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Finance Money Taxes

Simple Ways to Manage Expenses So Tax Write-Offs Are Easy

Life is expensive—and even more so when you have kids. Does it seem like your expenses just keep piling up? Wouldn’t it be nice to easily locate permissible tax write-offs come tax season?

Now that it’s a new year, it’s a good time to take charge of and manage your expenses. We all know the benefits of managing our spending, such as getting out of debt or increasing our savings. But did you know that there’s the added benefit of simplifying your tax write-offs?

With all of your spending clearly tracked, locating expenses that can be written off on your taxes will be a piece of cake!

Filing taxes can be time consuming and an outright drag, but with a few simple changes to your spending (and banking) habits, you’ll soon be breezing through the process. Here’s our list of life hacks on for managing expenses to make tax write-offs easy!

Up Your Budgeting Game: Embrace Technology

You’ve heard about the importance of budgeting—it’s nothing new and remains important. Technology exists to make your life easier, so why not apply technology to ease the stress of budgeting?

There’s a wide range of free financial software available nowadays to help you track your expenses—some of our favs are Mint, LearnVest, and mvelopes. Features include links to bank accounts and automatic calculation of income and expenditures. If you mostly use cash, many apps allow you to manually input information. Data is presented in charts and graphs that are so clear and easy-to-read, your 5-year-old could probably make sense of them.

When it comes time to file your tax returns, all of this data can be easily retrieved. Just remember, setting a budget is easy, but the most important thing is sticking to and frequently reevaluating it.

Switch to Debit Cards

When it comes to credit cards, many of us have a bad habit of maxing them out and only paying the bare minimum. This means you’re spending more than you have, which only increases your debt. If you must use a credit card, charge only what you can afford to pay off in full. The more you can pay in full, the fewer payments you have to keep track of for tax purposes.

Making the switch to debit cards is easy and has the added benefit of hard spending limits. This is particularly helpful if you don’t trust your spending habits, or those of your kid who’s away at college!

Record as You Go

When it comes to tracking your expenses, it’s best to record them as soon as they occur. If you wait to record your purchases from your receipts (and let’s be real, who saves their receipts any more?!) at a later date, you’ll end up losing track of transactions or accumulating a huge disorganized pile on your living room table.

Tracking spending in real time not only ensures accuracy in your accounting (guaranteeing the most write-offs come tax season!), but also helps with accountability since you’re forced to record every dollar that you spend in writing.

Cancel All Unused Accounts

How many subscriptions are you paying for each month?

How many are you actually using and how many could you do without?

Oftentimes, we subscribe to a service and then forget about it. How can you keep track of your spending if you’ve completely forgotten what you’re spending your hard-earned dollars on? For example, if you subscribed to a magazine about newborns two years ago and your baby is now a toddler, that’s a subscription you can do without. Or that weight loss membership you haven’t used since last year? Good riddance!

Get the Family Involved

Involving all members of your family will help you feel more responsible by leading by example. Some ways to get the kids invested in smart budgeting include:

Teach your children to budget and keep track of their pocket money—an intuitive smart phone app can make this more fun.
Avoid giving your college kids a credit card. Instead, get them a debit card and teach them how to track their spending.
If your kids are old enough to run errands for you, make sure they have electronic receipts for any purchases emailed to you so that you can easily input the transactions into your finance management app.

By making sure everyone else is accountable for their spending, you’ll likely feel encouraged to be more responsible and organized yourself—helping you stay in better control of your spending.

How to Manage Expenses: Less is More

The bottom line is: The less disorganization and overspending you have to deal with, the easier it is to keep track of your expenses. The responsibility ultimately falls on you to keep your spending in check, which will help you keep your sanity when it’s time to file your taxes.

And who knows? You might just uncover a tax write-off you never noticed before! Cheers to that!

Debt Free Finance Money Work at Home

Simple Steps for Working Moms to Become Debt Free

Being Debt Free – Oh the Freedom!

“I’m in debt. I am a true American.” – Balki Bartokomous

Many of us aspire to get ahead in life, but then things happen—it seems like, no matter our financial situation, debt sneaks into our lives and holds us back. Just when you think you’ve got some extra money saved, another bill pops up that needs to be paid off. Sound familiar?

