lot of revenue already this year and expect slower business next year, it may be a great idea. On the other hand, if you expect next year?s revenue to be fairly similar then there may not be any reason to defer any income.

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October 3, 2009

11 Year End Tax Savings Tips

Filed under: Finance — Tags: Savings, Tips, Year — admin @ 8:48 pm

This time of year, now through the first quarter of next year, you will see articles offering year-end tax planning tips. Tax planning tips can increase income in future years, so be careful. Many tax tips often involve accelerating deductions, deferring income, or last-minute charitable deductions (the first three following tips).

For example you may be compelled to make a large charitable contribution this year by December 31st. However if you could be in a higher tax bracket next year because your income is going up because of a substantial raise or bonus, you would have been better off to make the contribution next year. Some may say this is heartless, but I say just the reverse. If you pay less in taxes because of good planning, your will be better off financially and able to give more in the future.

If you have volatile income, before you use the tax savings tips here and in other articles, you may want to run projections for this year and next. A good accountant will run these calculations for you, but understand that tax law changes from year to year and from one administration to the next can often make predicting tricky.

1. Defer income

If you are able to defer income, such as commissions and bonuses until next year, you might be able to pay lower income taxes this year. However, you must consider what your income and taxes will be next year to be sure that you are not actually increasing your taxes.

2. Accelerating deductions

Accelerating major deductions such as state income taxes, property taxes, and mortgage interest may help anyone, especially during a high-income year. If you don’t think your personal income tax bracket will be higher next year, and you’re not affected by the alternative minimum tax, you can make state and/or local tax payments before the end of this year so you can take a deduction this year.

3. Charitable Contributions

Consider making chartable deductions before the end of the year to receive a deduction. You must make the contribution by 12/31/2007.

Donate appreciated property such as real estate or stock instead of the proceeds of the sale. You may be able to receive a deduction for the value of the contribution without paying tax on the growth portion resulting from a sale, then a gift. If you intend to transfer appreciated property, begin early since it will take several weeks to make the change.

4. Alternative minimum tax traps

Many people face large AMT bills compared to previous years. Be warned if you have larger than usual medical expenses, non-federal income and real estate taxes, or miscellaneous itemized deductions; or if you have exercised large stock options, to name a few.

Year-end tax planning strategies can backfire under AMT. Be very careful accelerating some deductions and exercising stock options at year end. See a tax professional for information on your specific tax situation.

5. Be careful when investing new money in mutual funds at the end of the year

Call the mutual fund and find out when the distribution date is. You may want to purchase after the distribution date to avoid owing taxes on fund shares that you owned only for a short period of time and had little to no gain.

6. Contribute the maximum to retirement accounts

Contribute the maximum allowable to employer-sponsored defined contribution retirement plans, such as profit sharing, 401(k), 403(b) and 457(b) plans. This not only provides an excellent tax deduction, but it also helps you to plan for your future retirement.

You may want to contribute to an IRA; up to $2,000 is fully deductible if you did not participate in a company-sponsored retirement plan or if your income falls below certain levels.

If you are self-employed, you can contribute more to a pension plan than into an IRA. You have until December 31 to set up the plan.

7. Investment Losses

If your investment portfolio has stock that has depreciated in value and is worth less than when you originally purchased it, you may want to consider selling it. You may be able to use that loss to offset capital gains and ordinary income.

Be careful though; investment decisions should not just be for tax purposes. Make sure that you do your research before selling any investment. Some people react too quickly when investments lose value; others sometimes hold on too long. If you decide to sell and invest in something new, make sure that you examine your portfolio to ensure that you have the right mix of investments to match your investment profile, risk propensity and asset allocation model.

8. Save for College

Consider contributing to your child’s college savings into a 529 plan. The contributions are not deductible on your Federal return, but parents may be able to write off contributions up to a certain dollar amount on their state income tax return. Log on to SavingforCollege.com to find out information about your state.

9. Home Improvements

Here is a great deal. How about saving energy and the environment, lower utility bills, increase the value of your home and save on taxes all at once. Projects for the home’s shell (insulation, windows, sealing) and heating and cooling may qualify for a one time tax credit of $500. However you are running out of time, since they must be in place by the end of 2007. So while crawling around your attic looking for ornaments, think of adding insulation. If you made home improvements over the last couple of years, be sure to dig up your records; you may already be eligible.

Before moving forward on one of these projects, make sure that you get full information about these and other energy efficient tax incentives from The Tax Incentives Assistance Project at http://www.energytaxincentives.org/. There you will find more information about Home Shell and Heating & Cooling as well as Hybrid Passenger Vehicles and Solar Energy Systems.

