10 Money Saving Travel Tips

Domestic travelers in the United States spent $927 billion in 2019. After the sharp decline in 2020, more people are now being vaccinated. The constant increase in travel bookings signal a return to a more normal way of life. Although the monthly personal savings rate has been in the double digits for the past year, remember to implement the following tips so you don’t break the bank during your next trip:

 ·       Redeem sky mile rewards – Frequent travelers often prefer to earn airline miles for day-to-day credit card purchases. Your sky miles account balance might yield a round trip ticket to your next destination.

·       All weekdays aren’t created equal – The best days to fly for cost conscious travelers are Tuesdays or Wednesdays depending on the route. The second best are Mondays, Thursdays, and Saturdays. The most expensive days to fly are Fridays and Sundays.

·       Early birds and night owls fair best – Early morning and late evening flights are usually less expensive. Be prepared to give up your seat on an overbooked flight for a voucher (if you have the time).

·       Book your car before booking your flight - Hertz Global Holdings, Avis Budget Group and Enterprise Holdings sold off inventory during the pandemic. There are more customers than cars and prices have increased.

·       Utilize hotel ground transportation – Many hotels offer guests free ground transportation to and from the nearest airport. Pick up your rental car from an off-airport location near your hotel and save approximately 15% in taxes and fees.

·       Beware of the hotel mini bar – Weary travelers can be tempted by the readily available chocolate bars, cookies, potato chips, wine, soda, and bottled water. These items are usually marked up 3-4 times the usual price.  

·       Pack your lunch – When traveling by plane or car, utilizing a brown bag usually creates healthier meals in addition to saving money.

·       Before you go, count the cost – Your travel budget may include a combination of the following expenses: airfare, airport parking, rental car (gas), lodging, tolls, food, shopping, and tips (maid service, baggage attendants, bartenders).

·       Consider travel insurance – Your decision should take into account whether or not your trip is refundable, the amount of coverage you might already get from your credit card, and where you’re going. Remember! United States-based health insurance policies generally offer coverage only within the U.S.

·       Upon return, start saving again – Establish a travel savings account which should also appear as a monthly budget line item to protect against going into debt for your next adventure.

Your adherence to social distancing, hand-washing, and mask wearing has created an opportunity to travel like the good ole’ days. If you’re going to spend money, you might as well get the best bang for your buck.

Money Earned from Working Can Suck

One of the secrets to getting and staying rich comes down to how your money is earned. Money earned from investing is taxed at a lower rate than money earned from working. The terms unearned income (e.g., from investments) and earned income (e.g., from a job) can have a profound impact on your ability to build wealth.

The following picture shows the cost basis summary for an investment account. Cost basis, in a broad sense, refers to the price you pay for shares of an investment. When you invest, two of the potential rewards are dividends and capital gains. A dividend is a sum of money paid, usually quarterly, by a company to its shareholders out of its profits. Various mutual funds and exchange-traded funds (ETF) also pay dividends. A capital gain refers to an increase in the value of an asset. It is realized when that particular asset is sold. A capital gain can also be unrealized which means that the increased value of an investment is only on paper. For example, if you paid $1,000 for 10 shares of a $100 stock and then the stock price went to $105, your $50 capital gain would only be realized if you sold the stock. If you didn’t sell, the capital gain would be unrealized. As additional information, a capital loss would be realized when selling an asset for less than what you paid for it.

Assume the above information belongs to a fictitious character by the name of Stacy. She’s single and earns $80,000/year. She decides to sell all the shares of this ETF held for more than one year. In the above picture, note the capital gain/loss column heading and the $2,857.27 listed under long-term. Short-term capital gain/loss represents shares owned for less than one year. When Stacy sells this asset, she will need to pay taxes.

Based on your knowledge about taxes, what tax rate do you think will be applied to this capital gain? A) 0%   B) 15%  C) 20%  D) 22%

The following image shows how Stacey’s $80,000/year income puts her in the 22% tax bracket. If she had worked more hours on her job to earn $2,857.27, she would owe $628.60 in taxes. However, because she sold shares within her investment account, the capital gains tax rate of 15% (answer B) applies based on her income. She would owe only $428.59 ($2,857.27 x 15%) in taxes. The difference in taxes between Stacy working for money and money working for her is $200.01 ($628.60 - $428.59). All income from work is honorable; however, money earned from a job is more expensive. The tax treatment of unearned income provides a better understanding of why rich people choose not to work for money and let money work for them.

