Beating Broke

Personal Finance from the Broke Perspective

The Scales of Finance

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IMG_2394Not to be confused with the scales that our friend Lady Justice carries around with her everywhere, the scales of finance are a bit different in function.  To truly weigh something, using a scale, you load up one side of the scale with that which you want to weigh and then put weights of a known mass on the other side.  When the scale is balanced, you count up the known mass weights and you’ve got the weight of the item(s) on the other side.  Lady Justice, as the story goes, does this by weighing a persons crimes and adding the appropriate amount of punishment to the other side so that the Scales of Justice balance.

When we think about personal finance, there are those that are die-hard frugalers.  There is no other way to save money, retire comfortably, or live, than by being frugal.  The more frugal you are, the more you save, and the less you spend.  Coupons are their best friends, as are black friday deals and places like farmers markets and flea markets.

There are also those that are the die-hard incomers.  Skipping a latte isn’t for them.  The only way to get ahead is to make more money while not spending any more.  They’ll work three jobs to achieve levels of income that were previously unheard of and use that added income to pay off debt and save for retirement.

But, much like justice, the scale can pretty easily be tipped into unbalance.  Frugaling, while a good idea, can only take you so far.  Income increasing can only take you so far.  Eventually, you’ll need to make a bit more money, or work less.  The right way to do it is to strike a balance between the two.  Cut your costs as much as you can, without going to extremes.  Increase your income as much as you can, without going to extremes.  Find a place where you can balance your financial life while still getting to live life and not be classified as a cheapskate work-a-holic.

 

 

 

 

Balancing the Scales of Finance

  • Create a budget. Know where your money is going (even if it’s going down the drain), and plan where you want it to go.
  • Cut costs. A little bit of frugal living isn’t going to hurt you.  Drop cable T.V.  You can replace it with Netflix, or books.  Find other things that you can do without completely or cut usage of.
  • Analyze your finances. Use your budget to determine the inflow/outflow of your finances.  How long to payoff your debts?  Could it be accelerated greatly by taking on a second job?  Maybe you only need a second job for 6 months to pay off a credit card.
  • Increase your income. There are other ways, besides taking on extra jobs, to increase your income.  Prepare for, and then ask for a raise.  Sell off stuff you no longer use.  Find a way to get paid for hobbies you already do.
  • Don’t over-do it. Maintain focus on your end goal, but keep your sacrifices to a bearable level.  All that extra income won’t do you any good if you burn out in 3 months because you’ve been working 80 hour weeks.  And all the frugal in the world won’t do you any good if you burn out in 3 months because you’ve been manually separating the plys on your TP.

Don’t think that just because you do all of this once, that you’ll remain in balance forever either.  At first, you will probably benefit from regular weekly or bi-weekly check-ups.  As you get more comfortable with it all, you might be able to do it once a month.  Much more infrequent than that and you’ll lose your focus and begin letting things slip.  If that happens, pick up where you left off and continue on.

As you continue on, the Scales of Finance will become easier to balance.  You’ll become better at it, and the scales will gain a little extra margin for error.  It may seem hard now, but it does get easier.  And, believe it or not, it can be fun.

Photo credit: Thatedeguy on Flickr

Couples; To Combine Finances or Not?

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Life
Married couples have been doing it for centuries.  Combining their finances is just something they’ve always done.  Call it tradition if you want.  Call it necessity.  Recently, it’s a tradition that has come under fire as being old and outdated.  After all, the reason that the tradition exists is because it was rather usual for the woman in the marriage to stay home and be a homemaker while the husband went off to work and earned the money.  Since the woman wasn’t contributing to the financial inflow, there was no reason for her to have her own account.  What would she put in it?

But, with a new age, comes new standards.  Now, it’s expected that a woman will enter the workforce (or, at least, the contingent workforce).  And she’ll remain there even after marriage.  Not only will she remain in the workforce, but there is a chance that she’ll bring more to the table financially than her husband.  Suddenly, the decision to combine finances isn’t such an easy one.  In fact, combining finances can lead to more arguments than keeping them separated, unless both parties are on the same page financially.  The way I see it, there are three ways you can handle finances as a couple.

