If you’ve followed the jar method of budgeting, you should have had about two weeks of testing this method out. How’s it going? You should be able to project out and see if you will be able to stay within your spending limit for each category – if there are no emergencies.

I’ve found that the “miscellaneous” or “entertainment” jar is where money often disappears the fastest, leaving the savings jar empty or with a few pennies rattling around at the end of the month. Is that what you’ve experienced? If so, it’s fine. We are going to change that for you with today’s lesson. We are not going to restructure your entire debt, we’re just shaking things up a bit.

After you’ve spent some time following a budget, usually where every penny is accounted for, you may begin to notice that you can probably make a few minor changes in one or two areas to save a bit of money. Chances are that you cannot change your rent or mortgage easily. Your student loans and credit card debt can be changed as well, but that will take some effort. Instead, I like to start with the jar with which we have the most control – entertainment.

Think back to the past two weeks. Where have you spent money from your entertainment or miscellaneous jar? Do you see the latest movies every week? Are you buying new clothes from the clearance sales? Lots and lots of mocha-choca-latta-ya-ya ( I had to slip that Lady Marmalade reference in there)? How often are you eating out?

As individuals living in the western world, we tend to like being entertained…a lot. We just don’t realize it. We think of it as a right to have every cable channel, plus the 4G phone, plus high speed internet at home, plus being able to buy lunch and maybe even dinner every day, plus picking up that awesome jacket on sale at Macy’s that you just won’t see again because it’s such a good deal, and oh, they have it in my size. Or maybe that’s just me.

Having those things are great, but how necessary are they? How happy do they make you? How much happier would you be with an extra $100 in your saving account every month?

I’m speaking as the converted here. I never, ever, had money left over after spending, I promise, EVERY SINGLE DIME EVERY SINGLE MONTH. I lived for years like that. In fact, I asked, if living paycheck-to-paycheck was so bad once. And yes, it is.

For the first time in my life I actually have a savings account, and while it’s nothing spectacular, I have a tiny emergency fund. If I blow a tire, I can actually pay for it without having to depend on a credit card. It’s an amazingly liberating feeling.

Now, for those of you who pay for everything with your credit cards for the points and then pay it off, you’re in a different place, so this doesn’t apply to you. My brother does that to get handsome cash back checks every couple of months. It works so well for him that he even wrote about how he’s making money with his credit card. Until we’ve all gotten our spending under control, this really doesn’t apply.

Over the next two weeks, I want you to rethink your entertainment jar. Take 10% out of that jar and put it into your savings jar, then find a way to cut your entertainment spending to make up for the difference.

I’m not asking you to live like a hermit. I’m not telling you to give up your latte.  I’m asking you to make a conscious decision to sacrifice a little or shop around for a better deal.  One change that I made was moving my phone service from AT&T to Simple Mobile. For $40 a month with tax included I get unlimited talk, text and 3G web.  Before that I was paying more for less service.  I didn’t give up my cell phone, I just shopped around.  Because we don’t watch that many movies, we got rid of our premium cable channels (bye-bye HBO) and we get 2 movies every week from the Redbox instead.  I ditched the $29.99 plan for about $10 in movies instead.  Some weeks, we don’t even pick up any movies.  Small changes add up.

So, your assignment this week is to trim a little bit of the fat.  Find a way to save 10% off of your entertainment budget and stick the savings into your saving jar.

If at any time you’d like to catch up to this course, or if you want to begin from lesson 1, you can always select the “Get Out Of Debt Course” under categories. Everything will be nicely organized for you in order of appearance. Remember, let’s make this a GOOD 2012.

See you in two weeks.

The trip was highly enlightening. For those of you new to the blog, I started a new job a little over two months ago. This was the first time that I was meeting everyone in my department. It was an “offsite summit” which was great opportunity to see how everyone interacts when together.

I can say this, no matter how much you dislike your boss, it’s never a good idea to tell him or her that you don’t respect them because of the way that they dress. Ouch! Major faux pas. I’m watching the fallout from that mistake (not mine) with popcorn and a front row seat…not that this person’s observations were wrong. It’s just that you don’t say what everyone else is thinking out loud sometimes. You have to learn how to keep your thoughts to yourself sometimes.

