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Managing the charity creep

by Jana 8 Comments

Lots of bloggers are talking about how quickly Christmas (and Hanukkah) are approaching. With the Christmas creep happening sooner and sooner, it feels like Christmas is coming way sooner than in about 8 weeks (which really is a long time). December is traditionally a difficult month, financially, due to both holidays as well as my daughter’s birthday. Since I know that these things happen every year, I budget accordingly and have never gone into debt for any of them.

But this post is not about how I plan for Hanukkah, Christmas and a birthday every year. No, this post is about something else that affects my budget every holiday season, and seems to be getting worse every year. This post is about the charity creep.

You all know what the charity creep is. It’s the onslaught of food drives, clothing drives, bake sales, Toys for Tots, Adopt A Family, Salvation Army bell ringers and pretty much anything else you can think of that involves you forking over money for a good cause. But there are just so many! Everywhere you turn, someone else is asking for money or goods for those who are less fortunate. This totally plays on our guilt that we have so much and we need to give back to those less fortunate, especially at the holidays (which is actually a term that bugs me to no end). Which is a concept I 100% agree with. And a concept that I practice year round, even without “the holidays”. But I digress…

When the charity creep starts setting in, if you’re anything like me, you get nervous and sweaty and anxious. After all, how do you discriminate between so many worthwhile causes? The easy answer is don’t discriminate. Give to all of them. But that’s insane and an unreasonable expectation. Another answer would be to just pick one that resonates the most with you (food bank, animal shelter, whatever). This involves looking at your values and deciding what you value more, which is not always pretty. A third answer would be to just not give to anyone at all and hoard all of your money for yourself. But that’s not nice. A fourth answer would be to just put all the options on pieces of paper in a hat and randomly pick one. It’s totally objective and gives each charity an equal chance.

Sadly, I don’t have any solid advice that would point you in a specific direction (except to make sure that the charity you’re giving to is legit. If you see a coffee can on a counter that says “Money for Poor Peopel” (spelling mistake is intentional), it’s probably not real). What I can do for you is tell you what I do and hope that it helps.

Years ago, my husband and I made a collective decision that we would donate to one food drive, participate in Toys for Tots, and give to the Salvation Army bell ringers. We discussed giving to a local animal shelter but instead of doing that, I give directly, from an automatic paycheck deduction, to an organization that has a Trap, Neuter, and Release program. My in-laws also donate money every year in my daughter’s name to a charity of their choosing (let’s not discuss this now. I get way too fired up about it). However, even among those general categories, it’s still hard to pick which food drive, etc. So we took the lazy way out. We went with convenience.

Every year, my daughter’s school sponsors a food drive and has an Angel Tree. Since we have to go there every single day, it makes for an easy drop off location. We just put the items with her things so when we leave in the morning, we just grab the donations, too. To afford it, we put a few extra dollars in the food budget, or look in the pantry, and give that to the food drive. For the Angel Tree, we pick two “ornaments” and set a price limit for each toy. What’s nice about using her school, especially for the Angel Tree, is that we know exactly where the items are going and there’s no question as to whether they’re getting to the intended recipients.

This year, though, I’m adding in something extra. Every year, the morning show that I listen to (Preston and Steve) does a Camp Out For Hunger. The literally live in a camper for 5 days and people bring donations that benefit Philabundance, the largest food bank in the Delaware Valley. Although I live close enough to Philly, it’s really hard to get there during the assigned drop off times. However, there is now the ability to donate online through the Acme (Albertson’s) website, and it can be done in values of $10, $25 or $50 and it’s all food donations, not money. I typically wouldn’t do a donation like this but P&S are really famous and influential in this area, and I’m confident they wouldn’t do anything to screw that up.

So that’s how I manage the charity creep. What do you do?

Guest post: Diet tips for finances

by Jana Leave a Comment

The following is a guest post from my friend Liz. She doesn’t have a blog but this post makes me think she should!

