Time for A Change?

Chances are that you are part of the 7 in 10 American households living paycheck to paycheck.  The funny thing is that only about half of you recognize that you really do live paycheck to paycheck.  That is some serious denial going on.  Here are some signs that you are indeed living paycheck to paycheck.  You have no savings, you feel like you play catch up on payday, you have too much month at the end of the money, you are anxious about how you are going to pay for an upcoming bill and most importantly- if you lost that paycheck today, you would be in serious trouble.  I'm not trying to make you feel stupid or worthless, I just want you to have a dose of reality as ugly as that might be.


There could be several reasons for being in this predicament.  Having career or medical issues, not knowing how to live differently and not having a plan are just a few.  Whatever the reason and no matter what your circumstances, you don't have to live like this anymore.  The key to unlocking a better future is change and that makes you the catalyst.  Only you can decide if you have had enough of the stress, pressure, and turmoil of living this way.  When you come to this crossroads you have a choice, either keep doing the same thing and getting the same results OR make a change (or several) that will lead you down a new path.  Sure, this new road seems scary and I won't lie to you, it will be hard at times.  You will even have setbacks and discouragements along the way.  But having traveled this road for the last 3+ years, I will tell you that I wouldn't go back to the way things were for anything.


If you don't know where to begin, start by realizing that you need to make a change.  If you are married, talk to your spouse about how you feel.  If your spouse doesn't feel the same way, get help from a third party clergy or counselor.  Not being on the same page with your spouse may be the biggest problem you are facing.  You will always be frustrated and never get anywhere if you are trying to row the same boat in different directions.  Work together to develop goals and a plan of how you are going to get there.  Gain the tools and knowledge to help you be successful in following that plan.  Get help when you need it.  Above all remember that this isn't a cake walk or a sprint.  Almost daily, I have to remind myself to think tortoise, NOT hare.

Tip & Quotes of the Week December 3-10

Being Content

Learning to be content with what you have instead of dwelling on what you don't have is a simple concept. It is probably the one thing that will keep your perspective in life. When we have gratitude in our hearts, we are content.

Homework:

Are you struggling with stuff-itis? The insatiable appetite to acquire because it is on sale, shopping makes you feel better, or because other people have it. If so, then you need a good dose of gratitude. The simple things in life are really what is important.

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

"Do not spoil what you have by desiring what you have not; remember that what you now have was once among the things you only hoped for." Epicurus

"We tend to forget that happiness doesn't come as a result of getting something we don't have, but rather of recognizing and appreciating what we do have." Frederick Keonig

The Gift of Contentedness

I hope you all had a great Thanksgiving Weekend and are starting off the holiday season in the spirit of thanks and giving.  At my house we are fans of Veggietales.  If you have never seen Veggietales I would highly recommend it because of the great moral lessons they teach.  My favorite is Madame Blueberry.  It's about about a blueberry who is 'blue' because of all the things that she wants and doesn't have.  Yet after buying everything she could ever dream of from the local Stuffmart, she still isn't happy.  Seeing a poor but content asparagus family who has love and gratitude makes her realize that things won't make her happy, having true gratitude will.  I know this is just a simple cartoon, but the lesson is the same.  Things will never fill a hole you have in your heart.  No matter how much money you spend you will always want more.  Happiness doesn't depend upon your worldly wealth or possessions, it's determined by your attitude.  It is very difficult to have gratitude if you are always thinking about what you don't have.  Instead of comparing your situation to others, remember and be grateful for the things that you do have.  Being truly content is the best gift you can give to yourself and teach your children and grandchildren this Christmas.

Tip & Quotes of the Week November 19-December 3

Get Organized!

Is lack of organization holding you back from achieving your financial goals? Something so simple can make a huge difference in how you view your finances. Not having a system that works for you to: pay your bills, track your income, expenses, and investments, and project cash-flow can be costly. Avoid these mistakes by having a plan and getting organized today.

Homework:

Choose a software program, form, or website that you like and keeps you and your money organized. Don't choose something so complicated that you don't understand it or something so time consuming that you don't use it. The simpler the better as long as it does the job.

"You will either learn to manage money, or the lack of it will always manage you." Dave Ramsey

"If you lack the courage to start, you have already finished."Unknown

"If you aim at nothing, you hit it every time." Zig Ziglar

Get Yourself Organized

When it comes to tackling your financial problems the first step in becoming successful is getting organized.  No amount of money or income potential will ever be a substitute for basic financial organization.  There are many options to choose, from software to websites, spreadsheets to just a legal pad.  Whatever your method of choice, the important thing is that it works for you.


