With that information in hand, you can make intelligent choices about what to buy with your hard-earned cash.
The first step in making a realistic budget is figuring out where your money goes. To keep track, make an expense record. You can make the expense record using an app on your phone, on your computer, using a spreadsheet, or you can choose an old-school approach and use paper and a pen.
Here's how to determine precisely how much you're spending:
At the end of two months, review your totals. Are you surprised at the dollar total or at the number of items you bought? Are you impulsively spending your money on many different items, or do you consistently tend to spend it on the same types of things?
Then, ask yourself if you could have eliminated certain expenses or reduced the cost of essentials: Did you compare prices when shopping? Did you try to find a coupon code or rebate to get a lower price? Could you choose a less expensive option, like working out at home rather than paying for a gym membership?
Ultimately, getting or skipping a cold brew coffee here and there won't make a huge difference in your overall budget, but a series of decisions will. If you always eat out, buy only the most expensive clothing, or habitually purchase whatever you want whenever you want it, these costs add up.
The trick is to figure out where your money is going and then find ways to lower certain expenses in a way that works for you. If you can't reduce your costs significantly, consider ways to increase your income.
Your expenditures account for only half of the picture. You also need to add up your monthly income.
Again, on your phone, spreadsheet, or on a blank sheet of paper, list the jobs for which you receive a salary or wages. Then, list all self-employment for which you receive income, including gig income, sales commissions, and money you earn doing any side hustles. Finally, list other sources of income, such as:
Next to each source of income, list the net (after deductions) amount you receive each pay period. If you don't receive the same amount each period, average the last 12.
Next to each net amount, enter the period covered by the payment, such as weekly, twice monthly (24 times a year), every other week (26 times a year), monthly, quarterly, or annually.
Finally, multiply the net amount by the number of pay periods to determine the monthly amount. For example, if you are paid twice a month, multiply the net amount by two. If you are paid every other week, multiply the amount by 26 (for the annual amount) and divide by 12.
When you're done, total up all the amounts. This is your total average monthly income.
After you keep track of your expenses and income for a few months, you're ready to create a budget. Your goals in making a budget are to control your impulses to overspend and start saving money.
To create your budget, follow these steps:
Category |
Expense |
Home |
rent/mortgage, property taxes, homeowners' insurance, homeowners' association dues, telephone, gas and electric, water and sewer, cable, internet service, garbage, household supplies, housewares, furniture and appliances, cleaning, yard or pool care, snow removal, maintenance and repairs |
Food |
groceries, breakfast out, lunch out, dinner out, coffee/tea, snacks |
Clothing |
clothes, shoes and accessories, laundry and dry cleaning |
Self Care |
toiletries and cosmetics, haircuts, massage, health club membership, donations |
Health Care |
insurance, medications, vitamins, doctors, dentist, eye care, therapy |
Transportation |
car payments, insurance, road service club, registration, gasoline, maintenance and repairs, parking and tolls, public transit, cabs, parking tickets |
Entertainment |
music, movies, concerts, theater, ballet, museums, sporting events, hobbies and lessons, club dues or membership, books, software and games |
Dependent Care |
child care, clothing, allowance, school expenses, toys and entertainment |
Pet Care |
grooming, vet, food, toys and supplies |
Education |
tuition or loan payments, books and supplies |
Personal Business |
supplies, postage, bank and credit card fees, legal fees, accounting fees |
Travel |
family trips, vacations |
Gifts & Cards |
birthdays, holidays, anniversaries |
Taxes |
deductions, credits, penalties |
Insurance |
life insurance, car insurance, home insurance, pet insurance |
Savings & Investments |
stocks, bonds, 401k, saving accounts, CDs |
If your expenses exceed your income, you will have to cut expenses or increase your income. If finding more income isn't realistic, focus on decreasing your expenses. The trick is doing this without depriving yourself of items or services you truly need.
Reduce the amount you spend in each category. Review your expenses and look for categories you can comfortably reduce slightly. For example, let's say you need to cut $175 from your budget. You had planned on spending $200 a month on meals at restaurants, but are willing to decrease that to $150, thereby saving $50.
