What Really Makes the Difference?

I have had a wild 2 months since I my last post. We decided to try and sell our house, got an offer within a week and moved into a rental to save money to buy another house in a couple of years. As of this Monday, when we close on the sale, we will be completely debt free! Going through all this has made me think of how far we have come in the last 5 years before we started this journey. We were broke, had a lot of debt, and living nearly paycheck to paycheck. We had great vision but no guide as to how to actually get where we wanted. All that changed when in the Summer of 2007 we were introduced to Dave Ramsey's ideas about debt and money. This paradigm shift is exactly what we needed. Since then we worked hard to not only pay off all our debt (about $24,000 worth) but build an emergency fund. We are getting ready to celebrate our 10th anniversary in a couple of months and celebrate in style we will by going to Jamaica. This is something we couldn't have imagined doing 5 years ago. I can't help but reflect on what has really made the difference in all this.

The things we do now aren't rocket science. Any sixth grader can do the basic math required to balance a budget. I think we've realized that is the easy part. The follow-through requires strength, discipline, and maturity to tell yourself 'no' or 'not right now' a lot of the time. It is NOT an easy road to travel, but since when is hard not worth the end result? Now we have a completely different view on money. We save up and pay cash for things, even if that means going without or less at times. This has given us freedom that was unfathomable before. Because of that freedom I want to shout it from the rooftops and wake people up. Let them know that there is a better way and that they don't have to be broke or nearly broke as a way of life. I have learned that doing this tends to rub some people the wrong way. They think I'm being conceited and think I'm better than them. This couldn't be further from the truth. I have never intended to offend anyone. I just can't contain my joy sometimes. I am simply enjoying the view of my efforts and want to assist others in their journey. My point is that to climb out of debt and change your life is HARD. It's REALLY hard to change the attitudes and behaviors that got you where you are today. But in the same breath I say that just because it is hard, it's not impossible. My husband and I are living proof that it's not. So decide to change today if you are tired of the same old results of being broke or nearly so. I'd be happy to show you the way!

Confessions of a Financial Coach

The Tortoise and The Hare:

It's not that fun to be and feel like you're the only tortoise in a world of hares. After all Tortoises are kind of ugly. They are big, bulky and all hard and wrinkled. Hares on the other hand, are fun, popular, fast, and sleek. Sexy even, compared to the tortoise. But if you think about it, tortoises are superior in many ways. While they are worn and weathered, they have everything they need to get through the storms of life. They carry their home after all, and they have endurance for the long journey. Hares are fast in bursts, but have ADD when it comes to staying focused on the task at hand. They are also ill prepared for drought and famine.

Sometimes I feel like the slowest tortoise in the world, like I'm never going to reach my financial goals. This isn't helped by feeling like I'm surrounded by hares, jetting past and dancing around me with all their excitement and great new things. Because of this, I do a lot of self-adjustment. I have to sit back and see the path I've traveled. It's been long and rocky. While I'm not to the top yet, I've come a very long way and life is good. If I had to, I would do it ALL again because it's been worth every hard step. While we only have one car for the time being and our house is a little on the small side for our growing family, I can't complain. My husband and I are debt free except for our house AND We have an emergency fund. That's more than about 80-90% of the population have going for them. So yes, I am a tortoise, but I'm proud to be one! Who wants to be a broke, stressed out hare? If you are trying hard to abandon your hare-like ways, keep trying! It's only too late if you stop trying. Just remember, every time I read the story, the tortoise ALWAYS wins.

Quotations of the Month November/ December

"Everything can be taken from a man or a woman but one thing: the last of human freedoms to choose one's attitude in any given set of circumstances, to choose one's own way." Viktor E. Frankl

"But godliness with contentment is great gain. For we brought nothing into this world, and it is certain we can carry nothing out. And having food and raiment let us be therewith content." 1 Timothy 6:6-8

Thanks and Giving

I wanted to take a moment and expand on what I posted on both my Facebook page and my NEW Google+ page this morning.  This is the season that we pause to reflect on what we are thankful for and hopefully give gifts to others that honor that gratitude.  If you follow this blog at all you know that this has been a very hard year for me personally.  Despite all that, this morning I am struck with how much I have to be thankful for.  My family is safe and healthy for the most part.  We are meeting our financial goals (even if it has taken much longer than planned).  And we have the privilege of living in a country where we have the opportunity to live our dreams.  If there is one theme that keeps recurring this year it's that the one thing that no one can take away from you is how you choose to feel or react about something.  Viktor Frankl, a holocaust survivor, really did say it best: "Everything can be taken from a man or a woman but one thing: the last of human freedoms to choose one's attitude in any given set of circumstances, to choose one's own way." 