A Polo Shirt and Lobster Roll Teach Financial Lessons

One of Al Riddick’s favorite pastimes is eating seafood (actually any good food). His wife, Lesia, recently discovered his favorite food truck, The Wicked Lobstah, was returning to Dayton, OH. A few weeks ago, Al started making his own lobster rolls but thought this would be a neat day trip since the weather forecast was sunshine and 60 degrees.

 Before leaving home, Lesia grabbed a shirt she had ordered from Nordstrom Rack and mentioned that they could stop by their Beavercreek location. Upon walking inside the store, Lesia said, “It shouldn’t take me long. I’m just making a return.” Based on past experience, Al knew they would be inside Nordstrom Rack for at least 30 minutes, so he went to the men’s section.

 The first thing that caught his eye was a beautiful, big, red sign that read CLEARANCE! To Al’s surprise, he found a HUGO BOSS polo shirt, but after noticing the $59 sale price, he put it back. Al then noticed another HUGO BOSS shirt that was on sale for $11.99 (original price - $88). He asked the sales clerk if the $59 price was accurate since the only difference was that the $11.99 shirt had one line of a different color going down the front.

 Al then started thinking about how some people, who have consumer debt, get further into debt simply because of practicing destructive behaviors. For example, let’s say Al decided to get the $59 shirt, but didn’t have the money in his checking account. Like many people, he may have thought, “I’ll put it on my credit card and then pay it off when the bill comes.” When you want something bad enough, you’ll make any excuse to get it. That’s the secret to why revolving (e.g., credit cards) and installment credit is so profitable. This is the question Al should have asked: What financial behaviors do I exhibit that are preventing me from having $59 to buy this shirt?

 Al also thought about how easy it was for him to justify spending $17 on a lobster roll in contrast to how he chose not to spend $59 for a polo shirt that had a lower cost per use value. In Al’s mind, eating good food is a dining experience while buying clothes, on the other hand, doesn’t make him feel warm and fuzzy on the inside. Again, this is just another emotionally charged rationalization.  The example presented was very basic; however, the same emotional response applies to financing homes, cars, and vacations.

 If you’re wondering, Al decided to purchase the $11.99 HUGO BOSS shirt after the sales clerk scanned the tag and discovered it should have been priced at $59. She told Al he could buy it for the price as listed. As you may have guessed, he couldn’t resist an 88% discount.

Al Played the Lottery and Won

The lottery is based on luck, but if you have the winning ticket, you’re luckiest of them all. Recently, Al was feeling adventurous so he played the Powerball and paid an extra $1 for the Power Play, a multiplier that increases the payout. To his surprise, he discovered that his ticket matched the Powerball number. His $3 investment produced $12 (300% return). When he went to pick up his winnings, the cashier was shocked to learn he didn’t want more lottery tickets. As you may have guessed, he couldn’t comprehend playing again when he was already a winner.

 This month is almost over, but remember that your monthly budget is more predictable than the lottery. Instead of spending money and hoping for success, you can create success by telling your money how to behave. All it takes is a simple and easy to duplicate plan that relies more on math than emotion. Your winning numbers can be found in the financial system you follow after receiving each paycheck. 

9 Financial Tips for the New Year

10, 9, 8, 7, 6, 5, 4, 3, 2, 1! Happy New Year! These are the words millions of people will say once the clock strikes midnight on December 31, 2020. Within a few days of celebrating the beginning of 2021, you might make a New Year’s financial resolution. Unfortunately, over 80% of people who make them will have failed by the second week of February. Don’t worry! This statistic will not apply to you unless you decide it will.

If you would like to achieve a New Year’s financial resolution, follow these tips to increase your chance of success:

1. Be committed; don’t just try. The word try implies that failure is an option. Once you commit to do something, you will find a way to get it done if your why is big enough.

