Are You Ready for Black Friday?
Christmas shopping is on my mind. Actually all of my kids birthdays are within three weeks of Christmas (on either side of it) so I'm thinking birthday and Christmas shopping (with very separate presents). With so much to buy, I always make sure that we are getting the very best prices possible on the gifts that I get. I do not always hit the early morning Black Friday sales, because I hate the crowd, and unless the deal is really worth it, I'd rather not worry about it. But I am always sure to scour the Internet and all of the ads to find out if getting up at 4:00 am is worth it.
I've found that the key to Christmas shopping with no regrets is to stick to a list and a budget. That means extra planning on my part, but it has always paid off. I also like to get everything done early. I hate crowds and lines at the post office.
So what are your best strategies for Christmas shopping?
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You Can Change Your Financial Picture
Finding the motivation to make major changes in your finances can be difficult. It is easier to start out with good habits and to stick with those than it is to determine that you need to change your bad habits and clean up the mess that they put you in. Most people are happy to continue down the path of the status quo and not make real or lasting changes to their lives, particularly if those changes require personal sacrifice. That's why many people end up waiting to hit rock bottom before they begin to make those changes.
However it is possible to make those changes now. You do not have to get into a despearate situation to decide that you are going to handle your money differently. Starting when you are fresh out of school is a great time to make changes or when you move for a new job, but you can do it even if you do not change jobs or employers. It is possible to make those changes.
The first step is getting on a realistic budget and sticking to it. If you don't do this all of the other changes you make will not be effective. It may seem as though I focus too much on budgeting, but if you cannot control your spending than anything else you do finanically will not be effective. You can always spend more money than you make. It does not matter if you make millions or thousands. To build wealth and to control your financial future you need to consistently spend less than you make and save and invest the difference.
What's stopping you from making the changes you need to?
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Are You Thinking About Your Taxes?
Frankly, I don't spend much time thinking about the amount of taxes I pay very often. As a freelance worker, I am responsible for paying on a quarterly basis, and my husband just has his deducted from his paycheck. Not something that we worry about usually. However it is a good idea to check in a few times a year to be sure that we are on track with the taxes we have paid. Our goal is to pay exactly as much as we owe, which means no big refund. But we also don't want to end up owing a lot at the end of the year either.
The first time I considered the fact that you can determine how much you have withheld was actually in ninth grade. My economics teacher did a whole spiel about it since her husband was self-employed and they covered a lot of the taxes he would owe by having her claim zero. I filed the information for future use and then in college I talked to someone who had made a big mistake. She claimed 8 on W-4 so that she wouldn't have anything withheld. She was single and had some bills that she needed to cover. She only meant to do it for a two months, but then forgot to change it back. The tax bill she had to scramble to cover was not pretty.
So take the time now to see if you are on track, and make sure you are having enough withheld. You should take into account whether or not you have sold any stock, or any bonuses you may received.
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Education and Earning Power
An education can make a big difference in the amount you earn, which in turn can affect various aspects of your life. But not all degrees are created equal and it is important to take that into consideration when you are thinking about going back to school to earn your degree. It is important to consider your marketability once you have finished school, and you should be working on improving it while you are attending.
When you are considering which college to attend you should look for a college that is the best fit for you both academically and financially. There are plenty of public universities with excellent reputations. Additionally there are schools that will fit your interests and programs better than others and give you experience that will help you become more competitive in the job market.
It is also important to consider how having a Masters degree or a PhD will affect your earning power before you begin pursuing them. Some professions require these degrees and some do not have a noticeable increase in earning when you have them.
Are you happy with your education?
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Investing and Debt
Investing and debt are generally not two things that should go together. This is especially true of credit card and other consumer debt where the interest rate is a lot higher than any dividends you are earning on the money. If you can't manage to stop going into the red each month, you need to sit down and address your situation before you begin investing. Saving all that money won't help you if you continue to create a bigger hole each month.
For example if you put $150.00 into investments or savings each month, but you put $100.00 on a credit card each month, you are really only putting aside $50.00. Except that you are paying interest on $100.00 at a higher rate than you are earning it. It simply makes better financial sense to put that $100.00 towards your credit card and then invest the extra $50.00.
