Category Archives: How To Guides

13 Simple DIY Home Inspection Tips

In today’s internet-driven world, home buyers have become more savvy than previous generations. Zillow, Trulia, Realtor.com, and a dozen or so other websites have made the process of window shopping for homes much easier. Pictures, virtual tours, and a wealth of data are available with the click of a mouse. And the average buyer can net plenty of experience living vicariously through other buyers’ experiences as showcased on the DIY Network and HGTV. Shows like Holmes Inspection have even inspired buyers to conduct their own DIY home inspection.

Yet the average realtor, myself included, can share countless stories of buyers who look at all of the wrong things when touring a home the first (or second . . . or even third!) time. I have had clients tell me that they were not interested in a home due to objections over carpet, basic landscaping, and even paint color. Other clients have happily fallen in love with homes once they mark off the “non-negotiables” on their list: granite counter tops, stainless steel appliances, and an open concept. I understand exactly what it must be like to host House Hunters or Property Virgins.

No home buyer should skip a professional home inspection. But you can save time and money by following these 13 DIY home inspection tips ahead of time.As a realtor, I am bound by a code of ethics which was designed long ago to protect consumers. I do my best to educate them regarding what to look for when touring a home, and I am quick to point out both obvious and subtle defects, as well as signs of possible latent defects. Most realtors who wish to protect their clients will do the same, especially if they want to keep a job long-term. However, not all realtors are so honest, as selling you a home as quickly as possible may determine whether or not they are able to pay their mortgage premium next month.

For the buyer who is represented by this kind of realtor, the process often goes something like this:

-Tour home, fall in love with aesthetic properties, develop emotional attachment to the home.
-Discuss pricing and comparable sales, make an offer, conclude negotiations and sign the contract.
-Schedule a home inspection with a professional home inspector.
-Begin picking out furniture, paint colors, carpet, etc., for the new home.
-Attend (sometimes) the home inspection with inspector, discover a lengthy list of problems which must be addressed.
-Enter state of sadness/depression/panic, question why the realtor did not notice or disclose all of the problems diagnosed by the home inspector.
-Either A) negotiate with the seller regarding necessary repairs or price concessions or B) cancel the transaction.

Sometimes the process goes much more smoothly. Sometimes it goes much, much worse, especially if the home buyers foolishly opt to skip a professional home inspection.

Avoid Home Buying Heartbreak and Hassle: Perform a DIY Home Inspection

In any real estate transaction, the most critical parties are typically the home inspector and the attorneys. As a buyer, they are your last lines of legal defense; they serve to protect you from danger and hours of stress and hassle.

To be clear, I would never, ever recommend that a client skip out on an independent, third-party, professional home inspection, even when buying a brand-new home through a builder. With that said, I believe a prospective buyer can save himself a great deal of time and money by looking out for the following problems and defects in advance of the home inspection by performing a DIY home inspection during a home tour.

The following DIY home inspection tips are not an exhaustive list. They may not apply to every home and location, and should be considered on a case by case basis. Again, do not skip a professional, independent home inspection in an effort to save money!

1. Take in the big picture

When Mrs. Superhero and I were searching for our first home, I was still a real estate amateur. We fell in love with a home which we had toured on a weeknight in February, so it was naturally dark during our tour. When we arrived for the inspection a week later, we met the inspector at the edge of the driveway. After introducing himself, the inspector said, “So, you know you’ll need a brand new roof ASAP, right?” Ouch.

Examining the full exterior of the home during daylight hours is an easy DIY home inspection tip. Look for damage to the roof (missing shingles, bowed eaves, rotting soffits, missing gutters), siding (missing or damaged shingles, encroaching landscaping), and the entire yard. Do not neglect to examine the same components in the garage, whether it is attached or detached. Also, examine the driveway for large cracks, potholes, etc. Note concerns on a checklist and document them with pictures on your phone or camera so you can address them during a possible future home inspection.

2. Test the garage door

It can be a bit uncomfortable to operate a garage door which does not belong to you, but this is an easy check that everyone should perform unless explicitly instructed not to do so by your realtor or the homeowner. Yes, your inspector will check it, too, but it is wise to check for problems yourself.

3. Open and close all interior and exterior doors

During your tour, you are naturally going to enter and exit all rooms in the home. While you’re doing so, opening and closing all doors is a simple step that some home inspectors may overlook from time to time. If you catch a malfunctioning door which requires re-hanging, you may save yourself money at the closing table.

4. Inspect the furnace, air conditioner, and water heater

When examining these items, look for evidence of maintenance dates on the exterior of the appliances. Inspect for any signs of leaking or irregular noises. If the furnace or air conditioner are not running during your tour, it is usually acceptable to temporarily adjust the thermostat to evaluate their level of functioning. Note: Do not attempt to turn on an air conditioner unit during the winter.

5. Examine all ceilings and walls for water damage

Admittedly, looking for water damage may be one of the toughest DIY home inspection tasks on this list. However, savvy homeowners are becoming increasingly skilled at hiding signs of water damage rather than rectifying the underlying problems. Any signs of discoloration, sagging, or unexplained lines near joints where dry wall may have been taped should be noted and addressed with the home inspector.

6. Check out the basement

More and more homeowners are searching for basements, in my experience. Yet many of them don’t check out the basement when touring a home if they learn that it is unfinished. You should examine the foundation for any major structural concerns, such as cracks, as well as examine the basement ceiling for obvious issues. If a basement is finished, you should ask your realtor to inquire as to whether the work was performed with permits. This may seem like no big deal to many people, but depending upon your city or village ordinances, a buyer could be on the hook for any un-permitted mechanical, electrical, structural, or plumbing work completed without a permit.

7. Examine the grade around all exterior walls

In the past five years, flooding has occurred in all 50 states, according to FloodSmart.gov. This cannot always be prevented, yet many home floods are caused by improper grading around a home’s exterior. Examine exterior walls to ensure that the soil is graded in an appropriate manner (slopes downward away from the home). Also ensure that downspouts are adequately extended away from the home’s foundation.

8. Test all light switches

This is an easy DIY home inspection item to cross off your list, and you’ll be glad to know if any light switches are wired improperly.

9. Inspect windows for signs of moisture

If you see fogging or condensation on windows, this is a sign that the windows may require replacement or repair. These items can be very costly, so you will want to be sure that your home inspector addresses them in his report.

10. Test all sinks and toilets

Invariably, home buyers feel uncomfortable evaluating the function of sinks and toilets. When you’re preparing to make arguably the largest purchase of your lifetime, pushing past some discomfort is a must! Begin by running all sinks individually for 3-4 minutes; this will reveal any draining problems. Also, check under vanities to ensure that drains are properly vented. Lastly, flush toilets in all washrooms while the sink is still running and listen for any odd sounds in the plumbing.

11. Evaluate Your Surroundings

I have heard countless horror stories from buyers who fell in love with a home only to face some harsh realities on moving day. One buyer discovered unappealing power lines running through their side yard. Another buyer shared that they hadn’t noticed a large water tower in their backyard because it had been digitally removed from all marketing photos online. And another buyer did not notice that a train ran right behind their backyard and shook the entire house several times a day. Be on the lookout for these unsightly hazards and more!

12. Visit Local Schools

While the value of a professional home inspector cannot be emphasized enough, buyers must inspect local schools themselves. Do not simply rely on reputation, recommendations from well-meaning friends, or scores from third party websites. Review state report cards, attend a school board meeting, and arrange for a brief tour of the school. In most areas, your property taxes largely go toward funding local public schools, so you want to be sure your investment is worthwhile.

13. Talk to Potential Neighbors

During your examination of the home’s exterior and yard, aim to strike up a conversation with your potential neighbors if they are also outdoors. Ask about their impressions of the neighborhood, schools, and neighborhood and community amenities. If you’re feeling brave, ask, “Would you buy your home again today if you were given the chance to do so?” Any major red flags revealed during this conversation may lead you to reconsider the home purchase (or seek a closing credit to build a bigger fence!).

Don’t Take the Home Buying Process Lightly!

For most people, a home is the largest purchase they will ever make. Do not enter into such an important decision without careful consideration of the condition of your potential new home! Review your notes from you DIY home inspection and compare them to the report provided by your professional home inspector. With careful consideration, you will avoid hassle and heartbreak and find the home of your dreams.


What additional home inspection tips do you suggest?

