Category Archives: Budgeting

Budgeting

Is It Better To Take A Meal Per Diem?

When you’re working on the road, you’re entitled to a meal per diem. Every once in a while if you’re an independent contractor you might decide that you’d rather not accept that because you’d rather use your receipts to write off for expenses instead. Is that a good move or not?

To get to this question you have to start with the knowledge that you only get to write off half of your meals. So, if you spend $50 a day on meals, you only get to write off $25.

It turns out that, unless you’re working in an area where your meals are very expensive, you can actually benefit by accepting the meal allowance, no matter what the rate is.

For instance, in 2014, the expense rates were $259 as a high rate and $172 as a low rate based on where you’re working. This equates to roughly $35 or $25 a day for meals. Just so you know, this normally includes what’s known as “incidental expenses”, which means tips and things like that.

So, let’s take the lower rate. Basically, by average it’s expected that most people would spend around $4, $7 for lunch and $9 for dinner, which comes to $20. Anything you spend over that, including that extra $5, is on you.

The question to ask yourself if how often you might go over the $50 a day amount while you’re on the road.

Let’s say that you work Monday through Thursday. Most probably you leave on Sundays so you can work Monday morning, and you leave late on Thursday or early Friday morning. You only get paid for meal per diems when you stay overnight, which means you’d get paid for Sunday through Wednesday. That’s about $100.

If you’re flying at least 5 hours in a day your costs might be higher because airport food is expensive; even lunch could cost you $20. So, on a travel day, you might spend closer to $40. That’s still less than the $50.

If you decided to eat out one day a week during 4 days your dinner might cost you $40. If you balanced everything else out for the day your total meal for that day would be over $50.

Even with two travel days in the mix you’d end up slightly better with the meal per diem.

Say you stay two full weeks. With the lower meal per diem, you could possibly come out way ahead. A way of looking at things is that anything not covered by the meal per diem is considered an allowed expense. If you know how to budget your money, and you’re staying in a room where you have at least a refrigerator, you could end up on the positive end because you might spend less than what your per diem gives you, and all your other expenses can be written off your taxes in full.

So, the recommendation overall would be to accept the meal per diem, even if it’s on the low end. Many years ago, when you had to turn in receipts, it wasn’t such a luxury because companies would sometimes balk at paying for meals they felt were extravagant, and that would cause unneeded conflict. These days, where they don’t track anything like that for convenience, you can spend your money however you want to.

Has this been something you’ve wondered about? If so, hopefully we’ve alleviated some of that consternation.

Budgeting, Managing Money

Are Sales Always Economical?

This weekend is one of the biggest sales periods of the year, and every year around this same time it seems like the best deals of the year are coming up. Whereas it seems like the best time to save money, one has to be wary of some of the deception that takes place at the same time.

For instance, there are many smartphone deals this weekend, and all of them might seem like you’re going to save a lot of money. You might, but you need to pay attention because most of the phones on sale are already obsolete. It’s rare to see the latest models having big discounts at this time of year, and truth be told, if you see a discount it’s probably not a new discount but something that was already available with a switch in plan that’s just been renamed for the holiday.

There are also places you’ll go to where you’ll see discounts of up to 50%, but if you do some homework and look at the prices during the year you’ll see those items have been marked up and then discounted, to the point where your savings aren’t really what they’re purported to be. That’s pretty sleazy but there’s nothing illegal about it.

The biggest thing to take into account is whether the item is something you actually need versus want; that is, if it’s for you. If you’re buying gifts for someone else we’d hope that you had a budget for that sort of thing. If not, it’s worth taking some time to think about things you really need, even if it’s for business purposes, and then determine if it’s worth the purchase.

Business furniture is always a good purchase at this time of year because it’s an industry where, sometimes, moving inventory is relatively static. It also works because things like desks and chairs rarely goes out of style.

Computers are something you need to take a good look at, even if you need one. It’s good to have an understanding of things like RAM and storage capacity and chipset. For instance, if you need office computers mainly for email and bookkeeping then you don’t need anything with 8GB of RAM, whereas if you’re making 3D models and the like the extra capacity is a great benefit. The same goes for storage, since most businesses will never reach a level where they’re going to need terabytes of files. As for chipsets, there’s mainly two (the names of which we won’t mention here) and, truthfully, both are good but one has a name that gets more respect and thus can drive the price of a computer higher than needed.

Overall, it’s best to figure out how much money you’re willing to spend after you put together a list of things you want, whether it’s for business or pleasure. Also, the best thing about shopping in today’s world is that you can take some time to do a little online research to see where you can get the best price.
 

Budgeting

4 Ways To Save Money On Gift Buying

It may be too late to get some of the best bargains for some holiday shopping but anytime you can get some ideas of how to save money that might fit within your budget as it pertains to gifts it’s a good day.

We want to preface this by saying that even with savings, you should always make sure you’re staying within your budget as much as possible. Nothing’s a deal if you can’t really afford it. Here we go:

1. Buy online. There are many deals to be made online, even for new items. Be cautious that you’re not losing your savings via lousy shipping deals, which some retailers are sneaky about (such as charging you multiple times for multiple items you know are going in the same box). There are the generic sites where you can bid on things and other sites that offer low prices by comparison, but sometimes the best deal you can get is directly from the manufacturer.

