Spending

What’s Your Method?

Perhaps you’re battling credit card debt or your lack of follow through on budgeting tips.  Maybe you need to work on educational savings goals for your children, or your retirement savings.  Whatever the case may be, you must find your method for meeting your financial goals and budgeting needs.

Choose Your Budgeting Style

One of the major elements is in respect to your budget.  When you do this, you must consider some important aspects with you and your budget:

• How technological, or “un-technological,” must it be?  Consider any devices that you have which could lead to an obvious choice in terms of convenience.
• What features do you need?  From the basics that a notebook could take care of, to the advanced features that an advanced program on your notebook computer can demonstrate, there are many sides to this story.
• Do you need to keep multiple budgets?
• Identify any weaknesses you have with keeping a budget, or remembering to use it.

Some of these points will lead you to a certain direction.  If you’re old school, you might prefer to stick with your pen and paper.  A smartphone that you use every day could mean that an app is right.  Take some time to consider how you currently keep a budget, as having something that works well for you is extremely important – how else will you pay off credit cards and  save for your children’s education?

The Problem of Motivation

As we continue our casual look into financial methods, another incredibly important issue is brought up with motivation.  In financial articles, it is perhaps not spoken of more often.  After all, the best budgeting tips in the world will do no good if they are not followed, of course.

You have to take a deep, hard look at the ways needed to motivate yourself.  For instance, some consumers needing to cut their expenses down or save more may find success of the following:

• Give yourself a goal.  For instance, as part of your budgeting changes, you could invest a small amount into a savings account each month.  With that money you could go on a small trip, thus giving you incentive. Or you could be saving for a deposit on your dream home.
• Put your budget in plain sight.  You might “see no evil” if you ignore views of your budget.  Let yourself see the debt you have on a regular basis; it might drive you to act upon it and remain disciplined.
• Inspiration.  Do what it takes to follow through.  Maybe you can have your household keep each other honest with spending money, or post reminders (i.e. notes around those high-priced restaurants’ phone numbers).  Put a picture of your future trip via the first point.

Overall, there are many aspects that can impact your financial well-being that are not directly about money.  The manner in which you keep your budget and motivate yourself with your budget can make a big difference.  Approach these items carefully to make implementing your financial plan much easier on yourself.  Sometimes you just have to do what it takes when it comes to your budget, and these examples can certainly help with execution and practice of good habits.

The preceding post is a guest post.

Will High Gas Prices Change My Vacation Plans?

I have some vacation time at the beginning of June, and the plan was to drive to Washington, DC with the family and take in some of the sites and monuments in the capital of the United States.  We were planning on driving since flying with 6 kids is a non-starter.  The round trip mileage to the city from our house would be about 635 miles.  I would estimate another 60 miles per day running around since we would likely stay in the suburban area.  The grand total mileage would then be estimated to be about 1700 miles when the trip is completed.

Again, having 6 kids means need room for 8 people plus the associated luggage.  We have a Chevy Suburban which would get about 17 miles to the gallon on average.  So let’s assume 100 gallons of gasoline would be needed to complete the trip.  At $4 per gallon, that would be $400 in fuel costs.

Alternative

The alternative might be to travel to Mackinac Island in Michigan.  The mileage to travel there would be 510 miles one way.  Furthermore, there would be minimal additional mileage to get around in the main part of town.  The island itself does not allow cars so we would take a ferry across and commute by bicycle or walking.  So, I would estimate about 1100 total miles for the trip which would require about 65 gallons of gasoline.  At the same $4 per gallon estimate, the fuel costs would be $260.

I am not sure that this would be a make or break difference overall, so another determining factor may very well end up being lodging or the expense of activities in the area.

Doing the Math

I am glad that I undertook this exercise because it really doesn’t seem like the distances are enough different to warrant a change of plans.  However, I must confess that no firm plans or reservations had been made.

The other suggestion was going to Cedar Point in Sandusky, OH.  This is only 300 miles away so the fuel cost could be decreased even farther to about $165.  This might be worth considering provided a decent place to stay could be found.

With such a large crew, we often will rent a house on vacation so that we can shop at the grocery and cook meals.  This saves quite a bit of money versus eating in restaurants.  Saving money where possible is key since the cost for attractions can add up rather quickly.

Ultimately, I want to make sure that we have some fun but, at the same time, control costs and not add any debt to fund the trip.

When to Buy Extended Warranties

If you are coming to my blog from Tight Fisted Miser, I would like to welcome you.  Stick around, read an article or two, and feel free to subscribe.

One of the greatest things about personal finance is that it is so personal.  You can take some thoughts or ideas that you read and apply them to your particular situation.  Not all of the information may be applicable at the time, but it may very well be something that you can tuck away for the future to be used at a later date.

While most of the PF blogging world would advocated against buying an extended warranty, I would like to explain why there are certain situations when I think it make sense.  I know that it has made sense for me with certain products.

Warranties Based Upon Time

One has to understand that I have six kids and there are certain items for which it makes sense to purchase an extended warranty, and these are the items that are based upon time and not usage.  For example, we use our dishwasher twice per day at a minimum.  Paying $600 for a dishwasher and adding $100 for a four year warranty is worth it to me since I know that I will be putting between 8 and 12 years worth of use on that dishwasher.

It was just last spring that at about the 3 year mark our dishwasher needed a new motor.  We ended up getting a new motor for free when the cost would have otherwise been $360.  Now I can figure that I can get another 2 years or so out of the dishwasher before needing to either repair or replace.  The warranty was solely based upon time so it makes more sense for me to get it than an old retired couple that might run it 2 times per week.

The same holds true for the washing machine and dryer.  I purchased the same four year warranty for these appliances as well.  Again because we run about 2 loads of laundry per day on average to keep everyone in clean clothes, it only makes sense that the wear and tear on this appliance is well above average compared to the typical family.  About 2 years ago, we had to have the washing machine motor replaced which would have been a $600 repair.  Instead, it was absolutely free.

On the other hand, we don’t bother with the extended warranty on vehicles or computers.  The amount of traveling that we have to do with 6 kids involved in activities is quite substantial.  The fact that these types of warranties are based on mileage doesn’t work well for our family.  Our Chevy Suburban turns 3 years old this month and has 102,000 miles on it.  Much of the mileage is highway as well.  It doesn’t make sense to waste the money on a warranty.  Instead, we try to keep the vehicle in top working order and repair what is necessary.

Computers, on the other hand, are either purchased as cheaply as possible for the kids to do schoolwork on or are used by the adults only in the house.  I have now had 3 laptops in about twelve years.  The first one lasted for five years and the next one for four.  I am on year two for the current laptop which is used for work, blogging, and personal projects.

My feeling is why pay almost 25% again the cost of a computer that I can likely take very good care of and make last for several years past any warranty.  Plus when the computer finally dies, I usually benefit from the added features of the new technology such as wireless and processing speed.

So, these are my thoughts on extended warranties.  For me, I have found something that seems to work.

Readers, what is your experience with extended warranties?  Have you purchased and wished you hadn’t or vice versa?  Share in the comments.