Archive for July 2020

Back to School?

School supplies? What does school even look like this year?

If you’re a parent, you are probably wondering what back-to-school will look like this year.

Back to school tips. Discover how to score great deals on school supplies.

 

Maybe you are waiting for your school district to announce their plans for the year, or possibly the year’s start has already been delayed. Parents are trying to decide between a multitude of options – send the kids back to classrooms full time, hybrid schedules mixing in-person and online, eLearning through your school district, co-ops with other parents, or homeschooling.

There is a lot of uncertainty right now about what this school year will look like. So whatever you are gearing up for, we want to help. 

Where do you start when it comes to scoring great deals on school supplies? Below is a list of tips and tricks for back-to-school shopping compiled by one of the I Was Broke. Now I’m Not. team members, Whitney Purcell, along with a few of our other moms. Whitney is a mom of two little girls (3 and 6) and has spent a great deal of time researching back-to-school deals.

When to Shop for School Supplies

Knowing when to shop can help you save a lot of money. We suggest checking to see if your state has a tax-free weekend and when retailers are planning to run specials.

Tax-Free Weekend

Shop during your state’s tax-free weekend is a great way to save money. You not only avoid paying sales tax on clothing and school supplies, but most retailers run specials that weekend as well.

Before you head out to do your shopping, do your research. Different states have different restrictions on what is tax-free. While most states include school supplies and clothing, you’ll want to check in advance. To see when your state’s tax-free weekend is and what it covers, click HERE.

If you are in a state that doesn’t offer a tax-free weekend, it could be worth driving to another state close by, especially if you need to purchase high priced items. Growing up in Kansas, we didn’t have a tax-free weekend, but Missouri was only a 30-minute drive, so going there to purchase back-to-school clothes and supplies was worth the trip.

This year some states, like Tennessee, are planning to have two tax-free weekends!

Store Specials

Another great time to shop is when a retailer is running specials. Check out stores like Target, Walmart, and office supply stores to see their specials. Typically this will start the beginning of August. Remember, you don’t have to purchase all of your supplies at one store – by shopping ahead of time, you can figure out where to buy what to save the most money.

You know Walgreens? Well, it isn’t just your drug store on every corner. Walgreens carries school supplies as well. While they aren’t the best priced, they offer great specials throughout the year, which includes deals on school supplies. Check out their weekly ads  and coupons to see if school supplies are on there. 

Where to Shop for School Supplies

You may feel like you are bombarded with options when it comes to where to shop.  Don’t look past the unexpected locations, though.

First Get a Rebate

Before you use any of the store websites on our list, you should use Rakuten to get cashback your purchase. Once you sign up for a Rakuten account, you can add their browser app which will notify you when they have cashback for a participating retailer.

If you don’t like the browser extension, you can also go to their website before visiting an online store. For example, I just logged into my account, did a search for Target, and it came up with 1% cash back. I click on the Shop Now button and it takes me to Target’s website.

That’s it! Whatever I purchase I get 1% cash back. The amount of cashback varies greatly by store. I have seen as much as 22% cashback at some small retailers or on specific items, but it is usually around 2%-3%.

Target

Yes, I know this one may seem obvious, but I will be amiss if I didn’t mention it. Not only does Target offer great specials for back school, but it has wonderful clothing options for kids.

Did you know that their Cat & Jack line has a one year warranty? My daughter’s legging had a hole in them, so I took them back. I didn’t have a receipt, so they looked up the item number to verify when it was purchased and replaced them with no questions. Not only that, but they run wonderful specials for Black Friday each year, including summer clothes, so I stock up online and avoid the lines.

Bulleye’s Playground (formally the Dollar Spot) has great deals on classroom supplies. Some of these are geared more towards teachers this time of year, but that is great if you plan to homeschool or do eLearning. I’ve purchased pencils, workbooks, whiteboards, etc. for my kids there. They love being able to practice their letters and numbers using these inexpensive tools.

Link to Target's weekly ad for back to school savingsIf your kids are going back to the classroom, this may be a great place to find gifts for your children’s teachers (and we all know they are deserve a great gift)! Remember, if you add a whole bunch of unnecessary items to your cart, you won’t be saving in the long run – something I have to remind myself of continually (with the help of my husband).

You can find Target’s weekly specials [HERE].  Deals vary by location, so make sure to check out the ads beforehand.  At some locations they are offering Crayola markers and crayons for $0.99, kids scissors for $1.49, paint sets for $1.99, plastic folders for $0.50, and notebooks for $0.69.  They also offer a 2-pack of kids’ fabric face masks for $4.

Aldi

I love Aldi! I love my low bill when I leave. I love the savings on my groceries. I also love their seasonal goods, including their school supplies this time of year.

