I Was Robbed By My Dentist
On Monday I went to the dentist because I felt as though my teeth were splitting apart. Somewhere over the last two months I started getting food stuck inbetween these two teeth in the back and it was becoming really annoying. I went to the dentist initially for a consultation for braces or something to push the teeth back together. As he started looking he discovered I had a cavity in one of the teeth which caused the back of the tooth to loose some tooth resulting in a small gap. My now free consultation turned into $60.00 out of pocket cost for a filling.
The dentist numbed my mouth up and started drilling. Suddenly he starts saying “Oh, oh yea, there it is… definitely the cause.” He continues on his expedition into my mouth and suddenly goes “uh oh, Hand me the camera!” Suddenly he is taking pictures of my tooth, drilling a little more, taking more pictures. Then he calls in another dentist into the office and says take a look at this, this is a good example. I’m now thinking to myself how does a cavity become a case study don’t they see them every day?
The dentist leans me up and starts showing me the pictures; Here is the original cavity, you can see it here after I drilled down. Then he explains that due to the food stuck in between the teeth all the time another cavity formed on an adjacent tooth. O.K, I’m thinking but this still isn’t a cause to break out the camera and call in the other doctors. He goes onto explain how in the tooth with the original cavity, there was a filling. Somehow the underside of the filling started to decay so he took the liberty of drilling almost all the tooth out. At this point he takes his gloves off and says This is a great candidate for a crown, I’ll have the office manager come in and go over the financing.”
So my consultation turned into a filling, which turned into two fillings and then turned into a filling plus a crown. I’m sitting there in disbelief as the office manager shows me the $350.00 bill that I need to come out of pocket if I accept the treatment plan. I’m sitting there thinking to myself “Do I really have a choice, I’m literally missing a tooth back there and it’s drilled down pretty far, if I don’t accept this it’s really going to hurt later.” I call the bank to transfer some money from my emergency fund into my checking account and I pay the bill. Three hours later I walk out with an appointment for my crown, a temporary crown in my mouth and a sore feeling in my bottom. I think I was robbed by my dentist!
TMM Top 20 Series: Build a Better Budget
To get a good idea of where you spend most of your money and what you can budget more closely, keep all of your receipts and record your spending in the appropriate categories below.
Create a new category if you have to. Set up a spreadsheet in Excel to keep a running list. Or keep tab of how much you are spending in a notebook. Whatever works best for you.
Top 20 Budget Expenses
1. Mortgage (or Rent) payment
2. Vehicle payment
3. Health insurance
4. Other insurance (vehicle, renters or home insurance, etc)
5. Student loan payment
6. Credit Card payments
7. Other loan payments (personal, home equity, etc)
8. Savings
9. Retirement
10. Investments
11. Food
12. Gas
13. Cable and Internet
14. Phone and/or Cell Phone
15. Prescriptions and Medical co-pays
16. Other education expenses (books, supplies, etc)
17. Hobbies and Entertainment
18. Pet expenses
19. Other Miscellaneous Expenses (ex: unexpected repairs or frivolous spending)
20. … got an expense to add? Let us know below.
This is a general list of the top twenty expenses that most people in their twenties incur. The list is meant to help people sort out their actual living expenses and be able to properly set a budget. This list is not meant to be all encompassing, nor is it in any particular order. Actual expenses and order of expenses vary by reader.
With that said, make sure that you include everything since we all tend to forget the irregular expenses. Then analyze your spending habits. Figure out where you can cut back (usually on the unnecessary compulsive purchases) and set a goal for the following month.
Keep in mind: it will be hard to cut yourself off from a normal luxury, so start out by spending only half of what you normally did. A common example is cutting back on the Starbucks runs. Or even smoking less will save you a bundle.
At the end of the month, take the money that you saved and either pay down some bills or add it to your savings account. Make new goals each month going forward until you reach a comfort level and Voila! You have a budget!
Seem simple? Actually, it is. The hardest part is getting started. Good luck.