The harsh reality is that many people are struggling with all kinds of debt. From credit card balances to student loans to taxes to car loans to medical bills and everything in between, being in debt has become a way of life for many of us. Add to that the fact that you have a family to take care of and the situation becomes even more stressful!

The good news is that you’re not the only one drowning in debt. The even better news (no bad news here!) is that you don’t have to accept it as a way of life. You have options to get out of debt and actually start saving money. With some discipline, clever thinking, and the right attitude, you and your family can be well on your way to experiencing the freedom of a debt-free life!

Tips for Becoming Debt Free

1. Create a Realistic Budget

Before doing anything else, you need to establish where you are financially. Everything you spend money on has to be accounted for—whether it’s bills, kids’ daycare or extracurriculars, food, or entertainment—record each item and the amount of money you spend on it every month.
After compiling a comprehensive list of items to include on your budget, decide what you and your family can do without (cable, for example). Oftentimes, it’s only when we see something in writing that we realize how much we spend on unnecessary things.

Speaking of putting things in writing, don’t forget to make a list of your debts and face them head-on like the strong mom that you are. Once you complete this exercise, you’ll be able to determine how much money you need to dedicate to debt repayment each month. This will help you envision the best plan for reallocating money from that list of unnecessary expenses (like your unused gym membership) to pay off your debt.

Look at that, your total debt is decreasing already!

2. Stop Borrowing!

Stop signing up for credit cards.

Forget about test driving that car you’ve been eyeing but really can’t afford the car loan for.

Remember, when you borrow, you’re only digging yourself further into debt. The more you dig, the longer it will take to get out!

3. You Can and Should Start Saving

Think of it as an emergency fund.

Life happens—If an emergency comes up and you have no savings, chances are you’re going to turn to credit cards to fund those emergencies.

Start small and work your way up. As a mom, ensuring that you can take care of the kids, particularly in an emergency, is undoubtedly one of your top priorities. Savings will be the safeguard between you and endlessly mounting debt.

This way, you can get out of debt and have peace of mind that you’re (somewhat) prepared for emergencies.

4. Pay off the Smallest Debts First

Let me tell you why:

You’ll be able to remove smaller debts from the list faster than that big loan with insane interest rates.

Once those debts are paid off, you’ll be able to contribute more to the bigger loans and pay them off faster.

Seeing debts removed from your list will give you an incredible confidence boost. Good job, mom! (Go ahead and do your happy dance!)

Don’t forget to automate your payments—the more automatic and effortless you can make the debt repayment process, the better.

Working From Home – A More Permanent Solution

There’s so much more you can do to become debt free. Getting discounts on your car insurance, cutting back on your lifestyle, and meeting with a financial advisor are all smart steps to help get you on the right track. However, if you want to permanently and quickly leave your debt-filled days behind you, then becoming a work-at-home-mom is an excellent option.

Ultimately, your ideal situation is having an ever-increasing income. And if you’re in the corporate world, you know that a traditional job doesn’t offer immediate financial growth.

Working from home has that earning potential. As a work-at-home-mom, you have the power to double or even triple your earnings from one month to another! You can take an active step towards becoming debt free—for good!

Our goal at Moms Making Six Figures is to give moms and their families the freedom to do what they want without feeling tied down by financial burdens. For more details on how to live a permanently debt-free life, visit our website at momsmakingsixfigures.com or call us at (858) 837-1505.

Money

No Budget? You’re Probably Spending More Than You Think.

Wow! Congratulations for taking the step reading this post! Most people hear the word “budget” and run as far away as possible, as quickly as possible! Why is that? Is it because when we hear the word we immediately think of restrictions and going without things we want? What if instead the word brought up feelings of true financial freedom and having the money to do the things in life we truly desire?

The definition of budget is simply an estimate of income and expenditure for a set period of time. Would you take off on a family road trip without knowing the address for your destination and directions on how to get there? Who knows where you might end up! Starting out the month without a budget is much the same.

I like to think of budgeting as telling my money where to go. I have found that when I don’t budget, it feels as though my earnings simply disappear. But when I go through a process of consciously deciding how I intend to allocate my earnings, I am in complete control of my money and where it ends up.

There are so many families that make great money but still live paycheck to paycheck. I believe this is a direct result of the fact that most of us don’t make a conscious effort to budget on a regular basis.

