By Daniel Rodriguez | Dr. Budgets
It can be easy to get caught up in the spirit of the holiday season… going into credit card debt of course! Kidding aside, it is very easy to overspend during the holidays because we are in a generous mood, and it seems like every company in the world is trying to get us to spend our hard earned money. This is probably why 37% of people said that going into debt is one of the top 5 causes of holiday stress. It doesn’t have to be a stressful time if you put some thought into it ahead of time and set some parameters for yourself. Below are four things you can do to give wisely this holiday season.
Make a List. It’s amazing how powerful it is to make a list before you go gift shopping for the holidays. I recommend you make a list that includes everyone you are buying a gift for and the amount you plan to spend per person, then add it up. If the total amount is too much, then make some adjustments before you start buying presents.
Don’t Use Your Credit Card. If you only use cash or your debit card this holiday season, then it will be very difficult for you to get into credit card debt. Think about it… do you really need to go into debt to buy things for the loved ones in your life? Is there a way for you to be more thoughtful about your giving and at the same time spend less? The people who truly love you probably don’t want you to be stressed out about your credit card debt.
Give What They Want. Give to the loved ones in your life how they want to be given to. You have to know your audience when you are giving. For example, my wife and I took the Love Languages test and ranked “Receiving Gifts” very low, so showering each other with gifts isn’t the best way to express our love for each other. Instead, we are able to show each other we care in more meaningful and affordable ways. Be very mindful of how to express your love and appreciation to the people in your life… sometimes you don’t need to spend a lot of money for them to know you care.
Charitable Giving. If you are giving money to charity, ensure that most of the money you are donating actually goes toward the cause they are supporting (this article can help you). Also, if you can donate and receive a tax deduction as well, even better! My wife and I give the things we don’t need to Goodwill, which gives us a nice little tax deduction every year. Lastly, check to see if you can get your monetary donation matched to double your contribution (sometimes companies have programs where they do this).
These are just a few tips on how to give wisely this holiday season. If you have some other tips, please share them with us in the comments section below. If you know somebody who went into credit card debt because of their holiday spending, and now needs some direction on how to pay it off, put them in touch with us. Happy holidays!
- Published in Spend Wisely
By Jennifer Rosson for Dr. Budgets
This month we are excited to have Jennifer Rosson as a guest blogger for Dr. Budgets sharing her tips on shopping smart! She is a true expert on shopping. To learn more about Jennifer, check her out at styleyourlifeblog.com. Here are her five ways to save money on your wardrobe…
1) Take a good look at your closet before you shop!
Most people tend to purchase the same type of items again and again… I call this your “uniform”. Because of this, your wardrobe isn’t as adaptable as it should be. What items could you add to grow your wardrobe and make it more versatile? Make a list of these items and look for them when shopping.
2) Think about your Cost Per Wear.
Keep this very simple formula in mind when shopping!
You take the cost of the item and divide it by the number of times it is worn, adding in any maintenance cost (dry cleaning, laundering tailoring).
- Dress on clearance $19.99
- Wore it once (1)
- Dry-cleaned ($5)
- $19.99/1+$5= $24.99
Cost per wear = $24.99
- Designer Jeans $189
- Wear it once a week for 12 months, 52 wears
- washed every other wear $1.00
- $189/52 +$.50 = $4.13
Cost per wear = $4.13
So sometimes those “deals” aren’t really deals at all. Think about this next time you are shopping 🙂
3) Consider shopping consignment.
I love consignment shopping. Find a credible consignment store that carries higher end items. This is a great way to pay up to 70% less on designer and contemporary brands. Closely check for any flaws, fading, etc. because these stores often have a final sale policy.
Two I recommend: The Real Real (online) and My Sisters Closet (San Diego)
4) Shop sale sections.
Okay before you say yes, of course, that’s obvious….
Let me clarify. Shop sale sections at high-end stores and shop with your list (from #1). Many people shop sale sections; the difference is shopping them with direction.
Shop sale sections in stores a level above where you’d typically shop. Why? Because you can get higher quality pieces for the same price you typically pay. Let’s say you typically shop at Banana Republic and you are willing to pay $150 for a dress. Well then head on over to Bloomingdale’s sale section and I assure you will find a higher quality dress for around the same price.
The second thing to keep in mind when shopping sale….
USE YOUR LIST!!! It is not a bargain if you don’t need it!!
