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