~K
Financial Health Check Up - Where Does My Money Go
After drawing up a budget I usually find that everything falls in line, I have plenty of excess money each month after I budget out for all my bills, savings, and other categories. I can use that excess money for saving, spending, goals, tithing it doesn’t matter as long as there is a place for it on the budget. The real problem is my bank account does not reflect this excess at the end of each month. Occasionally my wife and I have an issue with money that just seems to vanish. This phenomenon is called over spending and many Americans are guilty of it.
The Causes of Over Spending
Although I don’t have statistical data to back it up I think television and advertising is a large part of the equation. Have you wondered why companies spend millions of dollars on advertising each year? Just the Super Bowl ads cost multitudes more than regular prime time advertisements. You have ads on billboards, bus stops, buses, the radio, even our website has advertisements. Advertisements on the television and other places work, that’s why people spend more on things they don’t need. Have you noticed if you are watching t.v late at night you suddenly become hungry? Chances are you will hit food commercials, and they do look good!
Another cause of overspending is the relative ease in which most people can obtain consumer credit cards. The credit card companies offer you incentives to use their card, whether its cash back or reward points. How many people actually build up these rewards? Most people obtain a credit card with little knowledge on the proper use of one. They build up balances on them and neglect to pay them off in full, opting instead to pay the minimum balance. When you have a credit card there also seems to be less of a psychological connection with it. I know for myself it is far harder for me to depart with cash in my pocket than it is to pull out the credit card. This is why when I got shopping at the mall with my wife I leave the card at home and only bring the amount of cash we agreed upon spending.
Our Final, but surely not the last cause of over spending is that of emotions. There are many times we let our emotions get the best of us. My personal story, I was fresh out the military and doing some consulting. I had recently broken up with my girlfriend who at the time was my longest running relationship. I kept seeing her everywhere I went and it was starting to irritate me, especially when she showed up with other guy’s. What did I do, I went out and spent $26,000 on a BMW with hardly any money down. This was a bad financial mistake that I made but I still have the car and I still love it. I currently have over 135,000 miles on it and it runs amazingly. I plan on driving it at least another 3-4 years before even considering the purchase of another one. But the point of that story is I let my emotions drive my spending. I wanted to feel better and I did feel better but it was a temporary joy, once those payments hit some of that joy faded. Emotions can drive our spending in many ways. We will spend to keep up with the neighbors who just purchased that new 42 inch television. We make purchases because we want the best for our children. Occasionally we even become addicted to spending (shopping). I know a few people who are addicted to shopping, they have piles of clothing in their closets that still have tags on them. They let their emotions guide their spending, and this creates shortages each month.
Analyzing Your Spending
Now that we’ve explored some of the causes of overspending lets see if we can figure out where our money is going each month. The first part of analyzing your spending is to figure out what you are actually spending your money on. I won’t lie to you, this is tedious work that requires a great deal of organization. What you need is:
- A Small spiral Notebook
- A Small organizer, like a coupon organizer
- A Small Pen/Pencil
Your task, should you choose to accept it is to document every last expense. You will write down everything you spend money on from your morning coffee all the way to the 50 cent pack of gum. You will keep track of your expenses by writing down everything, and storing the receipt in your organizer. At the end of each week you will go through the receipts to ensure your records are good. After a month has passed you should have a decent amount of transactions written down in your notebook.
You will now take your transaction notebook and start going through it. Create categories such as dining, gas, clothing, household et cetera. You will find that at times it is hard to categorize things, to this I heed warning; Do not make a misc category and start throwing things in there, it tends to be counter productive. As you categorize and add up the values of spending over the paste month you will start to see trends forming. Perhaps you will realize that last month you spent over $150.00 on coffee each morning, and another $100.00 on coffee in the afternoons. It’s truly amazing how little things such as coffee can add up to a large amount over time. You will also find things such as every time you stop in the afternoon for a drink you also pick up a lottery ticket and a bag of chips. Your stop for a $1.50 drink just turned into $5.00, at the same time your waste line might be turning into something else!
Every Penny Counts
You may not realize it but every penny counts. Little things have a tendency of adding up relatively quickly and it’s up to you to nip that early on. In my opinion the best way to start decreasing your spending is in small increments. You don’t want to cut out all of your overspending the same day, it would be the equivalent of a person trying to stop smoking, drinking, and sniffing glue all in the same day it just won’t end well! What you should do instead is slowly decrease your spending by changing habits individually. You can apply the Try it For 30 Day’s method I’ve talked about before on TMM. After 30 day’s of trying something, you will pretty much make it a habit, then its time to move on to the next expense.
