Prepare Every Needful Thing

"If ye are prepared, ye shall not fear"


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Financial Preparedness–November 2015

Insurance

insurance

When my husband’s grandfather passed away unexpectedly in his early 40’s, he left behind a wife with several children still at home.  The couple had married young, and she had little work experience outside the home. Providing for the family was a real struggle for many years.  What made it worse was that they had recently decided to cancel their life insurance in order to try to get a business off the ground.  It ended up being a very costly choice.  At times our financial position may be such that we are necessarily living hand-to-mouth, but when we reach the point of having discretionary funds, we need to provide for future needs.  Just like building up our savings, purchasing adequate insurance can make the difference between having time to plan and adjust to misfortune or tragedy or having our challenges compounded by a financial emergency.

The amount and type of insurance we carry is a very individual decision that should be based on our particular circumstances.  As I have neither the knowledge nor space necessary to make adequate recommendations here, you will need to contact a financial planner or insurance company for guidance (ask friends for recommendations!), but before you make that appointment, you and your spouse will need to sit down and discuss:

  • What is our annual cost of living?
  • Do we need insurance for a temporary stopgap or to provide for the remainder of the survivors’ lives?
  • Are there additional expenses (such as ongoing medical treatments, end-of-life care, college tuition for children, vehicle replacements, debts, etc) that will need to be covered?
  • What type of funeral costs do we need to cover?
  • How might inflation affect the real value of this insurance over time?

Going in with a good idea of your needs and goals will make it easier for someone to help you purchase insurance suited to your situation in life.

If you already carry life insurance, take some time this month to review your policies.  Sometimes your life or family circumstances will have changed your projected needs.  Contact your provider with questions or to make changes.  In addition to life insurance, review your auto insurance and home or renter’s insurance policies to make sure that they are adequate but not excessive.  For instance, if you have a substantial auto and home repair fund, you may be able to save money on your monthly bill by switching to a policy with a higher deductible.  You may also want to prayerfully consider additional types of insurance such as long-term care, supplemental medical or identity theft protection.  While these may not be for everyone, you may feel prompted to prepare in this way.  Never ignore a prompting!

 “Wherefore, be not weary in well-doing, for ye are laying the foundation of a great work. And out of small things proceedeth that which is great.”   D&C 64:33


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Financial Preparedness–October 2015

Build up Savings and Cash Reserve

cash

“We ought to have a little money laid aside in case of a rainy day.”  Gordon B Hinckley, 2005

One common misunderstanding is that preparedness is only for widespread, apocalyptic-type events.  While we know that these kinds of “great upheavals” will become more common in the last days, we also know that disruptive events occur even more commonly on a single-household basis.  Employment ends or changes for the worse, auto accidents occur, medical emergencies befall, major appliances fail, water pipes break, and things always seems to fall just outside the purview of insurance and warranty.  At these times, having adequate savings can mean the difference between peace in the midst of trial and facing immediate financial catastrophe.

Shortly after our marriage, my husband and I felt prompted to save up for our Six Month Savings Fund.

  • We made a list of only our monthly essential needs and pared them down as much as we could For us, at the time, this was housing, electricity, telephone, water/sewer, insurance, diapers, 2 tanks of gas and a little fresh produce to supplement our food storage.  Multiply by six.
  • Pray!  My husband felt strongly that we should set a certain date to achieve our goal…a date by which it was mathematically impossible for us to reach our goal.  Our reaching our goal by that date was simply miraculous.  Heavenly Father wants us to live providently and will bless our efforts!  Remember Nephi’s courage…
  • Keep your goal in sight.  Pray daily.  Purchase carefully.  Be willing to sacrifice short-term wants for long-term blessings.
  • Once you achieve your goal (congratulations!), keep the money accessible.  It may be tempting to invest it somewhere your yield might be greater, but don’t risk your rainy day fund.  Keep it out of stocks, accounts that are uninsured or have long periods when you cannot access your money (such as retirement accounts and certificates of deposit).
  • Enjoy your new-found peace of mind.  Since then, we have known that whatever calamity may strike, we have six months of essential needs covered so we can address that problem rather than trying to figure out how to keep bills paid and a roof over our heads.