If you are struggling in this area or your system consistently fails you, then you may need a change.  The key is to find something that meets your needs, you are comfortable with, and that helps you reach your goals.  Also, make sure you have a system to organize and pay incoming bills on time to avoid late fees and bank overdraft charges.  This is a huge problem for many and a very large source of revenue for banks and credit card companies.  In this case your time and preparation really is worth money.  So make sure you always make time for this vital task.


So here are some of the most available and widely used software and website options.  The most widely used software program is Quicken.  Although I personally don't prefer it, many people enjoy using it to track everything from small business income & expenses to investments and personal budget expenditures.  You can also sync it with your accounts to automatically download your info.  If you like the idea of that but don't want to pay for the software another good option is Mint.com.  It is a completely free website that has most the features as Quicken.  In fact it's owned by Quicken.  It automatically updates your expenses directly from your banks and other financial institutions.  It also allows you to track these expenses, set a budget, and see the overall trends of your spending.  I recently started using this and while I like how well it tracks income and expenses and gives you a good overall picture of your finances; I am not impressed with the budget capabilities and lack of cash-flow projecting.  You have to wait for a bill or expense to actually hit your account before it's on the radar and for me that's too late.  This is why I have used for several years and still prefer Microsoft Money.  I love the way you can set up your month-specific budget, project cash-flow for the pay period and track expenses by category.  Unfortunately, Microsoft discontinued Money and all related software in the Summer of 2009.


If budgeting software or online tracking is not up your alley, you might prefer a simple spreadsheet in Excel or Google docs.  Combined with bill pay with your bank or credit union this can be a very effective yet simple way to keep track of your budget.  If you are really old school you might prefer to use a simple legal pad or ledger.  Whatever your method of choice remember, if it works for you and meets your needs stick with it.

Tip & Quotes of the Week November 5-19

Taking care of The Four Walls

While this isn't a very new or revolutionary concept, it's often forgotten when push comes to shove. No matter what your situation or income you always take care of your four walls first. This includes- food, shelter, clothing, transportation, and utilities. These are the basics of life and ALWAYS take precedence over anything else, including paying down debt and saving for retirement.

Homework:

Most of the time meeting these basic necessities is no problem. There are times when even paying for these is a challenge. This includes when there has been a job loss or reduced income, a major medical event from an accident or disease, or death in the family. Whatever the source of the crisis, it's very important to keep the fours walls at the top of the list of all expenses.

"Our necessities never equal our wants." Benjamin Franklin

"But if any provide not for his own, and specially for those of his own house, he hath denied the faith and worse than an infidel." 1 Timothy 5:8

"He who knows no hardships will never know hardihood. He who faces no calamity will need no courage." Harry Emerson Fosdick

The Four Walls

When it comes to personal finance this is the most basic of principles that also has biblical roots.  I've briefly talked about this in the past, but let me give a more thorough introduction to The Four Walls principle.  No matter what circumstances you find yourselves in you ALWAYS maintain your four walls (aka your household)- Food, Shelter, Clothing, Transportation, and Utilities before you do anything else including paying down debt and saving for retirement or anything else.  Often times taking care of these basic necessities is second nature and well within reach.  There are times after a job loss, income reduction, major medical event, death or divorce when even meeting the basics can be difficult.
So what exactly do the basics entail?  Even in these categories there is wide variance with what you actually need and what you have or want.  Food is the most important basic need in sustaining life.  It is the first thing that needs to be taken care of.  I'm not talking about eating out for every meal, buying filet mignon, caviar, and bottled water at the grocery store, or expensive personal care items.  I'm talking basic food staples and personal hygiene products.  Things may be bad enough that you can't afford to eat out at all and you may even need temporary assistance from a church or food bank.  These measures are temporary for a few months or a year but are not a permanent way of life.  Like food, clothing is another basic need.  Obviously this doesn't entail designer jeans and handbags or fancy sneakers.  You may need to shop consignment or thrift stores to meet this basic need.
Shelter, the roof over your head, whether it be an apartment or home that you can afford.  If you have ever been house poor, you know what this feels like.  A good rule of thumb is that you spend no more than 25-30% of your take home pay on shelter.  Anything much more than this is unsustainable long term and puts you at risk of facing foreclosure or eviction.  As hard as it may be, you may have to sell your home, on a short sale if necessary and move somewhere else. This is much better than having the house taken from you later.  Sadly, I have seen families lose nearly everything by trying to stay in a house they cannot afford.
Transportation and utilities are other needs that have a wide range in cost.  Again this boils down to the basics.  Am I starting to sound like a broken record yet?  Unless you use mass transit, you need a vehicle to get to work and back.  Trying to hold on to a car that you can't afford the payment, gas, insurance or maintenance on is stressful and not worth it.  If you need a truck or vehicle that can tow a trailer for work, that doesn't mean you need a brand new one.  When it comes to utilities you need electricity, heat, water and a phone.  Contrary to what your teenager or spouse might think this does not mean a premium $100 cable or satellite package and a $200 cell phone plan with unlimited everything.  The high speed internet might have to go for a while if necessary.  More hard changes may be necessary to keep your family afloat, but they will be temporary.  Obviously I have listed some worst case scenarios.  Above all, when push comes to shove you may need to trim some of these categories.  Whether you are facing a crisis or trying to find money to pay down debt and save, you are the one in charge and must decide what to sacrifice.  What's important to remember is to hold on to what really matters, your spouse and family.  Stuff is just stuff and you can always get another house or car, but your family is irreplaceable.

