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 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

A Tax Withholdings Case Study

Last month I had the opportunity to counsel one of my good friends and her husband with their finances.  Upon getting their numbers, one of the first thing I noticed was the very large gap in what I remember her telling me their approximate gross income was and what their take home pay actually ended up being.  Upon further investigation, we discovered that they had been over withholding their taxes by having way too few exemptions.  The result was that for the last several years they have been receiving an average $6-8K tax refund.  I had them adjust the number of exemptions they were claiming on their W-4 and we found an extra $400+ per month to bring home.  That's an extra $4800/year that they really need and that's not being loaned to the government interest free.  I can't tell you the relief that washed over them when they realized they weren't as bad off as they thought.  They were also appalled that they hadn't caught the discrepancy sooner.  They were caught in a vicious cycle of running up debt throughout the year only to try to knock some of it down when the tax refund came in.  Now they are thrilled to have one last big return and have a plan for that money to end the chaos.  Please take a lesson from this real-life example! Make the changes necessary today to take control of your financial destiny.

Tip of the Week February 18-25

Are you getting a tax refund?

The average tax return was a little over $3000 last year, according to CNN Money. This might seem like a really good thing to get money back from the government. I want you to think about this for a minute. One of two things are at play here, and sometimes both. You are either paying in too much money and thus receiving it back or you are receiving money that you didn't pay in the form of credits (earned income credit- EIC, child tax credit and such). Or like I said you are doing both and receiving a very large refund because you are not only paying too much but also receiving the credits.

The credits you really can't control since that's just how things are with the current tax system. You can however control how much you pay in. Here's a hint: if you are consistently qualifying for those credits, in particular the EIC, you should be paying very little if anything from your paycheck. This is because those credits offset any negligible amount you would need to pay. This would mean you make less than average household income ($49K/year) and have children. Add that to any other major deductions you may take- mortgage interest, charitable contributions, medical expenses, Roth IRA contributions. You could really get a bundle back...which isn't necessarily a good thing.

Homework:
So what do you do about this? If you are getting a refund I want you analyze why. Change your W-4 to reflect the proper amount of exemptions to claim. If you are unclear on this please see you tax consultant for the right number and/or talk with your HR director. This may be more or less than the number you come up with using the W-4 questionnaire. Also be sure to update it regularly when you have a change in income, number of dependents or life situation. Your goal should be to get the amount owed or refunded as close to zero as possible. After all who wants to loan the government money interest free for the year.

Quotations of the Month January

"Self-sabotage is when we say we want something and then go about making sure it does not happen." Alyce P. Cornyn-Selby


"A person's worst enemy can't wish on him what he can think up on his own." Yiddish Proverb


"I have never been contained except I made the prison." Mary Evans


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

Tip of the Week January 28-February 4

Friends and Family Sabotage

I wanted to end the month talking about another important means of sabotage- friends and family. While trying to accomplish your financial goals, having a good support system around you is very important. For those of you who are single, friends are like a second family. If your friends or family are ridiculing you for the changes you're trying to make, it's pretty difficult to continue. There will always be someone in your life that will try to pull you down. Whether it's a friend, co-worker, or family member, you will have to evaluate your relationship with them. Your true friends will always stand by you and support you through thick and thin.

Homework:
When you're trying to lose weight, the last thing you need is a friend asking you to go eat ice cream. It's the same thing with your finances. Friends wanting you to go shopping, or go out to eat every day can really hurt. If after you have explained to them what you are trying to do, they scoff and continue to pester you or make fun of you for not going with them, then it may be time to evaluate the relationship. If your friendship is defined by spending money that you don't have, find a way to redefine it or separate from that person. Family members can be more difficult to deal with. You may have family traditions of going on a big vacation every year, or spending big on holidays and birthdays. Most of the time the majority of family members will understand, but there might be a few who are offended that you are choosing not to spend money you can't afford. In these cases, developing thick skin may be a necessity.

Tip of the Week January 21-28

Spousal Financial Sabotage
If there's one thing that is harder to deal with than self-sabotage, it's when your spouse sabotages your finances. Whether this is intentional or not it's a BIG problem. I see in it many of my friends, family & clients. So what can you do about it if you feel that you and your spouse are trying to row your financial oars in different directions? First you both have to realize that it's happening and how emotionally exhausting it is. Remember, financial problems are only the topic that you fight about, or the symptom to the real problem(s). Where there are money problems in a marriage there will always be a breakdown in communication, mis-trust, or lack of organization. Many times it's a combination of all three. It takes an enormous amount of effort to be on the same page financially, but the dividends pay back many fold every time. Like I told the couple I coached last night, if you can come together on your finances, you can do anything!


