Cutting Back

Taking a cold hard look at finances is something no one likes to do or talk about, but it's a reality we all have to face. If you are living on half of your former income (or less in many cases), you have a challenge ahead of you. You may need to realign some of your activities. How about packing some sandwiches for an outdoor meal at the park or picnic in your own backyard instead of a trip to McDonalds. Look for ways to cut out the extras. You´ll be surprised as to how much you can save.

Use Your Income Tax Refund Wisely

If you are to receive a substantial amount of money from an income tax refund this year, start making plans now on how to spend it wisely. While you may be tempted to go on a shopping spree and splurge it shamelessly, resist that urge. Instead consider putting it aside in a savings account for something special. If you are unwise with your use of credit cards, use the money to pay off those credit card bills. You will save a lot of money on interest if you do not carry a balance over each month. Or maybe you need to replace a major appliance or use it as a down payment on a newer vehicle. Consider your refund as a bonus and use it to purchase some big ticket item that you cannot afford otherwise. You may want to treat your family to a nice vacation this summer. Consider everything carefully and decide what is the best decision for you. Taking a vacation or going on a shopping spree when your credit cards are maxed out, however, is not the right choice!

Establish a Savings Goal

No matter how thinly stretched your finances may feel, you need to set aside some money for longer-term objectives. Without a goal to work toward, saving feels like deprivation without purpose. The first step is to establish a target and put a price tag on it. Next, analyze your spending habits, looking for some fat to trim, such as that weekly $3 bag of chips being wasted on your hips. Small amounts add up. A reasonable goal is 10% of your monthly income. Adhere to the financial concept of "paying yourself first." That means that when you get your paycheck, set aside your savings before you start worrying about your spending. It takes discipline, but you can do it.

Buying a Home

When deciding to buy a home, first figure out how much house you can afford. A general rule is to look for a house costing two to two and a half times your annual income.

Monitor Your Cash Flow

When seriously considering buying a home, it is important to know how much you can afford to pay monthly in mortgage payments. It is up to you to make sure you can afford monthly house payments, child care, medical bills, and household expenses. Track your spending for several months so you will know how much house really fits in your budget. Remember to consider funds for long-term goals such as your retirement and college tuition for your children.

Help the Kids Need Clothes!

Check out the consignment shops or garage sales for some really good clothing for your children. They outgrow their clothes so fast, many times the clothes have hardly been worn, if at all. You can also get great bargains at end-of-season clearance sales. You can all look like a million bucks and no one will know the difference. After all, it is what inside that counts, not what you wear. When life gives you lemons, make lemonade!

Gather Financial Documents for Safekeeping

Set aside time to compile the following items on all family members: birth certificates, social security cards, marriage license, divorce papers, and dates of any military service. Keep a detailed list of insurance identification numbers and contact information. Also prepare a list of each of your financial advisers and any accounts you have at financial institutions, such as your checking, savings, brokerage, and mutual-fund accounts, as well as the names of any employers from whom you expect to collect a pension. Store these papers in a fireproof safe or a locked filing cabinet. It is also advisable to keep copies in a safety-deposit box

Bargain Alert!

Always be on the lookout for good bargains. If you come across a “blue-light” special on kids' items, take advantage of it. If your kids already have it, how about saving it for the inevitable birthday parties your kids are invited to attend. Keep a stash of ready gifts on hand. It'll save you more money in the long run. Be sure to make wise purchases though. There's no sense in wasting money on something nobody wants.

Tax Time Rewards

Tax time—that time of year adults have learned to dread. If you recently became a single parent, you may be pleasantly surprised, when you file your income tax return. If you have children living in your home, you can qualify as Head of Household and are entitled a large deduction than you would if you were filing single. You may also qualify for Child Care Credit for children under 17. And, do not forget to check out the Earned Income Credit given to individuals with low incomes (for 2002, up to $29,00 for one dependent child or $33,000 with two dependent children.) You may get more money back than you paid in.

Babysitter--Can´t Afford One!