Their weekly ads will show their specials, and when they expect to get items in stock. Aldi also gives you a sneak peek of what will be the next week’s specials so you can plan ahead. I suggest going on the first day the school supplies are stocked because these specialty items can sometimes sell out quickly. While some stores may restock, for some locations, once they are gone, that’s it.

Aldi is another excellent location for tissues and disinfecting wipes, which schools will most likely ask for in abundance this year.

Link to Aldi's weekly specials to save on back to school suppliesI’ve also seen great deals on character backpacks, lunch boxes, insulated food containers, and kids reusable water bottles. They even have lunch storage containers with compartments for their entree and sides.

If you need additional learning materials for at-home, Aldi offers educational puzzles and elementary age perforated page activity books. My daughter is working through their kindergarten book right now. They review letters, shapes, colors, and sight words. Aldi also had a summer review activity book this year.

Walmart

I’ll be the first to say that Walmart wasn’t my favorite place to shop. While they have low prices, our local Walmart always had long lines and not the best customer service.

However, when Walmart introduced its grocery pickup with a convenient app where I could do my grocery shopping in my sweatpants at home, I became a Walmart shopper.

Most moms will agree it is no fun running errands with kids in tow. In and out of the car seats in the heat – no, thank you! Getting Walmart’s low prices without standing in lines is a massive win in my book. Check out their back to school specials [HERE].

Dollar Stores

Check the Dollar Store, Family Dollar, or Dollar Tree for back-to-school items like basic calculators, planners, colored pencils, or clipboards. This will help you save money while still getting a great item. Most stores stock school supplies year-round, including name brand items at some.

Amazon

Link to Amazon school supplies shopping listAmazon often has the lowest price on items, so make sure to check items against Amazon. I’ve found if you’re ordering multiple of an item (like glue, markers, etc.) they have better prices. It also saves you on spending extra money on gas running around town, especially if you’re already paying for Prime.

We’ve included an Amazon shopping list to help you get started, click HERE.

Office Supply Stores

Office supply stores can have a reputation for being a bit expensive. They offer such a wide range of products that their draw is they have everything you need, not that they are the most inexpensive. However, during back-to-school, they will run specials. I’ve seen sets of colored pencils on sale for half of what they are listed for at other retailers. Check out their ads. If you can pop in quickly for a few items while you’re running errands, it may be worth the trip.

Link to Office Depot OfficeMax school supplies

Craft Stores

Check out stores like Michael’s, Hobby Lobby, or JOANN for school supplies.

BONUS – These stores usually have coupons that you can easily find online. I have the Michael’s and Hobby Lobby apps on my phone, so I can pull up their weekly coupon at checkout.  If you don’t have the app, don’t worry about printing the coupons ahead on time, just make sure you have their website pulled up with the online coupon.

How to Shop for School Supplies

We’ve talked about when and where to shop, but it’s also important to consider how you shop. If you buy everything in one location and pay no attention to the sales, you leave savings on the table.

Order in Bulk

If you have multiple kids or have a friend who is willing to split supplies, look at ordering in bulk to save money. Some retailers (ex. Amazon) will have a multi-pack of paints, sets of markers, scissors, etc. that you can purchase. Purchasing in bulk will help save you money per set. 

This also applies to items like Clorox wipes, sanitizer, and tissues. If you buy a multi-pack, you save per item, and you can keep the extra for your household stock.

Look at What You Already Have

School suppliesIf you’re like me, you love a good deal. So when I see something on clearance that I know we will need soon, I will scoop it up. Don’t forget to check if you already have it at home before you buy more.

Since kids were sent home early last year, chances are there are some unused items they can take this year. For instance, I have a few glue sticks that my daughter never used. Look through last year’s supplies for unused items that you can reuse this year.

Generic Brands

Don’t shy away from generic brands. There is a stigma that generic is inferior to name brands. However, that is not the case.

Some generic brands may not be a good deal over time if you have to replace them quicker or don’t work well. However, some stores (ex: Target) are making quality products (markers, colored pencils, etc.) that will save you money but still deliver the performance that your child needs.

Store Pickups and Online Shopping

Schedule store pickups for your school shopping. By utilizing curbside pick up options from Walmart, Target, Aldi, and more, you can save yourself time and money.

If you don’t have to go into each store, you are more likely to shop around and choose different stores for the best prices on individual items. You can add them to your current grocery pick up, so it doesn’t cost you an extra trip.

If you want to avoid the stores altogether, we’ve included an Amazon shopping list with some of our suggestions. No running around town – just click HERE and send!

 

Coupons

Link to IWB website coupon pageCOUPONS! Couponing may not be your normal habit, but back-to-school is a great time to look for coupons that could save you money on supplies.

