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3 Things To Know About Bankruptcy & Your Business

No one ever wants to think about bankruptcy, but it happens frequently. Whether it’s business or personal, sometimes it feels like it’s unavoidable. There’s a stigma attached to it although, strangely enough, rich people don’t feel as often as the rest of us.

Still, it’s something that needs to be addressed because it’s not the “end all” that it sounds like it can be… at least not across the board. We’re going to talk about 3 things we feel you should know and understand so that you’re armed with at least a little bit of knowledge if you believe it’s something you should consider.

1. Everything doesn’t go away if you declare bankruptcy

Bankruptcy can be a quick fix to your money problems or give you time to make deals to pay down your debt over a longer period of time than your initial agreement with creditors. However, there are some things that you still have to deal with if you declare bankruptcy. Some of those things are:

* student loans
* most legal judgments against you including alimony and child support
* debts you forget to list
* loss of home and property (unless you file Chapter 13)
* most tax debts

2. It’s going to affect your credit record for 7 years… possibly longer

Federal guidelines say a bankruptcy can stay on your credit report for a certain period, but with there being so many reporting agencies out there you’d have to be checking consistently and writing some of them to remove some of the data. That doesn’t mean that after 7 years you’re totally in the clear with those offering credit but it’s possible some of them will still send you offers with high APRs.

If you’re really in a bind and have to go this route, it doesn’t make you a pariah. Many automobile dealers will still allow you to buy a car, though they may make you pay a healthy down payment and you’ll get a higher interest rate. If you have the ability you can always go back and pay some of those creditors off and often they’ll reinstate your credit rating with them… sometimes not even increasing the APR on you.

When it comes to your business, this might be a reason to incorporate the business because if bankruptcy is related to it then it’s the business that takes the hit instead of your personal account, even if you’re a sole proprietor. This helps in cases where your business might get sued or other related conditions.

3. Don’t go into bankruptcy recklessly

Before you get to the stage where you might decide on going the bankruptcy route, first take time to discuss your options with an accountant or a consumer credit agency to find out if that’s your only option. Sometimes all it takes is a good financial eye to help you figure out how to pay all your bills, tell you who to call and how to negotiate better payment terms, while still having enough money to live on.

It won’t be easy unless you actually have way more money than you thought you did and just need to have a better budget set up for your comfort. It’s always better to take care of yourself than having to go into bankruptcy.

You Can’t Be Comfortable And Make Real Money

A couple of articles ago we talked about 7 easy ways to get comfortable with money. This time around we’re taking a different slant on the topic of comfort and money because it’s a totally different topic than the previous one.

Yellow Camaro

In this case, we’re talking to the people who say they want to make more money so they can do anything they want to and can live the life they want to live. Whenever most people are asked how much money they respond “enough to be comfortable.”

There’s a problem with this kind of thinking when it comes to money. The problem is that there’s no quantifier; there’s no true meaning of what makes anyone “comfortable” in reality.

For instance, is comfortable being able to pay all your bills, eat at restaurants, go to entertainment venues… what’s comfortable for you, the individual? Maybe comfort is never having to worry about paying the bills; that sounds nice doesn’t it?

Or does it? What if your bills came to $2,000 a month and you were earning $3,000 a month; would you be content? You might be. What if you wanted a new car and the payments each month was around $400, and you haven’t had to make car payments in a couple of years? Suddenly a big chunk is being taken out of your extraneous money. How comfortable are you now?

The reason we talk about budgeting first is because being able to take care of one’s bills should be the starting point before thinking about how much more money you wish you had to spend. A budget helps you take care of necessities, which gives you more time to figure out ways to make more money so you can do and have more things later on.

After budgeting and feeling comfortable that your bills are taken care of, now what? This is when things get tricky because everyone has a different answer, yet they might not have thought far out enough to be able to give a proper answer.

Do you ever want to buy new clothes? What happens if your TV, computer or smartphone fails? What if the pipes break and you need a plumber; are you ready to pay for an emergency service without having to give something else up? What if your favorite musical act is coming to town and tickets are $50 each?

