Plan ahead

Financial Health

Just as physical health makes a better life than being unusually tall or a popular kind of attractive, so financial health is a different thing than wealth. Just look at the athletes who become wealthy at a young age and then die poor. What they needed, what we all can benefit from, is financial health, something that doesn’t require a specific level of income or assets. 

A financially healthy person knows when to stop. When to stop recreational shopping, gambling, spending on games or collectibles, when to stop letting money seep away without noticing where it went. 

A financially healthy person looks ahead farther than the next paycheck. They realize that unexpected expenses aren’t really unexpected. We know to expect a car repair or a medical bill, but we don’t know when to expect it. The healthy response is to save up as if you knew it was coming next month, since it might. They start saving a little for retirement as early as their thirties. They put aside 1/6th of the car insurance bill each month so when the half-year bill comes, they are ready. 

A financially healthy person addresses emotional problems with appropriate solutions instead of covering them with the temporary thrill of a new purchase. 



Whew, 2017’s taxes are filed. It’s tempting to ignore the whole subject until next April. However, it’s smarter to pay attention now, in order to save money next April by planning ahead for deductions and credits.

How is a tax deduction different from a tax credit?

A deduction is an amount subtracted from the amount of your income that will be subject to tax.

A credit is a subtraction from the amount of tax you owe.

Suppose, just for an example, a single person has an income of $30,000. If there were no deductions, his tax would be $4,000. For 2018, the standard deduction is $12,000, so instead of paying tax on the whole $30,000, he’s taxed only on $18,000. His tax due is $1,800. So that deduction saved him $2,200 in taxes.

Once the tax has been computed, then we can think about credits. A tax credit is subtracted directly from the tax due. It reduces the tax amount directly, instead of reducing the amount of income to be taxed. In the ten percent tax bracket, a deduction of $1,000 from income saves you only ten percent of that $1,000, or $100. If our hypothetical taxpayer who owes $1,800 is eligible for a credit of $1,000 then he only owes $800 in tax.


Both deductions and credits will save you money. Now’s a good time to look at your income and expenses for 2018 to see what you can do to be eligible for the various deductions and credits available. A good place to start is the 1040 form. Look at the various credits listed, and see if any are relevant to you. Look at schedule A and see if you’re likely to have any of those deductible expenses. If your schedule A items add up to less than $12,000, then you can just use the standard deduction.

Those Predictable But Irregular Bills

Things like property tax, car registration, the half-yearly car insurance bill, holiday spending, vacations, big car repairs, replacing appliances are all things we know will happen. Because they don’t happen every month like rent/mortgage and utilities, it’s harder to plan for them.

Years ago I had a system for that. I added up all of those expenses for the year, divided by twelve, and put that much in a savings account each month. It worked very well. I never had to use credit to pay anything, and felt a certain financial serenity that was very nice.

An article in the Dollar Stretcher today informed me that that method is called a “sinking fund.” According to Dave Ramsey, this is different than an emergency fund. The items in the sinking fund aren’t unexpected emergencies, they are expected but irregular expenses.



Marie Brack is the author of Frugal Living for the 21st Century: Adventures in Using Your Money Wisely. It’s available on in both Kindle and paperback versions.

52 Weeks: Wills, etc. – Wills

As a former estates paralegal, I really, really hesitate to even mention drafting your own Will. So much can go wrong when you don’t know all the possibilities. Some things only an attorney is likely to know. On the other hand, if you have no kids under eighteen and very few assets, then you might do all right with a site like or with a Will form from a stationery store. “Wills and Trust Kit for Dummies” might also be helpful.

I am not an attorney and nothing I say here should be taken as legal advice. It’s always wise to consult an attorney about important legal matters. If you have minor children, significant assets, or greedy relatives, an attorney needs to draft your Will.

Take notice of what is required for the process of signing a Will. Different states require different things. You have to do it the way your state requires for it to be legal. Some states require notarization while other states don’t allow it. Different states require a different number of witnesses. In most states, you can sign your Will anywhere that you can assemble the required witnesses/notary; it doesn’t have to be done in a lawyer’s office.

