Category Archives: Single Mom Living

Adventures of a Single Mom – Camping

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Adventures of a Single Mom – Camping

A few weeks ago, I realized that this coming May will signify 5 years since I started this Single Mom gig.  I am shocked how fast this time has passed and it started me thinking back to the beginning ….. and our first adventure as a threesome!

Camping!

I have such great memories of camping when I was a kid. We camped with other families, so there were plenty of us kids running free through the woods, the streams, the campsites.  Our days were filled with exploration and fishing and swimming; Our nights were filled with roasting marshmallows and singing songs around the campfire with my Daddy and my Mom strumming guitars.

My mom, my big sister, me and my little brother and our dog in front of our tent.

My dad doing dishes in our camping kitchen.

Those adventures ended when my parents separated.

I wanted my kids to have these kinds of  memories, too, but instead of ending with a marriage, our adventures began at the end.  Are you following this?

Knowing that their dad was moving out as soon as his new place was ready, I was looking for something they could be excited about post-D Day.

I cannot remember what my inspiration was, but I knew without a “certain someone” to nix all my grand plans, the possibilities were endless.  I found a place that rented popup campers and booked a weekend in May along with a recommendation to a local lakeside campground.  I also had to borrow a truck to haul the camper and who in Texas doesn’t have a truck, except me.

Another great memory from my childhood.... all of my family and my mom's family piled into our popup

My mom got so excited about my plans, that she booked a camper for her and my step-dad and they joined us for the weekend.

So Friday after work, we headed to the local campsite and me and kids figured out how to set up a pop-up camper.  Success!!!

We built our very own, no lighter-fluid used, camp fire and roasted hot dogs for our dinner.

We slept comfortably and I even figured out how to make a bacon and egg breakfast in that tiny little kitchen.

We took long walks to the bathrooms and had a great time checking out the amenities.

We fished with leftover hotdogs and didn’t catch a thing.  The kids rode bikes and I took pictures of stuff.

We celebrated my Step Dad’s birthday, and roasted marshmallows and made S’mores.

We grilled burgers and did fun things with my camera and their little camping lanterns.

We fished some more and watched the ducks and my son accidentally threw his sister’s fishing rod into the lake trying to master his casting.

And on Sunday, we brought our first “Threesome” adventure to a close and packed up and went home.

And so began our love affair with camping……

And 6 months later, Santa (Mom) surprised the kids with our very own (used) PopUp camper!

But not before my parents ran out and bought this…..

and we became a camping family once again.

Yep, the guy with the cap and cigarette is the same little boy from the picture at the beginning…..

~Dona~

Taxes and the Single Mom

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Tomorrow, April 17th, is tax day for 2012 and for those of us who have not completed our taxes yet, here are a few tips to help you get it together.

Get it Together

Being slightly ADD, I find that having all my information in one place as I sit down to do my taxes will keep me from getting distracted.  Otherwise, as I run around the house looking for information, I can certainly stumble across  other things that require my immediate attention.

A list of these items also helps keep me focused.  So, grab a manilla file folder and on the outside, make the following list (only the items that apply):

Income:

W-2 (Job 1)

W-2 (Job 2)

1099-G (Certain Government Payments) i.e. Unemployment

Interest Earned:

1099-Int (Bank 1)

1099-Int (Bank 2)

Interest Paid:

Form 1098 (Mortgage 1)

Form 1098-E  (Student Loan Interest Paid)

Child Care Credits:

Print out of payments to Daycare/Childcare

Donations:

Monetary Donation Receipts

List of Goodwill/Salvation Army drop-off/pickup with Fair Market Values)

Investments:

Form 5498 (IRA Contributions)

Form 1099-R (Investment Payouts)

Medical:

Receipts (if taking deductions)

Form 1099-SA (Distributions from an HS, Archer MSA, or Medicare Advantage MSA)

This is not an inclusive list.   Since most people don’t have very complicated situations, this should cover most situations.  If you have a business, I recommend a  separate folder for those items.  Heck, I recommend a Tax Consultant.


With the items listed on the outside of the folder, start collecting this information and putting it into the folder and checking them off.  A series of check marks can be very satisfying.

Where to Find it

Income:

W-2’s should have been mailed to you by your employer postmarked by January 31st of the year.  Many employers utilize payroll management companies that allow on-line views and prints of checks and W-2.

1099-G will be sent by the local government agency and can also be viewed on-line via the payment history.

