Prime Time Money

Going To One Income?

We’re going to one income very soon.  This is the last month that we’ll receive two paychecks, as Mrs. PT will be going back to school next month.  I decided I would do a little preparation.  I did some research and came up with 9 tips for going to one income:

1. Reorganize Your Banking Situation - If you’re like me, you have multiple bank accounts.  One for each spouse’s paycheck.  These two accounts likely have their own direct deposits and outgoing automated bill pay and withdrawal.  In order to ensure you don’t incur any NSF fees, you’ll need to adjust your automatic bill pay and withdrawals.  Next week I’ll share how I moved my bill pay to ING DIRECT’s Electric Orange checking account. (subscribe and never miss a post)
2. Readjust Your Retirement Contributions - Since you’ll likely lose the ability to contribute to one of your retirement accounts (401(k), 403(b), Stock Plan), you’ll need to make up for it using an IRA, or adjusting the income earning spouse’s contributions.  We’ll lose the option of contributing to a 403(b).  I plan to supplement that by maxing out a Roth IRA by next April and by increasing my 401(k) percentage.
3. Know Your Finances - Beyond banking and retirement, make sure you have a full understanding of your financial situation prior to pulling the plug on the second income.  I recently built a dashboard view of my finances.  Using something like this or a simple pen and paper budget accounting for your new income and expenses will give you confidence in making the move.
4. Get Serious About Reducing Unnecessary Expenses - If, after you analyzed your finances you realize things are going to be tight, it’s time to get serious about reducing your expenses.  Start with the unnecessary items like dining out and luxury items.  Learn to live a frugal life.
5. Consider Going To One Car - While we’re discussing reducing expenses, if going to one income means that a spouse will now be at home, consider selling one of your cars.  We’ll be keeping our second vehicle because Mrs. PT will need to commute to school, and because here in sprawling Dallas it’s really hard to go without two cars.
6. Make a List of Frugal Things You Can Do - The last thing you want to do is shut off one income and increase your expenses because you’re spending more out of boredom.  Check out your local library and community event calendar for good ideas.  An awesome resource for this is The Simple Dollar’s 100 Things to Do During a Money Free Weekend. The ideas in here are great for anyone who stays at home like Trent.
7. Consider Working From Home - If you’re making the move to one income to stay at home with kids, consider doing some part-time work with a few free hours you may have.
8. Make Sure You’re Still Insured - Don’t forget that the loss of a paycheck usually means you’ll be losing benefits as well.  Health insurance is something you may need to switch to the other spouse.
9. Adjust Your Tax Withholdings - Here’s a plus.  Moving to one income means you’ll likely pay less in taxes.  Consult your tax professional and see if it’s necessary for you to adjust the withholdings on the remaining income.

Should I Go To One Income?

If you’re trying to decide if going to one income is a good idea for your family, use the Two Income vs. One Income Calculator (@ nytimes.com) which will tell you what you’re truly giving up if you drop one income.  The calculator takes into account expenses like daycare and home maintenance, as well as things you wouldn’t think of, like “un-researched expenditures” (the amount you paid more than the price you would have paid if you had time to properly research it).

Of course, the financial aspect is only one portion of it.  There are many great reasons for going to one income.  I believe a majority of us can make the move with just a few sacrifices.

What Others Are Saying About Going To One Income:

• Could Your Family Live On One Income? (@ My Two Dollars)
• Raising a Family on One Income (@ Get Rich Slowly)
• Lessons Learned from Living Ten Years on One Income (@ Frugal Dad)
• Living on One Income - The Married Life (@ Credit Withdrawal)

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As always, I don’t know all the answers.  I couldn’t think of a 10th tip for going to one income.  If YOU have one please leave it in the comments below.

NeoBudget Review

I was recently contacted by Luke from Tebros Systems about helping to promote the online envelope system budgeting tool, NeoBudget.   I checked it out and thought the tool looked slick, useful, very reasonably priced, and worthy of a mention here at Prime Time Money.  Plus, Luke’s offering it up to you for 50% off the regular price, if you sign up by September 1, 2008 (see more below).  I’m not getting any kick back from this review.

Before I decided to share more about this system I checked out the setup process myself.  The setup process was quick and painless.  Anyone can sign up for one month without charge.  I received one simple email to confirm my registration, and haven’t received any spam at all.  Nice.

As for the tool itself, it’s based on the envelope system of budgeting (learn more about the envelope system of budgeting).  While I understand how this system works, I’ve never used it.  Still, I know that many people do use it and see much benefit from it.

The NeoBudget website is very user friendly.  Head over and check it out for yourself.  It may be important to note that NeoBudget will import a Quicken (.qif) file.  That appears to be the only import/export feature they currently have though.

Want to know more, here’s a video introduction to NeoBudget.