10. If self-employed, buy equipment and supplies

Have you been putting off buying needed business equipment and supplies, or do you know that you will soon need them? Now may be the time to invest in your business and save taxes as well. Business tax can be complex; therefore it may be wise to first call your accountant prior to large purchases.

11. Give gifts to children

When you give to friends and family, it is usually not taxable to the recipient or the giver. Many people do not realize though if that gift exceeds $12,000 per person it is taxable to the giver, and at a high rate. Therefore, if you intend to give anyone more than that amount, you could give some this year and some next. The second tip is that you and your spouse can both give $12,000 per person, doubling the amount not subject to tax. Be sure to consult your legal and tax advisor prior to making all gifts.

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September 25, 2009

8 Essential Tips for Personal Taxes and Accounting

Filed under: Finance — Tags: Accounting, Essential, Personal, Taxes, Tips — admin @ 1:37 pm

A very important part of personal financial planning is tax planning. This article will help you take the mystery out of personal tax Planning by providing a financial planning perspective for your overall tax situation.

1. Be aware of the different types of taxes

Many people are not aware of the different types of tax systems that we have. Income: Federal, State and Local. Real estate tax. Tax on Investments: Dividends, interest, capital gain, and passive income on stocks, bonds, mutual funds, and investment real estate. Estate or Inheritance Tax: Federal and state tax due on the estate or the inheritor. Gift tax: tax on giver of large gifts. Entitlement Tax: Social Security and Medicare (FICA), Federal Unemployment (FUTA). Sales, self employment, and corporate taxation.

2. Consider working with a Qualified Tax Professional

Tax planning can be complex for many people, therefore it may be wide to work with a trusted professional tax advisor.

Tax advisors not only prepare your taxes but can help make decisions that will affect your future. They can serve as advisors for a whole host of matters and they can represent you if you face the dreaded audit. Consider the following when selecting a tax professional:

- Local: Someone that you can easily meet with face to face

- Personable: Someone that you can interact with and who cares about you

- Proactive: Some tax preparers simply look at your previous year’s return and plug your current numbers into last year’s format. This of course assumes that last year’s preparer knew what he/she was doing. Try to find a preparer who knows your situation. A proactive professional will ask questions that will help you anticipate changes in your tax situation to help you properly plan in advance

- Reputable: Find a professional with a good reputation. Ask people you admire for a referral.

- Skilled: Look for an accountant that is very competent. You have to be smart to obtain a degree in accounting or law.

Fees: Find out up front what they estimate their fees to be, what they charge to file electronically and whether they will represent you in an IRS audit. Avoid any ‘early refund’ ploys. Some well known tax preparation companies ‘provide’ this service which charges a hefty fee (with a lot of small print) and a lot of advertised hype for you to get your refund ‘early’. It is basically a high-interest loan. Just waiting for your actual refund will save you a lot of money.

3. Remember, tax preparation entails both art and science

The science involves the mathematical calculations that in most instances can be figured using calculators and software, and the infinite number of complex tax laws.

The art of tax planning comes into play with interpretation of any special circumstances. There are some areas of tax law that leave the government’s intentions unclear. No law can completely anticipate each person’s situation. You could call a dozen different IRS agents with the same question and get as many different answers. A proactive planner will research any unusual circumstances you may have and help you plan a course of action.

4. Doing Your Taxes Yourself?

I firmly believe in getting professional tax assistance. However, I realize that many people prefer to do their own taxes perhaps to save money, or perhaps you have cleaned up the mess a ’store front’ preparer made of your taxes and vow to do your own. It has been my experience that often the professional tax preparer has saved us the amount of their fee in our taxes. The peace of mind that the taxes are done right has a value all its own.

However, people who have prepared their own taxes at least once with paper and pencil or software usually understand taxes much better. If you self-prepare your taxes, consider having a qualified accountant review them before you send them in. They may find things you or the software might have missed.

If you made less than $54,000 in 2007, you can file your taxes electronically for free through the irs.gov website www.irs.gov/efile/. If you use tax software and wish to e-file be aware of the fees so that you can budget and compare prices properly. For example, a download of Turbo Tax Home and Business Federal and State for 2006 cost just under $100 and the filing fees cost around $30. Some States allow you to ‘phone in’ your State return for free.

If you choose to mail your return, go to your local post office and send it ‘Certified Return Receipt’ mail to insure that you have a record that the IRS received your paperwork. This will cost around $10 or less and will be worth every penny should the IRS contest the receipt of your return.

