money

RBBiz Day 8: Kate Northrup

Creative Business

Kate’s talk on Wednesday was all about the money!

IMG_20150318_133451

Having a money expert chime in during the Right Brainers in Business Summit is a regular part of the program and always interesting because Creatives, in general, seem to have a lot of anxiety and stress around discussing money, selling, budgeting, and the whole money numbers block that a lot of folks have. Even though I’m pretty good with numbers, I can safely say that I’ve had some other baggage around money matters in the past and I’m actively working to improve them.

If you recall, I wrote about how I redesigned the monthly budget worksheets for the Creative Days planner, this year, and one of the features I added was a more robust debt tracking system. It’s very cool to be able to put down arrows on more lines than up arrows, indicating the overall shift in my balances. Slow going, since I’m working off some spending born of impatience and whatnot, but it’s going in the right direction.

One of the lessons I try to remember each month as I fill out my budget and schedule all my bills to be paid (oh, thank goodness for online bill payment systems!), is to be grateful that I have the means to pay the bills. That while I might not always like the chore of paying bills, I’m able to do it (usually) without stress and that’s worth a lot. I think that one came from one of the first two years of the RBBiz Summit, but it’s stuck with me.

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These posts are getting shorter as the second week goes by. Chances are no one really minds, judging by my stats, but I will say it has less to do with the Summit (the guests are awesome day after day) and more the fact that I’ve been sleeping horribly the last few nights and I’m not entirely sure why. Makes for a very sleepy Scraps and a sleepy Scraps is not a talkative (type-ative?) Scraps. Anyway, two more days of Summit to go and then we’ll be back to our usually scheduled food, house, and craft fun.

Also, Happy Birthday to Todd!!! He’s not actually big on having his birthday celebrated, so we keep things low-key by request, but I am incredibly grateful that he was born 🙂

Climbing Out of a Debtor’s Rut: Try It Yourself

Third Time Wife, Wedding Planning

Triumphant bride standing on solid ground

Who else is ready to get out of debt?

To do this, you’ll need to know a few things about each of your debt accounts: current balance, interest rate and the current minimum payment.

Now:

  • Step 1: Put them in order, highest balance to lowest.
  • Step 2: Look at your budget for the month (make one if this isn’t something you already do) and figure out how much you can spare, in addition to your minimum payments listed above, towards paying off your debt.
  • Step 3: Add that additional amount to your lowest credit card, etc. each month. So if your lowest card has a minimum payment of $15 and you decided you can spare $20 more towards paying off your debt each month, you’d pay $35 towards that bill each month until it’s paid off.
  • Step 4: When you pay off the first card, roll that total payment into the next lowest bill. If, say, your next lowest bill has a minimum payment of $25, rolling that $35 that you no longer owe to Company A means you’re now payment Company B $60 a month and you haven’t affected your monthly budget at all.
  • Step 5: Repeat steps 3 and 4 until all your debts are paid.

It might seem slow going at first, especially if you’re stretched kinda thin to begin with and can’t afford a lot extra towards your debt, but after you get a couple of small balances paid off you’ll start to see dramatic results.

At least I think they’re kind of dramatic. I’m a numbers girl, after all, but seeing that balance start to go down chunk by chunk instead of pebble by pebble is a pretty cool feeling.

To see just how this will affect your own personal finance, I’ve put together a little spreadsheet you can download, plug-in your info and see the difference a little strategy can make.

CC Payoff Projector (just right click and save as to download a copy)

This isn’t, of course, exact, but it’ll give you a good idea of what to expect.

And depending on the card and the balance, you may need to update your plan from time to time.

A couple things to remember, though, to make this work the best:

  • Once you start to pay off a card, don’t use it! I know, it’s kind of obvious, but it’s worth saying that any charges made against it means longer to pay it off.
  • If the interest rate changes (an unfortunate reality, I’m afraid) make sure to update your spreadsheet so you can see what it’ll do to your pay-off plans. If it skyrockets, maybe call the company and ask for a rate review.

Now, why not just save up this extra bit and pay off the bill all at once? Easy! While you’re earning a percent or two per year (if you’re lucky!) in a savings account, that credit card balance is costing you up to 20% (or more). It just doesn’t make sense to save at a loss, you know?