Remember cost per wear?
5) Don’t shop out of desperation.
We’ve all been there, you have an interview or event and you have nothing to wear. You rush out the day before and purchase something to get you by. You settle because you couldn’t find something you loved. The result: you don’t feel fabulous at your event because you don’t love your outfit and you will probably never wear it again.
How to you avoid this happening to you? You know your lifestyle, you know what types of events, presentations, and interviews you have in a typical year. When you see a piece of clothing you love and you know you’ll have an occasion to wear it, buy it then! Don’t wait till you have the specific event. The event will come believe me and you’ll already have the perfect piece hanging in your closet!
- Published in Spend Wisely
By Daniel Rodriguez | Dr. Budgets
Many people probably find it overwhelming to bring some structure and planning to their personal spending. This is probably why only one in three Americans prepare a detailed household budget. This, in turn, is one of the reasons why people are still in debt. If you are a business owner, then this adds another layer of complexity, which is probably why so many small business owners are flying off the seat of their pants when it comes to their finances. When I work with small business owners at Dr. Budgets, there are four things I recommend they do when it comes to organizing their personal and business finances…
1) Separate Personal & Business. Keeping your personal and business finances separate is a critical first step. This starts with simply having a separate checking account for your business, and then using it exclusively for business. If you use a credit card for the business, then having a credit card dedicated exclusively for business expenses is a must (whether it is a business card or a personal card you only use for business). Also, even if you have a very simple business, you want to have both a personal AND business budget.
2) Track Your Spending. You want to track your business expenses using some sort of software. If you have a simple business without much activity, then you can probably get away with using a spreadsheet. As your business grows, consider using bookkeeping software such as QuickBooks. This is so important that clients of Dr. Budgets who are small business owners receive bookkeeping in QuickBooks as part of their coaching package. Also, track your personal expenses. If you have a record of those expenses available, your tax accountant may find that some of those expenses on the personal side can be written off on the business side.
3) Pay Yourself a Salary. Many people who own a small business don’t have a plan on how to pay themselves. As money comes into the business, that money usually is spent on both business and personal expenses. It is important to create some stability in your personal spending by paying yourself a consistent salary (as if you were working a job). Set a reasonable salary that will balance your personal budget, while ensuring that you don’t take too much money from the business. A fine balance has to be stuck here because if you pay yourself too much, your business runs out of money, but if you don’t pay yourself enough then you run out of money on the personal side. I spend a lot of time with my small business owner clients to come up with a salary figure that strikes that balance.
4) Save for Taxes. Many small business owners (especially new business owners) tend to forget to save for taxes. When you are an employee, it’s easy because taxes are taken out of your paycheck before you can spend the money. As a small business owner, you have to put some money away to prepare for the inevitable tax bill. If this habit is built at the very beginning, then it just becomes another “bill” that the business needs to pay every month (by transferring money to your business savings). Unfortunately, many small business owners don’t do this, and then when the inevitable tax bill arrives, they are shocked. Not saving enough money to pay your taxes is an easy way to get into debt as a small business owner, so you must plan for this by setting aside some of your business income every month.
Being a small business owner is a challenge even without factoring in the financial side of things. Doing the four items above can help mitigate some of the stress associated with running a small business. If you know a small business owner who prefers to have an expert look at their spending on the personal and business side, please have them contact us to schedule a consultation. These are only four tips for business owners. Do you have some other ones? If so, please let us know in the comments section below.
- Published in Organization Tips
By Daniel Rodriguez | Dr. Budgets
In many ways, No-Spendtember goes against what I teach my clients. In general, Dr. Budgets is not about cutting out the things you love and drastically cutting your spending. However, what I like about No-Spendtember is that it is like a spending “cleanse,” and by participating in “No Spendtember,” you see how freely you spend your money on things that aren’t that important to you. The side benefit is that you can jump-start your debt repayment or savings goals by participating in a one-month spending cleanse. No-Spendtember really challenges you to plan ahead and to get creative… two habits that can save you lots of money with a little effort. Here’s how:
Plan Ahead. How many times do you know you are going to attend a birthday party, but you put off buying a gift until you are on your way? Then, you pick up the gift (say, $35) but you also need a card ($5), a gift bag ($3), and tissue paper ($2). You know the gift could have been purchased online for $25 if you had ordered it ahead of time, and then you could have used a reused gift bag and tissue paper you had from the last time you purchased a gift last minute. And the best greeting cards are either handmade or purchased from Trader Joe’s (99 cents!) or Home Goods (their fancy cards are HALF the cost of a regular card at Target). All of which would have saved you $15-$20! Do that once or twice a month over the year and it starts to add up! Another scenario where planning ahead saves you money: packing snacks and water for a day at the zoo, park, ballgame, airport, etc. can easily save you $40 for a small family. Planning ahead definitely saves you money!