Tip & Quotes of the Week October 22- November 5

Holiday Spending

This is a very susceptible time of year for many holiday shoppers to blow their budgets. If you are a chronic offender, choose to break the cycle this year by having a cash only holiday. Not only will January be a lot cheerier with no massive credit card bill looming, but it has an automatic spending control built in. When the money runs out, you stop buying.

Homework:

Figure out how much you can afford to spend (that's the easy part) and don't spend above that (this is the HARD part). Be creative with your purchases. Great gifts don't always have to cost a lot of money and you certainly don't have to buy the entire toy store for your kids or grandkids.

"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

"You cannot keep out of trouble by spending more than you earn." Abraham Lincoln

"Spending is quick, earning is slow." Russian Proverb

Having a Plan for Holiday Spending

One of the 7 principles of money that I teach is that if you want to be successful with your money you have to learn to live on less than you make.  Now this doesn't mean that this applies to you only 10 months of the year and during the holidays it's a free for all.  It seems to be the same story every year.  We fail to plan for the expenses associated with the holidays and are surprised every year when Christmas still comes in December.  Then we don't pay for it until the tax return comes.  There really must be something in the air this time of year that causes a disconnect between your brain and your wallet.  Did you know that Americans spent nearly 16 billion dollars on holiday spending in 2009 and that was only in November and the first week of December?  And that was up from the year before.  If you are tired of this yearly cycle, here's what I suggest to break it.


1. Be realistic about how much you can and want to spend.  No matter what your income or situation, you have to set a budget.  This includes budgeting for more than gifts.  Decorations, parties, extra food, increased utility costs from lights and guests, and transportation costs often get forgotten and aren't budgeted for properly.
2.  Spend only actual money, whether in the store or online.  If you don't have the money in cash or in your account, don't buy it!  No matter how much it's on sale or you may want it.  If it's not in the plan, you don't get it.  This will make you prioritize not only how much you spend but what you buy with that money.  Plus, not having a massive credit card bill looming in January will make the season all the more enjoyable.
3.  Do a gift exchange.  Instead of buying gifts for every member of your family or extended family, draw or rotate names year to year.  My own family has been doing this for many years and it's worked very well.  Only having to buy one gift simplifies things immensely.
4.  Be honest with your family and friends.  Tell them this is the year that you are breaking the cycle and aren't spending what you've spent in the past.
5.  Prepare for next year.  Christmas is obviously a non-monthly expense.  As such, you can start in January to accumulate money every month into a Christmas fund.  Divide the amount you are planning on spending by 12 and put that much aside every month.  By the time next Christmas comes you will have the money needed to pay for everything.  This is very simple to do, but takes planning ahead and being intentional.

Tip & Quotes of the Week October 15-22

Perseverance is Key

We all know life can be very difficult sometimes, especially when it comes to your money. To have perseverance and to keep going when the going gets tough is what makes the biggest difference in the long run. Success in anything in life is achieved through this simple concept.

