Finances By Rachel~Financial Counseling

Confessions of a Financial Coach

2012-01-18T10:04:00.011-07:00

The Tortoise and The Hare:

It's not that fun to be and feel like you're the only tortoise in a world of hares. After all Tortoises are kind of ugly. They are big, bulky and all hard and wrinkled. Hares on the other hand, are fun, popular, fast, and sleek. Sexy even, compared to the tortoise. But if you think about it, tortoises are superior in many ways. While they are worn and weathered, they have everything they need to get through the storms of life. They carry their home after all, and they have endurance for the long journey. Hares are fast in bursts, but have ADD when it comes to staying focused on the task at hand. They are also ill prepared for drought and famine.

Sometimes I feel like the slowest tortoise in the world, like I'm never going to reach my financial goals. This isn't helped by feeling like I'm surrounded by hares, jetting past and dancing around me with all their excitement and great new things. Because of this, I do a lot of self-adjustment. I have to sit back and see the path I've traveled. It's been long and rocky. While I'm not to the top yet, I've come a very long way and life is good. If I had to, I would do it ALL again because it's been worth every hard step. While we only have one car for the time being and our house is a little on the small side for our growing family, I can't complain. My husband and I are debt free except for our house AND We have an emergency fund. That's more than about 80-90% of the population have going for them. So yes, I am a tortoise, but I'm proud to be one! Who wants to be a broke, stressed out hare? If you are trying hard to abandon your hare-like ways, keep trying! It's only too late if you stop trying. Just remember, every time I read the story, the tortoise ALWAYS wins.

Quotations of the Month November/ December

2012-01-18T09:53:00.003-07:00

"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." Viktor E. Frankl

"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

Thanks and Giving

2011-11-16T10:14:00.000-07:00

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

2011-11-16T10:03:00.000-07:00

"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

2011-10-18T13:30:00.001-06:00

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

2011-09-08T15:32:00.002-06:00

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

2011-09-02T09:39:00.003-06:00

"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

2011-08-26T10:08:00.001-06:00

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

2011-08-20T13:16:00.003-06:00

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

2011-08-12T09:29:00.000-06:00

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

2011-08-12T09:03:00.002-06:00

"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

2011-08-12T08:59:00.001-06:00

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

2011-06-24T09:11:00.004-06:00

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 (to the right) for June 24-July 1.

Maternity Leave

2011-03-30T11:06:00.001-06:00

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

2011-03-30T10:41:00.003-06:00

"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

2011-03-28T12:17:00.001-06:00

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

2011-03-18T12:31:00.001-06:00

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

2011-03-08T09:07:00.001-07:00

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

2011-03-08T09:06:00.000-07:00

"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

2011-02-25T12:52:00.001-07:00

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

2011-02-25T09:54:00.000-07:00

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

2011-02-07T08:32:00.000-07:00

"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

2011-02-07T08:27:00.001-07:00

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

2011-01-28T08:25:00.002-07:00

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

2011-01-21T09:27:00.001-07:00

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

2011-01-14T12:21:00.001-07:00

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

2011-01-14T12:06:00.003-07:00

"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

2011-01-07T13:53:00.002-07:00

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

2011-01-07T12:41:00.002-07:00

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!!!

2011-01-05T10:08:00.000-07:00

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!

Time for A Change?

2010-12-10T09:53:00.001-07:00

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

2010-12-10T08:15:00.000-07:00

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

2010-12-03T11:56:00.002-07:00

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

2010-12-03T08:12:00.001-07:00

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

2010-11-19T10:22:00.002-07:00

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

2010-11-19T08:38:00.000-07:00

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

2010-11-05T13:48:00.001-06:00

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

2010-11-05T08:22:00.000-06:00

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.

"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

2010-10-24T12:46:00.000-06:00

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

2010-10-22T17:05:00.000-06:00

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!

2010-10-15T09:45:00.002-06:00

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

2010-10-15T08:30:00.000-06:00

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?

2010-10-02T10:46:00.002-06:00

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

2010-10-01T08:16:00.001-06:00

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

2010-09-17T10:56:00.001-06:00

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

2010-09-17T08:14:00.000-06:00

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

2010-09-10T16:09:00.000-06:00

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

2010-09-10T15:56:00.009-06:00

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

2010-09-03T13:25:00.001-06:00

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

2010-09-03T12:34:00.000-06:00

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

2010-08-27T10:27:00.001-06:00

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

2010-08-27T09:09:00.001-06:00

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

2010-08-20T09:56:00.002-06:00

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

2010-08-20T07:43:00.035-06:00

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!

2010-08-16T10:49:00.001-06:00

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

2010-08-06T10:05:00.002-06:00

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

2010-08-06T08:11:00.007-06:00

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

Happy Marriages

2010-07-30T14:00:00.035-06:00

Yes, I have marriage on the brain. I attended the wedding of my oldest nephew yesterday. In honor of that special event I thought I would share some of what I teach to newlyweds while coaching them. I do not profess to be an expert on marriage, but I've found these simple keys to have helped in my own marriage. As a further disclaimer, I am a Christian and so I address the spiritual aspects of money and marriage. Whether or not you agree is up to you. I teach this because I know it works.

6 Keys to a Happy and Successful Marriage

1. Draw closer to God- by becoming individually closer to God, you will become closer to each other. Do this by making it a priority to:

Pray together daily

Read scriptures regularly

Attend church together

Pay a full tithe

I know these are really simple things to do, but they lay the spiritual foundation for the marriage. They are the glue that holds you together through good times and bad.

2. Learn to communicate- Take some time each day to talk about how your day went. This makes excellent pillow talk conversation and is a great reason to go to bed at the same time. It’s also a great way to end the day.

Women: your husband is not telepathic and never will be. If you want or need something, tell him. Men do not take subtle hints. Never assume he knows what you need from him. Also verify with him that he understands what you said.

Men: Actually listen to what your wife is saying. Don’t just tune her out and smile and nod. This is insulting.

If you can’t communicate about simple everyday things the bigger, harder issues will not bode well for your marriage.

3. Be Honest- Your life should be an open book to your spouse. Absolutely NO secrets! This breeds insecurity and distrust, which are the forerunners of divorce.

4. Learn each other’s love language- Knowing how we give and show love to one another is vital. If you don’t feel loved by your spouse, it can be hard to give love back. The 5 main languages are:

Physical Touch

Verbal (words of praise)

Service (acts of kindness)

Gifts

Quality Time

5. Work together on family finances-Disagreements about money are the #1 cause of divorce. Sadly, this is only the symptom of the underlying problem- a lack of communication. This should be a shared responsibility, not shouldered by one or the other. Even though one spouse will handle the mechanics of the process, each of you has a vote in where your money goes. Don’t use tantrums, or bullying tactics as a means to get your way. Be honest and mature about your situation. This requires good communication and work, but your marriage will be all the better for it.

6. Take time to court each other- It doesn’t have to cost money. Go for a walk together, write notes for each other’s lunches, watch a movie at home; as long as it preserves and develops your friendship.

I know these are simple concepts, but whether you've been married a day or 50 years they still ring true. Please take the time to nurture your marriage daily. I guess it's the optimist in me but I firmly believe a marriage can survive anything, so long as there are two willing parties to weather the storms.

Tip & Quotes of the Week July 23-30

2010-07-30T08:44:00.000-06:00

Mortgage Scams

We all know if something sounds to good to be true, it probably is. Scams of any type often have this as an underlying foundation. They prey on greed, fear, and ignorance. Mortgage scams have become the pinnacle of scams lately. So take care not to fall for them, they are everywhere and in many forms.

Homework:

If you are struggling to make your house payment, you are not alone. No matter what the cause of your present condition or no matter how hard things are, contact your lender first. Be leery of companies or software who make outlandish promises to be able to save your home from foreclosure. Most of all NEVER pay fees up front for future promises.

"The more gross the fraud, the more glibly will it go down, and the more greedily be swallowed, since folly will always find faith where impostors will find imprudence." Charles Caleb Cotton

"Rather fail with honor than succeed by fraud." Sophocles

Fraud is the ready minister of injustice." Edmund Burke

The Skinny on Mortgage Scams

2010-07-23T11:12:00.006-06:00

Fraud has been around forever and of course takes many forms. Mortgage fraud is consistently ranked in the the top 5 of financial scams. During the boom years, mortgage fraud consisted mainly of overinflated appraisals with investors or greedy mortgage brokers and banks selling high priced loans to ignorant and unqualified people. Now that those avenues have largely dried up, mortgage scams have taken a new look- the loan modification. The millions of Americans who have been affected by the recent economic climate are easy prey for these companies. Having been in the mortgage business for a short time during the boom years as both a loan processor and real estate attorney's assistant; I became a little familiar with the complexity of mortgages. Once going through the many steps of getting a mortgage written, it is even more difficult to change or void once it has been signed for.

