Personal Finance Archives - The Christiansen Group

May 23, 2019 by Neil Christiansen Leave a Comment

5 Easy Steps To An Effective Budget

Ah, the “b” word. Nope, not that one…the other one. The one that conjures up images of spreadsheets, endless calculations and potentially, hair pulling. Yep, that’s it … budget! Sadly, it’s this kind of vision that has folks avoiding the work involved in the most effective tool you can use to take control of your money! Its bad rep of boredom and sacrifice overshadow the amazing benefits of having one.

When you create a basic budget and stick to it, it will suddenly seem like you have more money. ~Dave Ramsey

A budget gives you the freedom to choose how you spend and invest your money. And, with the amazing technology we have available today, maintaining a budget is easier than ever!

Follow these 5 easy steps and you’ll be well on your way to controlling your finances!

1. Determine Your After-Tax Income

This amount is your total take-home pay, after Uncle Sam takes his cut, of course. Besides a regular salary, you should include any other income that comes your way during the year. This could include a side hustle, alimony, child support, interest, dividends, social security, year-end bonus, etc.

Have any automatic deductions like a 401(k), savings or insurance? Be sure to account for them so you have an accurate picture of your income and expenditures. If you’re married or have a significant other that you share expenses with, include their income as well.

2. Calculate Your Expenses

This is where the fun really begins! Grab your bank & credit card statements and any other financial files you keep…and possibly a can your favorite energy drink. While most of your expenses are monthly, some may occur only quarterly or annually, so using 6-12 months’ worth of statements can help you get the most accurate financial picture.

List all your expenses – we’ve included a Personal Budget Template to help you get started. Depending on your budgeting experience, or enthusiasm for details, you can either:

Get an average monthly expense by adding up everything you’ve spent in the last 6-12 months and dividing it by the number of months.
Break out your expenses by month. For instance, if your HOA fee is paid the first month of every quarter, you only have to include this item in your budget as an expense for January, April, July and September.

3. Subtract Expenses From Income

Your budget should account for every dollar. Although possible, it’s not likely that your expenses will match your income exactly. If your expenses are greater than your income, revisit your budget and see where you can make some cuts. If your income is greater than your expenses, you’ll want to account for those remaining dollars. You could start an emergency fund, pay down debt, invest them in retirement, etc. Just give them a home or they’ll find one of their own.

4. Budget Adjustments

Are you putting your money where your priorities are? Once you’ve taken a look at where you’ve been spending your money, you can make any necessary adjustments to create a budget that reflects your financial priorities. Let’s say after reviewing last year’s expenses you’re surprised to learn that the $5 coffee you grab on the way to work every morning is costing you $1,250 a year…YIKES! What if you got coffee only twice a week and put the $750 you’re saving towards your monthly debt? Or better yet, what if you make your coffee at home every day and saved the entire $1,250?

5. Record & Track Your Spending

Now that you’ve created this beautiful work of art (yep, we’re still talking about your budget), it’s time to put it to good use! Decide whether you want to use technology or take a DIY approach to your budget. If you decide to go the technology route, having software that links to your accounts, downloads all your transactions and categorizes them can be a great time saver. If you’re not comfortable with having your accounts linked to your budget software, using a spreadsheet or good old pencil and paper are still great options!

Review your budget at least once a month to see what money is coming in, how quickly you’re spending it and what you’re spending it on.

Life Happens, Be Realistic

Remember to be realistic about your budget. If you fall off the wagon once and a while, hop back on as soon as you can. If you stick to your budget the majority of the time, you’ll be successful in reaching your financial goals!

The information contained herein is general in nature and based on authorities that are subject to change. Churchill Mortgage guarantees neither the accuracy or completeness of any information and is not responsible for any errors or omissions, or for results obtained by others as a result of reliance upon such information. Churchill Mortgage assumes no obligation to inform the reader of any changes that could affect information contained herein. This publication does not, and is not intended to, provide legal, financial, tax or accounting advice, and readers should consult their advisors concerning the application of tax laws to their particular situations.

December 29, 2016 by Neil Christiansen Leave a Comment

Budget Savings for 2017: Little Things Add Up

People often think a huge difference in your financial situation can only come from making major changes. But lifestyle overhauls aren’t the only way to reset your financial picture.