Get Creative. Often, spending money is an easy solution to lots of life’s situations. I have found, if you take a little time to get creative, you can solve a problem or improve your life without spending money (or without spending a lot of money). For example, say you want to buy a new kitchen appliance (let’s say a juicer). You could jump on Amazon or head to the mall to pay full price, and then likely be upsold or give into an impulse buy and spend even more money! Then, you may not even use it as often as you thought you would and regret the purchase entirely. An alternative might be to borrow the appliance from a friend or family member to try it out for a week. If you love it and still want to buy one of your own, maybe you can find a discounted one on Craigslist or eBay (and save some money purchasing it from people who didn’t end up using it as often as they thought they would!). Another scenario where getting creative saves money is getting friends together for a potluck at your house instead of going out to dinner at a restaurant. You can easily save $50-$100 by doing that, and you’re able to let the wine flow freely!
The challenge to not spend money for a month during No-Spendtember simply encourages you to plan ahead and get creative, which in turn builds good habits that you can use all year. What are some ways you’ve planned ahead or gotten creative to save money?
- Published in Spend Wisely
By Jeannie & Daniel Rodriguez | Dr. Budgets
This month we wanted to write something from our perspective as brand new parents. Our daughter just turned three months old, and we couldn’t be happier (tired, but happy :-)). Since this is a money-focused blog, we want to share with you our 5 initial thoughts on having our first child as it pertains to money…
Plan Ahead. Before the pregnancy, we started to think about how to structure our health insurance and how much to put into our Flexible Spending Account (FSA). Timing obviously helps with this…we found out we were pregnant in September, and open enrollment was in November. We switched over to a lower deductible and lower out-of-pocket maximum health insurance plan and maxed out our FSA to take full advantage of what was offered through work.
Disability & Paid Family Leave. We live in California, which is very generous when it comes to maternity leave. Figuring out how to get disability and paid family leave benefits can be confusing though! There are no clear step-by-step instructions on how to obtain leave and it can be frustrating. For those who are eligible, you can receive up to four weeks paid short-term disability (State Disability Insurance or “SDI”) before the baby comes, and six weeks after (eight weeks if you had a cesarean section). The four weeks of pre-delivery leave can only be used before the baby arrives, so plan accordingly. Then, at the completion of SDI, you’re eligible for Paid Family Leave (PFL) to bond with your child. You can get six weeks PFL – and if your significant other pays into SDI with his/her job, then they’re eligible for six weeks paid bonding time too! Also, you don’t have to use the six weeks consecutively… you can use chunks of time up to a year after the baby’s birth day.
Something neat that we learned was that you can transfer your benefit amount from the Visa prepaid card to your bank account automatically! Since things tend to change often, your best bet is to Google instructions on how to do this. For us, receiving this money allowed us to spend just over three months with our newborn daughter, and that time with her and each other was priceless.
Discount on Hospital Bill. It takes a while for the hospital and insurance company to work out the bills on their end before you get a bill for what you owe. And, with everything going on with having a newborn at home, the bills might keep getting pushed to the bottom of the to-do list (below “keep baby alive” and “brush teeth”). If you don’t pay your bills right away, don’t be surprised if you get a call from the hospital billing department about payment. If you do hear from them, be honest about your situation. They might be in a position to offer 20% off your bill (which they did with us!) and/or set up a payment plan.
Amazon Prime. Amazon Prime was convenient before having a baby. If you are unexpectedly at the hospital three weeks before your baby is due, then Amazon Prime becomes a savior! If you are an Amazon Prime member and create a registry on Amazon, you get 15% off eligible items remaining on your registry. As labor began, we used the one-time 15% off discount to order the things we needed for the baby from the hospital room. When we arrived back home a few days later, we had a mountain of boxes waiting for us on our front porch! Also, with Amazon Prime you get free two-day shipping (and, sometimes, free ONE-day shipping), so we didn’t go crazy buying things we weren’t sure we would need before the baby came – we knew that if we needed an item, it was only a few clicks away. This saved us money by limiting what we bought before the baby arrived.