Another important aspect of having money set aside is having Cash on Hand.  This is a bit controversial in some circles, but here are some reasons you should consider it:

  • If your purse, wallet or identity were stolen, you would likely need to freeze your accounts and credit cards for at least a couple of days while they issue you new cards, perhaps much longer if your case is complicated.
  • Severe weather, software problems and security issues can disrupt the daily operations of your financial institutions.  If your bank’s headquarters were just hit by a hurricane, computer glitch or hacker, you may face difficulties or delays in accessing your money.
  • Local power outages can also wreak serious havoc.  Typically, ATMs will not work, credit and debit cards will be useless and checks may be particularly undesirable to merchants if they cannot verify funds or know when they will be able to deposit them.

These are situations we are likely to face that make having available cash highly desirable.  You will need to determine how much.  Recommendations vary.  You should aim to have at least enough for three days’ worth of essential purchases.  You may decide you would feel safer with a month’s worth of essentials, a month’s complete expenses including bills, or even more.  Once you have it, keep it safe.  You may wish to install a good, fireproof safe, or, if your finances do not allow that, search online for suggestions on hiding valuables in your home.  Here is just one page of ideas:

http://lifehacker.com/5960300/the-best-places-to-hide-valuables-in-your-house

 “Wherefore, be not weary in well-doing, for ye are laying the foundation of a great work. And out of small things proceedeth that which is great.”   D&C 64:33


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Financial Preparedness–September 2015

Shopping

shopping

President Gordon B Hinckley got a laugh in 2003 when he was listing womens’ roles and included “shoppers,” in his list.  I appreciated that he followed with, “Until I got older I never dreamed of what a demanding responsibility it is to keep food in the pantry, to keep clothing neat and presentable, to buy all that is needed to keep a home running.”  Shopping wisely and well can be very difficult! Here are some techniques that may be helpful in learning to do it better.

Groceries

Plan menus.  This might seem like a funny place to start, but this makes a huge difference in grocery shopping.  If your menu for the week/month/quarter is planned, your grocery list is made!  It’s much more fun to plan meals on your living room floor surrounded by cookbooks than in Safeway surrounded by your tired kids.

Make lists.  If you shop with a list you will be more likely get what you need and avoid what you don’t.  You will end up with less food wasted and will cut down the amount of time you spend in the store.  Once you know your store layout, you can even make your list in the order you will find the items.

Estimate your costs.  I faithfully estimated every shopping trip back when I was a student and living on air.  You wouldn’t believe the number of times I caught mistakes, both mine and theirs, this way!

Shop with cash.  My mom’s first stop every shopping day was at the bank for cash.  Without plastic, the only way she could go over budget was to make a second trip to the bank.

Plan when to shop.  Limit your shopping as much as possible.  Typically, the more often you shop, the more you will spend.  Frequency will depend on family size, mobility issues and your family’s home food production abilities, but once a week is generally sufficient.  I like to go on Wednesday morning to avoid crowds and to get the best shot at the “while supplies last” sales.

Other items

Don’t rush.  Unless it’s an urgent need, take your time.  This is the shopping version of “measure twice, cut once.”

Distinguish between wants and needs.  “There, there little luxury, don’t you cry, you’ll be a necessity by and by.”  It’s a good idea to do regular evaluations to prevent this slippage.  Make a list of your family’s gray area items and ask yourself, “what if we couldn’t buy this?”  There will be some items you really do need (serious impacts on productivity, health and comfort) and many others that you don’t.   Eliminate them or confine their purchase to birthdays or Christmas.  Luxuries are more luxurious when they are rare!

Do your research.  With smaller purchases, you can rely on trial and error, but for big ticket items check out reviews at Consumer Reports, amazon.com, epinions.com, etc.  Often you can search your item name plus “reviews” or “best” and end up with more info than you could imagine.

Compare prices.  Once you have determined what product you want to buy, start checking out prices.  You can call around, get online or pay attention when you are out making other purchases.  Record your findings.

Buy used.  Check Craigslist or other classified ads, garage sales, thrift stores or ask around.  You can save a lot this way.

Buy online.  Online stores typically have less overhead than brick-and-mortar shops and oftentimes have lower prices and a better selection.  Shipping costs will make or break the deal, so look for vendors that offer shipping discounts.  Also, do your research!  Search the store name plus “problems”, “complaints” or “reviews” and see what comes up.

Plan when to shop.  Summer clothes go on clearance after July 4th and Winter clothes after Christmas.  Back-to-School sales are the time to purchase office and some craft supplies.  Appliances, computers and cars go on sale just before the new models come out.  Determine when you are likely to find the best sales on items you need and plan annual or semi-annual shopping trips.

