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How to Save $1,000 on Your Monthly Bills

With some families seeing their bills grow faster than their income, finding ways to build the difference between the two has become a priority for them. I’ve written quite a few times about how we’ve worked to optimize our budget and how we trimmed expenses to help build our savings and invest more.

The $1,000 Challenge

I just finished reading another family’s effort on drastically reducing their bills – The $1,000 Challenge. It’s a great read from Brian J. O’Connor who is a columnist at The Detroit News. A couple of years ago he and his family wanted to put themselves on better financial footing. He created a challenge where he made a goal of reducing his family’s expenses by a grand.  It wasn’t easy at times, but he did succeed.

I loved following along as Brian honestly appraised his progress (or lack of it) week by week, looking for ways to save without sacrificing quality of life. I just wanted to highlight a few of my favorite points from the book.

  • Don’t be intimidated. Brian told me that one lesson that he hoped that people would take away from his book is how anybody can do this. Not all families can cut their expenses $1,000, but we all work on our finances one bite at a time. Have a goal and try to dig as deep as you can. So what if you don’t meet it? At least you’ve saved some money rather than not even bothering to try.
  • Weigh the time versus results when deciding where to start. Going for the low hanging fruit that can give you some big ways is incredibly motivating. No one wants to feel that their efforts are for nothing so take a minute to look at your monthly expenses and see where you can get a big win upfront. O’Connor knew he could probably get a big win with refinancing his mortgage, but the process would take some time, so his first goal was to slash their transportation expenses.
  • Review your cell phone to see if you can find a better fit for how you use it. Do you still have that expensive plan that you got years ago? It may save you a ton of money to make sure that it’s still a good deal.
  • Review your recurring expenses. Even if you did sign up for something, it doesn’t mean you have to keep it. Perhaps that gym membership should be cancelled since you haven’t used in the last couple of years or you discovered that you no longer need a golf magazine subscription because you’re now into tennis.
  • Get rid of junk. Brian also managed to simplify and reduce his expenses by getting rid of the stuff that was in their storage unit.

Not every couple has the same income or expenses, but I found Brian’s way to tackling their finances incredibly motivating. His humor throughout the book made it easy to follow. Sometimes finances can be so dry and boring and that can make it even harder to optimize expenses.  brian j occonor funny money

Working as a Couple to Save $1,000

After finishing the book, I was curious to find out how on board Brian’s wife was with the $1,000 challenge. After all as a couple, both spouses have a say and the reality is sometimes you don’t always see eye to eye. I had the great pleasure of chatting with Brian last week to help me get a better idea of how he and his wife tackled the challenge.

He admitted to me that his wife wasn’t sure that they could cut $1,000 from their expenses. She also had some family bills that she didn’t want to completely cut out but she was willing to see what he could find and was supportive of his efforts. Since he handled the bulk of the day to day finances, it made it easier to let him handle the phone calls and number crunching (while still keeping her in the loop).

We also discussed how to approach something like this when you and your spouse may have differing views. He suggested making it easy and risk free for the reluctant partner. Start with an area where you both agree needs to be trimmed. Then nibble around some of the other bills. You may not get to cut back as much as you had hoped, but at least you got some wins with your spouse’s support. That approach may pave the way for larger projects in the future.

Since he finished the challenge, I asked him if there were any habits or expenses he went back to or if they were able to keep the cuts over the years. He said that most of the changes stuck, mainly due to the fact that they slashed their recurring expenses. So just as setting up automatic deposits can help you save and invest, so can optimizing your regular monthly bills. You spend some time upfront, but the results last for awhile.

He also conceded that their grocery bills fluctuated based on how attentive they were.

Thoughts on Saving $1,000 as Couple

Have the two of you ever done a big money challenge like Brian? How successful were you?

How Much Money Do You Need to Retire?

I usually reserve my book and financial reviews for my other site, but I just finished reading Todd Tresidder’s book aptly named How Much Money Do I Need to Retire and I feel like it deserves a special mention as there are many Couple Money readers asking that question.

I’ve written how I had gotten a ballpark figure before, using financial calculators and basing assumptions on averages and historical data. I still believe it’s better to have some goal for how much to save than to just go without a plan. However if you can get smarter with your target number, than go for it.

How Much Do You Need with Conventional Retirement Planning?

What makes Todd’s book a resource is how he doesn’t give a one size fits all solution. He takes you step by step on how you can build a nest egg that fits your particular needs and situation. To give you an idea of wealth of information he shares, I’ll highlight just a few questions tackled in the first section where he explains how conventional retirement planning works.retirement book review

  • How much income do I need for retirement? While the traditional rule of the says that you should plan for around 75% of your current income, Todd shows that it’s more practical to look at your expenses and make a reasonable ballpark figure as to what you will need. He references studies where most categories see a significant decrease with the exception of health insurance.
  • How does inflation impact the amount of money I need for retirement? Todd gives some compelling reasons why you shouldn’t just assume the standard 3% rate and instead stress test your savings requirement.
  • How does life expectancy impact the amount of money I need to retire? While actuary tables are useful for insurance companies, Todd explains why they aren’t valid for you and your retirement.
  • How much will my company pension and social security pay during retirement? While those closer to retirement may want to factor in their pension and retirements, Todd goes into why you can’t treat them as secure solutions.