Homework:

No matter what your personal financial situation, keep striving for your goals! These may be the character defining moments of your life. They will make you or break you. As hard as it may be, refocus and gather strength from those around you. Things will improve.

"Edison failed 10,000 times before he made the electric light. Do not be discouraged if you fail a few times." Napoleon Hill

"Perseverance is not a long race; it is many short races one after the other." Walter Elliot

"Every man is free to rise as far as he's able or willing, but the degree to which he thinks determines the degree to which he'll rise." Ayn Rand

"Without perseverance, talent is a barren bed." Welsh Proverb

Perseverance=Success!

If there is one thing that separates the goal-oriented from the wanderers, the strong from the weak, and the successful from the failures; it is PERSEVERANCE through the thick and the thin.  This is true if you are trying to become fit physically or financially.  While this is such a simple concept, in practice it's very hard.  But anything that is hard to do will be worth it in the long run, right?


I want you to take a look at your life.  You've got things that are going well and things that aren't.  Look at the goals you may have set at the beginning of the year.  If you don't have any, think about what you want out of your life and future.  What are your financial goals?  Do you want to get out of debt?  Save for a rainy day or retirement? Have more money to give and help those around you?  Whatever your goals, have you accomplished anything towards them or are they sitting untouched on the shelf or in the drawer where you put them?  If you aren't moving toward a goal, why is that?  Personal finance is exactly that, personal.  It's not just about knowing how to do math.  By and large it's about the many emotional and behavioral strings attached to those numbers.


Remember, some progress is better than none.  It's the slow and steady mentality that you want; crockpot not microwave.  As frustrating as it is, there is no shortcut to any place worth going.  Maybe it's the optimist in me, but no matter what your circumstances financially or otherwise, a good dose of perseverance will keep you going along the way.  Because the sun eventually will come out tomorrow.  Please don't be so hard on yourself that you quit altogether.  After all, taking two steps forward and one step back will still get you to your dreams.

Tip & Quotes of the Week October 2-15

The Importance of Wills

A will is probably one of the most important pieces of paper you will own in your lifetime. Without it you leave your affairs in the turmoil of the state. They decide who will receive your belongings, and assets. Of course that might not seem so bad to you but remember, they also decide who will rear your minor children.

Homework:

If you don't have a valid or updated will, GET ONE TODAY! It's a simple process. I don't care whether you pay an attorney to create one or do it yourself with software or online. The point is that you get one done. Make those vital decisions for your loved ones, so there is no question what you want done. Please, be responsible and do it!

"No one can confidently say that he will still be living tomorrow."Euripides

"Live as if you were to die tomorrow. Learn as if you were to live forever." Mahatma Gandhi

"As a well spent day brings happy sleep, so a life well spent brings happy death." Leonardo da Vinci

"Will" You or Won't You?

They say there is nothing more inevitable than death and taxes.  While I am not going to talk about taxes, I am talking about death.  I don't mean to be insensitive but whether it's tomorrow or in 50 years we will all die someday.  I want to talk about the importance of having a valid will because the fact of the matter is 7 out of 10 Americans die without a will.  I can't understand why so many would not do something so vital for something this inevitable.  So here are a few myths or fears when it comes to estate planning.  First, "having a will means I am going to die."  NO, it only means that you are prepared for when you do.  Second, "things will work out fine for my loved ones whether or not I have a will."  Oh things might eventually work themselves out, but the courts take a long time and are much more costly.  Not to mention all this puts a lot of undue stress on those you leave behind.


Who needs a will?  Any adult who has anything.  There are very few adults who would be okay without a will- single, no minor children, and no assets (car, house, other valuables).  So if you are married, have children, or own anything of value, you NEED at least a basic will.  A will is a state specific document that provides the court with your wants and wishes for your estate.  This includes guardianship for any minor children.  Because probate is controlled on the state level, if you move to another state you will need a new one.  If you are married, both you and your spouse each need a will.  Most of the time these are mirror image or complimentary wills.  Things get a little more complicated if you have a blended family, so in these cases wills are that much more important.  It's also a good idea to update your will every 2-5 years.  


You may be thinking that it takes a lot of time or money to put one together.  Please do not let this be a hindrance in getting one.  If you're comfortable with online software you can get one for as little as $15.  If not, you can pay a reasonably priced attorney to do one for a few hundred dollars.  The more complicated the estate, the more I recommend having an attorney do it.  


