This past year, I’ve made some good headway towards my 2010 goals, mainly with paying down debt and increasing my credit score. Yet I’ve found that one of my primary goals, increase my savings, got lost throughout the year. The biggest reason this goal failed was that I didn’t set specific enough mini-goals with strategies to accomplish them. I’ll be breaking down my goals in parts with a wrap-up article scheduled as a guest post at another site later in January (I’ll share that link then).

Breaking down goals into bite-sized chunks seems to work well, at least for me. So for my first 2011 goal, increase my savings, I’ll structure it to make it more manageable and make myself accountable.

• Boost my savings accounts (there are a total of 3 of them)

1. Label my savings accounts accordingly: Big-Purchases, Wealth Building, Emergency Fund
2. Automate my savings amounts so it’s less likely I’ll spend the money. The amounts are as follows: $400/month into the big-purchase fund, $270/month into the wealth building fund, and $80/month into my emergency fund. This increases my monthly savings by $200. It also assumes that I’ll be saving a little over 13% of my income providing my income remains stable (that seems to be my biggest hurdle).
3. Create quarterly goals for each account – I need this goal mainly because my income is erratic: By March 31st I should have increased my big-purchase fund by $1,200, wealth building fund by $810, and emergency fund by $240.

To make this plan work, I’ll be posting the next 4 parts of this year’s goals throughout the next couple of weeks. The biggest factor for increasing my savings account is to find out where in my monthly budget I can scrounge up that extra $200. I know it’s there; at least that’s what my Quickbooks reports are saying. I recently renamed my three major accounts, thanks to my husband’s input, and may need to switch the monthly savings amounts around a bit. But the total amount saved each month will hopefully remain the same. Stay tuned for the specific strategies that are going to help me meet this primary goal.

What goals are you looking to accomplish this year? Do you have a strategy to accomplish them?

Fresh & Easy Market

Fresh & Easy grocery market’s have been popping up all over my neighborhood, but I just haven’t had the opportunity to explore them. Until now. Yesterday, my husband and I decided to explore their produce and packaged dinners since I had heard they offer a lot of prepackaged, easy to make meals. Since I’m always rushing around, and I don’t cook (yes, you read that right; I don’t cook!), I figured I’d find something I’d like that would be easy to make – read: Microwavable!

I was pleasantly surprised to find their groceries were fresh, reasonably priced, and they offered a lot of variety. Some examples of their prices:

• 10 lb bag of Idaho Russet Potatoes: .98 cents (right now potatoes are on sale in many local markets, but this beat out large chain prices by .02 cents)
• 5 lb bag of oranges: .98 cents
• bananas: .19 cents each
• Swirled raisin, cinnamon bread: 1 loaf – $1.50 (on sale – they offer 50% off of packaged meals that are expiring that day or items that are quickly approaching their “sell by” date).
• Premade Penne pasta with creamed tomato sauce: 1 serving $1.99

This is just a smattering of items I purchased. But as you can see, their prices are quite reasonable, especially their 50% off sale items. As long as you’re willing to consume the item within a day or two, you don’t need to worry about food poisoning (and most grocery stores’ expire date can be pushed a few more days anyway. – My husband’s family used to own a grocery store when he was in high school, so I have some insider information here.)

Checking out is also quite easy since it’s a do-it-yourself type checkout stand, and personally, I love these stands (major chains have installed a couple of these, but limit its use to 15 items per person). I can scan items quite quickly and have my husband help me bag them at the end of the end of the revolving belt. I even find it sort of fun, but that’s probably because I’m strange.

Now that I’ve had my first shopping experience at a Fresh & Easy, I’m sure I’ll be returning soon.

Do you have Fresh & Easy Market’s appearing in your neighborhood?

We budget-conscious folks know all too well that having some money set aside in savings is a smart move. After all, it only takes one or two major unforeseen expenses to throw our carefully-planned budgets for a loop, forcing us to reconsider putting the old credit cards back into use if we have too little in savings to act as a buffer. But knowing it’s important to save isn’t always enough to get us to actually do it consistently each month.  To really get a fire under you, I recommend motivating yourself by assigning a purpose for your savings accounts and defining specific savings goals. To this end, I recommend you open 3 separate savings accounts that I like to call barrels, because it makes them sound more concrete. They are:

1.) The Emergency Barrel. Your first priority and most essential savings account is your Emergency Barrel. In this barrel, sock away four months of living expenses to cover routine bills if anything were to happen to you and your spouse’s jobs. Even if you are self-employed and not at risk for a layoff, an Emergency Barrel is vital. You never know if a sudden health emergency will keep you from profitably running your business for a few months. Sit down and calculate the exact monetary amount you need to save to fulfill this savings goal; if it helps, you can draw a thermometer on a piece of paper and tape it to your refrigerator, filling in your progress toward the top with a red marker.

Building an Emergency Barrel takes time and isn’t much fun because once you’ve met your goal, you can’t really touch this savings account again for any reason except an emergency. Another use for the Emergency Barrel is for unexpected, immediate expenses. For instance, if your refrigerator goes kaput and you must buy a new one that very week, you can use this barrel, provided you remember to build back up what was used in the barrel.