Cloth Diapers. We love cloth diapers! They are cute, cost effective, and eliminate a ton of diapers from ending up in a landfill. Yes, it is a little more work having to wash and dry them, but well worth it for us. We estimate the cost savings here to be minimal the first year (we had to purchase the diapers after all), but upwards of $400 for the second year, and potentially thousands for the future child(ren) we wish to have.
Those are our 5 initial thoughts on having our first child. If you know someone who is pregnant or just had a baby and wants some coaching on how to adjust their budget after this big life change, have them contact us or schedule a complimentary consultation. Happy parenting!
- Published in Family
By Daniel Rodriguez | Dr. Budgets
Do you feel you have so much debt that you will never pay it off? Do you want to travel more without feeling guilty about going deeper into debt to do it? Teresa* had been in debt most of her life and decided she no longer wanted to live with it. Here is the story of her journey…
I am a single woman and I have a son in college who I support. I have a good job and income, but I couldn’t figure out how to stay out of debt. There were times when I would pay it off, but I would quickly get myself back into debt. About 10 years ago I heard about Dave Ramsey, and I thought “this is what I have to do to pay off debt.” So I created my budget and tried to save the $1,000 for my starter emergency fund, but something always came up financially and I could never do it.
When I was deployed, I managed to pay off all my debt and then I bought a house. That’s when my debt snowballed! Closing costs were more than expected, and then everything after that just seemed like a drop in the bucket. My thinking was “what’s another $5,000?”, so I just kept spending.
Between school loans, two car loans, credit cards and a loan against my 401k, I owed over $40,000.
One day, I decided to seek out a financial advisor to help me. He told me he couldn’t help me until I had some money saved. Since I always owed money, I couldn’t work with a financial advisor to invest money and get ahead. I told him I needed somebody to hold me accountable for my spending, so he referred me to Dr. Budgets.
Deciding to Work with Dr. Budgets
When I retired from the military, it was scary not knowing what my next job would be. On top of that, I owed money which was really scary! I wanted to get out of debt for the security. Also, I learned from Dave Ramsey that I was paying interest on the debt that I would rather have in my savings, where it could earn me money.
I contacted Daniel and he described his services – it sounded exactly like what I needed. It was nice to have been referred to Dr. Budgets.
Working with Dr. Budgets
The first meeting was great. I couldn’t wait to get started! After that meeting, he reviewed my spending and came up with my budget, and then we met to discuss the spending plan. I had my little spreadsheet budget that I had created and I thought I’d get something similar from him, but his was so much better!
When I created my own budget, I had just guessed how much I was spending in each category… “this much on groceries” and “that much on my home,” but it wasn’t based on anything. When he actually looked at my spending, he said I needed to increase my grocery budget – I had no idea! He also added categories so it was a more accurate reflection of what I was spending. I loved that the budget was on track and I wasn’t having to readjust it every month because the numbers were now reflecting reality – Daniel was tracking it and reporting back. When I had created a budget before, I set an amount I thought was correct for each category and then I’d adjust it as I overspent. I learned from Dr. Budgets that is not how budgets work!
My favorite thing was the Goal Tracker! Although, at first it was depressing because the first month the debt number just goes down a little. But as I was putting more toward my debt, it started getting exciting and I looked forward to seeing it; I’d print it out every month and put it up at work where only I could see it.
The two biggest things I got from working with Dr. Budgets were the accountability and the advice. It was a tremendous comfort having somebody review and discuss my spending with me. I was able to use him as a “scapegoat” a few times because I like to consult him before any major purchase. This ended up saving me big when a roofing salesman came to my door once and told me I needed a new roof. He was very high-pressure, but I told him that I had to talk to my budget guy. I had to say it over and over! When I talked to Daniel about it, he encouraged me to look into the firm and it turned out they were not very reputable. They were so high pressure, if I didn’t have Dr. Budgets as an excuse, I might have signed up and that would have probably been a big mistake!
It was hard sometimes to stick with my budget. My friends would tell me I deserved to buy nice things, but I told myself I deserved to be debt free.