Lenders have been swamped with requests by borrowers to perform loan modifications. Because of this, it is very difficult and time consuming to get one through. There are very strict guidelines for those to qualify for a modification. If you are in this situation I want you to first: take stock. Can you even afford the payments after they have been changed? Sometimes it's just best to try to sell the home rather than try to keep something that you can't afford, even if this means a short sale. If after deciding to go through with a modification, call your lender to see what the requirements are and get the proper paperwork started. I have heard to keep your answers brief and direct. Do not embellish and give unnecessary information. The person at the mortgage company has a stack a foot tall and doesn't care about the details of why you got into this situation.

If you decide to hire a company on your behalf to deal with the mortgage company, here are a few guidelines. There are very few legitimate companies who actually know how to walk through this process. As I said in my tip of the week, DO NOT give money up front for promises of the future. Also do not fall for ads on late night cable selling 'magic software' to 'fix' your mortgage problems, these are bogus. Do your research! Check with the better business bureau and Google the company with the word 'scam' to see if there are any complaints leveled against the company you are considering. If there are disgruntled customers out there, find them. Don't give out your personal info over the phone or online, especially if they called or emailed you. These are called phishing scams and are also among the top scams in the country. Last but not least, prioritize! If you are struggling with your house payment, remember the four walls. This means that you pay your mortgage, utilities, food, & transportation first before you pay anything else. I realize this may mean that someone doesn't get paid; but I'd rather have you current on your house and behind on MasterCard than the other way around. This will buy you some time to get your income up, do a short sale, and sell other things. These are stressful situations to deal with, but keep your chin up and don't fall victim to these scams out of fear of losing your house. When it really comes down to it a house is just a place. There are other places you can live and still create a home.

Tip & Quotes of the Week July 16-23

2010-07-23T08:07:00.002-06:00

Finances while Grieving

When you are in the midst of grieving the loss of a loved one, you may feel pressured to make major decisions. While you will have to make some decisions, when it comes to your finances, don't make any major ones. This especially includes what to do with life insurance payouts.

Homework:
For at least 6 months, if not a year, just cry and focus on yourself. Work on establishing a new normalcy in your changed life. This is your time and shouldn't be intruded upon by making major decisions about money.

"Death leaves a heartache no one can heal, love leaves a memory no one can steal." From a headstone in Ireland

"While grief is still fresh, every attempt to divert only irritates. You must wait till it be digested, and then amusement will dissipate the remains of it." Samuel Johnson

"Give sorrow words; the grief that does not speak whispers the o'er- fraught heart and bids it break." William Shakespeare

Grieving and Finances

2010-07-16T14:01:00.000-06:00

This, perhaps, is the most sensitive of subjects I've written about. It comes on the heels of returning from the funeral of the infant son of some dear friends of ours. Since I learned of their sudden loss earlier this week, I have been reflecting some on how losing a loved one affects our ability to make decisions about money. My advice on this subject is to abstain. Don't make any major decisions about money for at least 6 months, if not a year, after losing a loved one. This is especially true if you have lost your spouse. When grief is so raw and tangible you can touch it, your ability to make wise decisions is clouded. You are clearly not yourself and don't need to rush into decisions that you might regret later. This includes but is not limited to: shopping to fill the void, investing in anything, and buying and selling real estate. My one exception to this is to sell a home if you can no longer afford to live there.

When it comes to insurance payouts, park the money in a CD or other savings account for a time to just cry and work through your grief. Seek support groups and trained professionals to help you through the process, to begin to heal. When and only when you feel like you are returning to a sense of normalcy, then you can use the money to pay down any debts you may have, including your home. After that I would make sure you have a full emergency fund of 3-6 months of expenses. Then, if you have any money left you can move on to investing for your children's or grandchildren's college or for your own new future. Don't however (and this goes for all investments) invest in anything you don't fully understand or that sounds too good to be true. No matter what, give yourself time to grieve. This is your time so take it and don't feel guilty about it.

Tip & Quotes of the Week July 9-16

2010-07-16T09:09:00.001-06:00

Overcoming Discouragement

Discouragement is one of those chronic life conditions that comes with being human. We all get discouraged at times, especially when it comes to our finances. When (not if) you start to feel discouraged, please remember, you're not alone. Someone is in the same boat you are in or has been there before and chances are someone is also worse off than you are too.

Homework:

Keep going even when the going gets tough. Know when to seek professional help, either for your finances with me, or with your mental health professional for depression. A fresh set of eyes on your situation will help a lot. Taking one day at a time helps keeping things in perspective.

"Develop success from failures. Discouragement and failure are two of the surest stepping stones to success." Dale Carnegie

"Permanence, perseverance and persistence in spite of all obstacles, discouragement, and impossibilities: it is this, that in all things distinguishes the strong soul from the weak."Thomas Carlyle

"Discouragement is not the absence of adequacy but the absence of courage." Unknown

"Every great work, every great accomplishment, has been brought to manifestation through holding to the vision, and often just before the big achievement comes apparent failure and discouragement." Florence Scovel Shinn

Hope Vs Financial Discouragement

2010-07-09T11:26:00.001-06:00

Maybe it's because of the kind of week that I've had or maybe it's because I needed an infusion of hope and courage to fight past it. That's why I chose this as a tip of the week. Discouragement really is one of those things that comes with the territory of life experience. There will always be forms of it constantly nipping at our heels. Whether it's physical or mental challenges for us or our loved ones, relational or career disappointments or financial problems, discouragement takes many forms. So how do you keep it at bay in a world plagued with discouragement? Perspective is the key to giving you hope and courage. Because without the proper perspective it's very easy to become negative and discouraged about your situation.

I specifically want to talk about financial discouragement, since that's what I go up against when working with clients. I think that's why I chose to print "Inspiring Hope and Change in your Finances" on my business cards. There is nothing more satisfying for me than to see hope restored in a client's eyes when they realize that there situation is not really as bleak as they thought it was. Hope is a great tool for fighting discouragement. It gives you courage to fight another day, to try harder, and of course, to keep things in perspective. Discouragement often holds people back so much that they think, "what's the point, nothing will make a difference." So they just go on doing nothing about it. If you are discouraged financially, like I have been this week, don't give up hope. Don't lose sight of what you really are trying to accomplish. Remember the goals that you have set and know that with persistence and diligence you will achieve them. Sure you might have some setbacks, but everyone does. If, however, you still need that extra kick in the pants to jolt you into action, know I am always here for you. This is what I live for.

Tip & Quotes of the Week July 2-9

2010-07-09T10:26:00.003-06:00

Financial Independence

When you think of independence, you might think of being able to do whatever you want. Like when you first moved out on your own and thought you had arrived. Then of course reality hits when the bills come. I guess this goes along with last week's tip. Debt can not nor ever will give you financial independence. But this weekend as we celebrate our nation's independence, I want you to think about what real financial freedom would look like for you.

Homework:

Dream a little about what life would be like if you were completely debt free. For some of you this may seem too far away to think about or achieve. If that's the case, set goals and with persistence and focus you will eventually get there. If you need help making a map to that dream don't be afraid to ask. One of the most rewarding things about what I do is seeing hope return as we make a map together. My point is that if you don't have a plan to get where you want, how do you know how to get there?

"The true value of a human being is determined primarily by the measure of and sense in which he has attained liberation from self." Albert Einstein

"A big part of financial freedom is having your heart and mind free from worry about the what-ifs of life." Suze Orman

"Conformity is the jailer of freedom and the enemy of growth."John F. Kennedy

True Financial Independence

2010-07-02T10:12:00.004-06:00

This week as we celebrate the 234th anniversary of our nation's independence, I want you to take stock of your financial independence. I'm not talking about the false sense of independence that debt gives you. I'm talking about true independence or freedom that comes from not being a slave to your creditors. The fact of the matter is that 7 out of 10 households in this country live paycheck to paycheck. This is because we've chosen to have a mortgage that stretches us, a car payment or two, student loans, and to buy things on credit that we can't pay for, all in the name of financial independence. We try to show the world how independent we are by having all these things. When the reality is that we have made ourselves slaves one purchase and/or one loan at a time. As a result, we may also be slaves to a job that we don't really like because we need that paycheck to make our payments.

