You’re Guide to Discarding Important Documents

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Most people have moments when they come across a paycheck stub, bank statement, etc., and think to themselves, “Do I really need to keep this?” The answers vary based on the type of document. However, many people don’t know exactly when to throw them away (or shred). To help ease the confusion, I’ve got your answers below on discarding important documents 101.

  • Receipts should be kept for three years for any items that you need to itemize for your tax returns. Keep them with your tax documents.
  • Paycheck stubs have a lifespan of one year. Hang onto them until the end of the year to compare them with your W-2 and social security statements. Then, you can get rid of them.
  • Medical bills vary depending on your insurance. Receipts for expenses can be kept for one year unless your insurance company needs proof or verification of visits and claims. Your insurance may request bills for hospital visits, doctor’s appointments, etc., to be shown at certain times. Think about the type of care you received or the type of expense to determine whether or not you should keep them.Avoid discarding these expenses for up to three years. If medical expenses total more than 7.5% of your adjusted gross income, you can deduct them on your taxes. Keep these for three years with your tax records.
  • Bank and credit card statements need to be filed away for up to three years. The reason for holding onto bank statements is in case you are audited by the IRS. However, the three-year rule is a little different for your credit cards. If you have confirmed your charges and had proof of payment, then you can shred them. If you are using your credit card statements for tax deductions, hang on to them. Getting too much paper? Switch to online documents. Just remember to write a note, so you’ll know they are online when you go to retrieve them.
  • Utility bills can be scrapped after one year. The exception is if you are claiming a home office tax deduction. Then, our good three-year rule comes into play.
  • If you have records of loans that have been paid off, don’t get rid of them until it has been seven years. If you are still paying off a loan, store all records and statements together until you have paid it off and it has been seven years.
  • Tax returns also go by the three-year recommendation. The returns can be trashed after three years from the date you filed the original return. Hold onto the returns for seven years if you file a claim.
  • Investment and real estate records need to be handy for at least three years for audit reasons. In addition, you will be able to see how much taxes you owe when you sell the stocks or property.Monthly statements can be tossed when you have received your annual summaries.
  • Any contracts, insurance documents, stock certificates, or property records that are active need to be held in a safe place. Only discard once the contracts are completed, and policies expired.
  • There is never a lifespan on documents, such as marriage licenses, birth and death certificates, wills, adoption papers, and paid mortgages. These documents should always be kept and passed down between the generations.

The rule of thumb is to keep most important documents for at least three years. There are exceptions to the rule. But if you are in doubt about something, it is always good to hang onto it no matter how long. It is better to be safe than sorry.

xoxo,

Megan

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When is the Best Time to Buy…?

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Once again the holidays have come and gone and it’s almost a brand new year. Spending money on new purchases is probably the last thing on your mind. However, never fear, because you can plan your wish list around the months of the year. After all, a great bargain never goes out of style. Each month is known for its special deals on different items. According to experts, these deals are based on sale cycles, but some exceptions include fluctuations in prices and a retailer’s inventory. In addition, some products have seasonal specials, as well as being on sale at different times of the year.

January:

  • Holiday Decorations
  • Calendars and Planners
  • Toys
  • Exercise Equipment
  • Televisions
  • Bicycles
  • Houses
  • Small Appliances
  • Air-conditioning

February: President’s Day is a great time for retailers to have sales.

  • Furniture
  • Electronics
  • Cameras
  • Televisions (especially big-screens)

March:

  • Winter Clothing
  • Luggage
  • Camping Equipment
  • Toys
  • Outdoor Furniture

April:

  • Snow Blowers and Shovels
  • Computers
  • Electronics
  • Car Care Supplies
  • Home Improvement Supplies
  • Vacuums
  • Cookware
  • Auto Parts

May:

  • Easter Decorations
  • Grilling Tools
  • Mattresses
  • Pet Supplies
  • Refrigerators
  • Cookware
  • Vacuums
  • Gym Memberships
  • Party Supplies

June:

  • Gym Memberships
  • Tools
  • Dishes

July:

  • Jeans
  • Winter Coats
  • Furniture
  • Party Supplies
  • Grilling Tools

August:

  • School and Office Supplies
  • College Textbooks
  • Kitchen Accessories
  • Pool Supplies
  • Pillows
  • Linens
  • Socks
  • Underwear
  • Outdoor Toys
  • Outdoor Furniture

September:

  • Computers
  • Swimsuits
  • Pool Toys
  • Summer Clothing and Shoes
  • Large Appliances
  • Cars
  • Trees, Shrubs and Bulbs
  • iPhones
  • Lawn Mowers

October:

  • Air-conditioning
  • Lawn Mowers
  • Patio Furniture
  • Large Appliances
  • Tires
  • Jeans
  • Grills

November: Don’t forget about Black Friday!