Preserve things you can't live without. Make a list of things you feel you can't live without, and whittle down your other expenses to accommodate them. For example, you might decide to work out at home rather than at a gym because you know you'd go nuts if you couldn't eat out with friends weekly. If you make room for at least some of the things you love most, you're much more likely to succeed at your plan.
Don't think of your budget as etched in stone. If you do, and you spend more on an item than you've budgeted, you'll get frustrated and be more likely to scrap the budget altogether.
Review your budget and make adjustments. Check your figures periodically. If you never have enough money to make ends meet, it's time to adjust some more. Or, if you constantly overspend in one area, change the projected amount for that category and trim the money from another category.
Consider larger financial changes. If you continually come up short, you might need to consider some larger changes. For example, you might sell your newer car for an older used car to free yourself from car payments. As you make adjustments to your budget, give careful thought to your priorities. Think about what you value, and be honest with yourself.
Be willing to sacrifice. You might have to sacrifice some things that feel important to you. But don't expect to stick to your budget if you take away all but the essentials. Be realistic.
To learn more about managing your finances wisely, read Avoiding Financial Trouble: Ten Tips.
Also, consider getting Solve Your Money Troubles: Strategies to Get Out of Debt and Stay That Way, by Amy Loftsgordon and Cara O'Neill (Nolo), which is a comprehensive guide to getting back on your financial feet. It provides sample budget sheets, information on how to negotiate with creditors and deal with debt collectors, and more.
]]>No matter what you want your money to do for you, learning the basics of money management will help you make it happen.
Most people find dealing with personal finances a chore. Often they're not comfortable with math, don't feel they have enough time, or are even fearful of finding out that there's just not enough money in the bank to cover the bills.
Willful ignorance about finances, however, will get you nowhere. Financial knowledge yields financial power.
To improve your financial management skills, learn what's involved. The different aspects of financial management include:
You don't have to learn everything at once or become an expert. Start with the basics, and continue to educate yourself over time.
Drafting a personal budget is one of the best ways to control your spending. Until you know what you earn and spend, you can't figure out how to live within your means. Don't be intimidated by the process. Creating a budget can be simple and easy.
When it comes to deciding where to keep your hard-earned money, not all banks are the same. Fees vary greatly. Banks might charge you for visiting a teller, speaking with a customer service representative by phone, paying bills online, overdrawing your account, or other events. Choose a bank that has the best balance of customer service and fees, considering the types of services you plan to use the most.
Checking accounts. Many checking accounts waive certain fees if you have your paycheck directly deposited into your account. Most checking accounts also come with debit cards, which you can use to withdraw money from your account and pay for items as you would with a credit card. (See our "Check Cashing FAQ" below for more information on how checks work.)
Savings accounts. For savings accounts, ask about interest rates, minimum balances, and whether you're allowed only a certain number of monthly transactions. If so, you will generally be charged for each transaction over the limit.
Protect yourself from identity theft. Be sure to ask about the bank's policies to protect you from fraud and identity theft if someone uses your ATM or debit card without your permission.
File your tax return on time. If you can't, it's easy to get an extension by filing a simple form. But an extension doesn't extend your time to pay any taxes you owe; you'll have to pay these when you file for the extension.
Keep all documents related to your return for at least three years after you file.
When considering ways to invest your money, some common possibilities include (in roughly increasing order of risk): certificates of deposit (CDs), bonds, mutual funds, real estate, commodities, stocks, and business ventures.
The riskier an investment is, the more important it is that you have some expertise or get assistance from a competent agent. Also, consider how quickly you'll be able to cash out of the investment if you need quick access to the money.
Joining a club is one way to learn more about investments. For more information, see Joining an Investment Club.
Generally, banks and credit unions don't have to honor checks that are more than six months old, which are called "stale." But most banks will go ahead and honor stale checks anyway, even though they don’t have to.
The bank can cash your post-dated check at any time, even before its authorized date—unless you specifically instruct it otherwise.