What I appreciate is that Todd pulls no punches with these questions and more. He shares the math and studies relevant to each question. You are encourage to run the numbers yourself and decide whether or not conventional retirement planning suits your needs.

From here, the second section covers creative retirement planning. Todd goes over how you can adjust and tweak your current lifestyle and assumptions based on scenario analysis. He gives some practical advice on how you can turn activities and hobbies that you enjoy into income streams that you can utilize when you retire. For couples approaching their retirement and are looking to shore up their finances, this section is for you.

The last section gives the cash flow model, which Todd used himself and allowed him to ‘retire’ (be financially independent) at 35. He crafted a three rule system handles inflation and life expectancy plus gives you diversified sources of income.

I can say that going through the questions he asked, I feel more prepared and knowledgeable. Instead of being focused on that ‘magic’ number, I have a doable plan that would work for us. If you two are looking for a retirement planning resource, I highly recommend Todd’s book. It is packed with information without getting too dry or long winded.

Autographed Book Giveaway!

I had the pleasure of chatting with  Mr. Tresidder last month in St. Louis and I attended one of his sessions. Not only is he extremely knowledgeable about investing, he is also a genuinely concerned about helping others get their retirement plan squared away.

He was kind enough to offer a couple pf autographed copies of his book and I’m giving them away on both my sites – one for a Couple Money and one for My Financial Reviews. It’s simple to enter; I just want you to share your biggest retirement question by November 30, 2013. I’ll pick a winner December 1, 2013.

There are several ways you can submit it:

  • Facebook: Go to Couple Money’s page and leave it as a comment.
  • Twitter: Tweet it out to me (please use  @Elle_CM so I can see it).
  • Email: Send it to elle AT

Once you do, just leave a comment below so I can record your entry in my handy dandy spreadsheet ;) As always, I want to say thank you for reading and sharing your thoughts on Couple Money.

How Much Do You Need to Retire?

How many of you are looking at optimize your retirement plans now? How are you handling your portfolio now? What are some of your biggest concerns?

Giving in Times of Disaster

As many of you have probably seen, the Philippines has been hit by Typhoon Haiyan and it has left a trail of destruction and calamity as the country is scrambling to get aid to its citizens.  My husband and I have been discussing it, simply astounded by the numbers given in the news, especially with the amount of people estimated to have died. During sad times like these we look at our monthly budget so we can set aside something to give to one or more of our favorite charities.

I know we’re not the only ones who are eager to help so I wanted to provide information for Couple Money readers looking to offer financial assistance and some tips on avoiding scams.

Avoiding Charity Scams

What really boils my blood is how many scam artists come out to take advantage of the outpouring of generosity. However there are things you and I can do to make sure that the money given gets to the intended destination.

  • Do not donate online unless it is the organization’s official site. Social media has made it easier to spread information, but it has also helped spread misinformation and bad links. Go ahead and go to the official sites (I’ve listed a few below) and donate directly from there.
  • Ask how much  of your donation goes directly to the cause. This is not a rude question – many charities are happy to share information on their organizations. You can also use Charity Navigator to find out how the organization handles their finances.
  • Get a receipt with the name of the charity on it. Please don’t give cash to a charity, if you’ve been scammed, it’ll be almost impossible to track. Have a receipt to help you during tax time as well.
  • If you do fall victim to a scam artist, contact the Federal Trade Commission. Call the agency toll-free at (877) FTC-HELP to report it. It could help protect others from getting scammed as well.

If you have any other tips, please leave them in the comment box below.

Where You Can Donate to Help During Disasters

This is not an exhaustive list, but the organizations below have a long history of helping those who have been hit by a natural disasters. Please check with their site to get updates on what they are doing with each disaster, as some organizations have a criteria to assess the situation before intervening.

  • OxFam – The organization’s main goals include fighting injustice and poverty around the world. They also respond to disasters as they happen globally.
  • Doctors Without Borders – Doctors Without Borders/Médecins Sans Frontières (MSF) is an international medical humanitarian organization created by doctors and journalists.
  • Red Cross – This is probably the most familiar to Couple Money readers. Red Cross is an international organization tries to tackle several goals, including disaster relief.
  • The International Rescue Committee – IRC seeks to help people rebuild after a devastating crisis.

I hope this information helps you and your family get your charitable donation to the right place. Please pass this information on to those who want to give, but don’t know where to go.

Photo Credit: HowardLake

Budgeting and Saving as a Young Couple

When you are a young couple, you have a lot of things going for you financially. Although you may not be making as much money as you will later in your career, you also will not have as many expenses as older couples do. You also have your whole lives ahead of you to save for the important things you will need like a home and retirement savings. To make handling your finances easier, here is a guide to budgeting and saving for a young couple.

Saving Something Is Better Than Nothing

The key to becoming financially responsible is to start saving something. Even if you are absolutely strapped for cash, you should be able to save at least a little something. A good rule of thumb is to save at least ten percent of the money you make every month. You can even set up a pre-authorized contribution to a savings account which automatically deducts a set percentage of the value of each transaction you make into a separate account.

