I Love My Budget

I love my budget.

There. I said it. If you are a spender like I am, you know that this statement is an amazing one.

You see, as a spender, I didn’t like the word “budget” because it cramped my style. It made me say the word “no” too often. For some reasons, the word “budget” made me think of being broke.

But I love my budget because NONE of those beliefs were true.

Here are the top reasons I love my monthly budget:

  1. My marriage.  It ensures I meet with my bride every single month to talk about life and how our money needs to be managed to support it
  2. Debt eliminated.  Using the budget, we eliminated all of our non-house debt in 14 months and our house debt in 10 years and 1 month (so we can live without payments)
  3. Savings! Our budget allowed us to clearly understand what would be necessary to build savings
  4. Giving! We get to decide where we will give money each month (it’s our favorite part of budgeting)
  5. It provides control. In a world where everything seems to spiral toward chaos, it is awesome to know exactly what is going on with our finances

Why do YOU love YOUR budget?

Don’t have one? Just click HERE to access our free budget tools.

Read recent posts

On-Line Banks – Why I Use Them For My Savings Accounts

If you have ever heard me speak or teach about saving money, then you have undoubtedly been introduced to on-line banks. I’m not talking about banks that have websites but about banks that have little to zero physical “bricks & mortar” locations.

I’m talking about banks like Capital One 360 (formerly ING Direct) and Ally Bank (built on the base of GMAC).

Here’s why I use on-line banks (over a local bank) for my savings accounts:

  1. Better interest rate On-line banks pay interest that is generally 5 to 8 times more than a local bank savings account (somewhere near that of a 2 to 3 year CD) – but it doesn’t affect the liquidity of my money
  2. Sub-Accounts If you have a regular savings account, all you can see is a total amount of the money the account currently contains. With on-line banks, you can create something called “buckets” or “sub-accounts” to give every dollar a designated name! This means you can create sub-accounts like “Christmas”, “Emergency Savings”, “Vacation”, “Life Insurance”, etc. See the example screen shot below from my Capital One 360 account. You can click the image to see a larger version. This makes it so much better!
  3. Automatic SavingsYou can establish automatic transfers from another existing bank account. In the example I show below, I have set up automatic transfers for my emergency fund, YMCA annual membership, House taxes and insurance, Christmas, and life insurance premiums. It is a “set it and forget it” approach to savings that is awesome!
  4. Customer Service  Because these banks only have an on-line presence, they have to be INCREDIBLE at customer service, or people would not even know about them. Every interaction I have had with my on-line banks has been an incredibly positive experience.
  5. FDIC-insured  These banks are insured by the FDIC – just like any other bank. That means your deposits are protected. I like that!
  6. No fees  There are no fees unless you exceed the monthly allowable transactions (or something extraordinary like that)
  7. No MINIMUM balance  This makes it perfect for any and every saver.

I encourage you to check them out: Capital One 360  and Ally Bank.

Set a savings goal. Then establish an automatic savings plan to help you accomplish it!

Do you use any of these banks? What do you like about them most?

Disclosure

And Baby Sangl #3 is a …

GIRL!

Over the past several weeks, lots of people shared their “vote” on what they thought our new addition was going to be.

The results of the vote were:

  • 59% said GIRL
  • 41% said BOY

2 to 1 said “GIRL,” and you were right!

Ribbons and curls. My Little Pony. Bows. Little sundresses.

A baby sister for her big sister.

My heart is full.

And my bank account is trembling.

Can’t wait to meet this beautiful blessing!

How 0% Balance Transfer Credit Card Offers Work – And Save THOUSANDS of Dollars!

NOTE: I wrote this post to help people who are paying high interest on their credit cards. I maintain a running list of 0% Balance Transfer Credit Card offers HERE.

Here’s a fact: Many people possess credit card debt they are unable to pay off each and every month.

They want to pay it off each month, but they are unable to. As a result, they feel stuck. The interest rate being applied to their credit card balance is one of the primary reasons they feel that way.

