Happy Marriages

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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