Combined accounts. (What we do.)

We came to the conclusion early on in our marriage that combining finances made the most sense for us.  Neither of us made much more than the other, and we both brought about an equal amount of debt to the marriage.  We combined and pay all of our bills and other expenses from one account.  It makes it easier to balance, easier to pay, and avoids having to figure out how much each owes to what bill, or when/how to transfer money from one account to the bill pay account.

Combined account hybrid.

If you want the convenience of combined accounts, but still have a bit of an issue with purchasing things for each other.  Or, just want a “me” account where you can purchase whatever you want, whenever, no questions asked, a combined hybrid set up might make the most sense.  Combine all of your accounts, but open a new account in each of your names.  Those accounts get a set (budgeted) amount deposited into them each month.  Each account is completely hands off to the other partner.  Spend it however you like, as long as the cash is in the account to cover what you spend.

Completely separate.

You don’t like the idea of combined accounts at all.  They should be separate.  Each of you keeps your own account and you either agree on who is paying which bill, or you create a third account that each of you deposits your share of the bills into and pay all bills from that account.

Which is right for you? I can’t say which is right, or which is wrong for you.  It’s something that you need to sit down and discuss with your spouse/partner and decide on.  I think that combined finances are easier, but with automated deposits and bill pay, the separate accounts could be made pretty easy as well.  And, just because you settle on one way, doesn’t mean you can’t change it down the road.  What I will say is that people are sometimes quick to judge based on the decision that you make.  Are you too trusting by combining?  Not trusting enough by leaving things separate?  Perhaps your relationship is doomed if you don’t combine?

The truth of it is this: a majority of divorces have some root in money issues.  Forcing yourselves into a money model that you don’t like won’t help with that statistic.  Be open with each other about money.  Be willing to discuss your finances, both separately and combined, and get yourselves on a path to a solid financial future.  If you do that, it won’t matter which option you choose, it’ll be the right one.

photo credit: Will Folsom

3 Ways to Save at the Grocery Store

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Are you shocked by the recent high price of groceries?  Have you noticed a jump in your grocery bill?  I have noticed a jump of about $20 a week that I am paying now for the same groceries I used to buy for much less.  Unfortunately, I am not much of a coupon diva, and I don’t see myself suddenly becoming one.

Regardless if you use coupons or not, there are ways to put the brakes on increased spending at the grocery store:

1.)     Once a week, consider having breakfast for dinner.  Eggs average out to .10 to .15 a piece.  If you have 5 in your family as I do and serve every one 2 eggs, you are looking at $1.00 to $1.50 for the main meal component.  Round it out with some toast and fruit and you have a light, frugal dinner.  Or, consider serving French toast or pancakes.  Quiche and breakfast casseroles also will work.  My kids love getting breakfast for dinner, and lately we have been doing this once a week to try to curb our grocery costs.

2.)    Have one meatless meal a week.  Meat often is very pricey.  Omit it for one meal and save yourself that expense.  You could try beans and rice, tuna noodle casserole, vegetable fajitas, spaghetti, pasta primavera, etc.

3.)    Buy produce when it is on sale and freeze it.  We love red peppers but often can’t afford them.  When I found them on sale for $1.00 a pound, I bought 10 of them and chopped them up and froze almost all of them.  Throughout the winter I pulled them out to use in stir-fries.  We have successfully done the same with bananas for smoothies (chop up, sprinkle with lemon juice and freeze individually on a pan and then place all of them on a freezer bag), green peppers, strawberries and blueberries.

With the recent high prices of both groceries and gas, many families are feeling the pinch as more money leaves their hands.  If you use coupons, you will see increased savings, but even if you don’t coupon, try implementing some of these strategies to lessen the pain you may be feeling at the grocery store.