Let me give a simple example, let’s say you are a family of 4 with household take-home monthly income of $10,000 who desperately wants to take a vacation to Hawaii 8 months from now but you are not sure that you will be able to save the $8,000 to make that happen. Your fixed monthly costs (mortgage, utility, car payments, groceries, etc.) is $7,000 which leaves $3,000 per month in disposable income.

Scenario 1 – No Budget

Without being intentional and budgeting how you will spend that income, it’s amazing how quickly the remaining $3,000 or $100 per day can disappear. If you are married and there are 2 of you with debit/credit cards, it only takes an average of each of you spending $50 per day before it is totally gone.

Day 1 – You did some of your grocery shopping at Target or Costco and ended up with an extra $60 worth of clothes, books or candles that you hadn’t intended to purchase when you walked into the store. Your children did great at school today so you decide to take them to frozen yogurt on the way home from school and spend $14. You had a rough time getting the kids off to school in the morning so stopped at Starbucks to get a latte and breakfast sandwich and spent $11. When you get home your next door neighbor comes over selling girl scout cookies and you spend another $20.

None of these things taken individually is a big deal but before you know it, you’ve spent over $100 today! And there is a good chance your spouse has also!

Day 2 – The kids have sports practice and you are running late so decide to stop for dinner on the way home and spend $70. Your children bring home a scholastic book order and you are excited that they want to read so you allow them each to buy a new book and you spend another $30. There goes today’s $100!

Day 3 – Your daughter’s 10th birthday is coming up this weekend so you swing by Party City just to grab a few things and by the time you leave, you have $108 worth of cups, napkins, balloons, plates, silverware, decorations, etc. You stop to purchase her the gift she asked for (a $45 outfit) but you want her to have more than one gift to open so you grab a few “other little things” on the way out of the store and the total bill comes to $92. Today you have spent an extra $200 without realizing it!

Day 4 – You walk out to a flat tire in the morning which creates a lot of stress AND costs $200 once you get it to the auto repair shop and replace the two bald tires. There goes another $200!

Day 5-30… It’s always something. You can see how quickly the $100 a day simply disappears. Before you know it, you get to the end of the month and haven’t saved a single dollar to put toward your dream Hawaiian vacation.

Scenario 2 – Budget

As a family, you have decided that having family memories and vacations is a priority and you have picked out a dream vacation. You know you only have 8 months to save $8,000 so you want to see if there is any way to save $1,000 each month.

You realize that once you have allocated $1,000 to savings, you only have $2,000 left in disposable income to spend this month. So you set out to do a budget and make sure you can make it happen.

Before the month starts, you sit with your spouse and consider things that you know are coming up this month:

  1. Your daughter’s birthday is coming up and you want to be able to make it special, so you budget $200 toward her party and gifts. You put it aside in an envelope so that when you go to spend it, it is CLEAR when the money is gone and you cannot spend any more on the birthday.
  2. You know it’s been a long time since you had your tires replaced and you see that two of them are balding so you budget $200 to get those 2 tires replaced before they become a safety hazard to your family.
  3. You know with the kids sports schedules it can get hectic in the evenings so you budget $400 to spend at restaurants throughout the month.
  4. With $1,000 left in the budget, you and your spouse decide to take out $500 each for the month is “spending cash” to use on spur of the moment items. When you have cold hard cash sitting in an envelope or your wallet and recognize that with $500 to last 30 days you can only spend an average of about $16 per day so you are more conscious of making decisions about whether or not you want to go to frozen yogurt or purchase those girl scout cookies.

A budget doesn’t mean you can’t choose to do those things, it just means you are choosing in advance and putting more relevant decisions (like taking a family vacation) first!

In Scenario 2, at the end of the month the family likely won’t have felt like they were missing out on a single thing by putting $1,000 into their vacation savings before the month started. All that they gave up were a few trips to Starbucks, staying out of the clothes aisle at Costco, etc. But by choosing to be proactive, they were able to accomplish that big goal of taking their family to Hawaii!

Money

What are you teaching your children about money?

As parents, we intuitively recognize that teaching life skills is our responsibility. As such, we teach our children manners by constantly reminding them to use simple phrases such as “please” and “thank you.” We teach them about faith and God by reading the bible with them and praying before dinner. We teach them responsibility by assigning them age-appropriate chores. We teach them about personal care by having them bathe regularly and brush their teeth.

