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What does a budget committee actually do?

Posted on 10/21/2020 by Beck

I am not a big fan of committees. If you think like I do, you probably think that committees (and, even worse “sub-committees”) are necessary, but a necessary evil. As one who is not a fan of red tape, I see most committees as groups where a lot of talking gets done, but very little action happens.

In nearly any government organization, non-profit, or business, there is one committee that people know will be part of the structure of the organization: the budget committee. Since money is necessary to run any of these groups, a budget committee is often appointed (or elected) to handle some of this huge task. Lakeshore Payday Loans ExtLoansUSA.

But many people wonder what a budget committee actually does. Rarely, if ever, does that group have the final say on budgetary concerns, so what good are they? Are they really making a budget that will be put into action? Here are some things that a budget committee typically does.

1. Information gathering and funneling.

This may be the most important work of the committee, because it not only saves work for the others in the organization, but it obviously helps the committee with the rest of its work. Depending on the organization, most budget committees have access to documents and information sooner than others in the system. Assuming, they have a “financial mind,” they can make sense of this mountain of information more quickly than others. Then they can then put that information in terms that others can more easily digest.

So the committee becomes a sort of funnel, but the top of that funnel is the most important part. The gathering of information is vital to their business.

2. Projecting.

Taking that data, then, the committee often spends time projecting into the future in areas requested by the organization. For a business, they might try to project whether there is enough profit to consider a new franchise or a relocation. For a non-profit, they might try to project whether the level of private funding will rise or fall based upon the information they have. These are not declarations nor decisions, they are simply informed projections to help others in the organization make more informed choices.

3. Allocation suggestions.

Also based upon the information gathered, many budget committees look at the organization from a 50,000 foot view, and try to analyze the finances in a pie chart format. Sometimes, in the day-in-and-day-out running of a business, the leaders lose sight of the overall picture. They might be borrowing just a bit too much, or they might not be allocating enough to future projects.

A budget committee can see the total and raw numbers and help suggest an allocation of funds that will be not only best for the bottom line, but also best in keeping with the overall mission of the organization. A good budget committee will keep both of these clearly in mind.

4. Warnings.

This is often the only time we hear of budget committees, but it is one of their primary functions. Those who have this information and expertise are often the workers who must sound a warning. Maybe the local municipality is not paying employees at a competitive rate. Maybe the business is spending far too much inefficiently and it is endangering the bottom line. Maybe the non-profit is getting a bit too greedy and is losing sight of its overall mission. The committee can spell out these warnings using raw data, but also in language that is clear and concise.

Overall, the budget committee is necessary, so long as they know their true function and stay within those parameters. They must understand that they are not to make final decisions, but they should be allowed the leverage to make strong recommendations, even if those recommendations are seen as negative. The work done by the committee should provide others – especially leaders – in the organization more time to do other work, and those on the committee should always be available to answer questions or clear up disputes or struggles.

Committees should know their intended purpose and focus on doing their job well so that leaders can make appropriate decisions. As long as they’re doing that, I suppose they’re alright.…

Stock for children is a great introduction to investing

Posted on 10/04/202010/15/2020 by Beck

My daughter received $50 from her great-grandfather for Christmas and we all agreed that there was absolutely nothing left on her list that she really needed. I pitched the idea of buying a share or two of stock with the money so she could watch it grow over time. I think the idea of buying stock for children is a great way to introduce them to some basic investment concepts.

Besides, when I my kids age I thought the idea of owning stock was cool!

THE BEST STOCKS FOR CHILDREN
The best stocks for children are not necessarily the best stocks for average investors. Kids need to know a little something about the company. It could be their favorite tennis shoe brand (maybe Nike), maker of their favorite gum (think Wrigley), or even the maker of their beloved XBox (Microsoft).

I offered up a short list of kid-friendly stocks that I thought would provide good growth and dividends over the long term; nothing too speculative for my daughter’s first pick. As I suspected, she settled on Disney, and we were off to open a ShareBuilder trading account.