 

 

 

Money and Marriage: How to Talk About Money With Your Spouse

One year prior to marrying Mrs. Superhero, I became a gung-ho personal finance enthusiast. For the next several months, I ate, slept, and breathed money. I read financial books in my spare time and listened to podcasts during my two hour round trip daily commute. Just for fun, I began watching the now defunct Dave Ramsey Show on Fox Business and The Suze Orman show on MSNBC.

At the time, I had just started my first job teaching elementary school music. I lived with a roommate, drove a 2000 Ford Taurus with nearly 200,000 miles, and lived on a reasonably frugal budget for a bachelor. The soon-to-be Mrs. Superhero was completing her senior year and preparing for a similar career teaching music.

Call us old-fashioned, but we made it a priority to attend pre-marital counseling during our engagement. At our first meeting, the pastor who planned to officiate our ceremony asked us both to complete a brief questionnaire in order to develop a priority list for our sessions.

Not surprisingly, we both scored very highly in the area of personal finance. The soon-to-be Mrs. Superhero is a natural saver, and my near-obsession with personal finance had contributed to her gain of my new-found knowledge by osmosis. After asking us both if we had ever heard of Dave Ramsey or his book — we both had done so — the pastor informed us that we would be “fine.”

In reality, we weren’t going to be “fine.”

A storm was already brewing.

The First Money Talk

I will always remember our first family budget meeting. Shortly after our honeymoon, we sat down among stacks of moving boxes at the old oak dining room table in our rented townhouse. I was excited to do some intense number crunching, formulate projections, and dream about our future as husband and wife. To say I had preconceived notions about how this meeting was going to go would be an understatement.

We began the meeting by reviewing the state of our current emergency savings. Mrs. Superhero’s eyes lit up as we pored over the numbers; not because they were terribly high or impressive, but because she had worked and saved up $2,000 of our emergency fund during the past year, all while taking 19 credit hours, practicing flute and piano for hours and hours each day, and performing in the university orchestra and band. Never one to allow my agenda to be interrupted, I stated that we needed to boost our meager savings as soon as possible.

Next, we reviewed the budget I had put together the day before. I had pre-determined every single dollar of spending on paper and presented each category one-by-one in a very matter-of-fact manner. Mrs. Superhero listened intently, and when I had finished my review, I asked if she had “any questions.” Sensing the rhetorical nature of my question, Mrs. Superhero said “no.”

At this point, I’m sure I was feeling quite proud of myself for directing such an efficient meeting, so I moved to wrap-up the meeting and continue unpacking. Mrs. Superhero sheepishly agreed. Meeting closed.

In hindsight, I had no idea how to talk about money with my spouse. I could talk at her about money until I turned blue in the face, yet conversing with her hadn’t even entered my radar. There wasn’t much authentic communication happening.

Compounding Irritation

When it comes to money and marriage, a system of communication is vital. Read on and learn how to (and how NOT to) talk about money with your spouse.Prior to our marriage, I was genuinely excited about the merger of money and marriage. Call it naivete or wishful thinking, but I had no idea that it would be a challenge. A few months into our marriage, I thought things were going well. Mrs. Superhero had graduated in December and secured a long-term substitute teaching position for the spring. At our next budget meeting, I naturally came prepared with spreadsheets and figures illustrating how I had planned to utilize the coming increasing in our budgeted income. Though I deserved it, I was not prepared for what was about to happen next.

In no uncertain terms, Mrs. Superhero informed me that she had gone along with my “control of the budget” so far, but now she wanted a voice in the budget process. Immediately, I went on the defensive and argued that she had always had a voice in the process. As you can imagine, the conversation’s quality quickly eroded from this point.

How to Talk About Money With Your Spouse

Thankfully, Mrs. Superhero and I have grown in our ability to talk about money. We understand each other better with each passing year, and our need to discuss our finances in detail has greatly diminished. We have a system to keep our money and marriage on track.

This system took time to develop. It required an understanding of our individual financial inclinations and values. Once we came to a collective understanding — that I enjoy and value sensible stewardship and planning ahead and Mrs. Superhero values financial security and balancing the priorities of the future with today’s needs — we were well on our way toward happiness.

Money and Marriage – The Wrong Way

Needless to say, however, I made several mistakes early on, and they were damaging to our money and marriage. I have done things “the wrong way,” and it was damaging and discouraging.

1. Overuse the words “I” and “you” when discussing money.

Speaking these words frequently when discussing money is a sure fire way to create a divisive conversation. You will cause your spouse to become standoffish or even adversarial when the topic of money arises.

For example, “You spent too much money at the grocery store” and “I need a newer car” are two phrases which I actually spoke during early budget meetings. The words “you” and “I” super-charged these conversations with negative emotions. They made my wife defensive about her shopping and concerned about future spending on a vehicle.

2. Keeping your financial lives separate.

I know this will be a sticking point for many readers, but it is imperative that you and your spouse join your accounts and view your assets and income collectively. Separating money is a sure fire way to create silly fights and senseless drama. It also serves to unreasonably highlight whether one spouse is the primary breadwinner. When you decided to marry and merge your lives, you pledged to be partners, not competitors.

I believe this idea also includes the mental separation of income by source. When the primary earner holds that fact over the other spouse’s head, a fight is sure to follow.

3. Hiding debt or assets from your spouse. 

Before you marry, it is time to let all of your financial skeletons out of the closet. If you have bad debts from years of betting on horse racing, it’s time to come clean. It’s also time to share that you inherited $150,000 from Aunt Rosie. This kind of behavior is common, and it’s toxic to your marriage; according to a CreditCard.com survey, approximately 6 million people have concealed financial accounts from their spouse. Be honest so you can work together to clean-up bad debts or wisely formulate a plan for large sums of money or other assets.

Thankfully, I never had odd debts (or assets, unfortunately!) to hide.

Money and Marriage – The Right Way

1. Identify your common ground for your vision of the future.

If you’ve never done this before, it is easy. Take out a sheet of paper and a pen, and begin listing how you envision your future at various stages in life. How many kids will you have? Where will you live? Will you travel frequently? Will you support your children through college? Will you both work full-time? For how long?

The answers to these questions will provide common ground for the goals which meet at the intersection of your marriage and money; they will help you answer the “why?” questions which may arrive as you plan your financial affairs.

2. Learn to speak your spouse’s financial language.

When I finally realized that Mrs. Superhero values future security and balancing the priorities of both today and tomorrow, I learned how to frame financial discussions in a manner which actually matters to her. Now that our discussions include these perspectives by default, we are making better decisions which align with our collective goals.

Perhaps your spouse is a numbers person. Maybe he or she responds better to be emotional appeal. It is your job to discover their financial language and communicate in a manner which is meaningful yet non-manipulative.

3. Honor each other’s wishes as your circumstances allow.

This can be a difficult step for many people, especially for Extreme Frugalites, but it is important to give and take for the sake of your spouse. I, for example, have no desire to add to my already-fine wardrobe of slacks, jeans, button down shirts, polos, and t-shirts. But Mrs. Superhero enjoys purchasing a few new clothing items each month. Similarly, I enjoy trying new and interesting imported and craft beer. Neither of these indulgences is significant enough to derail us from goals, so we have learned to appreciate the little things which make each other happy.

Final Words

While the advice in this piece is designed to promote harmony between marriage and money, in the end, I must be clear: our marriage is far more important than any financial concerns, goals, or dreams which may fill our minds and hearts. It is easy to lose sight of this priority in the heat of the moment, but over the long haul, Mrs. Superhero and I have been successful in our marriage and money because the latter ALWAYS takes the back seat to the former.


How do you ensure a healthy relationship between marriage and money? How often do you and your spouse talk about money? How do you stay on the same page with your plans, dreams, and goals?

Investing is a Marathon – A Personal Training Guide to Win

Investing is a marathon, not a sprint.

Aesop’s parable of the tortoise and the hare is a timeless, yet somewhat ambiguous tale. It chronicles a race between the slow-and-steady tortoise and the overconfident-and-lazy hare. The tortoise paces himself appropriately, while the hare opts to enjoy a mid-race nap. When the hare awakens, he discovers that his competitor has already won the race.

Investing is a marathon, not a sprint.

I appreciate this wise lesson, but an alternative version of Aesop’s tale provides deeper wisdom.

In this iteration, the hare decides to provide the tortoise a head start. Throughout the race, the tortoise grows stronger and faster, a development which was unforeseen by the hare. Despite the hare’s eventual efforts to work harder and run at much faster speeds than the tortoise could ever imagine, the tortoise wins the race handily. In fact, the result is far from a photo finish.