2. Analyze financial lessons from 2020. This past year has been unlike any other you’ve experienced in your lifetime. Hopefully, you’ve identified opportunities to improve your financial game plan for next year. If you repeat the same behaviors, you’ll get the same results.

3. Adjust your behaviors. Write a list of potential outcomes if you decided to modify at least one behavior that could positively impact your financial future. Regarding your financial success, behavior plays just as big a role as intelligence, sometimes more.

4. Establish a savings goal for 2021. Mastering the art of saving usually prevents you from overspending. Setting a savings goal and creating a plan to hit the goal produces small wins that add up over time. 

5. Measure the gap between income and spending. As you prepare your January 2021 spending plan, determine the difference between income and spending for December. If you repeat this process each month, you will either be satisfied or unsatisfied with your financial progress for 2021. The choice is yours.

6. Pay yourself in installments. Project what major expenses will incur during 2021 and start saving immediately. If you know you have a $600 bill due on April 1, it’s much easier to save $200 every month during January, February, and March. This small, but significant tip can help you better manage cash flow and reduce financial stress.

7. Create and follow a monthly spending plan. You have a system for just about everything in your life; money should follow a system as well. While preparing your financial plan for January, develop a budget that is simple and easy to duplicate (teach me how to budget like a pro). Capture every expense and remember to give every dollar an assignment. Don’t forget about your monthly installment payments for that future big expense. Repeat this process every month.

8. Retrieve a copy of your credit report. Develop a habit of checking your credit report at least once every four months. Currently, each of the three major credit reporting bureaus are offering free weekly online reports through April 2021. Please visit www.annualcreditreport.com.

9. Measure investment performance. If you have pre- or after-tax investments, determine what you contributed during 2020 and assess the growth or decline in your account’s value. Depending on your goals, you might need to invest more or adjust your asset allocation.

After the clock strikes midnight on December 31, you have 365 days to make your financial dreams come true. Breaking down your yearly goals into monthly milestones almost guarantees success. On your mark, get set, go!

Let's Get Financially Naked

When someone at your doctor’s office says, “Will you please take off your clothes?” you probably aren’t offended.  However, there are certain financial questions many people consider to be forbidden because the answer would make them feel naked: How much money do you earn? How many credit cards do you have? What is the balance in your checking account? Revealing answers to these questions are insignificant because they do not provide any insight regarding your ability to manage money.

 While recording a guest segment for a radio show the other day, Al stated, “My wife and I live a very simple life. We have only 23 line items in our monthly budget.” After the interview concluded, the host, expressing disbelief in that low number of categories, mentioned he wanted to discuss these items on the next show.

If you doubt that it is possible to maintain a household utilizing 23 expense categories, here’s a summary of Al & Lesia’s monthly budget line items:

As you can see, this list is very basic. Items with an asterisk represent future high dollar expenses that are paid in a lump sum. For example, if you have several insurance policies with the same company, pay your premiums in full to take advantage of a larger discount (#MoneySavingTip).

There are a few items that are not on their list: mortgage, student loans, credit cards, and car payments. If you’re thinking about yourself, financially naked at the moment, and considering a weight loss, start with paying down your credit card balance. The lower the number of expense items in your monthly spending plan, the better. A revolving balance is like still having love handles after sticking to a meal plan and exercise routine for months without seeing any positive results.

If you haven’t been financially naked in a while, it’s time to bare it all in hopes of uncovering new opportunities to have more, spend wisely, and live abundantly. If you don’t like some of the love handles you discover while exploring your financial nakedness, a slight change in behavior can usually fix it.

6 Advantages of a Health Savings Account

The latter part of October is usually the time of year when employers kick off their annual open enrollment. During this two- or three-week timespan, employees have the opportunity to sign up for various healthcare options, insurances, a flexible spending account (FSA) or health savings account (HSA). To take advantage of the HSA, you must be enrolled in a high deductible health plan (HDHP). There are many benefits of utilizing a health savings account:

1. Triple tax savings – Contributions, earnings, and qualified healthcare expenses are not subject to federal income tax or state income tax in most states. The maximum HSA contribution for 2021 has increased to $3,600 for single coverage and $7,200 for family. If you are age 55 or older during 2021, you may contribute an additional $1,000.