I must say that I was going to talk about something completely different today.  I changed my mind because of a TV show that watched.  The back story was that the parents of these two kids were killed in an accident and the children having no other family were put into the foster care system.  This got me thinking because obviously these fictional parents did not have wills.  If they did their children would have gone to the guardian outlined therein.  I know this is just a silly fictional show, but sadly this kind of thing happens all the time in real life because people don't take the time to do even a simple will.  This, in my opinion, is the most important reason why you need a will, to declare guardianship for your minor children.  Their future is at stake and who wants to let the courts decide who will care for your children?  So please!  Be responsible to those you love, GET A WILL!  Don't wait another day!

Tip & Quotes of the Week September 17-October 1

Family Relationships

When it comes to money, family relationships can be in serious jeopardy. That is why I never recommend borrowing or loaning money to family for the fundamental reason that it changes the relationship. Despite what you might think, you are no longer just parent/child, siblings, cousins; you are master and servant.

Homework:

Stop borrowing from or loaning to family. Make it a priority to pay off your family debt as soon as you can. You or your family might not think it's a big deal, but your spouse might feel differently. Life is too short to let money come between your family relationships.

"Borrowing is not much better than begging, just as lending with interest is not much better than stealing." Doris Lessing

"People cannot live by lending money to one another." John Ruskin

"The rich ruleth over the poor and the borrower is servant to the lender." Proverbs 22:7

Family Relationships & Money

This may be a touchy subject for some of you because you are in the middle of such a situation.  You know what I'm talking about, you and your spouse were struggling financially so your parents or grandparents step in to "help".  This may have started as something innocent, but trust me, it changes the boundaries and feel of your relationship.  Thanksgiving dinner tastes a whole lot different when you are sitting across from your debtor or creditor.  


If you are on the borrowing end, you may feel the need to justify every purchase.  If you are on the lending end, you probably are hyper sensitive to that vacation your relative went on.  I've seen it time and again.  Money does crazy things to both people and relationships.  That is why my advice on this subject is clear.  Don't borrow money from or lend money to family, or friends for that matter.  This crosses a boundary that most likely destroys the relationship in the end.  If you have the resources, make a gift of the money, without expectations on either part of repayment.  Those unmet expectations are what sours the best of relationships.  Don't, on the other hand, give money you can't afford to miss.  Steer clear of these situations, because in the long run it doesn't help you or the other person involved.


So what do you do if you are in the middle of it?  It's too late to go back and undo what's been done.  I want you to reflect on this situation.  Honestly ask yourself if this loan is affecting your relationship?  Does it change the way you feel about the person?  If it doesn't bother you, does it bother your spouse or your other siblings?  If you are on the borrowing end you most likely you don't have the money to just repay what is owed and you may even be behind in what is owed.  If this is the case, your lender is probably angry and bitter about not being paid.  Make things right.  Set up a payment plan and don't rest until it's paid.  Of all your debts this one should take priority because no amount of money is worth sacrificing your relationship.  Trust me, it is affecting your relationship.  It may be subtle but it's still the elephant in the closet that no one wants to talk about.   If you are on the lending end, and especially if you are not receiving payments anymore, you may need to completely and emotionally write this debt off as a bad mistake.  As hard as this is to do, the damage is already done and it's best if you move on and learn from this mistake.  Doing this may even be a gift to your relationship.  Above all, remember that any debt is a form of bondage and it only complicates things when your task master is a family member.

Tip & Quotes of the Week September 10-17

Budget Gotchas

With school back in session now you've probably been thrown some curve balls when it comes to your budget. There are temporary measures to be taken immediately, but plan ahead for next time so an unplanned expense doesn't throw you off course.

Homework:

Non-monthly expenses are probably the most elusive part about budgeting properly. Physically moving the money into a slush savings account or into an envelope help immensely. Put these few simple things into practice so that next time you aren't left in a pinch.

"He who fails to plan, plans to fail." Proverb

"Planning brings the future in the present so that you can do something about it now." Alan Lakein

"It pays to plan ahead, it wasn't raining when Noah built the ark." Unknown

Tip & Quotes of the Week September 3-10

Becoming Financially Exceptional

Remember that 7 out of 10 of you are living paycheck to paycheck. This statistic knows no bounds. Whether you make 50K or 500K, if you don't learn how to manage your money you will be facing financial mediocrity. This is the average- the norm. Why would you want to stay average?

