This weekend is a family weekend.  My daughter is coming from Seattle with her son and fiance and two small horses to look for a house here.  Her fiance will be stationed not far away starting in February.  With both of my daughters on the West Coast, I have missed them immensely.  We put off our Thanksgiving celebration until Sunday when they could join us.

A few months ago, I made the decision to move in with Randy.  I have known him for about a year and had been spending more time on his farm than at home.  Two may not be able to live more cheaply than one but two together can live cheaper than two separately.  I don’t want to make it sound like a financial decision totally but finances was part of it for both of us.

It is wonderful to have someone to share both the good and the bad.  This holiday season we are going to be enjoying both of our families and have even eeked out enough to buy Christmas presents for the kids and grandkids.  I am so thankful that he is a part of my life.

I believe that you are going to see some changes in Oh My Aching Debts over the next few months.  I have been struggling both with my focus on it with all the changes in my life and on what direction I want it to go.  I think since homesteading is such a large part of our lives, it will probably focus more on that.

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I have begun to make lists of things that I need to get accomplished each day.  First thing on my list today was to get this article written and carnival links.

Money Ning reminds everyone to SMILE in the Carnival of Personal Finance Smile Edition.  Lots of great articles, many with holiday cooking and shopping tips.  Be sure to check it out.

Aching Debts was included in the Carnival of Financial Planning at Personal Financial Planning Blog Directory.  It is a smaller carnival but has some great articles.

I hope everyone has a great weekend.  I will be back on Monday with a personal announcement.  I’ve been putting it off but I think it’s time to share it with my readers.

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This statement shocked me.  My parents are retired and have a perfect credit record.  I cannot imagine them making a payment late, much less letting a house go into foreclosure.  However, I cannot fault their decision as in today’s economy and real estate market, their choices are limited and their savings are already shrinking due to the instability in the economy.

I know that this decision was one of the hardest in their life.  My point today is not to dissect their decision or situation and come up with solutions but to illustrate that we are all facing and making really hard decisions.  I would like to use the responses in an article on how the economy is forcing us to make decisions and how they are affecting our lives.  We hear a lot about how the economy is affecting the middle class but what about retired people who are struggling to live on a fixed income or families whose income has fallen to at or near the poverty level.

So readers, speak out.  Have you faced a hard financial decision?  How has your decision affected your life?  Was the end result positive or negative?

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We use the envelope system for both personal and business expenses and as cash comes in some is put in the bank and some is put in the envelopes. A priority is getting cash in the envelope for each bill. Checks are deposited in the bank and as a bill comes due, the money for that bill is put in the bank and the bill is paid. It’s a simplistic way to do things but it works for us. For over a year, the bills have been paid on time and we have money saved. Pretty neat, huh?

Her point is that for someone who is beginning to budget, a simple system may be the best.  Frankly, I think she is right.  When I initially started focusing on my finances and developing a budget, I also used the envelope system.  I didn’t use it for bills but I switched from using my debit or check card to using envelopes.  When I spent something out of the envelope, the receipt went in.

This simple method really helped me to determine where my money was going and helped me to focus on changing my spending habits.  I firmly believe however that how you budget or which spending plan that you use really doesn’t matter.  The key to budgeting is just to focus on your finances.

What do you accomplish when you start to focus on your money?  You become more aware of how much money you are spending.  You start to realize how much those little things like a soda and a snack on the way to work add up.  You realize that a large percentage of your money gets frittered away two or three dollars at a time whether it’s at a convenience store or in the gas tank from those little extra trips.

Once you know where your money is going, it becomes much easier to divert those dollars into savings or debt repayment.  If you stop at the 7-11 every morning on your way to work and spend $2.50, that adds up to $40 per month.  For me, that would be the minimum payment on my credit card plus a little extra.  If I add that to the payment I already send them, I could pay my credit card off in half the time or I could add it to my emergency fund.

It’s those little snowflakes of savings that come from simply focusing on your finances.  It’s not complicated.  You don’t need spreadsheets or programs or folders.  You simply need to focus in some way on where your money really goes.  Once you have begun, the rest gets easy.  The scary part?  For me the scary part is really knowing what I spend my money on, not planning where I want to spend it.

So if you are new to financial planning, keep it simple.  Keep your focus on your finances for a day, a week, or a month and the rest will come easily.  Be warned though, budgeting can become addictive.

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Ah, but if you are like me and you do not have a steady paycheck with a set amount of income, how do you budget?  How can you plan your spending every month if you don’t know exactly what your income will be?  What do you do if you don’t have enough income?  What do you do when you have more than you expected?

