With the official start of softball season only three weeks away, we’re fighting the crazy May rains to get even one practice in every week.  As usual, our team is almost brand new with only a few players returning from last season.  We’ve never worked together and it shows when we take the field.

There are men of all ages and skills on our team.  Some are old pros that have been at this for ages and others are “kids” home from college playing men’s slow-pitch softball for the very first time.  But all of us, regardless of skill and experience, need the practice. Individually, the practice helps us learn our position better and hone our skills; as a team, practice teaches us to communicate to execute plays with greater success.

I’ve played baseball for as long as I can remember and have enjoyed playing softball for the last six years and still I continue to learn and improve through practice.  Even Albert Pujols – arguably the best player in baseball today, if not ever – still practices to hone his craft. If a pro still learns and improves through daily practice, it only makes sense that we would as well.

Just like softball, personal finance takes practice, too. You’re not born knowing how to manage your money and you can’t just learn the skills you need to prepare for your financial future overnight.  It takes time, effort, and the occasional failure every now and then.

I’ve been interested in money and how I spend it since I first started earning an allowance.  Even with occasional lapses in fiscal and frugal judgment, I’ve always strived to make the most of every dollar that passes through my possession.  But I’m still practicing; in fact, everything I do is practice.

That’s why I write:  I choose to practice in public. You get to see my successes and failures and I hope you can use them as an example for your own personal finance practice.  I can only hope that my experiences can benefit you in some way – that’s what is important for me in sharing my “journey”.

Money management is a learned skill.  Without discipline, we would spend recklessly and with abandon and there would never be enough left for our present, let alone our future.  But through practice, we learn how to temper our spend-lust and how to craft the financial future we want for ourselves.

Even if you consider yourself a “pro” in personal finance, never stop practicing. These are skills that can constantly be honed and shaped and you will never run out of places to improve yourself.

Photo by: Valerie Everett

(c) 2007-2009, That One Caveman, http://www.thatonecaveman.com

With Mother’s Day right around the corner, I’ve been struggling to decide on a gift for my wife.  There are very few things that she wants, so gift buying for her is always difficult.  And when you’re living under a fairly strict budget, buying gifts is even more of a pain.

So this year, I’ve decided to bring back one of my favorite gifts as a child: Love coupons.

What’s a Love Coupon?

The idea behind a love coupon is that you’re offering a person you love time instead of stuff.  Frankly, most people have more than enough stuff, but rarely have enough time.  Giving a love coupon says that you value your loved one’s time and want to give more of it back to them.

What Kind Should I Give?

Think about the recipient:  What do they like best?  Is there anything they’ve complained about lately?  The answers to those questions might be the best coupons you could give.  For instance, my wife has been struggling to take care of the kids and manage the house, so my coupons focus on taking tasks away from her that cause her frustration.  I’m betting her favorite coupon this year will be “One Chore-Free Weekend” where I do all of the cleaning chores for the entire weekend.

How Do I Make a Love Coupon?

You don’t have to be artistic or clever – I’m certainly not – but the coupons should always be hand-made.  Since you’re making “time” your present, put some of your own time into making the present.  It’ll make a bigger impact and the recipient will know it was produced out of love.  I grabbed a piece of printer paper, measured out enough space for 10 coupons, and pulled out some old colored pencils.  My first two coupons can be seen above.

Spread the Love

Now, don’t go overboard with your coupons.  This is a special kind of gift and every coupon you produce is a promise to your loved one.  Don’t promise things you can’t provide and make sure you provide something your loved one wants.  Now grab a pencil and start making your coupons!

(c) 2007-2009, That One Caveman, http://www.thatonecaveman.com

Last week, I joined the 30-Day Budget Dare.  It had been a while since I actually built a budget and stuck to it, so it was time for me to start one up again.  For the entire month of May, we will live under the budget we drew up.  This experiment should help us get a better handle on our expenses.