0% balance transfer credit card offers provide a way to eliminate a credit card debt very quickly and can provide HUGE savings over keeping a balance on a high interest card.

Here’s an example:

  • Credit Card Balance: $16,000
  • Interest Rate: 21.99%
  • Minimum Payment: 1% of balance plus interest charges (or $10 – whichever is greater)

If this person were to keep the balance on this card, they would pay $44,895.36 and take 36 years 4 months to eliminate!

By transferring the balance to a 0% transfer offer and making the same payment, they would pay $17,039.51 TOTAL (only $1,039.51 in interest and fees) – and they would be free of credit card debt in 49 months!

Rolling a high interest credit card balance to a 0% balance transfer credit card offer SAVED $27,855.86 and become debt free 387 months (32 years and 3 months) sooner!

Here’s the process of how this type of offer works:

  1. THE OFFER  An offer and application for a zero percent balance transfer credit card is completed ON-LINE or through a mail-in offer.  During the application process, the applicant is asked if they wish to transfer a balance.When this option is selected, the application process includes the opportunity to provide information regarding existing loan balances that they wish to be transferred.  This requested information is detailed including – current provider, account numbers, and loan balance.It is important to understand that the application process requires the applicant to provide their social security number and that a credit check will be performed.Once the application is submitted, a decision is typically rendered within a time range of a few minutes to a few days.
  2. THE EVALUATION  Once the application has been submitted, the credit card provider evaluates the information provided to determine credit-worthiness.  This evaluation is completed based upon several factors that vary between lenders.  It always involves a check of one’s credit score and the loan amount requested.This evaluation also ensures that the person listed on the application is really the person requesting credit.  This is an extremely important step to prevent identity theft and fraud and should make the applicant feel much more comfortable with this process.
  3. THE DECISION  Once this evaluation is complete, a decision is rendered.  The lender’s decision will be one of three alternatives:
    1. ACCEPTED:  ALL of the balances to be transferred to zero percent
    2. ACCEPTED:  SOME of the balances to be transferred to zero percent
    3. DENIED:  NONE of the balances will be transferred

    If ALL of the balance transfer requests are accepted, the new credit card provider will send money directly to each of the lenders.  Within a few short days, the balances due each previous lender will be lowered by the requested amount and that new balance will transfer to the new card provider.

    If SOME of the balance transfer requests are accepted, the new credit card provider will send money directly to some of the lenders.  IT SHOULD BE NOTED that it varies between lenders on which balances will be accepted.  On one of Discover’s applications, it stated the following in their terms and conditions:

    “We process multiple balance transfers in the order they are requested on the application. Your credit line may be less than the amount of balance transfers you request. In addition, balance transfers may be limited to a portion of your credit line. If a balance transfer will exceed the credit available for a balance transfer, you authorize us to process any balance transfer for less than the amount requested, up to the amount of your credit available for balance transfers.” – SOURCE: Discover’s website

    If NONE of the balance transfer requests are accepted, then it means that requested balance transfers will not occur and the current lenders will remain the owners of each debt.

That’s how this type of offer works – hopefully it can help you save tons of money!

Disclosure

SERIES: How To Win With Money – Part 9

Welcome to another series here on the wildly popular I Was Broke. Now I’m Not. website. We’re passionate about helping YOU win with your money. In this series, we are going to be talking about a practical, step-by-step plan that you can use to take your finances to the stratosphere!

How To Win With Money

9.  Live a great life!

When you have accomplished Levels 1 through 8, you have positioned yourself to fund all of the amazing dreams and plans you have for your life. It allows you to be generous, provide in an amazing way for your family, and fund dreams you hardly dared to give breath.

Utilize your wealth to bless the poor and serve the less fortunate. Recognize that life is fleeting and that a life lived serving others and in the service of others is amazing. Ensure that you teach your children to apply the levels so that an inheritance will bless them instead of ruin them. Take no pride in your financial status as it will only amplify who you are anyway.

Have a blast with life! Life is amazing. And awesome. And wonderful. It is worth being FIRED UP over! And it is way too short to live it financially broken.

