Personal Finance

Personal Finance: How to Get Your Finances in Order

April 7, 2021 by am10756 Leave a Comment

Personal finance covers a range of topics including budgeting, expenses, debt, banking, mortgages, saving, insurance, investments, retirement taxes and estate planning. Essentially it encompasses all things money management.

personal finances. A guide for how to start a personal finance journey. A picture of a woman's hands counting cash

Personal finance is a loaded topic. There is so much to talk about when discussing personal finance. The core of my content really comes from my personal finance journey. This week I wanted to go back to the basics of personal finances. Where do you start when you want to learn about personal finances? What are the first steps someone should take if they want to get their finances in order?

These are great questions. You have to start somewhere. Competency in personal finance is a learned skill. I made a lot of money mistakes in my life. In my twenties I was not great with money. I can probably write an entire post just listing my money mistakes but I will spare you. Since starting my blog, Youtube channel and Instagram I have seen so many people say that they don’t know where to start when it comes to personal finance.

It occurred to me that I’ve never taken the time to inform my audience of where to start when you want to get your personal finances in order. It’s important to learn about personal finance and be motivated to makes changes. However, if you don’t know how to start getting your finances in order then the knowledge your gaining is going to go to waste. So, here are the steps I think you should take if you are motivated to get your personal finances in order.

Let’s get started

1. Calculate your income and expenses

This is the best place to start when going over your personal finances. First you need to determine your Net income. Net income is the amount you bring home after taxes and deductions. The amount that actually goes into your bank account. It’s very important that you only count what you’re receiving. Just because you make $65,000 per year does not mean you should budget for that amount. Budget for the income that you are actually able to spend.

To calculate your expenses I recommend going through your last 3 months of banks statements and credit cards statements. That way you can get a true average for what you spend on a monthly basis. If you use cash or Venmo be sure to calculate those expenses as well.

2. Calculate your debt

When discussing personal finance we have to talk about debt. Since you’re early on in the process let’s not worry about any outstanding mortgage. At this stage we’re going to look at all other outstanding debt. Student loans, personal loans, car loans, credit cards, etc. Write down all of your debt amounts and also write down the total amount of all of your outstanding debt. It’s very important to know these numbers. If you do not have any debt that’s great. You can skip right over this step.

3. Identify your needs vs your wants

Before you create a budget you need to have a clear understanding of needs vs wants. Needs refer to items in your budget that you cannot be without. Food, transportation, housing & clothing are all examples of needs. Wants refer to items that are convenient or desired but not necessary. This step is important when trying to get your personal finances in order because it sets the tone for your budget. Needs have to be included in your budget but wants will only be included if the budget allows it.

4. Create a realistic budget

Emphasis on the word realistic. A budget should be restrictive in a sense. It should allow you to pay for your needs but also keep you from over spending. If you are just starting to get your personal finances in order I highly recommend having a budget. Start with your needs. You have to include your needs in the budget. Then, if there is room in the budget, you can add in your wants.

5. Create an emergency fund

Now that you’ve written down your income, expenses debt, needs, wants and created a budget it’s time to create an emergency fund. This is a savings fund that is created specifically for unplanned emergency expenses. Life happens so you should be financially prepared in case of an emergency. I recommend at this stage having an emergency fund of $1000. Keep this in a savings account that is easily accessible but be sure to reserve it for true emergencies. This is a very important step. I do plan on doing an entire post about emergency funds because It’s so important and it will keep you from incurring more debt in the event of an emergency.

If you do not have debt, or once your debt is paid off, I recommend upping your emergency fund. It’s a widely accepted rule that you should have 3-6 months worth of expenses in your emergency fund. This will come in handy in the event of job loss or an unexpected medical emergency.

personal finances. What to use your emergency fund for. Emergencies. unexpected costs like car repair, home repair, medical bill or other unplanned costs that may come up

6. Start to pay off debt

Once you have an emergency fund of $1000 it’s time to start paying down your debt. Again, if you’re debt free you can skip this step. We are also not counting a mortgage as debt for this step. I recommend using a zero-based budget. Essentially that means that every dollar you bring in is allocated to something. There is no “extra money” left over. After you’ve budgeted for your needs any left over money should go to making extra debt payments. Getting your personal finances in order means getting rid of your debt as fast as possible. Debt is costing you so much money in interest and it holds you back in your financial journey. I highly recommend paying down debt before adding any “wants” into your budget. Try to stay motivated and send every “extra” dollar toward your debt.

