Archive for June, 2012

Rental Property Management Programs

Rental Property Management ProgramsMost people may have one or two rental properties and manage them themselves. They have to deal with all of the issues that renters will put land lords through and sometimes they even lose money over the deal as well. This can be from damages caused by the renter or perhaps the market just did not increase enough to compensate for all of the carrying costs and maintenance fees. There also this feeling by renters that landlords are rich and can afford to lose a month’s rent or perform repairs to things that have been damaged. Some also think that by walking away in the middle of the night they can actually get away with it. They can be found and charged and most are, but who really wants to go through that?

Some land lords will group together under rental property management programs and agreements. These are known as rental pools in some circles and have a great advantage of spreading the risk across a number of owners. Cash flow is always maintained, although it does vary. There is never a month were you have zero cash flow, such as when your unit might be vacant. This is an excellent advantage when you have taxes and a mortgage to pay every month.

How Rental Property Management Programs Work

There are likely all kinds of rental property management programs, however the one that this writer has had experience with is the rental pool program. Basically it works by all owners pooling all of their rental money into one account. All expenses to manage the condo or apartment building are paid out of it. This includes all common expenses, such as common lighting, garbage disposal, landscaping, condo fees, and rental expenses such as advertising.

The rental pool also pays for units that are vacant for the month. They also pay for expenses associated with going to small claims court to claim rent that has not been paid. In most cases a property manager is hired to manage the rental pool and all renting of the units. There is a board of directors for the rental pool separate from a condo board. The rental company is contracted to manage the rental pool, to pay all expenses and to pay all owners each month as well from the proceeds. When you pool units like this, owners can usually get a better price for the rental management side of things which also saves money.

Rental Pool Operation

Most rental pools that are part of a rental property management program run smoothly provided that you follow standard operating procedures. You must have a board made up of at least 3 members of the owners. The books must be audited each year and a tax report prepared each year for each owner to include in their tax filings.

Rental pools sometimes get into trouble when there is no oversight or very little oversite by the owners. Sometimes one owner will take control and that is usually when the trouble starts. Always make sure that there are at least 3 board members. They should meet with the property manager at least every 2 months and also review the books every quarter. The board should have an annual meeting that elects them and gives everyone to ask any questions that they might have.

An agreement for the rental pool should be set up. There should be a contract between the rental pool and the property manager. There should be an election of at least 3 board members each year. The board members staggered so that there is a combination of both new and experienced members on the board.

Follow some of these simple rules for a rental pool as part of a rental property management program. Generally you will have no serious problems unless the property manager fails to do his or her job. Always maintain a reserve fund for the rental pool as well to make sure you can deal easily with any financial surprises.

We will write more about rental pools in future posts. However if you have comments or want more information, please feel free to leave us some comments.


Reduce Montly Costs – Debt Freedom

Debt FreedomDebt-freedom is the mantra of many baby boomers about to retire. They have worked all of their lives to pay for the house. They have to pay for the car and to pay to get their kids through school. Then there are the various adult toys that they have collected. These include everything from cottages, sports vehicles, fancy cars and all of the electronics that money can buy. Now they are focusing on eliminating debt or reducing it as much as possible prior to retirement so they can live on a reduced retirement income.

Non baby boomers and first time home buyers are also aiming for debt freedom, paying off mortgages more quickly than needed and doing without so they can focus on reducing debt and saving the interest that they pay on this debt. Since 2008, interest rates have been at historic lows, but they are about to rise again in 2013 and 2014. This is the time to reduce your debt before interest rates go up. Debt freedom is important to many people who have either learned a hard lesson over the past two years or who have watched friends and relatives lose their homes and cars.

Debt Freedom – How Are They Doing That

Well the answer is that it varies, however for many of them it starts with setting a budget to try to keep their debts under control, and setting money aside to pay for any outstanding loans and mortgages.

It also starts by avoiding purchases in the first place that will increase your debt or make it more difficult to pay off existing debt.  Ask yourself if you really need the item, can you do without it , is there another cheaper alternative?

With all that has occurred over the past 2 years, the stock market crash, the foreclosed homes and more on the way, more and more people are aiming to decrease their debt. They are worried about the exposure they might have if they lose their jobs or if interest rates increase.

