My New Choice

How often do you balance your checkbook and check on bills?

The routine that I typically use is to call our “bank-by-phone” number or log into our online account once per week to do a checkup on all of the debits that have been made and the checks that have cleared.

When our monthly banking statement arrives, I do a quick verification of all the data and finalize the balances. While this may seem like a fair amount of work, I’ve got it down to a nice routine and it works very well for me.

Out of Touch
Over the last few weeks, we have had a lot of things going on at home and I’ve been very busy with work. We’ve finally had the window replacement completed and then ordered new blinds. The blinds arrived and were installed last week so things are finally starting to settle down on that front.

With everything that has been keeping my occupied, I haven’t been following my regular routine of the weekly balancing and it has left me feeling a little bit out of touch with everything.

In addition to not following my routine, I have noticed that my filing system of incoming bills and bills that have been paid has also taken a turn for the worse. Right now my desk has a large pile of papers that need to be addressed, although all of the payments have been scheduled so I just need to clean up the paperwork.

Build Strong Habits
This experience over the last few weeks has demonstrated to me the importance of creating habits for yourself. If you fly by the seat of your pants, I feel that it is much easier to ignore things too long and get yourself into trouble with late payments or overdraft fees if you’re not careful. While I know that might work okay for some people, I now know that it does not suit my personality.

By maintaining my routine, I have developed a keen sense of knowing what our balances are at any time and how upcoming bills will impact our available funds. Without these habits I am sure we would have a more difficult time given that we follow a fairly loose spending plan.

Have you found that you need to stick to a routine in order to maintain your comfort level? Or do you find that you work better with a more relaxed approach?

As a means of tracking my progress towards my 2007 goals, I am going to be running this as an on-going series of posts. As a bit of background, here are the opening posts in the series:

• June 2007 Update
• May 2007 Update
• April 2007 Update
• March 2007 Update
• February 2007 Update
• January 2007 Update
• 2007 Financial Goals

Non-Mortgage Debt
My original plan was to eliminate all of our non-mortgage debt by the end of 2007. As a reminder, the only non-mortgage debt that we have is the 0% balance transfer from American Express that is deposited in our HSBC account.

As I mentioned last month, I have been receiving some attractive offers for new 0% balance transfers and one offer is extended through February of 2009.

Unfortunately, I have called each of the companies regarding their offer and none of them are willing to deposit funds directly to my checking account.

Initially I had planned to just forget about the additional balance transfers due to that limitation but now I am thinking of just transferring the balance at American Express over to one of the new offers. I’m still not decided on this approach but it is under consideration.

In 2007 we have reduced our non-mortgage debt by 47.92% as we had paid off a previous balance transfer and have been making consistent payments on the AmEx balance transfer. The 0% balance transfer at American Express only has a few months remaining so we will either pay it off completely or roll that over to one of the new offers. If we select to roll it over, we will not be meeting this goal as the funds would remain at HSBC until the teaser rate expires.

Increase Net Worth
Ugh! Things were looking okay until the last week of July when the S&P 500 dropped by nearly 5% after July 23rd. For the first time this year I have had a decline in my net worth.

For the month of July, our net worth declined by 0.32% and much of that took place in the last week of the month. It’s disappointing to see but given the overall decline of the market I think we did fairly well. This brings the growth of our net worth to 20.15% since the beginning of the year.

The last few months have given me cause for concern as to whether or not we will reach our goal of increasing our net worth by 35% but I believe we can still do it.

Plans for August
Last month I had mentioned that we were going to be making the final payments on our windows and we did, although I discovered that I could use my rewards credit card to make the payment. Therefore the payment will not officially be made until our August statement is due for that credit card, which we pay off in full every month.

August will bring a close to the summer as our kids head back to school. In addition, my wife will be resuming her job once the kids are back to school so there will soon be an additional source of income. We’re still looking to get away for an extended weekend before school resumes but our schedule is so full that it may be difficult.

While I am a little bummed to have taken a step backwards in July, I realize that there are times when you need to take a step backwards before you can resume moving forward. The year has been flying by and I hope that everyone else is doing well on the progress towards their goals!