To instruct the bank not to issue the funds early, both state and federal banking laws normally require that you give the bank “reasonable” notice of the postdating. Federal law does not provide a minimum time period within which you must notify the bank. Though you should do it as soon as possible to allow the bank time to process the instructions, and you might have to pay a fee. You should also describe the check to the bank with reasonable certainty. In other words, give the check number, date, amount, and name of the payee. Generally, state law says that if you provide written notice about a postdated check, your notice is valid for six months; but if you give oral notice, your notice is valid for only 14 days.
If the bank releases the funds even after you’ve instructed it not to, the bank might then be liable to you for damages that are caused by honoring the postdated check. That might include reimbursing you for nonsufficient funds fees and penalties you incurred for subsequent checks that bounced as a result of the premature deposit.
Debt collectors and creditors routinely pressure consumers into issuing postdated checks, usually over the telephone. If a collector agreed to wait before cashing the check but cashed the postdated check too early, you might be able to recover statutory and actual damages.
Federal law restricts what a debt collector can and can't do with your postdated check. Specifically, under the Fair Debt Collection Practices Act (FDCPA), a debt collector cannot:
You can sue the debt collector in state or federal court for violating the FDCPA.
Under the FDCPA, you can get up to $1,000 in statutory damages. In addition, you might be able to get actual damages (damages based on actual harm you suffered, like nonsufficient fund charges from other transactions caused by the premature deposit), attorneys’ fees, and court costs.
The FDCPA doesn't cover creditors because they're not usually considered to be debt collectors. But creditors are governed by the Federal Trade Commission Act (FTCA), which prohibits them from engaging in unfair or deceptive acts or practices. The Federal Trade Commission (FTC) may consider the creditor's early deposit of your postdated check to be an “unfair or deceptive act or practice.”
However, unlike with the FDCPA, you can’t sue the creditor for violations of the FTCA. Instead, you should file a complaint with the FTC. You can do so by visiting its website. The FTC will then conduct its own investigation and, where relevant, take action against that creditor.
Your state's laws might offer additional protection from the premature deposit of postdated checks. For example, it might cover both debt collectors and creditors.
From a legal standpoint, you have the right to sue, get a judgment, and force collections, like by attaching wages or seizing bank accounts.
Also, in some states, a judge could award you up to three times the amount of the check as punishment for the bad check. Check your state laws.
The laws governing checks vary among states, although many jurisdictions have similar provisions. If you wrote a postdated check that was improperly cashed or deposited before the date on the check, or you need help filing a suit to collect on a bad check, consider talking to an attorney.
]]>Many cities limit dog ownership to just two, three, or four. Examples include the city of Roeland Park, Kansas, which limits ownership to no more than two dogs of six months of age or older, or more than one litter of pups, without a permit; and the city of Oakland, California, which prohibits keeping more than three adult dogs (more than four months old) on any one premises. St. Louis, Missouri has set the limit at four domestic animals within one parcel of property in a residential-zoned district; but note that cats in the house would then count toward your limit. .
You'll want to look closely at what counts as a "dog." As alluded to in the above examples, the typical rules apply to adult dogs and don't count puppies that are younger than a certain age, usually eight weeks to four months or so.
In less geographically dense areas, you might see restrictions that are based not on household but on acreage. Thus if you live on a large plot of land, you might be permitted to keep a greater number of dogs.
Also check your city's regulations for any exemptions, such as for people operating a kennel.
The goal of cities that limit the number of dogs in one household is to cut down on the problems that dogs can cause in urban areas. Unless owners are vigilant, dogs can create nuisances with their droppings and barking, or cause property damage, or in the worst case, exhibit aggressive behavior.
As one court upholding such an ordinance put it, "too many dogs in too small a space may produce noise, odor and other conditions adverse to the best interests of the community as a whole." (Zagaris v. City of Whitehall, 594 N.E.2d 129 (Ohio App. 1991).)
Violating the law by keeping too many dogs without a permit will probably earn you a fine.
Even a jail sentence is possible. A judge in Holland, Michigan—which has a two-adult-dog-per-household maximum—sentenced a man to 90 days in jail for refusing to give up any of his three dogs. The dog owner spent a few days in jail before agreeing to part with one of his animals. (An effort to change the law in Holland, to allow three dogs per household, failed in late 2011.)
If you are, for example, planning to run a kennel or do something else that would qualify you for an exemption, you might have to get a special license from your city or local government. That means extra fees, rules and, often, inspections by officials.