Even people who want to live a very simple life sometimes have something come up that they need to try to find the money for. A trip to the doctor’s office could cost you upwards of $500 if you don’t have insurance, and even with insurance you might have copays or deductibles you have to cover.

Whether you work for someone else or you’re self employed, these are the types of things you should consider along with the regular bills you have to pay, and that’s not even considering children and their needs and wants. You need to know what you have coming in and specifically going out, and then you need to have a legitimate dollar figure in mind that you’d like to have on a monthly or yearly basis so you have something to shoot for.

Thinking about living in “comfort” isn’t good enough because it’s not tangible. A good way to help figure it out is to get some paper (or Excel) and start a list of other things you’d like to have and do that are outside your budget. Add the amount you think those things would cost and tally it up; it’s probably easiest to look at it as a monthly cash output. Add that figure to what you bring home now and you’ll have an idea of how much you’d actually like to earn.

If you feel you can’t earn that much money then you’ll have to scale back on the things you want. At least you’ll know and won’t find yourself getting into financial distress by acting on whims you can’t pay for.

What’s your thought on the concept of living comfortable? Are you ready to put in the effort to truly live comfortably?

You Need To Be Honest With Your Accountant

Accountants and accounting firms are there to help businesses with their finances, predictions, taxes, and in some circumstances help them grow. They can make recommendations on people to talk with to help get you out of financial difficulty. They make recommendations on the types of people you should talk to when you want to invest your money. They can even help you by offering ideas of services you should ship out to others so you can concentrate on your business and career.

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With that said, as is pretty much true with almost everything else, an accountant’s effectiveness is only as strong as the information they get from their clients. What we’re talking about is being as honest as you can about what’s going on with your business and your finances.

It’s not that accountants are nosy and want to know everything that’s going on in your personal life. It’s that there are lots of things businesses do that accountants might not know about that can affect the work they’re trying to do for you. When you short change the information you give them, it’s hard to blame them on the back end if something goes wrong.

An example of something like this is if you’re paying someone under the table for work they’re doing for you on a consistent basis. If you’re paying them less than minimum wage, everyone knows that’s illegal. It could also be costing you because it’s possible that by putting them on the payroll your business could qualify for tax breaks that could save you some money on the back end.

Another example would be if you’re earning significant income for work you’re doing off the books. Helping someone out and getting a couple hundred dollars isn’t a big deal; earning thousands off someone else without claiming it as income is definitely problematic. You not only put yourself in danger of criminal prosecution, but your accountant’s reputation on the line if it’s discovered that the work they did on your behalf was faulty… even if it’s not their fault.

Years ago, a client of ours worked at a company where the chief financial officer kept fighting with the company’s accountants. After a few years, it was discovered that the CFO had been going into the system and arbitrarily changing numbers she believed they should be rather than what they were.

The accountant’s kept having problems balancing the books and were on the cusp of being fired until the accounting director at the company met secretly with a few members of the board and alerted them on what had been going on. The company went from reporting a profit of $2.9 million to an announcement of a $975,000 loss. Both the CEO and the CFO were terminated, and the accounting firm was able to offer guidance to get the company heading back in the right direction.

These types of things happen to companies big and small, and it all comes down to trying to hide the truth instead of owning up to their responsibilities. Being honest and up front with your accountants may not always be a pleasant experience, but in the long run it’s better all around to confront one’s realities than trying to keep things hidden.

7 Easy Ways To Get Comfortable With Money

The scariest thing many of us have in our minds at one time or another is not having enough money. It doesn’t matter what it’s for, whether it’s real or imagined. Unless we win the lottery (and how many of us have met someone who’s won the lottery?), we always feel like we’re going to need more than we have to do what we want and to feel comfortable and content.

U.S. Dollars - Benjamin Franklins
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You want to know a truth? You can feel comfortable about money now, and get on with the life you want to lead. It doesn’t need to be more money, but it can. All it takes is a shifting of your mindset in some unique ways that will help you feel more comfortable about money overall.