Would you like a little more breathing room in your budget?

Whether you follow a very strict monthly budget where you allocate each dollar to specific goals or follow a more loose budget where you meet your savings goals and live on the rest, I am sure you wouldn’t mind reducing your expenses.

Over at CareOne Credit there is a great article with 101 ways to trim your budget. While I don’t agree with all of the suggested tips, I thought that I would highlight a few of my favorites.

• Be realistic. How many people do you know that have started a diet and failed? One of the primary causes of failure is that they go to such an extreme at the beginning of the diet that they cannot possibly sustain that long-term. The same holds true with budgets. If you need to reduce your expenses, be sure to stay realistic and create a plan that you can live with month to month. When you try to cut everything at once, you will face a difficult road to stick to your budget.
  
  
• Be honest with yourself. I’ve mentioned before that my wife and I did not begin to truly eliminate our debt until learning to be honest with ourselves. When you lie to yourself about your financial situation, you are only hurting yourself. Don’t keep your head in the sand and do your best to be honest with yourself.
  
  
• Install a programmable thermostat. While I think this is a great tip, I do know it may not hold the same value for everyone. In our situation, my wife has been a stay-at-home-mom and therefore it is rare that there is a time of day when someone is not home. However, we still are able to take advantage of the programmable thermostat to automatically adjust the temperatures at certain times of the day or over weekends when we are home much less.
  
  
• Cut down on dry cleaning. We have actually saved a decent amount of money with this tip. There was a time when I would take all of my dress shirts to the cleaners every week to be washed and pressed. As much as I enjoyed not having to iron all of my shirts, I realized that I would sooner use that money for other purposes and cut this expenditure.
  
  
• Get your hair cut at a teaching salon. Other than my wife, we have not had an expense for cutting hair in a very long time. We’ve been able to cut this expense from our budget because my wife is a licensed stylist. Although I am a rare breed that actually wishes I would go bald, so all she really has to do is adjust the clippers as low as they will go and buzz off all my hair. If you’re not adventurous enough to try haircuts at home, going to a teaching salon can save a considerable amount of money - particularly for the ladies!
  
  
• Sleep on it. We’ve used this strategy to curb impulse buying for quite some time and it really does work wonders. In many cases you will come to the realization that you don’t need (and possibly don’t even want) the item in question once you have delayed that instant gratification.
  
  
• Bring your lunch to work. This can be a huge area to save money. In addition, don’t feel that you have to limit it to lunch as you can also save money on breakfast. I’m guilty of eating out for lunch more often than I should and I know this is an area where I can cut back if we have a need to reduce our expenses.
  
  
• Skip snacks at the theater. There are a few ways to save money if you go to the movies and skipping the snacks is one of the most cost-effective. If you simply cannot make it through a movie without a snack, stop off at the store before the movie and grab a box/bag of candy. You might need to stuff it in your pocket depending on the theater’s policy but it sure beats paying through the nose for their candy. Another way to save money at the theater is to see a matinee instead of the “primetime” showing. The theater by us has even cheaper tickets if you go before noon so check the theaters near you.
  
  

There are many more ways to trim a little bit out of your budget but the above tips are a few that we have implemented at one time or another in our lives.

What are your favorite tips for reducing your budget? Let me hear them!

A few weeks back I had mentioned that The Motley Fool was going to be eliminating their membership service and the discussion boards would be free for everyone to read.

However, in order to have the ability to post on the discussion boards you would have to be invited by an existing Fool member.

Just the other day I had noticed that I now have the ability to invite new people to become a member at The Motley Fool discussion boards. From what I remember at the time of the announcement, I will only receive 20 invitations so I will be offering them on a first-come, first-serve basis.

I Want To Be Invited
If you would like an invitation, simply comment on this post and include a valid email address that I can use to send you the invitation. That’s all you need to do!

Once you are signed up as a member, I believe you will then have your own invitations that you can extend to people as well.

Benefits of the Fool
As I have mentioned before, I honestly credit the Fool discussion boards with providing me the information and tools to improve my financial situation and eliminate all of our non-mortgage debt.

