Archive for September 2012

Are You Holding On To Financial Destruction?

As I was driving along a road one day, I saw a squirrel standing in the center of the road. He seemed to notice my oncoming vehicle, but was weighed down by a walnutt he was carrying.

As my truck bore down on him, he seemed to be working with all of his might to get off of the road to safety, but the nut was seriously slowing him down. In spite of the danger, he kept his firm grip on the nut.

I applied my brakes and had to swerve to avoid him. I’m happy to report that the squirrel got off of the road safely – with his nut.

I see people like this all of the time. They are holding on to something that is slowing them way down financially, but they just won’t let go of it. Unfortunately, many creditors and financiers do not swerve or apply their brakes to protect them.

The end result? They lose their financial freedom trying to hold on to the very thing weighing them down. Some common items that weigh people down are:

  • A car with a huge car payment
  • A huge house with a monster monthly payment
  • A boat payment for a boat that is used five times a year
  • A massive motorcycle payment

None of these are wrong. However, if it is weighing you down and putting you in danger of huge financial harm, it is time to let it go! Sell it, and liberate yourself.

Are you holding on to something that is weighing you down? Maybe it’s time to let it go – the truck is barreling down the road toward you!

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First-Time Budgeting

I remember our first-ever budget. It was in July 2003. My fine bride, Jenn, came into the living room with a budget scribbled on a piece of lined paper. She had been trying to get me to budget for the past 6 months or so, but I was not playing along (because I’m a spender!).

I believed budgets were controlling, restricting, live-in-a-Maytag-refrigerator-box pieces of trash. They made me say the word “no”, and it interrupted my flow. I wanted no part of it.

But let’s consider a snapshot of my family’s financial situation when Jenn walked in:

  • I was managing the money
  • We had $4.13 in our checking account
  • Our credit cards had a huge balance on them again – for the third time!
  • We had a 105% financed car and a 100% financed truck
  • There was nothing in our short-term savings account
  • We were B-R-O-K-E
  • I was in COMPLETE DENIAL!

I can not write this strong enough: I was B-R-O-K-E and telling my wife, “NO!” to doing something different with our finances! But, for some reason at that very moment, something happened that changed my life and marriage forever. I turned off the TV and looked at the budget she had prepared. It actually showed we could live for a month without incurring any additional debt!

LIFE-CHANGING does not describe the next few minutes. I moved into the computer room and started entering the expenses into Microsoft Excel. As I was putting together the formula to subtract expenses from the income, I realized that all of this time I could have been managing my money with the math skills possessed by the average first-grader. INCOME – OUTGO = EXACTLY ZERO! After a few minutes, we had a budget that was EXACTLY ZERO.

My life and marriage have been changed forever because we discovered that a budget is NOT restricting. It is freedom!  It is merely telling your money where to go instead of wondering where it all went. It allows you to pay off debt, save up for known, upcoming expenses, save money for emergencies, and fund your dreams.

The first budget was tough because not everything went according to the plan. Every month we had been spending an enormous amount at Wal-Mart and did not clearly know what we had spent it on. As a result, our first month was a little rough. Month two was a bit easier.  Month three was even easier.

Listen to your feelings as I write this next line: We don’t worry about money ANY MORE. We did something different. We applied God’s word and Grandma’s advice to our money and our lives have never been the same.

You CAN do this! You CAN get through the 1st month’s budget! Click on “TOOLS” at the top of the page or click HERE to download your FREE budget form and get started!

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Need further help? My book, I Was Broke. Now I’m Not., provides the exact tools my family used to win with money. It will help you do the same. Learn more HERE.

How Do I Get My Spouse To Work With Me On Our Finances?

“How do I get my spouse to work with me on our finances?”

This is a very common question I encounter in the world of personal finances! The non-participative spouse problem is real, and it can be extremely frustrating.

First, let me say these two things:

  • Finances are one of the top causes of marriage fights and divorce.
  • Until both spouses are on the same page financially, it is impossible to maximize your financial potential.

So, recognizing how important it is that you work together, I submit the following strategies to bring the reluctant spouse on board with planning the family’s finances.