There are several different ways you can go about paying off debt. Two well-known ways are the debt snowball and the debt avalanche. These are both great options. You should research both and choose the one that will work best for your personal finance journey.

7. Don’t get discouraged

If you’re not used to living on a budget give yourself some grace. Learning to live on a budget can be difficult. It takes a few months to get used to. You’re probably going to overspend or forget to add items to your budget at first. Go over your budget at the end of every week or month and determine what you need to work on. I promise, budgeting gets easier after time. I also recommend trying new budgeting tools until you find what works for you. You can use pen & paper, budgeting app, spreadsheet, etc. Take a few months, try not to get frustrated and find what works for you.

8. Educate yourself

If you are on a journey to improve your personal finances you should be proud of yourself. One of the best things you can do on this journey is continue to educate yourself. There are so many great resources out there. Numerous books, podcasts, YouTube channels, blogs, etc are available to access for free. I highly recommend looking through some of these resources and finding people that you trust to give you advice. I also recommend getting personal finance advice from multiple sources and ultimately finding what will work best for you and your financial situation.

9. Don’t compare yourself to others

Personal finance is personal. Everyone has to start somewhere. Some people are taught good money habits from their parents. Others have to make a lot of mistakes in order to learn good money habits. Some people come from privilege and have assistance with paying for college or a down payment on a home. Others may not have had any help and may have acquired a lot of debt in order to get where they are. My point is that you cannot compare your financial situation to anyone else because you simply don’t have all of the facts. Focus on your journey and the progress that you are making. You should be proud of yourself simply for trying to get your personal finances in order.

personal finance is personal. do what works for you

10. Continue to re-evaluate your situation

Getting your personal finances in order is a journey. It’s something that needs to continue for your entire life. It may get easier as time goes on. Especially if you’re paying off debt and continuing to learn how to better your financial situation. Even as you learn and become comfortable with budgeting, saving or investing you still need to “check in” periodically. You need to go over your budget and update or adjust it as your financial situation changes.

You will also need to review your emergency fund and possible re-fund it if you have had to use it. Once your debt is paid off you will need to determine where you “extra” income will be sent to. I highly recommend investing but I will save that for another post. Essentially you want to make sure that your budget and your actions are continually in-line with where you are on your financial journey.

These steps that I’ve outlined will help you to start taking control of your personal finances.

As I mentioned before, personal finance is a loaded topic. This post is really just a basic outline for how to get started. Each of these steps can easily be expanded into an entire post. If you are just starting a personal finance journey I hope I can be a great resource for you. Feel free to check out my other posts and leave any questions or comments you may have and I will be sure to respond. Thanks for stopping by!

The Cost of Adult Braces and How to Utilize a Flexible Spending Account

March 31, 2021 by am10756 Leave a Comment

In this post I will be outlining the cost of my adult braces, payment options, what a flexible spending account is and how to utilized this account to save money on adult braces.

THE COST OF ADULT BRACES AND HOW TO USE A FLEXIBLE SPENDING ACCOUNT TO PAY FOR THEM. PICTURE OF A DENTIST CHAIR

Adult braces. I know, there is no difference between braces and adult braces. For this post I will be referring to them as adult braces because that seems to be the popular term. A quick background on me: I needed braces for years but was never able to afford them. I thought braces had to be paid upfront in all cash and was never able to save up that much. I finally decided to make getting braces a priority and started researching adult braces in 2017.