First, let me tell you how flattered I am to be guest-blogging!  Just a little background on me – I’m 27, married, live in fly-over country, and work as an attorney for the state government.  I’ve been interested in personal finance since I got my first real “adult” job two years ago (and the student loan bills to match!).

Something that struck me recently is how many popular diet tips or theories can be applied to one’s finances.  It does seem to boil down to the two constants – output and intake.  For weight loss, calorie output must be greater than calorie intake.  For financial security, one’s income must be greater than expenditures.  There are countless ways to make both these goals happen – but the underlying formula is very simple.

So here are some diet tips that can be repurposed as finance tips – because why waste that valuable brain space?

1)      Don’t think of it as a “diet” – think of it as a lifestyle change. No amount of quick fixes – diet pills, cleanses, shakes, saunas, those old-fashioned machines where the giant rubber band shakes you – will result in long-lasting weight loss.  And in the personal finance arena, no amount of credit consolidation services, 0% balance transfer cards, check floating, or refinancing will help you get out of debt.  These can all aid you in the short term – but eventually, the weight will creep back on, and the interest rates will creep back up.

For long-term stability, you need to reevaluate your relationship with food – or money, as the case may be. This may involve short-term sacrifice – eliminating your entertainment budget for a few months until you get your emergency fund beefed up, for example – but these short-term sacrifices will generally reduce the need for more long-term sacrifices.

2)     Before buying something – ask yourself “do I need this?” Both spending and eating can sometimes be done without thinking – finding yourself with a bowl of chips in front of the TV, or grabbing a $2 lip gloss from the checkout lane at the grocery store.  These subconscious actions can add up in real ways, both on your hips and your credit cards.

The first step is to identify the source of these behaviors – do you consume when you’re bored? When you’re upset? When you’re celebrating? Once you’re aware of your “triggers”, you can work on redirecting that energy elsewhere. One fairly successful tip I’ve incorporated into my consumer “diet” is the 24-hour rule. If you really, really want it, mull it over for a day.  If, after 24 hours, you’re still thinking about it and it’s within your budget, go for it!  If you’ve forgotten about it by the next day, it probably wasn’t worth it. (The same principle goes for food, although waiting a full 24 hours is probably not recommended!)

3)     If you slip up, acknowledge it, and get back on the horse. All is not lost. Everyone has days where everything seems out of control.  But one of the biggest mistakes many dieters make is turning a minor slip into full-fledged diet sabotage – with the justification that “I already screwed up my diet for the day, what’s a little more going to hurt?”

Don’t use these slip-ups as an excuse to get back into old habits. Forgive yourself – we’re only human, after all! – and start the next day with a clean slate.  This will keep those little slip-ups from turning into major ones.

4)     You can have anything you want, but you can’t have everything you want. I’m a firm believer that there’s room for some chocolate in every life – and every budget.  Whether your “chocolate” is an iPhone, getting your hair highlighted every 6 weeks, lunches out, driving a new car – if it’s important to you, by all means, make some room for it.

But a diet of only chocolate won’t get you far – and more non-essentials creeping into your budget means less to spare for the basics.  Analyze your budget periodically – are you spending more on your basics, or on your extras? If you find yourself going over your limit but are reluctant to make cuts, look at ways to increase your income.  No different from exercising to burn off an extra slice of pizza.

This ties into number 5…

5)     Completely depriving yourself almost always leads to a splurge. This is true in every area of life.  Just look at the way consumer spending has rebounded since 2008 – by all measures, we’re still in a recession, but many of us are chafing under our “recession budgets” and have resumed business as usual.

And this is the danger of treating a budget as a “diet”, rather than as the new normal. I think of this as “yo-yo budgeting” – keeping it completely bare-bones for a few months, putting money away into savings, then blowing everything on a vacation, or a new pair of shoes – because after all, you deserve it for being so good, right?

WRONG!

