Year-end financial evaluation

Year-End Financial Evaluation
AJ & KJ: Tis the season where we start to talk about the changes a new year will bring and reflect on everything from the past year. Before moving forward though it’s important to take stock of all the life changes that have occurred that will impact the next phase of our lives.

1. Changes in incomes.
Whether it went up or down, you consolidated into being a single-income household or you won the lottery changes in income top the list for considerations that require an overall financial reevaluation. Perhaps you’re considering a significant career change or a return to education. All of these things are major factors in your financial future. Compare year over year income and spending levels to identify commonalities from which you can begin forecasting the next year’s budget (and savings!).

2. Health changes.
Until you have reason to give pause with regards to your health it’s an out of sight, out of mind variable. This year we both underwent new-to-us medical diagnoses that have impacted our lifestyle and our budget significantly. We’ve added a monthly boot camp and hefty expenses of supplements and vitamins which will change the way we allocate our available funds in 2015.

3. Family status changes.
We’re at that point in our lives where most of our friends are now married or in a committed relationship and have babies on the brain. We’re the very proud aunt and uncle to three munchkins and holiday shopping always reminds me how expensive those little boogers can be. Whether you’re expanding your family, taking care of elderly family members or just planning for the future these can be expensive variables.

4. Change in housing status.
Bought a home? Sold a home? Bought a home and have yet to sell the other home? Thankfully we’re at the end of a year that has seen a lot of home improvements and renovations, so it’s all blue skies and rainbows from here – until a tree falls, a pipe bursts or I find some new Pinterest-inspired monstrosity of a project. It’s hard to plan for the unknown, but build your budget based on what you think you’ll see with regards to housing changes and don’t forget to maintain a healthy emergency fund for all those unknowns.

5. Marriage status.
Congratulations! For better or worse a change to your marriage status impacts more than a few significant pieces of your life and budget. 2 vs 1 is a very different conversation and requires planning! It involves a complete review of your finances from savings to beneficiaries of your accounts and life insurance (just to name a few).

We can’t wait to start our 2015 planning and have several of these considerations to address. The prospect of a new year is always exciting and we’re looking forward to a more successful, healthier, calmer 2015!

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Look at your past budgets. You may be amazed

Illustration of Information Search Metaphor
KJ: We just went through this exercise, and it was quite interesting. I have used Quicken since the beginning of (my) time with an income, so I have quite a few years of history to be able to reference. I can slice and dice the data lots of different ways if I want to hone in on certain categories or just look at the high level information. What we did was look back to year-by-year spending since 2010 (the year we got married). With a good four-year history of LOTS of changes with moving homes, buying two cars, taking several (great!) trips, and adding in some home renovation costs in recent years, there was a lot to look at! Talk about a lot of one-off items that have come up over this (relatively) short time period! Amazing to look at the total figures that include the items that aren’t really part of a standard budget (well at least not what I would consider a standard budget). I like to call many of these items rotating, non-recurring budget categories. You never really know what will fit into this bucket – sometimes it may be a fun expense like a trip, but other times it may be a not-so-fun expense like a roof repair. Either way, you need to be sure you’re building some extra fluff into your savings to allow for these items that invariably come up.

AJ: Ideally, this is a once-a-month exercise unless you’re experiencing months of rapid change. I love to see the trends in our spending by category and trying to identify what it was that caused significant variances. This year, we’ve exceeded our budget pretty significantly in order to put down roots in a new-to-us home that we plan to enjoy for many, many years. Some years we’ve taken more frequent vacations. Regardless, it’s powerful to be able to look back and track where we’ve been and where we’ve seen the greatest shifts in our spending.

As we look forward towards a more lean, less project-driven year of budgeting, we’ll look to reset specific budget areas to help compensate for our heavy year of spending. Reassessing the budget based on our historical trends helps give us a place to start from and get back to knowing that we’ve been able to work within those budgets previously.

Understand why you save
At times, you’re saving for a very specific purpose, like retirement, children’s education, a planned trip, a car, etc. Other times, you’re simply saving for those unknowns. It’s good to build up some extra buffer as you don’t always know the timing of some expenses. You (generally) have control over some of those larger purchases like a home renovation, but a broken faucet or malfunctioning product may push forward the timeline from what you had imagined.