Read the entire series (available after 4/20/2013)

SERIES: How To Win With Money – Part 8

Welcome to another series here on the wildly popular I Was Broke. Now I’m Not. website. We’re passionate about helping YOU win with your money. In this series, we are going to be talking about a practical, step-by-step plan that you can use to take your finances to the stratosphere!

How To Win With Money

8.  Place at least 30% of your gross income into tax-advantaged investments.

Now that you’ve eliminated all of your debt – including your house and business debt, you have nearly reached the top of the ladder of winning with your money. At this level, you are now positioning yourself to prosper like few others choose to do. You have become an elite manager of money. Everyone can do this, but not too many are willing to make the few (but tough) decisions necessary to do so! In general, it takes between seven and ten years to move from Level 1 to Level 8.

Invest money into tax-advantaged holdings. It is important to pursue diversification to protect the investments to protect against a massive loss. Many people have achieved Level 8, but became so enamored with a particular investment (such as Enron) that they disregarded the importance of diversification and fell from Level 8 back to Level 1! After all, this is not about greed and hoarding. It is all about funding goals – your plans, hopes, and dreams.

Consider a 40 year old couple earning a combined income of $50,000 per year who has arrived at Level 8. They are now able to invest at least $15,000 per year. Suppose they already had $60,000 saved up because of their efforts in Levels 3 and 6. If they invest $15,000 per year from age 40 to age 66 and gain 12% annual growth, they will have $4,000,156 at retirement. That is with zero pay raises for 26 straight years.

Level 8 positions you for the final level on the “How To Win With Money” Ladder. It’s the best one of all.

Read the entire series (available after 4/20/2013)

SERIES: How To Win With Money – Part 7

Welcome to another series here on the wildly popular I Was Broke. Now I’m Not. website. We’re passionate about helping YOU win with your money. In this series, we are going to be talking about a practical, step-by-step plan that you can use to take your finances to the stratosphere!

How To Win With Money

7.  Pay off house (and business debt)

This is a level that marks a “major milestone” for most people. It is the goal of most people to retire with zero debt including their home. It provides a sense of security and accomplishment like little else will.

Utilize extra income and “found money” to eliminate the mortgage. There are several simple steps you can employ that can have a major impact on the velocity of your pay-off.

  1. Make a half-payment every two weeks Because there are 52 weeks in a year, this will result in 13 full payments each year. This can eliminate around 5 to 7 years on the average mortgage.
  2. Each year, use tax refund to make one extra payment toward principal This will accomplish very close to the same as option #1
  3. Pay extra money toward principal each month  Use our early pay-off calculator to help you figure out how many months you can shave off your mortgage!

When you eliminate your final debts, your monthly cost of living has usually been reduced by 50% or more. This accomplishes two things:

  1. It provides more financial security
  2. It makes your investments last twice as long because you now require only half of your previous need.

By the way, I paid off my house by age 38, and I promise you this is an incredible feeling.

You can do this!

Read the entire series (available after 4/20/2013)

SERIES: How To Win With Money – Part 6

Welcome to another series here on the wildly popular I Was Broke. Now I’m Not. website. We’re passionate about helping YOU win with your money. In this series, we are going to be talking about a practical, step-by-step plan that you can use to take your finances to the stratosphere!

How To Win With Money

6.  Place at least 15% of your gross income into tax-advantaged investments.

At this level, you truly begin to change your entire financial future. You have built savings, initiated investing, and eliminated all non-house, non-business debt. It is time to build wealth in a big-time way. You might call this “the dream funding” level.

Consider your annual gross income that you expect to receive this year. Multiple that salary by 0.15 to calculate your Level 6 investing goal. Suppose your gross income is going to be $40,000 this year. This means that your goal is to move at least $6,000 into tax-advantaged investments. Imagine how much this could grow to be after doing this year after year!

This money will be used to fund your big-time dreams and goals that you established way back at Level 1! This includes funding college for your child(ren), retirement, blessing others financially, dream vacations, and other items that are very important to you.