2. Interest and investment benefits – You can earn interest each month and have the option to invest in mutual fund families once minimum balance requirements are met. Before selecting your investment options, be sure to consult a fee-only advisor.

3. Portability – Because you own the HSA, you can take it with you if you change jobs, change health plans or retire.

4. Rollover – Whatever balance is left in your account at the end of the year, rolls over to the next year. There is no use it or lose it feature.

5. Age 65 comes with a perk – After reaching age 65, you can also use the money in your HSA for any non-eligible expense, penalty free. However, you will have to pay income taxes on that amount.

6. Wealth building hack – If you can pay for the expenses (save your receipts) you would usually bill to your HSA account from regular cash flow, this will allow your pre-tax contributions to continue growing at a faster rate. Years down the road, hopefully after your account has grown substantially, you can get reimbursed for the qualifying medical expenses you paid out of pocket.

If you have other medical coverage, you are not eligible to contribute to an HSA (e.g., Medicare or secondary coverage under your spouse’s plan if that plan is not a qualifying HDHP). If you and your spouse are enrolled in an HDHP with an HSA, be sure to monitor your contributions so you do not exceed the family maximum allowable contribution.

Open enrollment is also a good time to determine what your savings goal will be for 2021 and plan accordingly. Additionally, give some thought to securing a revised quote for your homeowners, auto, and liability insurances. You should qualify for an additional discount if you bundle. Instead of the set it and forget it mentality, an annual or bi-annual price check will help determine if you are overspending.

9 Ways to Feel Richer

It is a common belief that financial planners consider the rich as people having $5 million in net worth. However, the numerical classification of rich does not automatically mean someone’s quality of life is rich. 

Most people reading this may not ever qualify as being rich from a financial perspective, but that doesn’t mean you can’t feel rich. Here are 9 ways you can begin your journey to feeling rich:

Share new experiences with loved ones – If you’re somewhat adventurous, locate your nearest park and make plans to bathe in nature while exploring a hiking trail. Don’t forget to pack a picnic basket for lunch.

Practice random acts of kindness – Doing something for someone who could not do anything for you in return allows you to practice generosity.

Have more meaningful conversations with friends – Discussions within your circle of influence should not involve more complaints about what’s wrong with the world; instead, try to propose solutions to make things better.

Accomplish a goal – Remember the thing you’ve been saying you’re going to get around to? Do it. Time is a precious commodity so make the most of it.

Revisit moments of joy – Those pictures on your smartphone that you hardly ever look at are a good place to start. If you’re more seasoned in age, track down some old photo albums and reminisce about the old days.  

Call an old friend or acquaintance – Remember the last time you heard from someone you hadn’t spoken to in years? That feeling of reconnection probably made your day. Nothing is preventing you from reliving that moment, so call the people you thought of while reading this. (Sending a text message does not count).

Read more – Reading a good book will allow you to go on an emotional journey within the comfort of your own home. If you enjoy sci-fi, mystery, fantasy, or non-fiction, turn to page one and begin.

Engage in arts and crafts – Who cares if you aren’t good at something as long as you feel good doing it? If you like the way painting or learning how to play an instrument makes you feel, do more of it.

Dance like nobody’s watching – Express yourself in any way you see fit. If you’re a little offbeat, who cares? The world would be boring if everyone could do something as well as the next person.

Game Time Budgeting 10 Year Celebration Video Blog

Is Overdraft Protection Worth It?

Overdraft fees collected in 2019 by the 10 largest banks in America was $11 billion dollars. Not shocked yet? You are about to be. The average debit card transaction that triggered an overdraft fee was $20 according to the Center for Responsible Lending. Yes! You read that correctly, twenty dollars.

I have never been a fan of letting someone else count your money, so let’s look at why this activity is so dangerous. First, overdraft protection is a revenue generating product… period.  Profits, not you, are being protected. Second, the $35 average overdraft fee is steep considering the bank has immediate access to the money it lends (a very low risk loan) after receiving your next deposit. Third, once you incur one overdraft fee, the likelihood of incurring multiple fees increases based on the number of transactions for which you do not have the money.