A few helpful things I learned is that a braces consult is complementary. Anyone can meet with an orthodontist and get a price quote for braces and they will discuss the payment options with you. If you decide to get braces you will need a dentist sign a form stating that you have no cavities and your teeth are healthy enough for braces. You will also need to maintain regular dentist visits on top of orthodontist visits. Lastly, I learned that prices vary greatly so be sure to get multiple quotes for your adult braces.

Now let’s get get into the financial side of adult braces

How much do adult braces cost?

That’s a loaded question. There are so many factors to consider like length of treatment, the materials needed, your location and the orthodontist you choose. I can only speak for myself but I can say that the longer your treatment is the more expensive your treatment will be. My estimated treatment time was 2.5 years with a total cost of $4400. The price and the timeline completely shocked me. I decided to go forward with the treatment because I knew I needed it. For my treatment I chose to go with clear brackets, which are about $200 more than metal. I could’ve saved that $200 if I had gone with metal but I decided to splurge for cosmetic reasons. That $4400 included everything that was needed to complete my treatment. This includes appointments, X-rays, materials, 1 set of retainers and all other costs.

Payment options

Of course, you can pay for your treatment upfront with cash but that’s not always feasible. If you’re really good at saving you might consider waiting until you have the entire amount saved. For me, I knew I had put off my treatment long enough so I was happy that there were other payment options that I could take advantage of.

1. Insurance

There are a few options for paying off your adult braces. First, you can check with your insurance. If you have dental insurance you can ask for a copy of their orthodontic coverage policy. Most insurances, that I’ve looked into, do not cover adult braces. They only cover braces up to ages 17 or 18. Even if your insurance does not cover adult braces that does not mean that they will not cover part of your orthodontic treatment. Sometimes an insurance company will pay a portion of your orthodontic bill. It’s worth it to submit a claim or at least speak with someone from the insurance company.

2. CareCredit

Secondly, you can apply for CareCredit. CareCredit is a credit card that is accepted at numerous healthcare offices. You can use CareCredit to pay for out-of-pocket healthcare expenses. You can apply online or over the phone. I do want to put the disclaimer out there that I do not recommend CareCredit. That is because they have insanely high interest rates.

Now, you can potentially get a CareCredit card with no interest for 6 months up to 24 months. I only recommend using this card if you can pay off the balance BEFORE that no interest period is up. If you do not pay the balance off before that time you will pay interest on the entire amount borrowed. As I mentioned before the interest rates for this card are very high. So, CareCredit can be a helpful tool if you utilize the no interest period correctly. Otherwise I would not utilize this option.

My orthodontist did not accept credit cards but if yours does that is another option. However, I would advise against using any credit cards unless you can get a no-interest offer. Interest will really add up on a large purchase like adult braces. You do not want to go into debt for your braces treatment. You’re better off waiting and saving up cash to pay for the adult braces.

3. Payment plan with orthodontist

Next, you can ask if your orthodontist offers interest-free payment plans. The key here is interest-free. If your doctor charges interest on the adult braces then you will end up paying so much more. My orthodontist did offer interest-free payment plans as long as you set up an auto-debit. This allowed me to make payments on my adult braces without worrying about high interest fees.

4. Flexible spending account

Lastly, you can utilize a flexible spending account. Check to see if your employer offers this. This account made it so easy for me to save money. I paid off my braces so much faster because I took advantage of this account.

What is a flexible spending account?

A flexible spending account is a special account that you can use to pay for certain out-of-pocket healthcare costs. This account is funded by you and is taken out of your paychecks pre-tax. This equates to double savings. You are not paying taxes on the money that goes into the account and it lowers your taxable income for the year. Win win. Your employer can give you a list of qualifying healthcare costs that can be reimbursed to you from your flexible spending account.

To set up a flexible spending account check with your employer. They will have a specific process for signing up. Typically you have to sign up for this account at the end of the year and use it for the following year. So, for example, your adult braces are going to cost $1200. That means you are able to apply for a flexible spending account for $1200. The total amount is broken down based on how often you are paid. If you’re paid twice a month your employer will take out $50 pre-tax from every paycheck. Which will equal $1200 for the year. This will go straight into your flexible spending account before taxes.