Homework:

For some of you, change will be instigated simply by having a heart to heart talk. Regardless of what your circumstances are, start with this. Put the kids to bed and really talk with your spouse. You'd be surprised how much this really helps. Your spouse may be totally unaware of how serious the situation is. This is a non-confrontational approach, so stop if it escalates. More of you will need a third party to intercede and help you through the issues. This should start with your local clergy or a good marriage counselor. If your spouse doesn't want to attend, go by yourself to get the support you need to deal with the situation. This is very serious stuff I'm talking about. These are the seeds that lead to divorce. If left alone and untreated, they will grow as a wedge and fester your marriage. There will come a point when one or the other of you will reach a breaking point, snap, and the marriage like Humpty-Dumpty won't be put back together again.

Tip of the Week January 14-21

Financial Self-Sabotage
Are you guilty of sabotaging yourself financially? If you answered no, then you are probably lying to yourself. We all have done it at times, I know I have. So how do you avoid the pit falls of self sabotage? Whether you are talking about becoming financially fit or physically fit, the solution is one in the same- permanently changing the behaviors that led to the anorexic savings and bloated debt loads. That's right, this is the reason why so few actually get the long term results that they want. Think about it, our brains are hard-wired to seek pleasure and shy away from pain. Delaying a purchase or telling yourself 'no, not right now' is painful, especially at first. Think of this as an exercise building strength and memory, only for your wallet.

Homework:
I want you to sit down with a sheet of paper and think of every reason that you use to sabotage your finances (you may even need two sheets of paper). What's your negative self-talk when it comes to the way you handle your money. This could be anything, 'I spend too much', 'I'm too busy to think about it', 'I don't make enough', 'I make more than enough so it doesn't matter', 'I'm in too deep', 'It's only this one time', 'I'm having a bad day'. The list could go on and on. Think on it long and hard. The point I want to reach is that these are ALL simply excuses. They are the symptoms, the surface. Next, I want you to go back through your list and answer, 'why?' to every excuse you came up with. Why you think X makes it okay in your mind to do Y. I guarantee that if you do this and really search for 'the why', you will get down to the deep rooted issues of what led you to where you are today. Until you know the real reasons you will never see any lasting results.

Tip of the Week January 7-14

Back to Basics!

This time of year is filled with lofty goal setting and getting out of debt usually tops the list. Of course this rarely just happens. And so I want you to think of this from a different approach. It's the simple little things that make up the fabric life is made of. The small choices we make everyday that determine the course your life takes. In the world of finance I think it's best known as 'the latte effect'. A few dollars here and there that make a big difference over the long haul. Making small and simple changes now, on a daily basis does the same thing. So let's get back to the basics and focus on those small things that really do make a difference in your financial lives.

Homework:
Choose one area of your finances or budget that could use some extra attention. What is the category that is always out of control or throwing you off? What is your weak spot or chink that if left unchecked will unbalance the whole thing? We've all got one! You probably know exactly what I'm talking about, so it's time to fess up. Regarding this one habit or issue, identify what you can do to change it. This might be something drastic or simple tweaking. The point is that you do something to address the situation. We all know the power of denial. So stop and take stock of what you need. Be realistic and specific and if you slip up, don't quit!

Quotes of the Month Dec 10-Jan 14

"There are no short cuts to anywhere worth going." Beverly Sills


"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


"You will find peace not by trying to escape your problems, but by confronting them courageously.  You will find peace not in denial, but in victory." J. Donald Walters

New Format for a New Year

I have decided to change things up a bit on my blogging format.  Instead of having a longish post about my tip of the week, I'm only going to have the tip (off to the right) in a more expanded form.  Also, instead of changing the quotations every week with the tip I'm going to leave them up for a whole month.   As a result the tips will have the same theme for the month to go along with the quotations.  I feel the need to streamline the process and not be bogged down with a long detailed post every week.  


Again, PLEASE leave your feedback if you want a specific topic covered or if you have a problem you need help with.  My goal is to give you the information and the encouragement you need to keep going no matter what your personal circumstances.  I want you to read my blog and feel refreshed, inspired and hopeful again.  If I have learned anything about personal finance it's exactly that- personal.  Let's face it, this is hard stuff we are talking about.  It's nice to read about in theory but when you start to apply things to your own life, you'll understand what I'm talking about when I say- IT'S REALLY HARD!  But almost in the same breath, I'll always tell you that the 'hard' is worth it in the end.  Happy New Year!  May 2011 be all that you want it to be!

Tip of the Month December 10-January 7

Be your own Catalyst for Change

Only when and if you have decided that you have had it up to your eyeballs with the way things are, will anything begin to change. Coming to the realization that you are sick and tired of it is perhaps the crossroads that you need. Don't shrink away from this. Be courageous in facing things head on. Having financial freedom and peace is priceless and worth the sacrifice to have!

Homework:
Work together with your spouse toward the new direction you want your lives to take. Learn the tools necessary to start and more importantly continue on the journey. Keep going when things get rough, because the results really are worth it.

Happy New Year!!!

A new year has begun!  Sorry for such the long break between posts.  Don't worry I have not fallen off the blogging wagon completely.  I just had a busy holiday season with my family and then have been sick over New Year's.  Please check back later this week for more about what I love best!