First Month Of NeoBudget Free

NeoBudget offers a one-month free trial.  All you need is an email address.  Simply create an ID and Password and you’re good to go.  As I said above, the setup is very quick and easy.  Two weeks in, no spam received.

50% Off NeoBudget

If you decide you like NeoBudget and want to begin using it for yourself, make sure you take advantage of this 50% off deal.  Enter the coupon code “ptmblog” when you buy a subscription at NeoBudget, and you will receive 50% off your first purchase.  For example, if you buy 1 month, it is normally $2.50, you would get it for $1.25.  If you bought a year, it is normally $25, but would be $12.50.  This is a very limited time promotional offer, valid only for their first purchase at NeoBudget, and only if purchased before September 1, 2008.

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If you end up using this tool I’d like to hear how it goes.  Be sure and share your thoughts in the comments below…

Financial Organization: One-Step Challenge

Last week I took the one-step challenge to organize my finances. To meet the challenge, I decided to build a one-sheet, dashboard-style view of our finances. I determined it should have our personal income statement and balance sheet, as well as the account IDs and passwords associated with those accounts. It will also provide any details about any automatic transfers or payments that I have in place. Lastly, at the bottom of the page I’d place our main financial goals.

This “dashboard” will allow me to see a quick view of our net worth, budget, log-in credentials for each account, and goals we’re striving for. Not only will it help me manage my finances better, it will provide a cheat sheet for Mrs. PT in the event something were to happen to me. It’s a good idea to print out a copy and throw it in the safe.

My One Step is The First Step

Getting the big picture of your finances in front of you like this is the first step anyone should take in organizing their finances. Just like in my 10 Things series, where my first step is to “track your regular monthly expenses“. You don’t have to have your financial act together to complete this exercise. This could be your first step. Knowing where you stand is a good starting point for turning things around.

Build Your Own Financial Dashboard

While I’m not going to share my exact dashboard, I’ve built a template for you to use. It’s nothing fancy. Still, feel free to grab it, fill it with your own information, then stash it somewhere safe and secure. Share the template with your friends too. The login credential area is shaded grey so it’s a bit harder to read for someone standing over your shoulder.

Download Copy of Financial Dashboard (.xls)

Of course, life changes all the time, so your financial statements will only be accurate for a short time. Consider adding the dashboard to your jump/flash drive or your Google Documents account so you can periodically update them. Good luck and let me know if you have any questions on editing your dashboard.

Organize Your Finances: “Find One Step” Challenge

Credit Withdrawal, fresh off of a severe tagging by Mrs.Micah, just tagged me with the latest challenge that’s running around the pf sphere: “Find one step you can take to make your financial system better or more organized.”

I like the idea of this challenge because of how simple it is.  It’s just one thing I have to do.  I spent the last couple of weeks sharing some things you can do to give yourself a mid-year financial check-up.  We covered a lot of material.  So this is just one thing.  Easy right?

My One Step In Organizing My Finances

I’ll be honest with you, I stay on top of my finances pretty consistently.  Still, because we have so many accounts and goals, and because I sort of piece-meal the method (I don’t use Quicken), it’s hard to see the big picture.

I’ve decided to build a one-sheet, dashboard-style view of our finances.  It will have our personal income statement and balance sheet, as well as the account IDs and passwords associated with those accounts.  At the bottom of the page I’ll place our financial goals. I”ve done something similar in the past with my 50+ Online Account IDs.

After I have this dashboard view built, I’m going to run a copy and place it in our safe.  This way, not only is it a quick reference but it’s something my wife will have if something ever happens to me to help keep her on track with the finances.  As a way of holding myself accountable to the challenge, I promise to present my dashboard (without the actual numbers) for free download, here on the blog soon.

Now It’s Your Turn To Organize Your Finances

I challenge all of you to take just one step. Leave a comment, write your own post (and tag others!), or just do it quietly on your own.  I’m going to tag the following pf bloggers to take part in the challenge: No Debt Plan, Think Your Way to Wealth, and Money Hacks.

Over the last two weeks I’ve challenged you to conduct a mid-year financial check-up.  How did it go?  Here are the posts from that series:

Financial Check-Up Series

1. How is Your Spending?
2. Are You Saving Enough?
3. Got Bad Debt?
4. Reached Your Contribution Limits?

I’ve enjoyed putting this together partly because it’s helped me to take a closer look at my own financial status.  Keep in mind, this is by no means a complete list of areas for you to examine at this point in the year. 

Still, this list should be able to give most people a good starting point.  After all, most people could use to lower their spending, save a little more, and get rid of some debt (which just happens to be what this blog is all about). 

Every one’s situation is unique though.  Other areas you might want to consider:

• Maintenance of your Assets (personal residence, rental properties, cars)
• A Review of Your Insurance Policies (medical, life, auto, home)
• Creation of and/or Updates to a Will
• Organizing Your Financial Files

Do you have an area to add?  Leave it in the comments below.