Today, I want you to think outside the box. If doing those things cause nothing but stress, worry and heartache, how is that freedom? Today, I want you to dream about what it would be like to truly be financially free. What would you be able to do or not have to do? Who would you help? I'm asking you to dream about where you want to be and what you want to be able to do 5 or 10 years from now. Now ask yourself if what you are doing today will lead you to or away from those dreams. Some of you cynics might be thinking, "well, I won't ever get there, so what's the point of trying." That attitude is exactly what is going to stop you from even trying, let alone, actually achieving your dreams. One of my favorite quotes is by Zig Ziglar, it's one of his mantras. "If you aim at nothing, you hit it every time." He also says that, "failure is an event, not a person."

I guess what I'm trying to say is that no matter where you stand financially today, what are you doing to achieve your dreams of tomorrow? Remember true financial independence comes from hard work and patience. Only you can decide if it's worth striving for. Celebrate your Independence Day by choosing to make changes that lead to financial independence!

Tip & Quotes of the Week June 25-July 2

2010-07-02T09:19:00.001-06:00

Debt is NOT a tool to build wealth

Contrary to what most financial people will tell you, debt really is NOT a tool to build wealth. The truth is, your greatest wealth building tool is your income. If all your money goes out the door to pay somebody else, it will be impossible for you to save and build wealth. The only thing debt does for its user is cause stress, frustration, and hopelessness. It's a tool alright, just not one to cause prosperity because it has the opposite effect-bondage.

Homework

Think about it, has using debt been a blessing to you? (If it had you probably wouldn't be struggling financially and therefore not reading this right now.) Remember broke is normal. So I'm challenging you to not accept the status quo. If you are tired of being a rat in a wheel, break the cycle. This requires you to think and more importantly, do differently.

"A man in debt is so far a slave." Ralph Waldo Emerson

"Debt, n. An ingenious substitute for the chain and whip of the slavedriver." Ambrose Bierce

"Debt is the fatal disease of republics, the first thing and the mightiest to undermine governments and corrupt the people."Wendell Phillips

Debt: The 'Not so Good', The Bad, and The Ugly

2010-06-25T15:20:00.003-06:00

Debt is a product that is bought and sold, NOT a tool to build wealth. I know some of you, especially those who have been classically trained in finance or similar fields, think I'm nuts by suggesting this. I'm sure your professors taught you that debt is like a double-edged sword, wielding power as a tool, or cutting you if used incorrectly. Or it's described as a lever to use in order to do things that we could otherwise not do, like buy a car, house, or go to school. I've heard it broken down by category: good versus bad debt. While all of these explanations and metaphors are nice they still don't change the fact that debt in any form represents risk. 100% of the homes foreclosed on have a mortgage (or two or three) on them. 100% of the cars repossessed have a car payment. The vast majoriy of the wages garnisheed are because of delinquent debts of some form or another. In case you're wondering, no I'm not trying to be a wise guy or make fun in any way, but let me remind you that debt never sleeps, it never goes on vacation, it never goes away until it is paid.

Debt has been very well marketed, popularized and accepted over the last half century. This is particularly true over the last thirty years. At first debt was a way to buy a house or possibly a car that we couldn't pay for all at once. Then came the student loan and the credit card industry. Now days you can't turn around without being hit with 'buy now, pay later' ads for everything. So let's talk about the different packaging debt is sold in. You'll notice that I didn't include 'good' in my description of debt. This is because of the reasons I stated above. I'm sure you all agree that some forms of debt are just flat out ugly. This includes payday loans and of course IRS tax debt. The interest rates of payday loans are notoriously high and breed a horrible dependent cycle that is very difficult to break. If you think that is ugly, try owing the government money. IRS debt is probably the worst kind of debt to be in. This is simply because without notice your checking account can be raided if you don't pay. While the government will work out payment plans if you go to them, they are unforgiving if they have to find you. This is the only kind of debt that you can literally be thrown in jail for not paying. If you are self-employed or a contract worker don't fool around with this and pay your taxes.

If that was 'the ugly', what do I consider 'the bad'? This would include all other consumer debt, credit cards, car loans, student loans. Again most of you would agree that credit card debt is bad. Some of you may be wondering why I lumped the ever popular car loans and student loans into the bad. Well, because of the mind set that is associated with them, that they are necessities of life. "You can't have a car without a payment." And "you can't go to college without student loans" are the mantras of the middle class. These two things hold you back from achieving real wealth on an average income. The average car payment in America is almost $500 per month. Simply by deciding to keep and invest that money, instead of paying it to the finance company over your working lifetime, you will amass some serious coin. Watch this for a more thorough explanation. It will totally blow your mind! Now as for student loans, I consider them bad for a few reasons. Like IRS debt they are not bankruptable. They are with you until either you pay them off or die. The other hidden dangers are that they are very easy for young college students to get and the delay in repayment while you're in school acts like a bubble that bursts with a vengeance six months after you graduate. I'm not going to go into all the details because that is a whole other topic by itself.

Last but not least, and the one area I will probably get the most flack for, the 'not so good' debt. This is of course the home mortgage. I know some of you are baching at the idea that mortgage debt is not good, after all the interest is tax deductible. While the idea doesn't make it entirely bad or ugly, doesn't make it good either. It is debt after all, and to be totally debt free is exactly that- FREEING. Again this is a big topic that I will cover in more detail another time. For now, I want you to stop and think for a moment. What would your life be like if you didn't have a mortgage payment? What would you use that money on? Dream a little bit. It's hard to imagine, but think of all the money you spend, give and save.

This process of getting out of debt isn't something that happens overnight. It takes hard work and dedication to achieve these things. I can tell you that having tasted the freedom of having nothing but a mortgage payment, it is worth the time and energy. I now look forward to the future to being completely free of the mortgage too. No matter where you are in life, you too can break the shackles of debt. I'm here to walk with you on your journey, one step at a time.

Tip & Quotes of the Week June18-25

2010-06-25T09:09:00.000-06:00

Life Insurance

Life insurance is probably the one thing that most everyone needs but many people think they can't afford or never bother to think about until it's too late. Basic human instinct is to procrastinate doing things. Insurance is easily one of those things that we say 'oh, we'll get around to it someday'. Well guess what someday might be too late. Be responsible to those you love and get it!

Homework:

Now if that wasn't blunt enough, try this. If you die today, would your family be prepared financially to handle the storm? These things happen every day to someone, we just never think it will be us. Please take action and make sure you have the right type of insurance and of course, enough of it.

"It is unwise to hope for the best without preparing for the worst." Anonymous

"Human beings have a 100% mortality rate- we're all going to die someday. If people depend on your income, it is your responsibility to make sure they'll be taken care of if something were to happen to you." Dave Ramsey

The Basics of Life Insurance

2010-06-18T12:09:00.001-06:00

Ahhh insurance... the thing we all love to hate. Since the topic of insurance is too massive to cover in one week, right now I'm only going to talk about life insurance. For some reason life insurance is one of those things that people love to procrastinate getting. This is especially true if you are in your twenties or even thirties. This is just irresponsible, to say the least. You might think, "but if I get life insurance, I'm going to die." Well guess what, we are all going to die someday. When (not if) you die, do you really want to leave your loved ones in a pinch? I shouldn't have to brow-beat you too much because I'm sure you all agree that this is something that the vast majority of people need. As a disclaimer, I am not an insurance expert and don't pretend to know all the nitty-gritty of writing policies. This advice is for educational and informational purposes only. Please see your trusted insurance provider for personal quotes and service. If you live in Utah and are in need of reliable, honest insurance help, I know some highly qualified agents who could help you.

Insurance, simply put, is transferring risk from you to the insurance company. Whether it's home, auto, life, health, disability, identity theft, liability, or long-term care; they all do the same basic thing- transfer risk. Because of this, insurance is not meant to be an investment vehicle- avoid these types at all costs. The fees are typically very high and the returns usually mediocre at best. So keep in mind, there are many types of life insurance, some good and some not so good.