I was able to pay off the $40,000 in less than two years! I also took a trip to Japan and it was my first “debt free” trip. In the past, I would charge the airfare and the hotel on my credit card, but this time, it was all paid for.
I recently got into a car accident and realized that before Dr. Budgets something like that would have been a crisis for me. This time, I had money to pay the deductible, so it wasn’t a big deal. Also, I believe a new car payment would have triggered a spending spree for me because my attitude before was always “what’s a few more thousand dollars?” – I know I would have bought new furniture.
And I succeeded in another way: I’m thinking about money totally differently now. As we worked together, something would come up and I would approach Daniel with the solution. Coming up with a solution to a money problem on my own was something I would have never done before – I would just spend, spend, spend. Working with Daniel has inspired me to make my own big financial decisions in a way that doesn’t put me in debt again.
What would you tell someone in a similar situation to yours about Dr. Budgets?
I would tell them that working with a money coach is probably nothing like they imagine it would be. Daniel was so helpful and he worked with me. Some people say they don’t want to be restricted by having a money coach, but I want to say “you’re already restricted!” I don’t feel deprived because I know the money will be there to buy the things I want soon.
I know people who would benefit from working with a money coach, but they say they don’t want to spend the money to get out of debt because they’d rather spend the money on buying something – I want to tell them that’s backward!
Lastly, I’d tell people that my dogs never suffered 🙂 That’s to say, Daniel didn’t come in and say I had to stop doggy day care or spoiling my dogs. He made it work by helping me identify my priorities, which simply meant I spent a little less in other categories. I paid off my debt and built up my savings – and my dogs got to keep up their lifestyle!
Watching someone pay off over $40,000 in debt in less than two years is inspirational to me, and I hope it is to you too…especially if you are in debt and feel you will never get out of it. Thank you for sharing your success story with our readers, Teresa! If Teresa has inspired you to get out of debt and you need some guidance, please contact us or schedule your complimentary consultation.
*For client confidentiality, we changed the name of the person to “Teresa.” Everything else is factual.
- Published in Success Stories
By Daniel Rodriguez | Dr. Budgets
Debt can help you fulfill your dreams and move you forward in achieving your financial goals. Debt can also turn into your worst nightmare if you aren’t careful. So how do you use debt, rather than letting debt abuse you?
Step one is to get yourself out of credit card debt. If you are in credit card debt, then you need to figure out why you are still in debt, then take the necessary steps to pay it off. You can use a debt payoff calculator (like this one from The Simple Dollar) to get you going.
Step two is to stay out of credit card debt. It can be easy to use debt in a way that does not support your financial goals. Using a credit card to buy the latest gadget, that new pair of shoes, or to take that vacation when you don’t have the money can have harsh long-term financial consequences… this is when the Rule of 72 can work against you! Unfortunately, poor spending habits can be hard to break. As your income increases, you develop more expensive tastes, and your credit card balance continues to rise. It is a cycle that, sadly, isn’t broken by many people. Don’t be a part of those statistics!
So once you are out of credit card debt and are able to stay out of credit card debt, then there are many ways you can use debt to further your financial goals. You could use debt to purchase a property, purchase a car (be reasonable here!) so you can commute to work, or invest in your business. My wife and I have a low-interest rate mortgage that allows us to live in a place we love while keeping our monthly payment relatively low and stable.
Debt can also be used properly for short-term use, such as taking advantage of rewards or cash-back credit cards. The key is to use them wisely and pay them off every month to avoid interest charges. My wife and I use the American Express Blue Cash Preferred credit card for all of our grocery store purchases to receive 6% cash back… and we avoid paying interest by having it set up on automatic payment to pay the full statement balance every month. This way we earn the $360 annual maximum cash-back reward without ever paying a cent in interest! We also use the Target REDcard to receive 5% off at Target and free shipping at Target.com, and the Amazon Store Card to receive 5% off at Amazon.com, which in essence pays for our Amazon Prime membership.
There are definitely ways to work the system and use debt to your advantage. Carrying a credit card balance is not one of them, which is why that is step one. So, if you are still in credit card debt, bookmark this post and come back to it when you are out of credit card debt. If you are ready to get out of debt so you can start using debt to your advantage, contact us or schedule your complimentary consultation today to get started!
- Published in Debt
By Daniel Rodriguez | Dr. Budgets
You have a balance on your credit cards and you have decided to pay them off in two years. That’s great! So you simply take your total balance and divide it by 24 to find out what you should pay each month… then, two years later, you’re out of debt, right? If only it were that easy!