If you haven’t already joined in and built your own budget, it’s not too late.  All you have to do is follow these easy steps:

Gather Your Spending Info

The easiest way to start building a fresh budget is to gather your spending information for the last few months. We use Quicken to track our expenditures, so we printed out a report detailing our spending by category since the beginning of the year.

Even pen and paper are ok

If you don’t have your spending cataloged somewhere already, you can try looking through your credit card and bank statements to get a decent idea of where you’ve spent your money.  And since you’re not tracking it already, now is the perfect opportunity to start.  There are a number of free tools you can use, such as the free online edition of Quicken, Mint.com, Wesabe.com, a spreadsheet, or even something as simple as pen and paper.  Regardless of the method you use, it needs to be something you can stick with.

Work As a Team

Everyone who is affected by the budget should have a say in how it’s laid out.  To figure out our budget, my wife and I sat on the sofa together with the printout of our Quicken spending report and a pad of paper.  Over the course of about an hour, we had the majority of the budget figured out.

If you have kids old enough to understand the concept of finances, I heartily encourage you to include them in the process. Not only are they going to be affected by the budget, the process of building a budget is a great way to teach them about personal finance and financial responsibility.  Building a budget is a skill they’re going to need later, so let them start learning now.

Start Rough

Building a budget should include multiple sheets of paper, scratched out numbers, and running, rough totals.

Start with a rough budget

• Start by listing your income first, followed by all your paycheck deductions. This way you know how much money you have to work with.
• Next, list all your “fixed” expenses. These are the once-a-month expenses that you know will come up and don’t change much from month-to-month.  For example, your mortgage or rent, debt payments, utilities, and any membership or subscription fees you will owe are fixed expenses.
• Finally, list your “variable” expenses such as groceries, personal care, and other non-fixed expenses.

Once you have all your categories listed, start assigning your monthly allotment to each.  Fixed expenses come first since you can’t easily change those.  Then fill in your variable expenses based on your estimates from the last few months and any events you know that are coming up for the month such as birthdays or planned outings.

Balance the Budget

Now it’s time to total up your numbers to see where your rough draft left you.  If you’re in the black, congratulations – you can move on to the next step.  If you’re in the red, it’s time to adjust and balance your budget.  Our original run-through left us in the red by about $500.

If you’re like me, you over-estimated a number of variable categories to give yourself breathing room. Unfortunately, you’ll have to tighten that belt.  For instance, we originally budgeted $200 for clothing since my wife has no summer clothes that still fit (she has lost weight since two summers ago when she was not pregnant through summer).  We decided to cut that down to $100 and plan for an extra $100 in June.  We also cut back on our dining out since eating in is much cheaper.

If you find you don’t have anywhere to easily cut back, it’s time to make more painful cuts since you can’t afford to operate in the red for long.  It may be that your fixed expenses are too high – see if you can renegotiate some of your debt payments or find out if your landlord would accept a smaller rate for a short term while you shore up your finances.  It won’t be easy, but you’ll have to find some way to get back into black.

Force Money to Savings

The ultimate goal of budgeting is not to live within your means – it’s to learn how to live below your means. If you’re not pushing money to savings as part of your budget, you’re just treading water and losing your income could sink you permanently.  We regularly save around $250 each month outside of my 401(k) due to a few automated savings plans I’ve set up.  That money gets budgeted just like everything else.  If your savings category is $0, you need to take a long look at your expenses and decide if they’re worth the risk of not having a savings buffer.

Aim for Zero

A budget with money left over is a subconscious invitation to spend and is the easiest way to derail your entire budget. If you’ve totaled your numbers and your listed expenses are less than your income, you’re either not marking enough for the categories you’ve listed or you’re not pushing enough to savings – and it’s usually the latter.  After balancing our budget, we freed up an extra $100 and immediately added that to the savings budget.

Follow the Budget

The finished budget

Once your budget is down on paper, you’re done with the “easy” part.  The harder part is actually living by your budget.  If you’re not used to having to follow a budget this may not be an easy transition.

