I remember one of the main concepts I was taught in an undergraduate risk and insurance class is that you should self-insure if you can. Remember that your insurance company has administrative costs and does not pay out what it collects in premiums and the return on investing your premiums. The ideal relationship with your insurance company is that you don’t pay them much money and you never file a claim. Insurance should only be for potential financial disasters that you can’t afford. The best way to self-insure is to have an emergency fund, which you can use for a variety of bad things that can happen to you. Continue reading Five Ways to Reduce Automobile and Homeowners Insurance Costs
The easiest way to avoid these costs is not to buy a vehicle. As retirees, we did some soul searching recently about whether we should keep a second vehicle. We budget $800 a month for transportation. We could almost cut it in half if we got rid of one vehicle. We decided to keep both vehicles for the convenience. Continue reading Reducing Vehicle Depreciation, Finance Costs, Taxes, and Fees
According to Consumer Reports, the average five year cost to own a vehicle is $8,698. At an average annual mileage of 15,000, that comes out to 58 cents a mile, which is pretty close to the IRS standard mileage rate of 57.5 cents per mile. Continue reading Calculating the Five Year Cost of Ownership of a Vehicle
If your parents won’t make their parent contribution toward your higher education, your financial aid package will be less than what you need to go to school. However, if their household income was less than $24,000 their parent contribution would be zero. Continue reading What to Do if Your Parents Won’t Pay for Your Higher Education
1. Tax Breaks
The tax code is very friendly for parents paying for college and technical school. The Hope Scholarship Tax Credit lets you get a $2,500 tax deduction for paying $4,000 for your child’s qualified educational expenses, which are basically tuition and fees, but not room, board, or books. You get a $2,000 credit for the first $2,000 you spend on qualified expenses. The first $1,000 is a refundable credit, which means you can get this as a tax refund, even if you owe nothing in taxes. The second $2,000 you spend, you get a 25% tax deduction, so it is $500. You can change your W4 so you can decrease your tax withholding and make monthly payments to your child’s college or technical school. This tax credit does begin to phase out at $180,000 married filing jointly or $90,000 for single filers. Less than 10% of U.S. households have incomes of $180,000 or more. Continue reading Four Ways to Scrape Up Money to Pay for Your Child’s Higher Education
The concept of behavioral finance that most relates to budgeting is mental accounting, which is separating your money into separate accounts. Doing a budget is mental accounting, because you are separating your money into different accounts where your money is intended to go. You could also give savings account a specific purpose. Continue reading How Do Behavioral Finance Concepts Relate to Budgeting?
This is a consolidation of three widely used recommended percentage budgets from Dave Ramsey, Credit Counseling Advice, and Consumer Credit Counseling Association:
Charitable Giving 0-15%
Housing and Utilities 20-45%
Debt Payments 5-20%
When the three are combined for range, the range becomes too wide. Let’s see if I can justify narrowing it a bit. Continue reading Are Dave Ramsey’s Budget Percentages Wrong?
The Bureau of Labor Statistics put out the results of their Consumer Expenditure Survey for 2014 this month. I thought I’d look at the range of spending in the fourteen categories they use, based on household situation, and how our spending compares. I decided to look at spending based on age, income, city size, employment, and household composition. Continue reading How Do Americans Spend Their Money?
Today is the Day
Today we start our first month of living off our pension income. Our pensions were electronically deposited today. For the next four months, we are supplementing our budget with $400 per month that we saved for personal money and clothing, since it isn’t worthwhile for us to work the rest of 2015 since we don’t want to pay a higher rate of taxes and don’t want to increase our parent contribution for our daughter in college, as calculated by FAFSA. We plan to work for our personal and clothing money beginning in 2016, since we don’t want to draw on our retirement fund until it is larger.
Our Monthly Retirement Budget: Continue reading Starting On Our Retirement Budget
I finished my bachelor’s degree in business administration in 1982. Unfortunately, unemployment hit a post-depression high that year, and I couldn’t find a job that I liked. I went back to school to get teaching certification so I could coach high school debate. I’ve taught high school for 30 years. In 2009, I got certified to sell mutual funds, life insurance, health insurance, long term care insurance, and mortgages. I quit after three years working part-time, without much success as a salesman. While I was trying to sell financial products in 2010, I decided to go back and get my M.B.A. I planned to finish in two years, but an unavailable course and heart surgery for an aortic aneurysm cost me two years. I completed my M.B.A. in the summer of 2014. Last year I did tax preparation part-time. Continue reading Meet the Retired MBA