Rather than become a yo-yo budgeter, include enough space for extras in your budget so that you are meeting your goals without feeling deprived.  My husband and I use the allowance system to accomplish this – I can’t tell you how many arguments it’s averted.

And on a related note…

6)     Don’t wait to live. How often do dieters avoid buying new clothes with the idea that they need to lose a bit more first?    Many budgeters do the same – putting off expenditures and experiences until they save “just a little bit more.”

Balance is so important here.  Just as you don’t want to eat ramen noodles in retirement (I was going to say cat food, but have you seen how expensive it is?!?), you don’t want to postpone a lifetime of travel for retirement and find yourself unable to travel, or without a companion.  Try to look for the free way to do things, instead of believing you need to have others do for you. For instance, use a free tax software instead of having your itemizations done by an accountant or learn how to repair your own drywall instead of hiring out. Use self taught methods to perform needed tasks from a DIY point of view and you can have more things that you want and stay within budget.

Finding this balance is tricky, and many – myself included – are still getting there.  But I do think that balance is the key to everything. Balance work with play, saving with spending, and dressing-free salads with a big glass of red wine, and watch things fall into place!

 

 

 

Reader response: Why didn’t I learn?

by Jana 8 Comments

A few weeks ago, I guest posted on Debt Free by 30 skills I have in my 30s that I didn’t have in my 20s. In of the comments, a reader asked why I never learned those skills. I thought it was a great question that deserved its own post as a response.

The short answer is that I was lazy. Talking and thinking about money were boring to me so I didn’t do it. Finances were one of those things that I knew I needed to learn but at 20, 21, 22, didn’t seem necessary. I just figured my money would take care of itself. I knew I needed to pay my bills but that meant once a month, sitting down with my roommate and writing checks to our cable provider, our landlord and to my credit card. That was it.  I didn’t think about budgeting, retirement, savings or anything even remotely related to that stuff. Why? Because that stuff is what old people worry about.

I forgot that one day I was going to be one of those “old people”. It didn’t occur to me that one day, I was going to finish school and all of the insulation that goes along with being a student would be stripped away. I didn’t think that one day I would live in a place where utilities would not be included in the cost of living. I failed to realize that being fiscally responsible in my early 20s would leave me more options as I moved into my 30s. I didn’t consider the fact that there’d be a day where I’d have to rely on my income to meet my obligations. I just assumed that I would graduate, get a job, and everything else would take care of itself (including any debt I incurred. I suppose I believed a genie would pay it off for me).

Part of the reason was my parents. I know it’s cliché to blame my parents for my financial ignorance in my early 20s but sadly, it’s true. My mother has absolutely no idea how to handle money. I remember every Sunday night my dad sitting at his desk balancing my mother’s checkbook. I remember him yelling at her that she added when she should have subtracted. I remember him getting frustrated that my mother consistently forgot to input checks that she wrote. And I remember that not once, did he ever call me over to his desk so that he could teach me what he was doing. My dad is kind of an intimidating man, especially when he’s angry, and I never wanted to ask for fear of getting yelled at myself (I got yelled at plenty for other things. I opted to stay away from this).

I was also never taught about the importance of long term savings. After my bat mitzvah, my dad had me sit down and sign the back of about 100 checks that I received but he never took the opportunity to explain where they were going or why.  Being just shy of 13, I didn’t even think to ask. I just trusted that my dad knew what he was doing and that he was putting the money away for me for when I was older.  I should’ve asked and I should’ve taken the time to learn because as it turned out, the money got used for other stuff. I’m still not sure what or why and I’m sure not going to ask.

Now that I’ve properly blamed my parents for not seizing teachable moments, let’s reflect inward as to why I didn’t learn. We’ve sufficiently covered the fact that I failed to ask questions, I’m lazy and I thought that money was something only old people thought about. But wait! There’s more. Lots more.  For instance, I always thought that money was just something I couldn’t understand. When I was in high school, we were required to take economics. We learned about the stock market, investing, credit cards—all of it. And it bored the crap out of me, mainly because it sounded like I was learning some obscure foreign language. I don’t know about you but when I get bored and information is too complicated, I shut down. I decide that I’ll never understand it and I quit trying to learn. Such was the case with money.