Wondering how these rules are enforced? Animal control officials certainly don't go door to door taking a dog census. They rely, for the most part, on complaints or chance observation. So as a practical matter, someone who has more dogs than is allowed under the law is likely to get into trouble only if the dogs cause problems and a neighbor complains.
Court challenges to ordinances limiting the number of dogs one can keep almost always fail. This is due to longstanding legal precedent recognizing the power of state and local governments to regulate residents' health, safety, and general welfare.
There are a few exceptions, however. The Georgia Supreme Court found a county ordinance unconstitutional because it didn't include the criteria that a dog owner had to satisfy in order to get a permit for keeping more than four dogs. (Foster v. State, No. S00A2054 (Sup. Ct. Ga., March 19, 2001).)
The moral: First, find out your city's rules. Going to its website and searching for "dogs" will usually turn up the information you need, or if not, you could call an actual person.
Then, no matter how many dogs you have, don't let them become a neighborhood nuisance. If there are problems, work them out before the neighbors decide to go to the authorities.
Even if a city doesn't have a set limit on the number of animals, neighbors bothered by too many animals might sue in small claims court. If a court decides that the animals are a nuisance—that is, that they interfere with neighbors' enjoyment of their property—the owner can be ordered to compensate the neighbors or even to get rid of some animals.
]]>How long this process will take may depend on your relationship to material objects as well as on how badly you need the money that could be earned by selling off items one by one. The sad truth of the matter is that our beloved possessions, once used, often look like junk to others.
Although online sales have become the first possibility that occurs to many people, there’s no need to jump online right away. Local consignment, used book, clothing, and vintage or antique stores can be the most lucrative places to sell your possessions, because they draw in an interested audience who might spot your item, like it, and make an impulse purchase. Or if you are downsizing, talk to an estate sale specialist.
Your next stops might be your local Craigslist (which lets you sell items one by one) and eBay (where you will need to register as a “seller”).
For specialized items, you might want to check out these online possibilities:
A garage sale should be the last thing you try. It can be reasonably profitable if your house is well-located, but can also be a huge waste of time; and you’ll already have plenty to do with selling your home and moving into a new one. If you itemize your tax deductions, don't forget that goods donated to a charitable organization can go on the list. For this, you will need to calculate their “fair market value” at the time of the donation.
]]>Unfortunately, for most people it’s a good idea to get a new set of documents that clearly meet your new state’s legal requirements. The good news is that you’ve already done the heavy lifting—you’ve decided which documents you want and the key things you want them to accomplish for your family. It shouldn’t be difficult to get new documents that reflect the wishes you’ve settled on.
In any case, if your estate planning documents are more than a few years old, or if you’ve had any major changes in your family (marriage, divorce, new children or grandchildren) or property since you signed them, it’s probably time for a review anyway.
If you prepared a will in your old state of residence and it was valid there, then it’s probably valid in your new state as well; most states have laws that explicitly say this. So far, so good.
Still, out-of-state wills pose a couple of possible problems—or at least reasons to think about writing a new will.
Marital property rules. If you’re married and move from a community property state to a common law state, or vice versa, the rules about what you and your spouse own can change. In community property states, spouses generally own together anything they require while they’re married. (There are a few exceptions to this rule, such as property that’s inherited by just one spouse.) In other states, each spouse generally owns whatever is in has in his or her name. If you move to a community property state, the state may treat all your property as if it had been acquired in the community property state—which may not be what you and your spouse want. It’s a good idea to make new wills.
Learn more about who owns what when you're married.
You can make your own will, quickly and easily, using Nolo's Quicken WillMaker.
Executors. Your executor (also called your personal representative) is the person you name in your will to wrap up your estate after your death—to collect your property, pay the bills and taxes, and distribute what’s left to the people named in the will. A few states restrict who can serve as your executor; for example, Florida requires your executor to be related by blood or marriage, or to be a Florida resident. If you’ve recently moved south and your will names a New Yorker as executor, the Florida probate court won’t allow that person to serve. Many other states allow out-of-state executors but impose additional requirements on them. For lots of reasons, it’s often best to have a local executor. So even though your will is still valid, you may want to make a new one, naming a different person as executor.