Let's talk about the many types of life insurance available. It can be quite confusing if you don't know the terminology. There are two basic types of life insurance, temporary or term level and permanent or whole/universal level. Whole, universal or cash value policies are all pretty much in the same boat of permanent insurance (yes, they do have differences), but as a whole they are very expensive, and horrible investment products. The only people who think these are a great idea financially, are those who sell them. Typically the first few years of premiums that you pay go straight to the agent as commission making them highly profitable for agents, so beware. These policies are typically sold as a way to save and invest in your future, because over time they build cash value (after the first few years that is). Here's where the big problem comes in, when you die, the money that you 'saved' in your insurance policy goes away. The insurance company pays the face value of the policy and your built up cash value is null and void, yes, they keep it! It does not get passed on to your heirs. For these reasons steer clear of them. I've never heard any financial expert or guru independent from the insurance industry endorse this type of insurance. There are very few instances that I would even consider keeping or getting such a policy. My exceptions are if you can't qualify for any other type of life insurance because of a major health event in your past or if you are in a profession that is considered too high risk to be insurable. Again check with your trusted insurance agent for specifics about what you qualify for.

On the other hand, term insurance is the way to go. Here are some of the benefits. First, you can choose how many years you want or need coverage for, anywhere from 10-30 years. Second, the premiums are dirt cheap (especially compared to whole life policies). A 20-30 year policy with 8-10 times your income is usually adequate in replacing you, financially speaking. In general, whole life policies are so expensive that you can't afford to buy the full 8-10 times your income so not only do you end up with a crumby product, but you're under-insured at the same time. Lastly, I recommend getting coverage outside of your work. It's usually cheaper and if you leave or lose your job for any reason you still are covered.

That said, let's talk about who needs it and how much you need. If you are single with no one depending on your income (ie children, parents, siblings), you are in the small group of people who don't need to carry substantial amounts of life insurance. Chances are your work even pays for a minimal $10-50k policy for you. This would be enough to cover any medical and burial expenses you leave behind. If however you have children, a spouse, or anyone else who depends on your income to survive, YOU NEED LIFE INSURANCE. Your death would be hard enough to deal with emotionally for your loved ones, why would you leave them in dire financial straits as well? A word of warning, don't think that you stay-at-home moms or dads won't need life insurance simply because you don't bring a paycheck home. Think about all the costs of childcare, cooking, and cleaning. They cost a considerable amount to hire out. Even though I'm a stay-at-home mom, I still have a $250k policy that would help my husband with our children in the event of my death. Also, as a side note (and this should really be a no-brainer) don't buy life insurance for kids. It's not a good way to save for college. Just get a child rider for your term policy. This will cover any expenses in the event that heaven forbid something did happen.

One last thing just to drive the point and importance of life insurance home. I heard a story of a young man in his late 20's, who had been married for a few years. He and his wife were expecting their first child. Sadly, he was diagnosed with a brain tumor and passed away mere days before that child was born. In his final days, he was at peace because he knew his wife and baby would be taken care of, all because he had taken the time to get a term life insurance policy in place a few years earlier. Please, you never know when you will die, so be prepared for when it happens.

Tip & Quotes of the Week June 11-18

2010-06-18T08:40:00.000-06:00

The Irregular Income

Those who are self-employed or have irregular incomes due to commissions or seasonal work have a real challenge. You are most at risk for not having a plan (aka a budget) because you either don't know how to plan or you think it can't be done. Not having a plan in the short term can be detrimental to your long-term goals. For this reason it's more important for you to have a budget. It's not necessarily harder, it's just requires a different approach.

Homework:

No matter where you are in your budgeting ability, start today to make little changes. Remember, if you can't learn to live on a budget, building wealth will be very difficult if not impossible.

"Budget: a mathematical confirmation of your suspicions." AA Latimer

"The poor man's budget is full of schemes." Proverb

"For which of you, intending to build a tower, sitteth not down first, and counteth the cost, whether he have sufficient to finish it?" Luke 14:28

The Irregular Income Earner

2010-06-11T10:10:00.001-06:00

I have briefly mentioned this in a previous post a few months back (go here to read it) when I talked about budgeting in general. Today, as per request, I want to go into more detail about budgeting when you have an irregular income. As I've said earlier, it's actually more important for you to have a plan because your income can vary so widely. Whether you are paid on commission or seasonally this post is for you.

So here's what I suggest. Start by calculating the base income that you need to meet all you basic needs and minimum payments. Then go over your last year of earnings. What is the lowest amount you earned in a given month? If this amount is lower than the minimum you need, start here. I suggest having a savings account specifically for the 'hills and valleys' you see in any given year. This is separate from your emergency fund. Consider it a reserve account for those months you don't make enough. On months that you make more than enough, you would replace money that was taken out in a previous month.

You might be thinking, what do I do if I have several low months in a row and my account runs dry? In this case, you have two choices. You can find another source to boost your income or you can reduce your outgo. If you find yourself still with not enough, be sure to remember the four walls principle. Prioritize food, housing, utilities and transportation- the basics. You might face the reality that not everyone will get paid. Draw a line where the money runs out that month because that's all that you can do. Obviously, this is a temporary measure because you could never go on like this indefinitely. If things get that bad, you need to solve your income crisis. No amount of budgeting will make up for a lack of income. There's only so much you can sell or cut back on. You'll certainly need to make a plan for the short term, but long term you'll need to plan for what you want to do with your life. Does this involve further training or schooling of some sort? Make a plan and do it.

Now let's look at the times of plenty. The natural tendency is to get sloppy during these times. These are the times to build that reserve account and pay down debt aggressively. Don't fall into the 'we need it' or 'we deserve it' mentality. I'm reminded of the story of Joseph and The Pharaoh of Egypt in the Old Testament. Remember there were 7 years of plenty before there were 7 years of famine. Egypt was the only nation prepared and were able to share with their neighbors because of it. Preparation is key, especially if you have an irregular income. It can be a little more challenging, but it is doable. Neither good times nor hard times last forever. Chances are you will experience both many times throughout your life.

Tip & Quotes of the Week June 4-11

2010-06-11T08:46:00.000-06:00

Spoiled Children

When I think of spoiled children I think of the kid screaming and throwing a fit in the grocery store. We've all been there and heaven knows my older daughter has done it. The old adage, 'spare the rod spoil the child' is often mis-interpreted. Spoiling your children is not good in terms of worldly wealth. No, I'm not advocating using 'the rod' on children, that's down-right ridiculous. I take it to mean spoiling them with love, time and attention. Things that money won't buy. Giving a child everything they could possibly wish for, leads to adults who can't stand on their own and whose lifestyles are still subsidized by their parents. Stop the cycle today!

Homework:

By now you are probably sick of me talking about kids and money. I just can't help myself because there are huge problems facing the rising generation today. Developing character in your child is probably the hardest part about being a parent, especially if you weren't taught by your parents. If that is the case, teach your children the lessons you didn't learn.

"My father didn't tell me how to live; he lived and let me watch him do it." Clarence Budinton Kelland

"Some children are spoiled and it is not their fault, it is their parents." Roald Dahl

"Teach your children values and do not give them everything they want." Peter Buffett

A Parenting Lesson From Warren Buffett

2010-06-04T12:18:00.004-06:00

I know, I know you're probably thinking, "another week of children and money? enough already!" I couldn't help myself because I saw a very interesting and informative interview with Warren Buffett and his son Peter. It got me thinking, how do you successfully raise children, when you have money?

We all know Warren Buffett is one of the wealthiest people in the country and currently ranked 3rd in the world, worth an estimated $47 Billion. At the age of 79, he is The Oracle or Sage of Omaha. He is world renown for his savvy investment firm Berkshire Hathaway, his philanthropy and of course his frugality. While I'm not endorsing anything he has done or said, when it comes to children, he did a great job in my opinion. He raised 3 children (although he was only a millionaire at the time) to be successful adults in their professions. I heard him say that when it comes to children, you should give them enough money to do something, but not enough to do everything. That's just what he did with his children.

When his youngest son Peter was in college he was given 600 shares of stock in Berkshire Hathaway. At the time, in the 70's, this was worth about $90,000 and a proverbial drop in the bucket compared to the Buffett fortune. Peter, who wanted to be a musician, used this money to start his very successful music career. Oddly enough, if he hadn't done anything with the stock, it would be worth several million today, but Peter doesn't regret that fact at all. His father taught him how to work and follow his passion in life. Above all the Buffett children were taught the core values that money is just money and not everything. As a result, they have the character and independent identities to withstand the immense weight of their father's fortune.