How to get reimbursed from your flexible spending account

The way you redeem that money is by showing receipts for your healthcare costs. You can submit a claim and any receipts to the HR department to be reimbursed. As you submit your claims you will be reimbursed from your flexible spending account.

You can get reimbursement from your flexible spending account each time you submit a claim. There are a couple of ways you can decide to do this. You can submit claims as you pay for your healthcare costs throughout the year. You can also submit one large claim at the end of the year for your total healthcare costs.

A flexible spending account is so great if you utilize it correctly but there are a lot of regulations. It’s basically a use it or lose it account. If you allocate $1200 but you only claim $800 then you will lose out on that other $400. Be careful not to overfund your flexible spending account so you don’t lose out on any money.

A flexible spending account is a great tool that can save you a lot of money. Be sure to do your research before you open one of these accounts. There are so many different rules for how you can use these accounts. I would be happy to do another post dedicated to flexible spending accounts. If you have questions please leave them below

Adults braces. Flexible spending account calculation

Here is how I paid for adult braces and how I took advantage of my flexible spending account.

The total costs of my adult braces was $4400. My insurance (MetLife) did not cover braces for adults but they did cover $1000 toward orthodontic procedures. That brought my out-of-pocket cost to $3400. I put a deposit of $1000 which brought the total down to $2400. I then agreed to pay $108 for 23 months, with no interest, which would have paid off the balance. To save even more money I opened a flexible spending account.

I opened the flexible spending account for $888 which came out to about $34.15/bi-weekly. That $34.15 was taken out of each paycheck pre-tax for all of 2018. I decided to wait until the end of the year to make my claim from my flexible spending account. At the end of 2018 I received one reimbursement check for $888. I put that check directly toward my treatment balance.

So, I paid $108 to my orthodontist each month for 14 months which totaled $1512. At the same time I was also contributing $34.15/bi-weekly to my flexible spending account (pre-tax). Essentially, I used my flexible spending account as a tax-free savings account and I was able to pay off my braces in 14 months instead of 23 months.

Now let’s wrap this up

I hope that wasn’t too confusing. As I mentioned above there is so much to explain when it comes to flexible spending accounts and I’m happy to do a post dedicated to that in the future. I have had my adult braces for almost 3 years. It was supposed to be 2.5 years but the pandemic pushed back my timeline. Throughout that time I have gotten so many questions about the cost of braces and how I was able to pay for mine so I decided to write this post.

I was able to take advantage of the flexible spending account, my dental insurance and interest-free payments so I didn’t pay any extra out of pocket costs for my adult braces. If you are considering adult braces and you do not have access to these options I highly recommend that you avoid putting this expense on any type of credit that will accrue interest. I know I’ve said this several times but interest, especially on a large purchase like adult braces, is going to end up costing you a lot more money. Try saving up your money or even start a side hustle so you can pay for your braces upfront. Check out my list of 21 side hustle ideas HERE.

For more information on flexible spending accounts check out Investopedia & Healthcare.gov. These are the two websites that I utilized for today’s post.

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How To Improve Your Credit Score and What To Avoid

February 17, 2021 by am10756 4 Comments

Are you wondering how to improve your credit score? Do you know why your score is so low? In this post I will outline what a good credit score is, how to improve your credit score and things to avoid when trying to improve your credit score.

Credit score, poor, fair, good, very good and excellent with a check mark next to good

First let me explain how credit scores are rated. Credit scores range from 300 to 850. Generally, this is how the scores are rated:

SCORE	RATING
300-579	Poor
580-669	Fair
670-739	Good
740-799	Very Good
800-850	Excellent

Table of Credit Score Ratings

The most important thing to know when you are trying to improve your credit score is that it will take time. Don’t get caught up in the process and focus on the long-term goal.

You should never pay to get your credit score. You can get a free credit score at creditkarma.com. Once you know your credit score you will need to review your credit report. You can get a free credit report from annualcreditreport.com. Review every entry on your credit report and make sure that they are correct. If there are any discrepancies be sure to contact the agency responsible and dispute the errors.