HOW TO INVEST IN STOCKS FOR CHILDREN AT SHAREBUILDER
We decided to open a custodial investing account with ShareBuilder for a couple reasons. The main thing I like about Sharebuilder is that you can buy partial shares, so by committing $50 for her first stock purchase, she should be able to buy around 1.4 shares of Disney stock (trading around $32). If trading with a more traditional broker you often are forced to only trade in full shares – meaning kid-friendly stocks like Google and Apple would be off the table considering their high per-share price.

I decided to keep this money out of the Educational Savings Account, and her 529 College Savings Plan, because it may not be used for educational purposes down the road. Who knows…maybe this will buy her a car in ten years (with a little help from Mom and Dad, and a few more contributions from her Papa).

I can’t wait to show her “DIS” in the stock report of the newspaper and begin explaining what happens when stocks go up and down, etc. My wife is convinced I am WAY more excited about buying stock for our children than the kids are! She’s right, because no one ever explained these investment concepts to me, and what a leg up I would have had to have someone “coach” me on such financial matters a young age.

Let’s just hope I don’t have to teach them about losing money. Actually, that’s a pretty good lesson, too, and a good reason to get the kids involved when buying stock for children. They certainly need to know their are risks associated with investing in stocks.…

How Do You Keep Productivity Tools From Backfiring?

Posted on 10/02/202010/21/2020 by Beck

I guess I consider myself a productivity nut. Don’t tell anyone this, but I admit that I spend time looking through the Apple App Store for productivity tools – for fun! I know, it’s sort of a geeky thing but I enjoy it.

Some of my favorite productivity tools include Evernote for note taking, Dropbox for managing my files, Scanner Pro to store documents electronically, Feeddler to subscribe and read all my favorite blogs and KeePass to remember all my accounts and passwords.

I’ve recently added a few new ones too. I started using Instapaper to save articles I want to read later and Pinboard to manage all my bookmarks. I also started using Google tasks and Gtasks (iPhone/iPad app integrated with Google tasks) to manage my list of to-do’s.

Benefits of Productivity Tools

I feel like there are a lot of benefits to such productivity tools and mobile devices in general. Here are just a few that come to mind:

  • Time savings – I can locate a lot of information quickly using my iPhone and these tools. For me, that’s better than searching through a stack of papers or sticky notes.
  • Accuracy – With productivity tools such as Gtasks, I don’t have to remember things in my head. I’m not perfect and it’s too easy to forget things when you have a lot going on in your life.
  • Accessibility – My information is with me wherever I go. I don’t have to run home and look in my file cabinet. Files are accessible via my phone or from public computers if the information is stored in the cloud.

Productivity Tools Require Work to Use

While I love my productivity tools, they aren’t exactly free of work to maintain and use them. For example, if I find a website I really like I have to take a few minutes to send it to Pinboard. Once it’s over in Pinboard I need to tag it to easily find it later. Perhaps the shortcut is to a great financial calculator. If I don’t tag it under my financial tools I’ll lose it in all my bookmarks and just end up spending the time searching for it again later.

There is also some time required to access and use all these tools. While the benefits of Evernote are keeping all my notes in a searchable database, I have to take time to type them into the app versus writing them down on paper. Sure, sometimes it might be a bit faster to just write down a phone number or idea. But where will my idea be next week? It could still be on the kitchen counter or lost in the trash!

Categorization and tagging of notes, files, etc. can get backlogged and then you end up spending a lot of time trying to organize your information. This is work and sometimes takes you away from doing the work you need to be doing. You don’t have tagging when it comes to writing on paper, but it is helpful when using electronic tools.

How to Keep Productivity Tools from Backfiring on You

I have asked myself if spending time organizing and using my productivity tools can go overboard. As I mentioned above, I feel like I’m sometimes spending time tagging backlogs of notes that I didn’t tag when initially entered. Is this truly productive? Perhaps the long-term benefit is still there when I need to find my information later.