 

 “Wherefore, be not weary in well-doing, for ye are laying the foundation of a great work. And out of small things proceedeth that which is great.”   D&C 64:33

 


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Financial Preparedness–August 2015

Debt Snowball

snowball“Use it up, wear it out, make it do, or do without!”  “Pay as you go.”  What a contrast these ideas are to the way some live today!  The worst of our culture today is fad and fashion-driven and life with debt is expected, encouraged and even rewarded.  However, we are commanded to be in the world, but not of the world and, specifically, we have been taught “be modest in your expenditures; discipline yourselves in your purchases to avoid debt to the extent possible. Pay off debt as quickly as you can, and free yourselves from bondage.” (Gordon B. Hinckley)  One approach that has helped many become free of debt is the Debt Snowball.  Here is how to create your own:

  • List all current debts.  Include information such as interest rate, minimum monthly payment and total payoff.
  • Now organize your debts from smallest total payoff to the largest.  If you have two debts in nearly equal amounts, list the one with the higher interest rate ahead of the other.
  • Review your budget and determine whether you have any additional money you could put toward debt repayment.  Add this amount to your next monthly payment on debt #1.  If your budget does not allow a larger payment, do not despair, it soon will!
  • Make payments on debt #1 until it is paid off.
  • The following month, apply all the money you had been paying toward debt #1 to debt #2.
  • Make payments on debt #2 until it is paid off.
  • Repeat until all debt is eliminated.

This approach enables one to progress quickly as the smaller debts are eliminated, and resources are freed up to handle larger debts.  The gathering momentum is encouraging and makes it easier to stick with the program and become completely debt-free.  You can read more in the July 2012 Ensign “Getting Out of Debt—for Good”, Luke V. Erickson.

 “Wherefore, be not weary in well-doing, for ye are laying the foundation of a great work. And out of small things proceedeth that which is great.”   D&C 64:33

Note: If you are an Excel user, you can download free Debt Snowball spreadsheets at download.com (search “debt reduction calculator”) and at treesfullofmoney.com (click on “debt snowball calculator”).  These will enable you to input your debt information and see all your payoff dates at a glance.   Be sure  to download cautiously.  Use your anti-virus software to scan links, find and read reviews on products and read all contracts and agreements thoroughly.


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Financial Preparedness–July 2015

Monitor Your Accounts and Establish Sinking Funds

pen and paper2

 Now that you have set up and are tracking your basic budget, you can begin to go in and make small changes that will give you better control of your finances.

The first thing you will want to do is regularly monitor your accounts.  You can do this several different ways, depending on how thorough and accurate you like your personal bookkeeping to be.

  • Check all receipts against statements and then balance your checkbook and compare final totals. (Most thorough and time-consuming.  Essentially, all debits and credits are double-checked.)
  • Check all receipts against statements. (Debits and credits are single-checked.)
  • Scan bank statement and check on anything that seems out of the ordinary.  (A weekly check like this is the minimum you should do as it gives you a chance to catch fraud early on.)

I use the second option.  Here is my system for checking receipts against statements:

Gather the week’s receipts and the checkbook.  Print up the week’s credits and debits from online. Include all bank accounts and credit cards and make sure there is no gap between last week and this, such as a debit that came through late in the day.  Take the top receipt, match it to the debit on the printout and mark both the receipt and its corresponding entry with an X.  When the stack is gone, a quick scan of your printouts will now reveal any irregularities or missing receipts.  Research questionable charges and highlight items where the receipts are simply missing to ensure that they are recorded in your budget.  An uneventful account check usually takes less than ten minutes.

The second item this month is to establish sinking funds.  This is one of the things that makes budgeting all worth it.  Christmas, birthdays, vacations and even less-fun things like property taxes and car repairs will no longer be sources of financial panic or reasons to go into debt.  Simply take your end goal dollar amount and divide it by the number of months until the event.  For instance, you know that your sister would really like a certain $50 boxed set of dvds for Christmas, you have 5 months to save if you want to buy it Black Friday/Cyber Monday weekend, so you simply set aside $10 per month in your budget until then.  If you are not sure how much money you will need, just estimate and adjust as you get a better idea of the actual costs.  For things like repairs, you can save until you hit a certain dollar amount, or turn it into a multi-purpose fund.  We once had a car repair fund turn into a new car fund!  You can set up an actual savings account with your bank specifically for these amounts, or simply keep track of them in your personal accounting, whatever works best for you.  I can tell you from experience how nice it is heading into special events with money to spend, or looking at a well-padded repair fund.