Another great example of this was in the mid 90's Warren announced he was going to give away his fortune before he died. To jump start that, he gave each of his children a billion dollars (yes, with a B) to give away to whatever charity they wanted.

Now obviously we aren't Warren Buffet and it's not likely than anyone reading this will amass the kind of wealth that he has. The lesson, however, is the same, just on a smaller scale. Teach your kids to have the character to withstand the responsibility of their inheritance, whatever the size. If you don't they will crumble under pressure and it will be a curse instead of a blessing.

Tip & Quotes of the Week May 28-June 4

2010-06-04T10:40:00.000-06:00

Teach Them to Fish

In keeping with what I talked about last week, teach your teenagers about money. If you don't want them always coming back to you for money, teach them how to fish for themselves. This is a very important principle to learn before they leave home. Teach them how to work, earn and manage that money. Build those financial muscles at home!

Homework:

Even if you have young teenagers, they can still work and earn money by babysitting or cutting grass. This isn't to say that you will never give them money. I believe that you should give them the money that you would normally spend on them for clothes, gas and anything else that you feel generous to give. They then have to learn how to budget that money throughout the month. They will learn pretty quickly that money is finite and will have already practiced its management before they enter 'the real world'.

"If you want to recapture your youth, just cut off his allowance."Al Bernstein

"Little children, headache; big children, heartache." Italian Proverb

"When I was a boy of fourteen, my father was so ignorant I could hardly stand to have the old man around. But when I got to be twenty-one, I was astonished at how much he had learned in seven years." Mark Twain

The High School Graduate

2010-05-28T08:54:00.001-06:00

Well it's that time of year again- Graduation. Whether you, your children or even grandchildren have graduated from high school, the stats are very alarming. America is the most marketed to country in the world. Everyday we are bombarded by things we 'should' buy, consume and finance to pay for later, because we 'deserve it'. As a result, many of our young people fall into the idea that they have to have everything at once. These ideas just cause a real mess!

The average 18 year-old leaving for college is one of the most susceptible and vulnerable groups simply because they are young, inexperienced and have never had any training on personal finance, in school or from their parents. Thankfully, some states, seeing the need, have started to change their high school curriculum to include a semester of personal finance required for graduation. Utah is one of those states. A few years ago when the state was deciding what course to use, Zions Bank (a local bank) stepped up and paid to have Dave Ramsey's high school course put into every high school in the state. The competition?- curriculum put out by the credit card companies. Talk about a conflict of interest.

In the past, these young freshman have been subjected to a mine field of credit card offers on college campuses. You probably remember the tables set up the first week of school- sign up for a card and get a free t-shirt or pizza. Talk about being sent to the slaughter. Thanks to the legislation passed last year, it is now illegal to get a credit card if you are under 21 without income verification and a parent co-signer. This in effect is cracking down on the marketing on college campuses. We have yet to see if this is actually working, but I hope it will help somewhat. Sadly, some enabling parents will gladly co-sign for their college student to give them 'experience' and to use for 'emergencies'. First of all, for the inexperienced college student, going out with friends every weekend is an emergency. Secondly, this is like giving your child a loaded gun, it could kill their financial future. Many students end up dropping out of college to get full-time jobs to pay for the credit card debt they have accumulated. Of course doing so activates repayment of any student loans they have taken out. So it ends up being more of a burden. As you send off your freshmen to school this fall, please remember that nationwide only about 50% of those starting college actually get a degree within 6 years. Looking back, and I'm sure many of you can relate, I only wish I new then what I know now. That is partly why offer a counseling package for graduates and newlyweds. After all an ounce of prevention is worth a pound of cure, isn't that how the saying goes?

Tip & Quotes of the Week May 21-28

2010-05-28T08:35:00.002-06:00

Kids and Money

What are you teaching your kids about money? Even if you're not actively doing something to teach them, they are learning from your example. If you are mismanaging your money chances are your kids will too. On the flip side, if you are really good with your money, that doesn't guarantee that they will be too. In fact, if you are well off, the lifestyle you have just might cripple your child's financial muscles.

Homework:

Be deliberate with what you teach your kids about money. If you don't they will probably make the same mistakes you've made or worse. Chances are, if you're like me, your parents didn't teach you anything about finances. I was fortunate to have an interest in it, so I taught myself. I would challenge you to change your family tree. Break the cycle of financial ignorance in your home. Remember 'normal' in this country is broke~ become exceptional (and teach your kids how to be too).

"Children have never been very good at listening to their elders, but they never fail to imitate them." James Arthur Baldwin

"Loving a child doesn't mean giving in to all his whims; to love him is to bring out the best in him, to love what is difficult."Nadia Boulanger

"If you must hold yourself up to your children as an object lesson, hold yourself up as a warning and not as an example." George Benard Shaw

What is Your Financial Legacy?

2010-05-21T11:43:00.005-06:00

While I was in Nashville last month, I read a very interesting article in USA Today about Generation Y's challenges with money. The average college student now days graduates with over $23,000 in student loan debt. On average they have more than 3 credit cards, with 20% of them carrying balances over $10,000 (source: Fidelity Investments). Now to some of you, this might not seem so bad, but remember, many of these kids don't have jobs to repay this debt so the parents end up picking up the slack.

A few years ago, there was a documentary made called "Maxed Out". If you haven't seen it I would recommend it (with the caveat that it does have some language in it so try to get an edited copy of it). It talks about a lot of things regarding credit card debt and the problems it causes. But it also spotlights the dangers of college students' financial illiteracy when it comes credit cards. Some of the stories (and others like them) in this documentary spawned the new credit card legislation that went through last year. While this act is a start as far as prevention, it WILL NOT replace the need for you to educate your children about money. If you don't teach them, who do you think will? Would you really trust the credit card companies to teach your children about financial responsibility? That seems like the ultimate irony. You wouldn't want drug dealers to teach you kids about the dangers of drugs? So why is this any different?

Did you know the fastest growing segment of the population to declare bankruptcy is 18-24 year olds? That's right, fresh out of college, just starting out and crushed under the weight of debt. This is so sad because I firmly believe there are certain things a teenager should know how to do before they leave home. Things like basic cooking and laundry skills are good, but if you don't want your 30 year-old to be living in the basement make sure they have a basic understanding of personal finance. Some of you have experienced this with your children and others of you are currently on the child end. Teach your children to build good financial muscles, this is vital whether they are 3 or 30 (it's just a lot harder if they are 30). Wherever you are on this spectrum, start today to make changes for the better! This is not an easy process because it's easier in the short term to give in to their demands. Ask yourself, what will my financial legacy be to my children and grandchildren? Remember that true financial peace starts with financial independence.

Tip & Quotes of the Week May 14-21

2010-05-21T09:10:00.002-06:00

Envelopes?

If you know me at all, or have read my blog regularly, you know that I am old school when it comes to budgeting. When it comes to spending on everyday purchases; groceries, entertainment, and clothing, I use cash only. I won't go into details here as to why, but I will tell you that having used credit cards for the first 10 years of my adult life, cash is so much better. I don't dread the bill at the end of the month anymore, because I don't have one. Now that is real peace!

Homework:

I know I have challenged you to do this in the past but it's a good exercise. For three months put the credit cards and debit cards away when it comes to everyday purchases. On paydays or once a week, take out the money that you need in cash and put it in an envelope. I tell you to do this for 3 months because it takes that long to get comfortable and master the art of knowing exactly how much you need in those envelopes. My post will go into much more detail as to how to do this.

"How little you know about the age you live in if you think that honey is sweeter than cash in hand." Ovid

"Never ever discount the idea of marriage. Sure, someone might tell you that marriage is just a piece of paper. Well, so is money, and what's more life-affirming than cold, hard cash?" Dennis Miller

"Debt is dumb, Cash is king, and the paid off home mortgage has taken the place of the BMW as the status symbol of choice!"Dave Ramsey

The Envelope System

2010-05-14T10:21:00.003-06:00

I know I have mentioned this when I talked about budgeting. Please go here to read what I said about how cash will really works in your favor. You also know, if you read my ramblings how passionate I am about this system. This concept really is so old school, but it works! As you've read, I recommend using cash for everyday purchases. In my tip of the week I challenged you to use this system for 3 months. So let's talk about it.