How to increase your credit score:

Pay your bills on time. Even one late payment can have a negative affect on your score.
Pay more than the minimum payment. This will help you pay down your debt faster and you will pay less in interest.
Have a diverse credit profile. Having different types of open credit will help raise your score. For instance, having a personal loan, a car loan, a credit card and a mortgage is better and more diverse than just having 4 credit cards.
Pay off cards completely before the month closes out. You can call and ask what day of the month your credit card company reports to the credit bureaus. Be sure to pay your card before that day so they will report a lower balance or a zero balance for your card if you’re paying it off.
If you don’t have any credit or only have 1 or 2 items on your credit report you may need to open more in order to improve your credit score. Opening new lines of credit or loans may temporarily decrease your score but it will benefit you in the long run if you follow these steps and continue to be responsible.

its not as simple as just making on time payments. make your credit card work for you to increase your credit score written in black on white square with credit cards and keyboard in background

How I continue to raise my score

A trick that I use to raise my credit score is paying off a credit card completely every single month. I use my bank credit card to pay my gas bill every single month. It’s around $60 and my card limit is $500 so I am using less than 30% of the limit. Every month on the 9th my gas bill is charged to that card and every month on the 9th I make a payment to that credit card for the entire gas bill amount. The gas bill is the only charge I put on that credit card.

So, every month the card gets used and every month it gets paid off completely. Doing this for several months in a row will greatly increase your credit score. Just be sure that you are using less than 30 % of the card limit and it will reflect positively on your credit report.

Things to avoid:

Do not max out your credit cards. In fact, don’t use more than 30% of your credit card limit. So, for example, if your limit is $1000 you do not want to charge more than $300 to that card.
Do not close out credit cards. Length of credit history is important so you should keep all cards open, even if they have a zero balance. Some companies will close your line of credit after a period of inactivity but that will not affect you negatively so keep all cards open.
Do not pay for credit repair services. These companies claim to help improve your credit score and “repair your credit” but that’s just not the case. Anything these companies do you can do yourself. If you are in collections or have bad credit you can contact the collections agencies yourself and start to repair your own credit. Just remember that it will take time.
Do not pay collections until you have an agreement from the collection agency, in writing, stating that they will remove the debt from your credit report. I go more in-depth on this in my credit score video linked HERE.

A word of advice

One important thing to know is that medical debt has far less of an impact on your credit that credit cards and loans. If you are struggling with unpaid debt and collections you should first focus on the other debt before the medical debt. If you are struggling and unable to pay your minimum payments the first thing you should do is call the debt collector. Whether that be the credit card company, bank or whoever you make your payments to. Call them and inform them of the situation and see if they have any programs or special payment plans that they can offer you.

It’s best to speak directly with the payment collector and together you might be able to come up with a temporary solution to help you during your hardship. It is worth a try if you’re not able to keep up with your minimum payments.

If you are trying to improve your credit score and you don’t know where to start here are some resources that might help you

ExperianBoost. This is a free service offered by Experian, one of the 3 credit bureaus. Make an online account and Experian will review to your bank account to see if there are any monthly bills that can help “boost” your credit score. It’s almost instantanious and it really works. It raised my score by 14 points in minutes. You can check out ExperianBoost here.
Get a secured credit card through your bank or credit union. For a secured card you pay the card limit up front, as a security deposit, just in case you don’t pay your bill. So, if you get approved for a secured card with a $300 limit, you will give your bank $300 from your checking or savings account. After about 6 months of paying your bill on time the credit card will become unsecured and you will get your security deposit back. It’s a great way to get a credit card and start improving your credit score.
Become an authorized user on someone’s account who has good credit. Just be sure that you’re responsible enough to make on-time payments so you don’t decrease both of your scores.
You can apply for an amazon credit builder account. It works very similarly to a secured credit card. You can apply here.

Want to improve your score and save some money?