Financial Health - Initial Check Up
Every 3,000 miles you take your vehicle into the shop to get an oil change and a general check out. We visit the dentist at least annually to ensure we have healthy teeth and gums. We visit the doctor annually for check ups, or if we get a small cold to ensure we pull through it. How often do we perform financial check ups? This article addresses your initial steps in determining your financial health. Print it out at the office and take it home as a guide.
Gather Documents
Your first step towards a financial check up is to gather all your information into a central, organized place. For my family finances I use a 12 section accordion folder. This way I can organize items into categories such as; “Bills”, “Income Statements”, “Stocks”, “Credit Cards”, “401k/IRA”. The information you need is largely dependant on what you have. Some general, but critical items you need to gather are:
- Income Statements
- Bill Statements
- Credit Card Statements (with Balance)
- Retirement / Investment Accounts
- Mortgage Statement / Rent Statement
- Other Loan/Debt Statements
Open Documents and Organize
Many people I know will have to open envelopes in this phase. Most of the individuals in our age group don’t keep spectacular records. I’m not saying everyone is guilty of this but, if you have a pile of envelopes that have never been opened before sitting in front of you then its time to open them, categorize them, and file them with the most current on the top (or in the front) of the folder.
Calculate Net Worth
This step entails some math, you will need a calculator, a pencil (if doing your balance sheets, and financial statements by hand), your excel spreadsheet, or financial tracking software such as Quicken, or MS Money. This is the part where you will place your assets into proper categories on paper (or in excel), write down your liabilities and calculate the difference. This calculation will tell you where you currently stand. If you have a positive net worth, very good but check the numbers again because not many people in their 20s have a positive net worth, unless of course you listen to CNN and their “Where do you stand” calculator which claims most people in their 20s has a network of $400.00.
In order to calculate your net worth you will add your assets on the top. This includes things such as savings, stocks, 401k balance, money in your checking account that is not accounted for, cash in your pocket or under your mattress even equity in your house and vehicles. This can actually be exciting and a happy moment when you value your vehicles, realize how much equity you have in your house and see the final number. Then you will experience the depressing aspect of calculating your liabilities. The Liability category on your net worth spreadsheet includes mortgage, credit cards, car loans, personal loans, money you owe your sister from last Christmas. This is a big turn off to people and probably one reason most people don’t do this often. Seeing how much you owe written down on paper each month can be a depressing experience. Don’t fret, stick around Twenties Money Magazine and we will lead you to a brighter future, help you get that debt monkey off your back and have a more relaxed night sleep!
Now that you have the sum of your assets and the sum of your liabilities you will subtract the sum of your liabilities from your assets. In my case my network becomes negative because I count my mortgage as a liability. As time increases that mortgage amount will decrease the liability portion and increase my asset portion.
Analyze Monthly Cash Flow
Your fourth step is to analyze where all of your money is going. Personally I don’t like using items such as Microsoft Money, or Quicken. From my perspective there are far too many buttons and items in the menu that it consumes more of my time on data entry. I use a simple excel sheet that I’ve created for all my bills, categories and general monthly money flow planning. Your budget measures your monthly cash flow, you want to account for all of your monthly income and your monthly out go. Your monthly out go consists of bills, consumer credit payments, gifts, and your tithing. Your monthly income will consist of your pay checks, dividends from stock investments, retirement income (some 20s have been medically retired from the armed services).
Generally your aim is to determine where your finances are going and ensure you don’t have a monthly deficit. Dave Ramsey has an excellent monthly budget calculator/ sheet called the gazelle budget. Unfortunately you can not save the budget as an excel sheet, which would make it all that much better. The thing I like most about Dave Ramsey’s gazelle budget is the recommended percentages it shows.
Next Up
After analyzing your monthly finances, calculated your net worth and have created a budget you may find yourself in a state of depression. If that is the case, you can probably chase your negative monthly cash flow back to over spending. The key is to discover where your monthly deficits are, and correct you’re over spending. Tomorrow we will address over spending, and how to correct it.