It starts with setting budgets for holiday spending, vacation activities and everyday expenses. Shaving some of the extras off your day to day expenses can save a great deal of money which you can use to reduce your debt. Budgets are difficult to keep, many people break them and some people will even spend more money than what they planned. Some folks are doing without vacations for their family.

Commitment is Key

The first step is to set up a budget and is a good start. However sticking with it requires commitment and perseverance.

There are ways to increase the level of commitment and some of the rules are the same as any other activity that takes commitment:

  • Set a budget per gift recipient
  • Write down your purchases
  • Keep track of daily expenditures
  • Make sure you and your spouse are equally committed
  • Set a budget that is realistic
  • Identify specific monthly expenditures that can be reduced or cut
  • Set up targets for your debt reduction
  • Discuss expenditures with your spouse or friend before purchasing
  • Wait a day or a week to think about purchases, maybe you really do not need  the item after all

Debt-free target

Setting targets for your credit card payments, car loan payments and any other debts you have will help you go a long way to managing your debt. If at all possible cut up your cards and pay with cash. Pay for the things you need and do without the things you want. Use credit cards responsibly. Avoid high interest rate cards and pay off your cards balance at the end of each month.

Reduce your debt on the highest interest debt first to maximize your savings and make more money available to reduce your debt. If you can transfer high interest debt to low interest debt do so as quickly as possible. Use the savings to reduce your debt. Never use the savings to buy more things that you really do not need.

Debt freedom is an enviable target and objective and kudoo’s to those that achieve it. There is a certain amount of freedom an euphoria when it happens to you, enjoy it, you worked hard for it.

Comments and ideas about achieving debt freedom are welcome. Our readers are looking for ways to achieve this objective.

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Building Electric Auto Infrastructure

Building Electric Auto InfrastructureOur last post discussed Recharging Electric Vehicles in Condo Buildings. This post is looking at the subject from a broader perspective and asking what will the infrastructure look like for electric cars in the future. It will take time, but this is definitely the way that the future is going. Electric cars will become more and more popular. Almost all manufacturers have introduced hybrid cars into their lineups in order to maximize gas mileage and a few have introduced electric only vehicles. A Tesla roadster for example will go 245 miles on a charge, however it needs a 24o volt charging station to charge it. You can also use 120 Volt, however it just takes longer at this lower voltage to charge it.

The trend to electric vehicles is simply a matter of time, consumers ability to figure out how and when to use them and an infrastructure to recharge them. Hybrid cars do not need to plug into the electrical grid to recharge their batteries. Cars that do not have any kind of gas engine, require available sources of electricity and need to be plugged in to recharge their batteries.

Right now if you buy an electric only vehicle, you have to plan when and were you are going to recharge your vehicle. Plugging into just any outlet is akin to stealing power and people are not going to like that.  Even if you offer to pay for a recharge, there will still be some suspicion, since they will relate recharging to filling the tank with gas and wondering why you are not handing over $40 or $50 dollars instead of the $5 that you are offering which is all that it really cost! Someone really needs to figure out a solution that is economically acceptable to society and demonstrate to business how they can make a profit. All of us also need to be educated as well.

Building Electric Auto Infrastructure

There are many potential solutions, however today as we write this post, none are commercially available in any significant numbers that we are aware of. Some may not even be on the drawing board for all we know. But one way or another we need to be building an electric auto infrastructure to recharge our electric automobiles. The trigger of course will be high gas prices and by that I mean at least plus $5 per gallon. California has the highest prices in the nation, so a solution will probably appear here in California first.

Electric Meters on Our Cars

One way to deal with the cost of recharging and not just ripping people off, is to install a unit on the car which measures just how much electricity you used when recharging and the corresponding cost. You can then show whoever owns the outlet the amount used and pay them accordingly.

Solar Panels

While this is not the complete answer, I still do not understand why the auto manufacturers have not built solar panels into the roof of the car. At least this would provide some power and help to recharge the battery. We are well aware that you cannot depend on solar panels alone for electrical power. Races across the California desert in electric solar powered vehicles have proved that. But a vehicle that gets maybe 75 miles on one battery charge might get an extra 10 or 20% power with a solar panel. If your car is parked a lot it might even amount to more than 20%.