  • Flooring and Carpeting
  • Grills
  • Halloween Decorations
  • Cookware
  • Electronics
  • Tools

December:

  • Cars
  • Golf Clubs
  • Gift Cards
  • Computers
  • Cell Phones
  • Flooring and Carpeting
  • Electronics
  • Winter Clothes

Before any shopping trip, it helps to do your research, especially when it comes to making larger purchases, such as digital cameras or cars. Websites, including consumerreports.org and amazon.com are great places to start. On these sites, you can read customer reviews and learn more about the product. There is nothing wrong with shopping around, whether at stores or online. Shopping around allows you to see where you can get the same product for the best price.

Along with doing your research, it’s important to plan things out. Buy a calendar or make a list of when to buy different things. This is helpful particularly for larger shopping trips. A calendar and list are great for keeping coupons in order, too. Coupons are available in the Sunday newspaper, online and through phone apps. Another option is looking at coupons.com for deals. If you are shopping online, search for the store’s name and coupon codes before making a purchase. If you are a frequent shopper at a certain shop, ask about their loyalty rewards program. Most likely they will have one and it will be beneficial to join. Many of these programs give their members special deals and coupons to use. In addition, some programs give a percent back or discount on your purchases.

Try to schedule your shopping trips around holiday and seasonal specials. Holidays, such as Presidents’ Day, Black Friday, and Memorial Day, are known for their big sales and special deals. When it comes to sales, no matter if it is a special time of the year or not, it’s helpful to read the sales advertisements and flyers carefully. The small print could contain information that would limit or prevent a deal. Lastly, the days of the week also play a factor in when products are discounted.

Sunday:

  • Groceries
  • Major Appliances

Monday:

  • Cars
  • Electronics

Tuesday:

  • Movies
  • Airline Tickets

Wednesday:

  • Groceries
  • Jewelry

Thursday:

  • Clothes
  • Handbags

Friday:

  • Gas
  • Accessories

Saturday:

  • Department Store Items
  • Jackets, Coats and Outerwear

Shopping can be fun and hectic, especially when it comes to larger shopping trips or purchasing bigger products. It is important to remember and use some of the tried and true shopping tips. These tips can help take some of the stress out of the adventure. After all, shopping is supposed to be retail therapy, right?

xoxo,

Megan

A No-Spend Month? Budget, Please!

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It happens to most of us – overspending one month and not having enough money for the next. There are many ways to alter your budget to fix this problem. One of those solutions is having a no-spend month. That’s right, you don’t spend money on anything, but the necessities. You might be thinking, “How can I do that?” Continue reading to find out.

  • First, keep it simple. Try giving up only one luxury for the month. This tip is especially important for starting out. For example, try avoiding shopping for clothes, shoes, etc. for a whole month. This can be a drastic change, and it is best to start with what you are most comfortable with in terms of eliminating expenses. If you feel like giving up multiple expenses for the month, start with decreasing one at a time. Maybe it is the coffee you get on the way to work each morning, or maybe it is cooking dinner at home for a whole week, instead of eating out. Then, build up the amount of purchases you eliminate, until you aren’t spending money on unnecessary expenses by the end of the month. Lastly, you can also alter the time frame for how long you are doing this undertaking. Give it a go for a week. If that works, add on another week and so on. The main idea about the no-spend month is to truly keep it simple. Do what works for you and the plan won’t fail.
  • One option to help motivate you to stick with the no-spend month is to set a goal or give yourself a reason to save up for something. You might be wanting to add an X amount of money to your savings account for the future, or you might want to contribute a certain amount to your favorite cause or organization. This challenge can get tough. It is helpful to have a big picture in mind as to why you are doing this task.
  • Can it be a complete no-spend month? Yes and no. You need to still pay the bills and will have to do some planning ahead of time for the other expenses, such as groceries, gas, toiletries, etc. Think about this goal in terms of not spending money on things that can be considered “luxury” items. Do you really need a new pair of shoes this month? Do you need to see the latest movie in the theaters or can you wait until it is available to rent? There is no exact way to have a complete no-spend month because things happen and expenses come up. Just don’t go overboard on buying items that aren’t needed at that time or could wait another month or so for purchasing. For the needed expenses, try finding deals before spending the money.
  • Use what you have at home before going shopping. This is huge for groceries and toiletries. Remember that pantry full of products or extra shampoo you bought some time ago? Use those items first before purchasing more. Get creative and cook some fun meals for you and your family. You never know what will taste good together until you try it. As for the unused toiletries just sitting there? Think about the money you spent on purchasing those items. Not using the product is really wasted money. Another option is utilizing the items to make other items. For example, low on household cleaning products? Make a homemade version. Most DIY cleaners take ingredients such as vinegar, baking soda, lemon juice, and dish soap. Recipes can be found through a quick online search.
  • Stay at home, instead of going out. Date nights and family nights don’t need to be nights on the town. Try spending a day or night at home, watching your favorite movie, reading a classic book, cooking a meal together, playing a game outside, or doing absolutely nothing, but relaxing. There is no shame in spending a day or night at home. Plus, it puts more money in your pocket. If you feel the need to get out of the house, spend your time doing free things in your community, such as taking a walk in a park or volunteering.