Paying off debt isn’t just about figuring out the numbers. There are a lot of emotional considerations involved that may make it hard to pay off debt, which might explain why the average American household carries $15,762 in credit card debt.
Here are the 5 reasons why you are still in debt…
Lack of Motivation. Maybe you tell yourself you want to get out of debt every year, but at the end of the year you have the same amount (or more) debt than you did when the year began. You have a desire to pay off your debt, but your actions are painting a different picture… your desire to purchase what you can’t afford is stronger than your desire to pay off your debt. The reason why you are still in debt is because your goal to pay off your debt isn’t strong enough (or at least not stronger than your desire to swipe your credit card).
Lack of Knowledge. Maybe your goal to pay off your debt is strong, but you just don’t know how to start paying it off. Do you pay off the credit card with the highest interest rate or the one with the lowest balance? Do you do a balance transfer to a 0% credit card? Do you continue to use your credit cards while you are paying them off or do you cut them all up? You can pay your debt in a variety of ways, but if you don’t start somewhere it won’t pay itself off! My recommendation is you start by putting your credit cards away and stop using them until you are completely out of credit card debt. Once you put your cards away, you can then decide whether to pay off the highest interest rate or the lowest balance card first. If you haven’t started because you feel you don’t have enough knowledge, then this is probably the reason why you are still in debt.
No Budget. You can have the motivation and a plan for how to pay off your debt, but without a realistic budget (healthy spending plan) your progress will be limited. If you don’t know where your money is currently being spent and you don’t have a plan for how to spend it, then you can easily miss opportunities to make a significant dent in your debt balance. So, figure out how you are currently spending your money using a spending tracker like Mint.com, then develop a budget so you can allocate as much as possible toward your debt repayment goal. If you don’t have a budget, that could be the reason why you are still in debt.
Financial Emergency or “Financial Emergency.” Sometimes true financial emergencies happen… unexpected hospitalization, major auto repairs, or having to take a last minute trip to attend a funeral. Most of the time, though, they are probably only a “financial emergency.” Needing new tires or routine maintenance on your car is not a true emergency. Having to pay your car registration is not an emergency. Your annual insurance bill is not an emergency. Taking that last minute trip with your friends is not an emergency. I could go on and on, but the point is that all of these so-called “financial emergencies” are all things you can plan for in your annual budget. If you find yourself constantly encountering “financial emergencies,” that may be the reason why you are still in debt.
No Accountability. So, you have the motivation, knowledge, and a budget that factors in “financial emergencies,” but you are still not making much progress toward paying off your debt? The biggest reason could be a lack of accountability. When you have someone hold you accountable to your goals, something magical often happens… you start achieving those goals! Accountability is often the missing ingredient to achieving your goals because with accountability you have someone to report to about your progress. And it is much more enjoyable to tell that person you are on track with your goals, rather than having the conversation that you are failing miserably. So, have someone hold you accountable, whether it is your spouse, a friend, or a Dr. Budgets money coach. If you find that you have done everything, but you are still in debt, then the lack of accountability is probably the reason why you are still in debt.
- Published in Debt
By Jeannie Rodriguez | Dr. Budgets
Next month will mark the five-year anniversary of the day Daniel and I met, and it has been a wonderful five years! Three years (to the day!) after we met, we were married and there are a few things I’d like to share about what it’s like being “Mrs. Budgets.” When I tell people my husband is a money coach, I explain that he’s like a personal trainer for your money. He sits down with his clients each month to review their spending, he looks for places to save money, and he helps people achieve their financial goals. I think people have some ideas about what it must be like to be married to a money coach – for example, that Daniel is very frugal with his money – and I’m here to tell you the TRUTH about what it’s like being married to a money coach:
We Make a Budget Every Year and Review It Every Month
When we first merged our finances, Daniel and I sat down and had a conversation about how we spend our money and how we want to spend our money. We mapped out our financial goals and what was really important to us – just as Daniel does with his new clients! You might think that looking at your spending is a painful conversation, but it’s not at all! Daniel gets right to the good stuff to talk about what your financial goals are, and it’s a really positive discussion. With those things in mind, we look at the different spending categories and determine how much we’re going to spend in each category.