If you have irregular income, you really need to budget more than people with a fixed income.  You need to plan ahead for both the slack months and the months with excess income, otherwise you will find yourself in the debt hole.

Steps to Irregular Income Budgeting

1. Go back over your income for the last 12 months or as far back as you can.  Write down your total income per month.  You can use your bank statements, receipt books, paycheck stubs, etc.  If you are in a seasonal business, you will probably notice a trend of which months are good and which aren’t.
2. Total your monthly income and divide by the number of months that you have to determine your monthly average income.  Write down your monthly average.  Look at the months with the least amount of income and write down the two lowest.
3. Determine your monthly spending.  Write down the amount spent, who it went to and label it as necessary, perk or waste.  Bills such as rent, mortgage, heat, groceries, health insurance and debt payments are pretty much necessary.  Movies, dinners out, vacations, entertainment may be labeled as a perk.  Money spent at Starbucks, the local convenience store, etc may be something you want to label as waste.  It’s up to you to decide what the basic necessities of your life are.
4. Prioritize your necessary bills.  Make a list of your bills in order of importance.  For most of us, the mortgage or rent is going to be on the top of the list.  The next thing may be the utility bills and then any debts for cars, credit cards, etc.  The list should include who the payment is going to, the amount and then keep a running total.  It would look like this   Name ***** Amount***** Total so that when you are done, the total column will show the total amount you need to pay by the end of the month.
5. Analyze. Go back to your monthly income and look at the two lowest months.  If you were to only earn this amount, would it be enough to pay all your bills and still allow you living expenses?  How many months does your income fall below the amount of your monthly bills?  Would the average monthly income be enough?  How much do you have left over in the months with excess income?
6. Annualize. Take your necessary expenses monthly and add them up to get an annual amount.  Subtract it from your annual income.  If the result is a negative number then you need to either reduce your spending or increase your income.  If it is a positive number then you can move to the next step.
7. Take the months where your monthly income is below your monthly spending and subtract the amount you spend from your income for that month.  This should be a negative number and we are going to call it the shortfall.
8. Establish a shortfall fund. While there is lots of talk about an emergency fund in personal finance, if you have an irregular income, you need to establish a fund for those months where your income is at a low point.  This is not an emergency fund, this is money planned to meet those normal everyday living expenses that you have to pay even when your income is not enough. The shortfall fund should not replace your emergency fund.  Your goal should be to have an amount equal to the shortfall you determined in the previous step. On months where you have more income than your spending, put that money towards your shortfall fund until it reaches the annual shortfall amount.
9. Pay bills in order of priority. When you pay bills, pay them in the order of priority and mark them off the list as you go.  You should be able to look at your list and determine exactly how many you can pay.
10. Eliminate Waste. You designated a certain amount of your spending as waste.  Get rid of it and put that money towards establishing either your emergency fund or your shortfall fund.

Budgeting on irregular income is not easy.  It does require planning and saving to not end up with more month than you have money.  I personally have found that I have to put a certain percentage of my income into savings before I spend a single penny of it. Otherwise it will get frittered away on important but probably unnecessary things.

Do you have an irregular income?  Any additional tips on how to budget for it?  I’d love to hear from you regarding challenges and successes with it.

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by Phil Romans

With the most recent quarterly statements from Exxon, I am feeling raped.  With almost every American heavily dependent on oil, Exxon’s 58% increase in profit in the last quarter seems obscene and Exxon isn’t alone.  Oil companies across the board have been booming while the rest of the country suffers in the economic downturn.  Am I alone in wondering when we will have had enough and do something about it?

In my particular case, I, like most Americans, have to depend on gasoline to get to work whether I drive my car or ride a bus.  My house is heated with fuel oil.  The monthly cost right now to keep my thermostat at 60 degrees would be approximately $348 per month.  It would go up in January and February when the temperatures generally drop.  Between fuel costs and heating costs over 50% of my budget goes to the oil companies.  Even if you don’t have a car or heat with fuel oil, you still bear the cost of high oil prices.  If you buy groceries, you will be paying more as production costs rise due to high fuel costs for farmers and delivery.

Am I suggesting that we regulate prices or have the government intervene with profit taxes?  No, I’m suggesting that we wake the hell up and realize that there are alternative sources of energy.  We do not have to be totally dependent on oil whether it’s foreign or domestic.  There are viable alternatives that could significantly reduce our oil dependence.

There is an 80 year old oil man from Texas who is crusading for change.  His name is T. Boone Pickens and he has a plan.  The Pickens Plan uses a combination of wind, solar and natural gas which can all be produced in the US to reduce our consumption of foreign oil.