Parents are also often reminded that while we can preach these life skills until we are blue in the face, our children are more likely to mimic our actions than follow our words. So, if you’re telling your children to say “please” but not using the phrase yourself, your children are not likely to adopt that particular skill.

As I teach adults about how to handle their money and also have conversations with them about what they’re teaching their children, I am often met with a blank stare. For some reason, “handling money” is a skill that many parents have not recognized as THEIR responsibility to teach their children. Recently, I had a parent tell me, “I’m not good with math. That’s the school’s responsibility to teach my child.” My response? “I beg to differ!”

We don’t hold teachers accountable for teaching our kids the other life skills I mentioned above, right? So why is this skill any different? I think teachers’ plates are pretty full teaching our children subjects like English, Math, History and Science. We don’t hold our teachers accountable if our children don’t brush their teeth or express gratitude when they’ve received a gift…because we know that teaching these life skills is our responsibility. So let’s reframe how we think about teaching personal finance and handling money to our children and be deliberate about it!

While I could probably write an entire book on this topic, I’ve just started here with a brief outline of some basic principles that each of us can adopt with our children.

1. Money comes from work

Let’s be honest, as an adult, we know that money comes from work. If I don’t work, I don’t make money. But often we aren’t teaching our children this principle. I like to steer clear of giving my children an “allowance,” as it gives them the impression that they are entitled to money “just because.” Instead, I give my children an opportunity to earn “commission” if they are willing to take the initiative and do some work!

Don’t get me wrong…that doesn’t mean I pay them for every little thing they do—they have certain responsibilities and chores they are expected to do simply as a member of our family. They are expected to keep their rooms picked up, make their beds, and take care of their pets, among other things. They don’t get paid for these activities—it’s just part of living in our household and being in our family.

However, they do have an opportunity to earn money by choosing to do other tasks. I made a “chart” that sits in our kitchen and on each day there are several tasks that can be done, each of which has been assigned a commission amount. The first child to take the initiative and complete the task earns the commission. For example, if someone takes out the trash, he/she earns $1, and $3 for taking all the trash cans to the curb on trash day. Each Sunday, I tally up the total commissions earned and the kids get their “paychecks” in the form of cash.

2. Buying “things” you want requires money

Do you ever get frustrated that your kids feel entitled to everything they want? I know I do at times. But then I try to remember it is just another opportunity for me to help my children recognize it’s completely in their control if they want “stuff.” All they need to do is work for it and earn some commission so that they can buy it!

It’s amazing how quickly a child will admit that something she wants isn’t something she needs when its cost is hers to pay out of her own hard earned cash. I know my children started making informed, carefully weighed purchase decisions once they understood the difference between wants and needs, and they recognize that they can’t have it all. They’ve learned to prioritize their wants based on how much they’re willing to work to attain them. What a great life skill!

3. Saving and planning purchases is important

Wouldn’t it be beautiful if our children never went into debt and only purchased things they could afford with cash? Believe it or not, that is very possible if we teach them the right skills. When I pay out commissions each week, I have the children put 10% into a giving fund (they can choose to donate to church or a charity of their choice), 40% goes into a savings fund and 50% can go into their wallet to be used for purchases. I’m helping them start to understand the concept of delayed gratification.

A recent example of this proving very effective is when my 8 year old daughter continually asked me for an iPod touch. Of course, on her Christmas list she wanted the newest and best version. Rather than buying it for her as a gift, I recognized a huge opportunity to teach her about savings. When she was disappointed at not having received it for Christmas, I encouraged her to start saving for it! We got online and started to look up prices so she had an idea how much she needed to save. She quickly recognized that brand new models with lots of memory would require $200 or more, whereas a used model with less memory was only about $60. Suddenly, she was absolutely fine with the $60 model, including tax and shipping!

She made an envelope and drew a picture of the iPod on it, along with a huge 6-0 on it. We talked about the fact that if she worked hard and earned $10 each week she could buy it in just 6 weeks, or that if she did the normal amount of chores she had been doing and only earned $5 per week, it would 12 (which admittedly, is an eternity to an 8 year old).

So suddenly she went to work! She took $20 out of her “spend fund” in her wallet and decided that buying candy, gum or other trinkets was not as important to her as buying the iPod. She also got very focused regarding earning commissions and she surprised me by saving the $60 after only 3 weeks! She honestly beamed with pride when her iPod came in the mail and she treats it with more care and respect than I’ve ever seen her treat another object before. Because she went through the process of saving for it, she better understands its value! It was truly a priceless lesson.