So, how do you keep your good productive intentions from backfiring on you? Here are some thoughts that come to mind:

  • There is a problem if you haven’t started work in 10 minutes – Stop if you’ve been sitting at your desk more than 10 minutes and haven’t started to do your work because you’re still organizing, filing, tagging, etc. My theory is that organizing shouldn’t take more than 10-15 minutes per day. Set a limit and then get to work!
  • Your productivity is costing you big bucks – Another key thing to watch out for is the cost of productivity. I know it’s always difficult to measure time and money savings (the return on investment), but if you find yourself continually buying new tools, chances are you’re just buying toys. Stop buying toys and assess your real needs.
  • Figure out your needs – It’s important to understand the problems you’re trying to solve and then get the right tools to solve those problems. For example, I needed a way to capture all my bookmarks for websites and articles I wanted to quickly find again later. Pinboard is a simple web app that allowed me to do this. Plus, I can send my articles directly from Instapaper or Feeddler to Pinboard.
  • You don’t have a workflow – Not only do you need to assess your needs, you need to have a workflow. How do you add tasks and when do you organize them and prioritize them? How do you capture notes? This doesn’t have to be complicated but you should have some steps in mind, otherwise, you’ll find yourself bouncing around from tool to tool wasting time. My problem is that I often don’t stay true to my workflow because I don’t properly tag or categorize information when initially entered.

Final Thoughts

Too much tooling around can cause us to be unproductive. In other words, we have to stop organizing and using tools and just get to work! Productivity tools should be simple to use and they shouldn’t require more time to manage than the work itself.…

The debt snowball plan

Posted on 09/21/202010/15/2020 by Beck

THE “SCARED STRAIGHT” SNOWBALL DEBT REDUCTION PLAN

Basically, the plan is to make minimum payments on all your debt and pile your remaining get-out-of-debt money into a high-yielding savings account such as the one offered by Smarty Pig. When the balance in that savings account exceeds the balance of your smallest debt by 30%, the snowball plan calls for you to transfer the money into checking and eliminate that smallest debt.
As Trent points out this is probably not the smartest (mathematically) way to approach the debt snowball, but for those of us with somewhat shaky jobs, or in one-income families, it makes for a better night’s sleep to have a few thousand in savings at any given time. I’d gladly give up a couple months worth of interest to have a pile of money in the bank at the ready.

I may make one slight variation to his plan and preserve a $1,000 savings threshold – so when my savings balance equals my smallest debt, plus $1,000, I will bring the savings balance down to $1,000 and pay off the debt. Another idea to consider if you have several smaller debts (like I did in the beginning) would be to group those debts together to make one larger debt.

For instance, I had three debts under $500. If I was using the “Scared Straight” plan back then I would have grouped them into one $1,300 debt and used that as my target savings amount, otherwise you’ll be making several transfers out of your high-yield savings account to pay down the debt snowball, and it could cause a fee to be assessed on your savings account.

THE ORIGINAL DEBT SNOWBALL PLAN

The original debt snowball plan was made popular by Dave Ramsey in one of my favorite personal finance books and New York Times bestseller, The Total Money Makeover. If you haven’t read the book, I highly recommend it.…

Convert your monthly budget items to annual expenses

Posted on 08/03/202010/15/2020 by Beck

I’m currently reading Stay Mad for Life, the latest offering from CNBC and TheStreet.com money manager, Jim Cramer. By the way, I personally think this is Cramer’s best work as it focuses on all areas of personal finance, not just stock picking. I’m not a huge fan of Cramer the television personlity, but this book is pretty good.

In the early chapters of his book, Cramer discusses a unique way of budgeting that carries monthly expenses out to yearly outlays. It got me to thinking. My wife and I are big soft drink drinkers. Besides them not being healthy, I wondered in what other ways these things were affecting our lives.

$360 A YEAR ON COCAL COLA

In a given week we probably go through 2 twelve-packs of Coca Cola (or Diet Coke, depending on how good we are being, or not being). Our local grocery store generally offers a 3/$10 deal making these close to $3.50 each with sales tax. That comes out to $7.00 a week on soft drinks. Convert that to a 52-week, annualized expense and it comes out to about $360 a year for our family budget’s food category. That is nearly a dollar a day!

Over the next couple days my wife and I plan to take a look at our family budget and annualize all our expenses to determine what’s costing us the most over the course of a year (can you imagine what the cable bill looks like…yikes!).

By magnifying these monthly household expenses by 12 it really helps to illuminate those categories of the budget that need to be trimmed. Over time, we plan to create family budget spreadsheet to track all of these expenses (we already budget cash expenditures each month using Mvelopes – an online envelope budgeting system), and I’ll now have an “annual” column to calculate as well.…

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