What Climbing Mt. Everest Can Teach Us About Budgeting

May 31, 2016

Budget – the word can strike fear in the bravest soul. A budget for some is like climbing Mount Everest. Many have tried, many have perished, and the ones who get to the top are never the same again. As I was watching a documentary about Mt. Everest, the similarities between the ones who made it to the top and lived to tell about it and the ones who did not or perished are striking similar to those that successfully use a budget and those that have struggled to stick to a budget:

Unrealistic Expectations. Some of the failed climbers set unrealistic expectations about their own physical health, mental stamina and timeline to climb the mountain. Likewise, I have found one of the reasons why people fail to stick to a budget is that they create an unrealistic one. Look, you eventually are going to buy clothes and eat out. Even if it is not that often, put a dollar amount in the category. If are not sure where to start, look at your spending for last year, divide that number by 12 and use that number as your starting point for your monthly budget.

Not planning for the unexpected. Many climbers did not have a plan for how they would handle sudden changes in weather. Like the climbers, many people do not buffer what I called the “expected unexpected events.” We all know at some point our cars will need repairs and we will need to call a plumber. We just do not know when these things will happen. If you don’t  know how much to save, consider reviewing your bank account for car maintenance and home repair transactions for last year, dividing it by 12 and using that number as a starting point.

Not changing your plan. Successfully climbing Mt. Everest means making adjustments to your plan since your route may change or the terrain might take a climber longer than expected. As our lives change, the budget needs to be adjusted. Where I live in Georgia, my gas bill is higher in the winter and my electricity skyrockets in the summer. Also in the summer, I have to account for summer camp expenses. Review and adjust your budget to account for the highs and lows of your expenses throughout the year.

Of course, sticking to a budget is a lot easier than climate Mt. Everest. We can still learn a lot from it though. Making these adjustments can help you experience the “high” of financial wellness.

 

 

Don’t Make My Moving Mistakes

April 08, 2016

After a long process (it started with my first offer in August) of looking for, making offers for and securing financing for a new place to live, I just finished moving. Whew, that was a process…While I’ve done it many times in my life, I always forget how tough it is and how many things come up and how they can be budget busters. I re-learned a few things and maybe you can learn from my mistakes and not commit similar ones.

Always expect things to cost more than estimated! When you pay for a home inspection,  your inspector will find issues that need to be fixed – either by the seller or by you as the new buyer. In my recent experience, the issues that I needed to fix always cost just a bit more than anticipated.

For instance, there was some very worn and stained carpeting on the stairs that I wanted to replace. I looked under one area during the inspection that was a bit easy to peek under and I saw a nice wooden step. My plan was to simply pull up the carpet, have nice wood steps and remember NOT to wear slippery socks when going up and down the stairs.

Well, when the carpeting was removed, there were only two or three steps (out of 10-12) that looked decent. The rest were marked, scarred, virtually non-existent (a simple plywood plank, not a finished wood step) and my “nice wood stairs” idea went up in smoke. I called a friend who is in the carpet business and had him come out to salvage the situation with a newly carpeted staircase. It ended well, but that was a check I hadn’t anticipated writing.

What you can learn from my mistake: On your next move, either do some research into the pricing of each product/service that you will need or add in a “fluff factor” of 10-20% for the unexpected. It’s a bit cliché to say “expect the unexpected”…but, expect it! And do a room by room walk through with a notepad and build a list of projects that need to be done so that you have as much information as you can get to make your ballpark costs as accurate as possible.

You will pay for things you didn’t think you’d need!  When I moved, I thought I did a pretty thorough job of listing everything that I needed to pay for. I had movers, boxes, packing supplies, home inspection, appraisal, etc.

But there were two things that completely escaped my list. I forgot all about “service change” costs with my gas/electric provider and my phone/cable/Internet service provider.  Because my new place had never been serviced by these providers before, there were some installation charges added to the service change fees. In all, there were a few hundred dollars that I had no idea I’d have to spend.

Plus, my move was in April – which last time I checked was in the spring – but in Baltimore, the spring can have some cold days (as evidenced by the snow flurries I saw this morning). I completely forgot that my oil tank would need to be filled and it took about 250 gallons to fill. That was another big unexpected charge. Adding in a few other things that I hadn’t added to my list (shower rod and shower curtain, bath mats, outdoor deck chairs) – there was over $1,000 that I didn’t expect to pay but ended up paying.

What you can learn from my mistake: When you are calling your service providers, do it well in advance and ask about waiving the change fees in exchange for you being a loyal long term customer.  Ask for discounts. Ask if there is any way to lower your bill so that after you move, you have an embedded savings. I was able to do that with Verizon Fios and added a couple movie channels for less than my prior package price.

Finally, walk through with someone who has complementary skill sets. I understand the structural and mechanical pieces so I would have been better served to walk through (with my notepad) with someone who has more of a decorative slant than I do! (I’ll never be considered to have fashion/style sense.)

Moving is expensive…and exhausting….and frustrating. My budget was a bit busted and I am going to have to cut back in some other areas (dining out, coffee shops) over the next year or so in order to recover from the damage that the move did to my finances. But after spending a few nights in my new place and adjusting to the new sounds, I have to say it was very much worth the headaches! It’s a small price to pay for all of the reasons I chose to move and take on the financial trauma that a move can do to my regular budget.

 

 

 

Are You Married to a Spender?

October 31, 2011

What do you do if you are married to a spender and you are a saver?  Last week I met a woman (I’ll call her Paula) during a worksite financial planning session, and she complained about this very thing.  Having money in savings is a high priority for her – she has four months of emergency funds saved and has a dent in the down payment for their future house.  She is recently married to a spender (I’ll call him Rick) and is starting to feel resentful because the burden for saving is on her. Continue reading “Are You Married to a Spender?”

Follow Oprah’s Lead with Your Transition Plan

May 23, 2011

Oprah is counting down her last days on the Oprah Winfrey show.  At the time I am writing this she is at show 18, I guess I waited kind of late to watch her since there aren’t many left.  There is good news for me however because I understand she is going to a new network!  There will be more Oprah!  I guess I am in luck.  This may sound cynical because, well, it is. Continue reading “Follow Oprah’s Lead with Your Transition Plan”