I have to admit that I have been spending less and less time at the Fool in recent months but that is not due to the quality of their service. My time commitments at work have increased and the free time I do have is now spent with my family and working on my blogs, which unfortunately does not leave me much time to spend at the Fool.

The Fool contains discussion boards on just about every topic that you can think of and the people in the community are some of the nicest people you will ever meet. One thing that always amazed me at the Fool was how willing and able people were to help one another even though you may have only known each other digitally.

I highly recommend the Fool discussion boards and will be more than happy to use my invitations for anyone that feels like they will get value out of becoming a member.

Effective today the federal minimum wage has increased to $5.85 per hour.

This is the first increase to the federal minimum wage since September 1997 and ends the longest period without a federal minimum wage increase since being enacted in 1938.

In May of this year, President Bush signed legislation that will increase the federal minimum wage by $0.70 each year until 2009. In 2009 all minimum wage jobs will be required to pay no less than $7.25 per hour.

While this increase will likely be good news to many teenagers and adults working part-time jobs, I’m not so sure how much it will help the working poor. A person working 40 hours per week at minimum wage will see an increase of roughly $1,400 per year before taxes.

In the end, an increase is an increase and it is a good thing to see from a worker’s perspective. Smaller businesses might have a different opinion as it will now cost them more to staff their business, although there is also a $4.84 billion dollar tax relief for small businesses included in this legislation to help hire new workers and offset the increase in the federal minimum wage.

For those currently earning minimum wage, I hope you enjoy the increase in your paycheck and have the ability to set some of the increase aside for long-term savings!

The Illinois 529 College Savings Program, named Bright Start, is currently in the process of transitioning to a new program administrator.

For plan participants, this looks to be a very positive change and should provide a few new attractive options for your investments including the introduction of index fund options from Vanguard.

The new administrator will be OFI Private Investments Inc., a subsidiary of OppenheimerFunds, Inc. and there will be lower annual fees, enhanced online account management and a wider selection of investment options. The transition will not require any action on the part of participants and account balances will be moved to similar investments in the new plan.

Beginning July 23rd, Bright Start investors will be able to choose between an actively managed strategy or an index strategy. The active investments will be managed by OppenheimerFunds while the index investments will be managed by Vanguard. Further, there will be a choice between an age-based portfolio or a static portfolio.

The static portfolios will include an equity portfolio, balanced portfolio, fixed income portfolio, and principal protection income portfolio. There will be 6 different age-based portfolios with the asset allocation becoming more conservative as the child gets older.

One of the most attractive changes will be the lower account fees. The previous plan administrators had fees that were on the high side so this will be a welcome change. For investors that select the index strategies, they will have plan fees that range from 0.20% to 0.23% although there will be an annual account fee of $10 per index portfolio. The active strategies come with plan fees between 0.38% and 0.63% which is still a nice improvement.

If you’re currently enrolled in the Illinois Bright Start College Savings Plan, you should be seeing these changes in the next week and it appears that the plan will be much more competitive with other state plans. Please stop by and share your thoughts regarding the new plan and investment options.

Do you budget for your kid’s extracurricular activities?

How do you limit which activities your child can pursue? Is it by cost or by interest?

This summer we have had a handful of costs for extracurricular activities for our children and we are in the process of contemplating an additional activity for our youngest son.

From PONY baseball to the early summer football camp and a handful of other activities, our kids have had a busy schedule so far this summer. While we have not explicitly budgeted for these activities, they do fall within the scope of our budget as we live on a rather loose budget where the only hard rules are that our savings goals are being met each month and all of the bills are paid in full - we are free to *live* on the rest.

Our youngest son has been showing quite an interest in skateboarding and practices just about every day. In addition, we’ve taken him to a local skate park and he practices going down the ramp and staying on the board - which is rather impressive to me that he can do that at the age of 5.

We just recently found a local indoor skate park that runs a week long clinic for kids of all ages. We did call and they said they have had a few 5-year-olds before and we can bring him by so he can test the place out and see if he is interested. The cost is $250 for the full week and the classes run from 10am - 4pm and include a cold lunch each day. When you break it down to an hourly fee, I don’t think it is too bad.

