Name It To Claim It ~

Did you set a financial goal, maybe back in January, that you are not making progress towards?  It can be frustrating.  Even with the best of intentions, we often can fall short.  I wrote a few weeks ago about being specific with your goal - the more specific the better.  If you have fine tuned your goal and added in specific dollar amounts and time frames, but still feel like you aren't getting anywhere, try this:

Tell someone about your goal.  Better yet, tell as many people as you can.  Vocalizing a goal can reinforce your commitment and help you to stay on track to achieve it.  

Games People Play ~

A few mornings ago my son spent about 20 minutes pretending to be a hamster.  Super cute when you're four.  Worrisome when you are twelve.  And if I tried to do it at my age, I'd be swiftly hauled off to a nice padded room somewhere (which, on the plus side, would probably be nice and quite and peaceful...at least for a little while).

There is a game that you can get away with at our age.  I call it Jones or Not a Jones.  You can do it anywhere to pass the time.  When you're out and about, check out the people who drive or walk past you.  Are they a Jones or Not a Jones?

Food For Thought - Energy ~

Trying to be someone you're not or worrying about money because you're living beyond your means is exhausting. Budgeting, saving, and living within your means may seem like the more difficult or near impossible choice, but it is the easier choice in the end.

If you're feeling drained by your current money choices and habits, put some of your heavy load down by giving your budget and your habits a makeover.

Monday Challenge - 1% ~

Are you maxing out your retirement contributions at work every year?  If not, I have a challenge for you today. Try increasing your contribution percentage by 1% for the next few pay periods.  Often this can easily be done by logging on to your retirement account online or via a quick phone call to your HR department.  Chances are you won't notice much of a difference in your take home pay, but even 1% more saved in a 401(k) now can have a big difference when you're ready to make withdrawals in retirement.

One Good Stomach Flu...~

I crawled into February...literally, thanks to the incredibly un-fabulous Norovirus spreading like wildfire in the area.  I knew I was going down once my son caught it and I spent a sleepless night caring for him.  On the plus side, I think I lost a pound or two in the process.  What was that great line from The Devil Wears Prada?  I'm just one stomach flu away from my goal weight?

With January under our belts, now is a good time to refresh our memory on some of the changes to contribution limits and rules for 2012.  Okay, maybe I use the word good loosely here, but it's better than the stomach flu, you can at least give me that.  Here are some changes to note for 2012:

• Higher maximums for 401(k)/403(b)/TSP contributions.  For 2012, you can contribute up to $17,000.  If you're 50+, you can still contribute an additional $5,500 in catch-up contributions (this catch-up amount is unchanged, but your overall contribution amount would be higher).
• No change to the maximum contribution amounts for Traditional and Roth IRAs for 2012.  It's still $5,000 for those of us under 50 years of age and $6,000 if you're 50 or older.
• However, the income limits that govern who may contribute have changed.  For Roth IRAs, the income limits increased by $3,000 for single filers and head of household to a new range of  $110,000 - $125,000. For married couples filing jointly, the limits have increased by $4,000 making the allowable range now $173,000 - $183,000.  Remember, below the range, you qualify to make the entire contribution amount.  Within the range, the allowable amount will be decreased.  If your adjusted gross income (AGI) is above the range, contributions are not allowed.
• Income limits for deductible contributions to a Traditional IRA have changed too and depend upon whether or not you have a retirement plan available through work.  For those limits, you can read more here.

As I was writing this, I realized that one of my most loyal readers just turned 50 last month.  So, to her I say Yay!  You now qualify for the higher contribution amounts! Well, that and you do not look remotely close to 50 years old.  Maybe I should have led with the latter.

As always, I never like to look at these contributions as "all or nothing."  If you can swing a $2,000 contribution to a Roth IRA and figure it's not worth it because you can't do the whole $5,000 you are only shooting yourself in the foot.

End Goal ~

Have you set a financial goal for this year?  What is it?  Is it something vague like "save more money" or did you get into the nitty gritty of it?

I'm not going to knock anyone for setting positive financial goals.  Far from it.  Just the motivation and desire it takes to set a goal brings you a little step closer to actually achieving it.  It's on your radar screen now .  But I want more than that for you.  I want you to actually achieve it this year.

The best barometer for measuring the chances for success?  The level of detail.

How specific is your goal?  Many studies have been done that support the finding that the more specific a goal is, the more successful the outcome.  So, if your goal is to "save more money," fleshing that goal out a bit more with actual dollar amounts and dates will go a long way in helping you to reach it.  Turn "save more money" into "save $100 each pay period" or "save $1,000 in my savings account by July 1, 2012."  If you are trying to save $1,000 by July 1st, take that one step further and figure out what amount per month or per pay period you need to save in order to reach $1,000.  The details are your directions for how to get to your ultimate goal.