1099-Int (Interest Earned Income) should be mailed from the banking institution and is also available though their online banking portal.

Deductions:

Form 1098 (Mortgage Interest Paid).  If Property Taxes are escrow-ed and paid by the mortgage company, this information should also be on the Form 1098 that will be mailed by the Mortgage company.  If payments can be made online, then this information should also be on their online portal.

For Child Care Credit, a printout of the money received by the Day Care Provider will be needed with the full name, address and tax Id noted.  In my experience, the Day Care will only provide this information upon request.  This is a very important tax credit for anyone that is paying daycare.

Donation receipts should include gifts of money made to churches and other charitable organizations.  Remember that if you receive anything of value in return for your donation, then only the portion that is given above the value of the goods or service is tax deductible.  Ask the organization for the fair market value of goods or service you received and deduct it from the amount you donated.  Always get a receipt to support your donation.

Other donations include goods provided to organizations, such as Goodwill or the Salvation Army.  Be sure to keep good records and utilize a Thrift Store value of the items you donate.   And if the total of all your goods contributed values at more than $500, you have to file IRS Form 8283 with your tax return.

Here is a link to the Salvation Army Donation Value  Guide to help you find a value for each item that you donate.

Investments:

These can be both Income and Deductions.  If you are putting money into pre-tax and even some post-tax investments, you can receive certain deductions.  Discuss these with your Tax Consultant.   If you are taking payouts or cashing-out your investments, then these are considered income and can be taxable or even carry penalties if you pay/cash out before you are qualified to do so.  Check with your Financial Adviser  or your Tax Consultant.  If you have complicated investments, I recommend both a Financial Adviser and a Tax Consultant.   A Financial Adviser should not be giving you tax advice.

I thought this was a great article on Investment Deductions.  I was surprised by a few items on this list.  Specifically, writing a check for the maintenance fees for my retirement account, rather than having it deducted from the account, allows me to deduct those fees.   I may have to try that.

Medical:

HSA (Heath Savings Account)  are offered by some employers in conjunction with a high-deductible insurance plan.  This account allows you to save pre-tax dollars to spend on your medical bills and deductibles (much like a Flexible Spending Account but you don’t forfeit your unspent money at the end of the year).  It also allows you to save long term (year after year) and use the money in future years when you have a medical need.   Disbursements are reported to the IRS with the Form 1099-SA and are not taxable as long as the disbursements are for medical services and goods.

Check out this page for all the benefits, qualifications and contribution limits of an HSA account.

Git’er Done

Now that you have it all together, plugging your information into a Tax software  or visiting a Tax Prep Service or dropping off with your Tax Consultant will be much easier and allow the forms preparation to go much faster.

Get Ready for Next Year

Do you really want to go through this craziness again?  I didn’t think so.   Right this minute, pull out another manilla (or whichever color you prefer) file folder and mark it 2012 Income Tax and put it with your other files.  The next time you receive a tax document in the mail, make a drop at Goodwill, print off a receipt for a donation or a business expenditure, drop that document right into the file folder.   Viola!

Are You Getting a Refund? 

I really don’t want to know if you are getting a refund.  Rather, ask yourself if you would rather have that money in your paycheck each month or let the government have it (interest-free) for almost a year.  Some people enjoy the surprise of a refund come Spring but wouldn’t you rather have that money working for you rather than just waiting for you.

What if you took that extra money each month and put it into an interest-bearing account?  You would have more money next Spring than what the government would offer you.  If you want to take charge of that money, then you may want to revisit your W-4 and modify your exemptions.

This link from the IRS will help you determine the correct number of exemptions for a new W-4.   After changing your exceptions and submitting it to your payroll department, remember to check your paychecks to be sure you are “on-track” to paying the same amount of taxes you paid last year (assuming all income and deductions are the same).   You can change your W-4 as many times are you want, so feel free to make adjustments  as needed to ensure that you are paying your fair share and no more.  Otherwise, you may find yourself facing a tax bill, rather than a refund next year.

Hope this information helps you get on the ball and get your taxes done and off your plate.   After all, there are more exciting things you need to be doing.

Happy Tax Day!

~ Dona~

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~

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~

Money and the Single Mom – Debt

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Being a Single Mom is stressful enough with kids calling your name day and night, making demands on your time and attention, while juggling work, chores, bills, and laundry.  Being a Single Mom in debt is like have more kids, making demands on your hard earned money.  Maybe, even, interfering with your ability to make the bills or spend time with your kids because you have to work so many hours just to stay afloat.