Our primary budgeting plan for when we have those rotating, non-recurring expenses is to try as best we can to shuffle our month’s budget around to absorb as much of the cost. Then, for whatever we can’t make work in the existing month, we add it as a “recoup” for what our goal is for subsequent months. While it seems like there isn’t an end in sight sometimes, our goal is to really hunker down and chip away at some of this in 2015 now that we’re past a lot of our home renovation projects.

AJ: The hunkering down and chipping away piece is where my monthly tracking notebook becomes especially crucial. Meals are planned more meticulously, excess spending is trimmed and wants are considered more thoughtfully. We know that we all have our tipping points though, so using our past years’ histories helps our expectations stay more realistic which is completely necessary. When I’m on a mission to cut spending things have a tendency to get a bit extreme! :)

    When was the last time you examined your past spending?
    Did you learn anything eye-opening about your habits?
    Share with us what changes you had to make.

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Look at your past budgets. You may be amazed is copyrighted by without consent to republish.

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Credit card tips: what you need to know

Six credit cards
KJ: Lists, lists, lists. There are so many out there, but we keep coming across some great ones that will help you get on solid financial footing. In this post, we focus on Bank Rate’s 10 can’t miss credit card tips. Go ahead, read the full article. You’ll be amazed what you can learn in just a few minutes that could save you hundreds – or even thousands – over time!

AJ: I LOVE when Kirby finds articles that teach me things I don’t know. As an avid credit card user there are a ton of great takeaways in this article and even better reminders of things that make us successful credit card carriers.

Here’s our key takeaways that we felt were worth sharing:

Pay your bill twice a month
This is recommended because it keeps your credit card utilization low – one of the key factors in calculating your credit score. The lower your utilization (say you have a balance of $1,000 on a $10,000 limit that has been extended to you), the better your score. An alternative would be to put less on your card and/or see about having a higher credit limit at your disposal. The latter could get you into serious trouble though if you don’t use a program like to track your expenses and then pay your card in full each month, so beware.

Personally, I think this one more comes into affect when you are looking at purchasing a home, buying a car, etc. where your credit score is most front of mind and some type of long-term loan is on the line. Our preference to this is keeping higher credit amounts available to us, but just not using it.

Know card’s anti-skimming features
The regular mag-stripe on many credit cards could put you at potential risk with how easy someone can swipe your data. Try looking for credit cards that use the EMV technology that encrypts each and every transaction. Know how exposed you may be, and make changes as needed to help make sure you are protected.

Know your fraud protections
The Fair Credit Billing Act limits your liability with a credit card to $50 (and zero if it’s a data breach and only your credit card account information is stolen). Be sure to watch your expenses regularly and dispute any charges (maybe that waiter bumped up the tip a little more or a mysterious charge shows up). No one should be watching the transactions come across as closely as you!

Be aware that debit card liability limits often aren’t as great – and there are some significant differences in your potential liability. That’s why we prefer to use credit cards for all purchases and pay the balance in full each month.

Don’t pay for your cash back
Don’t get a rewards credit card and then not pay it in full each month. As we’ve written in the past, any amount you let carry over from month-to-month will very quickly eat into any benefits you thought you were getting!

Take stock of your wallet
This one’s pretty simple. Make a list of the cards you have in your wallet. Determine if any accounts need to be cancelled and closed. Check to see too that your spending pattern matches the best cards available today. Just because you opened a card years ago for rewards in a certain area doesn’t mean that it’s the best choice for your current lifestyle!

Be cognizant that closing a card can impact your average credit history and your available credit balance. Not that you shouldn’t do it, just be aware how it may impact your financing needs in the short-term if there is something on the horizon (say a move and new home purchase).

AJ: I am terrible at paying attention to what’s in my wallet. I’ve never lost a card (knock on wood), but things in my wallet are all kinds of expired, closed or invalid. Everything from insurance cards, benefits cards and credit cards, so thankfully Kirby is the king of maximizing credit card benefits in our house so he keeps us in the know on how to maximize our spending. All I have to do is remember which card I’m supposed to use on gas and groceries versus other expenses this month and we’re set!

Know what car rental insurance to take
Read the fine print on your cards! Many of your cards may cover rental accidents and damage, so don’t pony up for something you don’t need. Each card is different with what they cover, what deductible there may be, and whether international travel is covered, so be sure you know the stipulations.

AJ: This is completely new information to me! I love learning new things!