Check magazines, newspapers, or online coupon sites for options. On our budgeting page on the I Was Broke. Now I’m Not. website, we have links to several online coupon sites.  This is a great place to start.

If a store has an app (like Michael’s or Hobby Lobby that I mentioned earlier), check it before shopping to see if they have any special deals. You can find great deals and look for in-store coupons.  For instance, the Target app will show you their weekly specials, and you can add Target Circle Offers to save even more.

Loyalty Rewards

As you’ve been purchasing items, you’ve been earning rewards at a lot of stores throughout the year. Look to see what stores you’ve earned reward points and exchange your points for school supplies, clothes, or shoes. 

You may want to check if you have credit card points to redeem. If so, choose a store where you’ll do back-to-school shopping and get a gift card there. We’ve redeemed our points for Walmart and Target gift cards.

Price Matching

Does a store that you’re shopping at offer price matching? Stores like Staples, Target, Kohl’s, Office Max, and Office Depot offer price matching. Check each store to learn about its policy and restrictions.

Happy School Supply Shopping

I know making decisions about school during COVID-19 has been difficult and stressful for parents and school officials alike. So, however, and whenever your kids return to school this fall, we hope you find this helpful. Remember, there is no “right way” for everyone, so give yourself and others grace! Happy (and thrifty) shopping!

How have you saved money back to school shopping?

Get Your Finances Organized!

It is extremely important to have your finances organized.   In fact, I believe that lack of organization is one of the top reasons that people do not reach the peak of their financial potential.   I am excited about this post, especially because we have a FREE tool to help!

Some of you may hear the word organize and your heart flutters with excitement, while others are probably filled with dread just by the sound of the word.  Wherever you are on the spectrum, you can and NEED to get your finances organized.  For your own sake, and for the sake of those you love.

Person working on finances on computer

Step One Understand why you are doing this in the first place

Let’s face it – we are all extremely busy.   The last thing we need to do is initiate another paperwork process just for the sake of what “might” happen.   I believe, however, that this process is an extremely valuable step toward maximizing one’s financial potential.   If you take the time to complete the steps in this post, you will discover areas where your financial plan is lacking AND also where you are winning (which is very satisfying to see).

Here are some reasons to get organized financially:

  • Control:   It is hard for the finances to run out of control when you are focusing this intently on your financial affairs.
  • Improved financial focus:   We tend to improve that which we focus our attention on.
  • We WILL die some day:   Our family will appreciate a clearly organized set of financial affairs.

Organization and a great financial plan are two of the keys to the reason that Jenn and I have been able to experience financial freedom!

Step Two Prepare a list of all of your financial accounts

If you are a slightly, or very disorganized person (like I used to be!), this is probably going to be the most difficult part of the entire organizational process.   It is important to gather together your financial statements so you can easily prepare a one or two page document that details your entire financial picture.

Link to Financial Accounts Form to help organize your finances

To speed up the process, we are PUMPED to provide a FREE TOOL for you to consolidate all of your information in one place – our Financial Accounts Form.   You can download a copy from our Organizational Tools page on the IWB website.

Below is a sample of how the information can be written into the file.

 

Example of Financial Accounts Form for organizing finances

Step Three Information to include on your Financial Accounts Form

This form is meant to be the be-all to end-all location for your entire financial picture.   When you are looking for key financial information, you won’t have to go far because it is all contained within this file.   When you pass away, it allows your estate executor to easily understand what they are dealing with.

Here are the key items to include in your Financial Accounts Form.

  • Investment Accounts

 Include your 401(k), 403(b), 457, TSP, Roth IRA, IRA, stock, bond, and mutual fund investments.

  • Bank Accounts

Include checking, savings, money market, CDs, and any other accounts held at a bank or credit union.

  • Real Estate

    If you own real estate, be sure to list the addresses and the financial status of these holdings.

  • Will

According to Bankrate.com, 58% of Americans do not have a written will.   Have one, and include it’s location and your assigned executor on this document.

  • Power of Attorney

Healthcare POA, Limited POA, or other legal assignments of responsibility should be included in this document.

  • Insurance Policies

Include life insurance – be sure to include policies provided through your workplace.   Also include insurance on key possessions owned.


  • Jewelry (or other valuables)

If you have valuable possessions, be sure to list them and their locations.

  • Safe Deposit Box

If you have one, indicate it on this document and include its location!

I know.   I know.   This can seem overwhelming, but it is absolutely worth the effort to put this together!

Step Four Make sure you are budgeting

Having your accounts listed out and your financial affairs in order is so important.  What good does that do you though if you aren’t organized with the money that you spend?

Budgeting is another important step to making sure you are financially organized.  If you haven’t started budgeting yet I suggest you check out my post “How Do I Budget?”  It’s chalk full of tips on getting started along with free tools to make it easier for you.