Also, by concentrating your “extra” on one card at a time, you’re seeing results quicker (which is why I like to start with the store cards first–they tend to have higher interest rates and lower balances) and will then have a larger amount to roll onto your major card minimum payment when the time comes. Obviously if you’ve got a card that is in danger of going over your credit limit, it’s a good idea to get it down to a more reasonable level first, but we’re working from the idea that things aren’t quite that dire just yet.

This isn’t going to work for everyone, of course, but it is working for me, so I thought it was worth sharing. I don’t think I’ll be completely debt free by the wedding, but I’ll be in a lot better shape than if I didn’t do anything!

Pretty Book and Flower Icon

 

What’s your plan for debt management?

Building Out the Budget

Third Time Wife, Wedding Planning
House bank with a deposit going in

image via stock.xchng | photography by iprole

When deciding what type of wedding we wanted to have in our pre-gaged state, we knew we didn’t want this big, huge formal wedding but we did want more than just a courthouse ceremony and dinner afterwards.

We wanted a party.

I love throwing a good party and, thankfully, Mr. RT shares my enthusiasm for these sorts of things, so a celebration is not something we’ll willingly forgo. Whereas the usual party funds can be eked out over a couple of months, I’m thinking even a low-key wedding is going to cost more than our usual party budget and, this time, I’m definitely not doing my own catering!

Which brings us back to saving up over time, a benefit we have due to our longer-than-the-usual long engagement.

Confession: I’ve never been good at saving. I never really learned how!

Money was tight, growing up, and what came in almost always immediately went out. Whereas my brother grew up in the same home and was absolutely rabid about his piggy bank (we used to call him Alex P. Keaton-in training), I just never got the memo and, as an adult, not much has changed.

Still, I have learned that if I have a specific goal in mind I do much better than trying to save for some nebulous whatever.

And during the second half of 2011 I managed to get a good start to my savings plan.

But aside from the budgeted savings, what else can be done to help supplement that starter budget built by monthly savings alone?

I’ve known grooms who have taken fast food jobs at night in order to afford a nice honeymoon for after the wedding, but getting a part-time job might not be a) the easiest thing these days and b) most effective with everything else I’ve got going on.

Are you crafty? Do friends rave about things you make? Maybe an etsy store is a way for you to put your talents to good use. I have plans for one of my own plus other projects that may well net some additional wedding funds over the length of our engagement.

Maybe you’ve got a lot of items in your closets and garage and it’s time for a garage sale or an eBay blitz? Or register for items that you can use for the wedding as well as later (though I understand some etiquette mavens frown on that).

You could check and see if your bank offers a rounding-up savings plan–you know the ones, right? Every time you use your debit card (which is every grocery and gas and whatever trip, for me), they’ll round up your transaction to the nearest whole dollar and put that “spare change” into your savings account. Some banks even match those coins for a certain introductory period. It’s a high-tech version of saving your change in a pickle jar–though there’s something to be said for that, too!

And speaking of debit cards: does your debit or credit card have any points options available? And can you exchange those points for gift cards? Might as well put those points to good use, right?

But the real goal is to have a wedding that suits your style and budget without having to open a wedding credit card or get a loan to cover expenses. What’s NOT the best way to start out a life together? More debt!

How are you planning to supplement your initial budget?

Robbing Florals to Pay Rings

Third Time Wife, Wedding Planning

Wedding rings on top of cash

aka Figuring out just how your going to pay for what you want

Research weddings for any amount of time and you’ll get more than you ever wanted to know about where the budget should be spent. I despise the word “should.” Should implies that I have to do something because that’s how other people did it. And while I’m not one to have a problem with authority, I do take umbrage with those who pretend to know what I want more than me.

But having something like this sample budget allotment does give us a good place to start, so I’m not going to throw the budget out with the bathwater.

Here’s the basic breakdown for our $5K Wedding, as suggested by The Knot and Real Simple:

Reception $2425-2500
(including venue, rentals, food and beverage)

Attire $500
(bride and groom clothes and accessories)

Flowers/Decorations$500
(if it doesn’t come with the site, it goes here)

Music $400-500
(dj or band or your ipod and some speakers)

Photos & Videos $500-600
(includes the prints, too)

Favors & Gifts $150
(for guests, attendants and each other)

Ceremony $100-130
(site and officiant fees)

Stationery $150
(anything paper that gets mailed or handed-out)

Rings $100
(self-explanatory)

Transportation $50-150
(limos, valets and any hotel rooms for the bride and groom)

The biggest difference between the two suggested allotments were between music and photos: The Knot prefers photos to music and Real Simple considered them equal contenders.