Financial Health Check Ups
Every 3,000 miles you take your vehicle into the shop to get an oil change and a general check out. We visit the dentist at least annually to ensure we have healthy teeth and gums. We visit the doctor annually for check ups, or if we get a small cold to ensure we pull through it. How often do we perform financial check ups? For my family and me we review our finances monthly. We calculate our net worth, which thanks to a new mortgage is negative. We make sure we know what bills need to be paid, what bills are coming up. We budget; we calculate and perform general maintenance where we need it.
Many families don’t perform financial check ups, and I’m sure that singles do it even less. Ask someone how much money they have in the bank and you get a ball park figure. I have many acquaintances who have grown head aches because they over drafted their account and just don’t understand how! A good friend of mine was experiencing some financial ups and downs which caused her to move out of her apartment and move back in with her father. After listening to her I handed her my copy of Kiplinger’s Practical Guide to Your Money: Keep More of It, Make It Grow, Enjoy It, Protect It, Pass It On (Kiplinger’s Personal Finance)
Another question to ask is how much debt you have. Many people don’t have a true number, just a ball park which is usually way under what they actually owe. I have an acquaintance who is somewhere in the neighborhood of $50,000 in debt. He has no true idea how much he owes because he doesn’t check on it. He just sends the minimum balance and presses on with his life.
This week I will be writing about financial check ups. I will address the check ups in a generalized manner which can be applied to your monthly check ups but will start out from the beginning as if you have never performed a financial check up before. We will talk about what items to gather, setting goals, over spending, planning, psychological influences. We hope that you will enjoy this week’s articles, news and reviews. Thank you from Kristin and I for all the support all of you have given us, your continued readership and thanks to Patrick from Cash Money Life for all his support, encouragement and wisdom! Go check out Patrick’s blog he’s got some great stuff over there!
Financial Stress, Skewed
A friend of mine came across a report that was about young adults financial struggles called “Young People: Living on the Edge.” So he asked me to respond to the study, saying that it would be a nice piece for TMM. And I concurred.
First off, let me say that the lead for the actual report came from a fellow blogger, Ms. Emily Gerson who was making a guest post on the Free Money Finance blog. She wrote a passionate piece about the surveys findings and included her own experience and opinions on the situation. However, after a little research of my own, I would like to argue the situation another way.
The report has a few valid points and certainly has stated the obvious; in so many words, they explained that young adults are under financial stress and that the current economic situation does not make it any better. However, I believe that this report could have been done much better.
As we all know, some survey results that we hear or read about should not be taken very seriously because they were poorly done. More often than not, the researchers skew the data to the answer that they are looking for and blow the results out of proportion. So I approached this report with that idea in mind.
For anyone who has ever taken a statistics class, you would know that conducting research is a fickle thing, especially when you are using surveys. Your results are only as good as your data. So if your “random sample” is not random enough, if your sample size is not large enough, or if the focus group is not targeted enough, then your data will lead to inconclusive or statistically insignificant results.
I believe that this is the case with the report “Young People: Living on the Edge.” While they had good intentions, I think that they became misled in their motivation to do the survey. Qvisory is a young activist group, so-to-speak. And they actually have a nice website set up with good advice for readers in their twenties. I would suggest scanning over a couple pages if you like that sort of thing.
Anyhow, Qvisory set out to help young people, politically, by doing this study and presenting it to other important political groups in Washington, D.C. and online. However, in their endeavor they may have inadvertently allowed for a few things to slip through the cracks of the research filter.
With that said, I shall point out what are, in my opinion, their faults in the study. I noticed that the reports conclusions were drawn on a broadly defined focus group. To say that a “young adult” is from 19 to 35 is odd and has the potential to skew data. This does not mean that a 35-year old is not young. It’s just a point to consider because someone who is in their early thirties will be going through different things in their life and they have a different lifestyle than someone in their twenties.
Duly noted is that their methodology memo explains that there were parts of the data that they “weighed,” or in other words, that they adjusted. Adjustments are subjective and give wiggle room to skew data, thus they should be avoided. But interestingly enough, the methodology also included wording in which they recommended that their internet survey data should be “considered with limitations in mind” because of the nature of the sampling method can compromise the data. So basically, they were saying to rely on the data at your own risk - a disclaimer.