We’re going to offer 7 easy ways to get comfortable with money, although one of them is going to be harder than the rest. Let’s start with that one.

1. Budgeting

I know what you’re thinking; we’re pulling a fast one on you because this one is hard. Truthfully, budgeting really isn’t hard once you actually establish one. Getting started can be scary and hard because it’s something you’re not used to, and because most of the time you’re already feeling like you’re in monetary trouble. But once you know where you stand, and the majority of people find they actually have the money to pay all their bills and still be able to get multiple cups of coffee, all feels right with the world.

2. Savings with change

You know what feels worse than not having a lot of money? Not having even a little bit of money to buy something like a pizza. What you need to do is establish a way to put a little bit of money away for those types of occasions.

I know someone who do this by putting all his change in one place, and then once a week going through it and putting it into different containers. One container is the “play” money; another is the “emergency” money; and the third is the “savings” money.

The savings money is the most important money. Once a month he goes through his savings money to see how much of it he can put into rolls and then he puts those rolls into his safe or takes them to the bank for deposit.

This might seem strange because most of us don’t pay attention to our change anymore, but you’d be surprised at how much it can accumulate. Including pennies, he’s sitting on around $400, and that’s only because he cashed out his play money once to go to the casino.

3. Do the same with bills

Do you often have a lot of singles in your wallet? What about five dollar bills? Set up another container and if you have at least 3 of each of these take one and put it in that container. If you have at least 5 then put in two.

What happens is that you forget you have this extra money until something important comes up. Unlike your change, you don’t count this money on a weekly basis. Wait a couple of months before you check it; you’ll be amazed at how much you have. Try not to spend this money unless you have an emergency. You’ll feel comfort in knowing that you have a pile of bills on hand in case you need it.

4. Small charity donations

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You probably get inundated with lots of requests to donate to charity. Even that kind of thing can make you feel pressure when you don’t feel you have enough money to go around.

A simple thing you can do that will help you feel better about yourself is to donate small amounts in unlikely places. For instance, locally Wegmans periodically has these little tickets that allow you to donate as little as $2.99 to the Food Bank. Somehow they’re able to feed more than one person with that little bit of money. Every once in a while let the cashier scan something like that and you’ll feel good that you contributed something to a good cause that not only didn’t break the bank, but won’t result in getting a lot of letters sent to your house asking for more.

5. Go out for breakfast

Many money managers will tell people not to eat out in order to save money. We’re changing this up slightly because if you can’t have a bit of fun then why have money in the first place?

Why are we recommending breakfast instead of dinner? If you have to ask, it means you haven’t seen the difference in prices between breakfast and dinner.

Most local diners that serve breakfast have full meals that are not only relatively low in calories, but are pretty satisfying and tasty for less than five dollars. It’s also hard to mess up breakfast food. Going to dinner and ordering a salad will cost you at least $7. Ordering steak is not only a crap shoot because it might be tender or tough, but it can run you as much as $40 and take longer to get.

If you’re not eating out all the time and want an occasional getaway, nothing says you have to spend a lot of money to eat out. You can even order a cup of coffee if you want and the price will still probably be less than $7 total.

6. Start carrying cash

We’ve become a country that’s addicted to plastic, whether it’s a credit or debit card. It’s convenient and we tend to believe that our money is safer by using them.

There are two fallacies with this logic. One’s ever stolen personal information when the buyer is using cash. Two, studies show that people tend to enjoy things more when they buy them with cash and, as a side benefit, tend to spend less by using more discretion before purchasing things.

Someone I know used to start each week carrying $100, with the intention that’s all that could be spend during the week unless something catastrophic came up. It kept her on point and under control and allowed her to save money for whenever she wanted to make bigger purchases or emergencies. She said she never felt deprived because she got to make the choices and found herself feeling more comfortable by carrying cash rather than using her credit cards, which she left at home unless she needed to buy something specific.

7. Put together a “dream” list

This one should be fun. Sit down and take some time putting together a list of things you’ve been dreaming about that you might want to buy some day. On this list, make sure each item is well over $5,000.