Electrical Outlets at Work, at the Shopping Center etc

In some northern Canadian cities were it gets down to -40F in the winter, they already provide outlets at parking spots to plug in your engine warmer on these really cold days. Why not have more of these electrical plugs at work locations, shopping centers and other public places for those people who like to drive electric vehicles. This could be perceived as a benefit to employees and a competitive advantage for shopping centers!

Negotiate with Your Employer

This is one that could be interesting. Would the union negotiate with an employer to arrange for outlets at work locations as a benefit. It would be a win win for everyone! Everyone is seen to be saving energy and the employee benefits as well by getting free power at work for his or her car.

There are probably many other ideas for electric infrastructure for electric cars. We would love to hear from you about our ideas and any new ideas for electrical auto infrastructure solutions. Leave your comments and we will be happy to post them!


Hardwood Floors Installation Cost

Hardwood Floors Installation CostWhat is the hardwood floor installation cost? Doing a hardwood floor installation estimate must take into account a lot of items. The final  hardwood floor installation cost really depends on the agreement that you strike with the installation company and how much work you are willing to do yourself.

Our last post discussed all of the components and now we will talk about those items you can easily do yourself to minimize the hardwood floor installation cost and save you hundreds and sometimes thousands of dollars depending on the size of the job.

Hardwood Floors Installation Cost – DIY

Most people do not want to lay the floor themselves since they are concerned that they may make a mess of it, however there are lots you can do which will contribute to reducing the overall cost of the hardwood floor installation. Various hardware stores that sell hardwood flooring also offer training courses as enticements to make your purchase from them. if you would prefer to lay your own floor to further control the cost, then taking one of these courses is an excellent idea.

The items we discussed in the last post consisted of

  • Preparing your Space for a New hardwood Floor
  • Choosing your Hardwood Floor Material
  • Installing a Sub floor (if needed)
  • Hardwood Floor Installation
  • Installing the Baseboards
  • Clean Up

All of these items can be done by do it your self consumers, however if you are concerned about laying the hardwood floor, then why not try to do the other things to reduce some of the installation cost.

Preparing your Space for a New hardwood Floor: This one is pretty easy to do for most people. Move all of the furniture out of the room and remove the existing carpet and flooring. Nail down the existing plywood if there are any loose areas and remove any staples or other material that might make the floor uneven.

Installing a Sub floor (if needed): That is the easy part. Laying a new sub floor to strengthen the main floor can also be completed by almost any consumer, however you will need some tools for this work. Lay the 4 by 8 sheets across the joists and nail them into the joists. You will need to cut the sheets of plywood to fit in the corners and at the end of the walls.

Installing the Baseboards: The new baseboards can also be easily installed by do it your selfers, however you will need to have proper tools to cut and nail the baseboard on the wall. Also caulking compound will help as well to deal with any imperfections, nail holes and joints that do not fit properly.

Clean Up: Cleaning up is not that hard to do and will reduce your hardwood floor installation cost a lot as well. Remove all small pieces of wood that cannot be used, sweep up all sawdust and give the room that has the new hardwood floor a thorough cleaning. It is amazing just how much dust is created and gets on everything when a hardwood floor is being laid.

Installation Summary

The total hardwood floor installation cost can be reduced to the cost of the material and the labor cost to install the floor, saving a great deal of money for the consumer. As long as you are prepared to do a bit of work, the cost of hardwood floors can be quite reasonable.  The installers really do not like to do these other jobs as well, so if you are willing to pitch in and help they will appreciate it.

Comments are welcome about the cost to install hardwood floors, especially if you have the experience and knowledge.

 

 

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Saving Money on Gasoline

Saving Money on GasolineWe all need to figure out the best method of saving money on gasoline, because whether we like it or not, the price of gasoline is just going to keep going up and up and there is not a lot we can do about it other than not use it. The price of gasoline affects us in many ways, some we are not even aware of. for most of us, we think that it is only the cost of a gallon or a liter in Canada’s case. We drive every day and we put gasoline into our cars every day, so we see what how much the cost of gasoline is going up. Recently the price of gas has dropped because there is a surplus of fuel available. It probably will not last long so enjoy it while it is here.