4. Practice what you preach

Has your child ever said “Just put in on your credit card, Mom.” Mine has! A few years ago, I was admiring a gorgeous purse that I wanted and my daughter said “It’s cute Mom, you should get it.” When I responded “No honey, it’s too expensive.” She replied “Just put in on your credit card!”

That moment was a serious eye opener for me. It’s hard enough for a child to understand the value of money; especially when she sees us parents swiping credit cards rather than paying with cash. Credit cards dull the impact and significance of the cost of our purchases not only on us adults, but also on our children; their perception being that there is always more money available!

From that conversation with my daughter about the purse, I realized that I needed to be much more careful in what I was modeling for my children. I now try hard to make a point to pull out and pay for things with cash around my kids. And rather than making statements like “It’s too expensive,” I make statements like “It’s not in my budget this month…I need to think about how important this is to me and decide if it’s something I want to prioritize in my budget next month.” When I demonstrate prioritization and delayed gratification to my children, it’s much easier for me to ask them to do the same!

Money

Stacy’s Story: The Stress of Debt and Steps to Financial Freedom

Can you imagine what it would feel like to never owe anyone a single dollar?

Honestly, can you even imagine NEVER being in debt for a single day of your life? Sadly, I am finding the answer to this question for most people is a resounding “No!” And I have to admit that growing up the thought never even occurred to me. I remember my parents paying for things with credit cards, financing vehicles and talking about the expense of paying the mortgage. I also remember the palpable feeling of stress that it seemed to bring on my parents.

Memories of debt

I have a vivid and specific memory of a time when my parents purchased a new vehicle. I was probably only about 8 years old but I remember seeing my mom crying and talking about the fact that it was too expensive and she didn’t know how they were going to make the payments. That was when I really started to understand how debt can truly be a destructive force in our lives. However, I still thought it was just the way it had to be!

When I was 17, I saw this beautiful Red Honda Prelude on a used car lot and I wanted it desperately. I had a job and saved some money, but couldn’t afford to buy it with cash. That is the first time my desire or “want” for something won over my rational brain and I decided to take out a loan from the local credit union to purchase that beautiful car. And so started a pattern. Before I graduated from college, I had taken on student loan debt, financed a second vehicle and even started to rack up some credit card debt. I graduated with a degree in accounting and started my career as a CPA and financial statement auditor with a Big 5 accounting firm. I thought I had it made! Until I started to feel the enormous pressure of monthly payments. I had a great salary, but always felt broke because the money was out the door to make debt payments the second I deposited my paycheck.

I continued that lifestyle for much of my 20’s and into my early 30’s. Buying new cars, going on nice vacations, building new houses…hey, so long as I could afford the monthly payment I could afford it, right? All of my peers were doing these things and I likely earned as much as them so this was just the way of life, right? Wrong.

The stress of debt

The feeling never sat well with me. The stress continued to build and whenever I looked to my future, all I could see was working until the day I died to pay off my debts. I had no financial freedom whatsoever. So in my mid 30’s I decided to make a drastic change and go without things that I “wanted” in order to gain something that I desperately “needed”. The understanding that one day I would no longer be in debt and be truly free from the financial burdens that were dragging me down every day. Thankfully my husband was on board and we started taking the steps to pay off debt and set a “debt free date” in our future. We have one remaining debt, our mortgage, that we are continuing to chip away at but for the first time in my life, I KNOW beyond a shadow of a doubt that I will be debt free one day soon. It’s a very liberating feeling!

More is caught than taught

So now I am on a mission to help others understand that they too can have financial freedom! In April, I begin teaching a Dave Ramsey course called Financial Peace University at my church and as I prepare for this journey of helping others, I am again reminded at how desperately it is needed. As I talk with others, I am astounded at how often marriages and families are being put in jeopardy because of financial pressures. It’s time to take back control of our lives and not buy what we cannot afford to pay cash for! Crazy concept right?

Imagine if we could teach our children that from day one and they never had a dollar in debt in their lifetime. That is my dream for my children…I cannot guarantee they will follow my lead but I know that “more is caught than taught” so I am not only going to teach them the principals that I have learned but I am also going to model the behavior.