Monthly Archives: March 2012

Money and The Single Mom – Wealth Building

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I always believed that Wealth Building was something “rich” people did.  As I have schooled myself in the area of personal finance, I have learned that Wealth Building is not just for the wealthy.  It’s for everyone, even a Single Mom, like me.   Who knew, right?!?!

There comes a time to stop living like there is no tomorrow and start  making financial decisions that will support your longer term goals.  These could be to save for a down payment on a home, provide some money for the kids college, save for retirement, a newer car and/or simply to provide a comfortable cushion should life throw a few lemons your way.

None of these items are out of reach as long as you establish your priorities.

Wealth Building begins with a positive Net Worth.  What is Net Worth?  It is the mathmatical outcome of the value of your Assets minus the cost of your Liabilities.

Assets .v. Liabilities

Anything that is owned that has value, such as a home, auto, cash, art, and investments is an Asset.   Assets always have a positive impact to your Net Worth.

A Liability is anything in which money is owed and has negative impact to your Net Worth.  The more debt you carry, the more it offsets the positive influence of your Assets.

For Example

A spreadsheet adding all assets and making adjustments for liability will provide a clear picture of your Net Worth.  In the example below, Assets are listed on the left side based with their present value.

On the right is where all liabilities are listed and valued.  Home loans, car loans, student loans and credit card debt are all liabilities.  This would also include any outstanding money owed to the IRS or legal fees or liens against your property.

A house is an asset, except for the part of it that is financed.  Since this is a debt that will need to be paid (a liability) the asset is offset by the liability.  If the house is worth $200,000, but $150,000 is owed, the asset is only worth $50,000  (200,000 – 150,000 = $50,000).  Since the money owed is less than the value of the house, the house remains an asset but for only the amount of the equity (value – debt = equity) of the home, $50,000.

On the spreadsheet above, the house value is listed in the Assets column and the Mortgage is listed in the Liability column.   The Liability will offset the Value.

If the value of the house (the amount at which it could be sold) is less than the amount owed, then the house becomes a liability.  “Upside down” is a favorite term for this scenario.

Net Worth

When the two sides of the spreadsheet are added together Assets – Liabilities = Net Worth, the Liabilities will always devalue Assets dollar for dollar.   In this example, the Net Worth is listed at the top right-hand side at $165,500.  This person has a positive Net Worth and that is the beginning of building wealth.

Now imagine if that person only had a house debt.  Without liquidating any of their assets, that person worked really hard (took a second job, maybe) to pay off their debt and today only had a house payment each month, then their Net Worth would have increased to $210,000 (reducing the liabilities column to only the $150,000 owed.)

Building Wealth

A positive number in the Net Worth box is the start of Wealth Building.  Why?  Well, all things being equal and should someone call in all your debts, you would not be completely broke (assuming you sell all your assets).    I recommend that this exercise be done every quarter and if this number is climbing, then you are increasing your assets or decreasing your liabilities and, therefore, are Building Wealth.  If this number is declining, then chances are you have increased your debt load.

So, it is to be said that the first steps to a positive Net Worth is to create a budget, remove the liabilities, i.e. debt, and start saving.  Your goal each month should be to pay off debt and/or add money to your savings or your investments.  Both will have a dollar for dollar positive effect on your Net Worth.

There is no “Get Rich Quick” scheme for building wealth.  It takes planning, budgeting, saving and investing.  By the way, putting $5 a week toward the lottery is not an investment, nor is it a plan.

At this point in your financial development, investments should be limited to 401(k), IRA, or Mutual Funds.  I do not recommend investments in jewelry or art or even property until your Net Worth is in excess of $1M or you are comfortable paying cash for these items.

I will cover more of how to make your wealth work hard to make more wealth in my next blog in this series….. Money and The Single Mom – Investing.

On a Personal Note

I have been working on my financial plan since 2009.  At the time, I calculated my Net Worth and have tracked it quarterly for these past 3 years.  During that time, I paid off all my debt (except the house) and I am careful not to incur any additional debt by planning purchases and living within my means.  I have begun to give to my 401(k) and building my Emergency Fund.   As a result, I have consistently increased my Net Worth by at least 5-10% each year.  I am building wealth, as a Single Mom, and you can too.

Now You're Thriving!!!


Free Net Worth Spreadsheet – Excel

References: 

3 Simple Steps to Building Wealth, Investopedia.com

5 Ways to Build Wealth Automatically, Forbes.com

I recommend the following books for more insight into budgeting and other money matters:

The Total Money Makeover – Dave Ramsey

Debt-Proof Living – Mary Hunt

Next Wednesday – Investing

~Dona~

Book Review: My Single Mom Life

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Several years ago, as my marriage was crumbling, I came across this book at Walmart and I snatched it up immediately.  When the Good Lord hands you a guide to the next phase of your life, you grab it, of course.