As investors, many people are like the hare. They are always waiting and preparing for tomorrow. Others are like the tortoise. They invest slowly and boringly over time and maintain remarkable consistency.

When it comes to investing, the average investor would be wise to learn from both the slow-and-steady approach of the tortoise and the speed and intensity of the hare.

Investing is a marathon, not a sprint.

Investing is a marathon, not a sprint. Unlike running, you only get one chance to live and save. Will you be more like the tortoise or the hare?

Marathon Training

Following my first half marathon in 2010, I began training for my first full marathon in January 2011. The days are cold and nights even colder during Illinois winters, which made the beginning of my training extremely brutal, both physically and mentally. To make matters worse, I was still trying to master the fundamentals of distance running: proper form, hydration, nutrition, and the all-important techniques to avoid chafing.

However, I established a regimented schedule for both training and rest, learned to listen to the signs and signals of my body, and improved as a runner. Despite many mistakes and a few minor aches and pains, I pressed onward and completed my training.

Exploring the Parallels – Investing IS a Marathon!

Race day arrived much faster than I ever thought possible. Though I had prepared as well as I could have expected, as I stood at the start line with hundreds of other people, a thought played over and over in mind:

What did you just get yourself into?!

Getting Started is Hard

The race director fired his gun, and we were off and running.  The first mile was absolutely awful. I dodged slower runners left and right, expounding a lot of wasted energy in the process, and experienced my first doubts. I’m so far from the finish line, I thought.

Many people have these same doubts when they begin investing. They know they are beginning a long journey which requires patience and diligence, yet it is not uncommon for many beginning investors to experience waves of discouragement and doubt. So they work harder, save more, do more research, and re-read investment prospectuses. At first, their efforts barely move the needle.

As I approached the first aid station near mile 4, I felt satisfied. My body had finally warmed up, my doubts had dissipated, and my confidence was restored.

Achieving a positive net worth is much like a marathon’s first aid station. It is a milestone worth celebrating. This checkpoint is not achieved without hard work and sacrifice, yet it is only the beginning of a long journey.

Setting the Pace, Focusing on Your Goals

I settled down even more after the first aid station and found a comfortable pace. At times, running felt effortless during this stretch. Around mile 10, I passed by family and friends who were out to support me. They cheered me on and said I looked “very fresh.”

Investing is a marathon, not a sprint. Unlike running, you only get one chance to live and save. Will you be more like the tortoise or the hare?
Feeling great at Mile 10 of the 2011 Wisconsin Marathon

As I approached the midway point of the race, I noticed that many other runners were picking up their pace. I joined them for a moment, but wisely pulled back after a few minutes, as the pace felt unsustainable.

Moments later, I witnessed the jubilation of those same runners as they crossed the half marathon finish line. Unbeknownst to me, they had selected a different goal and adjusted their pace accordingly. As they crossed their finish line and celebrated the fruits of their labor, I began to feel sorry for myself. I still had 13.1 miles to go.

It is tempting for an investor to lose sight of the plan and pace and adopt someone else’s approach. However, their pace and goals don’t matter! Your pace and goals are important. Investing is a marathon, so be sure to run the race at your pace and aim for your goals.

Stay Strong, Finish Well

During the long stretch from mile 13 to mile 20, I found myself running alone much of the time. I was fatigued, yet I felt OK. I had experienced my fair share of emotional ups and downs by this point, but I trusted myself. I trusted my training. I continued to take one step at a time.

At the same time, I felt oddly apathetic. I didn’t feel much like drinking or eating gels, so I skipped an aid station. Instinctively, I knew this was a bad idea, but I just didn’t care anymore. I stopped thinking about the successful things I had done to get to this point.

The average investor is similarly susceptible to ups and downs, doubts, and apathy. When you have made sizeable progress toward achieving your goals yet still remain far from your nest egg target figure, it can be tempting to stop caring. It can be easy to rely on feelings and allow them to guide your choices and actions. You must remain consistent and continue to take the steps which helped your investments grow to this point! Investing is a marathon!

My experience from miles 20-26 was in direct contrast to the earlier stretches of the marathon. Up until this point, I was on pace to finish the race in 3 hours and 30 minutes. Everything changed at mile 20. While others whom I had passed earlier seemed to grow stronger, I was battling crippling nausea. I shouldn’t have skipped that aid station, I ruminated.

While this stretch was a slow crawl toward the finish line, it was a victory lap for one elderly gentleman. As this man who was old enough to be my grandfather passed me, he shared some sagely advice:

Just keep going. Keep your eyes on the finish line. Don’t give up.

For many investors, we experience the true ramifications of our mistakes during the home stretch. We wish we had started saving early, experienced more years of the wonder that is compound interest, and maintained greater consistency over the years. Yet the finish line of retirement is visible on the horizon.

As I passed the 26th mile marker and rounded a bend in the road, I saw the finish line for the first time in nearly two hours. I forgot about my nausea and soreness and began sprinting. I’m quite certain I must have looked like a geriatric patient gallivanting down the road, but I felt as quick as Usain Bolt as I crossed the finish line and received my medal.

Like an idiot, I awoke early the morning after the race and crawled out of bed to go for a short run. As I lumbered along under the light of the morning sun, I reflected on my training and race mistakes. Naturally, I was grateful to have learned many lessons. I was also eager to do better next time.

Recommendations to Win the Investment Marathon

However, there is no next time for investors. We all have only a single life to live, so it is important to act with wisdom the first time if we are to achieve the retirement of our dreams. Win the investment marathon by following these four recommendations.

  1. Start early! If you foolishly begin later, as did the hare, and think you can catch up, you are mistaken. Compound interest functions at its finest over long periods of time. Remember, as Warren Buffet said, “You can’t produce a baby in one month by getting nine different women pregnant.”
  2. Follow a plan. Remember, if you fail to plan, you should plan to fail.
  3. Keep it SIMPLE.
  4. Invest based upon your goals and desires, not those of anyone else. Your keys to happiness are not the same as those of others.

If you are looking to begin your investment race toward retirement, a number of routes can help you get started.

Disclosure: FinanceSuperhero recommends the following services and maintains an affiliate relationship with each. However, we only recommend services which we have reviewed and deemed helpful to readers.

I recommend opening an IRA (Roth, if eligible) with Betterment. At the time of publication of this article, over 175,000 investors have contributed more than $5 billion into their Betterment accounts and taken advantage of tax-efficient investing in low-cost index funds. You can even roll over an existing 401k. Open an IRA with Betterment today!

 

If you’re just getting started and desire a method to keep better track of your finances and investments in general, I recommend opening a free Personal Capital account. I trust Personal Capital to monitor all of my financial accounts in a central location, which allows me to see the big picture with a few simple clicks. Their instant calculations help me to ensure that I am on pace to meet my goals. If you desire, Personal Capital also offers advisory services should you wish to adopt a hands-off approach toward investing.


Do you believe that investing is a marathon? On a lighter note, have you ever ran a half marathon, marathon, or ultra-marathon? What other parallels do you see?

 

 

 

5 Small Business Tips: Save Money and Boost Efficiency

In today’s competitive market place, implementation of money-saving, efficiency-boosting small business tips can be the difference between profit and loss. Though my wife and I are young entrepreneurs, we have learned many important lessons over the past few years.

In July, my talented and hard working wife, Mrs. Superhero, shared a guest post, 10 Tips for Self-Starter Entrepreneurs. To date, it remains one of the most-popular articles on FinanceSuperhero.com. In the past two months, I have received many follow-up questions and requests for further advice based upon the tips shared in the article. In this post, I will share 5 additional tips which will aim to build upon the advice previously shared.

Small Business Tips

Simple Small Business Tips

Disclosure: This article contains affiliate links to services and products which may be beneficial to small business owners. 

According to the U.S. Small Business Administration, 28 million small businesses in the U.S. account for 54% of sales while also providing 55% of all jobs since the 1970s. Small businesses, regardless of their size, are a  major player in the American and even global economy. Launching a small business is relatively easy, yet building and sustaining a successful business model can be challenging.

Without further adieu, here are 5 additional small business tips to save you money and boost efficiency.

1. Structure Your Small Business To Protect Yourself

On the surface, this suggestion appears very obvious. However, in the midst of other start-up activities, consideration of legal structure for a new business is often placed on the back burner.

For many new businesses, in particular those run by sole proprietors, operating under a DBA (“doing business as”) arrangement may suffice. The advantage in doing so is simple: minimal costs and typically simple tax returns. However, operation as a sole proprietor may increase exposure to liability.