A $35 overdraft fee might not sound like much, but that’s because you are not listening. Hmmm! Let’s put this in perspective. Assume you have only a few dollars in your bank account and swipe your debit card for $20. Thanks to overdraft protection, the transaction clears but triggers a $35 fee. Is it me or does this seem similar to a sophisticated form of a payday loan? Don’t let the sexy words fool you.

I know what you are thinking… overdraft protection sounds like something that’s good for you. Who wouldn’t want to be protected from an overdraft? If you think of this as a payday loan, I bet you didn’t realize that the average overdraft loan repayment (remember, you borrowed $20 and paid $35 for the convenience) is only three days. Most payday lenders offer a 14-day repayment plan.

Using the APR (annual percentage rate) calculation from the Payday lending world, let’s shed some light on this math problem. Here’s how it works: Divide the amount of interest paid by the amount borrowed; multiply that number by 365; divide that number by the length of the repayment term; and multiply by 100.

$35/$20 = 1.75 X 365 = 638.75/3 = 212.92 x 100 = 21,291% APR

Please let my math not be correct. Overdraft protection is like payday lending on steroids.

Can you understand why banks love it when customers use overdraft protection? The truly sad part is that 9% of account holders pay 84% of all overdraft fees (approximately $9.24 billion). I understand that banks must earn a return when lending money, but something about this smells a little fishy to me. This is why I am a fan of opting out of overdraft protection. The true protection would come in the form of your card being declined when attempting to make a purchase without having enough money in your account. Protect yourself from yourself and opt out. A declined transaction might be embarrassing in the moment, but that is much better than being broke or minus broke for life.

Credit Tips During a Pandemic

COVID-19 continues to impact all aspects of everyday life. From a financial point of view, I’d bet it has been quite some time since you received a credit card offer. During economic times like this, credit card issuers are focused on controlling risks. When the economy was buzzing along, they had more confidence in people’s ability to make their minimum payment. Nowadays, that confidence has decreased.

Here are a few tips to keep in mind regarding credit:

Be proactive, not reactive: If your household has experienced financial distress during this pandemic, reach out to your creditors immediately and inquire about what type of hardship options are available to you as a consumer. Specifically, regarding credit cards, maybe they will be willing to lower your interest rate, reduce your minimum payment, or waive late fees. You can also try this with your mortgage and auto loan payments.

Reduce your credit utilization ratio: In an effort to control risk, your credit card issuer might decide to lower your credit limit. This action could trigger an increase in your utilization ratio (credit you’re using divided by the amount of credit you have available). If you have a credit card with a limit of $1,000 and you have a $300 balance, your utilization ratio is 30%. If your card issuer suddenly dropped your credit limit to $600, your utilization ratio would then become 50%. The interesting part is that this could also negatively impact your credit score because you are now utilizing more of the credit that is available to you.

Activate Automatic Bill Pay: Most of us like the phrase, “Set it and forget it.” This is how I view auto bill pay, so I never make the mistake of missing a payment. However, I don’t believe in forgetting about any bill that takes money out of your account. This auto draft impacts cash flow and should be tracked accordingly.

Document credit related agreements: When something is not in writing, it never happened. For example, our lawn care company has treated our yard twice this year. Back in March, a customer service representative and I agreed to a one-time lump sum payment for the year. He sent an email which verified our conversation and the price. After making two phone calls, I noticed the one-time payment had not been processed. They continued to bill us for each treatment which would have cost more than the negotiated fee. On June 15, a young lady contacted me about our past due bills (four months after the initial agreement). I explained that our bill was not past due because I had proof of a pre-arranged lump sum payment. She processed the payment and was very apologetic that it had not been taken care of earlier. If I didn’t have proof of the negotiated lower price, it’s possible I would have had to pay the higher per treatment fee.

GTB Celebrates 10 Year Anniversary!

As we celebrate one decade in business, each of our books (click to view books) will be available at a price of only $10 for the next 10 days (sale ends July 10, 2020 at midnight). Thank you for trusting us with your financial wellness needs.