There are certain categories in a budget that just make more sense to use cash for. These include but are not limited to: groceries, eating out, entertainment, clothing & blow money. The question often arises, how much do I put in the envelopes? The answer to that question depends on many things; family size, income level, and amount of debt you have. For groceries I would recommend somewhere in the range of 5-15% of your take home pay. This range applies mainly if you are not on the extreme low or high ends of the income spectrum. If you net $10,000/ year you need may more than $125/ month for groceries, especially if you have a family. Likewise, if you net $500,000/ year you wouldn't need to spend over $2000/ month on groceries. But for the average income in this country of $48,000/year this range works well.

Now let's talk about eating out/ entertainment. Did you know that in general there is an inverse relationship between one's consumption and one's net worth? That's right, the more you consume (spend), the less you have to save. What I tell my clients is to look at the overall picture. How much debt needs to be paid off? What do they want for the future? How badly do they want to get out of debt and change their lives? This category isn't a necessity to have. It's for fun and enjoyment. Yet some of us have been so lopsided by spending too much in this category that we've made a real mess of things. Going cold-turkey is not the answer either for most people, unless you are in very dire straits. Some entertainment isn't a bad thing, but you really have to decide what you are willing to sacrifice to achieve your goals.

While clothing is a basic need that should be covered, this doesn't mean you have to buy the most expensive brand name clothing at full retail price. Nor does it mean you must limit yourselves to buying only from the thrift store. If you have children they would obviously need clothing more often than adults, simply because they are still growing. For an amount in this category, I say, be reasonable in what your family needs, and shop for bargains. They are out there, both at the mall or the consignment store.

My last category that you may or may not use cash for is blow money. I personally don't use cash for this but many do. My husband and I have our own little checking accounts for this money. We typically use our blow money for things that we buy online for ourselves or just use our debit cards in a store. The important thing to remember is that the money is finite and isn't in your general checking account. As far as an amount, again it really depends on how much you really need to not feel completely out of gas. For some this might be $20/week, for others this might be $20/month. You really need to take into consideration your circumstances and personality. I personally take much less than my husband, because I'm a natural saver and I'm perfectly okay with this. As I've said before this money is to give you breathing room to do what you like in your budget. It's the grease that keeps thing moving. DO NOT, under any circumstances completely eliminate this category. Even if you only get a few dollars a week to buy a soda at work, you need this category.

As you go forward in figuring out what other categories you may need an envelope for, please remember to keep things simple. You wouldn't want to have 15 envelopes to keep track of, 3-5 categories usually will do the trick.

Tip & Quotes of the Week May 7-14

2010-05-14T08:50:00.002-06:00

Frugality

When you hear the word frugal, what do you think of? Most likely you think someone who is frugal collects lint and never leaves the cave. In reality the definition of frugal is "economical in use or expenditure; prudently saving or sparing; not wasteful" (dictionary.com). The opposite of this is of course wasteful. If you want to build wealth, you have to learn to be frugal. It's not what you make, it's what you keep that makes the difference.

Homework:

Start today to find little ways to save money. The possibilities are endless so be creative. From utilities to groceries and clothing there are ways to trim the fat and save. Remember there are only two sides to this equation- income and outgo. Take control of your outgo!

"Industry is fortune's right hand, and frugality its left." John Ray

"Without frugality none can rich, and with it very few would be poor." Samuel Johnson

"The way to wealth depends on just two words, industry and frugality." Benjamin Franklin

The Art of Frugality

2010-05-07T09:46:00.000-06:00

I've been reading The Millionaire Next Door (another great book that I would highly recommend if you haven't read it yet). I'm not even that far into it and I have been surprised by the facts I've learned thus far about the average millionaire in this country. The typical portrayal of millionaires by the media is rich and lavish lifestyles with fancy houses, cars, and clothes- the best of everything. When in reality 80% of millionaires are 1st generation rich. Meaning they started with from nothing, learned how to work and more importantly SAVE. How do you think they got that way in the first place? I know this sounds really basic, but then most things I talk about are. Think about it, if you spend everything you bring in, it is impossible to build wealth. I have a word of warning to those who grew up in affluence. You are in danger of not accumulating as much wealth as your parents, simply because of you have gotten used to a certain standard of living. Take care to learn the lessons of work and frugality and you will probably surpass your parents.

So how can you become more frugal? There are a lot of little things that you can do that make a huge difference. Let's take utilities for a moment. Did you know that by raising or lowering your thermostat by just 1 degree can save 4% on your heat or ac bills? Using fans are much cheaper than running the ac. Another great investment is to have a programmable thermostat. You can get a good one very inexpensively. I know in Utah you can get an energy audit from Questar Gas and they will give you a bunch of energy efficient stuff for free and credit the fee back to your account. You're not only saving energy, you're saving money.

Now let's talk about grocery bills- planning pays. I have several friends who save big bucks simply by planning their menus around the sales of the week. Some use coupons on top of that and save even more. The time is definitely worth the investment. With clothing, I try to buy things at the end of the season on clearance or at consignment/thrift stores. I once bought a coat in the spring that would fit my older daughter the following winter for $7! These are just a few ideas but there are many more things that you can implement to ave extra money. Of course saving that money is just part of the picture. You need to have a plan for that money. Paying down debt, saving or investing are all good options. Remember it's the little things that add up over a lifetime. There really is an art and style to frugality.

Tip & Quotes of the Week Apr 30-May 7

2010-05-07T08:48:00.000-06:00

Denial

Denial is one of those strange states of existence that allows us to justify the choices we make. There are extremely powerful emotions surrounding denial. Fear and ignorance run rampant when denial comes into the pictures. When you are in denial about your finances, you might feel like you are okay for the time being. You might tell yourself, "Things really aren't as bad as they seem to be" or "I can pay my bills" or even, "My job is secure, I don't have anything to worry about". Don't wait for life to smack the denial out of you. Consider this your gentle nudge- Take action today!

Homework:

If you are living in denial, especially about the state of your finances, I want you to pull your head out of the sand and face everything head on. This is obviously very scary, but it's like ripping off a band-aid, it hurts for a little while but not forever. You'll never know how deep the wound is until you clean it out.

"Denial ain't just a river in Egypt" Mark Twain

"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

"Delay is the deadliest form of denial" C. Northcote Parkinson

Half-Off Sale

2010-05-04T08:36:00.002-06:00

For the month of May I am having a fire sale! I guess you could call this my Grand Opening Sale. All sessions booked this month will be discounted 50%. This means that if you are still trying to scrape together the money to pay for it, please contact me by the end of the month. The session can be scheduled for next month if needed. Chances are you or someone you know is in need of my services. It is worth the investment in your future! Don't forget about my referral program (see my website for more details). I'm looking forward to serving you and your family!

Denial

2010-04-30T09:16:00.002-06:00

Now I know some of you have been anxiously awaiting for me to update my tip of the week. I hope you enjoy! Inspiration for this came as I was reading the revised third addition of Dave Ramsey's The Total Money Makeover (It's great by the way if you have never read it). I was struck by how much denial there is in this country when it comes to people and their money. For some reason mediocrity in financial matters has become acceptable and down-right normal in this country. Why? The fact of the matter is 7 out of 10 households live paycheck-to-paycheck, yet as many as half of those actually think they are in the 30% group. That is some serious Denial! Think about it, if you had a major life event today (ie. job loss, serious illness or injury, loss of spouse through death or divorce) would you even be able to make it to the end of the month? Be honest with yourself.

Now I'm not trying to belittle you or tear you down, I'm just trying to get you to face the music before life literally smacks it into you. Sadly even faced with these kind of major events, some of us go on living life like we didn't lose a job and the new one doesn't pay as much. Failing to make adjustments in the short term will become disastrous long term. This is why I have talked so much about being intentional with your money. If you are living without a plan and spending as much or more than you make, it's a dangerous road you are walking. It's only a matter of time before life pushes you over the edge, making it hard to recover. So please start today taking steps to correct the situation. Who knows, maybe things really aren't as bad as you fear them to be. If you're curled up in the fetal position with your eyes closed, you'll never find out. Please don't let the fear become paralyzing. Feel free to contact me if you think you need more help unpacking your particular situation. Sometimes a fresh set of eyes, with a different perspective is needed. I offer a free no-obligation 30 minute consultation.

Tip & Quotes of the Week Apr 16-30

2010-04-30T08:12:00.000-06:00

Don't loan the Government money!