Food Costs More

But what about all of the food that we eat. This is impacted in a big way as well since diesel which is also derive from oil is going up just as much. Diesel is used to power tractors and the trucks that deliver food to us across the country. If it were not for the trucks we would not have fresh produce available to us each and every day. The price of food is going to go up as well, which spells even more inflation.

Then there are all of the synthetics and the electrical generation plants that run on oil. All of these things are going to increase in price due to the rise in oil. Back to our original theme the only way we can save money on gasoline is to not use it and that applies to the what we purchase as well.

Saving Money on Gasoline – Drive Less and Plan Your Trips

Saving money on gasoline should not be that hard. Drive less, plan your trips to avoid using the car unnecessarily and purchase a car that is economical on cars. As I am writing this particular post, I am in southern California and I am really appalled at the size of some of the vehicles that are on the roads. Large trucks with one person in them, SUV’s and expensive cars that practically pour gasoline through the engine.

I am also heartened by the number of Toyota Prius’s that are on the road as well. They get 50 miles to the gallon  on average and can really make a difference when it comes to saving money on gasoline.

It All Costs Money

Unfortunately you really do not save that much money on a Toyota Prius  due to the upfront cost of the car. There is a premium on the battery and while your operating costs are much lower, the initial up front cost is high.

There is new battery technology coming and hopefully over the next 10 years we are going to see cars that are at a lower price than they are today with better gas mileage that use rechargeable batteries to help us all save money on Gasoline.

This is one of the most important things for our economy and if we do not solve this problem, our way of life, our standard of living is going to fall considerably. We can start now by saving money on gasoline by being smart about how we maintain our car and how we drive. For more information on how to save money on gasoline, see our previous post entitled, “how to save money on gasoline”.

Your comments are welcome. Anything that can help with reducing our dependence on oil and help the average consumer will be appreciated.

 


How to Save Money on Gasoline

As gasoline prices continue to rise there is more and more focus on how to save money on gasoline with your car. We have not even hit the summer months yet and already gas prices are pretty high and the expectation is for the price per gallon to go even higher. We decided to do a series on how to save money on gasoline since it hits the consumer’s pocket-book so hard and it is also related to the tires that you have on your car.

Over the spring, the price has risen continually and while this is really what has prompted us to write this series of posts. However regardless of what the price is, anytime you can save some money why not, so if even if the price decreases, why not try to continue saving some money.

Save Money on Gasoline Usage

In this post we are going to list many of the common sense things that you should be doing. Focus on making sure that you are getting the maximum mileage you can from the vehicle you drive. If you want to improve even further, then you probably need to change vehicles. Purchase one designed to provide a higher mileage per gallon rating.

Here is our list, let us know if we have missed anything:

  • Follow your car’s maintenance schedule
  • Use approved gasoline
  • Keep tires at recommended tire pressure at all times
  • Avoid jack rabbit starts and stops
  • Drive at the speed limit
  • Maintain a clean engine air filter
  • Change the engine oil regularly
  • Plan your trips
  • Combine errands

There are a number of myths that we have recently read about that we wanted to include as part of this post about how to save money on gasoline.

  • Over inflate your tires to improve gas mileage
  • Fill your tires with nitrogen
  • Fill your car’s gas tank in the morning when the fluid is cool and more dense
  • Open windows are more of a drag than running your air conditioning
  • Shift into neutral when going downhill
  • Change your air filter regularly

 More Details

Over inflate your tires to improve gas mileage: Tests have proven that there is virtually no difference in fuel economy. There is a loss of control and maneuverability with over inflated tires as well as the tires may overheat and explode

Fill your tires with nitrogen: Also no savings on gas mileage. Nitrogen is more inert and will maintain proper tire pressure better than regular air.

Fill your car’s gas tank in the morning when the fluid is cool and more dense: Gasoline is stored below ground in tanks which is at pretty much the same temperature all day long so no savings here.

Open windows are more of a drag than running your air conditioning: They both cause about the same drag on gas mileage, so you may as well be comfortable.

Shift into neutral when going downhill; Has no impact since the engine is still running and still burning gasoline.