What a list like this does is keeps your mind on the things you’d be willing to save money for, and will get you into a position where you’ll see what’s most important in your life.

Many people don’t notice when they spend $10, but spending $10 3 times a day ends up being $210 a week of unplanned purchases, money you could have used for other things, which includes your dream purchases. A change in mindset has been known to actually help some people save their way to wealth, or at least wealthy habits. It’s a great way to get comfortable with the idea that having money is a good thing.

There’s our list of 7 things; what would you add to this?

4 Reasons To Use A Small Accounting Firm

T. L. Wall Accounting and Tax Corp is a pretty small, local accounting company located in North Syracuse, NY. By small, I mean it’s mainly myself and another accountant for most of the year, along with an office assistant. During tax season I bring in a couple other people to help us get through all the extra work but mainly it’s just the 3 of us year round.

We do pretty well for ourselves, all things considered. We’re certainly never going to challenge companies that have hundreds of employees for all clients but there are many benefits that bring clients to us instead of them.

This isn’t a commercial for just our accounting firm. There are a good number of small accounting firms in our area and most of them are doing extremely well. There are lots of reasons why people like working with us, and we’re going to name 5 of them.

1. You can actually talk to and work with the person at the top.

Unless you’re the president of a multi-million dollar organization, you’re never going to walk into a large accounting firm and have the opportunity to talk to the person in charge. You definitely know you’re never going to have that person even looking at your taxes or books, let alone knowing what’s going on with them.

In a small firm, the person at the top looks at everything before it goes out to a client. The owner might actually be the accountant who’s working your account rather than handing it off to someone else. Either way, it’s nice knowing that the person in charge knows what’s going on if you need to talk to them specifically.

Also, you can talk to the person at the top multiple ways. You can go into the office, talk on the phone and even send email, knowing who’s going to get it… and they’ll respond to you (although during tax season it might take a little while longer).

2. Your account can educate you on how to work a budget.

When you establish a relationship with a small accounting firm, they want to make sure you know how to manage your money if they notice something is lacking. Many of them are willing to take some extra time to help you set up a budget or learn how to pay bills. It doesn’t matter whether you’re looking to set up a budget for your small business or a personal budget; they’re there to give you a helping hand.

3. Your accountant will have business contacts to recommend you to that are based more on trust than possible revenue generated leads.

Unlike large accounting firms, you’ll find that small accounting firms not only know which local businesses to recommend you to if you need any types of services such as investing or legal issues, but they’ve met and vetted these people also. They can’t take this lightly like larger firms can because every time they make a recommendation their reputation is on the line.

4. Small accounting firms can set up different types of accounts for their clients.

If you go to a large firm, you’ll find that they have pre-determined packages and rates that can’t be negotiated. With smaller accounting firms, they have the flexibility to tailor themselves to the types of services you actually need rather than have a one-size-fits-all model.

The reason for this is simple. With a small accounting firm there are fewer mouths to feed and no stockholders to appease. There are no partners that have to buy in and be taken care of for the corporation by the peons of the company, who work overtime for the billable hours. Even though they’re always looking for new clients, they’re also usually pretty content with the ones they already have so there’s no aggressive push to get you into an expensive program.

There’s no denigrating large accounting firms. Most of them are very good. We believe smaller accounting firms will offer a more personal touch, which is something we do with our clients.

What You Need To Know If You Have Even One Employee In New York State

Our state is pretty interesting; that’s a nice way to lead into employment and taxes when it comes to our business. This time around I’m talking about taxes for our employees. There are specific types of taxes I want to bring to your attention in case you’re looking to hire at least one person to work for you… legally that is. 🙂

Let’s begin with this reality; if you hire an employee and put that person on the payroll, you already know there are taxes that need to be taken out for both federal and state tax divisions. That’s not a surprise to anyone who pays taxes themselves… which is every single person who’s ever had a job.

What you may not know is that employers have to pay some of the same taxes that employees do… and some taxes that they don’t.