Of all the ways we use to save our money, giving it to the government for the year and then getting no interest back is probably one of the worst. Across the board, I have never heard financial experts of any kind endorse this idea. Yet millions of Americans do it year after year. Why? If you are among those, then PLEASE stop the madness! Take control of your money and don't loan it to the government.

Homework:

If you got a tax return simply due to overpaying, go to your HR manager and increase your exemptions immediately. Look at your pay stub and see how much tax is being withheld every pay period. Obviously you can't help it if the government pays you to have kids, pay your mortgage and give to charity, but if you are getting more than that back, change it TODAY!

"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

"Why does a slight tax increase cost you two hundred dollars and a substantial tax cut save you thirty cents?" Peg Bracken

"We have long had death and taxes as the two standards of inevitability. But there are those who believe that death is the preferable of the two. 'At least,' as one man said, 'there's one advantage about death; it doesn't get worse every time Congress meets.' " Erwin N. Griswold

Pictures From Training

2010-04-29T09:17:00.005-06:00

(As promised) I got my pictures downloaded from my counselor training in Brentwood, TN (just south of Nashville).

He slipped in the back door when we were in the middle of break out groups the first day of training. His voice was a little rough from talking all day and I could tell how tired he was. He stayed and talked to us for about 30 minutes. He praised us for coming (one-on-one counseling really is close to his heart) and talked about areas his company is growing to meets the needs of the country. Then of course being the good Christian man that he is, he prayed with us. It was a great experience!

The famous address of his building

It really is a beautiful building- All 4 stories of it!

Just inside the front doors- on the right of the lobby is his studio and on the left is Martha's Place and the store. Martha goes all out for visitors and had this great spread of cookies and chocolate covered strawberries and fruit. It was delicious!

When he came out during a commercial break to meet the counselors in training.

(No he is not a hummingbird)

Me and Dave (Yes I was nervous. That's why I look like a deer in headlights.)

Live on the air doing his radio show.

Hard at work solving the nation's financial woes!

Yes it really says that outside his studio

I didn't get any pictures of the fabulous hotel we got to stay in. It was an Embassy Suites- need I say more? It really was such a wonderful week. I learned so much and am having fun this week networking with people in my area. Last night I got to visit an FPU class for the first time. Financial Peace University, Dave's 13-week class is taught all over the country (go to his website to learn more about it). It was great to see people's lives changing for the better. Overall it's been a long past few weeks, I'm tired, but it's a good kind of tired because I love doing this stuff!

Counselor Training!

2010-04-26T08:52:00.000-06:00

So I know some of you are looking for my tip of the week. I decided to just post a new one this coming Friday since as most of you know I was at counselor training last week. I wanted to share a little about the week. First off, it was AMAZING to say the least. We of course got to meet Dave. He came and spoke to us for about a half hour near the end of day one of training. He (and his whole team) came across as a very humble, passionate, and hard working. I was very struck by how kind and loving they all are. Their goal is to literally to help one person, one family at a time. In the Media, Dave is often portrayed as one egg short of a dozen, because his ideas buck the norm in this country. He doesn't care about all the fame and notoriety he has gained over the years. 20 years ago when he went broke, he started one-on-one counseling at a card table in his living room because he didn't want anyone else to go through what he did. Now he has been blessed to share that message with an audience of millions on the TV and radio everyday. But I could tell as he was talking to our group that counseling is still his 'baby' and it really is about the people not the money. It is near and dear to his heart.

Later in the week we got to go over while he was live on the air and see him in action. I have some great pictures of his beautiful building. He came out during a commercial break and shook our hands, posed for pictures with us individually. Unfortunately, I am having problems downloading them to the computer because of some recent changes we've made to it. I will try to get them up later in the week.

Now these were just my experiences and impressions. I am not an employee or paid by his company in any way, but I feel the same way. It's really about the people. I look forward to start counseling more and helping those in need. I'm really excited because of all the resources I have at my finger tips. So if there's ever a question or situation I'm not sure of, I have a great counseling team back in Nashville to help me. Over all this was one of the best and most fulfilling experiences of my life. It ranks right up there behind marrying my wonderful husband and having my two precious girls. I learned so much and am really looking forward to this new journey.

My Website & Business

2010-04-18T09:30:00.003-06:00

It's official! My website came online last night. You can see the link in my services and pricing box or you can go to www.financesbyrachel.com After I finish my training this week in Nashville I will be officially open for business. Please help me spread the word about my services by joining my referral program. Refer a friend or family member and get a gift card as my gift (see my website for more details). As a service to my neighborhood, I am offering my services for free to my ward members at church. I feel I have been blessed with this gift and want to bless the lives of those around me. I also have a special rate for other friends and family, if you're interested in either of these, please let me know. Thanks to all you wonderful readers for your support. I hope you keep coming back for the learning and insights that I offer.

Tax Returns

2010-04-16T10:07:00.003-06:00

Ah...spring is in the air, the birds are chirping, the flowers are blooming and of course people are pulling out what hair they have left trying to get their taxes done. Nothing like the last minute procrastinators rushing to the post office to send off their tax returns. I know my quotes this week are more funny and sarcastic than thoughtful but I couldn't resist because it's true. Taxes really are the bane of most people's existence. The tax laws in this country get more convoluted every year trying to squeeze more and more out of the working people. But this post isn't about the injustice of the current tax system, it's about the tax return.

This time of year is either the most dreaded or the most loved depending on how much the government decided to take or give to you. If you are among the hard working, self-employed, then I feel your pain. For you, there's not much you can do for this except vote! This post is addressed to those if you who are not in that group and have a regular job with w-2's. You know who you are. When you started work, you filled out a W-4 that tells your employer how much to take out of your paycheck and give to the government in taxes. This form is vague and many people don't know what number of exemptions to put down. The number that's right for you varies depending on your situation. Quite often the guidelines on the form to figure the exemptions come out too low. This is especially true if you are a one income household and have children.

The bottom line is this: if you are over withholding your taxes simply to 'save money' and get a large refund STOP! As I said in the tip of the week, this is probably the one area that I have never heard disagreement in the world of financial advice. Here's what usually happens when you get your big fat tax return. You try to act responsibly and put some into savings or pay down the last of the Christmas bills or other debt that has accumulated throughout the year. But more often than not, the money just burns a hole in our pockets and we end up buying some big thing or going on a fabulous vacation. Either way, the money is gone and you still aren't any better off.

The most common excuses for this practice are 'I can't save money otherwise' and 'we use the money to pay down debt, so that's good'. Let's start with this business of not being able to save money. If you do what I'm telling you to do you will have more money coming home every paycheck. If you still don't trust yourself, then set up a savings account and have the money that would come home sent directly into the savings account. Out of sight out of mind. If nothing else, at the end of the year you would have your own 'tax return' and the interest accrued on top of that. If you want to make even more on that money than just simple interest in a savings account try this: use that extra money every month to go toward your debt. The interest you would save far outweighs the savings account interest. This is my preferred method but doesn't just happen automatically. It requires you to take an even bigger step and become intentional with your money. If you don't have a plan for that extra money, it will get blown on whatever looks good that week.

If you are using the money to pay down debt, then try this on for size. Try using the extra money every month to pay down debt or at the very least, to avoid the need for the debt in the first place. You'll see progress throughout the year and build confidence in your ability to take control of your money. Yet another reason to have a plan every month for your money (aka a budget). If you are still having trouble swallowing this advice, I would ask you to think about it and try it out for a year. You can always go back to loaning the government money if you don't like it.

Tip & Quotes of the Week Apr 9-16

2010-04-16T08:22:00.001-06:00

Financial Infidelity

For those of you who have never heard the term, let me explain. When you lie to your spouse about money by hiding income, or debts incurred, you are guilty of being unfaithful- financially speaking. (And no, I'm not talking about a stick of gum.) This is a very serious concern because it goes against everything a marriage is based on- trust.

Homework:

If you are guilty of lying to your spouse about money in any form, hiding income, debts or spending sprees, then it time to pay the piper and come clean. You know who you are. I am joining with that little nagging voice in the back of your head. DO IT TONIGHT! The future of your marriage depends on it. No matter how insignificant you think it is, you must be honest with your spouse. Chances are that your spouse's reaction will be like you are confessing an affair. It's that serious!