In my last Money and the Single Mom – The Budget post, I mentioned that debt was like having extra weight.  It bloats your budget, slows down your savings and creates an underlying sense of unworthiness.

Is a debt-free life a reality for a Single Mom? Yes.

Debt Freedom Feels Like This

My Story

During the demise of my marriage, we split our debt as equitably as possible and each of us took responsibility for our portion.  We had furniture payments, credit card payments, and a defaulted student loan that, in hindsight, I should have never co-signed.  The remnants of a life that was no longer.  It was scary to be responsible for even half of this debt we had accumulated and have only a single income.  An unreliable single-income, since my job was on a contractual basis.

In my effort to remove this scary debt as quickly as possible, I made some poor financial decisions for a quick solution.  I was debt-free for about 6 months before I started accumulating again.  It was only when I started practicing the principles below, I was able to systematically eliminate all my debt and be truly debt free!  It was difficult to change my ways but the road to glory is never easy.  But it is definitely worth it.

There are two reasons we get into debt

Emergencies: What usually gets us into debt is the “Emergency” that forces us to turn to our credit cards to rescue us.  A flat tire, a car repair, an emergency room visit, a broken wash machine….. all at the same time!  Now imagine if you had $1000 or even a $500 sitting in a savings account just for those type of emergencies.   Wouldn’t that take care of most emergencies and give you more peace of mind than a credit card?  Imagine a life where you pay for emergencies as they happen and not get a bill for it later

Self-Rewarding: The “I need it now” or “I deserve it because I work hard” mentality causes us to live beyond our means.  It’s reaching for the credit card to purchase those new shoes because you’ve had a bad day and feeling pretty will cheer you up.  Or, like I did, take the kids on a Disney vacation because I’m more fun than their dad and we deserve it because I am a Single Mom. (I can’t tell you how many times I’ve thrown the Single Mom card to justify what I want).   In reality, other than the food, shelter, clothing and utilities, you don’t really need much.  An neither do the kids.

Steps for Getting Out of Debt

1.  Build a Fund for Emergencies.  Depending on your income, this can be somewhere between $500 to $1000 to start.  Stop paying extra on your debts until you have this in the bank.  Sell off stuff you don’t need, turn off the cable, stop the extra driving around and start socking away the money and put it in a savings account that does not give you super easy access.  I use http://www.SmartyPig.com, an online savings bank, but there are many other accounts that you can tie to your bank account so you can move the money to and from your checking account without having “at the moment” access.

2.  Cancel your Credit Cards.  Quit carrying them around.  Cut them up.  You don’t need them.  You have an emergency fund.  And, no….. new shoes is not an emergency.   Too tired to cook is not an emergency.  A spa weekend for an overworked Single Mom is not an emergency.  Get out of the “I deserve it” mentality.

3.  Live by your Budget.  I cannot emphasis enough how important creating AND using the budget will be for a Single Mom’s peace of mind. As you build your first budget, it will take time to make one that truly works from month to month.  Keep learning from your budget and tweaking it each month.  It has to make sense for your life in order for it to work for you.  The budget will help you SET and KEEP your priorities straight.  It’s a wonderful tool I talk about here.

4. Develop a plan for paying off your debt.  List your debt from smallest to largest, ignoring any interest rate, and start paying extra on the smallest until it is gone.  Then combine that amount with your current payment on the next largest and when that is paid off, apply that payment to the payment for the next largest.  Continue to do this until all your debt is gone. For most people, with average debt, this could take up to 18 months or more.  Be patient.  I can assure you that it is worth it.

Like weight loss, debt did not accumulate overnight and it won’t disappear overnight.  To live a debt-free life, it requires a change in your mind-set, your behavior and it requires a plan (Budget and Payoff Plan) that you work every week.

Things NOT To Do To Get Out of Debt

  • Do not take out an equity loan or a consolidation loan to pay off your debt.  It sounds like a good idea, but you are just trading debt for debt.  Chances are you will be increasing the interest rate on the lower rate cards and in the end pay more interest each month and less principle.  Also, an equity loan puts your home in jeopardy should the unthinkable happen.
  • Do not cash in your 401(k) or IRA to pay off debt quickly.  This puts your retirement into jeopardy.  You are trading in a longer term cash value for an instant solution.  The longer money sits in these accounts, the more money it makes.  By removing this money from these accounts, that money is no longer working for you.  We will talk more about this phenomenon in future posts.