In order to minimize exposure to risk and liability, the formation of a corporate entity, such as an LLC (limited liability company), may be advisable. This process can be expensive and time-consuming, which leads most experts to recommend holding off on this process for a short time.

Small Business TipsHowever, for those wanting to take this step, INCFILE.COM offers a simple and affordable process to do so. In my home state of Illinois, the package rate for forming an LLC begins at $49. The Illinois Secretary of State also charges a $500 LLC registration fee.

How does forming an LLC save you money? By taking legal steps to limit your overall liability, you are protecting your personal assets. For example, if you are a musician, forming an LLC may be a wise move to protect valuable assets, such as antique grand pianos, professional-quality string and woodwind instruments, and other valuable equipment.

The scope of this article does not allow a full discussion of the merits of DBA and LLC designations. For more information on this topic, I recommend further reading on the topic.

Related – Limited Liability Corporation Versus a Sole Proprietorship – Bloom, Bloom, and Associates, P.C.

2. Track Your Mileage

If your business requires frequent driving to meet clients, you could be missing out on significant tax savings. For 2016, the IRS established a rate of $0.54 per mile. Please note the following:

*If you are tracking your mileage, you may not also use any depreciation method on your vehicle. This will surely trigger the alarms at the IRS.

*In lieu of tracking mileage and claiming this deduction, you can choose instead to track the actual costs of operating your vehicle in a business capacity. This can be more complicated, which leads many business owners to track mileage instead.

Small Business Tips to Save Money and Boost EfficiencyIf you prefer tracking mileage, I highly recommend utilizing an app such as MileIQ to streamline the process. In August 2016, I used it to track my mileage for my real estate business. The app classified 265.2 miles of business driving, a value of $143.23. It worked in the background on my iPhone without requiring any prompting or effort on my part.

The app is very intelligent and intuitive to use; drives can be classified as personal or business with a swipe of your finger, and frequently-driven routes may be auto-classified, based on your preferences. You can download mileage reports in Excel or PDF format at any time, which makes record keeping very easy.

If you will be classifying 40 or fewer drives per month, you may use the app at no cost! Beyond that, the paid version offers tremendous value when the time saved on tracking mileage in a manner detailed enough to satisfy the IRS is considered.

As an added bonus for FinanceSuperhero readers, if you sign-up for MileIQ using this link, you will save 20% on the regular annual rate of $59.99.

Small Business Tips to Save Money and Boost Efficiency

3. Keep an Electronic Calendar

Few mistakes can be as devastating to your business’s reputation as missing an appointment or failing to follow-up with a client. Depending upon your specific business, the “What Have You Done For Me Lately?” mantra remains very applicable.

In order to make sure we do not miss appointments for our side jobs, Mrs. Superhero and I maintain a free shared Google Calendar. The app is very user-friendly, simple to maintain, and allows for event notifications to be established via e-mail or text. Our shared calendar allows us to stay on the same page, balance priorities in a centralized location, and avoid double-booking ourselves.

4. Maintain Accurate Records For Free

While many small businesses may prefer their tried and true use of programs such as Quick Books, many free, user-friendly alternatives are available today. I have created Excel templates which I utilize to organize all income and expenditures for Mrs. Superhero’s music studio, but I may soon look into alternatives to streamline my processes.

One promising alternative is Wave, a free accounting software platform designed specifically for small businesses with fewer than nine employees, independent contractors, and sole proprietors. The interface allows users to track sales/income, expenses, create and manage invoices, and scan receipts – all for free! It syncs with your business accounts to eliminate the need for manual data entry, generates professional accounting reports (accounts receivable, accounts payable, balance sheets), and creates invoices with ease.

For a small cost, payroll and credit card processing are also supported. Simply put, there is a reason why over 1.7 million people use Wave today.

5. Utilize Amazon Prime to Save

If you are a lean enterprise (think sole proprietor), chances are you spend a great deal of time running errands and picking up last minute items. This also wastes earning potential. After all, time is money!

Amazon DashI highly recommend an Amazon Prime membership in order to minimize wasted time and improve your efficiency. With Prime, you receive free two-day shipping, no minimum order size, and also will enjoy access to streaming music and video. You can establish recurring orders for items which you need regularly, such as ink, paper, envelopes, and a variety of other office supplies using the Subscribe and Save or Amazon Dash programs – no more last minute trips for office supplies!

If you’re on the fence, I recommend taking advantage of the Amazon Prime Free 30-Day Trial, which can be cancelled at anytime. 

Final Recommendations

By following the five small business tips above, you can improve the efficiency of your business and save money. They will free up your time to focus upon prospecting, improving your services, and meeting the needs of your clients.


What small business tips do you recommend? Which of the small business tips mentioned above do you implement?

How to Save Money on Vacations

Everyone wants to save money on vacations. Why wouldn’t they?

For a variety of financially-driven reasons, only 51% of eligible American employees utilize their allotted vacation time, according to MarketWatch. Many respondents expressed that they couldn’t afford to take vacation, did not want to return to piles of unfinished work, or did not trust a colleague to complete their work in their absence. Among other reasons, perhaps Americans are just stuck in the grind, suffering DINGOs who cannot afford a vacation, or are naturally poor savers.

In October, Mrs. Superhero and I will enjoy a guilt-free vacation getaway and spend four days in Las Vegas. It has been fun to research, plan, and discuss all of the activities that we would like to include during our stay, as this will be our first trip to Vegas. I admit that I am overwhelmed by all of the options, but I am choosing to think positively. We will just have to return to Vegas another time – which should be very possible considering the money we will save on this vacation!

How to Save Money on Vacations

 

STEPS TO SAVE MONEY ON VACATIONS

While there are many ways to save money on vacations, I recommend the following steps because they are tried and true. They have helped me and my wife save money on vacations, and we believe they can help you, as well.

Fail to Plan, Plan to Fail

In the midst of our planning for our vacation to Las Vegas, there is one thing my wife and I haven’t had to consider: how we are going to pay for the vacation.

A few months back, I opened a Digit account in order to satisfy our goal to save money for vacations automatically on a regular-basis. So far, our account has swelled to nearly $900, and we haven’t missed the money one bit. That money will cover the costs of our package deal, which includes airfare and resort stay. We will address our plan to cover the costs of food and entertainment below.

Recommended Open your own Digit savings account for free today!

Many people only pause to consider how they are going to pay for their vacations after they’ve already swiped their credit card. When you consider the fact that credit card interest rates may range anywhere from 12 to 26 percent, on average, we have discovered how not to save on vacations!

With a minimal effort, you can create a plan for paying for your vacation in advance. Remember – if you fail to plan, plan to fail!

Book Your Vacation As Far Ahead As Possible

Generally speaking, a common way to save money on vacations is to book your trip as far ahead as possible. Airlines and hotel chains have a simple mission: strive to reach full-capacity for every flight and individual hotel at all times. They are unlikely to achieve this goal, of course, but they increase their odds of doing so by offering advantageous savings far in advance of travel dates.

We recommend consulting a variety of websites, such as ExpediaTripAdvisor, and Airfare Watchdog to monitor prices. On most of these platforms, you can create and save itineraries and opt to receive price alerts. You can also utilize the option to name your own prices on Priceline.com.

When planning our Las Vegas vacation, we found the best deal for our preferred resort on Expedia.

One word of caution when booking in advance: Be sure to read the fine print regarding cancellation policies and purchase cancellation protection/insurance if you feel there is a chance you may need to cancel your vacation.

Consider Last Minute Vacations

If you are unable to book your vacation in advance and can accept flexible travel dates, you may save money on vacations by purchasing last minute deals.

When Mrs. Superhero and I were planning our first wedding anniversary vacation several years ago, we were able to find a deep discount on a hotel room in Traverse City, Michigan. We found this deal despite the fact that our stay coincided with the National Cherry Festival. Vacationers who have flexible calendars, and in particular those who are educators, can take advantage of similar last minute deals to save money on vacations.

Plan Your Meals, Too

In most vacation budgets, the third-largest line item after airfare and hotel costs, respectively, is often food. You have to eat on vacation. If you’re like me, you like to eat well and try new foods. Fortunately, you can do this at a reasonable cost.

At breakfast time, avoid eating at your hotel or resort unless the meal is free or included with your stay. Typically, you can save money on vacations by walking a block or two to find more affordable breakfast options. You may even opt to enjoy a light breakfast in your room by eating food purchased at a grocery store.