The changes that Pickens is suggesting would not change our daily lives.  We would not be driving solar or natural gas powered cars or heating our homes with solar panels.  The plan uses wind & solar farms to produce a large percentage of our electricity and natural gas to power the commercial fleets of trucks that keep American produce on the move.

But a national shift in energy sources is not enough in my opinion.  We all need to take a look at the way we live and the things we take for granted.  As a nation, we regularly waste energy.  We drive big inefficient cars, we think nothing of driving a few miles to pick up what we forgot on our grocery trip instead of doing without for a day,  we leave lights on, we throw a pair of jeans in the dryer to dewrinkle them, and the list goes on.

I am just as guilty as the next person although my energy costs are high enough that I do make a conscious effort to conserve.  I still find myself making extra trips back to the store even though I drove by it on the way home from work.  When my favorite pair of jeans are wet, I will throw them in the dryer rather than wearing something else and hanging them out to dry.  I forget and leave lights burning in rooms that I have left.

These small things do not add up to much in my monthly budget.  They might increase my energy costs by one or two percent.  They won’t break my bank on a personal level but if you start adding the costs up in your town or in your state or even in the country, a two percent drop in energy consumption is significant.

So what can you do?  Be informed.  Check out the Pickens Plan.  Write your elected officials and let them know that you are tired of our country being enslaved to foreign oil.  Be conscious of your own personal use of energy and try to find ways to reduce it.

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Check with your local extension agent to see what dates you can plant or you can determine the normal dates of the first and last hard freeze.  Take the date of the first hard freeze and calculate back 30, 60 and 90 days.  Almost all seed packages will give the number of days to harvest.

Here in Virginia, we are seeing our first frost in the last week or two but they are nighttime lows and the temperature has been in the 60s and 70s during the day. These can be ideal temperatures for growing cool season vegetables, many of which can improve in flavor with a light frost.

Some of these vegetables can be planted in the fall for winter harvest and some in the winter for early spring harvests.

Root Crops - There are a variety of different root crops that you can grow in a small garden.  I have been experimenting with them in the last year and have found that I enjoy the different flavors.  Most root vegetables are mild and are cooked similar to potatoes.

1. Carrots
2. Bunching Onions
3. Beets
4. Radishes
5. Turnips
6. Rutabaga
7. Parsnips
8. Globe Onions
9. Leeks
10. Garlic

    LEAF VEGETABLES - I have to admit that it has only been in the last year that I have gained any appreciation for ‘greens’ but properly prepared they are delicious.  Since moving to the country in southern Virginia, I have been properly educated on the preparation and cooking of them the old southern way.  I am not going to separate them out but they are quick growing and best suited to the spring, fall and early winter harvest.

11. Kale
12. Collards
13. Swiss Chard
14. Turnip Greens
15. Lettuce
16. Spinach
17. Arugula
18. Mustard Greens
19. Corn Salad

    CABBAGE FAMILY

20. Cabbage
21. Broccoli
22. Brussel Sprouts
23. Kohlrabi
24. Cauliflower

    PEAS - Peas thrive in cooler weather and can be planted in the fall or early spring.  Snow peas and sugar snap peas are eaten whole and are a great addition to salads.

25. Snow Peas
26. Sugar Snap Peas
27. English Peas

    SQUASH - Winter squash is actually grown in the spring and fall and generally has long storage times that allow it to keep through the winter months.  High in vitamins, there are a wealth of winter squash recipes that will tempt even those who may be a bit skeptical.

28. Acorn Squash
29. Spaghetti Squash
30. Butternut Squash

Most of these vegetables can be grown from seeds.  Seeds can be obtained from national seed companies such as Gurneys or Burpees and often plants can be obtained locally from a nursery or green house.   Check around, it may not be too late to get some winter vegetables started.

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In early 2003, John bent over to pick up a towel off the floor.  When he reached down, he had a knife sharp pain in the middle of his shoulder blades that radiated down his right arm.  Thinking that he had pulled a muscle or had a muscle spasm, he lay down for awhile and applied a heat.

When it didn’t go away, he took the day off work and rested.  Any movement of his head, shoulder or arm, re-awakened the sharp pain to the point of naseau.  Later that day he made an appointment with a chiropracter.  The chiropracter took xrays and found 3 discs in his upper back that had  slipped, resulting in an 8 degree curvature of the spine.  He referred him to a sports medicine chiropractor and then to a neurosurgeon.

The long and short of the medical history is that the neurosurgeon said that it was inoperable as surgery might make it worse and there was a less than 50% chance that it would improve.  He gradually lost feeling in his right hand and lost the ability to look up and focus on anything due to pressure in his spinal cord.