Homework:

If you are stuck in a financial rut, or feel like you are spinning your wheels, then it's time to try something new. Read through my blog archives. Learn more and most importantly DO something different. I would also be happy to coach you through the process.

"The ignorant man marvels at the exceptional; the wise man marvels at the common" George D Boardman

"To create something exceptional, your mindset must be relentlessly focused on the smallest detail." Giorgio Armani

"You can always become better." Tiger Woods

Unplanned Expenses

It's that time of year again- back to school!  It seems like every week the kids are bringing home unexpected or forgotten fees related to school.  If while planning out your budget for the month you forgot to include room for things like this, you may be tempted to throw your budget out the window and give up.  Resist this urge to give up, because until you are practiced enough to remember all those little budget gotchas, you'll have to reshuffle things a bit.  If you don't have the money in an assigned category you'll have to borrow money from a few different categories to make up the difference.  This is of course an emergency stop gap, not a way of life.     


I have suggested in the past, especially when you are new to trying your hand at budgeting, to make sure you include a miscellaneous category in your budget.  The point of this category is to catch any small unplanned things that come up during the month- gifts, activities, fees.  This is usually $15-$50/month depending on your needs and your income.  Any amount more than this, in my opinion needs to be given to a specific category.  Whether you keep this money in cash building up in an envelope or put it into your non-monthly expense savings account, make sure you assign it somewhere so it doesn't get lost with your other money.  As you get your budget more fine tuned the need for this category will diminish because you will assign the money to more specific categories.  


You might be asking, "well, this is all good and fine, but what do I do if I have an expense come up that is more than my miscellaneous budget?"  Sometimes this happens and at that point you need to assess the situation.  If it's a considerable amount of money, like an unexpected car repair or something like that, then it may be necessary to tap into your emergency fund if you can't cash-flow the expense until payday.  If it's not a true emergency then borrow from other categories like I've already mentioned and put into practice a method to avoid that next time.  A good idea if you have school-aged children is to start a school category in your budget.  This would include school lunches, fees, field trips and anything else related to school.  Any unused money would roll over to the next month.  I know these are really simple steps to take but they make a huge difference in the long run and will save you that last minute headache of scrambling for the money.

Recipe For Becoming Financially Exceptional

Today I am addressing those of you who feel you live comfortably.  You make a pretty decent average or above average income (the average income in the US is ~49K/year).  You are probably fairly typical by having a car payment, and a student loan from your college days.  You probably use your credit cards faithfully for the bonus skymiles or reward points, but may or may not pay the balance off at the end of the month.  Also, you may have never had the need to learn how to budget because of your income or simply don't bother to because it's too menial or you don't think you have time.  I run into you a lot and hear, "Oh we think it's great what you do, but we aren't struggling, so we don't need your help."  Granted you may not come out and say it like that but that's the basic drift of how the conversation goes.  If I am describing you please stop and take a listen to what you inner voice is telling you.  


Answer these questions honestly:
Are you tired of feeling like you have nothing to show for the money you make?  
Do you dread paying the bills because there is little or nothing left afterwards?  
Does thinking about retirement or the kids college make you sick or keep you up at night because you know you aren't saving enough?
Do you disagree with your spouse about how the money should be given, saved or spent?


If you answered yes to any of these questions, this is your wake up call!  You are the perfect candidate for what I do and teach regardless of how much you make or how well off you think you are.  Well perfect that is, if you have the desire for change and achieving a better life and future.  You are my favorite kind of client.  I can take you from average to exceptional by making some small changes in how you manage your money because you have a good income.  So what are you waiting for?  Why settle for mediocrity when you can be truly exceptional?

Tip & Quotes of the Week August 27-September 3

Health Insurance

Health insurance is vital to have no matter what. The number one reason of bankruptcy is medical debt. Not having even basic health insurance for a short amount of time is seriously flirting with disaster. An accident or a serious illness is all that stands between you and a major crisis.

Homework:

If you don't have health insurance or think you can't afford it, think again. It's one of those things you can't afford NOT to have. Do it!

"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

Why Health Insurance is Vital

I know this is a very hot political topic right now, but I'm not here to talk about reform or how expensive health insurance is.  I'm talking about this because this is a vital part of having a solid financial foundation.  As I mentioned in my tip of the week, medical debt is the number one reason why people declare personal bankruptcy.  This is totally a preventable reason if you are prepared with an emergency fund and of course have health insurance.  Now I know some of you are thinking, I can't afford health insurance or I don't qualify for it.  These are probably the top 2 reasons why people don't have it to begin with.