Let’s pause and discuss cooking for a moment. I did not learn to cook for a few reasons. One, I was incapable of cooking without starting a fire (I’m better now. I only start one fire per year instead of per week). Two, my firesetting prowess made my parents forbid me from using anything in the kitchen that was not the microwave. Three, that’s what restaurants and take-out were for! I did cook some things—pasta and chicken. I was really good at making sandwiches and soups (from a can but whatever) and I never starved. My expenses at this point in my life were so low that going out to eat was no big deal.  Cooking was not a priority because I had money (or so I thought).

And now we return to money.  As I mentioned in my post, I didn’t practice self-control either. That was a skill I had to grow into gradually. This was actually something my parents did do right. While they were really good about buying me everything that I needed and most of what I wanted, there were times where they adamantly refused and they made me save my allowance and babysitting money in order to purchase something extravagant like a brand new camera or a Coach wallet. However, once I became an “adult”, all of that patience went out the door. I bought what I wanted, when I wanted because I didn’t have the forethought to realize that I was going to have to pay that money back. It wasn’t until I was 29 and my daughter was born and her needs had to come first did I really learn what self-control was all about. If it came down to a new outfit or diapers, the diapers were going to win every. Single. Time.

I’m not trying to justify or explain or defend why I was like this. It’s a shame really. Because now? I’m literally paying for being that way.

Come back next week when a special guest poster will explain why these are all poor excuses.

Small changes make big differences

by Jana 5 Comments

I was driving recently when Alter Bridge’s “Ghost of Days Gone By” came on the radio. I adore this song. The more I hear it, the more I like it. It’s such a great song that I forget it’s really by Creed minus Scott Stapp. In other words, Creed sucks but when the singer is replaced and the band is given a new name, it magically makes all the difference and it becomes something awesome. Which got me thinking.

Finances kind of work the same way. You can plod along, doing what you normally do, and no matter what it’s just not working. Your budget fails every month. Your debt repayment plan gets derailed. You’re constantly behind on bills. You’re slashing expenses but other expenses keep rising. You start to fall into a self-loathing, self-pitying stream of self-beratement until you collapse on the floor in a messy drunk heap (or was that just me?). Then, one day,  you make a small change and instantly everything clicks.

I’ve actually experienced this type of change twice. The first was finally getting on a budget. Finally getting all my expenses written down and figuring out where my money was going each month made managing my money a whole lot easier. I was no longer frustrated by questions like “how am I going to afford this” and “good Lord, is this bill really due again” and “where the f*ck is all my damn money?” I had an idea of where my money was going, how I was going to afford everything and even attempt to plan for things in advance. One thing that I did during this time was withdraw $500 every payday (my bank’s daily withdrawal limit) and fit all my two-weeks expenses (minus bills) in that pot of money. Unfortunately, after weekend #1, there was only enough money for gas and the next week’s groceries left and I would have to use my debit card to fill in the gaps. It was frustrating for two reasons 1) I hate balancing my checkbook which I would have to do each time I used the debit card and 2) I couldn’t understand why I was running out of money. After all, my expenses were budgeting and planned. Right?

Turns out, not so much. I never bothered to do an itemized calculation of what I was spending each month on things like toiletries, household expenses, clothes, pet expenses…all of those little expenses that would just seem to crop up unexpectedly even though I knew that I needed to pay for them. The other mistake? Was letting my bank’s limit dictate how much money I had in my budget. I realized that I needed more (sometimes, way more) than $500 every two weeks especially when gas was teetering on $4/gallon. Once I realized this, I was astonished with my own stupidity that I hadn’t thought about this before. That was when I called our first family budget meeting (this meeting involved only my husband and I as our daughter is 4 1/2 and the dogs lost their ability to have input after they ate my underwear). I printed out Dave Ramsey’s budget forms and together we went line by line, discussing and deciding how much we do spend, should be spending and should be saving. We arrived a total amount for each category that we need to budget monthly. And instead of taking out the $500 and making it work, I write a check and one of us cashes the check, giving us exact amount of money that we need for those 2 weeks. If there’s money left over, it rolls over into the next pay period/month (like rollover minutes but with money instead. Brilliant, right?).