But this brings me to the question of how much is too much when it comes to extracurricular activities?

Right now our kids are still pretty young and the costs have been relatively minor. The PONY baseball season came with a $100 fee, while the baseball camp and football camp each had a $40 fee. However, I’ve heard that if our son continues with baseball and makes a traveling team that we can expect to pay into the $1000’s for one season between fees and traveling costs.

As much as I do not want to squash the dreams of my children, there is a point when you have to give serious consideration to whether or not it is feasible to pay the fees for those activities. Will my son become a professional baseball player? I certainly hope he does but the odds are not exactly in his favor. As a parent, I would hate to think that I possibly held him back from that potential because I balked at paying the fee for something.

Will our youngest son be a professional skateboarder? I doubt it but it does bring him a ton of enjoyment right now. Is that worth the $250 for the week long clinic that will teach him much more than he knows now? When I think back to the joy our oldest son had on his face when he turned a double-play in baseball, I feel like these costs are more than worth it.

How have you approached the fees for extracurricular activities for your children? At what point do you draw the line?

Are your financial records in order? Do you need help with your organization?

Earlier today I was reading an article on Yahoo! Finance about digging out and getting yourself organized.

In the article, there were a few common blunders to avoid as well as a few tips to follow as you try to put some order in your financial life.

Organizational Blunders to Avoid

• Neglecting to write a will :: Guilty as charged. This is something that has been on my to-do list for awhile now but always seems to get pushed behind other tasks. Something I have done recently was to create a record for my wife that listed all of the financial accounts, including the website for online access and any associated username and password. In the face of tragedy, you do not want your loved ones in a bind.
  
  
• Throwing away tax returns after a year or two :: I’ve yet to discard a tax return as I keep them all filed in my archive. Along with each tax return I have an envelope that contains all of the supporting documents that are relevant to that return. However you file your financial records, hang on to those tax records for about 6-7 years but definitely no less than 3 years.
  
  
• Saving too much paper :: See above. I’ve had a bad habit of keeping everything. I had utility bills from 7 years ago and phone bills from 10 years ago. Why? That’s a good question. Over the last year or two, I’ve sorted through everything and have come up with a much better system. Although I now have a few boxes of documents that are waiting to be shredded.
  
  
• Storing the only signed copy of your will in your safe-deposit box, instead of giving a copy to your lawyer or other trusted adviser :: Okay, I don’t have a will nor do I have a safe-deposit box or lawyer. Once I complete my will, I will be sure to store a signed copy with a trusted 3rd party.
  
  
• Neglecting to carry an emergency list of loved ones, doctors and advisers in your wallet :: I’m not doing too well on avoiding these blunders as I don’t carry any contact information in my wallet. About the closest thing I havei n my wallet is my healthcare insurance card. My only concern with carrying around a list of contact information is that if you lose your wallet, that information is all available to the person that finds your wallet.
  
  

Organizational Tips to Follow

• Direct Deposit :: The only time that I have not utilized direct deposit is when it was not an available option. Having funds such as your paycheck or dividend check automatically deposited to your account eliminates the possibility of misplacing a check and saves time as you don’t need to make a trip to the bank.
  
  
• Paper certificates :: Are you holding on to any old paper stock or bond certificates? It is a good idea to transfer the paper certificates to your stock broker as that will prevent you from losing the certificates.
  
  
• Filing taxes online :: This is something that I have been doing for quite some time and love the simplicity and speed of filing my taxes online. The popular choices for tax preparation software are capable of handling just about any tax situation so I would highly recommend filing online if you are not doing so already.
  
  
• Update regularly. Back up your records regularly. And print several copies. :: As I mentioned earlier, I’ve got the natural habit of saving quite a bit of information. As more of my records have moved to eletronic media, I am sure to update my information on a regular basis and have a standard backup routine for my records.
  
  

As you work to improve your own financial organiztion, you will be on the right path if you try to avoid these common blunders and consider implementing the tips mentioned above.

Do you have your own life lessons on blunders or tips related to organization? I’d love to hear them!