If you don’t feel like you can save this much, then look for things you can cut out of your budget. Things like eating out, entertainment and alcohol often take a large chunk of a young couple’s budget. You should go over your budget with a fine-toothed comb until you are able to start consistently putting away at least ten percent of your earnings into savings.

Ways to Save More

When you are able to start saving money, you need to decide how to save it. The first thing you need to do is to put aside your savings until you have saved enough to cover at least three months’ worth of living expenses. When you have accomplished this feat, you will have a solid financial ground to buffer any unexpected expenses such as car repairs and unemployment.

Once you have this rainy-day fund put aside, you can start investing in other things. If you have any outstanding credit card debt, you should first pay that off. After you have all of your credit cards paid off, you should start saving for a home. You should also be putting aside the maximum amount of money into your retirement plan. This is especially important if you have a company 401k plan that provides you with matching funds for investing. Failing to take advantage of these matching funds is like setting money on fire.

When you have reached a financial position where you have started to max out your retirement savings amounts, it is time to look into alternative investments to make your retirement even more comfortable. You should look at stocks, bonds, mutual funds, real estate and any other investment opportunities that appeal to you. Diversifying your investments is the best way to make sure that you burden the least amount of financial risk.

Saving money may not seem like a lot of fun, but it is very important. The rewards are well worth the discipline required. When you have the money set aside for your own home and a retirement, you will be really glad that you became financially savvy.

Breaking Down the Walls

One of my goals for Couple Money is to highlight personal finance sites, book, and people that I think can help you with your finances. I mentioned earlier this week that I enjoyed reading Norma Yaeger’s book, Breaking Down Walls. Her memoir was a mix of the personal with her story about building a successful career in a male dominated industry and education with her advice about investing and finances. 

After enjoying the book, I asked if I could submit a few questions that I had and Mrs. Yaeger was gracious and kind enough to take time out of her busy schedule to answer them.

What motivated you to write Breaking Down the Walls?

Initially, I was interested in leaving a legacy for my family. I have two daughters, two sons, three granddaughters and two grandsons. I wanted them to know my story so that it would help them to achieve whatever they had a desire to do with their lives. I wanted them to never say “NO”, I cannot do it. Find a way to do it for yourself. Do not wait for others. My book tells the reader that the fear of failure is the worst enemy of success..

I really appreciated that you fought hard to maintain your integrity in an industry that has a reputation for putting profits over people. How did you strike that balance between taking care of your clients and making a profit?

I kept my integrity because my clients were very important to me. I worked very hard to get my clients and I wanted them to get the best advise I could give them. The longevity of my career depended on the profits of my clients. If I took care of my clients honestly and ethically, my profits will follow.

How did you educate/steer customers on making investments for the long run instead of looking for quick wins?

norma yaeger

In the early years of the career, we did not have the speedy computers. Actively trading the market was not possible. Investing in stocks meant for the long term. When programs for retirement became popular, long term investments were necessary for one’s retirement. Speculative short term trading only became the tools of the brokerage company’s traders who had access to the computers.

The computer age changed the industry. However, I still believe the investors who are interested in retirement must think long term and invest in good companies. Trading in and out will also cost an investor a great deal of money in commissions and that will also effect his profits and losses.

Rapid trading is for the professionals and not for the public. The market must be watched carefully every minute of the day. My clients were told how I felt about investments vs trading.

I’ve read that women are conservative investors. Based on your experience, how much of that is true (if any)?

It is my opinion that women are more conservative in their investments. It is much more difficult for women, who may be earning less on a job, to be able to recoup the losses that may be realized from speculative trading. Many women look to their retirement accounts as their only investments. By nature that means long term investment grade stocks and bonds. Women tend to research stocks that they know and understand. Women generally invest in dividend paying stock and interest paying bonds. These can also increase their income.

Have you seen a change in how women invest? For example, how hands on (or off) have they become with their portfolio management? Do women tend to favor a certain investment style?

I have noticed that many investors today are making their investments into mutual funds. There are many funds with different objectives and these funds are managed by professional analysts. They are making the investments with knowledge of the companies they are purchasing for the portfolios.

Many high net worth individuals will hire personal managers to manage their portfolios, but this requires a great deal of money for investment. The Mutual Funds offer diversification for your investment no matter how small it may be.

Finally, as a mother, how did you help your children with learning about investing and finances?

I had chores for my children and they received an allowance for these chores. I then set up a budget with them on how to spend the money. Sometimes they had money left over and we then spoke about how to save their extra money. The savings account was the first investment for their extra money. As they got older, the savings account got larger and it was possible to talk about other ways to spend and invest their savings. Stocks and investments was table talk in my home.

My children learned early about investments, savings and speculation. They all have retirement accounts today and invest long term. I hope they are teaching their children about how to handle their money and investments. All my children and grandchildren have read my book.

Thoughts on Breaking Down the Walls

If you have the opportunity, I think you should pick up a copy of Yaeger’s memoir. There are plenty of stories not only about how investing in the stock market has changed, but also has some incredible gems on being smarter with your investments.