I don’t have any financial knowledge to drop on you today. But I do want to take a moment to say that I appreciate you for taking the time to read my articles and supporting my blog!
You are the reason I continue to put my ideas on this screen and it means the world to me to know that you find the information I share valuable enough to keep coming back!
I’m excited for what the future holds and having you be part of this journey!
Happy Holidays!
Last night (as I sat in a turkey-induced coma) I watched in amusement as family members were gearing up for their annual Black Friday outing. Newspaper ads were strewn across the dinner table while they chatted about the most strategic routes to the best deals and how much they budgeted to spend at each location.
Their whole process reminded me of an article I read a few years ago that recommended a family spend 1.5% of their gross annual income during the holiday season for gifts.
That number kept running through my mind as they said their goodbyes and headed out to spend their hard earned money.
It is easy to get “wrapped up” in all the hype about what you should be buying, or how much you should be spending.
Our society is obsessed with putting a number to happiness. If you don’t achieve that number, you feel like a complete failure; no wonder why so many of us have the winter time blues.
It is unrealistic to generalize everyone’s situation, and, to suggest that spending 1.5% of your annual income is the “norm”.
For instance, a family might have an annual household income of $250,000, but have horrible cash management skills and are drowning in debt.
Is it fair to say they should spend $3,750 this holiday season because that is what is expected? I don’t think it is.
I believe there are ways for families to still have fulfilling holidays while keeping on a budget, but not falling to social pressures.
The keyword in knowing what the right amount for you to spend is budget. If you don’t know how you are spending your money, you won’t be able to identify problem areas that are holding you back from achieving your goals.
Simple cash management today can go a long way in future financial success.
It usually takes six months to a year of continually tracking cash flow in order to get a good idea of where your money is going. Once you have established a budget that allows you to fulfill your most basic needs and goals, you can start to branch off and save for the things you enjoy; vacation, hobbies, holiday spending, etc.
Many financial institutions offer savings accounts that are aimed at specific goals. These are great ways to keep yourself on track for holiday budgeting. As a bonus, they usually have certain periods that you can withdrawal money, which will keep you from being tempted to dip into it.
If you don’t have a budget set up yet, or you are struggling to stay on budget, here are some recommendations that can help you keep your holiday costs low, but still enjoyable:
These are just a few budget-friendly ways you can take part in the holiday spirit.
What it really boils down to is that creating memories and sharing time with loved ones is more important than any material gift.
Don’t get sucked up into what other people are doing and focus on what makes you happy.
I’m on an impromptu road trip this weekend to North Carolina. Unfortunately, my Grandmother passed away on Monday and the viewing is today.
I didn’t have a lot of time to plan and one of the decisions I had to make was whether to rent a car or take my own.
There are two factors to consider when deciding to drive your own car versus renting a vehicle for a road trip.
The first is to crunch the numbers.
If you rent you’re going to have to pay the rental company a fee to use their car. The cost will vary depending on how long you are renting and the type of vehicle you choose. The longer you will be renting and the smaller the vehicle, the lower your rate will be.
The rental car company will try to up-sell you on items like insurance, GPS, and XM radio. This can add $60 to $100 per day to your daily rate! I never take the insurance the rental car company offers.
I prefer to call my insurance company to let them know I’ll be renting a vehicle and request they add rental car coverage (specifically loss-of-use coverage) for a limited amount of time. I also decline the GPS and XM radio options. We have cell phones that can do both things for free.
But what about the cost of driving your own car? You likely own your car so it doesn’t cost anything to drive it. Even if you have a loan, I wouldn’t consider the loan payment in the cost.
Instead, you’ll need to calculate the “wear and tear” costs. This would include things like oil changes, tires, and other parts. A long road trip will speed-up the deterioration of your car’s parts that would normally only be replaced every few months or years. A good rule of thumb to calculating these costs is to multiply the total miles of the trip by $0.20.
Of course, there is the cost of gasoline. You’ll have this cost whether you rent or dive your own car. However, make sure you know how much gas the rental car company wants you to return the car with. If you’re responsible for dropping it off with a full tank, but don’t, they’ll charge you to fill it up. I’ve made this mistake before. It cost me $10 per gallon!
The second factor to consider are the things that are more phycological in nature and less about cold hard numbers.
For example the condition of your car. If you have a new car, you might be hesitant to put a thousand miles on it for a road trip. It’s new and you want to keep it that way!
On the other hand, if you have an older vehicle, you might worry if it’ll make the trip at all. If it broke down, you’re in for the cost of towing AND
There’s also the WOW factor of getting to drive a different car for a few days. It’s new and it’s exciting! Especially when you’re on your way to somewhere warm and opt for the convertible!
These psychological factors are harder to substantiate because they aren’t based on fact. They’re based on our feelings. They are still important to take into account though.
I can’t say there is a definitive right or wrong answer. The math may say one thing but the emotional drives may say another.
Just like my trip to North Carolina. The math was clearly in favor of taking my own car. But my car is a few thousand miles shy of 100,000 and my emotions said to prolong hitting that milestone for as long as possible. Even though hitting 100,000 miles a few months earlier than planned would have zero impact on the reliability of the car.
You know how the old saying goes, “If all of your friends jumped off of a bridge, does that mean you should too?”. Well, in the case of starting a blog, yes, Mom, I do think it’s a good idea!
Blogging has become quite popular with financial advisors lately. And for good reason. It gives advisors the ability to get their values and ideas on paper and share them with the entire world.
I started this blog as a way to (selfishly) work on my writing skills while at the same time (altruistically)
This blog will be for folks who don’t have a lot of time to sit down and read an exhaustive article about complex financial strategies. Instead, expect weekly five-minute reads where we’ll break down strategies — from simple to mildly complex — using easy to follow flowcharts and supporting commentary. I’ll also have periodic articles where we’ll take a closer look at random financial planning related topics.
You can learn more about me here. You can also connect with me via e-mail at patrick@precedentam.com.