It was this book that helped me to understand that my new life was not a tragedy, but an opportunity to make a better life for me and my kids.  An amazing life.

The author, Angela Thomas, found herself in a life she didn’t choose as the single mom of 4 children.  Her first response was to fall apart and grieve for 3 long months.   With the encouragement of her parents and a bossy friend, she turned to her faith and began to piece together her life and bring a wholeness to her family.  In an ironic turn, she sold her wedding ring to buy furniture for their first home and with that, began to feel like they were going to make it.

As she walked this journey, she shares her experiences in solo-parenting, finances, dating, setting boundaries and changing her perspective.  While it is an uplifting story with practical advice on how to put one foot in front of the other and decide to have an amazing life, she shares her lonely-mom side, too.  She skewers the idea that since we have children, that we are never lonely.  We are.  God made us for companionship.

She has a wonderfully wholesome outlook, using her faith in God to establish a framework for her Single Mom Life.  There is no bitterness here.  There is no blame.  Her story is about taking survival to the next level.  It’s about living with integrity and passion.  It’s about thriving in your circumstance.

Her storytelling style is an easy read and with a graduate degree in Theology, she carries her spirituality through out the entire book.

I bought this book 5 years ago.   It gave me hope and conviction that the kids and I will have a great life together and that my faith and my attitude was going to make all the difference for me and for them.  I have read it again each year and I find something different each time that I can apply to my life at the given moment.

I recommend this book to anyone who is a Single Mom or preparing for life as a Single Mom.  Whether you are surviving or thriving, you will find this book to be inspirational.

~Dona~

Adventures in Table Making – Wrap Up

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As promised in Monday’s post here, I wanted to wrap up all the choices, costs, timeline and references in making this table into a single post.

References

Table Plans:  www.ana-white.com   Narrow Farmhouse Table

Table Top Idea:  www.deuxmaison.com (I love the rustic finish on the base here, as well)

Tapered Leg Jig

Materials & Costs:

I purchased Select Pine boards for this project.

Table Top:

8 – 1x3x6  –  $5.35 ea =  $43

Base:

2 –  1x3x6 – $5.35 ea =  $11

1 – 1x4x10 – $11

2 – 1x4x6 – $6.43 = $13

Scrap 2×2 (13¾”)

2 Cans White Primer =  $8

2 Cans Satin Ivory Silk = $8

2 Cans Matte Clear = $8

2 cans Wood Stain = $8

Total: $110

Dimension:

Table Top:

66″ Long  20″ Deep

(Remember to not cut 1x3s to length until after the boards have been glued and sanded)

Base:

Legs:  29¼”

Side Aprons: 58″

End Aprons: 13¾”

Maybe someday I will know enough about SketchUp to draw some awesome plans.

Colors:

Table Top:

Golden Pecan Stain

Cherry Stain

Base:

Ivory Silk Satin

Tips:

1.  I like to sand all the pieces before I assemble the final product.  That way there are no awkward angles or corners to sand into and the only sanding after assembly will be to smooth out any added wood putty.

2. Clamp together similar pieces and sand together to keep pieces uniform.

3. Test out stain and paint colors on test boards, including a poly coat.

4. Use a hair dryer on a cool setting to eliminate bubbles in your brushed-on poly coat.

Timeline

I completed the table top and the base as two separate projects over two weekends.

The table top took about 2.0 hours to assemble and sand allowing for a day to let the glue set and sanding a short time each evening.

The base took about 2.0 hours to assemble and sand.

Each coat of Poly was allowed to dry for 24 hours with a very light sanding between each coat.

I hope you enjoyed following this project and learned something new, like I did.  Good luck on your next project

~Dona~

Adventures in Table Making – Part II

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Here it is!  The table that I have been working on these past few weeks.   The table top, which I discussed in Part I, is now married to the base.  (Que Wedding March)

The Base

The base comes from these plans on http://www.ana-white com, the Narrow Farmhouse Table.

Except, her plans are for a table 96″ long and 30″ deep.  I loved the tapered legs in this plan, so I modified her plans down to 66″ long and 20″ deep in keeping with my intent and location.

Tapered Legs

The challenging part of this plan (click illustration above for Ana’s plan) was the tapered leg.  The goal, of course, was to have 8 uniformly tapered legs.

After a few failed attempts to make perfect cuts with a circular saw and a jig saw, I ran screaming to the internet looking for a better solution.  And I found this…..