Practical Budgeting Example Post-Layoff Due to COVID-19

In 2010, I was laid off so I thought it might be helpful to create an example of how a household could adjust to a decrease in income. Please note the following:

• This example assumes unemployment insurance payments amount to 50% ($1,500/month) of the previous income ($3,000/month). These numbers probably don't reflect your respective income, however, the goal is to understand a concept. 

• Some budget categories were purposely excluded to save space. However, in a crisis situation, taking care of your necessities is still key.

• The percentage of income contributed to each expense category (pre- and post-layoff) is the same except for grocery, student loans, and the credit card payment. For example, because the mortgage is $1,100 and income is $3,000/month, that's 36.67% of net income. 

• Mortgages that are federally backed qualify for relief which explains the half payment. In reality, you might be able to suspend or reduce payments for up to 12 months.

• Federally backed student loans are deferred until Sept. 30, 2020 so $250/month was reallocated to grocery. 

• $25 for the credit card bill was also reallocated to grocery. Keeping food on the table is crucial.  

• Some people may receive an additional $600/week ($2,400/month) in unemployment compensation. This is how the total unemployment income could reach $3,900/month. Due to the higher than normal unemployment benefit arrangement because of COVID-19, some people may be earning more while unemployed. 

Success Doesn't Happen By Accident

Last month, I had the chance to have lunch with Precious Scott. She was in the audience during a speaking engagement I did at her former employer. She’s originally from Zimbabwe and the story of how she came to the United States blew my mind. During her childhood, her dad, who worked as a detective, passed and her mother had to raise three children alone. Their home, which was linked to her father’s employment, had to be vacated not long after his passing.

Precious mentioned that her ticket to a better life was through education. Unfortunately her mother could not afford to send her to college. While talking with a friend one day, she learned about the US Student Achievers Program. Twenty out of thousands of students from Zimbabwe were going to be selected for an opportunity to attend college in the USA. Precious applied to the program and was selected, then was accepted to Berea College on a full scholarship. The only problem was that she did not have the money to pay for her flight. For the next 30 days, Precious knocked on doors of businesses in the business district near where she lived to ask for airfare assistance. Because of her resilience and her determination to succeed, she got the money to secure her dream.

Due to financial hardship, she owned only one good dress for the trip. A monk she had befriended heard about her opportunity and gave her the one piece of luggage he owned.

Precious graduated from Berea College with a degree in accounting. She is now a CPA, and an Audit Manager for a very large corporation, married and has two children. She and her husband are also debt-free except for their mortgage. Sometimes when you chase your dream, you catch it.

Sometimes Insurance Is Worthless

During the shuttle ride to the airport after our last vacation, my wife and I met a gentleman who had recently graduated from college. While we talked, he mentioned how life in the real world is very different from college. He was traveling with his mother, and she kept telling him how he's going to have to learn a few tough life lessons.

We noticed he had bandages on his finger. His mom chimed in and talked about his unfortunate accident that happened the night before. Apparently, he cut his finger and had to visit the hospital for stitches. Luckily his mom was fluent in Spanish so the process of getting the medical attention he needed was not challenging.

The interesting part about our conversation occurred when he mentioned the $1,300 medical bill that had to be paid on the spot. He covered the cost with his credit card. He then stated, "When I get back to the states and go to my job, I'll contact my insurance company so I can get reimbursed." I think this statement is what his mother was alluding to when commenting on his life lessons. When you're on vacation and have a medical emergency, your health care insurance is usually only valid in the country in which you live. Without travel medical insurance, the cost of a medical emergency can sometimes end up costing more than the trip itself.

If this gentleman had purchased travel medical insurance, I'm almost 100% sure his cost would have been far less. Unfortunately, this life lesson cost $1,300. Whether you decide to purchase travel medical insurance or not is your choice. My goal is simply to heighten your level of awareness regarding situations that could potentially impact your money.

A Penny Saved is More Than a Penny Earned

In 2010, I was laid off from a six figure a year job. At the time, I had $173,107 in my 401k account. I could have let the money stay there but that would have been like breaking up with your significant other and leaving your toothbrush at his/her house. I elected to transfer the balance to a Traditional IRA (Individual Retirement Arrangement) and haven't touched it since. Recently, I checked the balance and it's $419,909. That's $246,802 more than what I had in 2010. So let's see, $1 saved turned out to be worth $2.42 nine years later. It could have been more if my risk tolerance were higher, however, it could have also been a lot less. 

