In case you’ve been living under a rock and have not filed your taxes, here are some tips for filing an extension.
Owe the IRS money this year? Don’t worry, so does your favorite 80′s pop icon, Lionel Richie. I’ll bet he owes a little more than you do.
If you are feeling blue on this tax day, don’t impulsively get a dog to lift your mood…they cost real money.
1 Timothy 6:17 says this:
“Command those who are rich in this present world not to be arrogant nor to put their hope in wealth, which is so uncertain, but to put their hope in God, who richly provides us with everything for our enjoyment.”
For some reason I cannot stop thinking about the phrase at the end of that sentence: “…who richly provides us with everything for our enjoyment.” Here’s the question that is messing with me right now:
Do I enjoy what God has richly provided?
What “enjoyment” means – to enjoy something means two things: (1) possession and (2) use. As I survey my home, I quickly realize I have numerous possessions. Possession is not my problem. My problem is use. Many of the possessions I do have, I don’t use.
The “80/20 rule” applies to stuff too – in our house, we probably use 20% of our possessions 80% of the time. Everyone in my family has a few articles of clothing that we wear 80% of the time. I have a few tools that I use 80% of the time. My kids have a few toys they play with 80% of the time. The point is this: we have a significant number of possessions that go largely unused. How are we doing at enjoying what God has provided? Honestly, not very well.
Enjoy, sell or give – for all of us, we would do well to examine our possessions and do one of three things:
Enjoy your possessions – if you’ve got it, use it. The first option is challenge yourself to use your stuff. Sit on your couch, use your iPad, read books on your Kindle, eat dinner at your dining room table, wear your clothes, use your tools, mow grass with your lawn mower, run on your treadmill, use your Abs Core Blaster 2000, make smoothies with your crazy powerful blender, use your cookware by eating at home, and make your kids watch those DVDs.
Sell your possessions – if you’re not using it, sell it. If you have things that you are not using, the second option is to sell them so those dollars can be used elsewhere (like giving away to help to meet a need or establishing your emergency fund). Someone will gladly pay you for your unused juicer that was supposed to change your life, three years ago.
Give away your possessions – if you’re not using it, give it away. The last option is to give your possessions away. There is someone out there who will use something you are not using. If you haven’t used it in three months, then you probably are not going to use it in the future. Go ahead and give away that weight lifting set. You’ll find another spot for all those boxes that are currently resting on the weight set.
There is not a fourth option - keep what you’ve got, don’t use what you’ve got and seek to collect more stuff you won’t use (i.e. be discontent with what you’ve got). That is not enjoying what the Lord has richly provided.
What in your house needs to be used or needs to go?
Question: How do you budget if you have variable income?
Answer: If you have variable income, or are thinking about changing jobs and your income will suddenly become variable, below are four things to consider when it comes to budgeting.
1. Determine your “bare minimum” expenses. You have to know the bare minimum that you need to survive. To figure this out, work backwards. Start adding up all of your monthly expenses that MUST be paid each month/week in order to survive. For many of you, the bare minimum include the following: income taxes, property taxes, giving, rent/mortgage, auto insurance, homeowners insurance, gasoline, food/toiletries, basic utilities (power, gas, Internet, and phone) and consumer debt (car, student loan, credit card). Things like pedicures, the tanning bed, coffee shop, dining out, or that fancy shampoo are not bare minimum expenses. These extra items are not off limits, but they are items that you include only after you know with certainty that you will have income in excess of your bare minimum expenses. You need two broad groups of expenses: (1) the bare minimum and (2) items to include in the budget if you know you will receive income in excess of the bare minimum.
2. Determine what you will do if you don’t earn enough to pay for the “bare minimum” expenses. If you don’t make enough income to pay for your bare minimum expenses, ideally, you will have some money saved up to help make ends meet during these lean months. The upside of 100% commission jobs is that you can potentially earn more than those in a salaried position. The downside is that you eat what you kill. If you don’t close any deals, then no money. You need to anticipate and plan for some lean months. Ask yourself:
What is your plan for the lean months?
How will you pay for your “bare minimum” expenses during lean months?
How will you pay for your “bare minimum” expenses without credit cards?