Once we have our budget, we review our spending each month to see how we did. Most months, we do well in each category and might overspend in a couple categories – but that just means we try to do better next month. I thought that I would DREAD these monthly budget reviews, but it’s so enlightening! Before I met Daniel, I couldn’t tell you how much I spent on dining out or groceries – and, I won’t lie, it would get away from me and I was overspending every single month. Now, I look forward to talking about our money because it’s such a positive conversation, and I know where we stand as far as spending and can see our progress toward our long-term financial goals.
I Get a Massage Every Month
When we talked about what was important to us, Daniel said that it was important for him to enjoy a massage every month, so we put that in the budget for him and for me! I think many people think of Dr. Budgets as being really frugal and not spending money on any type of luxury – but that’s not true! He’s all about cutting the spending that doesn’t matter so that you have money to spend on what’s important. He’d never tell me I couldn’t indulge in a luxury I want (mani/pedis, a facial or spa day) – we would just need to look at the budget together to decide from where the money would come.
I Buy Whatever I Want and He Never Questions My Spending
You’d probably think there are a few months where the monthly budget review could get pretty intense (around the holidays, for example, when I can get a little carried away with gifts, holiday parties and decorations!) but it never has. We have structured our budget in a way that we each get money every week to spend on whatever we want – and I love it! Basically, each of our incomes goes into our joint account, and from that account we pay for our joint expenses like:
- Mortgage and Utilities
- Automobile Expenses
- Groceries and Daily Living
But also from that account, we each have money transferred to our personal accounts each week for spending outside of joint expenses. That’s the money we use to buy gifts for each other, special indulgences (spa days, the latest tech toy, etc), going out with my girlfriends, and whatever we want! Daniel never questions this spending because it’s my fun money. I’ve never felt like I had to hide big purchases or justify a new dress – he doesn’t question how I spend my money.
We Treat Our Friends
Imagine you go out to dinner with Dr. Budgets and his wife, and the check comes… you might think that he’d bust out the calculator and determine (to the penny!) how much you each owe – but that’s not the case! One thing that is important to us is that we want to treat our friends occasionally and never let money come between friendships. It’s nice having money in our budget set aside so we can treat friends to a ball game, dinner, or movie tickets.
I Don’t Clip Coupons (Although Daniel Does Sometimes)
I do not enjoy clipping coupons. If I see a coupon for a place I shop often, I might stick it in my wallet to use later, but I’m not coupon crazy. You might think Mrs. Budgets is an “extreme couponer” by association but, while Daniel will use coupons for things, I almost never do (and he’s cool with that) 🙂 Since I do all the grocery shopping for the house, I do have some tricks to saving money on food without clipping coupons.
I Never Worry about Money
When I met Daniel, I had a lot of credit card debt – but I was well on my way to paying it down. I was renting out a room to help pay my mortgage, and at the beginning of each month, I remember rushing to deposit her rent check because I never had a buffer in my account to cover the mortgage payment. I also remember checking my credit card balance while standing in line at the grocery store to see if I had enough funds to cover what I needed to buy. Basically, I was constantly worried about money.
After I paid off my debt, I felt like a huge weight was lifted! And after Daniel and I merged and organized our finances, I soon realized I wasn’t worried about money at all. I never need to worry because we have automatic payments and buffers, and anything I need or want to buy is accounted for in the budget.
Being married to Dr. Budgets sounds pretty great, huh? At least, I hope it doesn’t sound like I’m married to an extreme cheapskate who makes me eat Top Ramen every night, as many people might think when I say I’m married to Dr. Budgets 🙂
The best part? I’ve heard numerous Dr. Budgets clients say they have many of the same benefits by having Daniel as a money coach! If you’d like to get a massage every month, review your monthly spending and financial goals, and stop worrying about money, then you should talk to Dr. Budgets too!
- Published in Love and Marriage
By Daniel Rodriguez | Dr. Budgets
This month, we sat down with Bobby Martins, a Real Estate Broker with nearly 20 years’ experience in San Diego. Bobby shared his home buying tips – all of which are Dr. Budgets approved – and some of them might surprise you!
