That & That: Making It Work for YOU Edition
Posted by Gail | Filed under Money Management, This & That
Money means different things to different people. And because each of our lives are so different, we have to do different things with our money. You need to understand what you need and then adapt your plan to make what you want happen. You work hard for your money. Spend a little time figuring out how to make it work smart for you.
Dear Gail, I am a single dad who has been raising my son since he was 7 years old (He will be 15 in June of this year). Anyways for the last 7 years, I have had two jobs (a full time and a part time). I always said to myself, once I reach top rate at my full time job, I would be able to quit my part time job. So I just recently reached top rate (20.35/hr) at my full time job, but I still seam to be needing the part time job for that extra income security, as things keep popping up and I still find myself from living paychecks to paychecks. The question I have for you is their a Canadian Guideline on Expenditures/Budgeting for a single parent with one child where I can raise me and my son comfortably. The bottom line though is I should of been more disciplined during those years of raising my son on one income as I lost a lot of valuable one on one time with him that I will never get back, but can only hope to build a more solid relationship with him in the future. Also a second part to the original question, which you may or may not be able to answer is how much money does one need to make to provide a comfortable life for me and my son and at the same time help me put away some money for my retirement. Thanks Gail, I know this answer has been long winded, but I thought I really needed to explain so I can get some logical and thoughtful input from you. Hope to hear from you soon Gail. And again Thank you.
T, while I’d love to be able to provide you with a formula, there isn’t one. How much you need depends on too many variables: where you live and what you must pay for housing, how much you have to spend on transportation, how much you need for things like food and medical care, and what kinds of things you do like sports or 4-wheeling. Every picture is different, and so the solution has to be what works for you.
You’ve done well to raise your boy on your own. It is never easy being a single parent; so many things to balance. And looking back at what you could have done differently only works if it’s an incentive to change what you’re doing now. If it’s just regret, it’s a waste of time.
The first step is figuring out what your fixed costs are, and how much of your income is eaten up by those. Are there ways to lower your costs so you don’t have to work so much. Then go to your variable costs and do the same. You can use my interactive budget worksheet as a guide. But you have to make a plan that works for you.
My husband and I are both very young and have had the opportunity to advance quickly in our careers. Due to our success we have had the ability to buy and pay off our house in a little over 4 years. Next month we make the last payment on our mortgage and now we are a little unsure what to do next. We would like a larger house some day, but it is not a necessity right now. On the other hand buying a larger house and getting another mortgage seems like a good idea as we are both young, have yet to start a family and have no other debt. What would be your advice regarding the situation?
W, what an interesting question. First, I must applaud you and your husband for setting and achieving such a big goal so quickly. As for what to do… well, that depends. Are you already saving your maximum for retirement? Do you have a healthy emergency fund just in case? Do you have both life and disability insurance (private) so your butts are covered? If the answer to all these questions are yes, then by all means, find your next — last — house and get busy with it. Keep in mind that if you plan to have children, there will be a disruption in your income and you should have a significant pool of money set aside if you’re going to stay home with the baby(ies) for a year or longer.
Yay! We have just finished paying off our mortgage and credit cards. We owe one last thing and that is $12,674 on our car (at 2.9% interest). By August we will have stashed enough to pay off the car and still have $12K in our savings acct. However the plan in August is for me to quit my full time job ($3100 net per mth) and work from home (I have been doing esthetics out of my home part-time which I plan to turn into a more lucrative home-based business). This way, we can stop paying $700 per month in daycare fees and spend more quality time with our 4 year old Daughter. My question is: since my Husband will have the only “stable income” from August, will it be better to pay off the car in full in August, or continue with the monthly payments and keep plugging into our savings incase he looses his job? I know you always say get out of debt first but I’ve been hearing a lot of advisors say “pay your minimum” and stash the cash until we are out of the recession.
A, one thing I keep trying to stress is that every financial story is different, and so every solution is different. In your case, keeping the car payments and stashing the cash makes the most sense so you have a big safety net in place. It will also be important that you do a biz plan for your home biz so you know exactly how much you need to keep “in the biz” and how much you can take as an income. Make your budget in tiers so that you cover your a) must haves b) necessary but not essential c) wants, in that order.
Do you have any tips or guidelines when dealing with tips/gratuities as part of monthly income? I work in a coffee shop and make about $20 per day in tips (which I have in my budget). I’m quite disciplined and every day I put my tips into one of my jars but I see many of the girls I work with use their tips as mad money, not realizing how much it can add up to!
Carolyn, you’re a smart girl to realize that tip money is real money and should form part of your budget. Use it to fill a jar — for your groceries or entertainment for example — while you track it on your budget so you know exactly where it has gone. That’ll leave more of your pay in the bank to cover your other expenses and goals.
I am a single mother of one and I make $25000 a year. I have budgeted all my expenses and I fond that my percentage doesn’t match your. What do I do? I have no where to cut back. I have $216 left after paying everything but debt and saving. I’m $6000 in debt not including my car loan, which is $7000. I need to build credit history, which is why I got the car loan. I pay all my bills on time. I just don’t know what to do with the rest of the money?
R, my percentages are guidelines. The important thing is that your budget balances and you actually have some money left at the end. You need to get rid of the consumer debt — the $6,000. And you need to be saving something… at least $50 a month for emergencies, and another $50 a month for long-term… which means you need to find a way to make just a little more money. To get that $6,000 paid off, you should be putting at least $300 a month against it, assuming a not too high interest rate.
First of all, I love your show! You have inspired me to really try and take control of my financial health. I’m a single mom of two kids, ages two and five, and my husband passed away recently so it’s been a tuff go. So down to the question. I make approximately $3500 after taxes per month but I have very little money in the bank at the moment, approximately $500. When should I take money out for the jars? Once a month? Once a week? And, I alloted $600 to pay my credit cards per month. Should I let the money accumulate in my bank for one month before I pay this amount? I hope this makes sense. If not, please let me know. I guess I usually spend the money as fast as I make it so it’s hard to pay $600 in one shot to the cc company.