Budgeting is part of being organized with the money that comes in and what goes out of your account each month.  Taking control of this sets you up for financial success.

Step Five Where to Find Free or Cheap Resources

  • Check your local hospital for free healthcare power of attorney forms.

For instance, our county hospital provides links to South Carolina’s free power of attorney form.  Check your local hospital system’s website to see if they have the same available.  They may also offer advanced directives.  An advanced directives form takes the pressure off of your loved ones to make care decisions for you if you aren’t able to communicate your desires yourself.

  • Some county library websites will also offer free legal forms, including those that are state specific.
  • Several free legal documents (including power of attorney and a basic will) are located HERE

If you have substantial assets (including sizable term life insurance policies), I highly recommend that you meet with an attorney to have them review your documents to make sure everything is well organized and accurate.  It may cost you up front, however it will give you peace of mind and save your loved ones in the long run.

Where else have you found great free (or cheap) legal documents?

Get Your Finances Organized!

Those Type A people reading this are probably chomping at the bit to get this done (if they haven’t already started).  However, I know this may not be everyone’s idea of fun.  Don’t delay though!

My hope is that as you’ve seen the benefits of having your finances organized it will keep you motivated to see it through.  Getting organized may seem like a daunting task, but you should feel better equipped for it now.

As you organize your accounts and records not only will it help your loved ones in the long run, but it will become easier for you to understand your current financial position.  This will help you as you make monthly decisions in your budget and set you up for success with your finances.

This may be a time consuming task your first go round, but after you have this set up it will be easy to update and maintain it going forward.

5 Ways to Save Money Without Selling Anything

When the economy takes a down turn, one of the best ways to “weather the storm” is to save money!  In this post I will share the top five ways that we see people saving lots of money.

I believe that if you apply these five items, you will save over $1,000 a year.  Don’t believe me?  Try them out!

1. Home and auto insurance

I know that I have mentioned this several times on the blog, but it is so true!  I have had HUNDREDS of stories of people telling me about how much money they have saved by getting new quotes.

Many of them never had to change their current insurer because they took the better quotes back to their current insurer and demanded a better deal.  Sweet!


 

On our Next Steps Insurance page we have links to get both Auto and Homeowner’s  insurance quotes. These allow you to fill in a bit of information and receive quotes without the hassle of having to call around to multiple different companies.

Remember when LendingTree said “When banks compete, you win!”?  Well, the same is true for insurance companies.  Be sure to get your home/renter’s insurance quoted along with your auto insurance because bundling them together will save you 10% – 30%.

2. Life insurance

It is incredible the number of people who have dependents reliant upon their income yet do not have life insurance.  According to LIMRA only 59% of Americans have life insurance, and have of those with insurance have inadequate coverage.

As a teacher and speaker on the subject of personal finances, I have seen many examples of inadequate/no life insurance.  The impact that it has on the surviving dependents is devastating.  I have also seen instances where there was adequate insurance.  The result is much different!

I have also seen a lot of people who are paying way too much on life insurance.  Some people are paying thousands of dollars a year in life insurance premiums who tell me that the cash value will be worth $1,000,000 when they retire.  I tell them that this is great, but if they would have term life insurance and invest the difference in cost, they would have $10,000,000.

I recommend term life insurance equal to eight to ten times one’s annual take-home pay.  For healthy people term life insurance is SO CHEAP.  I personally carry thirty year level term policies on my bride and me.

HavenLife Insurance link - get quotes to save money on life insurance

You can obtain online quotes without speaking to anyone HERE

Go ahead and check them out.  If you do not have life insurance and you have dependents who are reliant upon your income, purchase a policy ASAP.  If you already have life insurance, compare the costs.

My bet is that you will save a ton of money.

3. Zero-percent balance transfer credit cards

I do not know how the credit card industry has been so effective at teaching Americans to believe that 15% is a good interest rate.  But they are great at it!  I cannot tell you the number of times I have heard the following statement during a financial counseling appointment:

“The interest isn’t bad on this card.  It is only 17%.” Or 13%. Or 11.99%.  Or …  You get the picture.

I used to say the same thing (when I was BROKE).  I got “unBROKE” by challenging my belief system and realized that I was allowing myself to be legally robbed of my money!

If you are paying high interest on a credit card, you should seek to restructure that debt.  One great way to restructure debt is to play the “surf the balance” game.  Move the balance to a zero-percent balance transfer credit card and then work like crazy to pay it off.  If it is not paid off by the end of the zero-percent period, surf it again.  This ensures that all of your payment goes to reduce the principal balance of the debt.

Link for 0% transfer credit cards to help save money on interest

There are several 0% Balance Transfer Credit Cards located on the “Next Steps” tab (HERE).  Move the balance and make progress toward 100% debt freedom!