The best way you can help yourself succeed is to remember that you made this budget for your self and your future.  Following your budget will only benefit you; breaking the budget will hurt you.  Just stick with it, even through the difficult patches, and you’ll come out ahead.

I’ll check back in in a couple of weeks to share how well we’re doing and I want to hear then how you’re coming along, too!  If you have any other tools or methods you use to build your budget, please share in the comments. Let’s all help each other succeed.

(c) 2007-2009, That One Caveman, http://www.thatonecaveman.com

I’ll come clean: While I’ve repeatedly suggested that everyone have and follow a budget, I’ve been lax in that department. While I could excuse myself because of the stress of providing for a growing household, that only provides me yet another reason to actually have a budget. That’s why I’ve decided to join in the 30-Day Budget Dare, as challenged by Glblguy from Gather Little by Little.

For the last five months, we have had no idea whether we were improving or damaging our finances. It seemed every time we saved on something, we ended up spending more somewhere else. Now that our “required” monthly expenses have settled down, it’s time to rebuild that budget.

In the past, we’ve used Quicken’s budgeting features, but always struggled to properly categorize each transaction (plus, it didn’t help with cash transactions). We also tried the original Pear Budget spreadsheet but couldn’t seem to click with it. We’ve even considered Mvelopes, but still we fell behind. So this time, we’re going to keep our budgeting method simple: Pencil and paper.

To get our “working” budget numbers, we’ll examine our last five months of expenses in Quicken and get a general idea of how much we spend in a handful of broad categories. Then we’ll match that up against our income and see where we can cut the budget to make it match (or, even better, end up with a surplus that we can save). Each day, we’ll take our receipts and write down where and how much we spent and update the running total for the month.

By keeping the method simple and offline, we can update it quickly and easily. If we’re out of town, we can either choose to take the sheet with us or write it down when we get back. My bet is that with a simpler system, we’ll be more likely to keep up.

Starting May 1, we will officially be living with a budget. That gives me a week to put together the initial data and start adjusting myself to the budget. Before then, I’ll share our system and our budget and I hope you’ll share yours, too. Let’s enter this challenge together and see how well we do!

If you have a budget plan already or know of a good way to set up a budget, please share it in the comments!

(c) 2007-2009, That One Caveman, http://www.thatonecaveman.com

I’ve struggled for over a decade with my weight. Although I proclaimed last year that I wanted to get back down to my high school weight, but my efforts have been far less than successful. I know I could try harder, but I haven’t found the key to motivating me to eat better and lose weight faster.

In order to better motivate myself, I started listing all the ways I could save money by losing weight:

Life Insurance

Last week when we met with the insurance agent to discuss our life insurance needs, we discovered that I didn’t qualify for the best rate due to my weight. When I get my weight below 175, I can qualify for the lower rate as long as all of my other risk factors are still well-managed. Besides, weighing less will make it less likely that I will die due to a weight-related issue and that’s always a good thing.

Health Expenses

I believe I’ve isolated last year’s gastrointestinal issues to my weight and eating habits. Because of these issues, I’m on a long-term prescription and may need to undergo more frequent colonoscopies. And recent research I’ve read about points to the possibility that my migraines are also weight-related. If I get my weight back down into the “normal” range, there’s a chance I can forgo at least a good portion of those ailments and the related expenses.

Food Cost

Obviously, by eating less and eating smarter, I’ll spend less on food. We’re already doing a good job at home, but my snacking at work is sabotaging not only my weight, but my wallet.

Auto Fuel Usage

Just as you can save on gas usage by taking out unnecessary cargo and lightening your car, the 40 lb “spare tire” I’m carrying with me is cargo as well. If I can jettison that weight, I’ll use less fuel on every car trip. And by working to lose that weight by riding my bike more, I can further reduce my fuel consumption.