It is easy to get caught up in all the things we don't have or wished we had and even easier to blame others for what has happened to us.  But it is hard to learn to be content with what we do have and work around the obstacles of life.  And so this season, find something you are thankful for and give yourself the gift of contentedness.

Quotations of the Month September & October

"A life lived with integrity- even if it lacks the trappings of fame and fortune is a shinning star in whose light others may follow in the years to come." Denis Waitley

"Success means having the courage, the determination and the will to become the person you believe you were meant to be."George Sheehan

"When life knocks you down, you have two choices- stay down or get up." Tom Krause

"Quality is never an accident. It is always the result of intelligent effort." John Ruskin

A Little Swamped... but NOT Forgotten

Hello all you wonderful blog readers!  I realize I have not been the greatest at keeping up on my blog the last couple of months.  This is mainly because my life has gotten extremely crazy.  With 3 little girls to take care of, a household to run and the added burden of our latest adventure- my husband had a seizure and totaled our van.  While everyone is miraculously safe, I am now realizing the full impact of all this because I am the only driver in my house now.  If you don't think that's any big deal, just consider all the places you and your spouse drive in any given day.  Thankfully, he's able to car pool to work, so I don't have to drive him there.  But all the times I just needed him to run an errand for me or take one of the kids somewhere are gone for the time being.  Combine that with still dealing with the repercussions of having a NICU baby earlier this year, I'm quickly discovering that a very strong gag reflex, acid reflux, and solid foods don't mix very well.  It's quite the zoo at my house right now.  So for the time being, I'm taking another official break from blogging until things settle back down to a newer normal.  While I'm a little swamped, you are not forgotten.  Through patience and perseverance, all things will work themselves out, in any area of your life.

There's No Substitute For Honesty

I Just finished reading an article about the tens of millions of dollars worth of cash and other valuables that were returned to their rightful owners in Japan in the months since the massive earthquake rocked the country earlier this year.  It made me think.  This speaks volumes about the character of the Japanese.  Not only are they and traditionally have been great savers but they are willing to be honest in such a desperate situation.  Honesty is one of those things that most people don't think about on a daily basis.  But it's a quality that makes up the moral backbone of any successful society.  Without it we'd be far more greedy, selfish, and slothful than we already are.  The world would be down right scary if there was no honesty.  But think how wonderful it would be if there was more of it.  I firmly believe it would go a long way in solving much of societies woes.

So what does this have to with money?  Well, everything!  Do you put in an honest day's work for the money you get paid?  Do you pay your taxes honestly?  Are you honest with yourself and others in what you can really afford?  Or are you living a lie that's beginning to crush you?  When it comes to honesty there really isn't another substitute.  If you lack integrity in any of these areas, you will have trouble with your money.  This is mainly because money problems are always a symptom of other problems in your life.  At the heart of most money problems is an integrity issue.  Whether with yourself or others.  Integrity stretches far beyond the bounds of finance.  A lack of it will affect every other aspect of your life.  So be honest with not only yourself but others.  Your life and the world around you will be all the better for it.

Quotations of the Month August

"The true test of financial discipline comes not when faced with spending money you don't have, but rather when you have the money and choose NOT to spend it anyway." Rachel Heath ~Finances By Rachel


"Desires dictate our priorities, priorities shape our choices, and choices determine our actions. The desires we act on determine our changing, our achieving, and our becoming."Dallin H Oaks


"We all must suffer from one of two things: the pain of discipline or the pain of regret." Jim Rohn


"Courage doesn't always roar. Sometimes courage is the quiet voice at the end of the day saying, I will try again tomorrow." Mary Anne Radmacher

The Four P's

Perseverance, Patience, Participation, & Perspective- Four words that sum up success in not only your finances, but life.  Perseverance, because without it you give up short of the mark when things get hard or aren't working.  To me, this is the #1 ingredient for success, because the lack of it shows in your character.  It's easy to give up or quit when things get hard.  Having perseverance means that you muscle up and shoulder the hard times as well as the good.  Having perseverance also takes a lot of another P- patience.  You can't have one without the other.  Like they say, if you ask for patience, it's tested immediately.  So expect it to be hard at first.  I chose participation because you have to be in the game to win.  It's a choice we make every day.  There is no standing still.  You are either moving closer to or farther away from your goals.  And Perspective, because it's hard to participate, have patience and persevere through the tough times if you don't keep it in mind.  Without proper perspective, hope fades and we despair easily.  Being successful isn't an accident.  It won't just happen.  It takes all these qualities working together to get to where we want to be in life.