It is important to note that this 15% investment of gross income does not include any match you may receive from your employer. Whatever they may contribute is above and beyond the 15% goal.

Consider the following example:

  • 28 year old parents earning a combined income of $50,000 commit to follow this process
  • They achieve Level 1 (set goals) and Level 2 (save $2,500) in three months by using their tax refund
  • They achieve Level 3 (invest enough to capture company match in retirement account) one month later by contributing $100 per month and their employer matches with another $100.
  • They achieve Level 4 (become debt free except house) over the next 3 years
  • They achieve Level 5 (save 3 months of expenses) in another 8 months
  • They are now 32 years old and have arrived at this level – Level 6 – and begin to invest $7,500 (15% of gross income) into tax-advantaged accounts.
  • They receive another $3,000 in matching contributions from their employer making their total annual investments equal $10,500 per year (or $875/month)
  • They invest this amount every year until they are 66 (for a total of 34 years)
  • Because they started investing in Level 3, they have been investing $200 a month for 32 months. This investment is already worth $7,499 at age 32!
  • Using this $7,499 and assuming an annual growth rate of 12% with monthly contributions of $875/month, their investments will be worth $5,418,542 at age 66.

Get. Fired. Up!!!! By the way, this assumes that this couple never received a pay raise for 38 straight years.

Any doubt that this process will help you win with your money?

Read the entire series (available after 4/20/2013)

SERIES: How To Win With Money – Part 5

Welcome to another series here on the wildly popular I Was Broke. Now I’m Not. website. We’re passionate about helping YOU win with your money. In this series, we are going to be talking about a practical, step-by-step plan that you can use to take your finances to the stratosphere!

How To Win With Money

5.  Build savings to three months of expenses

Read step #5 again. Note that this level focuses on saving three months of expenses – not income. Because this follows level #4 (to eliminate all non-house, non-business debt), your monthly expenses should be much lower! In general, this level will take three to nine months to achieve.

It is amazing how much confidence this will give to you! Your ability to live is no longer wholly dependent upon an employer’s willingness to keep you. You can encounter financial challenges with substantially reduced stress. Even more, you are able to look beyond the current day and week and focus on “what could be.” It is at this step that you will begin to live in the vision and goals you documented at level one – the start of your journey to win with money.

Take a moment to determine how much your monthly expenses will be once you have eliminated all non-house, non-business debt. Now, multiply that number by three. This is your “Level 5 Savings Goal.” If you don’t have this much money saved right now, take a moment to think about how you might feel upon achieving this level. Let that feeling provide fuel to you as you progress up the nine levels required to truly win with money!

Read the entire series (available after 4/20/2013)

SERIES: How To Win With Money – Part 4

Welcome to another series here on the wildly popular I Was Broke. Now I’m Not. website. We’re passionate about helping YOU win with your money. In this series, we are going to be talking about a practical, step-by-step plan that you can use to take your finances to the stratosphere!

How To Win With Money

4.  Eliminate all non-house, non-business debt

Let’s face it. Debt is a drag. It hangs on like a bad relationship or a fixer-upper money pit house. Anyone, when given the choice, would choose to be debt-free over paying debt payments every month.

The average family possesses credit card debt, student loan debt, furniture debt, vehicle debt, and a personal loan or two. Then a house payment enters into the picture. Every single month, 40% or more of the family’s income is “dead on arrival” because it must immediately be sent out to lenders.

And the average family feels trapped.

The average person believes they will always have a car payment and credit cards must be used for every financial emergency.

But they are believing a lie.

The facts reveal that the average family can become free of all non-house, non-business debt with 12 to 36 months. The facts show that an average of between $500 and $1,250 per month could be freed up just by eliminating this debt.

You want to truly win with money? Eliminate non-house, non-business debt and utilize that freed up monthly money to achieve levels 5 through 9!