Know how to dispute a purchase
Be sure to check how to file a dispute with your credit card company if the goods and services aren’t up to snuff. Don’t avoid conflict in this area. It’s your money, so don’t let a retailer pull one over on you if you’re too timid to fight it and something was legitimately wrong (read damaged or incorrect product or price). Try to resolve it with the retailer first, and if it isn’t resolved, then work with the credit card company as needed.

    What credit card tips would you add to the list?
    Share with us your credit card must-knows.

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How do you balance cost and quality? Is the more expensive option actually better for your budget?

Shopping Carts
KJ: We’ve all bought something at some point because, hey, it’s cheap! Why not spend the $1 or $5 on [insert product]? What could you possibly lose? Well, as the adage goes, you get what you pay for [sometimes]. It’s not always best to just go with the cheapest option just because it is cheaper. But, it’s also not always the best to just go with the most expensive option. It seems that products in today’s world have a more limited shelf-life than they used to, so knowing a product’s shelf life before you make a purchase can work wonders for your long-term family budget.

This is often a discussion we have in our household particularly as it relates to all of our major purchases like appliances, but it also applies to everyday items like nice clothes, paint for the walls, and household goods. Knowing the answer to the following questions for each purchase you make though – no matter how big or small – will help set you up for maximizing how far your household’s budget will go.

AJ: When Kirby and I first started dating and were shopping for college necessities he absolutely insisted that he needed only one of each of the following items: a cup, a plate, a bowl, a fork, a spoon, a knife. WHAT?! I thought he was completely crazy! The longer we’ve lived together, though, I’ve come to appreciate Kirby’s philosophy. I’m a never-run-out, come to my house in case of emergency or natural disaster kind of shopper. I own two of most every pair of pants I’ve bought in the last ten years, I never buy one of anything, and I can always find something else I want. Thus, we comparative shop. We balance Kirby’s desire for practicality with my desire not to have to run to the store multiple times a week and shop smarter.

What is the average life span for the product?
Basics, people. If a major appliance comes with a one-year warranty, think twice. Read reviews, do research, price compare. Are there significant maintenance or return experiences from other customers? Our research seldom leads us to the cheapest out-of-pocket option today, and in fact, it often leads us to one of the higher end options. For instance, if you have a product that costs $200, yet you have to replace it every 3 years, then wouldn’t you prefer to pay $500 now for a more reliable product that lasts 6 years? Not only do you get an option that is often more durable and reliable, it often coincides with a more stable brand (especially when you factor in warranties or any other product guarantees – they’re only as good as the company backing that guarantee!). While the math is seldom as simple, it’s an exercise worth calculating when making almost any purchase. Being proactive about your major purchases means building in flexibility and the power to choose. Waiting until something pricey breaks to competitive shop means you’re forced to take whatever is available, often at the expense of either quality or price.

What is the price per ounce, gallon, unit of measure?
You have to start with the most fundamental detail – is this stuff physically going to rot before I can use or consume it? This is one of the easiest to calculate when it comes to the grocery store. Most grocery store companies now let you price compare instantly as you shop the aisles and can quickly see the cost per unit. Don’t just assume though that the lowest cost per unit is the best value for you. We’ve run into this a number of times in the last several years where a product seemed like a better choice for the budget, but it ended up costing more in the long-run. If something is half the cost, but you end up throwing away more than half of it because it expired sooner, is that really any savings to your family? Surprisingly, you could have bought the more spendy product with a higher quality and more durable shelf life. We’ve run into this with sour cream where the cheaper options just don’t last as long, so we actually end up spending more each month.

Now, I’m not advocating that all higher end products are worth the cost, but it’s definitely worth considering their long-term impact on your budget and not just the “whatever is cheapest now” option.

AJ: This concept becomes especially relevant for those of us buying in bulk. Not only are products often of an entirely different level of quality at super stores, but they’re also not always cheaper by ounce. The easiest way for me to keep track of what is really a good deal versus what is really just a whole lot more is to know what I pay per pound, per ounce or per unit on average. This applies to supplements we take, paper products, meats, produce, etc. It can’t always be about cost, but tracking can make a huge difference.

Is it cheap for a reason?
Not much to say here other than some products are just cheap for a reason. They aren’t durable, they are low quality, they break instantly, etc. Hey, that’s fine for some things – like a cheap gimmick item or one-use type products, but for most everyday products, it just doesn’t make sense.