In this case, the devil isn't in the details.  Success is.

Reduce, Reuse ~

There is a predictable routine in my household.  It goes something like this: I buy an item of clothing for my eight-year-old daughter.  She looks at it, tries it on, does a Tyra Banks runway walk in it (don't ask - I have no idea), sticks her hip out, and says it's good.

I then ask her a minimum of 12 times if she likes it and will wear it.  She says yes.  I ask a few more times.  She still says yes.  I then clip the tags, wash it, and put it in her drawer.  She wears it one or two times (a few more if I'm lucky) then declares it to be too big, too small, too itchy, too uncomfortable, too brown (yes, that has actually been an offense), etc.  I then have to struggle to get her to wear it again.

It doesn't happen with everything, of course.  But it still drives me mad.  And yet...

I looked around at my stuff the other day and noticed all of the half-used tubes of lotion, lip gloss, etc. that litter the drawers and cabinets in my bathroom. While not exactly the same, I have to recognize the bit of hypocrisy  in that. So I have begun a bit of a mission to use up the things that I have around the house before buying anything like it.  I got a basket, dumped the things I wanted to use up into it and have been systematically working through the stash since.

Not only does it save a bit of money, but it's kinda nice to feel like I'm lightening the load a little bit.  And I've yet to complain once that a lip gloss is "too brown."

Divide and Conquer ~

Are you wanting (or trying) to budget but having a hard time figuring out where to make reductions in your spending?  Try this exercise:

Divide your spending into two categories.  In one column, put expenses that are relatively fixed.  These are things like rent, mortgage payments, property taxes, insurance premiums, etc that don't vary from month to month.  Set that list aside.

Now make a second column with all of your other items that are more flexible.  This is often called your discretionary spending because you exercise a certain level of discretion when choosing how much to spend in these categories.  Things like cable, phone, clothing, gifts, eating out, groceries, Target, household goods, cell phones, haircuts, etc. should go here.  If you know how much you spend on each of these items, fill that info in too.  If you don't know, you should...so spend some time figuring out your cash flow first, and then return to this list.  This can be an estimated number, but the problem with our estimates where budgets are concerned is that they are often (far) below what we actually spend.

Once you have your discretionary list in place, look at what should now be a shorter list.   Having a shorter list makes this task a little more manageable and far less overwhelming than considering your entire budget as a whole.  Next, decide which areas you can and want to cut back on.

If you're going to need the whole family on board in order for this to be successful, get everyone involved in the process.  Make each person pick an area where they will spend less and let them know that they will be held accountable.  Nothing like familial pressure to encourage follow through.  The way I see it, you have to deal with the headache of sibling rivalry on an almost daily basis.  Let that work to your advantage for the greater good now.

If you're so inclined, tell your kids that anything they save the family above and beyond the amount needed can go into their savings or 529 account.  Or not.  I won't tell them that was even a consideration, so they'll never know.  Some may call that bribery, but I call it creative budgeting.

Food For Thought - Joy ~

Where do you find your joy?

Your answer to this can be pretty revealing.  Did your answer involve money at all (spending it, getting it)?

Joy is healing.  Joy is uplifting.  Joy is contagious.

And joy is free.

Tipping Point ~

Growing up, I really didn't date much.  I'm sure there were a whole slew of reasons for this.  My painful shyness was at times misinterpreted as aloofness.  My biting sarcasm and overall cynical attitude at the time didn't really scream hug me.  Boys weren't interested in the, um, mental stimulation an honor student could provide. But also right up there was my dad.  He would have put the FBI to shame if he had had access to that kind of technology (and a brief tutorial).

Like with most things in life, though, there was a tipping point.  That kind of ugly-cry moment when things change.  Suddenly, in my mid-20s, McGruff the Crime Dad started trying to fix me up with guys.  In all fairness, this was completely justifiable if not a little weird given the bang-up job I was doing on my own.  Plus, I think he was getting fearful that there wouldn't be any grandchildren in his future.  Still.  Tipping point.

If you have debt or aren't saving as much as you want (or should!) towards a specific goal, what would be your tipping point?  Be honest.  Now ask yourself: do I really want to have to go there?  Do you really want things to get to that point (whatever that point may be) before you make a change for the better? Chances are your answer is no.

Do yourself a favor and avoid a heaping serving of grief down the road by making the changes you need to make now before you find yourself in a game-changing situation.  Being proactive is far more efficient than trying to be reactive.