How to attack debt:

  1. Understand how much debt you really owe (I really like using the free website www.annualcreditreport.com to determine this)
  2. Calculate your Debt Freedom Date (use the free calculator HERE)
  3. Pay off debt using the Debt Snowball technique (focus on smallest debt first)

Read the entire series (available after 4/20/2013)

SERIES: How To Win With Money – Part 3

Welcome to another series here on the wildly popular I Was Broke. Now I’m Not. website. We’re passionate about helping YOU win with your money. In this series, we are going to be talking about a practical, step-by-step plan that you can use to take your finances to the stratosphere!

How To Win With Money

3.  Invest enough to capture your full company match (or $100 – whichever is greater)

Compound interest is an amazing financial principle that can literally explode your finances to levels you never believed possible. As proof, let me provide you some examples:

  • $50 per month for 40 years at 8% annual growth will yield $174,550 (you only invested $24,000 of your own money)
  • $100 per month for 40 years at 12% annual growth will yield $1,176,477 (you only invested $48,000 of your own money)

While you may be sick of debt and really want to start attacking it before you begin investing for the future, please ensure that investing is #3 on your journey to financial freedom. Here’s why: CONSISTENCY and TIME are what matter most when it comes funding your big-time goals and dreams (which is #1 on our “How To Win With Money” plan). If you have debt, it can take months or maybe even years to eliminate it. If you choose not to begin investing, you lose both “consistency” and “time,” the two biggest enablers for wealth!

Suppose you choose not to invest your $100 per month and focus on killing debt instead. Let’s assume that it will take three years for you to eliminate your non-house debt. Let’s see how much this will cost you:

  • $100 per month for 40 years at 12% annual growth is $1,176,477
  • $100 per month for 37 years at 12 annual growth is $819,259

Delaying your $100 per month investment for just three years will cost you $357,218 (the difference between $1,176,477 and $819,259! And if your company matches your investment dollar-for-dollar, double that amount to $714,438!

Non-investor: If that doesn’t make you RUN to begin your investments right now, I don’t know what will!

Where do you get started with your investments?

  • Start with company retirement plan (especially if there is a matching contribution from your employer)
  • Open a Roth-IRA (or similar tax-advantaged investment account)
  • Start or buy a business
  • Real estate
  • Personal talent or skill set that can create income

Read the entire series (available after 4/20/2013)

SERIES: How To Win With Money – Part 2

Welcome to another series here on the wildly popular I Was Broke. Now I’m Not. website. We’re passionate about helping YOU win with your money. In this series, we are going to be talking about a practical, step-by-step plan that you can use to take your finances to the stratosphere!

How To Win With Money

2.  Save money (Build a wall of protection) – Start with a goal of $2,500

I’ve seen nothing provide greater confidence to a leader than having financial margin. Money in the bank provides a person with the ability to take risks, pursue opportunities, fund dreams, and encounter obstacles. Without savings, a person will always be at risk of financial catastrophe. Any occurrence of a multitude of potential financial challenges could cause financial collapse – vehicle breakdown, air conditioning unit failure, replacing an appliance, and medical bills all seem to be attracted to people who have failed to save money.

If you want to truly win with money, you must prioritize saving money.

Saved money allows you to prevent future debt. This allows you to confidently turn your focus to eliminating any existing debt you may have.

A beginning goal of $2,500 will allow you to pay cash for most financial challenges you could potentially face such as an emergency trip out of town, replacing an appliance, or repairing the car.

Here are some ways to quickly achieve this goal:

  1. Sell something
  2. Use your tax refund
  3. Take a 2nd job and commit to depositing all of the extra money into savings
  4. Eliminate an “extra” or several “extras” from your monthly budget
  5. Use our “next steps – money saving ideas” page to find ways to save money

Read the entire series (available after 4/20/2013)

SERIES: How To Win With Money – Part 1

Welcome to another series here on the wildly popular I Was Broke. Now I’m Not. website. We’re passionate about helping YOU win with your money. In this series, we are going to be talking about a practical, step-by-step plan that you can use to take your finances to the stratosphere!