I didn’t have a chance t browse a bunch of blogs this week, but I’m going to bring you some of the best blog posts on personal finance that I had a chance to read anyway.

• On my one “free” night for the week, I had dinner with Suba from Wealth Informatics and her husband.  They re really nice people, and I’m such a New Yorker.  Hope that I didn’t scare them off.  Suba always writes well researched articles, and this week’s article, Money Can’t Buy Me Love…Or Can It? is no different.  Honestly, someone would be hard-pressed to want to be in a serious relationship with me if they knew about my debt ahead of time.  Thankfully, I already have a willing victim, so I’m good.
• I always appreciate a different point of view.  Aloysa’s take on 50 Things No One Told Me About America might get you thinking as well.  I’d love to do one called 5 things no one ever told me about being locked in a  gilded cage with your coworkers for 6 days.
• Since I don’t maximize the amount of money that I put into my 401(K), I don’t have a ROTH IRA, but if you do, you might want to learn about the Roth IRA Early Withdrawal Penalty.

I should have a couple more article up, but it’s 5 in the morning, and I need to reset my sleep clock.  This is totally not related to anything, but did you know that The Twilight Zone comes on at that time? I didn’t.

Don’t forget to join me this week for a new article in the get out of debt series.  I hope that you’re learning, because I am.

Debt loads and credit scores also vary substantially when age is taken into account. As shown in a new infographic available at livecreditsmart.com, have different reasons for debt and different credit histories. An examination of the infographic further gives us an idea of the priorities and challenges held by each generation.

The Greatest Generation, which includes anyone over the age of 66, is on the whole the strongest and most secure from a debt perspective. Members of this generation have the highest average credit score (an 829) and boast an average debt of $38,043 – over 51% below the national average. Due to its greater financial security and more advanced position in life, this generation has the luxury of working to reduce its debt without taking on any further monetary burdens. Most debt among Americans older than 66 is tied up in a home mortgage.

The next youngest generation is the Baby Boomers, which include anyone between the ages of 47 and 65. The Baby Boomers are working their ways towards a debt situation similar to the Greatest Generation, but they are not quite there yet. They hold a lower average credit score (782) that is nonetheless solidly above the national average. They also report a far higher amount of debt than the Greatest Generation – at over $101,000 per person, this debt load well exceeds the national average. So how can this high debt figure be explained in light of a solid credit score? For the average Boomer it all comes down to housing. Although their debt falls below the national averages in every other category, Boomers are still paying off their second mortgage and have amassed a considerable amount of debt in this area.

The generation with the highest amount of debt is Generation X, which has an average debt load of $111,121. This figure falls 42% above the national norm. Gen Xers also have lower than average credit scores (718). We can explain the substantial debt burden carried by this generation by their more transitory nature. They are old enough to have mortgages, families, and other expenses, but they are also young enough to still hold student loans. Since this generation covers a period of increasing earning potential, a higher debt figure is not necessarily a bad sign for people of this age.

Our youngest generation includes Americans in the 19 to 29 age range – Generation Y. Not too surprisingly, Generation Y has the lowest debt load of all the age groups ($34, 765) but also the lowest credit score (672). These figures can be explained by Generation Y’s youth; they are not old enough to have amassed considerable debt or to have boosted their credit rating. Most of the debt held by this generation goes into a home mortgage, although in a relative sense it far exceeds the national average when debt involving student loans, auto loans, and retail cards is taken into consideration. Gen Y simply does not currently posses the income to shoulder many of its expenses.

This breakdown goes to show that a person’s debt load – and, by extension, their personal finance situation – can be explained in part by the circumstances surrounding their age bracket. As each generation continues to grow older, we can only hope that the X and Y groups will someday achieve the financial security, credit scores, and minimal debt burdens enjoyed by the Greatest Generation.

Everyone has certain smells that they associate with the holidays. For some it’s pine. For others it’s gingerbread. For me, it’s paint.