It’s true that selling your home or working an extra job can yield huge results, but there are several other ways to give your finances a positive jolt in the new year. You might not even notice these small changes, but you likely will notice the additional budget savings.

1. Cell Phone Plan

A monthly cell phone plan for a family of four can easily end up costing as much as a car payment. We’ve all grown accustomed to phone calls, texts, email, and social media being part of our everyday lives, so we often overlook this growing expense.

One way to trim this cost and add to your budget savings is to take a look at how much data you’re paying for each month versus how much you actually use. It might be worth it to cut back. On the other hand, are you and your family facing overage fees too often? You might consider increasing your data plan.

2. Digital Subscriptions

More people are “cutting the cord” (canceling their cable tv subscriptions) than ever before, all in the name of budget savings.

But many of those smaller online services like Amazon, Netflix, and Spotify, can add up to, and even surpass, a typical cable bill.

Marketwatch estimates that the common digital services the average person subscribes to—including dating sites, e-books, music services, gaming sites and online newspaper subscriptions—can add up to about $156, about $40 more than the average cable bill of $112 a month.

These smaller fees, often the equivalent of buying lunch or some other tiny purchase, are easy to overlook. A useful practice is to take each of your digital subscriptions and calculate how much you’re spending yearly. Then ask yourself if it’s really worth it. It may still be worth keeping if it allows you to get rid of another cost entirely and adds up to budget savings.

3. Unlimited Memberships

Whether it’s going to the gym, getting your car washed, or going to the movies, there’s often an “unlimited” option available. It does seem to make sense at first: why should you pay à la carte when, for a little bit more, you can have as much as you want?

The problem, as one study found among gym-goers, is that too many people opt for a flat-rate membership with the goal of eventually taking advantage of the savings it would provide. Then life gets busy, they don’t get around to going, and their budget savings plan takes a hit.

It’s understandably tempting to hang onto these “deals.” But once you do the math for the past few months, calculating how many times you’d need to take advantage of the membership in order for the fee to pay off, it will become clear whether you’re actually saving money over. It’s most important to determine whether these unlimited memberships are right for you right now—you can always return to them later.

4. Coffee Shop Runs

Half of the American workforce spends $1,000 or more every year on coffee – are you among them? That $6 latte you grab each day might not seem like much, but it can quickly add up to $30 per week.

Simply making your coffee at home or at work and buying “good” coffee, you could save $1,500 or more over the course of a year.

5. Food and Drink Waste

Most Americans overspend on food, both at restaurants and the grocery store. And that’s not even taking into account the food we purchase that simply goes to waste. A study by the Natural Resources Defense Council found Americans 40% of food purchases get thrown away — which equates to an average of $2,000 per year, per household.

To prevent this money leak in your own home, take the time to plan your meals and resist the urge to buy in bulk.

6. Price Creep

“Price creep” happens when new customer pricing expires and sometimes fees get tacked on incorrectly. Cable and internet providers are frequent offenders. If you aren’t paying attention, you could be paying far beyond what you should be paying, so make sure you keep an eye on your bills.

7. Energy Costs

For most of us, energy costs rise and fall throughout the year. But the weather isn’t always to blame. It can also reflect the energy-saving efforts you haven’t taken within your home or apartment.

If your heat or air conditioning is overworking overtime, you could be wasting hundreds of dollars each year. Programmable thermostats create a comfortable environment when you’re actually at home. During the winter, thermal curtains or use draft stoppers can keep the hot air inside. In the summer months, close your shades to keep things cool.

Other energy hogs that could be major money leaks include outdated appliances and incandescent light bulbs. Just a few small changes can help you spend less all year long.

8. Shipping Fees

Companies often use shipping fees as a strategy for getting you to fill your virtual shopping cart. And the minimum amount many online retailers require for you to get free shipping keeps climbing. But what can you do besides buy more stuff or pay for shipping?

For companies that charge for shipping, look for free shipping codes at sites like CouponSherpa.com and FreeShipping.org. Another option is calling or opening a live chat with a customer service rep to ask what offers may be available—they might just offer you free shipping, rather than lose your business.