Most financial advisors suggest that you be consumer debt free before you begin seriously investing. The one exception is taking advantage of your employer match on your retirement program. This is free money that you can get for your retirement and it is foolish to simply pass it up. Once you have met your employer's match then you should funnel all of your extra money each month into getting out of debt. After you have done that you should invest a large portion of that each month.
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Get Rid of the Extra Financial Weight
Have you ever been in a really bad situation? A bad date or stuck with a bad roommate or in a job that seems to be just killing you. Maybe you ended up with a professor that was horrible, and you do not know how you survived the class. Looking back at those situations do remember the weight that was on you, the dread that would come up as you had to deal with the situation and the relief once you had. Debt is just like that situation. When you first start out with a little bit of debt, it doesn't seem like too much or that it is too bad. But as you ignore the problem it gets bigger and worse until you feel just as trapped by it, as you did in your other situations.
You can break free from the debt trap, but it will take drastic action your part. Without a budget you won't be able to control your spending and funnel more money towards your debt. Without a that extra money you will not be able to get out of debt. You may even want to take on an extra job in order to get out of debt as quickly as possible. You can do it. It can take serious action to turn a situation around, but it is possible.
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Long-Term Vs. Short-Term Goals
Lately I have been thinking about my long-term versus short-term goals, as I adjust my plans so that I can accommodate all of them in my life. Some of my long-term goals seem to conflict with my short-term goals, even though ultimately they are all heading to the same place. It can be difficult to determine which goals are the most important and which goals may need to fall to the back and put off for a few years.
For example you may have a goal to travel to Europe and another one to buy a home in the next year. It may be that you need to choose one goal to complete first and then complete the second goal in a year or two. Each person will make a different decision based on life circumstances and planning. Some people will buy the home first, while others may travel to Europe because they plan on starting a family in the next year or two.
As you look at your long-term and short-term goals be sure that you keep the bigger picture in mind. You do not want to sell your retirement or future short because you are too focused on meeting your current wants. At the same time it is important to enjoy your journey, and so you should still do things that you enjoy--it just needs to be in balance with saving money and getting out of debt.
How do you balance your goals?
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Are You Being Pressured to Buy a Home?
There may be a lot of pressure for you to buy your first home right now. You are out of school and have your first good job. Additionally there is a tax credit and mortgage rates are at an all time low. There are also a glut of houses on the market which means prices are lower, and you may be able to buy a foreclosure at even more savings.
However if you are not ready to buy, then you shouldn't. Home ownership costs more money than just the mortgage payment. You should think about the additional property taxes you will need to pay as well as maintenance costs of the home. Will you be able to afford that and your house payment?
If you have a lot of debt or if you do not feel that you will stay where you are for at least three years you are likely better off to continue renting. Remember that a home is only a good thing as long as it doesn't ruin you financially. You should be sure that you choose a home that you can afford, and wait until you really are ready to buy one.
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Are You Preparing for Your Dream Retirement?
I have very specific plans and dreams for my retirement years. I have a great aunt who spent most of her retired life traveling abroad, and I've always wanted to do the same thing. I would love to see the world, and then be able to go back and visit my favorite spots. I'd also love to be able to just wander around a country and really get a feel for it. The way I've planned my life I wanted to do this in my retirement years, and I'd love to be able to retire early and spend a lot of time traveling.
Most people have plans for their retirement, whether it is extensive travel, moving to the coast or the mountains or spending as much time possible with grandkids. But while they may be planning what they want to do with their retirement, they aren't taking the necessary steps to actually achieve those goals. They aren't saving retirement or they aren't saving enough for retirement. Additionally they may not be paying close enough attention to what their investments are doing in order to meet their retirement goals. Simply investing in your 401(k) may not be enough to finance your dream retirement. You should talk to a financial planner to figure out a plan that will help you get there.
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Don't Let Open Enrollment Pass You By
Open enrollment is the time to make changes to your benefits package. You can drop some of your coverage or enroll in additional plans. If you have recently married or have had a child you may want to consider changing some of your coverage options like increasing your life or disability insurance. You may also want to atke advantage of your Flexible Spending Account to cover health and day care costs. These plans can save you money in the future, and are worth taking the time to figure out if they are right for you.
This weekend take a few minutes to sit down and go over your benefits. Determine if you want to continue where you are or if you want to add or drop any of the plans. It is also a great time to think about increasing your retirement contributions.
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