Beating Broke

Personal Finance from the Broke Perspective

Archives for July 2008

Know Your Stuff – Home Inventory Software

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If you own a home, you know that you quickly accumulate lots and lots of stuff.  If you were to ever have a fire or a flood, it could be hard to prove to the insurance company what you had and in what condition.  In fact, if you have a fire and can’t prove you had it, they might just not pay you for it.  One of the best ways to prevent such a disaster is to complete a home inventory.

Ideally, a home inventory will include an itemized list of your possessions that will include serial numbers, model numbers, and replacement value.  It should also include pictures of the items at the least and a video of the items if at all possible.  A home inventory is something that every homeowner should have.

The more industrious of us can easily put together something with a spreadsheet and some archived pictures and videos.  The less technologically inclined might need a little help.  And a little free help is always good!

The Insurance Information Institute has a program designed for just such a solution.  The Know Your Stuff Home Inventory Software is a free download.  It includes a quick wizard for creating your room-by-room inventory and then gives the ability to attach photos to each item.  It also allows for attaching a digital copy of your receipt to the item for quick and easy value proof.

Once you’ve added all your possessions, you have several options for saving and archiving your inventory.  The simplest being a quick save to your harddrive or a print out that gets placed in a safe deposit box or safe.  They also allow for the ability to save the inventory to a 3rd party archiving system, but that carries a fee as well.  If you already have a offsite backup system in place (you should if you have anything important like a budget on your computer), like Mozy, then you can simply save the file to your hard drive and then have your current system back up the file.  Easy as pie!

Don’t forget to take your completed inventory into your Home Owners insurance agent to discuss your coverage and make sure that you have enough insurance to cover your possessions!

Don’t Make the Cost of Gas Your Scapegoat

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With all of the discussion about the price of gas that has been going on lately, and rightly so, it’s easy to blame your current financial troubles on the higher cost of gas.  Don’t.  While the higher cost may be hitting you hard, it isn’t the cause of your situation.  But we all like scapegoats and we like to blame things on someone or something other than ourselves.  Something that is out of our control.  As an added bonus, we get to complain about the people behind it and blame them too!

Here’s the dirty truth of it all.  The price of gas is not the reason that you are having trouble financially.  At 17 MPG, the difference between 1.999 a gallon gas and 4.159 a gallon gas is about $1500.00 a year.  A little over $125 a month.  It sounds bad, but when was the last time you remember paying $1.99 a gallon for gas?  It’s been a while.  The recent raises in price took the gas from about $2.499 to 4.159.  The difference there at 17 MPG is just under $1200.00 a year.  Or a little under $100 a month.

And that’s at 17 MPG.  If you are driving a car that gets 25 MPG, the difference is about $800 a year or $66 a month.  At 30 MPG, it drops to about $664 and $55.

$55 a month is nothing to scoff at.  And $125 can be a near catastrophe for some people.  But, if you had your finances in order to begin with it wouldn’t be a disaster.  It’ll still take a dent out of your budget, that’s for sure.  But a person who has control of their money and tells it what to do will be able to quickly rearrange that budget and keep on track with their debt elimination and savings goals.

If you make concessions and shorten trips or consolidate errands, you can cut that gas bill too.  Besides, don’t you feel just a little bit silly about blaming all your financial woes on $50 a month?  I bet you pay more than that on your cable bill…

Wanna see my numbers?  Here’s the spreadsheet I used. http://spreadsheets.google.com/ccc?key=pKnPEyRsjPSLpIC6wCWdjbg&hl=en

Beating Broke Rules: Cars

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One of the tenet that I am trying to live by financially is to pay cash for as much as possible.  There are certain things that I won’t be able to do that for.  A house is the most likely example there.  Many people would lump a car in with that category as well.  Not here.

Beating Broke Rule: You should strive to pay cash for your cars

This rule accomplishes a few things for you.  By paying cash, you don’t have any monthly payments.  By paying cash, you are also forced to buy a car that you can actually afford.  No more $45,000 cars on a $70,000 salary.

Beating Broke Rule: Buy Used.

A new car depreciates in value more in the first few minutes of ownership than it does in the next year.  The second that you sign the paperwork and the dealer hands you the keys, a new car loses a large percentage of it’s value.  In some cases, this can be 10-15%.  By buying used cars, someone else has already paid for that depreciation and now you can enjoy the lower depreciation of the car through the years.  And if you go with a car that’s only a few years old, it’s almost like a new one anyways.

Beating Broke Rule: Don’t Lease.

Why would you want to pay someone several hundred dollars a month to drive their car only to give it back to them in the end with no value back?  And if you think you need to lease so you can have the smaller payment, you should be looking at a cheaper car in the first place.