A no-spend month can be tough. Create a plan and stick with it. Know exactly where you need to spend money and where you can save. At the end of the month, you might be surprised by how much money you saved.

xoxo,

Megan

How the Cash Envelope Method Can Help Your Budget

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Every so often, I add a new trick to my budgeting system. Sometimes this new addition helps, and sometimes it doesn’t. Recently, I tried the cash envelope method, also known as the envelope budgeting system, and this was definitely a positive move. The idea is that you pay everything in cash and don’t use a credit or debit card. Instead, you withdraw a certain amount of cash from your bank account and divide it into the payments needed for different expenses. Then, place each amount of cash into an envelope, label it with the name of the expense, and don’t touch it until paid. Sounds simple, right? Well, after using this system for about a month, I discovered there were some advantages and disadvantages. Continue reading to see what worked for me (and what didn’t).

  • It works, but you need lots and lots of discipline. With the cash envelope method, preparation and organization are key. At the beginning of each month, as you are preparing your budget, think about what expenses are automatic withdrawals or can be paid with cash or check. Then, schedule in the bills that will be automatically taken out of your account. After calculating your new bank account total, determine how much money will be needed for the rest of the month’s expenses. For me, all of my bills are automatic withdrawals, so I used this method for my extra expenses, such as groceries, toiletries, etc. Lastly, be prepared to make multiple trips to the bank or ATM. For me, I withdraw money in larger amounts and then set aside individual amounts for the different expenses. To calculate that bigger amount, I added in how much I would spend on the individual expenses. Getting started can be confusing at first, but it is worth it.
  • One downfall for me was not recounting my extra cash often. Early on, I allotted different amounts for upcoming expenses. However, if I didn’t spend all of that certain amount, I had change left over (mostly one dollar bills). But, I discovered I was able to use this loose cash on expenses that popped up during the month (it acted as an emergency fund). Lastly, when I didn’t count my cash often, I relied on my debit card for some purchases. One of the ways to fix this mistake is by always knowing the amount of cash you have on hand.
  • It provides you with a sense of security. I went ahead and set aside money for upcoming, planned expenses towards the end of the month. When the expense was finally needed, I was at ease knowing I already had the money for it and didn’t have to worry.
  • Adjust your system to fit your needs. The cash envelope method is very flexible and can be individualized for any budget. For me, it worked best continuing the automatic withdrawals and using this system for the remainder of my monthly expenses. For you, it might work better to use the method for everything, including your bills. Find what works for you. This budgeting method should help your budget, not harm it.
  • Stick with it. This method is unique and will take time to work. Try using this system for only a few weeks and then you can lengthen the time as you become familiar and comfortable with it.

The cash envelope method is something I will continue to use in my budget system. After time, I will be perfecting what works and how I can make it better. You can do the same. Give this method a try, at least once, because you never know how much more money you’ll have left over after all expenses are paid.

xoxo,

Megan

Budget Bzzz: Sweet Summertime Savings

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As May is about to come to a close, many people start thinking about summertime. However, for some people, summertime is closely associated with the dollar sign and all the expenses the season involves. There are vacations, camps, air conditioning, and more that makes summer one of the more expensive seasons. According to the managing vice president of Capital One, Shane Holdaway, March is the most expensive month of the year. (Yes, I realize it is May and we are talking about March – but stay with me here.) In an article on Oprah.com, Holdaway states this is because March is an in-between month, between seasons, where people are getting cabin fever and thinking about their summer plans. And with the summer plans, people are spending money. So, now back to May, if you were one of these people, how do you recoup some of that money to put more back into your wallet this summer? Continue reading below to find out.

