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?
Friday, May 28, 2010
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
Friday, May 21, 2010
What is Your Financial Legacy?
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.
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
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
Friday, May 14, 2010
The Envelope System
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.
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
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
Friday, May 7, 2010
The Art of Frugality
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.
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
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
Tuesday, May 4, 2010
Half-Off Sale
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!
Friday, April 30, 2010
Denial
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.
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
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
Thursday, April 29, 2010
Pictures From Training
(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
Monday, April 26, 2010
Counselor Training!
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.
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.
Sunday, April 18, 2010
My Website & Business
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.
Friday, April 16, 2010
Tax Returns
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.
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
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
Friday, April 9, 2010
Honesty really is the BEST policy
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
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
Friday, April 2, 2010
Money is Amoral
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
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.
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.
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