Change your air filter regularly: Regular checks by your mechanic will be sufficient to let you know when it should be changed. If it is dirty he will tell you it needs changing.

Hopefully these ideas will assist readers regarding how to save money on gasoline. Please leave comments on any additional ideas that you may have.


Recharging Electric Vehicles in Condo Buildings

Recharging Electric VehiclesThe debate is only beginning regarding recharging electric vehicles in condo buildings. On the one side is the condo board and the owners. They do not want to subsidize individual owners who want to charge their electric vehicles nightly. Even though they live in the building and they are willing to pay for their usage. Then there are the various government agencies who are promoting clean vehicles and electric vehicles and of course the auto companies who want to sell more of these vehicles. Any obstacle is a potential deterrent to increased sales. They are very concerned about resolving these issues. Some cities are just beginning to add charging stations for electric only vehicles.

Recharging Electric Vehicles

A recent article in a local newspaper reported on this particular issue and in our opinion was skewed on one side of the discussion. This is what really prompted us to add our comments to the argument or discussion about who pays for the electricity in a condo or for that matter in an apartment building were the electrical costs are shared by all of the owners.

Recharging Electric Vehicles – What are the Issues?

Perception that all owners would be subsidizing the few electric vehicle owners in the building who use electricity to charge their cars. This is easily countered by the car owner paying for the electricity based on a measured or calculated value.

People who do not understand how electricity is priced and used and how much it actually costs. This is also easily demonstrated by an expert who can demonstrate what the real costs are.

Governments not addressing recharging issues. We have gas stations all over the place. We have electric systems all over the place. What we do not have is a way to deliver electricity to electric vehicles and it is very difficult to address this issue. Could we put a meter on the car that calculates how much electricity is really used?

Electrical Infrastructure

An issue that the newspaper article ignored all together was the electrical infrastructure. In the example in the newspaper, the condo building is 40 years old and has one outlet in the garage, which one of the owners was using to plug in his electric vehicle. What do you do when there are 2 or 3 more vehicles? One outlet on one circuit will not support more than two cars and may not support more than one car depending on the amperage rating of that circuit. Who will pay for the upgrade to the condo’s electric wiring system? This can become a very expensive issue and should it be shared or paid for the owners of the electric vehicles?

A condo built 40 years ago will have an electrical distribution system suitable for that time. This was before flat screen TV’s in every room, computers for each resident, various other electronics, a variety of appliances that did not exist at the time etc. The electrical load now may be taxing the system to the point were you have to spend major money upgrading the electrical panel, the distribution system in the building and perhaps even the entry cables into the building.

Fear Mongering

Some people might say that we are just fear mongering and against electric vehicles. This is not the case at all and in fact we would like to purchase an electric car in the future when the prices are a bit more reasonable. Until an assessment is completed of the electrical system in the condo building the condo board would actually be remiss in its duties if they just allowed this owner to connect his car to the electric grid.

We think that the condo board should place a temporary band on the connection and recharging of electric cars. They should arrange for an assessment of what is needed and what the impact would be of connecting one car up to perhaps a maximum of 10 cars to the system in the condo. This would include upgrade costs as well as electricity usage costs. Armed with this information, they would then be in a position to decide on the best course of action for all owners.

Send your thoughts and opinions

Your opinions and thoughts on this subject would be useful to our readers. We are willing to even approve links to your own web site in return for a well written comment that contributes to this issue and hopefully long term resolution of what to do about connecting electric vehicles to a common electric grid for recharging.

 


Certified Property Manager

Certified Property ManagerShould you hire a Certified Property Manager? Or someone who is offering the services of a property management firm? Many people every day are trying to figure this out. It usually comes down to what the services are going to cost. What you actually get for the money you are going to pay this Certified Property Manager. Consumers do want to hire professionals and they want to hire people who are honest and will not rip them off. After all you are asking a stranger to look after your home, one of your most prized possessions.

What does it mean when you have hired a certified property manager? Usually it means they have attended some courses on property management at a local college, hopefully received a diploma from that college and they belong to an association of property managers. Some people reading this may react and say well so what. It does not mean they have the experience to manage a property and they may not even be able to do a good job. Should you look for a certified property manager or for a company that has lot’s of experience with certified property managers working for them.