There are several things you want to express in a Will:

  • What kind of funeral or cremation do you want? Also, put this in an easily found letter or tell your family what you want. People don’t always get around to looking at the Will until after the arrangements have been set in motion.
  • If you have minor children, who do you want to raise them? What if you and their other parent are both gone? If you don’t name a guardianfor your children, the judge will have to guess what you might have wanted, based only on what other people tell him.
  • It would be wise to name back-up guardians, in case the people who are your first choice can’t or won’t act. Raising children is a big responsibility. You should probably ask the people you want to be guardians before putting them in your Will. When I was young, my mother spent money she couldn’t easily afford to have a Will made. She wanted to be sure I wouldn’t fall into the hands of the foster care system. People often also state in a Will what they want to happen to any pets they may have.
  • Who do you want to have your car and personal property? List physical things like cars, furniture, and personal items in a separate attachment to the Will. You can easily change it without having to have the Will itself changed. I’ve changed my attachment a dozen times when I got rid of things or got new things. Because of the attachment, I didn’t have to change the Will itself. Make sure your state allows attachments to a Will.
  • Bank accountsand real estate can have a joint owner or beneficiary on them. That property will go directly to that joint owner or beneficiary. They are not affected at all by the Will. What if your savings account has someone on it as beneficiary, and in your Will you direct that it should go to someone else? In fact, it will go to the first person, the one named on the account as the beneficiary.
  • If you make someone a joint owner, they have immediate shared control over the property. A joint tenant on a bank account can make a withdrawal without your signature. They don’t have to wait for your death as a beneficiary would.
  • If you put a joint owner on your house, they can’t sell it without your signature. By the same token, you can’t sell it without their signature. This gives them the power to stop you from selling, if they choose to do so. Even kind, usually trustworthy people might put their own interests first in this kind of situation. So consider carefully before adding a joint owner.
  • Who should take charge? Name an executor, also called a personal representative, to carry out what you’ve put in your Will. Because things change, it’s wise to name at least one alternative executor in case the first one can’t or won’t take the job. Ask your potential executor(s) if they are willing to serve. You can save some costly attorney time by going to your appointment with all of these things thought out. Have all of your beneficiaries’ and executors’ names and addresses already written down to give to the lawyer.

Tell Your Card Issuer In Advance

Many debit and credit card issuers now watch our accounts for activity that isn’t normal for us, to nip theft in the bud. If a home-body suddenly starts charging airfare and hotels, often they will place a temporary hold on the card until they can contact the customer and confirm that this unusual usage is legitimate.

If you’re not a gamer at all and suddenly buy a raft of them, the card issuer wonders if the card was stolen. They don’t know your grand kids want those for Christmas.

If you aren’t prepared for this, it can slow you down in paying your normal bills and activities with that card.

You can save a little aggravation by calling the company before starting an uncharacteristic series of purchases.

Memorize a Phone Number!

I’m probably not the only one who relies on the Contacts list in my cell phone. When my previous phone suddenly and completely stopped working, immediately I didn’t have any of my contacts!  That experience taught me to keep a paper or Word document copy as well. I have some phone numbers on paper in my purse, too.

But what if you aren’t at home, and don’t have your paper copy with you? If you were stranded, a business might let you use their landline, but phone books are rapidly going out of style, and your friends’ cell numbers wouldn’t be in a phone book anyway.

I recently found out third hand that if you get arrested, they may not let you use your own cell phone. Once your phone is booked into their property hold, your contacts are gone with it. (Yes, I know you don’t plan to get arrested. It’s rarely a plan, and unexpected things can happen with traffic stops.) All those people you might have called are suddenly not available to you.

Who would come and bail you out? Who could come and get you if you were stranded? Better yet, who would call everyone you know until someone could help?

Memorize at least one person’s phone number.

Prepping – For Taxes That Is

When Federal income tax was first instituted in 1913 the form was three pages long, the instructions only required one page, and that’s all there was to it. Ah, the good old days. Last year I filed a tax return that was 22 pages long.That was my own silly fault for having so many different tiny streams of income, each requiring its own page or pages. Lucky for me I actually enjoy keeping records and since I got bifocals I don’t have a problem filling out forms. If you itemized deductions or if you have a business with deductible expenses, you kind of have to keep records even if you don’t enjoy it.

The first thing I did was get in the habit of saving all paperwork and receipts that I would, or even might, need for taxes. I have a file folder for it and just drop them in all year long. When tax time comes I have a messy stack of papers, but I have them all and I know where they are. Failing to prepare for an unpleasant task doesn’t make the task go away, it just makes it harder. If it’s too late for this idea to benefit you this year, act today to make next year better. Designate a spot for any and all tax-related paperwork. A file, a box, a drawer, wherever it will be easy for you to put the papers as they come in.

Recently I made Excel spreadsheets that mimic the tax forms that I use. I can enter income as it comes in and deductions as they happen. At any moment I have a snapshot of what my tax situation is shaping up to. This is helpful for making decisions that effect one’s taxes. It tells me if I need to start saving up to pay self-employment taxes. When it’s time to fill out the forms, I just move the numbers from my spreadsheets to the forms.

Plan ahead and act on the plan.