5. Keep great records

If you are already very organized you may read this section just to feel great about your organization skills or skip to the next section. If, however you have heard ‘get organized’ many times before and if you are the type of person who balks at the idea of organizing that mess of receipts just remember how you felt last year as tax time approached. You could become organized in only one evening of television viewing with the right tools. Arm yourself with an accordion file with at least 16 sections. Label them according to your situation or use the following sections: Auto, Bank, Business, Credit Cards, Dental, Medical, General Receipts, Grocery, Income, Insurance, Mortgage, Utilities, School, and Taxes. Now sort your receipts into these sections. Organizing your receipts will help you “Take the mystery out of…” your financial situation. Use a new accordion file every year. Not only will this help you find needed information, it will also help you find a receipt in case you need to return an item you purchased. . Your tax professional will be sending you a tax organizer the end of December or the first of January. In this organizer will be a list of information that you will need to gather. Becoming organized will help you easily gather the information you need to fill out your tax organizer.

6. Start early

Do not procrastinate on your taxes. Tax professionals are unbelievably busy January through April. Firms who prepare business returns also have a crazy March 15 business deadline. We are providing this information because we want you to get the most attention from your preparer during their craziest season. As soon as you get your organizer, begin gathering the needed papers. If you are only missing one or two pieces of information return the organizer to your accountant with a note that says what is missing. They will begin entering the information in their software. Try to get a January or February meeting with your accountant. These months are the best to meet because they will have more time to spend with you and they will be able to think proactively. If you are looking for a professional, start looking now.

Another reason to start early is allowing yourself time to look for records, ask financial institutions for copies of lost information, or calling investment companies for statements.

7. Judicious Paycheck Tax Withholding

Many people like to overpay their taxes, so that they get a nice refund in time for vacations or other wants and needs - Kind of like a forced savings. Overpaying taxes is like a giving the government an interest free loan of your money.

Good financial management involves developing savings habits so that you set aside money in an interest bearing account from each paycheck for future needs, wants and emergencies. This helps you to avoid using credit cards for those things and not having to wait until refund time. Secondly it then allows you to manage how much you can afford or are able to put into 401(k) plans at work. This accomplishes two things, first you are managing your money better and you are saving for retirement. Saving for retirement in tax deductible retirement plans like 401(k)s will also lower your taxes, enabling you to save more for retirement and everyday needs and wants.

If you want to lower the taxes that are being withheld from your paycheck, file a new W-4 form with your employer to claim an additional withholding. Make adjustment for getting married, divorced, having children and for increasing contributions to tax deductible retirement plans. Your accountant will help you estimate this.

8. Tax planning is not the tail that wags the dog

Taxes consume a large if not the largest single percentage of your income, therefore good financial planning should strive to lessen them, by whatever means possible as allowed by law.

However, tax planning is not the only core issue of good financial planning. Tax planning works in concert with your overall goals and your individual situation.

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September 11, 2009

11 Great Financial Tips for Homemakers

Filed under: Finance — Tags: Financial, Great, Homemakers, Tips — admin @ 9:06 pm

These tips were provided by my wife, Laura Irwin, who gleaned them from many years of homemaking and learning from others. Homemakers face a myriad of challenges; not the least of them is managing family finances on only one income. This is just a short list of issues. Self education regarding family finances is crucial for homemakers because of reduced income, lack of retirement accounts, increased need for self-discipline (possibly more time to shop), and the fact that if the finances become an issue, homemakers may have to return to work. We wish you the best and hope that these tips are helpful.

1. Accountability - You must plan finances together with your spouse. This way, no one gets to play the ‘blame game’ when things go wrong. When both spouses work on finances on a weekly basis, overspending by either spouse will become apparent. You will also get the chance to congratulate each other on your successes. You are in this together. We all know that money is a huge cause for stress in relationships, and working together will help prevent years of financial stress. This may also help you both learn self-discipline and how to live on less. Accountability helps you not be that guy in the commercial where he says, “How did I do it? I am in debt up to my eyeballs!”

2. Keep depositing money in your IRA - Even though you may not be earning an income. Women are poorer in retirement than men are because they earn less, live longer, take time out for child rearing without contributing to retirement accounts, and receive less in Social Security benefits because of the time-out for child rearing. This is statistically even more important for women in minority groups.

3. Budgeting, Debt Reduction and Saving - Proper budgeting and debt reduction will help you meet your goals of being able to live on one income. Some women are naturals at budgeting, but if you are not one of them, a budget is simply a spending plan that helps you keep track of regular monthly expenses and savings for planned purchases and the future. If you have never created a budget, you may consider using software, an Excel spreadsheet, or simply paper and pencil. You will be spending a lot of time with it, so use whatever makes you comfortable. Put your debt reduction plan into your budget. For great information on reducing your debt, see www.debtproofliving.com.