Water and Soap

Ok, this is a bit of a stretch, but I believe I can save in the shower as well. Since I’ll have less surface area to clean, I’ll require less soap and less water to get clean. Maybe I’ll save a few pennies each shower, but it still adds up!

What Did I Miss?

This is a quick list that I put together and I’m sure I missed something. How else can I save by losing weight? Please tell me in the comments!

Photo by: chrisphoto

(c) 2007-2009, That One Caveman, http://www.thatonecaveman.com

We’re relatively new to using online bill pay. For years we felt more comfortable with sending out a check than entering a few pieces of info online and throwing our money out at the speed of light. But about this time last year, we decided to sign up instead of spending an increasing amount on stamps.

We thought everything was going great, but then I was woken up Saturday morning at 8am with a scary phone call.

“This is your credit card company. You are currently ten days past due. To arrange for payment over the phone, press 1. To speak to a representative, press 2.”

I quickly sobered out of my half-asleep and groggy state, pressed “2″ and ran down to our computer to figure out what went wrong.

While waiting on hold, I opened Quicken and started searching. Sure enough, we recorded the full payment to our credit card seven days before it was due. Something had to be wrong. The automated voice contradicted what I saw in front of me.

Out of increasingly morbid curiosity, I checked the online register on our bank’s website. My heart sunk when I saw the truth staring back at me: We did make the nearly $900 payment, but not to the credit card company. By mistake we entered the amount one row above the credit card and sent all our money to our cable company.

Once the phone representative came online, I quickly explained the situation to him and set up an immediate payment from my “backup” checking account. (All the more reason to have an emergency fund, folks!) And he agreed that this was an uncommon situation and that he would do what he could to remove the late fee and help keep this off my credit report.

Now that that disaster has been averted, I need to prepare myself for the inevitable fight with my cable company to get my money back. With my long and conflict-ridden history with my local cable company, I’ll be lucky to see my money within a month. Hopefully it doesn’t take that long since my emergency fund is nearly tapped out.

The lesson here is to be exceedingly careful when using your bank’s online bill pay option. One quick, careless typo can cost you thousands of dollars and even impact your credit. For now I think we’ll still use bill pay, but I know we’re going to be more careful in the future!

Photo by: catd_mitchell

(c) 2007-2009, That One Caveman, http://www.thatonecaveman.com

I received this comment from Chelsea on my article on how to pay for college when you’re own. I already emailed her back with some suggestions, but it looks like she could use a lot of ideas. What do you think she should do?

Hello. I am a college student currently taking out 45 grand a year to pay for college. I am a double major in classics and english lit, and will no doubt be starting my publishing career at a measly 30 grand or so a year. My parents make too much money for me to get a cent from the school or the government. While I completely agree with the fact that I appreciate my experience at school much more than others who are having their way paid, I will be living as a college student well after my bachelors degree because my monthly bill will be astronomical (1600 or so). In all reality, your options dont work for everyone. I work 30 hours a week and am taking 17 credit hours this term. The time Im spending working is really fruitless, as it goes towards things such as rent, the cable and the electric etc. I do not spend my money partying as others might and most of the time barely keep my head above water every month. Its unnerving to think that Ill still be living this way 10 years after my graduation. I would consider the military, but it seems to me that a degree in english lit and classics would do me absolutely no good there. I would never use them, and while some may be in these degree programs to “just get a degree” I am not. Id like to use the education I am paying so much for. If I wanted to only “get a degree” I might choose a more rewarding one when it comes to income and not simply doing what I love. I wouldnt mind working “part time” I guess you could say to serve my country and help foot the education bill, but every option seems to have the minor possibility of going overseas. Going overseas surely takes me away from NYC/Boston or any other big publishing city. Are there any more ideas for me? I get tiny amounts of money from the scholarships I find online, and while I know every little bit helps, it sometimes feels fruitless. I just wanted to know if there were any more resources I havent tapped in to. Im soon to be 180,000 in debt and making 30 a year. (Before moving up, obviously) Im at a good school (University of Miami) and dont want to give that “name brand” up for a state school education, which seeing as Im not a Florida resident, would really save me very minimal money in the end while losing the experience at this school that I love. Help??