Certified Property Manager

We happen to think that you should hire someone who has both. Having been on the board of several condominiums and having dealt with many property managers, we have found like all industries there are some good ones and then there are those that really will never do a good job.

We even had one company who paid us lip service, said they would do everything we asked and then did absolutely nothing at all. We had to fire that company and it was a difficult time for all concerned, since you then must hire a new property management firm, transfer all of the records over and then get to know your new company. All of this must be accomplished in a less than friendly environment with the old company that you were dealing with.

Hire Experience

Always hire a property management company with experience and one that operates in a professional manner. Look closely at the fees and also the services you receive for these fee’s. Do you get the reports that you need to not only manage the condo or apartment building properly, but to also manage the property manager and assess the job they are doing?

You should also make sure that they have a certified property manager on staff so that in addition to experience, they are also up to date on the latest property management laws and consumer rights. Many states and provinces have consumer rights in place to protect the renter. You do not want to run up against some bureaucrat with unlimited resources who tells you to rescind a rent increase for example that you need to run your business.

Certified Property Managers are Good at Theory

Training is always good and it is important to have. However as with all training until you get out in the real world and face some of the issues that consumers throw at you, no amount of training can really help. Training may prepare you for what to expect, however it cannot tell you what to do in every situation. There are just too many variables and that is also why you must also get experienced property managers as well to manage your home, your condo or your apartment building.

Comments are welcome, especially regarding any experiences you may have had in the property management field that may assist our readers. Build a requirements list and match various property management companies against this set of requirements. Interview several and make up your mind based on the facts and not how well you may have gotten along with the representative. Sales is easy, doing the actual work is more difficult and you will need to be working with the people who actually do the work.

 


Hardwood Floor Installation Estimate

Hardwood Floor Installation EstimateThe cost to install a hardwood floor can vary a great deal depending on the material you choose. It will also depend on the condition of the floor area you are covering and how much work you are willing to do yourself. Always ask for a hardwood floor installation estimate from qualified installers. You will have several estimates to compare and you are considering installers that know what they are doing. In addition a high cost area will be the stairs and especially a curved stair way. Placing hardwood on the stairs can sometimes cost as much as a full room.

Hardwood Floor Installation Estimate – Costs

We are going to discuss each of these issues in more detail to give you some idea of what you can be looking at when it comes to making a decision regarding a hardwood floor installation.

  • Preparing your Space for a New hardwood Floor
  • Choosing your Hardwood Floor Material
  • Install a Sub floor (if needed)
  • Installing the Hardwood Floor
  • Installing the Baseboards
  • Clean Up

Preparing your Space for a New hardwood Floor

This portion is definitely a possible do it your self part of the work, however many people will opt to have someone do this for them so it is included in the estimate. You will need to ask for preparation to be included and you will need to be specific about what you want done.

  • Moving furniture to another room
  • Removing all wall hangings and pictures from the room
  • Removal of current floor covering including carpet & under pad
  • Disposal of carpet and under pad
  • Clean up of bare floor, vacuum of the floor and the hot air vents
  • Removal of any staples or nails that may be protruding

Choosing your Hardwood Floor Material

We will not say too much here about the material other than the obvious. You will need to purchase sufficient material for the area you are covering with some extra due to bad cuts etc. There are so many possible materials that all we can say is select something that is durable and is pre-finished to minimize the work and the upkeep once installed.

Installing a Sub floor (if needed)

As part of your hardwood floor installation estimate,  most installations will need a sub floor installed to minimize squeaks when people walk across the floor. This is usually half inch plywood that is screw nailed into the existing floor. At the minimum, you will want to screw nail the existing floor to all joists to minimize the possibility of any squeaks once the hardwood is installed.

Installing the Hardwood Floor

A reputable installed can install the floor for you, including the unfinished baseboards. Always obtain several estimates as well as references from people you trust before accepting one company or another’s estimate.

Installing the Baseboards

Your estimate should also include installation of the baseboards to completely finish the room. The baseboards may only have the primer coat on them and you will be expected to apply the final coat of paint unless this is something that you also would like included in your estimate.