Tablesaw Tapering Jig

Click the illustration above to get the directions for making this Jig for the tablesaw.  It was quick and easy to make with scraps I had on hand.

After making the jig, then I set up my saw for the 1×3 sized legs.  The fence was set to ensure that the saw blade entered the wood at the appropriate place and then I loosened the screw to get the angle that I wanted.

I was able to make 4 identical legs from the 1×3 boards.

Then I set up the jig for the 1×4 board by making the same adjustments to the fence and the screw to ensure I was getting the exact angle cut that I needed.

Once I got the hang of  it, and I did have to make adjustments to the screw a few times to get exactly the angle that I wanted, it was quick work to make the 4 identical legs from the 1×4 boards.

After all the cuts were made, I clamped the boards together to sand them to ensure they remained identical.

Then I glued and nailed the 1×4/1×3 combo’s together to get 4 distinct leg sections.

Be sure to follow Ana’s Leg diagram in Step 3 to ensure you are creating the correct combinations.

Framing the Base

I made some changes to the base from the original plans.  First, I removed the leg braces.  Since the table is not as deep as the original, it didn’t require the additional bracing.  Also,  I did not want to detract from the beautiful legs.

I did add the bracing and instantly regretted it.  I removed both of them with a swift whack of the hammer (while bracing the legs).

Second, I replaced the 1×6 apron with a 1×4 apron.  Again, the smaller table did not need that type of super structure and the 1×4 allowed more leg clearance when using a chair with a standard seat base height of 18″.

Using clamps, glue and a nail gun, I attached the apron to the legs.

Prepping the Base for the Table Top

The original plan for adding a table top to the base was to attach individual 1×8 boards screwed through the top.  Instead, I had created a single piece table top that I wanted to attach through the bottom.

So, rather than adding the 2×2 table supports as shown in Step 6:

I added corner brackets and a single 2×2 support in the middle which I glued and nailed into place.  The corner brackets are there to screw down the table top from the underside.

Painting

I used a color board to decide on a paint color for the base.  I matched this color board up with the stained top to get an understanding of how the colors would work together.  Plus, I can take the color board into the target room to see how the colors work in the lighting it will live in.

I did attempt to use just a clear lacquer finish to bring out the beauty of the select pine, but I’m afraid my cheap nail gun made too many blemishes that needed corrections and the lacquer would only accentuate the wood putty.  So, I decide a painted base was in order.

I applied three thin coats of white primer.

Followed by three thin coats of Satin Ivory Silk

Followed by two thin coats of Clear Matte.  After allowing the base to dry for 24 hours, I was ready to attach the table top.

Attaching the Table Top

I carefully laid the table top upside down onto some towels and then placed the inverted base on top.  I carefully measure and remeasure the overhang and made some reference marks.  In the case that the base is not perfectly square, the reference marks will allow it to be squared up as it is screwed down.

The Scary Part

I cannot count how many times I have ruined a beautiful finish by accidentally choosing the wrong screw size.   Since I was attaching the top to the base from the underside, there was the risk that I would end up piercing the finished topside if I was not careful.  Nightmarish stuff.

First, I made absolutely positive that I had the correct screw size (1 ¼”) for all 4 screws by stacking two 1×3 scrapes and ensuring the screw would not protrude, even if slightly countersunk.

Second, I knew I needed to make pilot holes to ensure that the wood would not split and I was concerned that I would drill through the finished topside.  To prevent this, there are two methods.

1) Use a piece of tape to mark on the drill bit the depth to which you want to drill.

2) Countersink your drill bit into the chuck to the desired depth.  Measure your depth with the 1 ¼ screw.

Next, I made pilot holes and then sunk the screws working in opposite corners to allow for squaring up as I went.

I made sure the Base was flush with the table top and did not overtighten.

So, I have gone from this:

Desk Mock Up

To this:

Narrow Farmhouse Table

Lots more to share with you regarding the final wood/color choices, costs, project time and some building tips.  I will save this for tomorrow while I savor my finished table.  Sometimes I walk into my bedroom several times a day just to look at it.

I will also be linking this on www.ana-white.com as a brag post.

Money and the Single Mom – Savings

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Savings!

I’m not talking about what you “could have” spent if you didn’t get those shoes on sale.  I’m talking about purposeful, methodical accumulation of funds.  A savings attitude will serve you well when Wealth Building for retirement and kid’s college funds.  However, first and foremost,  you will need to build a healthy Savings account.  This Savings Account, known as an Emergency Fund, will be the buffer between you and that sense of doom, that horrible overwhelming feeling when disaster calls.  Believe me when I say disasters come in spades.