The second small change has made the most significant impact on my budgeting. I now only have to balance my checkbook once a week, or sometimes only on payday, and now there’s always have enough cash for expenses each pay period rather than a cash/debit combination. It has been such a relief to start making my bank work within my constraints rather than the other way around. It was such a small change that I can’t believe I didn’t think to make it sooner.

Kind of like Creed didn’t think to replace Scott Stapp sooner. That guy is a douche.

What small changes have you made that have had a significant impact?

Dependent Care: How we do it

by Jana 10 Comments

When my daughter was born, one of the first things my husband and I did was enroll in the Dependent Care benefit option at work. For those of you not familiar, Dependent Care works similar to a Health Savings Account or a Flexible Spending Account. You contribute money, pre-tax, and then draw on that money to offset child care expenses. There is a $5000 limit for one child and a $6000 limit (total, not per child) for two or more children. However, unlike an FSA or HSA, you cannot draw on money you have not contributed; you may only draw on money that is in your account. This can make things a little tricky at first especially if you’re not paying attention.

When we first started paying for daycare, we had no idea how to use our DCA effectively. It took about 8 months of confusion, moving money around and manipulating the checking account until we devised a system that has worked splendidly for the last 3 years. It works so well, in fact, that at the end of the year we wind up paying only 1 week out of pocket!

Before I explain what we do, let me break down what it costs and how we pay (and why). We currently pay $165 per week for our daughter, which should be $660/month, right? Wrong. Why? The owner is an idiot and does some sort of complicated formula where she calculates that daily rate and the actual number of days in a month and then makes that the monthly rate (OK, fine, it’s logical but the owner is still an idiot. I stand by my statement). Rather than paying the monthly rate, we pay weekly; rather we pay bi-monthly. Each payday, I write out a check for the upcoming two weeks for $330. Why don’t I pay by debit or credit? Because she tacks on a 3.5% fee for that privilege. So I’ll write checks instead. Fine with me–it makes her have to do some work.

Now for the dirty details. Let’s do a list:

  • Of that $330, $165 comes out of our pockets and $165 of our DCA contribution is used
  • Our DCA contribution every two weeks is $192.30 ($5000 max benefit/26 paychecks)
  • We are left with a balance every two weeks of $27.30.
  • Every 3 months, we have 1 week saved
  • By December, we have 3 weeks balance remaining in our DCA account

This extra 3 weeks leftover means that we only have to pay 1 week in December, or if we do have to pay, it’s a nominal amount. Having that extra money available in December is great because we get absolutely slammed financially that month: Christmas, Hanukkah and our daughter’s birthday (yes, I know we should be planning and budgeting for this in advance. We’re working on it).

Our system, while seemingly cumbersome, actually is quite beneficial. Besides not having to pay in December, it also helps offset the out of pocket cost each month, spreads the money out over the year instead of concentrating it in one part, and, yes, we still get to deduct the difference in total amount paid and the $5000 on our taxes. The only pitfall in this plan is the fact that on payday, I have to remember to fax a completed form with information like my daughter’s age, the name/address/EIN of the provider and signed by the assistant director or owner and my husband to the company. As I am a forgetful Jones, I have a hard time remembering this. But I combat the problem by leaving a little note on my computer that says “Dependent Care”.

While I wish I didn’t have to pay for daycare at all and I dream of the day she starts kindergarten and childcare expenses go away, maximizing our Dependent Care benefit has paid off.

Do you use a Dependent Care Account? If so, how do you structure your payments to maximize the benefit? 

 

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