Now, some of those amounts are absolutely laughable: $100 for 2 wedding bands?! Sure, I could find them like that online from some warehouse but we might have to monkey things around just a bit. Like maybe going the iPod route instead of a dj and freeing up those funds for other uses, and having the ceremony and reception at the same venue so as to avoid car rentals, 2 location fees and who knows what else.

We do agree that the reception taking up half the budget makes sense as one of our priorities is good food and drinks. Meanwhile flowers will probably get nixed altogether in favor of less-perishable, more economical options made by moi, as will pretty much all the stationery needs. That doesn’t mean we get to totally zero out those ledger lines, there will still be expenses involved (like stamps!), but they will be much less than these estimates with the rest made up in “sweat equity.”

And while there’s still the possibility of adding more to the budget (funds, not expenditures) by the time it’s all said and done, I don’t really have a problem being a couple with more time than money to pull off this wedding.

Pretty Book and Flower Icon

Does your proposed budget make you shudder? 
Or are you, like us, determined to make it work? 

Money Matters When Considering Matrimony

Third Time Wife, Wedding Planning

Continuing on in the quest to quell my initial objections to a third marriage, our respective financial status was another facet I had to come to terms with before I agreed to become Mrs from Ms.

Dollar sign casting a long shadow

image via stock.xchng | illustration by rigor789

Ages ago I heard that sex and money were the two main reasons for arguments in relationships.

For the average couple of a first-wedding age in their early-to-mid 20s, both halves of the whole are either in college, just out of or just starting those entry-level jobs. Money has more to do with making ends meet than anything else.

Fast forward to the second or third-time bride and the picture might look a little different:

  • you’ve probably been in your career for several years, maybe even gotten a promotion or three;
  • you may have some savings, a retirement plan or investments;
  • you may also have a certain amount of debt either in credit cards, a mortgage, business loans or some combination thereof.

Remarriages also mean there’s a past to be considered. Does one partner have children from a previous marriage? Aside from the step-parent duties the other may be taking on, there might be child support or alimony to figure into your future budgets.

My financial past is has a couple of significant hills and valleys. I’ve been so upside down while finishing my degree that I couldn’t pay my rent and car payment in the same month (and only a bail out from a friend kept said car from being repossessed). And I’ve also paid off all the debt I was left with after my first divorce and lived credit card-free for a few years.

I may not have completely learned my lesson last time as now I’ve got a wallet full of store and major credit cards that I was not as wise as I meant to be with. Add to that a hefty student loan and my financial picture isn’t as bright as I want it to be. I’ve put a strategy in place for paying each off, in turn and over time, but it won’t be complete before we’re married. And that bugged me since Mr. Road Trip has recently paid off all of his major debts. I really was worried that I’d be burdening him, credit-wise, were we to marry before I took care of all of that pesky consumer debt.

Things like personal credit cards generally aren’t affected by one’s marital state, I learned (unless you add your partner onto the account, that is). Student loans, however, especially if you’ve petitioned for a reduced payment based on income or hardship, do take a spouse’s income into account to some degree, but they still belong to the person who accrued the debt, not to the marriage that came after.

For this reason, and to avoid any shocking revelations in the future, it’s a good idea to sit down and have a heart-to-heart (or, should I say, checkbook-to-checkbook) discussion with your intended, just to make sure you both know what you’re getting into. This is a good time to discuss things like combining checking accounts versus keeping them separate, future big purchases and the realities thereof and how you’ll handle the household bills (and which ones could be combined) once you’re married.

Because we were already living together–and Mr. Road Trip actually had a couple periods of unemployment after he moved to Florida courtesy of those wonderful economic dips a while back–we were pretty aware of where we both stood. Still, it was worth a discussion on our part just to make sure–we all know what assuming does, right?

On the upside–two people mean two incomes (usually) and that means a better combined buying power if you do want to make a significant purchase in the future.

Was debt something that crossed your mind before saying ‘yes’?
How did you make peace with the money monster?