Samantha, how often you take money out for the jars depends on your specific needs. It sounds like taking smaller amounts would work better for you, so do it weekly. As for paying off your credit card, as soon as you make a payment, interest stops compounding on the amount you’ve paid… so doing it more frequently actually works to your benefit.
I am a 46 year old single mother of an 11-year old son. I have spend a large part of my money trying to pay off my mortgage and trying to build wealth. I currently have a $33,000.00 mortgage on my principle residence and I have a $120,000.00 mortgage on a rental property in another province which I rent out and make some money from. I have no other debt. No credit cards etc. I rent out the basement of my principle residence and I get support payments. I have about 15,000.00 in savings. My gross salary is 60,000.00 The value of the principle residence is over 400,000.00 and the rental property is valued at $240,000.00. I bought if for 150,000.00. I drive a 12 year old vehicle that has started to cost my $ in repairs and my principle residence needs maintenance. I will be getting a 6,000.00 refund on my income tax and I would like some advice on how to spend the money. Normally I buy second hand vehicles and buy them out – I don’t like monthly payments of any kind. I don’t know if I should do the repairs on the house and consider buying new car with O interest and do monthly payments. Should I consider monthly payments for the 2 house and car insurances – there are no fees attached to doing so? I have no “modern” appliances and the basics on our 1 TV not flat screen. I’m feeling like I should be further ahead. My son says that I am disconnected from the world.
P, you seem to be doing very well to me. Since the financing on a 0% car costs nothing, that’s one way of taking care of the car issue while leaving some money free to handle the home maintenance. As for whether to go monthly or annually with insurance, if there’s no discount for an annual payment and you like managing the payments monthly, then go for it. Don’t forget to live a little too. All work and no play…
September 9, 2009 at 5:47 am
[...] News Sources wrote an interesting post today onHere’s a quick excerptMoney means different things to different people. And because each of our lives are so different, we have to do different things with our money. You need to understand what you need and then adapt your plan to make what you want happen. You work hard for your money. Spend a little time figuring out how to make it work smart for you. Dear Gail, I am a single dad who has been raising my son since he was 7 years old (He will be 15 in June of this year). Anyways for the last 7 years, I have had t [...]
September 9, 2009 at 5:49 am
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September 9, 2009 at 8:02 am
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September 9, 2009 at 8:41 am
In reference to the waitress earning tips, keep some out for taxes!!
Canada Revenue knows servers earn tips and expects that to be added to your income.
September 9, 2009 at 9:58 am
I second Diana. Make sure you track and claim how much income you have made from your tips. You should save about 30% (to be safe) – so $6 every day, for the tax man.
September 9, 2009 at 2:33 pm
Gail, I enjoy reading your responses to the questions posed. I try to guess what you are going to say before I read your reply ;o)
Would have loved for you to have been with me a couple of hours ago. In the grocery store.
Here I was, adding up prices in my head, staying in budget with my purchases (money from the grocery jar) and the couple ahead of me, after paying for their groceries proceeded to purchase $54.00 in lottery tickets.
As you would say ‘whaz up with that?’ I was stunned. I would have loved to say something….but, it’s not my place – I didn’t know them and they sure weren’t asking my opinion……but we could have certainly raised our eyebrows at each other.
September 9, 2009 at 3:02 pm
Hi Gail,
I have a question regarding your advise on payingg car insurance monthly.
As far as I knwo there is an interest added to the premim when you pay insuramce monthly – around 2-4%. Wouldn’t it be better to save the money monthly while collecting interest and pay insurance annually versus paying insurance company the interest $?
Thanks,
Y
September 9, 2009 at 11:12 pm
@YK – I am butting in. How much interest will your money be making? How is it calculated? I bet if you do the math you won’t come out ahead or by very little. Maybe once interest rates go up to 4%….if they ever get that high again.
September 10, 2009 at 4:49 pm
@YK
I pay my insurance premiums monthly for house and vehicle and there is no interest charge added to the premium.
September 10, 2009 at 6:27 pm
Until just recently when I combined my house and car insurance with the same company – I had a monthly/quarterly fee for paying my house insurance in installments therefore, I refused to pay it and paid my house insurance in full annually. However, now that the two are combined I pay a monthly premium with no additional fees – which I specifically asked about due to the extra charges paying my house insurance monthly/quarterly (can’t remember which).
September 10, 2009 at 9:08 pm
@megwilson and Joanne – read your statements very carefully. When I get my vehicle insurance statement (I pay monthly but the statement comes once a year) there is a list of all the premiums that make up my payment and on a totally different page in small print it says “A monthly automatic payment charge of 3% of the premium amount applies.” I have been with different companies and all of them charged it for monthly payments. My house insurance is paid yearly and does not have the same fee. I have called to combine them but it always works out cheaper to keep them separate. @Joanne – make sure you read the paper statement. Don’t ever take your agents word for it.
September 10, 2009 at 10:00 pm
As long as I pay monthly there is no additional fee – my annual premium is the same added up each month. However, I did have to pay 2/12ths of my premium going on the monthly payment plan, which is common. But there is no fee for monthly and I went over my policy with a fine tooth comb much to the agents dismay due to the house policy added to the monthly fee 4 months into the car policy since I was going from annual to monthly. ( 3 x a year has a fee with my insurance company.) I do agree that companies are different and you need to make sure that you are aware of all fees going in and decide which is best for your situation.
September 11, 2009 at 2:33 am
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September 15, 2009 at 7:27 pm
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