Let’s start with Social Security and Medicare. Known as FICA (Federal Insurance Contributions Act), both of these come out of your employees pay and they come out of you as the employer also. It’s the same exact amount for each of these, which makes it easy to calculate if you’re handling your own payroll, which for 2017 is 7.65%. Both of these are federal, and since it’s probable that you’re going to reach the age one day when you’ll get your bit out of the pool, you can see this as a good investment towards your own future.

The two taxes you might not be fully aware of are federal and state unemployment. These aren’t taken from the employee; only the employer. That’s because employees who lose their jobs and qualify for unemployment insurance end up having to pay taxes on that money as income later on.

Luckily, the rates aren’t that high and, for any employer paying for a full time employee, you don’t have to pay it all year long. However, the language gets a bit tricky.

For instance, the federal unemployment rate for 2017 is 6.0%… unless you live in a state that also collects for unemployment insurance like New York. Because New York has unemployment taxes, its employers get a discounted rate. For 2017 the rate is 4.1% up to the first $10,700 in employee earnings. After an employee has reached that limit for the year, the employer doesn’t have to pay anything more until the new year.

Remember that the actual federal unemployment rate is 6%? In New York for 2017, the rate is 10% of that rate, or .6%, up to $7,000 in employee income. Once again, once that rate has been reached the employer is good until the beginning of the new year.

There you go. Of course, two ways to help you do this if you don’t have the time or feel comfortable is to either work with an accountant or payroll service. Both will give you great guidance as well as relieve you of a lot of stress.

What You Need To Know When Starting Your New Business

If I were to start a new business again, I would hope to first read the book Before You Quit Your Job by Robert Kiyosaki. It talks about the reality of what it takes to get into the proper mindset of self employment. It’s not all that easy for the majority of people. Over 95% of all new businesses shut down with 3 years of starting.

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We’ll let Kiyosaki handle the mindset part of this. What we’re going to touch upon are more tangible things you need to think about that will help you transition from what you were doing before to set yourself up properly for what you want to do now.

First, let’s look at general supplies. When you’re working in an office, most of these things are covered by the company. Now that you’re in charge, unless you have a lot of employees ready to go immediately (which no one does), you need to think about what you really need for your business.

For instance, one of my clients went to an office supply store when he started and bought all the supplies his office used to have. That included pens, pencils, staples and paper clips, as well as a bunch of envelopes. Five years later the only thing he’d gone through were regular envelopes. It turned out that he did most of his work on his computer, so all the other stuff he had sat there… except for the pens, which all dried out.

Second, you need to determine the technology you’re going to need and to what degree.

Almost everyone needs a computer for something, but not everyone needs the best there is. There are two determinants for selecting a computer, and neither one is based on cost.

The first is how much time you’re going to be spending on it. If you’re rarely going to use it, either for business or pleasure, then you only need a basic computer. You might even be able to get away with a tablet, which you can do almost anything with but also travel with. If you’re on it often then you might need a more powerful desktop or laptop that can withstand lots of use.

The second is the type of software you’re planning to use. If it’s basic stuff such as spreadsheets and writing software then any computer, laptop or tablet will suffice. If you’re going to use software to help do designs or anything that will take up a lot of power you’re going to want to get something high end that also allows you to easily upgrade components for the long haul.

There are differences in price of course, but if it’s about your business then you need to consider what you need to spend for your business regardless of cost. Remember, you get to write it off on your taxes.

The third thing you need to think about is what you’re good at and what you can allow someone else to do for you. For instance, maybe you’re good at numbers but if you’re accumulating a lot of expenses or looking to incorporate your business, you might want to think about hiring an accountant. If you’re putting together marketing material you might want to talk to some professional printers or designers. If you’re going to be doing a lot of mailing or other office things you don’t have the time to do (such as answering phones), there are people you can hire for that. Make sure to use your time well.

The fourth and final thing to think about comes back to how much money you want to spend up front. I’m someone who believes that if you’re unsure you’re going to need something then wait until you do before you spend money on it, especially if it’s expensive. This includes your office space; don’t fill it with desks, chairs and file cabinets until you’ve decided it’s what you need to grow your business properly.