Bulls Eye ~

Today I realized that my entire outfit was made up of things I've purchased on clearance at Target.  Just sayin'.

Silence ~

I feel like I have been silent here for longer than I'd like.  I enjoy being in this space, but when the rest of my life goes into overdrive, my posts here suffer.  It's bound to happen.  More than anything else, my family comes first.  The way I figure it, I only have a relatively small window of time to be the best parent I can be to raise two loving, responsible, productive kiddos.  If you are a parent, you understand how this time goes by in the blink of an eye.

Of course, this is how life is in general.  You may think that you have plenty of time to save for retirement, but in the blink of an eye you turn 40...let's say last week...and you can't believe you are THAT old because really just yesterday you were 16.  But there it is.  The good news is that you're not dead.  The bad news is that you are broke and you won't be able to retire unless you radically change your lifestyle and spending habits.

While technically it's never too late to adopt good financial habits and skills, it's exceedingly better and easier if you do this while you are younger (now) and there's less damage to undo (now) and more time to reap the benefits (now).   Think of how much easier it is to tame the sassiness of a six year old before that same six year old becomes a sassy sixteen year old.

Makes you think.

Food For Thought - Mirror Mirror ~

Parenthood has been one of the biggest influences on my personal growth.  There's nothing quite like seeing your habits and traits mirrored back to you through the attitude and behavior of your 8 year old.

If you can, try to use this phenomena to your advantage where your financial growth is concerned.  Step outside yourself and try to view your habits and spending through the eyes of an outsider.  Maybe it's your kids or another family member.  Maybe it's your neighbors or friends.  Try to be completely objective and honest.

See something you don't like?  How would you change it, if you could?  Spend some time coming up with a game plan to make that change happen.

Fighting Weight ~

Okay, so you worked on calculating your net worth and have a good idea where you stand financially. I liken this to jumping on the scale in the AM and knowing what your current weight is...except that I have stopped doing the latter but enjoy doing the former.  Let's say your "scale" informed you of what you already know: you are not going to walk the runway in a Victoria's Secret fashion show anytime soon.  What now?

With your weight, after putting the scale in its place with a few choice words, you would probably take a look at how many calories you are eating every day or week.  It's a similar thing with your finances.  You need to take a look at how much money you are spending.  If you don't know, take some time to either go back through your bank and credit card statements, as well as receipts or (much easier, I think), track your spending going forward for this week or month. Get a little notebook and write down the date, what you spent, and where you spent it for every purchase.  Common items to fall through the cracks for budgets?  Expenses that aren't monthly.  Make sure you remember to take into account things like insurance premiums, gifts, property taxes, vacations, and the like.

When you're done, compare that number to your monthly or annual income.  How well do they match up?  Are you spending too much?  Saving too little?  Go back to your budget and see which items you can trim.  It may take some time to fine tune your spending, so be patient.  And remember that a budget is a "living" document.  Costs go up (as does your income, hopefully!) so you will want to revisit your figures periodically.

Not knowing how much you have going out compared to how much you have coming in is a recipe for disaster.

When One Door Closes... ~

Were you wondering when you were going to see my annual post about "closing out the year?"  Maybe you weren't ready to face it yet.  You're not alone.  I've been trying to clean up all of our Christmas decorations, and my son is following me around as I do it...putting everything back.  He's not ready to let go just yet.

I like the clean slate that the turn of the year brings.  It feels fresh, and promising, and filled with so much potential.  I'm not a real "resolutions" kind of person.  I think those are too short-term and fleeting for most people.  I am, however, a fan of personal growth and making a genuine effort every day to better yourself and your life.

The best place to start?  Know where you stand.  If you know me or have been reading my blog for a while, you know that I end every year by recalculating our net worth.  Why do I do this?  First, it can re-energize me on whatever goal we are working towards.  It is nice to see the efforts of your hard work paying off.  Second, it gives me a very clear idea as to where we are starting from for the new year.  The unspoken third is that I am a bit of a financial nerd, and this activity is actually really fun for me.  Sorry guys...I'm taken.

There are many good resources online to guide you through the process of calculating your net worth.  I like to do mine in Excel, though.  The reasons are simple.  First, I have a separate worksheet for each year (all within the same "workbook" or file), allowing me to track our progress.  Second, I have line items for each of our accounts, assets, debts, etc.  So, I just have to plug in the numbers, and Excel does all of the heavy lifting in terms of calculations.  Nice!

To get an idea of what you need in order to calculate your net worth, you can start by looking at the worksheets offered by About.com, ING, and Morningstar.  Whatever you choose, make it easy on yourself to keep track of this on an annual basis for motivation and to check your progress.

Good luck and Happy New Year!