1.  Plan out your conversation

  • Take time to write down the reasons you would like to have your spouse’s active help in managing the family’s finances.  The Financial Planning Checklist can help you with this.  Include your dreams in this list.  That 25th anniversary trip you have always dreamed of, the boat you’ve always wanted, paying for your daughter’s wedding, paying for your children’s college, etc.
  • Look into some potential ways to improve your financial management.  I highly recommend putting together a monthly spending plan BEFORE the month actually begins.  You can find FREE copies HERE. Complete a personal finance study like the I Was Broke. Now I’m Not. Study.

2.  Talk with your spouse

  • Arrange for a babysitter to watch your children, and schedule a night out with your spouse. Go to a nice dinner and then to a coffee house. Tell your spouse you have something you want to discuss that is VERY IMPORTANT to you. TRUST ME.  When you tell them you want to discuss something VERY IMPORTANT with them, you WILL have their attention! This sort of statement is NOT something your spouse hears every day.
  • Share your concerns with your spouse. Explain in terms of unrealized dreams. Here are some examples:”I am concerned that if we do not work together to plan our finances, we may not get to go to Hawaii for our 25th anniversary” and “The children are growing up so fast, and we have not started saving for their college yet” and “We have earned over $500,000 over the past ten years, and we only have $1,500 in savings.”  DO NOT PUT THEM INTO A DEFENSIVE POSITION. IF YOU DO, THIS WILL NOT BE A PRODUCTIVE DISCUSSION. Don’t say terrible or hateful things like, “Our finances stink because of your ignorance, and this is all your fault.”

3.  Take Action!

  • You have had the discussion. It might be appropriate to back off for a little while to let your spouse process everything you have shared. At some point, however, you need to take action! Sign up for the class.  Set up an evening for you both to prepare a budget once the children are off to bed.

By the way, marriage is grand, but divorce is at least a hundred grand! I’m convinced that if most people knew how much divorce would really cost them, they would be much more willing to spend the money to figure out a way to work together!

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Power In A Plan

Do you have a plan for your life? I know you have dreams for your life so let me be more clear. Do you have a WRITTEN plan for your life?

Something amazing happens when you take pen in hand and write out your plans! When you write them down, there is a much greater chance your goals will be accomplished!

An old Chinese proverb shares, “The faintest ink is sharper and longer-lasting than the brightest mind.”

It is the truth.  On many occasions, I have written my plans on paper and accomplished the goals.  Sadly, I have had many more occasions where I did not take the time to write out my plans and rarely were those dreams accomplished.

We tend to get way too busy to continuously remind ourselves of our plans and dreams. We are busy running from the kid’s basketball game to go to church. We run from there to go to dinner with friends. From there we dash over to school for an event there. In the midst of all of this activity, we can lose sight of our future hopes/dreams/plans.

Maintaining a written dreams list will provide a constant reminder of “why” you are doing what you are doing right now.

Take the time right now to write out your plans, hopes, and dreams! The achievement of your hopes and dreams is at stake, so it is worth the time! Spend five minutes dreaming and writing right now. It could change your life forever.

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Pain Of Same Greater Than Pain Of Change?

I regularly meet people who believe they should be able to continue behaving the same and still achieve different financial results.

Here are some examples:

  1. The person who wants to eliminate financial stress, but refuses to save money.
  2. An individual who dreams of a fantastic retirement, but fails to build net worth.
  3. A parent who wants their children to attend college, but saves nothing for their education (but they DO have 95 video games and three different game consoles)
  4. The person who wants to win with their money, but chooses to not carry health insurance (even though we all experience sicknesses)

This is insanity. If one wants to achieve different financial results, it is important to change. Most of us, however, struggle with change. It is frustrating to change things – especially financially. It requires education, focus, partnership, and time.

Most people change their financial behavior when the “Pain of Same” becomes greater than the “Pain of Change.”

Situations such as:

  • When you can’t stand the idea of being broke another minute so you establish a savings account that automatically zaps money from your paycheck before you ever bring it home.
  • When the thought of not being able to pay for your child’s college becomes greater than telling your kids that you will no longer purchase video games until the account is fully funded.
  • When you consider the risk of not having health insurance, you obtain a high deductible health plan to prevent catastrophic medical expenses that could cause bankruptcy.

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