4. Fifty Dollar Limit - Or any amount you both decide on together. This tip has saved us many unnecessary purchases because spouses must communicate about a purchase before spending over the limit. (This does not apply to the weekly bills like grocery or utilities.) At times, this rule may seem too restrictive, but we have found it to be a huge budget saver. It also helps to get a second opinion. Recently, my wife called me from the check out line about purchasing an item, and I was able to remind her that we already own one! Judge the long-term benefit of purchases. Our children are teenagers, so we have had a chance to learn from our mistakes and wish we had done some things differently. One of our regrets is overspending on toys, and watching the toys be neglected, eventually ending up in a garage sale. Since we have begun paying for our oldest child’s college tuition, it is painful to think of how much money we could have put into a college savings account had we not purchased those toys. Other examples of this include purchasing children’s furniture, which will have to be replaced as the child grows. An inexpensive bed rail can make an adult-sized bed usable from toddler age to adulthood.

5. Understand marital financial mindsets - What happens when opposites attract? They get married, then begin to fight about money! Consider the following ways people view their finances: There are optimists, pessimists, spenders, savers, planners, procrastinators, and any combination of these. Perhaps his parents were well off financially and she was raised in poverty. On the other hand, perhaps her parents taught her sound financial principles and his parents kept their finances a secret, or worse, he has copied their example of bad financial habits. Open and honest communication about both of your mindsets may help you work through any pre-conceived views or bad financial habits. Remember that this must be done without finger pointing and with the goal of financial harmony. Perhaps reading a good book together about marriage and money would be helpful.

6. Houses and Cars - These are the biggest expenses for most marriage partners. Ideally, if you can plan to have your mortgage paid off before your first child goes to college, you will feel less stressed about paying tuition. Another great way to save money is to buy great low-maintenance cars and drive them for a long time. There is no freedom like driving a car that is ‘paid for’. Many experts recommend that you put the amount of your payment into savings after you have paid the car off to save for the next one. From personal experience, we also recommend planning for what kind of car you will need several years from now. In other words, do not buy a two-seater if you plan on having children in two years. Hold off saving for the family vehicle. Also, do not sell the minivan after middle school because the kids are not in sports anymore. You may need it to haul your child’s belongings to college.

7. Get Organized - Buy a file cabinet for financial and other important papers. This central location will allow you both to understand where anything important belongs. You can avoid many financial mistakes by keeping papers and bills well organized.

8. Understand your Health Insurance - Health insurance costs have risen for everyone. If you have employer-provided health insurance, take the extra time to understand your coverage, especially during enrollment time. Understanding your coverage may help you save a lot of money. Figure out which policy is best for your family. For instance, if you have a high monthly prescription expense you may research which plan pays the most for prescriptions. If your medical and/or dental expenses are very high, you may be able to deduct them (7.5) of your adjusted gross income. Keep track of your mileage to doctor appointments (20 cents per mile). See your tax advisor regarding your specific situation and see irs.gov Publication 502.

9. Set long and short-term goals together - Creating goals together is a wonderful marital exercise. You will learn what each partner finds most important both now and in the future. It is amazing how current wants can be dismissed when they are compared with a written plan.

10. Determine areas of overspending - Each month as you both check your budgeting progress, watch for recurring overspending in any categories. You will probably find one or two areas that go over each month. If you are within your overall budget, you may want to raise your budget amount in those areas or find ways to lower your spending. Many busy families find that eating out regularly exceeds their budgeted amount. This one requires extra self-discipline to plan ahead and create freezer meals that you can fix in a matter of minutes. Tired moms will hate this suggestion at first, but it really can save hundreds of dollars.

11. Do not let grocery shopping be a budget buster - A penny saved really is a penny earned when it comes to grocery shopping. For decades, women have come up with creative ways to save on groceries. I remember my mother saying that any money she saved from groceries went toward birthday and Christmas gifts. Somehow, through hard work she was able to feed three growing boys and still have money left over! My wife’s family preserved produce from their large garden and from local fruit growers. Others use coupons, shop for sales at multiple stores, or plan meals around sale items. All of these ways are wonderful - do whatever works for you. My wife recently read a huge stack of books from the library about saving money and discovered one recurring theme about grocery shopping. Most books recommended keeping a book of regular prices for each item you usually purchase. That way you can see if it is really a great sale price, or if they simply put it in the grocery flyer at the regular price. If that sounds like a lot of work to you, visit www.Thegrocerygame.com. After entering your zip code and your local grocery store, you will be able to access a computerized list of best deals at your store that week. After only three weeks, we have saved about $200, and we have begun a stockpile of groceries in the pantry.

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