For those with variable income, the temptation to live off credit cards will increase during these lean months. Relying on credit cards is not the best long-term option. Proverbs 22:3 says, “The prudent man sees danger and takes refuge, but the simple keep going and suffer for it.” Don’t be simple. Anticipate and plan for how you will survive during the lean months. Do yourself a favor and come up with a plan before the lean months hit. If you wait until a lean month happens, the temptation to live off credit cards will be very high.
3. Determine what you will do if you make more than the bare minimum. This might be the most important issue to determine.. Most people on variable income get into trouble…not during the lean months, but during the months of surplus. When the money is flowing in and all needs are being met, it is very easy to become accustomed to that cash flow and forget to save for a lean month. The months when you make more than the bare minimum will take the most discipline, but you can do it. Here is a suggested plan to deal with the excess: (1) fund some non-bare essential expenses and (2) work on increasing your emergency fund to meet about six months of bare minimum expenses.
4. Set a “reassessment” deadline. In potentially unstable situations like variable income, it is always a great idea to set a “reassessment” deadline. Give yourself a few months to execute your new plan, but in the event things don’t work out, be sure to set a date when the bleeding will stop. You don’t have to be a math wizard to know it is unsustainable to live for an extended period of time when your expenses are higher than your income. This is not the formula that leads to financial freedom; this is the formula that leads to debt, stress and misery. Those who are willing to take the risk of living with variable income are also susceptible to believing that “everything will be better next month.” Don’t be haughty and arrogant and think everything will be better with the next deal. If you have a few bad months in a row, cannot pay the bare minimum expenses, and are relying on credit cards, then you need to get a job that pays the bills.
It is not impossible to budget when you have variable income; you just have to be more diligent than those with fixed incomes. Work backwards, determine your bare minimum expenses, have a plan for the months when you don’t make enough money to cover your bare minimum expenses, have a plan for the months when you do make more than your bare minimum expenses, and always know when your reassessment date is so that you will have an opportunity to stop the bleeding if things don’t work out.
Here are the suggested videos to watch this week, they can be found by clicking here.
The link to the article to read for week #3 homework question #4 can be found by clicking here.
I’m sure some of you laughed last night when I said that part of step #1 in the “simple plan” was to get $1,000 in your checking account or savings account as a starter “emergency fund”. I’m sure some of you said to yourself, “What planet does he live on? If I had $1,000 in my checking account, I wouldn’t even be taking this crazy class!” Hang with me on this one, because this is a really big deal…
The way I see it, you have three options:
1. Increase your income.
2. Decrease your expenses.
3. Hope for some unknown distant relative to die…soon…and leave you a bunch of money.
We’ll ignore option #3 for obvious reasons and jump right into options #1 and #2. Jesse Mecham – the founder of You Need A Budget has some great ideas in his book titled You Need A Budget, some his ideas, with my commentary, are below.
INCREASE YOUR INCOME
Work overtime – no one said this was going to be easy. Getting out of your current financial situation is going to involve making some tough choices. If your employer allows it, add 1 or 2 extra shifts a month or 5-10 extra hours a week.
Get a part-time job – current job won’t allow overtime, great…look for something at night or on the weekends. Dave Ramsey has story after story of people who actually delivered pizzas to earn extra money to get out of debt and establish an emergency fund. There’s no shame in part-time work. As Dave often says, “if you live like no one else now, you will live like no one else later.”
Start a small business – some of you have some crazy good skills that can earn you money. Do you make an amazing pie? Are you great a sewing? Can you mow a lawn faster than Tony Stewart can drive a car? Do you love kids and enjoy babysitting? Don’t mind picking up dog poop? Find something people hate doing and let them pay you to do it.
Sell your stuff - people LOVE garage sales. Take all that stuff in your home that you never use and sell it. We are a family of four and in my home we have eighteen places to sit. EIGHTEEN! Do we really “need” 18 places to sit? Order your life based on the rule, not the exception. If you haven’t used it in the past 3 months…consider selling it. I sold a bunch of books on Amazon.com this past December and made well over $100. Doesn’t sound like much, but every little bit counts (see Proverbs 21:5 below).
DECREASE YOUR EXPENSES
Drop the land telephone line – land lines are SO 1986. Get rid of it and just use your mobile phone.