Baby-sitting. I can't afford to pay a babysitter when I need a night out. Check with your network of friends. Set up a kid swap system—take turns watching each other's children to give the other parent a much needed “time out.” Make the night you are watching the kids a fun time—rent movies, plan a slumber party, or turn your home into a fun pizza parlor and let the kids make their own pizzas. Be imaginative and creative. Not only will mom get a night out, but the kids will look forward to their night out too.

Stock Up on Grocery Sale Items

When grocery shopping, keep an eye open for bargains and specials, and stock up on canned items that have a long shelf life. Cereals, pasta, rice, and beans will also keep for several months. Take advantage of the buy 1, get 1 free, and 2 for 1 specials. You will save money and will spend less time running to the store to pick up needed items.

Applying for a Home Loan

Mortgage lenders typically use three tests: 1) The monthly house payment including property taxes and insurance should not exceed 26% of gross monthly income; 2) All monthly debt payments plus the house payment should be less than 38% of gross monthly income; 3) The home buyer should have two to three months´ worth of payments in an emergency fund.

Save Money on Meats

Cut back on the amount of meat used in your meals by substituting part of the meat with grains or beans. Oats and crumbled wheat bread are great ways to extend a meatloaf or meatballs. Use an extra can of beans and less meat in your chili. Experiment with some meatless meals such as spaghetti with meatless sauce, or some other hearty pasta or grain dish. They probably will not even notice the meat is missing.

Just Say “No” to Junk Foods

Many of today's snack foods are not only nutrient deficient, but they are also quite expensive. Since kids like to munch and dip, try fixing fresh veggies or fruit with a nutritious dip, rather than chips and dip. Keep junk food out of the house and when they get hungry, they will raid the refrigerator looking for something to munch on. Have the veggies and fruit already prepared for them, and see how fast it disappears. Carrots, celery, and apples are all good dippers. And peanut butter on celery is much healthier than peanut butter and jelly on bread. Save money and have healthier kids.

Entertainment for Less

Check out garage sales. You can pick up some great games and toys for practically nothing. Or check the clearance sales. As soon as Christmas is over, go shopping! Plan to be at your favorite store when the doors open and head straight for the toy section. Many stores mark items down 50% or more after Christmas to make room for spring inventory. Be sure to hide the items from your kids though and stash them away for birthdays or next Christmas.

Cut Back on Eating Out

Let´s face it, it is easier and less time-consuming to stop by a fast-food drive-thru restaurants or convenience stores to pick up something for lunch or your evening meal than it is to cook at home. Try this experiment. Designate a typical week and record the amount you spend every time you purchase ready-made food to eat, whether you eat it at the restaurant, home, work, or on the road. You will be surprised at how much it adds up to each week. Multiply that cost by 4.5 and see how much money you are giving to others to feed you.

Prepare a Will and/or An Estate Plan

If you have children, you need to plan for what is going to happen after you are gone. Among the provisions you should make: Appoint an executor, the person who will handle your estate as well as someone with power of attorney, and decide who will care for your kids if they are still minors and how you want them to receive money from your estate if something should happen to you.

Movie Night at Home

If you have taken your family to the movies lately, you know how expensive this venture has become. Rather than take the whole family to see a movie, consider waiting until it comes out on video and buy it. You can usually buy it for what it would cost for 2 or 3 people to see it one time. If you own the movie you can watch it numerous times but only have to pay for it once. Pop your own popcorn in the microwave, open a 2-liter bottle of soda, and enjoy a night out on the town at home. After you have watched the movie until you never want to see it again, turn around and sell it at a garage sale, or better yet, sell it on the Internet. Many times you can get more money for it than you would by selling it at a garage sale.

Brown Bag It

You don´t have to eat out every day. Several days a week you can brown bag it. When you begin preparing meals at home in the evenings, prepare extra for leftovers and package it away in single serving sizes for lunch. If your place of employment has a refrigerator, you can store your lunch there until you are ready to eat. If no refrigerator is available, buy an insulated lunch bag and a reusable ice pack. These work very well in keeping