Every decision one makes has consequences that must be dealt with. Her decision to stay at that school is costing her $45K/year. Her decision to avoid the military removes a potential way to pay for school (and give great stories for later writing). Her “name brand” fixation prevents her from looking at other qualified schools. Something’s going to have to give if she’s going to see some change.

What would you suggest for her? How would you go about fixing the situation if it were you?

(c) 2007-2009, That One Caveman, http://www.thatonecaveman.com

Photo by: racineur

The Christmas shopping season is upon us. Malls are cramped with people shuffling through racks trying to pick the best deals. Stores are opening earlier and and closing later while hoping to get a piece of the ever-shrinking spending pie. And I’m stuck here wondering how I’m going to get everything done in time for Christmas, birthdays, and the upcoming birth of our second child.

Honestly, I strongly dislike the “Material Christmas” season. It’s an orgy of careless spending, thoughtless gifting, and overeating – indulgences of every variety. I much prefer a quieter, simpler Christmas with family and the exchange of one or two meaningful gifts. But since I live in the “real world”, undertaking the task of Christmas shopping is still a required ritual.

Over the years, I’ve developed a few strategies to help cope with the stress of holiday shopping.

Prepare Early

Well before taking on the task of actually shopping for the presents, it’s important to develop a “game plan.” Starting in late October, I start figuring out what gifts my family would enjoy. I inventory their current fascinations and I’ll even directly ask them what they want. I want to be 100% sure that they will enjoy the gift I give them so my efforts and money don’t go to waste.

Once I have a good idea of what I’ll purchase, I tackle the circulars to find the best deals and how to best combine multiple purchases into one trip. In past years, I’ve even gone so far as to build a mini-timeline to help map out what stores I will hit, what I will get where, and about how long it should take. I’m serious about limiting my “holiday shopping experience”…

Know Your List and Your Store

When the day finally comes that you go shopping, it’s imperative that you know the shopping list almost, if not completely, by heart. If you’re standing in the store being jostled about by other harried shoppers, it’s easy to get flustered and lose track of the list. You’ll be busy trying to figure out what to do next instead of staying on task and getting the shopping done.

Before I enter a specific store, I’ll read over the list I built for that store. I do my best to map out the path I’ll take in my head before I enter so I can avoid the frustrations of searching a busy store for the gifts I intend to give. This sounds a bit mechanical and not very much fun, but I’ve found it essential for keeping my cool and dealing with the situation as best I can.

Get In and Get Out

For heaven’s sake, don’t dawdle once you get in the store! There are plenty of other people milling about in there causing nightmares for the staff and other shoppers. (Trust me on this one, I used to work retail and the “worst” Christmas shoppers were the ones clogging the aisles while they suffered from terminal indecision.) To make the trip as easy as possible on everyone:

• Gather your purchases as quickly as you can in an orderly fashion
• Be courteous to the other shoppers and workers
• Organize your purchases before coming to the register
• Have your method of payment ready before everything’s rung up
• Smile, be polite, and leave the store with your purchases

Avoid the Rush

It’s hard not to think of cattle when the crazed consumerists are pressing their bodies against the locked doors of a store before dawn. And the mad rush that is triggered by the opening of said doors is just sad. Do yourself a favor and save your dignity by avoiding the nonsense that is “Black Friday.”

Great deals are to be found all season, not just on Black Friday – especially in a tough year such as this one. You’re not going to find any empty stores until mid-January, but you can avoid the worst of the rush by shopping at slower times.

If you go on a weekday morning (before lunch time), you’ll find a lot of elderly shoppers and a few stay-at-home moms, but the stores won’t be packed. Later in the day, you’ll find the shopping traffic much heavier. If you’re a night owl, shopping past midnight on an average weeknight at a 24-hour store such as Wal-Mart will find you greeted with a few odd stares and mostly-uncrowded aisles. The weekends are right out – everyone and their dog will be out and you won’t stand a chance.