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Financial Preparedness–June 2015

Set up a Budget

budget

Last month we focused on paying tithing, saving receipts and tracking expenses.  This month we take the next step and set up a budget.

  1. Pull out last month’s records and evaluate them, taking notes as you go along.  First, remember the axiom, “spending fifty dollars a month less than you receive equals happiness and spending fifty more equals misery.”  Based on last month’s spending, in which direction are you headed?  Look at the specifics: are you happy with where your money went or are you shocked by some of your final numbers?  Are you living as frugally as you would wish or can you see room for improvement?  Write down ideas for reducing expenses as they come.  This is often inspiration!
  1. Decide how to set up your budget.  Again, it doesn’t matter how you set it up, just find what works for you.  Here are just a few options: **
  1. Based on last month’s records and your notes as you reviewed them, prayerfully set up a reasonable monthly budget in this order:
  • All sources of income
  • Tithing and taxes
  • Required inflexible expenses (rent, mortgage, debt payments, court-ordered payments, insurance, etc)
  • Required flexible expenses (electricity, water, sewer, gasoline, food, clothing, savings, etc)
  • Discretionary spending (entertainment, cable, subscriptions, vacations, gifts, etc)
  1. Establish regular Budget review times.  How often to review budget depends on your and your spouse’s spending habits.  If you spend small amounts on a daily basis, you will need to review your budget at least every couple of days.  If you tend only to do one or two shopping trips weekly, once a week should be adequate.  If you shop only a couple times monthly, you can get away with still less frequency.  The key question is:  Do I know how much I have left to spend before I make a purchase?  If the answer is, yes, you are reviewing often enough; if not, you will need to increase the frequency.
  1. Pray for help. Establishing new habits and exercising self-discipline is difficult and you may want to throw in the towel at some point along the way.  You will need His help. The Lord is not neutral on finances.  Money is a stewardship given to us to learn faith, self-control, service, consecration and many other Gospel principles.  He intends us to use it wisely and well to build the kingdom and bless our lives and the lives of others.  Pray to remember these things and to act in accordance with this knowledge.
  1. Do it!  Print up your pages and put them in a binder, save your spreadsheet to your desktop, fill your envelopes and go.  If you are not initially 100% successful, that’s fine.  Pay attention to where you have done well, say another prayer and resolve to do better tomorrow.  Remember that you have not failed as long as you have not given up.  New habits can be established and you will see miracles in your finances as you continue on!
 
“Wherefore, be not weary in well-doing, for ye are laying the foundation of a great work. And out of small things proceedeth that which is great.”   D&C 64:33

**Please exercise caution in selecting the companies, software firms, etc that are allowed access to your financial records.  As far as my Web protection software could tell, the links I have included are all safe, but please take some time to prayerfully research them, particularly if they will have access to account numbers,  Social Security or other id numbers.  Identity theft can be a major financial blow to an individual or family!


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Financial Preparedness–May 2015

Pay Tithing and Track your Spending

coins-600x600

  1. The Lord has promised great blessings to those who pay a full and honest tithe and so any financial preparedness program should begin there.  By returning a tenth to the Lord, we exercise our faith, show gratitude for His blessings and open the windows of heaven to receive help and guidance as we work to become better prepared.  Please contact the bishop if you have questions or concerns.
  1. The second goal for the month is to keep track of what you spend.  Hang on to all receipts, bills and invoices.  Record these amounts regularly.  Most find recording either daily or weekly works best, as the transactions are still fresh in one’s mind and the quantity of work is very manageable. The record-keeping can take place in a notebook, in a spreadsheet or on a computer budgeting program.  Some banks and credit unions even offer such tools as part of their services.  Just find a method that works for you and begin.  This is an important preliminary step for setting up a budget, which we will do next month!

Basic budget sheet from lds.org:

Sample budget worksheet

“Wherefore, be not weary in well-doing, for ye are laying the foundation of a great work. And out of small things proceedeth that which is great.”   D&C 64:33
 

The Lord’s guidance for keeping our financial houses in order is very basic. This section will repeat annually.