Clean Up

Installing a hard wood floor creates a lot of mess and a lot of dust not only outside but inside your home as well. Consumers can definitely do all of the clean up inside of your home, however the contractor should be doing a minimum cleanup, removing all unused pieces and vacuuming all dust from inside your home in the work areas.

Before you move the furniture back into the room, all of the walls and the floor need to be thoroughly cleaned to remove all dust that was created. If you had someone move the furniture out of the room initially, make sure you complete all dust removal before moving the furniture back into the room.

There is lots of work that the home owner can take on themselves, including even the installation of the hard wood. It is important to be clear when you are asking for a hardwood floor installation estimate what is to be included and what is not included in the estimate.

Comments are welcome about your estimates of hardwood floor installation and how you may have saved some money.

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Childhood Spending Habits

Childhood Spending HabitsOur web site is all about saving money around the home and how we can do things ourselves. I read an article recently that discussed the reasons that we spend money and it occurred to me that if we were able to manage the urge to spend money better we would probably be able to save more money for some of the things we consider higher priorities in our life. So I decided to write this post based on some of my own experiences. The basic premise is that your child hood experiences with money often have a huge impact on how you manage money as an adult.

Child Hood Spending Habits

Your childhood spending habits have more impact on your spending habits as an adult than you know. If you were careful with money growing up, then today you are probably the same way as an adult. On the other hand if you spent every cent that you earned or were given as a teenager, then there is a really good chance you are still doing the same or close to it. Old habits are hard to break for many people and this is one that can have significant impacts well into your late adult years. There are lots of other examples we could discuss. Each person needs to examine their own experience as a child growing up to determine what is influencing their spending habits the most.

There are lots of theories about why this phenomenon is true, however the reality is that you are still spending all of your money every pay check. Taking control of your finances and managing your money so that you have funds for some of the things you need or want to do later in life is in your best interest. In the writers situation, we never had a lot of money and to this day I hate to part with a cent and I am very upset if I feel that I am getting ripped off.

Examine Why You Spend Money

You also need to focus on why you do some of the things that you do. For example if buying something new makes you happy, then you need to give some thought about how to control these feelings and the reasons why you spend this money. Not having nice new things as a child might drive you to buy lots of new things as an adult. Having your allowance stolen, might mean you feel you need to spend it before it is gone. These are all child hood experiences that sometimes carry through into our adult years and we need to understand them and get control of them.

Influencing Your Children

We did the usual thing with our kids. We gave them an allowance and we gave them pretty much everything they needed or wanted. We did not give them a TV set in their bedrooms or a cell phone or a car when they were teens. We wanted them to make these purchases themselves and in doing so set their own priorities. They tend to make different decisions when they have to balance their own decisions about how they are spending their money vs. their parents. We also taught them about saving and how their money could increase through generating income. We bought shares in their names for them and for every birthday and Christmas we would add more shares. I also talked to them about the 10% rule of saving 10% of their income. As a result they added to the purchase of shares and now they both have a nice little nest egg and the 10% rule continues to be followed for them.

Repairing, Doing Without and Delaying Spending

Another habit from my child hood that continues to this day and a reason why I am making posts to this web site is that my family always would try to repair something that broke first before throwing it out and purchasing a new item. In fact it became a challenge to see if an item could be repaired instead of throwing it out. Of course you always need to evaluate whether it costs more to repair vs. buy new!

There is the question of Need vs. Want. We all think we need things, however most people when they really looked at something they are considering purchasing, might have to admit it is something they want vs. need. If it is something you want, then there is a decision to be made. Can you do without that item or can you delay spending the money on that item? If you answer the question honestly, you may be able to save yourself a great deal of money.

Summary of Spending Habits

  • Examine your childhood spending habits
  • Assess what habits have carried through into Adult hood
  • Asses which habits you can change
  • Develop a plan that changes habits and gets control of your spending
  • Start by saving 10% of your income
  • Can you repair damaged or broken items
  • Can you delay your purchases
  • Can you avoid your purchases
  • Evaluate your needs vs. your wants

Let us know your thoughts and comments by leaving comments on this post. Additional ideas are also welcome as well if they will help our readers get control of their finances and savings.


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