2.) Big Ticket Barrel. This savings account should be used any time you want to start saving money for a major one-time purchase. The big ticket item you are saving for might be something you really need around the house, such as a new washer/dryer or dishwasher, or merely something you want but don’t want to buy on credit, such as a big screen TV, a new MacBook, a Fender Stratocaster or a new set of bedroom furniture. How much you use this savings account depends on how often you make big purchases. My husband and I use our Big Ticket Barrel almost exclusively to save up for vacations (this year, we went to a resort in Cozumel!). If you don’t happen to have any big ticket items in mind, you can discontinue contributing to this barrel for a while. When you do use it, calculate exactly how much you need to save to buy the big ticket item, and discontinue saving once you’ve reached your goal.

3.) The Big Whammy Barrel. This is the account you use to save up for a big purpose, such as a down payment on a dream house, a wedding or college fund for a child, or a year of worldwide travel. Since these can take years to accumulate, you may want to consider a Certificate of Deposit (CD) or other savings options that garner higher interest.

The final thought I will leave you with is when it comes to building savings, it is best to set concrete goals and to assign a purpose to accounts that you have. This way you can monitor your progress toward those goals month by month and have consistent motivation to save.

By-line:

This guest post is contributed by Kate Willson, who writes on the topics of top online colleges.  She welcomes your comments at her email Id: katewillson2@gmail.com.

A couple of days ago I mentioned a comment I overhead. The one about how “everybody” is having to short sale their homes so “everybody’s” credit will be affected by the housing market. I also mentioned at the very end of the post (if anyone actually read to the very end) how I predicted 4 years ago that the housing market wouldn’t keep rising. My main reason for this prediction was that the houses in my area were selling for astronomical prices. Prices that didn’t match salaries. I knew that something wasn’t right. When a couple grosses $75,000 but is able to purchase a house for $550,000 there’s something fishy going on. (That’s over 7 times their income!)

However, our mortgage broker friends tried to convince us that prices would keep rising because there were all these new kinds of loans available for buyers that would make the monthly affordable. Still, I didn’t buy it. Though the monthly was affordable, as little as I knew about finances and real estate, the payment wasn’t even covering the interest.

Now my initial prediction wasn’t that the market was going to tank (though secretly I sort of hoped it would as someone sitting on the sidelines realizing I couldn’t afford a house. -No harm meant to those in this situation – I just wanted to purchase an affordable house.) I thought it would level off for many, many years until salaries caught up with the tremendous housing prices.

Now that I’ve seen the housing market crash and the outcomes thus far, I have a few new predictions to make. Just to protect my ass-ets; I’m not a financial analyst, genius, true psychic or real estate agent. Just a very realistic, hard-working person who is still renting!

• The housing market will continue to scrape along the bottom for at least another 18 months.
• Some areas that weren’t hit as hard will do just fine and may see a market more similar to a “historic norm”. Others, like the Southwest will see even more foreclosures.
• The government will try again to boost home ownership by offering incentives, perhaps in the form of taxes or some other incentives in conjunction with banks, within the next 18 months.
• The housing market will not be the industry to kick start our economy. (If I were a real psychic, I could predict what will!)

Obviously none of these predictions require Mensa abilities. They are just realistic statements given the current facts. I don’t want to predict farther than a couple of years, since I do think that the market will eventually stabilize and get back to a more normal flow. Well, I guess I can say that this is my prediction for 5-years out – a more normal housing cycle (smaller increases and decreases over time. Click here for a historical housing graph – it appears that an 8-9% increase over 20 years is “normal”.) I don’t think we’ll see this roller coaster housing market again for a very long time; it left too many people with an ill-taste in their mouth.

Do you think my predictions are out of whack? Do you have any predictions about the housing market? What pattern did you see in your area that signaled a “red flag”?

I had roughly budgeted how much money we’d spend on our move between the U-Haul trucks and the help we hired. I also budgeted in the deposit on our new place and weighed the expenses of the new rent with the savings in utility costs. What I hadn’t budgeted in was the cost of transferring the utilities and phone service. It had been so long since our last move, I had forgotten that transferring phone service would cost about twice the amount of a regular phone bill. I had also forgotten that the utility company charges a “New Service” fee even though we have been customers of theirs for years.

Total under-estimated utility costs: $325!

Now at the same time, our U-Haul truck rental and hired help ended up slightly under budget and our renters insurance is crediting  us $44 annually for moving to a better area, though only 4 miles away from our previous address. But that’s how many city/suburbs work: one block is great and the next is slightly better than a slum.

After revising my budget given our increase in rent, but decrease in overall monthly utilities our housing costs equate to 47% of our total budget (only 1% higher than where we were previously living). However, that includes all phone bills, utilities, rent, renters insurance, and storage which we will need temporarily until we get a little  more organized. We might be able to forgo the storage unit which would save us $50 a month, but that only lowers our overall percentage toward housing to 46%, or back to where were in terms of percentages for housing.

Yes, housing costs is a big chuck of our expenses, but I guess I’m paying for the sunny weather, better neighborhood, smog-filled skies, and traffic congested arteries. If I wasn’t such a wimp when it came to cold weather, I could always relocate to Nebraska and slash my housing budget in half or in third!

Have you moved recently? Were there costs you hadn’t thought about or had underestimated? Do you calculate your total budget in terms of percentage points, or just whole dollar figures?