Many times, you can also arrange for free in-store pickup—you may even get your items faster this way.

When you add up all of those daily, weekly and monthly impulse purchases, you’ll find a huge money leak.

9. Bank Fees

Banks continue to find ways to cash in on fees, including things like overdraft protection.

A 2014 study conducted by the Consumer Financial Protection Bureau found that customers who opted in to receive overdraft protection, for instance, paid seven times more in overdraft and nonsufficient funds fees than customers who hadn’t opted in.

When it comes to banking fees, it’s important to know what you’re paying for. You may find you’re paying a monthly fee simply to access your funds, or for services you don’t use. In the name of budget savings, it may be time to consider changing banks altogether.

Huge Budget Savings Don’t Call for Huge Sacrifices

When it comes to finding more money in your budget, a few small tweaks you might never miss could mean new financial possibilities for you and your family in the new year.

July 1, 2015 by Neil Christiansen Leave a Comment

8 Money Management Tips for Financial Control

Money Management Tips to Bring Financial Success

As we move into the 2nd half of 2015, now is a great time to revisit your financial situation and plan for the second half of the year. Whether you’re a savvy saver or you’re trying to eliminate debt, these money management tips can help you build and improve your financial foundation. These tips will reinforce your good money habits and provide motivation to eliminate any bad habits that are keeping you from achieving financial freedom.

Find your “why?” Why do you want to take control of your finances? Do you want to get out of debt, save more for retirement or help your children save for college? Whatever your reason is, turn it into a financial goal, and help your money start working for you.
Review your financial accounts. Get an accurate picture of your financial situation by printing out the statements for each of your bank and credit accounts for the past 12 months. Highlight your fixed, irregular and discretionary expenses.
- Fixed Expenses: Mortgage/rent, utilities, etc.
- Irregular Expenses: Car or home maintenance, taxes, etc.
- Discretionary Expenses: Shopping, restaurants, entertainment, etc.
Create a spending plan. A spending plan helps you spend your money purposefully, instead of scratching your head at the end of the month wondering where your money went.
Track your expenses. Tracking your spending habits provides you with a real-time view of where your money is going.
Eliminate debt. Getting rid of debt is a priority for many people, but the process can be intimidating. Be patient, and take it one debt at a time. For example, if your goal is to get rid of credit card debt, make larger payments on the card that has the highest interest rate while paying the minimum amount on the other cards. This will allow you to focus on paying off your debt one card at a time. Just remember to eliminate or limit your spending on each of your credit cards so you don’t reverse your progress. For more information on this process, check out our article on Eliminating Debt.
Review your credit report. An annual review of your credit report helps you stay on top of what’s being reported to credit bureaus, allows you to fix incorrect information and alerts you to accounts that may have been opened fraudulently.
Start an emergency fund. No one thinks about having an emergency fund until something happens. An emergency fund will help protect you from financial stress in the event of an emergency, such as a job loss, medical emergency, unforeseen car or home repairs, and more.
Invest. Help your money work for you by making smart investments. There are many investment options available, so be sure to choose one that meets your needs and financial goals.

5 Reasons to Track Your Spending

Although tracking your spending may seem like a tedious task, it can help you take control of your finances. Tracking helps you to become more conscious of what you buy so that you can analyze your current habits and put better ones into place.

You’ll answer the question, “Where did my money go?” Most people have asked themselves this question at one time or another. Keeping track of what you spend helps you to think twice about your purchases, especially the ones you make on a whim.
You can use it to help you create your spending plan. If you want to save more money, but aren’t sure where to make cuts, track your spending for a month. Once you know what you’re spending your money on, you can reduce any non-essential spending.
It’ll help you stick to your spending plan. Tracking your finances helps to ensure that you’ll stick to your plan.
You’ll be able to save money to achieve your financial goals. Once you know where your money is going and have created a budget, you can channel more of your money toward larger savings goals, such as college, a down payment on a home, a new car or retirement. Even if you don’t have a larger savings goal in mind, tracking will help you keep more of what you earn.
You may become more conscious about how to track your progress in other areas of your life. A funny thing happens when you begin tracking your finances—the consciousness you’re developing about your spending can trickle into other areas of your life, such as your health. And, the willpower you hone as you resist splurging on an unnecessary item may also help you to resist splurging on that extra cupcake or skimping on your workout.