How To Win With Money

1.  Set Goals

Suppose I told you to run a race, but I did not tell you where to run. You could do a lot of running and still not end up at the ultimate goal – the finish line! Now suppose I challenged you to run a race, and at the same time I provided you a detailed map of the race course, a GPS, and a personal guide. The chances that you will end up at the finish line will have increased exponentially!

There is nothing like the power of a clear goal to spur one to take action. While a person might be able to make progress with their life without having clear goals, the process of establishing and tracking goals makes their achievement more likely. This is especially true when it comes to money and money management. One rarely stumbles upon wealth. Facts support this. Most wealthy people achieve their success through a series of focused decisions that are inspired by their goals.

Your money decisions should be driven by your goals for life! Many people make the mistake of allowing their current financial situation to dictate their goals. They make “broke thinking” statements such as, “I can’t afford that” or “I’ll never be able to do that.” This is a money lie that can create paralysis in all areas of life.

Establish life goals that mirror your plans, hopes, and dreams. Refuse to let the high costs frighten you away from establishing each goal because each one can be fully funded by following this plan.

Take some time in the near future (why not right now?) to write down some of your goals. Here are some good questions to ask yourself to fire up your dreams again:

  1. What opportunities do I want to provide to my children?
  2. What trips do I want to take?
  3. Who do I want to bless? What do I want to bless them with?
  4. What type of house do I want to live in?
  5. Where do I want to live?
  6. When do I want to retire?
  7. What career(s) do I want to pursue?

Here’s a “MY LIFE GOALS” form you can use to write your goals.

Read the entire series (available after 4/20/2013)

How To Prepare A Budget That Works

There are a lot of people who struggle with budgeting. They know theyshould have a budget, but there never seems to be enough time, energy, or money to prepare one.

I know the feeling. However, I also know the feeling of not having control of my money and always running into financial disasters toward the middle to end of each month. It was in December of 2002 that I experienced my IHHE Moment (I Have Had Enough Moment) and resolved to figure out a way to gain full control of my money. By July of 2003, I figured out a way to make budgeting work for my family. Below are the steps I put into place. If you put them into place, I’m confident this budgeting process will work for your household too!

  1. At least 3 days before the month begins, make a list of all your expected income and expenses for the upcoming month.
  2. Pull up the FREE BUDGET TOOL. Enter the income and expenses into the worksheet.
  3. Modify your income/expenses to ensure that the following formula is true: INCOME – OUTGO = EXACTLY ZERO

It really is that simple.

However, before you dive into preparing your best budget ever, I urge you to consider a few tips I’ve learned along the way:

  1. Prepare the budget BEFORE the month begins (before you get paid and start spending money). It is very difficult to prepare an effective plan in the midst of already spending it!
  2. Be realistic. I found that my previous attempts to budget failed because I was lying to myself and not being realistic.
  3. Put some fun in the plan. It really is okay to spend some money on FUN – as long as you aren’t mortgaging future plans, hopes, and dreams in the process.
  4. Use cash envelopes or a pre-paid gift card for categories where you have a tendency to overspend. This has worked wonders for my budget! The categories I use cash envelopes for are groceries, restaurants, clothing, spending money, and entertainment.
  5. Recognize that you will forget some expenses – especially in your first few budgets! I’ve seen many people address this by putting a “I forgot!” line item in their budget to cover these forgotten expenses.

Now go put that budget together, and start winning like never before!

Read recent posts

Baby Sangl Survey: Baby BOY or GIRL – VOTE!

On February 1st, I announced that our family was growing again. We’re so fired up about this for several reasons:

  1. Doctors told us that having another child was highly unlikely.
  2. This makes three miracles
  3. Children are a blessing from God!

At the end of this month, we’re going to have the “find out what we’re having” ultrasound. Since this expense will continue to help me max out my health insurance deductible, I thought we could have some fun with this by “voting” what we think “Baby Sangl” is going to be: another beautiful daughter who makes my wallet spontaneously combust or another son who will follow in the footsteps of his brother and break everything in the house – including my flat screen tv with his toy fire truck.

So … let the voting begin:

Subscribe to automatically receive every post in your email

Read recent posts