You will save a ton of money by restructuring high interest debt!

4. Online savings accounts

Do you have money in your savings account?  If not, it should by your TOP PRIORITY.  $1,000 as a minimum or $2,500 if you have kids or a house.  I repeat – this should be your TOP PRIORITY!

For those with money in savings, how much interest is your bank paying you?  If it is a local bank, it is likely that the interest rate is very, very, very low (close to 0%).  Online banks pay much higher interest because they do not have to pay the costs of maintaining local branches (people, buildings, etc).  These online banks pay around 5X – 8X the national savings interest rates of other banks.  I hold all of my savings in online banks and have done so since 2007.  They are FDIC-insured and are very easy to use.

Link to online banking options to save money on fees and earn more interest

There are several excellent online banks. Click HERE to see the online banks I use or recommend.

The bottom line is that your money should make you money – the most money possible.  My online banks allow me to do that for all money that I plan on using within the next five years.

5. Groceries and cash envelopes

Cash envelopes allow me to save a TON of money.  How?  I have a written spending plan that my bride and I prepare every month.  In this written plan there are several items that I tend to be impulsive with.  Groceries, dining out, clothing, entertainment, and spending money are the top five impulsive categories for me (can I get a witness?).  To control my impulsiveness, we pull that money out in cash.  We stow away the debit card and only allow cash to be used to purchase items in our impulsive categories.

This one move saved us over $200 a month in groceries alone!  You can read more about how to start with cash envelopes HERE.

Link to budgeting tools and budget boosters, like money saving coupons

You can also use coupons to save a ton on groceries.  In fact, my team has prepared an entire section of money saving tips for groceries under the Next Steps budgeting tab.  You can check it out HERE.

Our Top 5 Ways to Save Money

Saving money, especially a large amount of money, can seem impossible.  Our hope is that after reading this blog post you come away with practical ways to save money NOW!

Some of these savings ideas will take some work.  No one ever says, “I’d love to be on the phone with different insurance companies all day!” However, if it means saving $500 or more each year those phone calls are worth it.  Not to mention, most companies now offer online quotes that eliminate the hassle of waiting on hold.  We’ve heard from numerous people that after they called for new quotes not only are the saving money, but they’re also getting better coverage.

Decide to take action today.  Think about the last time you got a new insurance quote. If you have balances on credit cards look into transferring them over.  Move your savings to an online bank to earn more interest and save on banking fees.  Identify areas where you overspend, and start using cash envelopes and coupons for those things.

I believe that by pursuing these five money saving areas you can save $1,000 or more.  Tell us how you did!

You Can Be Debt-Free

I have found that a vast majority of those who sign up to attend the Financial Learning Experience are living paycheck-to-paycheck AND carrying debt.  In fact, statistics from surveys I have conducted show that 72% of those attending my classes are living paycheck-to-paycheck.  Of those 72% living paycheck-to-paycheck, 24% are BEHIND on payments.

Only 3% felt that they are doing well financially.

Wall with script "until debt tear us apart"

 

This is a NATIONAL problem.  No matter where I go, I see the trappings of debt – marriages failing, stress, depression, and hopelessness.  And all of this is happening in one of the wealthiest countries on the planet!  This is entirely unacceptable!

So, as part of my crusade to help America become debt-free, I am going to share the process I followed to become debt-free.

Before I get started, I want to ask you these questions.

  • Would you join me in my crusade?
  • Would you share this with others?
  • Would you commit to become debt-free?

I WANT YOU TO BECOME DEBT-FREE!!!  It changes your life!  It enables you accomplish far more than you ever thought possible with your personal finances!  It allows you to go do exactly what you were put on earth to do – regardless of the income!

Step 1 – Understand WHY you want to be debt-free!

I believe this is the most important step in becoming debt-free!  In the hundreds of financial counseling sessions I have held, it is amazing how many people do not have a plan for their lives.

I ask them, “Why do you want to win with your money?”  and they stare at me like I am from outer-space.

“Why?” they stammer back at me.

Seriously, I believe that it is the first time that many of these people have ever seriously thought about what they want to accomplish with their lives.  As a result, they are bumbling through life just “trying to make it through the day”.

What a miserable way to live!

I cannot overstate this fact – IF YOU AIM AT NOTHING, YOU WILL HIT IT EVERY SINGLE TIME!

Write out your hopes and dreams.

When Jenn and I wrote down our hopes and dreams on paper it opened our eyes to the fact that our money management (or lack of) was literally ROBBING us of our future!  We wanted to move back to Anderson, SC to take a job that paid way less than what we were making, but every single dinner at Outback was robbing us of that opportunity.  Every single debt payment went off to make the bank wealthy while at the same time robbing us of our God-given dreams!