These are only some of the things you should consider when starting your own business. Overall, our best advice is to think before you leap when it comes to spending money. Not only can you never get it back but you might need to hold onto it to cover expenses until you get some paying clients.

Should You Balance Transfer Your Way Out Of Debt?

It feels like every day we get another letter in the mail offering us the opportunity to get a new credit card. Most of them come with some kind of deal, which is usually 0% for six months if you balance transfer from your current credit cards. Some people give thought to using the process of transferring debt as a way to get out of credit card trouble. Can it work? Let’s talk about it.

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Any time your debt is at a low interest rate, it’s a good thing. Even when we talked about interest rates not always being the best option, when it comes to outstanding debt it’s always the best option… if you’re already in that position.

Let’s talk briefly about the benefits of balance transfers. The benefit of transferring debt to a lower interest rate card is that the amount of overall debt you owe will go up at a much reduced rate. If you have the capability of paying more on your credit card than the minimum, you could reduce your debt load much faster. If your debt is high you’re probably not going to pay it off before the free period ends, but you end up in a much better debt position overall.

If it were all so simple everyone would be doing it, and there are a lot of people who are doing it. What often happens is that people transfer to a lower interest rate card, which means they also have smaller payments they have to make. That’s so enticing that people feel they’ve gotten a second bonanza and only pay the minimum amount, using the extra cash for other things instead of paying down their debt. Credit card companies are counting on this because they want to build your debt up and extend it as much as possible.

Something else that people don’t pay attention to is what the interest rate will be after those six months, and some of the terms that come along with it. At least the federal government has put regulations into place that says these companies can’t jack up the interest rate on the outstanding balance… at least not immediately. If you’re behind on your payment just once, even by a day, they then have the right to jack up the interest on everything, and these days the going rate is 30%.

The last thing some people do is transfer their outstanding balance on one card to another, then either start using the new card or, even worse, add more to the card they just transferred their balance from.

To make this type of thing work takes discipline. If you don’t have it then you could end up in a worse position than you began with. You need to have a plan, and that plan has to include:

1. A faster way to pay down a big portion of your balance. At the very least, you need to try to pay at least the minimum payment balance amount that you were paying on your previous card, which was probably higher than your new card. That’ll bring your debt down somewhat, although it would be better if you could pay double the amount of your new payment each month.

2. A way to pay down other debt so it doesn’t grow while you’re concentrating on this one. This means you have to be strong and not use your other cards, or do anything else to put yourself in trouble that you can only get out of by using all off your new and previous credit options.

3. A budget to stay on track with your spending. You knew that budgeting word was going to come up, didn’t you? There’s no way for you to keep track of your finances without doing one.

4. Realizing that without changes, you’ll be in the same boat, only worse, in due time. Nothing to add to this one as it’s a warning on its own.

Just these 4 things can help you go a long way; unfortunately, they’re not easy for everyone to do. You know yourself, so hopefully you’ll make the wisest decision possible.

Take Care Of Your Necessities First

A couple of years ago we asked this question: have you started budgeting yet? It’s a fairly important question because we’re of the opinion that you can’t grow and maintain your finances without knowing how much you make, how much you need to pay out every month, and how much you have left over for everything else. We highlighted 3 things in that article:

* your bills are under control

* you have more money in your checking or savings account

* you have more peace of mind because you’re not as worried about paying your bills

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To expand on this topic, we felt it was a good time to talk about “wants” versus necessities. You’d think this one would be easy, but often we find that what many people believe is important to them isn’t really all that important in the scheme of things. These may or may not be bills you’ve put within the budget, but it’s important enough for you to think about the necessities first… even moreso than all the bills sometimes. Shocking? Let’s find out.

Necessities are the things you absolutely need to have to survive. Food and water come to mind, but our needs are bigger and more specific than that. Some needs might look like “wants”, and some “wants” might contain needs. It’s all in how we think about these things to determine what we have to consider.

Let’s look at water for a minute. All of us need water to survive, even more than we need food. Without water, you can only survive 8 to 10 days.