I saved the best for last. Apply for a credit builder loan with Self Inc. This is a “loan” that you make payments to each month solely for the purpose of increasing your credit score. Once the “loan” is paid off you will get to keep the money that you paid into that loan. Essentially it’s like a savings account that you are paying into but you have specified terms for payments, like you would for a loan. Your payments will be reported to the credit bureaus so continuous on-time payments will help boost your score. It’s a really cool idea and if you are interested you can check out the details here.

I know this was a lot of information to digest. Please reach out in the comments if you have any questions

One last note. A credit score of 680 is typically good enough to get approved for most loans and credit cards. Once your credit score reaches 740 you will typically be eligible to the best interest rates. So those are the 2 credit scores to aim for on your journey to raise your score.

I hope this was helpful. If you enjoyed it please share this post to Pinterest. If you have any credit related stories I would love to hear about them in the comments. I do plan on making more posts about credit and credit cards in the future so I would love for you to leave some questions or reach out to me on Instagram. Thank you for stopping by!

Green background with 4 green check marks. www.imperfectashly.com. Do you need to improve your credit score?

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Budget Tips

February 6, 2021 by am10756 2 Comments

Over the last few months our budget has changed drastically. We bought our first home in September of 2020 and now we’re paying mortgage, HOA and utilities that we weren’t paying before. Most of our income use to go to savings and now were trying to find a balance between saving, paying off debt and living expenses. Here is how I budget, for now, it always seems to change. I will also give you some real numbers but keep in mind that we live in Southern CA so our expenses may seem outrageous if you live in other areas. I guess that’s the price we pay for great weather all year.

To make my monthly budget I use a regular spiral notebook. Nothing fancy, I prefer pen and paper. Here is the exact notebook I use if you’re curious https://amzn.to/37hnTMP

The first thing I do when creating my monthly budget is determine our monthly income. Not our gross income, the amount that actually gets deposited into our bank account.

Tip #1-Send money into your savings account before you do anything else. A big mistake people make when budgeting is paying bills and giving themselves spending money before they contribute to their savings account. If you wait until all your bills are paid and all your spending money is accounted for you will probably have very little if anything to send to your savings account. So make savings a priority.

After we’ve determined the amount we are sending to savings we then move on to our fixed expenses. These are bills or expenses that are due every month and the amount is the same from month to month. Our fixed expenses include mortgage, utilities, phone bill, child care, internet, HOA, insurance & a few others.

Tip #2-You can change your fixed expenses. Try looking for quotes with other insurance companies, call your internet company and ask for a discount or cancel subscription services that are not being used.

Next I move on to our variable expenses. These are things that are irregular or have fluctuating amounts from month to month. Some of our variable expenses are groceries, Costco, spending money & eating-out.

Tip #3-Variable expenses are where you can really cut your costs and make your money stretch. The grocery budget is the easiest place to start when looking to save some money. You can also lower or eliminate spending money or eating-out for a period of time to help you get on track with expenses.

Once I have all of our expenses accounted for I take our total income and subtract our savings, our fixed expenses and our variable expenses. Any money left over will go toward paying down any outstanding debt that we have like credit cards or student loans.

Tip #4-If you don’t have any money left over that’s ok! As long as you are paying your bills and paying the minimum to your debt you are doing fine. Start to evaluate your budget and see where you can cut or eliminate expenses. Any “extra” money you find should go toward paying off debt. Once your debt is paid off you will have a lot more money to spend or to save.

This is our actual 02/2021 budget. Please excuse the hand writing but since my platform is all about budgeting I thought it might be helpful to see some real numbers. I did block out our income but everything else is an accurate estimation of what we intend to spend this month.

At the end of the month I will go back and compare my written budget with our actual expenses. From there I can see how we did for the month and what areas we need to work on for next month.

There you have it. It’s not that exciting but hopefully this was helpful or at least inspired you to start a budget. I will link the video below of me writing out my budget for those of you who would like to see it. I am also trying out some new budgeting apps and I will be sure to share my thoughts in a future post. Please feel free to share your budgeting tips with me and we can keep each other accountable!

*Disclaimer: Some links may be affiliate links

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