planning

Everything You Need to Know About Filing All the Correct Tax Forms On Time, Every Time

Everything You Need to Know About Filing All the Correct Tax Forms On Time, Every Time

We help small businesses navigate through the sea of confusing paperwork to make sure the right forms are sent out at the right time. To give you a better understanding of how it all works, we’ve created this convenient list of important documents and their due dates.

Why You NEED a Budget

I have a client I met about 5 years ago, and at that time she was broke. Worse then that, she was in a bad relationship, and without her other half she would not have been able to pay her bills.

The first thing I noticed when we met to talk about her finances, aside from her lack of funds, was that she had no budget or system to create one. So we put one together.

Needs

The budget was simple. We started by setting up a spreadsheet (think Google Sheets) using her weekly paycheck amount and her average weekly grocery and gas bill. Then came her average monthly expenses: cellphone, TV & Internet, mortgage payment (which included escrowed expenses for property taxes and insurance), car insurance, and utility bills. She went through her bank statements to get actual amounts so we knew we had real information to work with. What good is a budget if the amounts aren’t accurate?

It turns out she was earning barely enough to cover her necessary expenses.

and Wants...

Then we covered the less critical expenses such as dining out, movies, clothes (for her and her two school-aged children), and pet expenses for her dog. Forget vacations, she hadn't traveled in years and knew it wasn't in the cards. But she did admit to buying herself new clothes about once a month (the kids more so when they needed them). She also had a relatively healthy dog that only needed an annual visit to the vet so his expense was minimal (aside from food which was also negligible).

Once we added her wants and needs into her budget, it was clear she could not afford everything on her own. However, with the extra support of her not-so-great boyfriend, she could more than afford her current lifestyle.

But she wanted out of the relationship.

Small Potatoes

After we put it all together, I was able to step in and do what I do best; analyze. The first thing to go was her monthly habit of clothes shopping. We agreed she would need new clothes from time to time, but not every month. By cutting this monthly habit she was able to save money and also became more aware of seasonal sales to get really good deals (Black Friday anyone?).

Dining out and going to the movies were also off the table. For the cost of taking her kids to the movies every month, she could sign up for Hulu and Netflix and have endless content choices for less. She also cut her TV package down to internet-only because she now had Hulu and Netflix for TV & movies. Some might argue the lack of content choices so we added a few bucks per month for a weekly visit to her nearby Redbox.

Big Ticket Items

Despite these cutbacks, we still hadn't made the progress she needed. So next, we reviewed her insurance policies. Guess what? She hadn't thought to combine her home & auto policy. As soon as she did (and changed insurers) she started seeing big savings.

Where it gets better is on the mortgage. She had been paying pre-recession interest rates (think 6.5%) but during our meeting (circa 2011), rates were at about 3%. We worked with a local bank to refinance her mortgage and dropped her payment hundreds per month. We even cut the mortgage from a 30-year term to 15-year term and the payment was still less with the added benefit that her house would be paid-off much faster.

Make It Happen

Not soon after her mortgage was refinanced she was able to give Mr. Not-so-Wonderful the boot. Even without him she was able to pay her bills and save a little for emergencies. The greatest part of this experience was that she was able to declare her personal and financial independence by changing some of her habits implementing a budget. Today she is doing very well; she has established college funds for both of her children and has built up a nice emergency fund. She has even been able to re-introduce some of her wants back into her lifestyle and is less stressed out about finances because she now uses a budget to plan.

What are some methods you use to budget and stay in the habit of budgeting? Add them in the comments section.