Change Happens When You Do

Believe it or not financial problems are only the symptom of other bigger life problems.  I see this all the time with my counseling.  Whether it was a lack of planning, poor life choices, addictions, mental or physical illness, all of these problems cause financial problems.  Until they are addressed and you set on a new path, they will still yield the same harvest of problems- financial or otherwise.  So unless you want more of the same, take a look at your life and see what is the root of your financial woes.  I particularly like the quotes I chose for this month because no matter how you put it, change only happens when you do!  

Busy Days

Well, as you can see I've haven't posted in a couple of months....let's just say that I've been very busy enjoying summer with my family.  I'm just now starting to feel a little more back to normal, now that my baby is getting a bit older and we are done vacationing.  I've decided that I'm changing the format of my blog again.  I don't have as much time as I used to and so instead of weekly tips I'll just post them as I have time to do so.  This may or may not be on Fridays as it has in the past, but I hope to still have something weekly to talk about.  As always feel free to join my Facebook page to post questions or topic ideas.  I'll post things on there too, hopefully several times a week.  Or feel free to email me as well.

Quotations of the Month June & July

"There is treasure to be desired and oil in the dwelling of the wise; but a foolish man spendeth it up." Proverbs 21:20

"Despair is most often the offspring of ill-preparedness." Don Williams Jr.

"If one asks for success and prepares for failure, he will get the situation he has prepared for." Florence Scovel Shinn

Tip of the Week June 24-July 1

Emergency Funds & Insurance

As if I haven't beaten this topic enough, I'm going to do it again. On average you have a major life event (job loss, major medical crisis, other very bad things that impacts your finances) at least once a decade. I knew we were due to have one and we did in the form of having our 3rd daughter. She was born 3 1/2 weeks early and ended up staying 2 weeks in the NICU. Facing massive medical bills we were so glad that we were prepared with the proper insurance and an emergency fund. We only ended up paying $770 of the $32,000 bill. As a bonus we made money because we had a supplemental maternity/hospital policy through Alfac. While this was originally purchased because we have a high deductible health insurance plan, I could never imagine how useful it ended up being. We didn't have to use our emergency fund to pay for hospital bills because it paid entirely for our portion until our max out-of-pocket was met.

While you may think everything is going well today. You are making good money, everyone is healthy, and life is good right now; everything and I mean EVERYTHING can change in the blink of an eye.

Homework:
If you don't have a plan for your money or are not actively working towards those goals, you are by default moving away from those goals. Being prepared for life doesn't just happen. Start or resume those plans today!

I'm Back!...Well, Mostly

The last few months have been a world-wind of busyness.  I meant to start blogging again a few weeks ago but have been side-tracked with family, yard work, and life.  I'll try to post as often as my time allows, but anyone who has had a newborn knows how time consuming they are.  Baby #3 has come with its own challenges.  She was born 3 1/2 weeks early and then spent 2 weeks in the NICU because of apnea and reflux.  While she is doing really well now, it was quite the ordeal, both exhausting physically and emotionally.  I didn't have to worry about finances in the process though because we had insurance and emergency savings.  See my tip of the week (to the right) for June 24-July 1.  

Maternity Leave

My husband and I are getting ready to welcome our third child in the next 3 1/2-4 weeks.  Because of the this and other factors, my life has gotten very busy.  I have made the decision to simplify things as much as possible and put myself on maternity leave a bit earlier than I had originally planned.  I am planning on taking a break for April and May.  Know that I have not lost my passion in the least bit, but there is a time and season for everything and right now I need to focus fully on my family.  I'd be happy to answer any questions you may have in the meantime.  They can be directed to my email (rachel@financesbyrachel.com) or facebook page.

Quotations of the Month March

"Credit buying is much like being drunk. The buzz happens immediately, and it gives you a lift. The hangover comes the day after." Dr. Joyce Brothers


"A creditor is worse than a slave-owner; for the master owns only your person, but a creditor owns your dignity, and can command it." Victor Hugo


"Promises make debt, and debt makes promises." Dutch Proverb


"The crown of the wise is their riches: but the foolishness of fools is folly." Proverbs 14:24

Tip of the Week March 18-25

Why Credit Cards Don't Pay

We've all seen the ads- get cash back, airline miles or bonus points by charging on your credit cards. This sounds like they are just dying to give you free money, right? The truth is that it's a marketing technique to get you spend more and pay them interest in the process. They do research and know that by purchasing with plastic you spend more than you would if you used cash. Adding the facts that you justify spending more (since you're getting rewarded) and the bulk of you not paying your balances off every month; you've been sucker punched by the credit card company.