  • Assess the damage. It can be hard to admit you went on a spending spree and see how much you spent. However, it is necessary. Think about the expenses you have already made or are going to make during the summer and see where you can pare down. Maybe you purchased a suite at the beach and you really don’t need it. See if a friend or family member might be willing to pay you and use the suite for their vacation. Another option is to try to find another family that will go on a beach trip with you and would be willing to split the costs.
  • Get back on track with your budget. Unfortunately, there are just some expenses you won’t be able to recover. Factor them into your budget and rebuild from there. Sometimes it is best to start from scratch with your budgeting. First, write down all of your fixed expenses, such as car payments, utilities, insurance, etc., and then see how much of your income is left over. Stick to your new budget until you have regained what was lost.
  • Create a plan for paying off your debt and big expenses. Let’s face it – a vacation can be expensive. If you under-budgeted and over-spent, create a well-organized repayment plan. Think about the last trip, refigure your budget and see exactly how much money you have to spend. Paying off your debt or big expenses should become a fixed expense. Go on a spending diet and don’t spend money on anything unnecessary until that purchase is paid off.
  • Always, always, always track your spending. Whether you made the purchase months in advance or that day, write it down in whatever method you prefer. This will help prevent a downfall if you accidently forget an expense that was made in March, but the money wasn’t taken out until May.
  • Set a deadline to get back on track. Summer doesn’t have to be a time to lose money. It can be a time to gain it. For example, create a deadline and commit to it for reorganizing your spending and paying off summer expenses. This can be at the beginning, middle, or end of summer. Whatever works for you.
  • See what went wrong. To be honest, something went wrong somewhere in your budgeting method for some expenses to slip through. Determine how that happened. Maybe it was an impulse expense. There is nothing wrong making purchases ahead of time; just make sure you have budgeted them in and keep track of them.

Summertime can be a time to make memories with your loved ones. But, it can also be a time to save money and get back on track after the summer expenses have been made.

xoxo,

Megan

The Mystery of Sales

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S.A.L.E. I love hearing and reading the word “sale,” because I know where there’s a sale, there is money to be saved. However, when it comes to finding deals in stores, it is important to understand the fine print. Sometimes, an item on sale ends up costing you the same amount, if not more, as the regularly priced item. Back in December, I read an article from The Washington Post titled “Why the money-conscious should beware the after-Christmas sale.” Writer Michelle Singletary states, “We have been brainwashed to see a sale as a thrilling event. It’s not. We’ve been bamboozled.” Later in the article, she says that the problem with sales is that we often don’t know whether or not the sale is truly a discount. As an example, two weeks before Christmas I noticed an item was “on sale” at the grocery store. Then, the week before Christmas, the same item was “on sale” again, but with a higher price. Why? Because retailers know you are going to pay the higher sale price, without noticing last week’s price, and still believe you have saved money. The end of the article gives readers a challenge, which is the same challenge I’m going to give you: be careful when it comes to sales and, before you fork over money, know whether or not it is actually going to put more money into your wallet. How do you do that? Continue reading and I’ll tell you.

  • As with any form of budgeting, it is important to plan and scope out the deals and sales ahead of time. It is also imperative to do the math and know the product’s regular price and exactly how much you’ll be saving with the purported sale. Retailers use psychological tricks to make shoppers think the closer it is to the holidays or on major sale days, such as Black Friday, the better the deal a person is getting. However, most of the time, sale prices go up as the days approach. To avoid this trap, try using apps, such as ShopAdvisor. This program alerts customers when products they want to purchase drop in price. If you are like me, you always wonder “Will the sale go any lower?” Think about what day you are shopping. Is it near a major holiday or sale day? If so, the answer is probably no and you should buy the item now. Is it an out of season purchase, such as Christmas wrapping paper at the beginning of January? It might decrease. This is the beauty of paying attention to apps to help you shop.
  • Another psychological trick that fools people is the “left-digit effect” or the difference of one cent in price. For example, more consumers will buy something if it is priced $x.99, instead of a whole number. In a 2009 study, researchers at Colorado State University and Washington State University ask participates to analyze two identical pens. The only variation between the two was their price – one was $2.00 and the other was $3.99. The study’s results showed that 44% of the participants chose the higher-priced pen, because they only noticed the 99 cents and not an even number.
  • Watch out for bulk bargains. There are times when items are placed on sale, but with a maximum limit. Research has found that having a limit makes sales jump, even if there is no discount. A person’s mind and the store’s marketing department cons one into thinking the product is on sale. So, the next time, ask if the “2 for $4” means if you are only purchasing one is it only $2.00 or regular price.
  • Lastly, notice the placement of certain items in a store. Normally, half-priced, pick-up purchases are at the entrance, because they get customers shopping immediately after walking into the shop. These products are known as “open-the-wallet” items and are displayed in an elaborate and random design. During the holidays, retailers began this ploy as early as October and hope it keeps consumers purchasing into November and December. Continue walking into the store if you are looking for the real deals. In addition, look at the position of products. For example, many stores will put two very similar, but different in price, items side by side, in hopes people will purchase the higher priced item. Be aware of the “compromise price effect” and look at the price tags. Also, keep in mind the quality of a product. Just because it is the lowest price or on sale, is it durable? Will it last a long time? Sometimes it pays off in the end to spend a little extra on quality purchases.