Like me, you may have heard thousands of times throughout your life that a penny saved is a penny earned, however, that's not true, IT'S MORE. If you don't believe me, take a look at your retirement account balances over the past few years. Notice the difference in what you've contributed versus the current balance. 

My Bank Tried to Steal From Me

Never in my life would I have imagined that my bank would steal from me. To add insult to injury, who would have thought this would occur because Lesia and I came in $87 under budget on September 30th in the eating out category for our monthly spending plan? Yes, our monthly financial game plan is that detailed. LOL! Since we were headed to Turks & Caicos Islands the following week to celebrate Lesia’s 45th birthday, we agreed to use this extra money for meals. Restaurant and grocery prices are extremely expensive when you travel to a location where everything is imported (note the price for one watermelon below).

At the end of every month, I zero out our joint checking account in preparation for the next month’s spending. Usually this involves transferring the remaining balance to our emergency fund or travel account (money that’s left over at the end of the month still needs an assignment). Because I needed to go to the bank, while there, I filled out a withdrawal slip for $87 to take on our trip. Later, after looking at our account online, I noticed that $87.07 had been deducted from our account. I went to the bank the following day since I had to make a deposit and discovered that the scanner read $87.07 from my withdrawal slip. As you can imagine, I requested a seven cents refund. I said to the teller, “If this situation was the other way around, I’m sure the bank would want its money back.” She responded, “You got that right.”

Remember the following tips so you can keep more of what’s yours:

• Inspect what you expect – Anytime a financial transaction occurs, it should be for the exact amount you agreed to (electronic or paper receipts serve a purpose).

• Never assume – If you have blind faith that a specific credit or debit will post to your account as planned and fail to check the math, you could be an involuntary accessory to theft (from yourself)

• Technology makes mistakes – Although technology can increase speed and efficiency, I’d think that almost nothing in the world operates with 100% accuracy.

First Class Put Me In Debt

What is the last thing you checked off your bucket list? For quite a while I have wanted to fly across the ocean in one of those airplane seats that recline into a bed. As you can imagine, the cost to do this and my passion for getting the most value when I spend money don’t jell too well.

 My wife, Lesia, and I recently celebrated our 17th wedding anniversary with a trip to Venice, Italy. We then went on a seven-day cruise to Kotor, Montenegro and the Greek Isles (Corfu, Athens, Kotakolon, and Argostoli). This was also our first time doing a two week vacation. Isn’t it funny how when you do something you enjoy, you want more of it as fast as you can get it?

 Unfortunately this trip created a challenge for me. Lesia had 128,000 frequent flyer miles which earned her a FREE ticket. I had only 98,000 miles. The additional miles cost $637.73 (taxes included). Because I could have flown coach for $0, the additional expense was not covered by our travel account. Upgrades are a personal preference. I chose to pay the additional expense out of my allowance. As you can imagine, my account does not have that much money in it so we agreed that I could borrow $500 ($137.73 down payment) from the travel account and pay it back in monthly installments at 0% interest. I’d bet you’re shaking your head right now. LOL! My debt will be paid in full next month. Now that I think about it, if you borrow money from yourself, since I’m 50% owner of the asset that provided the loan (our travel account), was I technically ever in debt?

 The $637.73 was worth every penny for the comfort and perks. I had a pillow, blanket, TUMI overnight kit, and noise cancelling headphones. I also loved all the food that was constantly being served. While watching TV, I had my chair tilted so that it felt like a recliner. When it was time for bed, I hit a button which allowed my seat to lay flat. For quite some time, I had the biggest grin on my face while thinking, if I never do this again, at least I had the experience this one time.

 I’d bet there are some experiences you’ve always wanted to enjoy which require money. What if you put a price tag on it and began saving a little extra each month? You could take the easy way out and finance the experience (like I did). However, if you have to pay at least a penny in interest, the cost is too high.

Three Ways for Couples to Manage Money

Couples communicate everyday but I sometimes wonder how many of those discussions involve personal finance. When you think about it, money is one of the most important, yet least discussed topics in most households.