2. Buy within the first two weeks “after” a holiday. This may not work well for items that won’t come out until just before a holiday but for everything else almost all businesses are trying to clear out inventory at drastically reduced rates. If the item you want to buy isn’t time conscious this is a great way to save a lot of money.

3. Don’t always buy “new”. There are a lot of big ticket items that are still pretty good that people decide to sell for reasons other than because something went bad. Things like cars and jewelry, sometimes even appliances, often get sold because someone didn’t like it as much as they thought the would but otherwise are just like new. Sometimes you can save as much as 75% on some items that aren’t fully new, and we’ve seen some cars with less than 5,000 miles go for upwards of 40% off, depending on the model.

4. Look for “vintage”. Going further with the theme of not buying new all the time, things like paintings, quilts and furniture sometimes retains itself pretty well over time and, in some instances, if you shop properly you can save some money on really nice stuff. Of course some vintage items go up in price over time so you might want to think about your purchases as an investment to help someone make money later on.
 

Budgeting

Reasons To Have At Least One Credit Card

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Credit cards can be dangerous in the wrong hands. They can also not only be beneficial at times, but they’re necessary at other times.

There’s an interesting debate between financial experts on whether people should pay off all their credit cards as soon as possible or keep a balance on some of them and pay them down via a schedule to show that you know how to pay off debt. It’s a crazy conversation where, strangely enough, both sides make sense. There’s no doubt that if you have a lot credit cards you need to wean yourself off them but what are some of the thoughts on having credit cards in the first place? Check these out.

First, having at least one credit card turns out to be necessary if you ever plan on going anywhere or staying in a hotel. You can’t rent a car without one, can’t stay in a hotel, and if you’re flying in these days of terrorism worry you might have to find ways of proving who you are before you’re allowed to buy a ticket.

Second, you can probably alleviate some of these issues by using a bank debit card that’s either a Visa or Mastercard but there’s something you need to know. If you’re renting a car they’ll hit your account up for a much higher amount than what they believe your balance will be and that could leave you without access to your account if you don’t have way more money in it than you expected to need. The same goes for some hotels. They’ll only keep it that long for up to 24 hours but that could be quite stressful.

Third, though we’d probably side with those who believe if you can pay off your credit card immediately do so, within the context of a budget if you need a big ticket item and can pay it off within 3 – 6 months without hurting yourself overall it’s not a bad idea to do that.

Fourth, there’s a fine line on just how many credit cards you can have, even if they’re all pulled off, and how credit agencies will judge your worthiness. If you have more than what makes them comfortable they see you as a potential credit risk who could run up unconscionable debt within a short period of time, even if that’s never been your pattern. Having too few credit cards, or at least a history of having them, makes them feel they can’t get a gauge on the type of financial risk you might be. We can’t make that recommendation for you but it’s something you should know.

Fifth, if possible it never hurts to have at least one store credit card of some type, and the best type is a department store. In an emergency you might need clothes, and even if the interest rates can be higher on store cards having the ability to get clothes where the monthly payments will be lower than normal credit cards can be crucial.

There you go, some thoughts on why having a credit card might be worthwhile. Let us know your thoughts on this.
 

Budgeting

Setting Financial Goals

As we get closer to the new year, it’s a good time for you to start thinking about financial goals. Those goals will be different if you’re a business, an independent professional or an individual or family, but it’s still important to work on setting at least a few goals.

There’s always a debate about whether it’s better to set goals that are definitely reachable or whether thinking outside of the box and shooting for the moon is the way to go. Truthfully, the best goals are the ones where you actually have some kind of control over it because it’s easier to stay focused. For instance, if you said you were going to save $25,000 but you only make $30,000 a year right now and have $5 in your savings account, it’s probably a very unrealistic goal without some other plans that have nothing to do with finances.

All financial goals are about 3 things: saving money; reducing debt; and increasing income. You can set your goals based on one thing, or you can try to do something with all three. If you’re already doing well financially maybe you don’t have to worry so much about the last one, and yet even there the concept of income isn’t a strange one, as income is more about growing your money than about finding a new job.

Whereas when we talk about budgeting we always start with figuring out income, when setting financial goals you always think about your debt first. This is because most people have higher debt, as it pertains to percentages at least, and it’s probably the most important thing to know where you stand.

Next on the list comes saving money. This is important because it’s your first step towards becoming fiscally responsible. Saving money takes on two forms. One is actually saving money, such as in a bank, investments, etc. The other is saving money on purchases, whether it’s new items such as clothing or items such as food, which are recurring purchases. There are families that learn how to save $100 or more each month just using coupons or store coupons at stores they don’t usually frequent. Just imagine how important an extra $100 is a month without having to worry about an increase in taxes.

Finally comes the topic of increasing income. It’s last on the list for two reasons. One, not everyone has to deal with this one as a definite thing, although looking at different ways to invest money in higher yield returns might not be a bad idea. For some people however this will be important if they’re just barely getting by on what they make now. We’ve previously warned people about the tax dangers of part time jobs but that might be one way to go. Another way to go is to see if you can get a raise where you work. If it’s a large company where you can’t just ask for a raise, it might be time to broaden your scope of employment opportunities for something that pays better.

No matter what you do, setting goals is only the first step. No goal can be achieved without plans for how you hope to get there. Of course if you ever need help in that arena, give us a call. 🙂