That made me MAD!  It made me FURIOUS!  It made me realize how incredibly STUPID I was to be managing our money so crazily!  I had $755 PER MONTH going out to pay car debt, credit card debt, and student loan debt.  Add in the stupid house payment, and I had over $1,700 per month running off to make the bank wealthy!

By writing out our hopes/dreams on paper, Jenn and I were motivated to manage our money differently.  It caused us to view debt differently.

Are you ready to get rid of your debt?

Couple working on their budget so that they can become debt-free

Take your first step today by print out THIS FORM and filling out your own hopes/dreams.  If you are married, you need to do this separately and then take time to discuss it with each other.

By the way, one of my hopes/dreams is for you to become debt-free!

What has kept you from attacking your debt?

Step 2 – List your debts.

During financial counseling sessions, it is a guarantee for any person who has debt that I will calculate their debt freedom date.  You should see people’s reactions as I put together a list of their debt!  Their reactions relay to me the true facts of debt.  Here are some very common reactions that I see or hear.

  • Hiding their eyes
  • “Oh no!”
  • “I’ve never added it up.”
  • “This is scary.”
  • Moving to a defensive position as if to guard themselves against the debt
  • Turn their head so they don’t have to look at the debt total

I KNOW that it can be scary to total up debt.  The mere fact that it is so scary tells me two things:

1.  People do not like debt.

2.  People have not been paying attention to their finances and do not have a well-defined plan for their life.  Otherwise, they would not have incurred most of the debt.  It is literally ROBBING them of their financial future!

Here is what I say to them – “If you don’t know how many heads the dragon has or how large the dragon is, how can you effectively defeat it?”

It is time to slay the dragon.  Use THIS FORM to prepare a well-organized list of your debt.

Why is it so scary to total up debt?

Step 3 – Calculate your debt-freedom date.

It is really very simple to calculate your Debt Freedom Date.  You need two numbers to calculate your Debt Freedom Date – Total Debt Owed and Total Monthly Payments.   I pretend that there is actually only one debt – with one big balance and one big monthly payment.

Debt Freedom equation. Total debt owed divided by total amount of your monthly payments equals months until debt-free.

Look at the sample debt list below.  This family will be debt-free in just 33 months!

Chart of monthly debt payments, including the debt balance for each and the monthly payment for each month.

In the TOOLS section, there is a free tool called the Debt Freedom Date Calculator.  If you enter your debts and monthly payments into this tool, it will calculate your Debt Freedom Date for you!  If you don’t have Microsoft Excel, click HERE for a web-friendly version.

How many months until you are debt-free?

Step 4 – Establish accountability to become debt-free.

The strongest among us can still fall to temptation!  You could be making fantastic progress toward debt-freedom and then a new truck pulling a new boat passes you on the road.  If you are not careful, you will also be pulling a new truck and boat down the road!

There are two key ways to ensure you are held accountable to your goal of debt-freedom!

If married, work together with your spouse.  If unmarried, have someone you trust (someone who has won with their money) hold you accountable!

There is incredible power when you work together with your spouse toward debt-freedom!  It is a common goal that will unify your marriage and cements your commitment to managing your resources together.

I have also found that when I have a bad case of the “I Wants” and “I Gotta-Have” Jenn does not.  She shuts me down!  Then, when Jenn gets a bad case of “I Really Want This” I do not.  I shut her down!  Why?  Because we are not doing debt!  We are THROUGH with it!!!

Plan your spending every single month!

Planned money goes farther than unplanned money!  Every single month Jenn and I sit down TOGETHER and spend every single dollar on paper before we are paid.  Don’t miss that – that was good!  Every.  Dollar.  On.  Paper.  BEFORE.  We.  Are. Paid.

From the day that Jenn and I started budgeting, we have not incurred any new debt.  In fact, we became debt-free (minus the house) in just 14 months!

I can tell you this.  I HATED the idea of budgeting and now all I do is yell from the mountaintops about how important it is and how EZ it is to budget!  There are FREE budget forms that are available HERE.  Use one of them to start your journey to debt freedom!

Your budget will hold you accountable.  I wouldn’t be surprised if it helped you free up $200 – $500 per month to attack your debt even harder. It did for me!

If you’re already debt-free, how did accountability help you stick to your debt-freedom plan?

Step 5 – Secure your debt-freedom.

Save at least $1,000 before attacking your debt!

I have seen so many people calculate their Debt Freedom Date and get all fired up about attacking their debt.  They sell everything and everyone in sight.  They can’t shut up about getting out of debt.  It is all they talk about with their spouse.  They have even sold their Clay Aiken AND Celine Dion albums!

Everything goes great for two months.  They smile every time I see them.  “This is awesome”, they tell me enthusiastically.