So the point is, I am not saying that I don’t agree with some of the statements made in the report. In actuality, I agree that young adults across the nation are feeling the pinch. And I don’t need the survey to know that the current economic situation is not making it any easier. But, I don’t think that this is the survey to prove it.
~K
Back to School Special - Free Ipod
I wanted to highlight an article that Patrick published this morning. It’s really more of an advertisement but I think this is a great deal for anyone going back to school. If you are currently looking for a new computer for the school year Apple has a deal for you! The deal is available under the Apple Education Discount to eligible students and teachers. Now through September 15, 2008, qualified individuals will be eligible to receive a free 8 GB iPod Touch ($299) or 8 GB iPod nano ($199), and a free printer (up to $100) with the purchase of an eligible Mac computer.
See the article over at “Cash Money Life” for more information.
“Here’s Your Sign…”
Recalling my last article: My College Sold Me Out, I couldn’t help chuckling at an article that I found in the Austin Business Journal.
Is it just me, or are credit companies a little dumb?
TrueCredit.com (by TransUnion, one of the Big Three credit bureau’s) and Zogby International did an online survey to see if college students were coming out of college with credit card debt. They also asked the students if they signed up for credit cards because they were offered a “free” gift or a special offer.
And wouldn’t ya know it? Survey says: College students do have credit card debt. Some even admitted to signing up because of the free stuff.
What did they think they were going to find out? That college students don’t use the credit cards that are pushed on them? Here’s your sign…
~K
Unexpected Repair: Emergency Fund Or Monthly Excess?
Yesterday I was looking over the budget and my bank account, doing the routine of balancing out the checkbook and making sure I had paid all my bills. I noticed that I was under budget by about $800.00 this month and I was thinking cool, throw half in savings and the other half towards an additional car payment to expedite the payoff process. I was excited because normally I am only a few hundred under budget, so having this much extra is great!
My wife got home from work last night around 5:30, the sound of her truck pulling in was followed by the sound of a loud crash. Instantly I knew she had just hit the garage door! I controlled my anger pretty well, at least pretty well for me. I told her to walk away from the truck and garage so I would not start yelling at her. I could see she already felt bad enough about it I didn’t want to deal with the garage door being broken and her crying. Assessing the damage I concluded it was not that bad, the truck was fine and the garage door could be hammered back out using a rubber mallet. The one thing I noticed however was the bottom bracket which holds a wheel was slightly bent and needed to be corrected otherwise the garage door would not function properly. I suppose in my contained anger I completely neglected the warning sign that said “ Do not remove the red bolts.” I removed them, and soon thereafter realized the err of my ways! Those bolts held the bracket for the tension line that holds the garage door. Now my garage door is lopsided and really messed up!
I can’t fix the problem myself since I’m not a hands on person, I’m more of a hands on computer person and am more than willing to pay someone to do what I can’t. The real question is, do I file a claim with my own auto insurance for this? Do I file a claim with my home owners insurance? Do I pay for it out of my emergency fund? Or the alternative, pay for it with my monthly excess money?
Since it was motor vehicle related I’m unsure whether I can claim it against my home owners. The truck that hit the garage door was mine, so it would go against my auto policy and that’s only if the repairs don’t exceed $500.00 (my deductible). Does this constitute an Emergency? I guess the moral of this story is don’t count your chickens before they hatch. I really hate sometimes how life will throw curve balls such as this at you, but I guess it makes life more interesting!
What do you think? How should I pay for this? Do you have a “Spouse stole our extra money” story? Leave a comment!
CNBC Stock Picks for 20 Somethings
The sinking stock market is enough to scare off most investors, let alone those in their 20s who are just starting their investment portfolio. So, CNBC asked four market watchers for stock picks — given a five-year time horizon — for 20-somethings.
Kristin takes care of most of my back up analysis when it comes to stock picks. She bought this article up to my attention and in the email said that she only agrees with 3 of the picks. Of course, every person is different when it comes to investing and you should follow your own desires, risk tolerance and do your own research.
