Thursday, December 2, 2010

$2,011 in 2011

I’ve found it hard to get into the Christmas spirit this year.  I attribute that mostly to the weather.  Apparently all it took was a nice blanket of snow the other day to turn me into a Jingle Bells singing fool.  It’s usually this time of year that people begin to think about what next year will bring.  Now that your Christmas will be less stressful – thanks to my last post – it’s a great time to get your affairs in order before 2011 is here.

I will admit upfront that many ideas I’ll share below could be quite challenging to you.  Some of you might think I’m nuts.  I can attest, however, that I’ve done all of these things, they all work, and they are absolutely worthy of your consideration.

But first, let’s cover some more practical, mainstream matters first.  Here’s a short list of a few practical end-of-year matters you need to take care of or at least consider:

1)    Fund your retirement plan.  I can’t stress enough how important this is.  Fund it until it hurts, and then fund it some more.  I’ve had several of you ask me about college planning/funding for kids or grandkids.  I will cover this more in-depth soon, but for now, your retirement account should always be fully funded for the year before you consider putting a dime toward your kids college education.  If you don’t have a retirement plan (IRA, 401K, 403b, etc.) start one.  Now.  It’s never too late.

2)    Give and give generously.  Church, food pantries, agencies, non-profits, foundations, scholarship funds, fundraisers, etc.  Clothes, food, money, whatever.  Most of these are tax deductible.  Whenever possible, write a check (for tax purposes).  If you have to give cash, ask for a receipt.

3)    If you have any Realized gains from any investments (you sold your investment at a higher price than you paid means you’ve realized that gain) take a look at what they are and, if necessary, consider selling any investments in which you have a loss to offset some or all of those gains.  This can minimize your tax obligation.

Okay, enough of that boring (but important) stuff.  Want to have some fun?  Let’s get into some ideas or challenges for you to consider as we get ready for 2011.  These are great ideas for saving some extra money, and at the same time even teach some good life lessons for yourself and any kids you might have.

I’ve done all of these things at some point.  They can be very fun, are quite practical, and make a lot of sense.  I challenge you to stretch yourself, and by doing so, it will stretch your dollars.  If you try any of these, please let me know how it went.

1)    No Food For You!  This one makes a lot of sense, especially on the heels of Thanksgiving.  The challenge is this: Take a week off from buying groceries and only use food that exists in the back of your fridge and pantry.  You’ll be surprised how easy this is.  With four kids, our weekly grocery bill is around $150.  Once to twice per year well skip buying our weekly groceries and get creative with the box of pasta that’s been in our pantry for 6 months and the muffin mix we had great intentions for last spring.  Not only does this save money, but it clears out your overstocked pantry!  BUT, here’s the most important part – put your savings in a savings account.  If I don’t take $150 and put it away, it’ll just be spent somewhere else.  Have fun with this, get creative, and share your adventures should you choose this challenge!

2)    You mean I have to talk to my spouse?  This challenge will be the most controversial, but I promise you it will be the best decision you can make.  The challenge is this: Get rid of your TV for one year.  That’s right, I said it.  Get rid of it.  Full disclosure – we have 2 TVs in our home currently.  That said, we’ve lived without TV for several years, and we miss those times dearly.  I cannot quantify for you the amount of life you waste watching TV.  You really have no idea – until you get rid of it.  You’ll rediscover your spouse, your kids, your neighbors, books, hobbies, family, etc.  It’s amazing the difference it will make in your life.  Another bonus?  No cable bills!  Here’s the important part – take the money you had been using to pay your cable bill and put it into a savings account.  In one year this can easily top $1,000 in savings.

3)    AND you want me to shop with my spouse?  This was one of the first challenges Jill and I took when we were first married.  To save our pennies, we wanted to spend as little as possible on food.  The challenge is this: Once a month, cut your grocery budget in half for the week and make it work.  Here’s the key: Prior to hitting the store, visit an ATM and take out CASH ($75 in our case) and leave your credit cards at home.  Take the whole family and make it an event.  Get creative, don’t succumb to buying junk food, and spend time planning it out before you go.  Your kids will learn the value of a dollar, and you will be forced to shop for the best deals and make the most with your money.  It’s rewarding to know that everything in your cart was purchased for a specific purpose.  Again, take the other ½ of your grocery budget you didn’t spend and put it into a savings account.

What happens if you take these challenges and implement each of them in 2011?  You will have a savings account with about $2,000 in it!  Wouldn’t that be nice?  Who’s going to take the challenge?  Report back how it goes, how much you’ve saved, and what you’ve learned.  I’d love to know!

Until we meet again...


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