I love a good horror movie. Not the ultra-gory kind that makes me close my ears and squint my eyes shut. But the more psychological kind where I get sucked into someone else's version of a no-good-very-bad-day.
But you know what? Real life can be pretty darn scary as well.
Sometimes nothing is scarier than money. Nothing.Sometimes nothing is scarier than money. Nothing. Click To Tweet
Money and the situations it puts you in can conjure up all sorts of monsters. The kind that go splunk, splat, and kerplunk in the night…that make you run and jump on your bed for fear of it grabbing you (oops, that would be my own childhood quirk picked up after watching one too many screamers).
This isn't Charles Dickens' time, when people went to jail for being in debt. But let's face it, some of the money monsters you're dealing with feel no less oppressive than a debtor's prison.
If any of these guys have been rearing their ugly heads in the night, in meetings during the day, or while you are supposed to be enjoying moments with your families, then I've got just the tools you need to slaughter them.
Money Monster #1: Tax Mistake Phantom
Doing your own taxes can save a lot of money. Plus you get to do cool things like learn about the tax code (okay, maybe I'm the only one who finds the tax code slightly more interesting than the candle-dipping process). But do you ever get taunted by the Tax-Mistake Phantom? You know, that feeling that the IRS might come after you for a few thousand dollars from years ago because of unknowingly filling something out incorrectly?
Tax Mistake Phantom Slaughter Toolbox: The first way to slaughter this bugger is by calling the IRS directly if you ever have any questions while filling out your taxes. My Aunt Nancy taught me this several years ago, and while simple, it really is a great option if you're stuck on something and want to make sure get it filled out right. Your second way to slaughter this phantom is by doing a hybrid approach to your taxes. Instead of totally DIY'ing them, choose a program like Turbotax. Not only do they automatically check over your return by running inspection tools through an algorithm of some sort, but there is an option for a little backup insurance and assistance in case the IRS comes after you.
Money Monster #2: End of the Month Menace
You dread that end of the month menace who seems to empty out your accounts around 5-7 days before your next paycheck and budget cycle starts. While you want to be enjoying your money all month long, it seems hard to do when you've got a monster working against you.
End of the Month Menace Slaughter Toolbox: Slaughter this menace by drip-feeding your cash flow throughout the month. For example, if you've got a monthly grocery budget of $500, then figure out the breakdown per week ($125). Stay as close as possible to this breakdown, as it means you won't leave yourself nudging into the nether regions of your cupboards at the end of the month. The same can go for “mad money” spending. Paul and I agreed to an allowance that we each get each month to spend as we please. The best way that this works (re: the way that will not leave us on empty for the last week of the month) is if we divide the amount by 4 and take out weekly installments.
Money Monster #3: Debt Inheritance Juggernaut
Yes, you're in debt. Way too much of it. Since you're pretty sure you'll never dig out of this mess (could be a self-fulfilling prophecy, especially if you don't try this), you're scared to death that your children or other family members might inherit your money troubles.
Debt Inheritance Juggernaut Slaughter Toolbox: While there are a few exceptions, generally your children or whoever inherits your estate will not personally have to pay off your loans. Unsecured loans like credit card bills and medical debt will have to be paid out from the estate, and any debt remaining will need to be written off by the creditor. Any secured loans will come out of the estate as well, and the creditor can seize the asset that the loan is tied to if it is not repaid (but again, this does not take your child's money out of their pocket, just attempts to make the creditor whole from your estate). Stay away from having someone co-sign a loan for you (because yes, in death, they would generally be on the hook for the rest of the co-signed debt). Be mindful of joint-held accounts, as this could bring creditors to the other account holder's doorstep. And if you live in a community property state and leave a widow/widower, then they will be responsible for any debts that remain. Here's a great article with lots more specific information on how to slaughter this Juggernaut.
Money Monster #4: Balance Check Troll
You've got to check your checking account, especially since the mortgage will be coming out next week. But your stomach lurches every time you do so because you're afraid of the troll that might have taken all your money without you knowing it. In fact, you've delayed so long that now if you check and there's not enough in there, you may not have time for the 3-5 day transfer window between accounts.
Balance Check Troll Slaughter Toolbox: I used to have to deal with this troll! Not because we didn't have the money but because I tried to swoop too much of it into savings each month. My husband finally came up with the best way to slaughter this one — by keeping a buffer of several hundred dollars in our checking account at all times. Sure, it doesn't earn interest. But now I can gleefully check our account, knowing that the troll is gone.
Money Monster #5: Looming Layoff Scoundrel
There was a round of layoffs in your job during the Recession, and you survived that. But your company hasn't exactly recovered to its old glory days before 2008. Your gut is telling you that instead of more client work, another round of layoffs may be coming down the pipeline. What makes your palms sweat? Knowing that your current paycheck is just enough to pay your bills.
Looming Layoff Scoundrel Slaughter Toolbox: Preparation is key in dealing with this ugly monster. You'll want to run a financial emergency drill to see what it would look like if you were on unemployment, and the things/services you can pare down in your budget. This will help take some stress off of you. Also, you want the upper hand in your layoff negotiations with your company.
Money Monster #6: Adjustable Rate Mortgage Gremlin
You signed up for an adjustable rate mortgage because the rates were so damn good at the time. And they're still good! But…what happens if the economy turns around and the interest rates suddenly resemble the type of raise increase you'd like to be seeing (double digits all the way, baby)?
What is this going to do to your cash flow? If your only backup plan is foreclosure, then break the emergency glass and grab your tools below.
Adjustable Rate Mortgage Gremlin Slaughter Toolbox: Confront this monster head on to see that it's nothing more than a mutant cotton ball. Work out a few different scenarios using this calculator so that you're not surprised with what your monthly mortgage bill could look like (you can read your docs…or skip that snooze fest and call your mortgage company to find out how much of a swing your interest rate can take). Then you've got to fund an extra account above emergency savings that will deal with the budget aftershocks of a possible rate hike. Also, refinancing is an option while rates are still historically low (though make sure you understand the closing costs involved to do so).
Money Monster #7: Impoverished-Retirement Barbarian
You've seen what it can mean to live on social security alone in retirement, and it's not pretty. One large house repair and you will be eating rice and beans in the year ahead, if you can pay it at all (and don't mention the annual property tax bill you'll incur for staying in your home). And this is all assuming that social security will even be around for you when you do retire — the Social Security Administration has already announced it will not have enough to pay 100% of benefits by the year of 2033.
Impoverished Retirement Barbarian Slaughter Toolbox: You can't slaughter a monster — especially a seemingly amorphous, complicated one — if you don't know how big it is. How you're going to do that is to get clear about the amount you need to be saving/investing today in order to reach a comfy retirement goal.
Which money monster keeps you up at night? How are you planning on slaughtering it?