Five months later, they avoid me.  When I ask them what is up, they say something like, “Well, Johnny broke his arm and the emergency room bill and doctor bills cost me $1,500.  I had no savings so now I am right back where I was – falling back into more debt.”

How demoralizing is it to attack debt so fervently and then have to go right back into debt?  It is AWFUL!  Don’t do that!  Instead, save up at least $1,000 into an emergency fund before attacking your debt and THEN you can attack your debt all you want!

What happens if you have an emergency pop up while you are attacking your debt?  You can use the emergency fund to cover the expense.  To replenish the emergency fund, slow down on the debt pay-off plan until you have the $1,000 back in the emergency fund!

By the way, if you have a house, kids, or more than one car I highly recommend $2,500 for your emergency fund.

Secure your debt freedom plan with your emergency fund!

Congratulations!  You now know the process that Jenn and I used to become and STAY debt-free!  You are now equipped!

What are you going to do now that you are equipped to become debt-free?

Family at the beach.

You can be debt-free!

I want to equip you to become debt-free!   Jenn and I became debt-free in 14 months by following this process, and I can tell you this – there is NOTHING like living life without the trappings of debt!

Let’s review the steps to debt freedom.

Step 1 – Understand WHY you want to become debt-free!  You greatly improve your chances of becoming debt-free when you understand the reasons that you are making sacrifices in lifestyle!

Step 2 – List your debts.  If you don’t know how large the giant is, it makes it really difficult to understand the overall situation!

Step 3 – Calculate your Debt Freedom Date.  When you have put together your Debt Freedom Date calculation, print it out!  Put it on the refrigerator!  As you pay off each debt, draw a big line through it!  You will not believe the conversation this will start with your family and friends as they come over to visit.

Step 4 – Establish Accountability.  If married, hold each other accountable.  If unmarried, have someone who has won with their own money and has your best interest in mind.

Step 5 – Secure Your Debt Freedom.  Before attacking your debt save at least $1,000, or $2,500 if you’re married with children, so you have an emergency fund.

I hope that you have taken the time to write out your plans, hopes, and dreams for your life.  Knowing these will help you stay the course.  It will motivate you to say no now so you can win later!

What Should I Do With My Tax Refund?

What are you going to do with your tax refund?

Image of tax refund paperworkWhile tax season may seem like a distance memory to some, others may been filing today.  2020 has brought about a lot of changes, one of which was an extension for tax filing from April 15th to July 15th.

If you’re getting a refund what exactly should you do with this “extra” money this season? Save it? Pay off a debt or two? Invest it? Spend it? The possibilities might seem endless!

However, I would encourage you to plan out your refund BEFORE you ever get it.

STEP 1  Before You Spend It, Plan It

I used to have my tax refund spent sixteen different ways by the time it actually arrived. It was assigned to pay for Christmas, vacation, clothes, credit card bills, student loan payments, car payments, a new appliance, a new electronic device, etc.

In addition to having spent the refund sixteen different ways, I had already made all of the purchases via credit cards or other forms of loans.

When the refund actually arrived, it was woefully inadequate to cover all of my crazy spending.

Talk about feeling miserable! Is anyone reading this feeling my pain, or am I the only one who has done this?

When I decided once and for all to take control of my finances, I realized the root cause of my problem.

What was the root cause and the reason for all of my crazy spending?

I did not have a PLAN! 

Link to mini budget form

Before you spend your tax refund, plan out the spending! I highly recommend that you use the Mini-Budget Form (Excel) to plan your spending. Enter the amount of the tax refund at the top, and spend it to exactly zero. Remember: INCOME – OUTGO = EXACTLY ZERO™.

Start planning now – BUT don’t start spending just yet. We are still in the planning stages.

Next, we’ll cover where the money should go!

STEP 2  Build the Wall

Next, you need to build a wall of protection! When maximizing your tax refund, there are three categories that can help you build this wall:

(1) Save it, (2) Reduce Debt, (3) Invest it

When you’re trying to decide where to spend the money you get from a refund I typically refer back to the I Was Broke. Now I’m Not. Ladder. By identifying where you are on the ladder, you can pretty easily decide on the best way to spend your refund this year.

FIRST: Save It

One of the biggest reasons people fall off of the “I’m Going to Achieve Debt-Freedom” wagon is because they do not have any savings. Life is going to happen and it will cost money! If you do not have any savings you will remain broke.

Do you currently have money saved for emergencies or Known, Upcoming Non-Monthly Expenses (Christmas, vacation, property taxes, annual memberships, homeowner’s association fees)?

Before attacking debt or investing, you need to save money! Start with saving at least one months of expenses. How would it feel to have one month’s of expenses JUST SITTING THERE in your bank account?

I remember the day that this happened – and I did not have to mail it out to a creditor!!