Shopping for items on sale is a great way to put extra cash in your wallet. However, it is important to shop smart and know whether or not the sale is actually worth it.

xoxo,

Megan

How to Start the New Year Off Right with Budgeting

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Often, at the start of another year, people set goals and begin different routines. They break away from the ordinary and change things up. So, why not do this with your budget and finances? Last month, I discussed what you need to do at the end of the year. Now, let’s talk about budgeting for the new year.

Organize Your Budget: 

You might have done an analysis of your budgeting method in December. Now, it’s the time to put your changes and/or brand-new budget into practice. According to CNNmoney.com, one way to divide your income to make sure you cover all budgeting areas is by using the percentages below:

  • 30% – housing and debt (mortgage/rent, credit cards, loans)
  • 26% – living expenses (food, clothing, utilities, medical, transportation, and entertainment)
  • 25% – taxes (federal, state, local, and property)
  • 15% – savings and retirement
  • 4% – insurance

To stay on top of these percentages and how much of your income goes where, use a budget worksheet. Consumer.gov has an easy printable worksheet. If this method doesn’t work, don’t give up! Continue searching until you find a budget worksheet and percentages that fit you.

Savings and Emergency Funds: 

You might have seen on social media various “money saving challenges,” such as setting aside all of your $5 bills for a whole year or each month putting $25 into your emergency fund. Well, these strategies do have value (no pun intended) to them. Adding to savings can be hard at times. However, small changes can add up over time. One of my favorite money saving challenges doesn’t involve setting aside a certain chunk of income every so often. The task is to eliminate something each month:

January: Skip the restaurants and fast food.

February: Cut out soda, bottled water (use a reusable water bottle), and alcohol.

March: Say no to retail therapy; only purchase what is necessary.

April: Spend less money on entertainment.

May: Eat no junk food.

June: Leave the air conditioner off for as long as possible.

July: Cancel paid subscriptions and unused memberships (you don’t really need that gym membership).

August: Look for extra ways to make money.

September: Limit trips and traveling long distances. If you are looking for a summer getaway, now is the cheapest time to book.

October: Quit expensive habits.

November: Keep your heating costs down and only use when needed (after all, we do live in the south, where it says warm even during this time of the year).

December: Create your own Christmas gifts.

With this strategy, you won’t save the same amount each month, but you will decrease your spending. This plan can also be altered to your schedule and needs. If you need a designated lot of money for each time, start small. Put away loose change or a $5 bill once a week. Then, reflect on how well your process is going and make necessary changes. Whenever an emergency occurs or you want to purchase a big ticket item, you’ll be glad you have the extra money to make that happen. It’s like paying yourself!

Stock Up: 

You don’t need to do the extreme couponer’s version of stocking up and creating a stock pile, but it is always helpful to have items on hand. Aim for having a three-month supply of things you and your family use every day. Your “stock pile” could include:

  • Pasta
  • Peanut butter
  • Toilet paper
  • Paper towels
  • Trash bags
  • Shampoo and hair care products
  • Oatmeal
  • Rice
  • Flour, sugar, and other baking essentials
  • Nuts and trail mix
  • Coffee
  • Cleaning supplies

The key to stocking up is to not pay for each item individually. Be on the lookout for coupons that are buy 1, get 1 free and when a coupon is paired with a sale. Buying in bulk from stores, such as Sam’s Club and Costco, are great ways to add to your pile. Also, think about the holidays and seasons. Never spend money on popular purchases until they are out of season. For example, your sweetie can wait until after Valentine’s Day for their candy.

Starting off right with new strategies for your budget will help you all year long. Come December 31st, you’ll be in a better position to accomplish all your financial goals and dreams.

xoxo,

Megan

Post written for Forsyth Woman Magazine