Surviving or Thriving?

A well-funded Emergency Fund is the key difference between surviving and thriving as a Single Mom.  As a Thriving Mom, you are taking control of your money.  You are on a budget, out of debt and now you are building a safety net to keep you and your kids safe from the unexpected pitfalls of life.  Things like illness, job loss, or any interruption in income can be difficult for most two-income families.  It can be devastating to a Single Mom.

Last October, my son had to be hospitalized for 3 days from an infection from an indoor swimming pool.  While still paying for what the insurance didn’t cover, he then had to have his front teeth rebuilt from a biking accident.  This month alone, my slab has sprung a leak ruining my laundry room and hallway flooring and my car bumped fenders with another car (so not my fault but no one wants to believe me).  Of course, I have insurance, but I also have deductibles that need to be met before my insurance will kick in for the rest.

The point is… disasters will happen and sometimes they just refuse to wait until you have recovered from one before the next disaster takes up residence in your life.

Enter the Emergency Fund!

As recommended in my blog “Money and the Single Mom – Debt” , you should have a small emergency fund of $500 – $1000 to cover unexpected emergencies as you focus on getting out of debt and stop using credit as a safety net.   The next step is to make a BIG Emergency Fund.  This fund should be large enough to cover your minimum living expenses for up to 3 – 6 months.  This fund can support you should you lose your job, or have to take time off from work for a child’s illness, or even replace a refrigerator or buy a reliable used car.  This is not the “Momma needs a Cruise or a New Car” or “The Kids Deserve an Xbox” fund.  This fund is your security blanket and your Superpower.

How to Start Saving

The rule of thumb is to take 10% off the top of each paycheck and start socking it away into a savings account.  Sounds easy enough, but most people who don’t have a habit of saving will most likely find this a difficult step.   Most of us are stretched to the limit, as it is.  Here are a few ideas to help you get your Big Emergency Fund started:

I recommend reading “Live Your Life for Half the Price”  by Mary Hunt (Everyday Cheapskate) to get great ideas on how to live well for less.  Borrow the book from the library and start shaving that 10% off your lifestyle and moving it into your savings account.

Look closely at your budget and start getting rid of unnecessary expenses.  Revisit your insurance, your electric company, your cable and phone bills and find out if switching companies can get you cheaper rates or remove features that you really don’t use or could otherwise live without.  Do this on an annual basis.  You will be surprised how many new luxuries make their way into your budget each year. 

Selling stuff is a great way to clear out the clutter and beef up your Big Emergency Fund.  When I sell stuff, I immediately put the money into my SmartyPig account.  Do you have anything that you can sell in a garage sale, eBay or Craigslist?  Then take a picture and get it posted.

If you have successfully paid off all your debt, then move that payment into your savings.  You’ve been living without it all this time, you won’t miss it.

A second job or overtime is always a great way to stockpile money quickly, but is not always an option for a Single Mom.

Remember that 10% should be your target, but if you can only scrap together 3% or 5% for a while, then don’t let that stop you from getting started.  You will be surprised how fast it can grow even from the smallest input.

Where to put that Money!

That money needs to be some place where you can get to it when you really, really, really need it, but not so easy that you can just transfer it over to your checking account to cover an unexpected “retail therapy” shopping spree.

I recommend having it in a different bank all together and have found that some of the online banks like SmartyPig, ING,  Ally can give you the best  interest rates available.  Do your research  and you can set up an online account tied to your regular checking account with $25 or less.   Then set up automatic withdrawals on your pay dates.

Patience!

It will take some patience, some sacrifice  and some time to reach your 3 or 6 month goal and there will be setbacks, since emergencies come unannounced all the time.  Don’t give up.   There will be a peace like you’ve never know when an emergency comes to take a bite out of your fund.  While you will be sad to see the money go, (and it will be done with a lot of kicking and screaming) it will feel less like doom and more like a simple inconvenience.

Now You’re Thriving!

I recommend the following books for more insight into budgeting and other money matters:

The Total Money Makeover – Dave Ramsey

Debt-Proof Living – Mary Hunt

Next Wednesday:  Wealth Building

~Dona~

It’s Spring Break

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and I will be at Six Flaggs all day today with the kids. This is an immense sacrifice on my part, as I detest spending long hours, standing on concrete, waiting in line for a 2 minute adventure. And since I can’t find anyone to take my kids to this “Rites of Spring”, I must sacrifice my comfort and enjoyment to make awesome memories for my kids.