Every couple has their own unique way of doing things (finances included). If your system is working, keep it up. If not, you might need to try something different. Here are three options for handling your finances as a couple:

• 100% Together (My personal favorite) - Yours, Mine, Ours - you operate as a team and each member of the partnership puts 100% of their respective income in a joint account. From there, all the household expenses (i.e., mortgage/rent, transportation, utilities, grocery, debts, investments, etc.) are paid. You could also allocate a certain portion of the joint income to each individual as an allowance. By doing this, if you surprise your significant other with a gift, you can maintain the element of surprise since the cost will only be known by you.

• Equal Sacrifice but Not Equal Giving - It's rare that each individual in a union earns the same amount of money. In an effort to ensure the higher earner doesn't feel like he/she is carrying the load alone, each individual could contribute 80% of his/her paycheck to the joint account for household expenses and keep the remaining 20% for personal use. Although both spouses are contributing the same percentage to the household, I'm not a big fan. For example, if one spouse earns $5,000 a month and the other earns $1,000, their fun money will amount to $1,000 and $200 respectively. The spouse with the lower income may one day resent the other. These percentages should not represent a specific target for your household. It's only an example. Do the math to determine what works best.

• 100% Separate - You live under one roof, however, your household is divided into yours and mine. This option is my least favorite since each individual is operating in a vacuum. If a bill isn't paid (e.g., mortgage, car payment), you might not find out about it until it's too late. Plus, whichever one of you passes away first might leave the other confused about your portion of this financial arrangement. 

"I Feel" vs "I Know" in Personal Finance

How many times in your life have you started a sentence with the words I feel? When we use these two words in a financial discussion, they can sometimes thrust you into a world of make believe. For example, I had a conversation with a young lady a few weeks ago who graduated from college in 2015. While asking a few questions so I could better understand her current financial situation, I noticed she kept saying, "I feel" while giving her response.

One of her goals is to get an apartment of her own and move out of her parent's home. I recall her saying, "I feel like I need my own apartment at this stage in my life." When it comes to money, feelings are one thing and then facts can sometimes be quite different. After discussing her income and monthly bills, we quickly discovered she could not afford to move out of her parent's home. A quick math calculation provided the answer we needed. We then were able to come up with a plan of action to increase her income and minimize expenses (usually the only two ways to solve a financial problem).

Here are a few financial questions that can be answered with a fact (or estimate) and not a feeling:

• If my household continues to save X% of its monthly pay for the next X number of years, how much money might we have by the time we plan to retire? https://www.nerdwallet.com/investing/retirement-calculator

• If I plan to retire one day, how long will my retirement nest egg last? https://RetirementPlans.Vanguard.com

• If my employer told me I was getting laid off in three months, how many months could I live before having to borrow? The answer can be found by adding up your household expenses that are mandatory (e.g., mortgage, homeowner's insurance, utilities, grocery, car payment, car insurance, health insurance). Next, divide the balance in your emergency fund by the total of your monthly expenses. For example, if your mandatory monthly expenses totaled $4,000 and you had $12,000 in your emergency fund, you could live for 3 months ($12,000/$4,000) without having to borrow.

• Assuming you left this world today, have you obtained the appropriate life insurance to ease the financial burden for the person(s) who would have to care for your dependent(s)? Have you documented what should happen with your estate?

• Assuming you are an investor, do you know how you are being charged (e.g., fee-only, commission only, fees and commissions)? If you are being charged a certain percentage of AUM (assets under management - total market value of the investments that a person or entity manages on behalf of clients), how is that impacting your future wealth building capability? For example, if you have $1,000,000 in your portfolio and the AUM fee is 1% annually, that's a fee of $10,000*.

Remember, each of the above questions can and should be answered. I feel like you can do it but I know you either will or will not.

*Note: This example assumes no change in account value and a one-time charge at the end of the year. Though the published rate is annualized, fees may be taken out more frequently on a pro-rated basis - generally daily if charged by a mutual fund company, or quarterly if by an investment adviser. This means the actual amount you pay each year can vary, since your account balance varies day by day.