The credit issuers aren't the only ones who have learned this. Have you noticed that over the last decade everyone and their dog takes credit cards? You might think this is because they want to make it 'easier' to pay for their customers. Yeah it might be easier but they do have to pay Visa or Mastercard 3-4% of the transaction amount. However what companies started realizing is that you spend more if they take your credit card, more so than the 3-4% they have to pay for the transaction. McDonalds did a study and concluded that their average credit card customer spent 40% more on their ticket than cash spenders. This was a jump from around $4 to $7 and the reason why they and all other fast food joints started accepting credit cards. That said, let's do some simple math. According to Smart Money Magazine, the average consumer spends 12-18% more using credit than cash. Even if you were half that conservative at 6-9%, are you really coming out ahead playing the reward program game? NO- because they are only giving you 3-5% on your money.

Homework:
For one month, use cash instead of credit cards to purchase everyday items like clothes, groceries and eating out. This not only keeps you on track with your budget, but you won't be paying for food that is long down the sewer when the credit card bill comes. The trick is to be realistic and that once the money runs out you don't just keep hitting the ATM. For more about this check out my archives about budgeting properly.

Tip of the Week March 11-18

Why Not Use Credit Cards for EVERYTHING?

I get asked this question quite a bit. Why not use credit cards for the cash back, reward points and airline miles? It's free money from the credit company and I pay mine off in full every month, so what's the big deal? To all those who ask these questions I will say, I used to believe that. I was very good about charging everything (including utilities) and then paying it off in full when the bill was due. I literally felt a sense of pride that I was somehow winning and swindling the credit card company out of all this 'free money'. There were a couple of major flaws with this behavior. First, I never felt like we were getting ahead because after the big credit card payment was made there wasn't any money left. Second, when there were unemployment issues, the bill couldn't be paid off in full. Thus being caught in an endless cycle. Sure we had stellar credit but we didn't have any money in the bank.

The truth is that credit card companies know exactly what they are doing by offering the various reward programs they do. These are skilled and very well researched decisions because they know that the vast majority of credit card bills are not paid off every month. They know that because you think you are getting rewarded, you will justify spending more and then not pay it off in full. Think about it, if they were losing money on these programs they would stop them immediately.

Homework: 
This week I want you to go over your credit card statements and uncover what you are really charging. Chances are the bulk of it is everyday spending like gas, groceries, eating out, entertainment and other fun things. Keep in mind what your real cost is for my tip next week. I'll talk more about how you really end up spending more by using plastic versus cash.

Tip of the Week February 25-March 4

What Should You do With Your Tax Refund?

I've been asked this question a lot lately. Since the first refunds should be arriving in the next couple of weeks, I thought this would be a good thing to discuss. As I established last week, it's not so great of a deal on your end if you get a tax refund. Sure it might seem like bonus money but it's either your money that you loaned the government interest free for the year or it's someone else's money. But enough about that, what do you do with the money if you are getting it?

Since I am a Dave Ramsey counselor my advice is the same as his. Start wherever you are in your baby step process. If you haven't started or have no idea what I'm talking about go here for more information. This program is boot camp tough and not for sissies. If you aren't ready, then what I'm going to say won't make a bit difference to you because you probably won't do it anyway. If however you are ready to step out of denial and change your life- keep reading. This is after all more about priorities than anything else.

Homework:
If you don't have anything in savings, start by putting $1000 away for emergencies. Remember it's not if but when you will need this money. Next if you still have refund left and are ready to dig out of your pit, use the rest of your money to pay down your debt snowball. This is not to say that you can't use any of it for having a bit of fun, but this depends on your situation and how serious you are about getting out of debt. If you are going to pay down debt only to run it up again later this year, then what's the point? You're in an endless cycle and you might as well blow your refund.

If you are going to spend some of the money on things other than saving and paying down debt be sure to prioritize. Is it something you really need like getting the car fixed, badly needed house repair, or a big bill that is coming due? Or is it a want like furniture, flooring or a gadget/toy? Maybe you are in the middle of a crisis or see one on the horizon. If this is the case, pile up the money into savings to weather the storm. Whatever your circumstances use prudence when making these decisions. The bottom line is if you don't have a plan or aren't intentional with your money you won't have any and you will always be wishing for that big refund.

Quotations of the Month February

"The hardest thing in the world to understand is the income tax."Albert Einstein


"Next to being shot at and missed, nothing is really quite as satisfying as an income tax refund." F.J. Raymond

"It's income tax time again, Americans: time to gather up those receipts, get out those tax forms, sharpen up that pencil, and stab yourself in the aorta." Dave Barry