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Adventures in Table Making – Part 1

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Enough about my Home Office Makeover.  I’m taking things slow and having to make a few purchases or builds, which will require waiting for my April Budget.   I might even try my hand at upholstering some slipper chairs that I want to build/add to my office.

When I decide to build, I look for plans that I can use to make what I want and then I read them and read them and read them again until I can make it in my sleep.  At that point, I feel comfortable tweaking the plans to suit my liking.

Remember when I mentioned building a desk/table for my bedroom in this post?  I found a plan here, on www.ana-white.com, which is a great site for plans to build beautiful and functional furniture.

The dimensions shown were a bit larger than I had in mind for the space.   I was looking to create something more of a sofa-table-sized desk to put against that wall and anchor my artwork.  I loved this long lean look.

So I did a mock up of the size that I was thinking to ensure that it was truly a functional depth and length.  I used 8 ft cedar fence boards (because that is all I had and didn’t want to cut them down) and then used a small table that I shimmed with boards to get the height that was in the original plan.  Here is the mock up.

Desk Mock Up

The 8 ft length was more than I wanted for that area, so I decided to shorten the length to 66 inches (a few inches in each direction wider than the artwork) and shorten the depth to 20 inches so that it didn’t interfere with the normal flow of traffic into my bedroom.

There are many reasons I picked this plan.  The first reason was the wonderful tapered legs which I knew would be a beautiful detail and a challenge to my skill set.  And it was both!  …. more to come in Part II of this blog.

In reading through the plans for this table, each of the table top pieces are attached individually to the frame to create a table top.   I wanted to take those single pieces and make a solid table top and this differentiation was my second reason for choosing this plan.

Building

Starting with 8 – 1×3’s (which measure ¾ x 2 ½) to reach that 20 inch depth. (vs the 4 – 1×8 boards in Ana’s design which I would have had to rip boards down the middle or modify my dimensions)

Ready to be a Table Top

True that I could have just used a piece of birch plywood cut to fit…. but where is the fun in that!?!

I lined up the boards, without cutting to size yet, by the short sides and put a bead line of glue between them.  Then I clamped them together using  scrap boards to keep the 1×3’s from squeezing out.

Be sure not to clamp them too tight or all the glue will be pushed out and the table top will eventually break.  Allow the bond to set overnight.

It would have been sweet had the boards all lined up prettily and gave a smooth top from the start….

Before Sanding

So, it took some work with the belt sander to smooth out the unevenness and make a top that looks seamless.

Sanding

Using a belt sander with a 50 Grit Course Sanding Belt (which is used for surface leveling and paint removal), I smoothed down the ridges on both sides of the table top.  This was a slow process.  I worked on it for about 15 minutes at a time  for 3 evenings and I made sure that I used a dust collector, hearing protection, protective lenses and a dust mask.  I think I scared the children.

After getting the ridges smoothed, I switched to an 80 Grit Medium Sanding Belt  and sanding again and finally a 120 Grit Fine Sanding Pad with my small sander to smooth the surface.

Next, I cut the table top to length using a straight edge and a circular saw.

Staining

When I mocked up the table using the Cedar Fence Planks, I was drawn to the warm color of the cedar and how well it matched the other furniture in my room.  So, I bought a few different stains and tested them out on scrap wood.

First I applied Pre-Stain Wood conditioner to the scrap wood then a coat or two of stain.  I tried both Golden Pecan and Cherry.

The Golden Pecan on the left is too light and the Cherry is too red.  So I did a blend of the two…… Cherry on the bottom and two coats of Golden Pecan on top.

And that gave me the warm rich color I was looking for.

With 1 Cherry Coat

First I applied Pre-stain to the board and then wiped off the excess.  Then, I applied the Cherry stain with a brush, waited 10 minutes and wiped off the excess with a soft cloth.

Next, I applied the Golden Pecan with a brush and then wiped off the excess after 10 minutes to get this effect.  I was very happy with a single coat of Golden Pecan over the Cherry.

After staining, I applied two coats of satin Poly with a brush allowing each coat to dry overnight and light sanding between coats.  I had bubbles show up in my poly as I was brushing it on.  Most the bubbles disappeared when it was dry.

After two coats of Satin Poly

The Table Top is now ready for a base.  Which will be Part II later this week.

Project Costs

8 – 1×3’s -Select Pine – $57

2 – Cans Stain – $6

1 – Can Pre-Stain – $5

Paint Brush – $6

Total Costs:   $74

I already had:

Gorilla Glue

Poly

Have you ever taken on a project just because you knew it would challenge your skill level?  I did with this project.  Making a solid smooth table top with sticks of wood was an amazing experience.

Have a great week and reach for the unknown.

~Dona~