Most tourist attractions aim to pad their bottom lines by preying upon the impulse of unsuspecting vacationers. They know how to take advantage of your unexpected hunger and thirst. This is why theme parks can charge $10 for bottled water and $12 for a hot dog. By planning ahead, you can save money on vacations even within your food budget. Aim to stock up on snacks and beverages at a grocery upon arriving at your destination. If you are driving, purchase these items before leaving home.

We recommend avoiding tourist hot spots. To save money on vacations, strive to eat and drink as do the locals. Once again, TripAdvisorGroupon, and Restaurant.com can provide direction as you plan. In a pinch, you can also find last-minute deals in this manner, so be sure to download the appropriate apps for these platforms on your mobile device.

Additionally, opting to eat a larger lunch and smaller dinner can help you save money. Many lunch specials feature dinner entrees in smaller portions, but they are still large enough for lunch. When dinner time arrives, eating slowly and savoring a smaller meal can make it seem larger.

I am unconcerned about food and entertainment costs during our upcoming Las Vegas stay, as we will likely use Groupon and Restaurant.com as much as we can. Our normal budgeted funds for food/entertainment will cover the remaining costs. We will also loosen up the purse strings for one or two nice meals.

Stick to Your Plans

We will certainly face our share of unexpected expenses while in Las Vegas. However, most of them will be opportunities which we may choose rather required expenditures. We will need to exercise discipline and control in a land of many rich opportunities; of course, this is a well-known best practice which should be implemented in order to save money on vacations.

As budgeting guru Dave Ramsey often says, “Adults devise a plan and follow it; children do what feels good.” The power of suggestion and advertising can be very strong, especially on vacation. But if you remain in tune with your goals and values, you will not fall victim to impulse.

Find Free Events

You can find free events in virtually any vacation destination on any given day. This only requires a small effort to save money on vacations.

Apps such as Yelp, Eventbrite, and LikeALocal can help you to find free or cheap events. Again, plan ahead and download these apps on your mobile device prior to leaving on vacation.

Travel During Off-Peak Seasons

Despite my above example about the National Cherry Festival in Traverse City, traveling during off-peak seasons is the best way to save money on vacations. If at all possible, avoid travel to child-friendly locations during March and April (spring break time) and June-August (summer vacation). Also strive to avoid vacation travel during holiday weekends, such as Memorial Day, Independence Day, and Labor Day weekends. Airlines and hotels often charge holiday premiums during these peak times.

How to Save Money on Vacations
Avoid crowds by traveling during off-peak times

Concluding Thoughts

While vacation costs can put a strain on budgets big and small, you can take steps to save money on vacations. You work hard to earn your income and vacation time, so maximize every opportunity you can to rest and recharge without breaking the bank. Even if you truly cannot afford a vacation, consider an affordable staycation as a method to avoid burnout.

Finally, do not forget to take advantage of web sites and apps such as ExpediaAirfare WatchdogPriceline.comTripAdvisorGroupon, and Restaurant.com when planning a vacation. With any luck, they will help you save money on vacations!


What shows, restaurants, etc., do you recommend we check out in Las Vegas? What other tips do you recommend to save money on vacations? 

 

 

 

Start Managing Your Money Smarter with These 5 Simple Tips

I was having one of those mornings; perhaps you can relate. I found myself in a mad scramble to locate a pair of socks which would fit in with the color family of my pants, shirt, and tie. After a few minutes of searching through an unsorted basket of socks, I located a pair.

Though this simple search only stole a few minutes of my time, it led me to think further about the perils of my own disorganization and the potential costly consequences.

When you do not maintain organization, specifically in the area of your finances, uncertainty lingers in the air like the smell of rotting garbage; it may not bother you much at first, but if it is ignored, the problems will quickly worsen. Over time, you will undoubtedly bounce a check, forget to pay your electricity bill, or incur unnecessary financing charges.

Start Managing Your Money Smarter with These 5 Tips

Much like unsorted laundry, your money is helpless without you. If your finances require some decluttering, whether minor or major, now is the time to take control and do what is necessary to provide the organization and structure your finances desperately need.

To read more of this article and learn five ways to improve your finances today, head over to VTXCapital.com.

Check back here on Wednesday for a new piece on the two most numbers most important to financial success and on Friday to apply old-fashioned gridiron lessons to your finances.

 

20 Budgeting Tips for Singles – A Bachelor’s (or Bachelorette’s) Guide

Last week, the state of Illinois finally passed what I would describe as a “Band-Aid” budget. While politicians largely celebrated this move and patted themselves on the back, their budget does very little to solve the gaping wound that is the state of financial chaos in which Illinois currently finds itself.

As I read the headlines and a few articles, I marveled at the difficulty the legislature faced in passing a budget. As you may or may not know, Illinois recently went an entire fiscal year without a budget. This standoff made previous budget delays (18 days in 1991, multiple delays of several weeks in the 2000s, and the bitter standoffs of recent years) look like small blips on the radar.

While Governor Rauner and Speaker Madigan set aside partisan gridlock long enough to pass a budget, public schools, state universities, and social service agencies are from celebrating. To the detriment of the citizens of Illinois, the finger pointing between Republicans and Democrats will surely resume and intensify in the next months.

Right around the time that Governor Rauner was delivering his press conference regarding the new budget, I sat down to review my planned budget for July 2016. Since September 2009, I have created a unique monthly budget using Gazelle Budget, the online software platform created Dave Ramsey’s team at Ramsey Solutions. That makes 71 unique budgets. It felt good to add yet another accomplishment to the mental list of ways in which I put the state of Illinois to shame.

MY FIRST BUDGET

As I often do when completing a budget, I took a look through the archives to see how Mrs. Superhero and I have come. My trek brought me back to September 2009, the month in which I created my very first budget.

In September 2009, I was a newly-employed, engaged bachelor, living independently for the first time in my life. Less than one week before the new public school year started, I accepted a job offer to teach music about 25 miles away from my university campus. With a week to prepare, I scrambled to locate housing, sign my contract, and prepare for a radical life change.

At the time, I had barely a tiny inkling of how to responsibly manage my money. I had recently read The Total Money Makeover in record speed, but I didn’t know the first thing about budgeting an “adult” paycheck. This was going to be the first time I had ever earned a paycheck which included a comma in the amount field!

After reading about Gazelle Budget (which is being replaced soon by EveryDollar), I purchased an 18 month membership, which included access to all three hours (ad free) of the Dave Ramsey Show podcast, for $89.95. Moments later, I created my first budget.

In all its glory, my very first monthly budget, from September 2009
In all its glory, my very first monthly budget, from September 2009

I began by projecting my total net income for the month, $2,357.29 in total. In that moment, I recall feeling pretty wealthy. I continued by inputting my desired charitable giving ($236 – 10%), rent ($400 – I rented a room in a two-bedroom condo from a friend-of-a-friend), food ($305 – for groceries and restaurants), and my debt obligations ($50 car payment and $200 credit card bill). From that point, I filled out the budget with an estimate of utilities, transportation (gas, car insurance, and routine maintenance), clothing (new work clothes and change for laundry), personal spending (spending money blow money Starbucks fund, books, gifts, hair cut, toiletries, and the Gazelle Budget subscription), and savings (emergency fund and honeymoon fund).

As you can see above, my projections for spending (middle column) were not entirely accurate when compared with my actual spending (leftmost column) at the end of the month. In fact, despite projecting a zero-based budget, I spent more money than I earned in September 2009.

This was hardly a Superhero effort.

On the other hand, the percentages of my categorical spending mimicked responsible spending.

Budget Percentages 1

Budget percentages 8-11
Categorical budgeted spending as a percentage of net income, September 2009

THE TROUBLE WITH PROJECTIONS

For the first full month of living on my own, I updated my budget on a daily basis. I kept a stack of receipts for all cash purchases and utilized internet banking to reconcile all other transactions. Yet despite my diligence, I was still brand-new to the process of budgeting.

As you can see below, I overspent considerably on food and personal spending; I had budgeted a combined $572.29, approximately 24% of my net income, but at the end of the month, I had spent a combined $761.58, approximately 32% of net income.

When I broke these spending figures down further, I discovered that I had spent $156.50 at restaurants and $80.77 at Starbucks.

Ouch.

My First Budget - Spending
20 TIPS FOR THE BACHELOR’S OR BACHELORETTE’S BUDGET

I chose to present the above figures for two primary reasons. First, I wanted to prove that it is possible to build and maintain a monthly budget as a single person. Second, I wanted to be fully transparent about my early mistakes.