Start Planning Today

Contact us today to receive your free consultation with a Certified Financial Planner and get on your way to a solid financial future!

May 20, 2015 by Neil Christiansen Leave a Comment

Eliminate Debt & Take Control of Your Finances

Eliminate Debt With The Rollover Formula

Credit card debt is easy to accumulate but often hard to pay. Many times, people fall into the “minimum trap” when paying their credit cards. Unless you’re using this tactic as part of you’re overall strategy (like below), just paying the minimum due on credit card bills will barely cover the interest you owe, to say nothing of the principal. It will take you years to pay off your balance, and you could potentially end up spending thousands of dollars more than the original amount you charged. If you carry outstanding balances on two or more credit cards, the rollover formula can help you take charge and eliminate debt. Here’s how it works:

Step 1: Make a larger payment on the card with the highest interest rate and pay the minimum on the rest.

Step 2: Once this card is paid off, apply the amount of its payment to the minimum amount you were paying on the card with the second highest interest rate.

Step 3: When the second card is paid off, add that amount to the payment of the third card, etc. until you have paid off all of your credit cards.

5 Ways to Eliminate Debt & Take Control

Stop Borrowing from Your Future to Pay for the Present. Don’t use a credit card to pay for things if you can’t afford to pay off your monthly bill in full. There’s no faster way to fall into debt. Instead, put aside some cash each month for larger purchases such as a vacation, so you can pay for it in full. If there’s something you really want, but it’s expensive, save for it over a period of weeks or months before charging it so that you can pay the balance when it’s due and avoid interest charges.
Create a Spending Plan (aka “a budget”). Most people spend thousands of dollars without much thought as to what they’re buying. A spending plan helps you see where your money is going each month and makes it easier to resist impulse buys and other nonessential purchases.
Expect the Unexpected. It’s tempting to reach for your credit cards when an unforeseen expense arises. However, it’s less stressful to save for it in the first place. Build a cash cushion worth 3-6 months of living expenses by saving a small, consistent amount each paycheck for your emergency fund. If you don’t have an emergency fund, a broken furnace or damaged car can seriously upset your finances.
Watch Where You Borrow. It may be convenient to borrow against your home or your 401(k) to pay off debt, but it can be dangerous. You could lose your home or fall short of your investing goals at retirement.
Get Help as Soon as You Need It. If you have more debt than you can manage, get help before your debt breaks your back. There are reputable debt counseling agencies that may be able to consolidate your debt and assist you in better managing your finances. But there are also a lot of disreputable agencies out there. If you need a referral, I have worked with some good companies.

Paying Off Your Loans

Whether it’s a car loan or a student loan, it’s possible to pay back the amount you borrowed in a short amount of time. Just be sure to check the terms of your loan to ensure that you don’t have any penalties for early payoff.

How Loans Work. Most loan payments are calculated using compounding interest, which is the interest that is added to the principal of the loan each month that the balance is outstanding. You end up paying interest on top of interest. Although compounding interest is designed to work against you, you can pay off your loan three to four times faster with minimal additional cost to you just by knowing your “magic number.”

What’s Your Magic Number? The “magic number” is the portion of your monthly payment that goes towards principal. That’s it; no complicated math required. Pay your loan off quicker by doubling, tripling or quadrupling your principal, or “magic number” each month.

Don’t Be So Quick to Pay Down Your Mortgage

Don’t pour all your cash into paying off a mortgage if you have other debt. Mortgage loans tend to have lower interest rates and are the last debt you should pay off. Keep in mind that unlike other types of loans, you may deduct the interest you pay on the first $1 million of a mortgage loan. If you’re concerned about your mortgage rate and want to lower your monthly payments, consider contacting us to refinance.

The Bottom Line

Eliminating debt can seem overwhelming, but if you break it up into small steps, you’ll be on your way to being debt free in no time! If you’d like to share additional debt elimination techniques, post to our comments section.