That’s because, for as long as I can remember, I’ve spent every winter break with a paintbrush in one hand and a bucket of white primer in the other at the family ice cream store with my brothers and cousins. There’s a lot to paint and fix in the brief two weeks that we close the store, but luckily there are a lot of us.

Between the four kids, the eight grand-kids, the new great grandchildren and all the spouses there are upwards of 20 people who swarm the small building every holiday. When I was younger my grandmother managed everything but these days she wields more plates of food than she does paintbrushes. She’s in her late 70s and starting to feel her age.

She still nominally owns the store, but about 10 years ago the family took a collective look at the situation and realized it was untenable. Sure, my grandmother had a will, but all that did was divide the value of the property equally among the beneficiaries. What if we wanted to keep it? Who would have control?

So my mother and her siblings decided it was time to meet with a professional to discuss succession planning.
It was an arduous process, mainly because their lawyers insisted that everything be put down in writing. 60 plus years of tradition, unofficial communication, and oblique decision-making processes had to be deciphered, documented and made official in a way that made legal sense.

It took several months to draft what eventually became the LLC formation documents with each sibling and my grandmother set up with an equal share of the corporation. But if anything happened to any member of the partnership, there was now a clear course of action laid out.

But that was only half the battle. They might have equal voting rights in the corporation, but that didn’t mean that all of them were equally qualified to run the business. Who was going to step up and take the reins from my grandmother? And who, if anyone, would want to run it after she passed away?

After a lot of discussion and a great deal of introspection the siblings laid out a plan. Two of them, my mother and aunt, would step up into management positions and slowly begin to take control of the business away from my grandmother. The LLC would advise and support for as long as needed, and my grandmother would still have a final say in any changes, but as long as the store remained healthy the others wouldn’t interfere.

A lot has happened since then, but while my mother stepped down in order to open her own business my aunt is still managing the store. The years between have been filled with a lot of education for everyone- it was harder for both my grandmother to let go and for the LLC to keep out of the business – but the store is healthy and everyone in the family is still speaking to each other. My aunt is thinking about buying out the rest of the partnership so that she’ll own the store outright, but that option is several years down the road.

I know that no matter what happens, whichever family member ends up with the business, my future holidays will likely be the same as my past: catching up, eating truckloads of food and roughhousing with my cousins, all between laying down coats of heavy white paint.

Megan Durham still makes a mean milkshake, although she’s now a freelance writer living in Seattle. You can read her blog at comfyninja.blogspot.com or check out her website at megandurham.com.

The one common ritual that we all share is how we treat someone who has died.  In all cultures there is a ritual process of essentially saying goodbye to your loved one.  It is a fact that we will all meet the same fate some day.  I encourage everyone, no matter how young or old, to think of what your family would need if you passed away tomorrow.  If you haven’t begun making preparations, do so now.

On to some of the best personal finance articles that I found this week.

• I’m in love with the two personalities behind the blog, Mike and Molly’s House.  Mike just got laid off for the second time in a year (or two), so now they’re going to video blog their attempts at building  a website to make money.  I wish them lots of luck.
• I also love Sandy L’s stories about her Old World mom, Babci on First Gen American.  This story is about Babci’s theories on remodeling.  Gotta love moms.
• Say that you eat out but realize later that your server forgot to bill you for all of your meal.  Do you return to pay for your meal? Aloysa at My Broken Coin faced this dilemma.  Keep in mind, depending on the restaurant, servers have to account for the money for meals that they ordered from the kitchen, so it might come out of your server’s pocket.
• Finally, I figured this fantasy post called Where Would You Invest A Million Dollars from Hope to Prosper was timely.  Especially since I saw some long lines by the lottery machine since everyone is busy playing the Powerball lottery for  chance to win over $300 million.

Honestly, I didn’t want to get left out either, so I bought into the company pool for $2.  Hey, if they won this thing while I was traveling, I didn’t want to be the only loser going back to work while everyone else was swimming in their millions.  They are so not leaving me behind.

Those were some of the best articles that I found last week.  Come back to the blog this week for some mindless rambling with a side order of finance tossed in.

I leave you with my favorite motivational song from Whitney Houston.  When I’m doubting that I can attain all of the goals and dreams that I aspire to, I always play this song.