Yes, creating a budget is not always easy. It isn’t the cool thing to do, especially as a young 20-something fresh out of college. Even at age 30, I can still recall the temptation to throw caution to the wind and live it up. Heck, I almost went out and leased a car!

However, I still recall one of the most powerful motivators for a 20-something single: the desire to prove one’s independence. Creating a budget is one of the best ways to set out to accomplish this goal and appear to be an adult. If you don’t manage your money responsibly, you will surely appear to be a child to you parents and extended family.

To win with money as a bachelor or bachelorette, follow these 20 tips.

20 BUDGETING TIPS FOR SINGLES - TW

1. Share costs with a roommate.

In my case, I avoided spending $1,000 per month for a one-bedroom apartment and spent $400 to rent a home in a two-bedroom condo. By sharing costs in this manner, I avoided spending 40% of my net income on housing costs.

Housing is by far the biggest budget buster for the average bachelor or bachelorette. Spending within this category can be a difference-maker.

2. Gather an accurate picture of your monthly debt obligations.

When you are just starting out, you will feel the temptation to delay examining your debts, particularly if your student loans are still in deferment. Avoiding your debts will not make them go away, so gather this information, including total principal, interest rates, minimum payments, and loan terms for each debt. If you’re unsure or unclear about any debts, contact the appropriate customer service department right away. Also, you should check your credit report; remember, this can be done free of charge once per year with each of the major credit reporting bureaus.

3. Prepare your own meals and cook at home as much as possible.

As a single young adult, preparing your own meals will accomplish two goals: you will save money, and you will not gain weight eating low nutrition/high calorie fast food. As an added bonus, you will be able to host your dates for dinner and impress them with your fine culinary skills. They’ll expect Ramen, and you’ll blow them away with shrimp creole!

Ladies, don’t forget, the way to a man’s heart is through his stomach.

4. Maintain a college lifestyle, at least in terms of spending.

When your first paycheck rolls in, you will immediately experience the temptation to buy everything in sight. If you establish an unreasonable level of spending out of the gate, you will set yourself up for failure. As much as possible, continue to live a college lifestyle (i.e. behave as if you are poor), within reason, of course.

5. Do not go out and buy a new (or new to you) vehicle.

You need to get used to living on a budget first in order to determine what you can or cannot afford in a new vehicle. Don’t allow pride and vanity to influence your decision-making process. If your current vehicle gets you from point A to B, it’s a keeper – at least for a few months.

6. Invest in a decent coffee maker with a timer function and brew your own coffee at home.

I learned this the hard way when at the end of my first budgeted month I had spent $80.77 on coffee on my way to work. I had a decent Mr. Coffee coffeemaker, but it didn’t have a timer feature. If I happened to be running late to work in the morning, I resorted to a quick Starbucks stop, which cost me significant money without adding any perceived value (neither happiness-wise nor nutritionally speaking).

Nothing beats the sweet aroma of morning coffee, especially when you brew it yourself and save money in the process

Mr. Coffee
Nothing beats the aroma of freshly-brewed coffee in the morning – and it saves you money!

7. Stay in.

Fortunately, I did a good job of this. My wife-to-be and I enjoyed cooking dinner at my condo and watching reruns of The Office. I know that many single people will feel the temptation and be pulled into the expensive night life scene, but do so within reason. Invite friends or your significant other back to your place, where food and drinks are cheap.

8. Find affordable dates with Groupon and Restaurant.com . I’m not even sure if Groupon and Restaurant.com existed back when I was a bachelor, but taking advantage of them today is a key part of our dining out experience. With either platform, you can purchase certificates for what is usually a fraction of the value, which allows you to realize significant savings and still enjoy a night out. The most common Restaurant.com offer is $10 for a $25 gift certificate. Check out the Restaurant.com offerings in your area by following the link and entering your zip code.

9. Build an emergency fund as quickly as possible.

As a young single person, building an emergency fund is the definition of adulting. Without an emergency fund, you will face unexpected expenses and be forced to swipe your credit card. Or worse yet, you may have to beg your parents for a loan or a gift.

10. Begin charitable giving right away.

While I have always given 10% to charity and missions organizations, I know this isn’t for everyone. If you’re not a natural giver, start small. Even $1 or $10 per month will benefit worthwhile organizations. If you’re not into structured giving, pay it forward and purchase the coffee or meal for the driver of the vehicle behind you in the drive-thru.

I strongly believe that regular, consistent giving is a key to winning with money. The act of giving teaches you that money is not an asset to be horded, stockpiled, wasted, or worshipped, but a tool to help yourself and others.

11. Strive to create a zero-based budget every month.

Remember, you will fail at this at first. Over and over and over. However, I found comfort in a Dave Ramsey quote during my initial months of struggle with my budget:

Adults devise a plan and stick to it. Children do what feels good. -Dave Ramsey

12. Accept that your budget projections will rarely be perfect.

On a related note, embrace your budget mistakes as they occur. Be willing to adjust your budget several times during the first several months.

13. Share your budget with a friend who is wise with his or her finances.

Accountability is helpful for everyone. It is part of the reason why I write this blog. A good budget is not inflexible.

14. Tell yourself every day that instant-gratification isn’t all that gratifying.

A few days ago, I read that the average person only waits 5 seconds for a web page to open before becoming irritated and moving on. Clearly, we live in a culture which embraces speed and instant results over patience.

You will need to learn to delay your desires in order to maintain a successful budget. Make a plan and stick to it.

15. Don’t worry about investing money right out of the gate.

In the personal finance blogging community, the suggestion to delay investing for retirement is utter blasphemy! However, I believe that there are better uses for your first months of pay. Make sure your budget is in order, build an emergency fund, and take time to research your investment options. When the time comes to invest, look into low-cost options through Betterment and Motif Investing. You will be glad that you waited.

16. Identify your values and be sure that your budget follows them.

If you’re not sure where to start with values-based budgeting, check out my two part series on budgeting with values in mind:

Values and Budgeting – Part One

Values and Budgeting – Part Two

17. Once you’ve identified your values, create written goals that you wish to accomplish.

Writing V-SMART Goals is the best way to accomplish your goals.

18. Be transparent with your friends and family about your budget.

It is OK to explain that you are striving to manage your spending responsibly. In fact, if you keep your budget goals a secret, it will be more difficult to stick to your budget, as co-workers will invite you out for happy hour drinks and apps every Friday. Just be up front and honest.

You can still have a social life on a budget. But be willing to say "no."
You can still have a social life on a budget. But be willing to say “no.”

19. As follow-up to number 18, be willing to say “no.”

If you want to live on a budget and win with money, you will likely hurt people’s feelings from time to time.

20. Avoid making any purchases on impulse.

If you are considering a sizeable purchase, write it down and check back again in thirty days. See my recent piece, The Thirty Day List, for a step-by-step process on delaying purchases.

Note: This piece contains affiliate links. FinanceSuperhero only recommends products designed to save readers money.


Readers, what budget tips do you have for singles?

What Are You Teaching Your Kids About Money?

Recently, in an effort to force myself to slow down a bit and actually relax, I started watching a few episodes of the hit-show The Goldbergs, which is set in 1980s Pennsylvania. Mrs. Superhero claims that I am really half-watching and half-working on my laptop, but that is a subject for another article.

In an episode I watched last week, Murray, the family patriarch, is sitting in his recliner, sans pants, and his wife, Beverly, is in the kitchen, when his oldest son, Barry, approaches and asks for money. Here is their conversation:

Barry:  What if I told you one day there’d be a piece of technology that can guarantee I play professional basketball? Well, that day has come. The Reebok Pump. A cushion of air around the foot that literally allows you to defy the laws of gravity. And the amazing part? It’s only $175. Don’t say no.

Murray: No.

Beverly: Honey, I’ve got a pair of Reeboks upstairs you can have.

Barry: Oh, really? Can I please borrow your beige mom sneakers? Listen! My dream is to be a basketball superstar, not a nurse!

Murray: Well, here’s the thing about your dream. It’s stupid.

Barry: You have the money. Just get your pants and give it to me.

Beverly: Barry, your father’s pants are not a bank.

Murray: Money comes from hard work, you moron. You really want those shoes, come down to the store and work for ‘em.

Barry: Fine! But when I get to the NBA, and you want my autograph, I’m signing it, “Worst wishes, Barry.”

As I watched this episode, all I could do was laugh–a lot. An hour later, as I lay in bed, my stupid brain could not stop thinking about this conversation and the events which followed.