Name: Bobby Martins, GRI, ABR, CRS, CDPE, EPRO
Occupation: Real Estate Broker
Company: Keller Williams Realty
Location: San Diego, CA
1) Select a Great Agent
Do your homework to find a real estate agent who fits your needs. Most home buyers are brand new to this, but the data is out there to help you. Bobby says to “go to Zillow to find out how many sales that agent has done. Is that the best agent for you? Maybe not, but it’s a starting point.” Interview a minimum of three agents and ask for written documentation of their sales. It shows that they have a good track record. Finally, he says that if you talk with an agent who makes predictions about the market or how much your home will increase in value “You should RUN. They’re not supposed to and there’s no way they can know for sure.”
2) Ask Lots of Questions
Here are some questions to ask an agent:
Do you have a support staff? Who? How many?
How many sales have you had over the last 12 months and over your career?
Have you ever been sued or gone to arbitration?
What are the main points of your marketing? (This is a question for a seller’s agent)
What’s your favorite thing about working with buyers?
But what Bobby says is most important is to “find somebody you like and connect with – somebody you trust. It’s the biggest financial purchase of your life.” And he stressed again the importance of interviewing multiple agents… “Be careful not to end up with a nice guy who can’t negotiate contracts. Right now, there is very low inventory… if you’ve been looking for 2-3 months and find your dream home, you want somebody who can close the deal.”
3) Tap Into Your Agent’s Professional Network
An experienced real estate agent has a vast network of professionals who can help you. To whom should I talk to about where to start with pre-qualifying for your mortgage? To whom should I talk to about title insurance? Which escrow company should I use? Do you know someone who can show me how to save for the down payment? A great agent will have answers to all of these questions.
4) Think Long-Term
Bobby says that when he starts working with people, he starts a conversation… “I want to start forecasting… Do you have kids? Do you want kids? Are you going to stay in San Diego?” If you’re looking for a 10-15 year home, you might want to stretch a little.
It might surprise you that a Money Coach would encourage you to stretch your budget in order to buy a home (that better serves your long term needs), but Bobby makes a really good point “If you buy a home to fit your immediate needs and then outgrow it, you have to move again. Commissions, closing costs, hiring movers… it can all add up to tens of thousands of dollars. You can see how it makes sense to stretch a little financially to buy a long-term home.”
But there’s a fine balance. You don’t want to fall in love with a home you can’t afford. “It’s the kiss of death,” says Bobby “you should never look at properties you can’t afford.” To prevent that, Bobby has his clients work with lenders to get pre-approved, and then they work to map out a game plan to start identifying suitable properties.
5) Buy a Home Close to Where You Work (Even if It Costs More)
There can be a lot of extra costs to owning a home located far from work. Some are clear, such as higher fuel costs and additional wear and tear on your car. Other costs are less obvious. If you buy a larger home in the suburbs, it costs more to heat/cool and furnish it. And if your home has a big side yard, you might buy an RV! Bobby says “live close to where you work. If that means living in a townhome, then so be it. You’ll save a lot of money on gas, you can go home for lunch, and your quality of life is so much better.”
Another aspect to consider is your lifestyle. Bobby points out that “if you like to frequent restaurants and clubs downtown, but buy a home in Scripps Ranch, you’ll start to see Uber expenses adding up.”
Everybody’s situation is different, but for many people, it makes sense to own. Bobby says to own “as soon as possible – as soon as a lender will give you money. The numbers need to make sense, but it’s so much better to own.” From a budgeting standpoint, owning can be great because your mortgage payments stay the same (as long as you get a fixed mortgage) over time. You do have to have an extra line item in your budget for repairs and maintenance (i.e. plumbing, air conditioning, roofing, etc.), which many people fail to account for when they purchase a home.
Bobby asks, “as a renter, do you feel that rents are going to go up in the next 2-3 years, or down? Everybody says up… you’re already paying a mortgage, it’s just not your own.”
And now, the important questions! It’s a tradition to ask our guests some fun questions…
What is your favorite ice cream flavor?
Girl Scout Cookie Samoa-flavored
If you didn’t live in San Diego, where would you live?
Orange County or Los Angeles, as close to San Diego as I could.
What is your favorite color?
Baby blue… it says “trust me” 🙂
If you weren’t a real estate broker, what would you be doing?
I don’t know… an actor maybe?
Thank you so much, Bobby, for sitting down with us and sharing your expertise! These are some great home buying tips. I have known Bobby for many years and refer to him for my real estate questions. If you are looking to purchase or sell a home and need a few real estate agents to interview, please contact me. If you have any other home buying tips, please share them in the comments section below.
- Published in Spend Wisely