For advice on serving as an executor, see The Executor's Guide, by Mary Randolph.
A revocable living trust isn’t subject to the same kind of rules as a will; it should be valid in any state, no matter where you signed it. But take a look to be sure it’s up to date. If you acquire real estate in your new state, you’ll probably want to hold it in the trust, so that it doesn’t have to go through probate at your death.
You can also make a valid living trust with Nolo's Quicken WillMaker.
Some states explicitly accept advance directives (also called living wills) and healthcare powers of attorney that were signed in other states. Others don't have any laws on the subject, which means that healthcare providers in your new states might balk at out-of-state documents. But as a practical matter, no matter what state law says, your family is likelier to have an easier time getting the document accepted if it’s familiar to local medical providers.
Each state has its own forms, and they vary tremendously. Some states, for example, have a combined healthcare directive and power of attorney, so that in one document you both state your wishes for end-of-life care and name someone to carry out those wishes. In other states, the documents are separate. The terminology can be different as well; in some places, you appoint a healthcare “agent,” in others, a “proxy” to act on your behalf.
Get more information about advance directives and medical powers of attorney.
If you’ve named a payable-on-death beneficiary for an insurance policy, bank account, retirement plan account, or other asset, it should be valid no matter where you live. Your agreement is with the institution that controls the asset—the bank, insurance company, or retirement account custodian. Just make sure that the institution has up-to-date contact information for both you and the beneficiary you named.
]]>Many people occasionally sell items online through auction website like eBay or online classified ad services like Craigslist. These sales are the online equivalent of garage or yard sales. Usually, when you sell old personal use property (such as old clothing) online you incur a loss--that is, you get less than you paid for it. Losses on the sale of personal use property (such as clothing or personal use cars) are nondeductible personal losses. The IRS doesn't expect you to report these on your tax return. Nobody cares about them. An occasional seller who sells an item at a gain would have a taxable capital gain that is supposed to be reported to the IRS (see the discussion of collectors or investors below).
A hobby is an activity you engage in for a reason other than earning a profit--for example, you create art for enjoyment or collect matchbooks for fun. If you sell something created or acquired as a hobby online, the profit you earn is taxable income that is supposed to be reported on your tax return. Under prior law, hobbyists could claim as an itemized deduction their hobby-related expenses up to the amount of income the hobby earned during the year. However, the Tax Cuts and Jobs Act completely eliminates the itemized deduction for hobby expenses, along with many other miscellaneous itemized deductions, effective starting 2018 through 2025. This means that taxpayers will not be able to deduct any expenses they earn from hobbies during these years, but they still have to report and pay tax on any income they earn from a hobby. The deduction is scheduled to return in 2026. To learn more, see Nolo's article, Can You Deduct Your Expenses From a Hobby?
Unlike a hobbyist, an investor wants to earn a profit, but is not engaged in a full-fledged business. These people purchase property with a view to having it increase in value over time. For example, an investor coin collector purchases coins primarily to earn a profit by selling or trading them--not for enjoyment. When an investor sells an item at a gain, the amount is a taxable capital gain that must be reported on IRS Schedule D. Income tax must be paid on the profit at capital gains rates. Net capital gains from selling collectibles (such as coins or art) are taxed at a maximum 28% rate. If an investor sells a collectible at a loss, the loss is a capital loss that may be deducted from any capital gains realized during the year. If capital losses exceed capital gains for the year, a maximum of $3,000 of the loss may be deducted from other income with the remainder, if any, carried forward to future years.
If selling items online is your business, the same tax rules apply to you as for any other business. Online selling is a business if you regularly engage in it primarily to earn a profit. If you earn a profit in any three out of five years, your activity is presumed to be a business. You don't have to engage in online selling full-time for it to be a business, but you must work at it regularly.
When you have an online sales business, you may deduct all of your business expenses from your business income. You pay income tax on your profits at regular tax rates. If you incur a loss, you may deduct it from other income during the year. When you have a business, you must pay self-employment taxes (Social Security and Medicare taxes) as well as income taxes.