"We're never so vulnerable than when we trust someone- but paradoxically, if we cannot trust neither can we find love or joy."Walter Anderson

"A lie may take care of the present, but has no future."Unknown

"The cruelest lies are often told in silence." Adlai Stevenson

"The glue that hold all relationships together... is trust, and trust is based on integrity." Brian Tracy

Honesty really is the BEST policy

2010-04-09T08:23:00.001-06:00

A solid marriage has at its core trust, communication and above all honesty. A marriage lacking in any of these categories is bound for some bumpy roads. Quite often, these core issues manifest themselves in the form of money problems and fights about money. Money fights are the symptom, while a lack of honesty and trust are the root of the problem. Complete financial transparency is absolutely vital in a healthy marriage. If you can’t trust each other with money, then you’ve got much bigger problems that need to be addressed through good marriage counseling.

If you don’t get help for these underlying issues, you are leaving a big wedge in your marriage. We all know what wedges do, they split things in half. I don’t want to scare you into thinking your marriage is doomed, but I do want to spur you into action. In coming clean to your spouse, he/she will really feel betrayed, because you broke trust. It won’t be pleasant, but neither is digging out a splinter with a needle. If you don’t remove the splinter, it festers and gets infected. This infection can get so bad that it can lead to death. If you both fight through the tough times your marriage will come out stronger than before. So please, get help and remember, honesty really is the best policy.

Tip & Quotes of the Week Apr 2-9

2010-04-09T08:20:00.001-06:00

2 Lessons in Money

There are two things you need to know about money. First, money is amoral. It isn't inherently good or bad. What people do or don't do with their money is what makes the difference. Second, money is active. It is in a constant state of flux. This is why it's called currency, because it has a flow or current to it. Whether you are a high school drop out or have a PhD, you still have to learn to control your money.

Homework:

Don't let financial ignorance stop you from making the most of the money your earn. Swallow your pride and know when to get help. You can be a genius and still be broke because you don't know how to manage your money. I guess by reading this blog, hopefully I am helping you learn more.

"Money will make you more of what you already are. If you're not a nice person, money's going to make you a despicable individual. If you're a good person, money's going to make you a better person." Bob Proctor

"The amount of money you have has got nothing to do with what you earn. People earning a million dollars a year can have no money and people earning $35,000 a year can be quite well off. It's not what you earn, it's what you spend." Paul Clitheroe

Money is Amoral

2010-04-02T12:29:00.002-06:00

We all have heard the frequently quoted scripture "For the love of money is the root of all evil..." (1 Timothy 6:10). Notice that it doesn't say money is evil, it's "the love of money" that is evil. For this reason money is amoral. It doesn't make you good or bad it simply amplifies what kind of person you are. We see this all around us. I'm sure you've met rich and poor people alike who are jerks. Just like you probably know really good, nice people who either don't have much or are very wealthy and generous with that wealth. Having money doesn't make you a better person unless you are good to begin with. Likewise, the lack of money doesn't make you a bad person. Whatever the state of your finances, remember that the type of person you are doesn't dictate how much money you have. The kind of person you are is reflected in how you behave with that money.

Money is Active

2010-04-02T12:28:00.000-06:00

Anyone who has had money or would like to have money (pretty much everyone) has experienced how money is active. It has a flow that makes it unique. Whether it's observed through varying interest rates, cash flow, or value, money is dynamic. If you try to hold onto it by burying it in the back yard in ten years, it will have lost buying power, and therefore value, due to inflation. Sometimes the harder you hold onto it the faster it seeps through your fingers. (That is the paradox of giving that I'll talk about another time.) The vast majority of time however, money leaves because you're not respecting it. You've gotten lazy and just going with the flow, swept up in the current so to speak.

Are you starting to see that if you can understand this law of money, it might be easier to manage? This is why I think I keep talking about and coming back to the principles of being intentional, organized, focused and above all educated about how to handle money. This concept takes time and patience to understand and develop. It doesn't happen overnight but if you keep going, you will get there. Through this process please remember that money doesn't care what level of education you have. The fact of the matter is if you don't know about money management, then you can't keep beating yourself up. Until now you have probably been doing the best you could with what you knew. Ignorance about money and impatience are a recipe for disaster. Now it's time to change that and do better.

Tip & Quotes of the Week Mar 26-Apr 2

2010-04-02T09:27:00.001-06:00

Patience is Golden

We all know that patience is a virtue. Unfortunately, patience is one of the hardest virtues to develop. But if you can master patience in your finances, nothing will stop you! The possibilities are endless if you can develop patience. On the other hand, being impatient is probably what got you into the financial mess in which you find yourself. Delayed gratification is truly golden.

Homework:

If you start to feel impatient and want to buy something now, even if you don't have the money- stop and slow down. Rushing into things because you want it now, is impatience. Poor decisions are made in impatience. This is especially important if you are making a big purchase like a car or a home. But even the little purchases add up and can be detrimental to wealth building. Just think about it please.

"The two most powerful warriors are patience and time" Leo Nikolaevich Tolstoy

"Patience is the companion of wisdom" Saint Augustine

"He that can have patience, can have what he will" Benjamin Fanklin

Great Strides

2010-03-28T11:40:00.002-06:00

So as you can see I gave the blog a face lift with my new photos. My good friend Karla is wonderful with a camera. Please visit her blog by clicking on my picture. She also took the gorgeous picture of the sunflowers. Her work will be displayed on my website when it is published in the coming weeks. I have made great strides this week in getting things ready for my business. I got my cell, started my business license application, bought my domain name and ordered business cards, and of course got pictures taken for my website. I am really looking forward to getting everything finished. I am also so excited to leave for Nashville in 3 weeks to complete my training and learn more in-depth about counseling. Until then, please remember that I am here to help answer any questions you might have. Also if you have any requests of topics you'd like me to discuss please leave your feedback. Thanks! and I hope you enjoy reading my blog :)

Patience Pays

2010-03-26T13:51:00.001-06:00

These days a little patience in our society could go a long way in solving many problems we face. Especially when it comes to our money. I mean think about it. We live in a world that has rush rush, buy now pay later, gotta have it NOW type of thinking. So many people are willing to put money into the next 'sure' investment or other get rich quick schemes. What ever happen to good old fashioned patience in getting what we want? Has this all too important virtue really been foolishly thrown by the wayside? It seems like now days adults walk around acting like a kid in a candy store throwing a tantrum. Only instead of a candy store it's the Mall, Electronics R Them or Big Box store inc. We use rationalizations like, "I work hard so I deserve it" or "I need it" because it's safer, a good investment, or "it makes me look sophisticated or smart." Or my personal favorite- "I can pay the monthly payment so I must have the money to buy it." These excuses are nothing but a bunch of garbage that make it all better when the bills come due. While all of this stuff is nice to have, we delude ourselves into thinking that we must have it, no matter what the cost.

I believe the amount of patience one has is in direct proportion to how much wealth one can acquire. You see, your income is your most powerful tool in building wealth. If it all goes out the door in payments to banks and corporations then you can't build wealth effectively. This is true whether you make $50,000 or $500,000 a year. In the average working lifetime you see at least a million dollars pass through your fingers. How much are you going to hold onto? If you lack patience, then you will always be in debt, going from loan to loan all because you want it now. Most poor financial decisions can be traced back to a lack of patience. Ironic when you consider that newlyweds spend the first 7 years of marriage trying to attain what took their parents 30 years to achieve.

I have said before and I'm sure I'll say it again, the key to getting out of debt is to have focused intensity over the long haul. This focus requires diligence and of course patience. I know these concepts might seem a little abstract so let me give you an example of how patience really pays off. The average car payment in this country is around $478 a month. That's a pretty big chunk of change to be forking out every month for something that is going to go down in value every year. Think about this instead. If you saved up and paid cash for say a $2000 car and then continue to save what you would have spent in a car payment. You could easily upgrade with to a better car in a matter of months. Over a lifetime, these car payments can cost you dearly. If you show patience and invest that car payment you could easily have close to a million dollars by the time you retire. Last time I checked, a $2000 car in good condition will still get you work and back just as well as a $20,000 car. It might not be as pretty or smell as nice but for a the time being, it's worth it's weight in gold- literally.

Patience will pay off every time you apply it, whether it's buying a house, car, big screen TV, furniture or anything really. It's one of those behaviors that again separates the rich from the poor. Like diligence and focus, it gives you perspective of what's really important in the long run. This isn't to say that you can't ever go out and buy nice stuff. But it means that you just shouldn't rush out and buy it all right now. Chances are that you'll value the stuff more if you had to sacrifice more to get it.