Take your lunch to work – You say, “What!?! My co-workers will think I’m strange.” Two things: (1) no they won’t and (2) your co-workers are probably broke and in debt because they go out to eat every day. They will only think you are strange if you cook fish in the microwave at work. Don’t do that. Seriously, don’t do that.
Make coffee at home – let’s be honest, the reason you want Starbucks every day is because you look cool carrying that cup. Your Starbucks is more of a fashion accessory than it is a need. Make the stuff at home…with a $20 French Press, it will even taste better.
Stop buying soft drinks when you do go out to eat – at most restaurants, soft drinks are the most profitable product on the menu. Mmmm, free water.
Make rabbit ears cool again – want to know which executives are up at night wondering what the future holds for their business? Cable and Satellite TV executives. Drop cable or your satellite provider. There, I said it. You’ve been waiting for it and I finally said, “GET RID OF CABLE TV!!!” I’m not telling you to go all “Little House on the Prairie” style and sit around by candlelight each night making paper dolls. Check out HULU.com, get a Roku box, sign up for Netflix streaming. Remember how cool you felt when you were 7 years old and got a library card? Bring back that feeling. Libraries actually still exist! Who knew? What’s even better is now that your mom is not with you, you don’t even have to borrow books – you can just borrow movies! For free! There are more options than ever for free entertainment right now. All you need is an internet connection…and some good books (b/c you will watch less TV…which can be a good thing).
Use coupons – each year, millions of coupons go unused. This is a tragedy. Resolve now to stop this madness and accept free money from these companies. You are leaving money on the table. Use Google to find coupons for your favorite grocery store. Guarantee you’ll save $5-$10 per trip.
The lists above are by no means exhaustive. And some of you might be thinking, “big deal if I save $10 – I need $1,000!!!”. Here is another fundamental mind shift that needs to take place: steady plotting leads to big change. That’s why this first step is so important. We need to fully embrace this mind shift.
“The plans of the diligent lead to profit as surely as haste leads to poverty.” – Proverbs 21:5
Getting $1,000 in your emergency fund make seem like a pipe dream, but if you are diligent, you can accomplish this goal and move on to step #2. DO NOT GIVE UP!
Would love to know if you have any other expense reduction tips. Leave a comment.
MW1 participants -
Stewardship – a stuffy word, but the right word to describe the biblical view of money and possessions. This is, however, the perfect model because the alternative is so risky. The alternative to stewardship is ownership, and ownership can quickly get out of control and begin to rule our life. God loves us and wants what is best for us. Stewardship protect us from ourselves, which is why it is the perfect model.
Next week is a big week as we start to talk about putting together a spending plan (i.e. budget) for the month of March. Question #3 in the Homework is really important – come to class with a list of the categories you would like to use in your spending plan.
Here are some suggested YNAB tutorials worth watching this week. You can find these on the bottom left hand side of this page: http://www.youneedabudget.com/support/training-and-education
Looking forward to being with you all again next week.
Before we start any new enterprise, we need good information. We need wisdom, knowledge and understanding.
[3] By wisdom a house is built, and by understanding it is established; [4] by knowledge the rooms are filled with all precious and pleasant riches.
(Proverbs 24:3-4 ESV)
Gathering facts cannot be skipped. It is one of the most, if not the most, important steps in this process. But the gathering the facts alone will not get us where we want to be. Dave Ramsey has a great observation:
“I am positive that personal finance is 80 percent behavior and only 20 percent head knowledge.”
-Dave Ramsey, The Total Money Makeover
The sweeping changes to our current system start today. The behavior we are going to start modifying first is tracking every single expense. If you spend cash, write it down. If you use your debit card, write it down. If you use your credit card, write it down. Remember – we suspect our money is cheating on us. It is not doing what we want it to do. Start spying on it to confirm your suspicion.
MW1 participants – below is a great video tutorial to watch this week should you choose YNAB as your expense tracking system. Please note that YNAB offers numerous live classes (for free) each day. These classes will give you a broad overview of the software and how to start using it. Both their live courses or their archived video tutorials can be found here: http://www.youneedabudget.com/support/training-and-education
Here is a suggested tutorial to watch this week:
I would also encourage you to watch the ones on Handling Cash and Creating A New Checking Account.