This article will discuss your rights with regard to the storage company and what you can do to forestall an auction and get your personal goods back.
The thought of losing one's possessions is heartbreaking and frightening. Many people use storage units to hold irreplaceable items, such as family heirlooms and original legal documents, in addition to clothing, furniture, and so on.
If, however, you haven’t paid your rent in the storage facility for a number of months, it is not uncommon for the facility to threaten to sell (or discard) your possessions, often via an auction. This is ordinarily legal, so long as the storage facility gives notice of your default (nonpayment) and follows other procedures laid out in its written contract with you.
You'll want to research your state's law for limitations on what a storage company can actually do. The law might, for example, mandate that the storage facility notify you via a particular method (such as mail or email) or provide public notice of the upcoming auction. It is also likely to require a number of weeks' waiting period between your default and any public auction, so as to give you time to pay off your debt and get your stuff back.
Now is also the time to review the fine print of your contract, starting with its definition of when you're in default. Expect to see something set between five and 30 days after payment was due. At the point of default, the contract might explain that you will be denied access to your storage unit altogether.
Although unlikely, there's a chance your contract violates the terms of your state's law, so contact a lawyer if you're seeing clauses that seem too egregious to be legal.
Storage facility auctions usually occur either on the site of the storage facility or in an off-site location. Public notice of the auction is given, and third-party consumers can attend and purchase your items. Indeed, many consumers pay special attention to announcements of these types of sales, since they can buy goods at relatively low prices.
The specific procedure for how your company would conduct this type of sale will depend largely on state law and the fine print of your rental agreement. Most likely, the agreement specifies exactly what the storage facility can do and when. You will likely get a letter notifying you of the company's intentions well before the actual sale. A 30-day notice provision would be typical.
If you receive such a letter, remember that selling all of your possessions is not the company’s first choice; it would much rather receive payment for the storage unit. Selling your possessions requires work (though they often sell the whole contents of a storage unit at once, rather than going piece by piece). It is far easier for it to simply collect rent from tenants, which is precisely why it is sending you the frightening letter in the first place. It wants you to pay.
Thus, if at all possible, you should quickly respond to the letter with full payment. If you are unable to pay the full amount due, don’t despair. There’s a decent chance that the storage company would accept a partial payment, or a payment plan, in lieu of full payment.
For example, imagine that you owe $300. See if you can get a manager on the phone, and make an offer to pay $100 immediately, followed by payments of $50 over the next four months. The immediate payment gives the company confidence that you are not a deadbeat, while the longer-term payment plan gives you a chance to get your finances in order. This sort of approach will generally prevent the storage company from putting any of your personal items on sale.
]]>Before running to the company, make sure that you yourself did not attract the rats, for example by storing food or sweets in your unit. Most likely, your rental agreement has a term that would prohibit you from keeping any such items in the facility.
Next, you should immediately contact your storage facility company. The company might not be aware of the rodent problem, and it should quickly call an exterminator to mitigate the infestation and damage.
The fine print of your rental agreement might indicate that the facility is not liable for any damage to your property beyond the company’s control; for example, damage done by a fire or an earthquake. But you'd have a strong argument that an infestation of rodents is within its control, and that the facility was negligent by failing to set rodent traps or conduct routine inspections.
Or, the facility might indicate that you could or should have bought storage insurance to cover your possessions. You could likely point out, though, that rats and vermin are commonly excluded from such insurance coverage.
Ultimately, any decent business would offer to evaluate any damage to your belongings. If there is actual physical damage, it should pay. If it doesn't, you would be within your rights to write a letter (or have an attorney write a letter) asking for compensation. Remember, storage facilities are in competition for business, and fear bad word of mouth.
Rent abatement for the month when you saw the rodents would be a reasonable amount of compensation. Therefore, it is in the company’s best interest to address the situation and attempt to make you whole, especially if it could do this with just a few hundred dollars.
If you own a home, you might take a look at your homeowners' policy to see whether it covers property kept in a storage unit. Homeowner's policies commonly provide some coverage for off-site personal possessions. However, the compensation it would provide is likely to be a small fraction of the items' value. And again, policy exclusions for rodents and such might cancel out any hope of getting reimbursement.
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