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