While these solutions provide instant gratification, there is no lesson learned.  I say this from experience, because I took money from my IRA to pay off my debt and within 6 months to a year, I was almost right back where I had started. And my Retirement account is much poorer for it.

This second time attacking my debt, I had to work hard to stick to my budget.  I sold things, like my motorcycle, reduced services like cellphone and cable and changed my habits.  The hardest thing was giving up my American Express Gold Card, because I kind of liked impressing people with my Gold Card status.  It was difficult to admit to myself that I was this shallow.

The rewards of being debt-free far outweigh the momentary gratification from having something new.  Once you are debt-free, then you can begin the next important step…. Saving …… Big Time!

Next Wednesday:  Money and The Single Mom – Savings

~Dona~

Money and the Single Mom – The Budget

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As a Single Mom, I am the CEO of  a little sole proprietorship known as, Mi Familia.  A multifaceted, non-profit,  organization with only one revenue stream…… ME!!

Scary thought!

When I was married, I paid all of the bills and drove most of the financial decisions.  So handling money, bills and reconciliations is not new to me.    However, Money Management was a whole new challenge with a reduced income,  no spending accountability and no fall back plan.  Where is the collaboration on how the money is to be spent?  Who is gonna stop me from buying another pair of shoes?  Who do I blame when the money runs out before the month does?

Since that time, I have studied many aspects of Money Management.  There are great tools out there that teach everything from the basics of Money Management through the intricacies of Wealth Building.  It became the difference between Surviving and Thriving for me.

And it all begins with the most old-fashioned of notions; Living within your means and sticking to a budget.

The Budget

This Single Mom’s best friend is my budget.  This tool, when used daily ( I do mean daily), allows me to own my world.  I think of my budget as an allotment of money, much like an allotment of calories.  If you overspend the allotment of calories for the day, then you will gain weight.  If you overspend your allotment of money for the month, you will go into debt.  And having debt is a lot like carrying around extra unwanted pounds.  Uuugh!

The concept of Zero-Based budgeting, as taught by Dave Ramsey , is how I plan my spending.  My budget for the month shows how every dollar will be spent before the month begins.   I know that all my needs will be taken care of each month and in sticking to my budget, a few of my wants will be satisfied, as well.

Zero-Based Budgeting

This is based on the idea that each and every dollar is spent, on paper, before the month begins.  Beginning with the basics, I write down the monthly amount for each of these:  Rent/Mortgage, Water, Gas, Electric, Food.  If I can pay these bills, then the kids have food and shelter and life is good.

Got money left over?  Good.  Then I write down the monthly amount for each of these:  Clothing, Auto, Insurance, Gas, Daycare.  If I can pay these bills, I have everything I need to get to work everyday.

Still have money left over?  I address my debt.   If you have debt, then get on a schedule to pay these bills off and add these to your monthly budget.  Remember:  Paying the minimum on your debt will keep them around FOREVER.  Pay as much as you can on the smallest bill each month until it is gone and then move that money over to the next debt.

Finally, I make sure I put some money for savings (10% is recommended) and some for giving, maybe some blow money (money to spend however I want)  and there should be $0 left to spend at the end.

A simple spreadsheet can help you set up your budget.

The Why’s of Budgeting

Debt is dangerous.  Especially for a Single Mom.  I have one income and controlling where that precious money goes is imperative to my survivability.   If you are living beyond your income, then you are incurring debt.  Stop that now!

Budget is a “NO” wins situation.  When my budget says “NO”, then I can win every argument with your kids.  You can always blame the budget, like it’s a third person at the dinner table.

I have found that planning my money ahead of time and spending accordingly makes it feel like my money does more.  Once you stop letting money slip through your fingers, you will be surprised how abundant your money feels.

A budget is empowering.  Making decisions over who will and won’t get MY money puts me in control and that can be very satisfying.

A Final Note

If the word Budget feels too constricting, please feel free to refer to it as a “Spending Plan” or a “Cash-Flow Plan”.  Whatever you call it, if you don’t have a plan, your money will just slip through your hands.

I recommend the following websites for online tools:

http://www.daveramsey.comFREE Zero Based Budgeting Tool

http://www.kiplinger.comOnline Budgeting Worksheet

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:  Ways to Avoid (additional) Debt