First up, "I can't afford it".  Frankly, this is one thing that you can't afford not to have.  There is a certain number of you who may have coverage offered at work but you don't make enough to afford it.  I'm talking about the family who is below the poverty level.  If this is the case, you probably qualify for Medicaid.  I am not endorsing using Medicaid permanently as a means of life, merely as a stepping stone until you can improve your education, get a better paying job or find other ways to increase your income.  Another common problem is if you lose your job or are self-employed.  Paying for COBRA insurance through your previous employer is probably not feasible since you don't have an income.  These plans are usually out of reach for most.  You're better off to buy a private insurance plan. Find an agent who can shop around different types of policies for you.  There are many options to choose from.  Higher deductible plans might not be ideal for you permanently but they can be customized with office visit coverage and are much cheaper than other more traditional plans.  Use this where possible when you are between jobs or between college and a career.  This is where HSAs are very convenient to have, like I talked about last week.  I'd rather have you be looking at $5,000 or $10,000 worth of medical expenses with a high deductible plan than tens or hundreds of thousands because you didn't have any coverage.


The other main reason why people don't have insurance is because they have really expensive coverage at work, but don't qualify for a private policy.  Many chronic medical conditions as well as most mental health conditions are deemed uncoverable by individual plans.  I know this because my husband has been denied individual health coverage.  For these reasons, most if not all states have a group pool health insurance plan that you can buy into.  The rates are more expensive, but it is a great alternative for those who otherwise would not be covered.


I decided to write about health insurance this week because of a story I saw on the news recently.  A young married woman was standing on the side walk waiting for the bus to start her final semester of college.  An impaired driver jumped the curb and plowed into where she was standing, completely destroying her knee.  She was a dance major and loved teaching ballet.  If this weren't bad enough, sadly, her husband just graduated from college a few weeks ago and they were no longer covered by health insurance.  This poor couple will be impacted for years to come, not only physically and emotionally, but financially.  Things like this happen everyday.  Please take the necessary steps to prevent and prepare for such things.  It's really that important.

Tip & Quotes of the Week August 20-27

Emergency Fund

I've said it before and I know I'll say it again. Everyone, no matter how old or young you are, no matter how much you make; needs an emergency fund. You'd be surprised at how many don't have even just $1000 in reserves. But sadly considering 7 out of 10 of you are living paycheck to paycheck, I guess it's not too surprising.

Homework:

If you do have an emergency fund, that's great! However, if you don't, make it a priority to get one ASAP. Life is a dangerous ride and if you don't have a cushion you are bound to get hurt. Take action today!

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

"Anything that we can do to raise personal savings is very much in the interest of this country." Alan Greenspan

"An emergency fund turns a crisis into an inconvenience." Dave Ramsey

The Importance of Emergency Savings

I know you have all been patiently waiting for me to get back on top of things and blog again.  I just was busy last week and didn't get around to it.  Anyway, last month we had quite the experience that illustrates a few major points in personal finance.  First, you must live below your means.  If your expenses meet or even exceed your income, you are building a house of straw.  When the first big wolf (aka life) comes along, he'll blow you down.  Second, this experience shows the importance of having and maintaining an emergency savings.  Remember it's not if, it's a matter of when one will happen. 

It all started last month with the great HSA debacle.  I haven't talked about HSAs.  In case you don't know, it stands for Health Savings Account.  I will talk about the benefits of these in the future, but basically they allow you to save for and pay for medical expenses with pre-tax dollars.  We have one through my husband's work.  Without realizing it, we over-funded it for the year and so when his HR manager went to add our contribution, it wouldn't let her do it because of the tax implications.  We are talking about a few hundred dollars.  The paycheck had already been cut so she couldn't just add it back in.  We had to wait until the next pay period to get the missing money.  Normally this would have been nothing more than an annoyance, but that pay period we needed to order my husband's medication.  He has a chronic condition and the medication is very expensive, almost $800 for a three month supply, until we meet our deductible.  Without that money in the HSA there wasn't enough to cover the full cost.  We ended up pulling money out of our savings account to cover the cost and waited to get a partial reimbursement from the HSA and get the rest of the money in the next paycheck.