Barry Goldberg begins working with his father at the local furniture store. Ironically, he is a natural salesman and does very well, but his success comes after some early struggles. When his first payday arrives, Barry is astonished to receive a paycheck for $33.

Barry: Is this some sick joke? Oh. You’re just busting balls, huh? This is a joke paycheck.

Murray: I wish I was busting balls. Welcome to the real world.

Barry: I know I made more than this. Why is it so low?

Murray: Taxes! You got federal, state, social security, F.I.C.A..

Barry: What are you talking about? Those aren’t real things.

Murray: Did you ever go to school? Taxes? Those are totally real things.

Goldbergs

 

 

 

 

 

 

 

 

 


Tough Love and Tough Lessons

In these two brief scenes, Barry Goldberg’s words and behavior provide a glimpse into the American entitlement culture and the interconnected role of money.

-Barry is easily swayed by the power of advertising.

-Barry expects money to be given to him rather than earned.

-When Barry begins to work, he overvalues his contributions and expects unrealistic earnings.

-Barry is oblivious to the basics of federal and state taxes.

Fortunately, Murray Goldberg, while unconventional, is a good dad at heart and teaches Barry key lessons in a very short time.

-Money is easy to spend but difficult to earn.

-Money comes from hard work, moron!

-Taxes are a painful reality.

Early Money Lessons

Fortunately, Superhero Dad wasn’t too much like Murray Goldberg when I was growing up. He wore pants, most of the time, and didn’t call me and my siblings morons.

Like Murray, Dad worked hard to provide for our family, and he made sure that we did not go without anything which was truly a need.

On the other hand, we experienced our fair share of tough love, and I am grateful for that today.

Like Barry Goldberg, I used to ask Superhero Dad for money for many unnecessary things, like going to the movies with friends or baseball cards. I quickly learned a simple lesson:

Work and get paid; don’t work – don’t get paid.

When Dad opened up his wallet, I could be sure that I would soon be raking leaves, mowing the lawn, or climbing up on the roof to clean out the rain gutters in order to earn the money bestowed upon me.

The Finance Superhero Plan for Raising Financially-Literate Children

Mrs. Superhero and I do not yet have children of our own. However, between the two of us, we know a thing or two about teaching children as a result of our professional backgrounds. When we do have our own children, we will carefully implement the following techniques and teach  financial lessons:

We will let our children see how we manage our finances. We will be appropriately transparent, within obvious reason, so our kids learn the value of money.

We will implement commission rather than allowance. Our children will learn that those who work get paid and those who do not work do not get paid.

While the importance of work and the natural compensation which follows will be emphasized, we will teach our kids that not all work is for the purposes of getting paid. Sometimes, we will roll up sleeves and work to serve other people and support the community. Sometimes, we will work to care for our own household or personal belongings. Pay is not to be expected for all work.

We will guide our children to give, save, spend, and invest. Dave Ramsey touts the “give, save, and spend” mantra, in that order, and I don’t have a problem with it. We want our children to experience first-hand that that money is not meant for hoarding; rather, it is a tool to take care of both oneself and others, too.

As a result, some of our children’s savings will be in a liquid money market or savings account. This won’t be about earning interest, which will be low, but it will show our children the value of having money remaining and to teach them not to spend all they earn. When they want to spend all of their money and deplete their savings, we will let them from time to time (this will be SO painful for me!) and allow them to learn from their mistakes at an early age.

In addition to learning about spending and proper decision making, we will teach our children about the power of investing when their limited earnings permit it. We believe that children can learn the power of compound interest at an early age. If their earnings won’t support investing, we will involve them in the process of funding their ESA and 529 accounts when they are mature enough to understand.

Likewise, we will emphasize the importance of investing to instill a long-term mindset. We will start them early on this so they think investing is “just normal” and “what everyone else does.” They will be astonished when they look up as adults and see that their once small investment has grown due to time and compound interest.

Leaving a Legacy

As Mrs. Superhero and I get closer and closer to starting a family of our own, I have thought increasingly about the legacy we will leave behind. I have thought about all I have learned from my elders, including Superhero Grandpa (and Grandma) and Superhero Dad (and Mom). I know I will be like most parents and rarely have all the right answers.

In the ancient Book of Proverbs it is written, “A good man leaves an inheritance to his children’s children.” Through education and experience, we hope to leave this kind of inheritance, built upon a foundation of love, wisdom, and stewardship.




Readers with children, what have you taught your children about money? Do you provide an allowance? At what age do you believe children should begin learning about money?

Readers without children, how did your parents teach you about money? What lessons remain vivid in your memories today?

The Staycation: A Cure For Burnout

One month ago, Mrs. Superhero and I were about to embark on a vacation to Nashville, Tennessee. We had our hotel room booked, dinner reservations were made, and our itinerary was packed, with plans to visit the Parthenon, the Grand Ole Opry, and check out the local music scene. When we received word that one of our preferred dog breeders had puppies available, we scrapped the vacation plans in order to stay home with the newest addition to our family.

Our Easter surprise
Our Easter surprise

Give us some credit! At least we tried to take a vacation.

According to Kelly Phillips Erb at Forbes, most Americans utilize only half of their allocated annual vacation time, while seventeen percent (!) use no vacation time at all. This shouldn’t be too surprising. Erb cites a 2013 American Express press release figure stating that the average American vacation costs $1,145 per person, or an astounding $4,580 for a family of four. What was once a summer tradition for nearly all families in previous generations has become an impossibility for many families today.

While our planned vacation would not have cost anywhere near these figures, it would have represented a significant cost. At the top of the list of projected costs, of course, were hotel fees, fuel, and meals.

And while we would have been fortunate to avoid the high costs of flight tickets, Disney World passes, and the uncertainty and stress of international travel, our vacation would have been a busy one. Truth be told, I was exhausted prior to the vacation and was already looking forward to my vacation from the vacation.

Why Americans Overspend on Vacation

Based upon the aforementioned average vacation costs, there is little doubt that the average family is spending obscene percentages -around 10 percent- of their annual income on vacations.  While the reasons for this are varied and plentiful, the opportunity cost is devastating. And the average family does not even realize it.

Imagine spending $2,000 per year on vacation and saving the remaining $2,580 each year for 10 years. I think I could live with that scenario. Factor in compound interest, if you were to invest that money each year. I hope I have your attention.

Excuses, Excuses, Excuses . . .

Over the years, I have most often heard the following rationales excuses for overspending on extravagant vacations:

But my kids deserve a vacation!

I will not debate the fact that your kids likely want to go on a vacation. Whether they deserve one is not my place to determine. However, I can determine this with certainty: Your kids want quality experiences and your undivided attention, neither of which cost $4,580.

My greatest memories of childhood vacations involved inexpensive vacations. My family always had fun staying in average hotels, eating in local diners and mom-and-pop restaurants, and partaking in reasonably-priced attractions.

Years later, your kids won’t remember the vacation more fondly because of the money you spent. They’ll remember the time you spent together!

Everyone else has been to ________.

The Keeping Up With The Joneses mentality is nearly as powerful as the kids-related guilt trip, by my observations. The problem? Keeping up with the Joneses is one of the most anti-Superhero moves you can make. The Jones financed their $4,580 vacation on their American Express card at 25.99% interest. It is OK, they insist, because the monthly payment is “manageable.” The Joneses probably lease a vehicle or two, as well. Don’t even think about following the Joneses. They’re likely broke.

The Solution

When planning a vacation, Mrs. Superhero and I have very different ideals. She would be happy to be parked on the beach for 16 hours per day, while to me, this sounds a lot like a scene from Dante’s Inferno. I am good for a couple hours at the beach, but afterwards, I suffer from insatiable wanderlust. I long to see and do everything a locale has to offer. Yes, the Superhero Principle of Maximization has even followed me into the realms of vacationing. I am sure Mrs. Superhero and I are not the only couple to experience this kind of disagreement.

Despite our differences, Mrs. Superhero and I always have fun on vacation. We both understand that everyone needs to recharge from time to time. Most employers today provide vacation time in order to ensure that their employees avoid burnout and remain productive in their roles. However, the type of vacation we have been reviewing thus far rarely offers the opportunity to recharge.

Ever feel like you need a vacation from your vacation when you return home? Bingo.

