Money Day

Those of you affected by the U.S. tax day who have not done your taxes, do them today. You don't want the horrible frenzy next Saturday and the driving in the line of cars to post your return. Just get it out of the way.

Everybody else, today's a good day to take a look at where your money is going. Are you going deeper into debt or paying it off? How's your tax withholding? If you had to pay out a huge amount at tax time and your income hasn't changed much, then maybe you should increase the withholding to spare yourself the scramble for the money. Got a huge return? How about lowering that withholding and setting up an automatic transfer of that cash difference in each check into a retirement account – you won't feel the difference throughout the year and your money will be earning you interest.

Some tips:
– Balance your checkbook & credit card statements every month. Not only will it keep you aware of any trends in the flow of your money, it will also mean that you can catch bank errors or identity theft while there's time to do something about it.

– Pay off your higher interest debt first. Make minimal payments on the rest and put as much as you can towards those big bad boys.

– My financial security rule of thumb: if you are carrying debt with over 6% interest, you should cut optional expenses to the point where you can make significant payments on it every month. Try for 10% of the current amount remaining this month if you can and then keep paying that amount. That will rid you of it within a year.

– Even when you're paying off debt, set up an automatic transfer of $25 into savings every payday. If your company has retirement contribution matching, take advantage of it.

Do you really need a car?

This tip is probably only relevant to city-dwellers, but even those in the country should mull over just how much vehicle they really need.

How much do you spend on car payments, repairs, insurance, parking and tickets? The average is about $500 a month.

I took a look at that number and thought about the hassle of driving, parking and protecting a car in the city and opted out.

I could rent a car every weekend and still come out ahead, but what I've found is that I don't really need a car very often. I have a membership with City Carshare and use it between zero and 3 times a month usually. I take a cab an average of once or twice a week. Otherwise, I walk, take public transit and carpool with friends from work.

I save money, get exercise, avoid stress and dramatically reduce the impact I have on the environment.

What would your life be like if you lived in a vibrant neighborhood where you could walk to shops, restaurants & entertainment and if your commute gave you time to read, catch up on email or just stretch your legs?

For all that talk about cars helping us stay connected and giving us flexibility, I've found quite the opposite to be true: I'm less isolated and more free without a big metal box on wheels.

Will Secondhand Do?

About to go shopping? Think about whether all of it really needs to be brand new.

Sure, you don't want hand-me-down underwear or food, but a winter coat? a dining table? a breadmaker?

Get familiar with your local resources. What kind of things do the different thrift stores have? Are you in a Craig's List area? Does your community have something like a "pay-and-take" where unwanted goods can be exchanged?

Don't forget to ask your friends and family! Maybe someone has just what you need languishing in a closet and will give it to you, sell it cheap, or swap.

Comparison shop between new furniture and antiques. My Ikea office cabinet and my beautiful 1920's armoire weren't really very different in price, but the latter gets much more active use in its place of honor in the living room.

Whatever you settle on, remember that you have a lot of options beyond what gets advertised.

How much do you really need that ticket to boxtown?

In my time I've had memberships to super huge warehouse stores. Costco is something of the archetype for this, but there are other similar places where one gets "great deals" by buying in larger quantities.

I always find, after the initial glut of buying lots of things for relatively less money, that I'm overall spending more than I would shopping at neighborhood stores – even non-chain ones – and ending up with things I don't really need or more than I can use.

What's even sillier about it is that I wind up buying not quite what I wanted – different brands, other flavors,  higher calories – because the selection is more limited.

Take a good hard look at your shopping habits and the kind of eating habits they're leading to. Try taking a month off from the big box stores. Shop locally, get more fresh fruit & vegetables, pick out ingredients to cook with or make a sandwich for tomorrow's lunch instead of a frozen entree. Visit the farmers' market and find the nearest good bakery to your house.

At the end of the month see how you feel, what you're eating and what you've spent.  Chances are pretty good that the delicious organic produce that's giving you loads more energy has been easily paid for by not having bought a boxed set of DVDs for a show you liked when you were 12, a five-attachment cordless drill, and a pair of ill-fitting orange sneakers with totally cool treads.

Avoid the Shocking Utility Bill

Gas prices, including natural gas prices are very high and not expected to change much for the better. That means your utility bill is probably rising.

Save yourself from a nasty surprise on the bill after a particularly cold month by doing some no cost and low cost changes to reduce your energy use. Lowering thermostats somewhat, using appliances more efficiently,  and putting in a low-flow showerhead can all help. Find out more from your utility company. Mine provided this PDF file of tips: 123 Gas Savings.

Instead of a bill $50 higher than normal wouldn't you really rather have a nice dinner out or go see a show?

Are you using it?

Back on January 4th, I recommended "If you don't use it, don't pay for it".

So, it's been over two months; are you really using the things you decided to keep paying for?

I reduced my Netflix membership to two videos at a time and thought that would be enough of a change to bring me back into a reasonable budget for my video entertainment.

The two videos I have on my shelf right now arrived on around January 19th. Apparently, no, I really don't need this membership. Time to cancel (or at least put the account on hold for 3 months since Netflix offers that civilized option, ever so handy for those of us with 499 items in their possible rentals queue).

Eyes on the Prize

Now that you're focusing on what you want and don't want in your life, there are probably some things you'd like to save up some money for. It can be hard to do that, though, if you find that you never seem to have extra at the end of the week.

Take a look at what you have to spend each month (rent, bills, payments to reduce debt, groceries) and what that leaves you for flexible expenses. Assign yourself an amount that you get to spend each week (or fortnight  or month) on optional things.

Take two index cards. Tape the cards together on the long edge. On the inside left, write the list of things you want to be saving up for and the amount that will take. On the right, put the amount you have assigned yourself as available for optional things.

EVERY non-essential purchase should be entered and deducted on the right.
Before making a non-essential purchase you'll see your wishlist and think about whether it's really worth it. You'll also get a clearer picture of where your money goes.

For example:

- latte & croissant $4           $196.00
- new TMBG album $17.50          $178.50
- pizza & beer with pals $20     $158.50

If you don’t use it, don’t pay for it.

What do you shell out money for every month? Sure, rent or mortgage, utilities, food, but what about non-essentials? Take a look at your routine expenses and the time you spend enjoying the results of them.

How many hours do you watch those extra cable channels? What's does that mean you pay per hour? Do you still plan to be spending that much time that way or are there other things you'd do if the temptation wasn't there? Do you read the paper every day? Is it worth the subscription? What about the magazines you get? And that gym membership? Are there free exercise methods you'd use just as often?

It doesn't matter if it's a small expense, if it's not giving you a benefit you find useful or beautiful, then stop spending that money. Save it or spend it on something that matters to you more.