AJ: Cheap is often about as good as “light” is delicious. Unless you’re talking about birthday candles and cotton balls cheap usually isn’t worth the paper your money is printed on.

The more spendy category can be difficult at first
When you first start saving and budgeting it can be quite difficult to shell any more out of pocket than the lowest of quality and cost. I can’t even think of spending an extra $100 NOW…I don’t have that in my bank account! But once you get yourself on better financial footing, you’ll find that you may actually be able to absorb the difference in your regular monthly budget. If not, maybe you’re able to trim a little bit over a few months to make it work.

Sometimes it’s hard to see past the end of your nose
In today’s world, we’re so used to having instant gratification on almost everything that it’s difficult to truly plan for any period of time past tomorrow. Teaching yourself discipline and really thinking about the long-term for you, your family, and your cash flow, will take you far. Few goals are just a month away, so reframing how you look at a purchase can make very meaningful differences on your family’s bottom line!

    What tips do you have when evaluating a purchase for your family?
    Share with us your experiences where cheap-for-the-sake-of-cheap worked well and where other times it didn’t quite work to your favor.

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How do you balance cost and quality? Is the more expensive option actually better for your budget? is copyrighted by without consent to republish.

Some of the links in the post above may be affiliate links. This means if you click on the link and purchase the item, we will receive an affiliate commission. We feel strongly about only recommending products or services we use personally and/or believe will add value to you, our readers. Read more about our commitment to providing quality product recommendations.

A billionaire’s perspective on working: a three day work week?…

Calendar Image
AJ: Irrefutable fact: Carlos Slim knows things about making money. His estimated net worth at $83 billion pretty much speaks for itself, and it makes him one of the wealthiest individuals in the world. Carlos Slim has an interesting take on the future of the working people – 3 day work weeks that span 11 hours each up until age 75. In our house we call an 11 hour day a Monday, or a Tuesday, or a Wednesday, take your pick, but 11 hour days aren’t something that gains attention in our household. I couldn’t physically do my job in 3 11-hour workdays currently, but maybe if I had until I was 75 it’d be a whole different story.

Live life at every stage
So what of it? Carlos thinks that life should be lived at every age and at every stage as though you’d earned the beauty of retirement day in and day out. I LOVE the idea of shorter work weeks, but my shorter work week would be 4 12-hour days, not 3 11-hour days, and I’m betting I’d still wind up working some evenings and weekends. I don’t think I’m special or unique, I think that’s just become more the standard of what we’re all accustomed to working in order to get our jobs done. Our generation is waiting longer to start families, is climbing the professional ladder faster than the previous generation and is working in a fully connected universe, so it’s impossible to imagine a world in which we work less than we do today, but maybe Slim’s onto something.

KJ: This is one of the daily conundrums of saving money. How much do you want to sacrifice or withhold consumption today only for some uncertain point in time in the future? Why push yourself so hard today and miss out on all the together time, family time, travel, whatever suits your fancy in the meantime? If there’s one thing we can glean from Carlos’ perspective now it’s that life is about balance – across all ages and stages and to not just continuously push for a brighter future. Relax, and learn to enjoy the scenery along the way!

75 isn’t so old
KJ:Standards of living have continued to rise over the last 30+ years, making the new 75 much more cozy than the previous generation’s life at age 75. And if that’s the case, maybe we won’t have all that much reservation to working to age 75, 80, 85. It all just depends on WHAT we are doing at that point and finding something along the way that we really enjoy that we could see ourselves doing for decades.

AJ: Slim votes for machines and services working 24 hours a day and people enjoying life more and spending more time in training. It’s truly revolutionary thinking and other richy rich people don’t love Carlos for his perspective which is why I find it so interesting.

Fascinatingly, the 5 day, 40 hour work week has only been in existence since 1938. I literally have jewelry that’s older than that. So is it really all that strange to think that we could be in a remarkably different working environment 20 years from now? I would love to see what a difference that kind of thinking would have on the quality of life for future generations.

What would three days of work change for you?
How would that change your overall quality of life?
What would you do with the extra time each week?

Read more about Carlos Slim’s perspectives from CNN Money on his work week thoughts from July 2014, and Carlos’ thoughts on a three day work week from October 2014.

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