The Staycation

Based upon my most recent experience, I believe the staycation is the answer to all of our problems. Compared to a vacation, a staycation allows for several built-in savings:

  • No hotel fees ($100-300 per night, on average)
  • No rental car ($50 per day, on average)
  • No obligation to eat 2-3 restaurant meals per day ($10 per person per meal, on average)

With the realized savings (likely exceeding $1,000) associated with a staycation, you are presented with several opportunities:

  • Go out for one nice meal at a restaurant you would not normally visit
  • Complete a necessary home improvement project (Boost your home’s value by choosing an improvement with a high return on investment and increase your equity at the same time)
  • Get started on a side hustle
  • Visit friends and family
  • Actually rest!

My Staycation

The time away from work turned out to be the perfect cure for the burnout I had been experiencing. During our staycation, Mrs. Superhero and I reaped the benefits of several of the suggestions listed above. In addition to bringing home our new puppy, Coda, we were able to spend time with our newborn niece, experience quality time with my in-laws, host friends for dinner, and complete many items on our spring cleaning list. I took a nap every afternoon, read several quality books, and took Mrs. Superhero to a couple restaurants we had been waiting to visit.

Coda, our adorable teddy bear
Coda, our teddy bear

Perhaps most importantly, I launched FinanceSuperhero after several months of contemplation and poking and prodding from Mrs. Superhero. I had an incredible amount of fun and began work on a project that will hopefully help thousands (eventually) of people Restore Order to their World of Finance.

Further Benefits of the Staycation

Obviously, the opportunity for savings associated with a staycation are sizeable. Depending upon your circumstances, you might invest your realized savings, build your emergency fund, or use them to reduce or eliminate debt. You can be responsible while having fun!

Staycation Pitfalls and How to Avoid Them

When planning a staycation, follow the Know Thyself Superhero Principle. You have inherent weaknesses which threaten to derail your staycation, and it is up to you to know yourself well enough to neutralize the threats posed by your weaknesses.

If you have a tendency to work too much, even when you are on vacation, take concrete action to prevent this. Unplug your devices, set an auto response to your e-mail, and let clients and associates know in advance that you will be unavailable for the duration of your staycation. Provide an alternate contact who can handle matters and contact you in case of emergency or crisis.

If you have are in the habit of wasting time off completely by mindlessly watching TV or sleeping in until noon, you need to anticipate these problems and build in structure to your staycation. While you need to rest, this should be planned to some extent. Develop a loose, non-restrictive itinerary with your spouse/family so everyone is in the same page. Base the itinerary on designated priorities for your staycation.

If you are likely to spend too much money, be certain that you create a line item for your staycation in your monthly budget. Most Superheros will create a separate budget. Yes, make a separate budget for your staycation, even if you do not plan to spend sizeable sums of money. Without hotel and travel costs, you should be able to afford a few luxuries, such as massages, nice dinners, or shopping trips; your budget will help you understand what opportunities are within your reach.

Plan Your Next Staycation

If the concept of a traditional vacation stresses you out, straps your cash, and leaves you feeling like you need a vacation from your vacation, a staycation may be right for you. A staycation allows for time to rest, revisit and reevaluate your goals, focus on helping others, and declutter your financial life, among the aforementioned possibilities. What are you waiting for?


Have you planned a recent staycation? How did you maximize the realized savings? What are your favorite staycation activities? Share your tips in the comments section.

Decluttering Your Finances – Five Steps to Simplify Your Money Today

Earlier this week, I published a post about the importance of written financial goals.  Several readers and commenters agreed that the creation of written goals has been one of the largest contributors toward their financial progress. In reading and responding to their comments, it is clear to me that these commenters have detailed plans and have been able to follow them.

I believe their successful planning and subsequent written goals ultimately stem from possessing an accurate understanding of their financial outlook at all times. Furthermore, written goals often provide the added motivation and accountability needed for that final, persevering push toward achievement.

Organization is Vital

Yesterday, I was having one of those mornings. I found myself in a mad scramble to locate a pair of socks which would fit in with the color family of my pants, shirt, and tie. After a few minutes of searching through an unsorted basket of socks, I located a pair. Though this simple search only stole a few minutes of my time, it got me thinking about the perils of my own disorganization.

chaotic desk, covered with all kinds of paper, files and envelops
If your desk looks like this, read on!

When you do not maintain organization, in all areas but specifically your finances, uncertainty lingers in the air like the smell of rotting garbage; it may not bother you much at first, but if it is ignored, the problems will quickly worsen.

Five Steps You Can Take Today

Much like unsorted laundry, your money is helpless without you. If your finances require some decluttering, whether minor or major, now is the time to take control and do what is necessary to be the Superhero that your finances desperately need. You can start by implementing these five easy steps toward decluttering your finances:

1. Automate Your Finances As Much Possible

If you are like me, you value your time just as much as you value money. By automating common expenses, such as mortgage or rent payments, utility bills (such as water, trash, electricity, gas, television/internet, and mobile phone), life insurance and disability monthly premiums, car payments, student loan payments, retirement account contributions, and even savings, you can save yourself significant time, energy, and money. The days of writing countless checks, licking envelopes, and purchasing stamps will be drastically reduced.

Most major banks will allow you to set-up auto-pay on these bills with very little effort involved. You can even negotiate with most providers to establish a chosen day of the month for your auto-draft to occur, which will allow you to spread out your payments to align with your pay periods. Lastly, some institutions, particularly student loan servicers, may provide a small APR reduction when you sign-up for auto draft and paperless billing.

Alternatively, you could choose to place these expenses on a credit card each month, leaving yourself with only one condensed bill to be paid. This could be advantageous if you receive rewards.

2. Sign-up for Paperless Billing

When you became an adult, checking the mail each day surely lost its allure. Good news: you can restore fun to the act of walking to the mailbox each day by signing-up for paperless billing with all providers who offer this service. Doing so will literally and figuratively decrease the clutter in your mailbox and your finances. Furthermore, with electronic copies housed by your various institutions on secure servers, your information will be protected, you will be less likely to experience identity theft, and you will not need to fear losing an important document or missing a bill in the mail.

3. Sign-up for an Online Budgeting Tool

When it comes to monthly budgeting, I firmly believe everyone should experience working through the fine details with a legal pad or spreadsheet and a calculator. In the interest of decluttering and saving time, however, the average consumer has plenty of online budgeting tools from which to choose.

After utilizing Gazelle Budget for many years, I am currently transitioning over to a paid subscription version of EveryDollar, a product created by the team at Ramsey Solutions. EveryDollar is a very effective way to create detailed monthly budgets, track spending by linking with all of your financial accounts, and monitor progress on your goals. I particularly enjoy the features which allow users to create sinking funds and budget for irregular (bi-monthly, quarterly, semi-annual, or annual) expenses.

I also utilize Personal Capital to gather a daily snapshot of all of my accounts and to gauge my current net worth. It is the most simple and effective way to monitor all of your accounts, and furthermore, it will be provide a variety of analyses. The best part? It is free!

4. Use Cash Allowances to Pay for Basic Spending

While EveryDollar can certainly ease the burden of tracking a multitude of debit and credit transactions within your monthly budget, I recommend providing cash allowances within basic categories such as groceries, restaurants, gas, and discretionary spending (or what Mrs. Superhero likes to call her Stitchfix Fund). You can include these cash allowances in your budget with one simple transaction on the first day of the budget month and be finished with the category.

If you are like me and Mrs. Superhero, these categories will represent a large percentage of your monthly expenses. By implementing cash allowances, your will provide an additional layer of accountability to stay on budget (you cannot spend more money when the cash is gone) while simultaneously freeing up additional time each week, which you could allocate toward a side hustle or building your own blog.

5. Eliminate Your Debts as Soon as Possible

For many families, debt can represent a significant percentage of their monthly budgeted income. When you shed the shackles of debt, you free up additional streams of income which may be re-allocated as automated contributions toward liquid savings, retirement accounts, non-retirement investments, and savings toward the purchase of rental properties.

Additionally, without multiple debt obligations, the sheer number of your monthly transactions will be reduced. Fewer transactions will lead to even greater simplification. You will also experience the peace that comes with no fear of missing a payment or incurring late fees and interest charges. Lastly, you will not experience guilt each month as financial institutions earn interest on your hard-earned income. Trade monthly debt payments for the joy of watching interest work in your favor as soon as possible!

Final Recommendations

If you are willing to dedicate a few hours this weekend, you can implement the above steps to greatly declutter your finances. The sacrifices you make in doing so will pay great dividends, pun partially-intended, for your financial future. After doing so, you will be free to turn your attention from fretting and worrying about your finances and onto creating a game plan and written goals for your future.


Readers, what steps have you taken to simplify your finances? What recommendations would you suggest, in addition to the above suggestions?