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