Here’s Hoping 2021 is More Joyous for you than 2020

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New Year’s Day: The day that most Americans gather around the big screen TV (or streaming service) to watch college football bowl games, consume wonderful snacks and indulge in the beverage of choice.

However, I have an annual ritual that I observe every New Year’s Day, and that is examining my financial wellness. Sounds exciting doesn’t it! Well it kind of is, as I like to control my finances versus my finances controlling me. There is nothing worse than financial stress!

Many years ago, I was attempting to qualify a young couple for a mortgage loan, and the husband’s credit became an issue. When asked why the accounts had been paid late, he replied that there was “too much month left at the end of the money.” That’s just about the best way to explain it. He had more bills to pay in that 30-day window than he received in income. Now, in July I asked you to track your every expense so that your budgets would be realistic, and you would have a very honest picture of what your monthly expenses really were. I don’t know about you, but I am ALWAYS surprised at the expenses that we incur each month. Most people think that they are in better shape than they are, so that’s where my annual New Year’s Day ritual can help.

What’s Your Net Worth?

I compile a balance sheet on our family, and then look back at the previous year’s balance sheet to see how they compare. Your assets should include any cash on deposit, the value of any real estate owned, the balance of your 401k account or any stocks and bonds held, and the value of your vehicles. Even though they have value, I do not include items such as beanie baby collections, musical instruments, gun collections etc. as an asset, even though you have “invested” in these items. They obviously could be sold, and the money used to boost your bottom line. But we are not looking at the value of tangible assets at this time other than those initially noted. I then total our assets.

Next, I look at our liabilities by first listing our mortgage loan and car loan balances, and any outstanding credit card debt, or installment loan balances that we have. Be sure to include any medical bills that have been set up on monthly payments. This is our total debt.

By subtracting our debt from our assets, we will get a snapshot of our net worth. This would be the value of your estate should all assets be sold, and all liabilities paid off. Each year you want to work to increase your net worth from the previous year’s total if possible.

Now it’s ‘Cash Flow’ Time to See if You Have ‘Too Much Month Left at the End of YOUR Money’

List the minimum monthly payments for your home, auto, credit cards, installment loans, medical bills and total them up. Now add up your guaranteed monthly sources of income. If you are paid every two weeks, just use the net amount for two pay periods as your monthly income. Your monthly cash flow is your total income less your total monthly minimum payments. Do you have any money left at the end of the month? I certainly hope so, as the cash flow model above includes only debt payments, and no expenses for living! Your true cash flow will be the above minimum payments PLUS your monthly living expenses.

Now comes the difficult part: tracking your monthly living expenses. These include housing, food, medicine, gasoline, utilities, car repair, home and yard maintenance, clothing, children’s activity registration costs like dance classes or little league, and the list goes on for each family.

This exercise is where your eyes might bug out of your head as you stumble on miscellaneous expenses that you were either not aware of or had forgotten. Every time I have done this the miscellaneous expenses, car maintenance, and medical expenses have made my preliminary budget obsolete before I even began. So just because you don’t have these expenses as regular monthly payments like a credit card payment, you need to factor these expenses into your budget either as a specific line item, or to savings to cover these expenses when they do arise. Go on-line or go through your checking account statements either in hand or on-line to see what you paid in these categories last year. Having any fun yet?

Now, pull up an Excel spreadsheet or sit down with a legal pad and list each monthly minimum payment you must make for both debt and living expenses. Total all minimum payments and estimates and then subtract from your monthly net income.

Do You Have Any Money Left at the End of the Month?

Most of us cannot control our income at will, so we need to look at reducing our required monthly debt and living expenses to free up more cash. If you have an installment loan payment or a monthly credit card payment, using any extra cash to pay these off early will save you money in interest, eliminate a payment, and then free up more disposable income to go to savings, or to pay off another account.

This examination of financial wellness certainly rules out any “impulse purchases” by yourself or your family if your efforts are going to be any benefit to you.

Now that your monthly income and monthly minimum expenses are set, you have your initial working budget! Yeah!

Notice I said initial working budget. Which means budgets will change with a new pay raise or a new car loan payment, and you must make the adjustments accordingly.

Your Financial Goals

What are your family’s financial goals for this year? To save $1,000 for Christmas? To have $2,000 in savings? To pay off a couple of credit card accounts? Get your family involved as this helps get everyone onboard to work together to meet these goals.

Some easy places to begin are looking at your current habits, and if changing the habits will assist you in meeting your goals. I used to buy a Starbucks latte every morning. Was it good? YES! Was it more expensive than the black coffee that’s free at work? Absolutely! By eliminating Starbucks daily, I saved approximately $150 per month and lost weight as I was consuming fewer daily calories. Did I have to make a change? NO! But was it beneficial? YES! So, look and see what you might change to save a little money daily.

Another place in our budget that jumped out at me as a waste of money were subscriptions purchased that were not being used. From magazines that were never read, to the on-line clubs and memberships that never got used. We were given a Hulu component in April so we could watch more television and movies while we were quarantined. We purchased Amazon, Netflix and several other streaming services, and have probably watched about four movies in seven months. We are usually so tired at the end of the day we collapse on the couch and watch reruns of Andy Griffith and Family Feud.

Interest rates are as low as they will ever be. If you have a mortgage or auto loan, check to see if it’s worth refinancing your current loans. If you can refinance, you will immediately recognize extra income each month as your payments could be less. And on your long-term mortgage, this savings can be exponential over the life of the loan.

Other Areas to Find Monthly Savings

  • Compare home and auto insurance policies to see if another company offers the same coverage for less money
  • Look at your cell phone plan to know exactly what you are paying for. Do you need all those services? Can you carrier give you a better deal to keep your business?
  • When shopping for groceries, don’t purchase more than you need. Also, look at buying generic brands vs. name brands if possible, in order to save additional money.
  • Don’t carry much cash. You can spend a pocketful of cash very quickly and not be able to account for what you really purchased. Use on-line digital financial institutions and utilize the technology that is out there to assist you.

By “projecting forward” you will become aware of upcoming expenses such as oil changes, birthdays and holiday expenses. This will require you to recognize these expenses ahead of time so you won’t be surprised when they occur. Budgeting for these items takes thoughtful consideration.

In Conclusion

Establishing an accurate budget does not take much time, and once established they are easy to monitor and adjust.  Also, there are many phone and laptop applications that will assist you. Some applications can even track your expenses as they occur.

However, you manage your budget, do it consistently and adjust accordingly, and you will have very few surprises that might keep you awake at night. Now you WILL have money left at the end of the month!

And, knowing that you are in control of your financial destiny will allow you to really enjoy those New Year college bowl games. Finally, no matter which team is victorious, YOU will be the true winner!

Should you have any questions regarding these tips please feel free to email me at

Bill Carter is Director of Fire/EMS Business Development for Civic Federal Credit Union in Raleigh. He has been in the financial services industry for 41 years and serves on the Advisory Board of the North Carolina Fallen Firefighters Foundation. You can send your questions to him at:

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