Shop Online

Of course, the internet is open all day, every day. If you know your gift list well in advance, you can order everything online and let UPS do the worst of the work for you. This year, Amazon.com will be getting a lot more of my money than they have in years past. With the deals I’ve found there, my general loathing for the crowds, and the uncertainty of when the baby will arrive, the safety and security of shopping online looks great for us this year.

As Always, Have Fun

I’m a huge proponent of always having fun, no matter what you’re doing. Christmas shopping is about sharing your love with someone else and trying to give them the best gift for them. When you’re out braving the crowds, it helps to remember why you’re there. Keep love in your heart, be as kind and courteous to everyone as you can, and limit your exposure and everything should go fine.

(c) 2007-2009, That One Caveman, http://www.thatonecaveman.com

Since the beginning of the year, I’ve been obsessed with my net worth and how it changes from month-to-month. I checked my 401(k) hourly and adjusted my month-end balance forecasts every week. I meticulously analyzed every dollar entering and leaving my accounts. And I came to a conclusion: My “net worth” doesn’t matter.

Really, net worth doesn’t matter. It’s just a number on a spreadsheet and is meaningless when trying to describe my true personal finance health. Yes, you read that correct: It’s meaningless. The only thing that really matters on a day-to-day and month-to-month basis is my short-term financial health.

Yes, my 401(k) is dropping and my house’s value is fluctuating, but none of that affects my life today. And if you’re not currently withdrawing from your 401(k) and you’re not trying to sell your house, it doesn’t affect you either. The true indicator of your current financial health can be described in a simple flow chart:

Personal Financial Health Flow Chart

That’s it! If the money coming in every month exceeds the money going out, you’re experiencing financial growth; if you’re spending more than you’re making, you’re falling victim to financial loss. It doesn’t get any simpler than that.

And this rule applies no matter what the stock market, the credit market, or the housing market is doing at any one moment. Cash flow is the true indicator of your month-to-month financial health. As my pastor loves to say, “Healthy things grow,” which means a healthy cash flow will help us grow our savings and grow in our financial independence.

So from now on, I’m not going to share my net worth. An arbitrary number on a meaningless spreadsheet isn’t going to tell me or anyone else how my financial health is changing. What I will do is to figure out our budget (yet again) based on what I’m really bringing home and share with you what I’m doing to return to living within our means and what we learn as we return to a positive cash flow.

It’s not going to be easy, but I’ve already proven that I’m making more than we need to survive and thrive if not for our debts. But if we’re to have any hope of prosperity, our cash flow is going to have to pull out of the red and stay there.

This article was featured in the Carnival of Personal Finance #177 at The Sun’s Financial Diary.

(c) 2007-2009, That One Caveman, http://www.thatonecaveman.com

Photo by: rKistian

After an item in my most recent purchase dropped by $5.00, I pulled up the same page I always have to request a price match and quickly sent off my usual form letter. Within a few hours, I received the following response:

Thank you for writing to us at Amazon.com to take advantage of our Post-Order Price Guarantee.

…

Only orders placed before September 1, 2008 are eligible for a price difference refund under the Post-Order Price Guarantee policy. As of September 1, 2008 we are no longer offering discounts if prices change on our website after you make a purchase.

Thank you for shopping at Amazon.com–we hope you’ll visit us again soon.

It appears that Amazon is hurting in our current economy, just like every other retailer.

I’m very disappointed that they pulled this consumer-friendly benefit away, especially since that was the difference maker in a few of my purchases. How do you feel about losing the 30-day price match? Will its absence change your buying habits and make you consider other retailers instead? If you’re looking elsewhere, have you found another retailer with a similar policy? Tell us in the comments!

(c) 2007-2009, That One Caveman, http://www.thatonecaveman.com