When this happened, the first thing I thought of was, what would we have done if we didn't have that money set aside?  This would have been a true crisis!  I mean, he couldn't just not have his medication for a few weeks.  I guess this would have been a situation where someone without savings would have put it on a credit card and added to their debt load.  


To finish the story, a few weeks later we got an extra big paycheck and were able to put the money back into savings.  However, last pay period things went wonky again when an error was made because the automatic HSA contribution wasn't changed.  Yet again, we found ourselves shorted a few hundred dollars.  This time we only had to wait a week to get the extra money, but it was still annoying.  Again I thought, what if we weren't in a position to handle this shortage?  So please take a lesson from my story.  Ask yourself what you would do in this situation?  If being shorted a few hundred dollars temporarily completely rocks your world, please make some changes today.  If you don't know where to begin, I'd be happy to help.  This is what I live for!

Tip & Quotes of the Week August 6-20

Fear

Living in fear is one of the worst ways to live. Not only does it affect your mental health, but the worry eats up your physical health. It robs your life of joy. The stress and worry over finances can only be relieved if you are willing to face those fears. Like ripping off a band-aid, yes it's painful, but in the end it's better than letting the wound fester.

Homework:

Don't let fear overtake your life, get the help you need today. I promise the pain of change is nothing compared to pain of fear in your life. If you or someone you know are experiencing this, I'm here to help!

(These are some of my favorites)

"Change is very hard and we change only when the pain of [staying the] same is greater than the pain of change." Dave Ramsey, More Than Enough

"Whether you think you can, or you think you can't, you're absolutely right." Henry Ford

"Insanity: doing the same thing over and over again and expecting different results." Albert Einstein

Keep going!

Hey there! I just wanted to drop a quick word of encouragement to you in the trenches.  I know this is tough stuff you are dealing with.  I've dealt with it and am still dealing with it.  Life will always be there trying to derail your efforts.  The thing you have to remember is that small things make big things happen.  The little daily things you do with your money make a huge difference over the course of a month or year.  Adding all those little things together over time, you will see a difference.  So keep your chin up and keep going! You will only get where you are going if you keep at it!

The Emotions of Money

Why is money so hard to manage?  I mean we're talking about sixth grade math.  I have come to the realization that it's hard because it's not just about the numbers.  It's all the emotions swirling around earning and spending money that make it so difficult to deal with.  This is the ugly side of money.  Today I want to talk specifically about fear.  This is the #1 emotion that I run into as a financial counselor.  Getting people to face their fear and denial is the most challenging and frustrating part of my job because I can't help them if they are paralyzed with it and in denial about their situation.


One of my financial counselor associates hit the nail on the head when he mentioned to me that every one needs a dentist, yet everyone doesn't go to the dentist.   Even when you're in pain, the fear of going to the dentist will keep some people from going anyway.  He likened what we do to being like a dentist, only for your wallet.  Some may need a check-up and others may need a root canal.  As a side note,  I hope Aaron doesn't mind that I borrowed his idea, because I thought it was brilliant.  If you are in the Kansas City area, please check him out, True North Financial Fitness Coaching.  Fear of what may or may not be needed, keeps some from trying in the first place.  Fear of actually facing the elephant in the room and fear of the ability to change things are completely normal when it comes to financial problems.  I firmly believe that if you've got the will, I've got the way for you to get help.  It's only too late if you think it is, because restoring hope is what I specialize in.
  
My point is that there are many emotions surrounding money.  From an early age our interactions with money will affect how we will use it as adults.  Think about some of your first memories of money.  Chances are, these are the roots of why you handle money the way you do. Fear is a huge stumbling block for a lot of people.  Please don't let it stop you from achieving your goals, especially the financial ones.   

Tip & Quotes of the Week July 30-August 6

To the Newlyweds

Those of you who are engaged or newlyweds are probably seeing your future through rose colored glasses. Not that this is all bad because it's good to be optimistic. But I want you to realize that marriage is much more than an event, it is a process. It is hard work to keep a marriage on the right track because life will try its best to derail even the strongest of marriages.

Homework:

With your spouse or fiancée, read through my 6 tips to a successful marriage. These concepts apply whether you've been married a day or a lifetime.
"Chains do not hold a marriage together. It is threads, hundreds of tiny threads which sew people together through the years."Simone Signoret

"Success in marriage does not come merely through finding the right mate, but through being the right mate." Barnett R Brickner

"A long marriage is two people trying to dance a duet and two solos at the same time." Anne Taylor Fleming