Is water “water” though? Many people believe they need to buy bottled or filtered water instead of using tap water. True, truly filtered water is better for you, but not all bottled water is really filtered. Even if it is, the cost of water can be prohibitive when you’re on a tight budget.

Water bills are generally pretty low; in some communities you’ll end up paying less than $25 a month. Filtered bottled water will run you close to a dollar a bottle; you can’t survive on only 25 bottles of water in a month. You can get other bottled water for less, but unless you’re living in a place like Flint, Michigan, it’s probably not much better than what you’ll get out of your tap. This is one of those instances where you need to figure out what’s more necessary in your situation or what you feel you can afford.

The next necessity is food. If you have water, you can survive up to a month without food if you have to. Gandhi used to regularly fast upwards of 21 days at a time during his many protests.

Once again, is food “food”? If your budget is tight, do you still buy a lot of organic food which in some instances is 3 times the price of non-organic? How long can you survive on boxes of macaroni and cheese and stay healthy, even though it’s the type of food that can go a long way? Do you know how to shop for the best price so you can afford to buy healthier food here and there while supplementing it with other things? Have you mastered the art of buying in bulk?

One more necessity is clothing. We need clothing to keep us warm, to be able to leave the house, to perform a job… along with a host of other things. All clothes aren’t equal, but some are more equal than others (to quote from Animal Farm).

Clothing can be a much different thing to figure out. For instance, if you’re working a corporate job and are on a fast track upward, then designer clothes are probably what you need to buy, which is a big but necessary expense. For most people, casual wear will probably suffice. There may be a nominal difference in quality between buying a $15 cotton shirt or one for $3, but you need to determine what’s necessary for you at the moment. If you can buy 5 shirts for the same price as buying one, isn’t that a great way of stretching your budget and taking care of a necessity?

It might seem like nitpicking, but the truth is that every day most people end up making the wrong decisions based on a misperception of what’s necessary in their lives. I knew someone who decided she had to pay $450 to have her hair done and neglected to pay her $250 energy bill. Others might feel the need to buy clothing rather than food or water. Figuring out what’s necessary could help you buy all 3 items, even if they’re not of the highest quality.

Should You Start A Health Savings Account?

Since the Affordable Care Act’s long term life is up in the air, it’s time to start looking at other health care options to help you with medical bills in case you need medical help. This might leave the option of a health savings account as one of your only options, at least for a short time period.

A health savings account (HSA) is a medical savings account available to taxpayers in the United States who are enrolled in a high-deductible health plan. The benefits of having one is that it’s tax free and you can rollover anything you’ve accumulated from past years. The downsides are it’s only available if you’re in a high deductible health plan and unavailable if you have Medicare, Medicaid or Tricare coverage.

If you have one of these high deductible insurance plans now, it’s not a bad idea to have a HSA. Even if the ACA goes away, it won’t be immediate, which means any money you’ve saved will still be tax free if you need it. The most you can put into it is $3,400 for individuals and $6,750 for families; if you’re over 55 you can add an extra $1,000.

If you’re employed, you can have your contribution automatically deducted from your paycheck, which is the easiest way to go. Otherwise, you can add money to it whenever you want. Also, you can decide to invest your contributions, which could help you build your health funds (it could also go the other way; something to think about).

You’ll get what looks like a debit card and be informed of your balance monthly, and that’s what you’d use to make your payments. It’s pretty simple, and easy to track.

On the other hand… if you’re going to go through all that trouble, it might be just as easy to create a savings account and start funneling more money into it just for this use. True, it’s not tax free, but you’ll have total control of it and not have to worry about whether or not the ACA health plans are going away. Right now one of the houses of Congress is advocating a HSA health system, so it’s possible that starting one might be a safe bet, but it might not be the same type of plan it is now.

In the meantime, you still need to make sure you have health care coverage for the time being. The penalties for going 3 months in a row without coverage could be as high as $2,085 for the year, or 2.5% of your income… whichever is higher. Protect yourself; your health is worth it.