For a construction supervisor, this was a very debilitating injury.  The short term disability company researched his injury and hired a specialist to evaluate his ability to return to work.  When the specialist sent in his report, the company paid him for 3 years of disability.

In the meantime, his insurance benefits had run out and he was unable to pay the high cobra fees to keep insurance.  He applied to Social Security for Disability and Medicaid.  If you research disability claims, you will find that they are almost always denied the first two or three times that you apply.  This is exactly what has happened to John and he found himself living off his ever dwindling resources.

Five years later, he is still battling the disabilty system.  Unable to afford health care, he has no medical documentation after 2005 to prove his claims.  Because Medicaid is only available if you are approved for disability, he is one of thousands of people who have fallen through the cracks in the system.

John is not some bum who has lived his life off the system, he was just like you and I.  He had a good job with a good income and benefits.  He had worked for the same company for 17 years.  He had a home, a nice car, two kids and a good middle class lifestyle.

Now he is caught in a vicious circle.  His resources have dwindled until they are barely able to pay the small mortgage payment on his family home and the electric bills.  He needs medical care and documentation to prove his continuing disability but is unable to afford the high cost of CT scans and MRI’s and the specialists that are needed to diagnose and treat.  Without further documentation it is likely that his disability claim will be denied again.  He has tried to return to work but a day’s normal activity results in weeks of pain.

He is not alone.  According to Tim at My Disability Blog, more than 50,000 people in Michigan alone are waiting on disability claims.  Sixty to Seventy percent of all disability claims are initially denied and have to be appealed numerous times.  The chances of getting disability are not good unless you hire and attorney or disabilty specialist to represent you.

Do you know anyone who has applied for disability?  What did they go through?  Did they ever receive it?  Are you prepared if you are ever disabled?  Do you have long term disability insurance?  Are you sure?  Many people believe that they have it through their employer but these policies are often limited in time and will not support you during the years that it might take to get Social Security disability.

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While you are there be sure to check out some of my personal favorites:

There are some tips on how YOU can save the US Economy at Smart Money Life.  It’s time we took some of the responsibility for the state of the economy and quit pushing the blame around.  We all contributed.

Broke Grad Student has multiple pages of Deepest Darkest Financial Secrets post card style.  Gosh, these made me feel pretty good about my own financial secrets.  I don’t hold a candle to some of these!

If you are a granola person, there is a great guide to making your own granola at Interesting Money. We used to make homemade granola when I was a kid and it was SO much better than the store bought variety.  The initial costs are a little higher than what you would buy in the store but the costs go down as you make more.

Curt at Penny Jobs has an interesting commentary on the economic situation.  His article on The End of Capitalism as We Know It is worth reading.  Certainly made me go ‘hmmmmmm’.

And to end on a positive note, check out Squawkfox’s article on her readers 3 Best Financial Decisions.  Make sure to read the comments as there are lots of interesting ones!

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Gas prices have driven my fuel expenses up until they are the highest expense that I have.  The recent drop in price has helped quite a bit but it is still my highest expense.  I stumbled onto a way to cut my fuel bill in half yesterday and I jumped at it.

I have been driving a 1991 Toyota Previa (mini van) for the last year and a half.  It gets decent gas mileage (23-25 MPG) even for a mini van.  Even at that it takes between 5 and 6 gallons per day to commute to the shop and back home so for the last 12 months my fuel costs have averaged approximately $20 per day.  This means that when I get to work, I groom my first dog just to pay for gas and my second one to pay for overhead at the shop.  I only make money on my 3rd dog and I only do an average of 3.5 dogs per day.  As you can see, fuel has been taking a full third of my income.

A friend mentioned yesterday that they wanted to sell their Geo Metro.  I had a Metro when they first came out and LOVED it!

Mine averaged 40 MPG on the highway.  I didn’t have the cash to buy it but it worked out that he was looking for a mini van.  We negotiated an even swap and I am now the proud owner of a 1993 Geo Metro. I’m not the only one who has found that the Metro is a car that meets todays needs as you can read in th

is CNN article.

The Metro should not use over 3 gallons round trip which should effectively cut my fuel costs in half.  With gas prices dropping, I should be able to keep my fuel expense in the 10-15% range of my budget.  I am a lot more comfortable with that percentage than I am with a full third.  Of course there are sacrifices.  The Metro has a lot less room to haul things back and forth to and from work.  It is not a comfortable car for more than 2 adults so families with teens may want to look at another option.

They stopped making Metros a few years ago when fuel costs were down but there are still a few used ones floating around.  With 3 cylinders and 49 hp, they aren’t a power car but if you are looking for a car to commute in, you can’t beat the price or the mileage.

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