If you do not have savings, use your tax refund to fill it up! Don’t have an account? Get great interest rates from these banks:

After you’ve established your emergency fund you should make sure to save for your Known, Upcoming Non-Monthly Expenses!  These are expenses that we KNOW are going to happen.

Known, Upcoming Non-Monthly Expenses like Christmas, vacations, property taxes, building fund pledges, quarterly insurance premiums, annual health club membership fees, annual golf club dues, and homeowner’s association fees.  If you have not saved for these expenses, they will completely derail your financial plan!

It is AWESOME to have money saved up in advance for vacation and Christmas!

SECOND: Reduce Debt

Don’t skip ahead to this step! Make sure you have savings first!

Too many people race past the previous option and use their $3,000 tax refund to pay off $3,000 of a $5,000 credit card. They have no Emergency Fund, they haven’t saved for Known, Upcoming Non-Monthly Expenses, and now they have just spent all of that money on a credit card.

Image and link to debt freedom date calculator

Even if the $3,000 paid off the credit card, it is still not worth it if one does not any savings! Think about it this way. If the $3,000 credit card had a monthly payment of $100, how long will it take to get that $3,000 back into the bank? THIRTY MONTHS! Not worth it.

BUT, if you have taken care of the Emergency Fund and have saved for your Known, Upcoming Non-Monthly Expenses, it is time to attack the debt! Pull up the Debt Freedom Date Calculator (Excel) and calculate your own Debt Freedom Date! Make some debts leave your life!!

THIRD: Invest

If you have already saved money and reduced or eliminated your debt, your next step is to invest. Investments are the KEY to funding your big time plans, hopes and dreams! Investing is simply using your money and possessions to create more money and possessions. The goal for any investments is to gain more in return.

To learn more about the investments I’ve made this year check out the Monday Money Tip Podcast Episode #87.

STEP 3  Fulfill Some of Your Dreams!

Since the word FUN is in the middle of refund, make sure to have a little fun and fulfill some of your dreams!

Your tax refund could allow you to be generous and bless others, have a fun day with your family, or contribute to funding a dream.

What dreams do you have? What will it take to accomplish them?

Here are some good questions to ask yourself to fire up your dreams again:

  1. What opportunities do you want to provide to my children?
  2. What trips do I want to take?
  3. Who do I want to bless? What do I want to bless them with?
  4. What type of house do I want to live in?
  5. Where do I want to live?
  6. What career(s) do I want to pursue?
  7. When do I want to retire?

My passion is to teach you how to live a fully funded life so that money doesn’t keep you from living your dreams.  In my book, 20/20 Money, I talk more in depth about how to make your dreams a reality.

STEP 4  Should You Even Receive a Tax Refund?

This one will be argued until the sun fizzles out, but here are my thoughts.

If you have proven to yourself that you can abide by your written budget every single month for several months, then you could consider increasing your W-4 exemptions so that you come close to breaking even at tax time.

Because you have demonstrated the ability to stick to your written plan, you will be able to take full advantage of your money instead of giving the government an interest-free loan all year long.

Link to monthly budget form

BUT, if you have NOT proven to yourself that you can follow a written budget, I would highly consider leaving your exemptions as is.  Focus on getting your money management under control by planning your spending using a BUDGET FORM from the “TOOLS” page.

You should keep it the way it is until you have sufficiently proven to yourself that you are a good manager of money.  Think about how horrible it would be to blow all of that extra money in each paycheck and then not even receive a tax refund check!  Awful!

STEP 5 What Do I Do if I Owe Money?

Maybe you’re reading this, and thinking I wish that was me.  I wish I was receiving a refund, but instead I’m going to owe money.

Many people who have delayed filing have probably done so knowing they are going to owe money.  Some of you have already started to save money in preparation for this, but others may be wondering where or how you are going to come up with extra funds.

Check out Episode #83: Money Saving Tips and Episode #106: Buying and Selling Online of the Monday Money Tip Podcast if you need some ideas on how to save or earn some extra money for your tax payment.

Maximizing Your Tax Refund

As I shared before, I used to spend my tax refund sixteen different ways BEFORE I ever received it!  What a miserable feeling it is to receive that great tax refund check and turn around and mail it out to creditors.  Anyone identify with that feeling?

But, I also know what it is like to receive a great tax refund check and be able to KEEP IT ALL!  What a great feeling!  It is a reward for sound money management.

Why not make this year be THE YEAR that you take control of your finances?

Use this tax refund to make sure you’re on the right track financially.  Stock up your emergency fund, pay off debt, and start funding your dreams.  Whatever you decide to do, do it intentionally.  Write up a plan, and allocate the money according to that plan.

 

For more tips about how to maximize your tax refund check out Episode #82 on the Monday Money Tip Podcast.