Recommended Spending Percentages

I often am asked the following question:

Do you have a breakdown that shows what percentage of our monthly income should go towards the different categories? For example, what percentage of our money should we be spending on housing, transportation, etc.

Here is a general guideline for major spending categories:

Typical Spending Percentages
Giving 10 – 15%
Saving 10 – 15%
Housing 15 – 35% (including utilities)
House Payment < 25% (including escrowed taxes, insurance, PMI)
Transportation 10 – 20% (including gasoline, taxes, insurance, & repairs)
Food  10 – 20%
Clothing 5 – 10%
Other Debt < 10% (not including house and car payment)
Entertainment 5 – 10%
All other 5 – 10%

Hope this helps!  If you have a question, you can ask it HERE.

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Impulsiveness = B.R.O.K.E.

Have you ever made a poor financial decision because you got caught up in the moment?   I have.   I once bought a car when I was caught up in the moment.   I paid full price (plus more).   I financed the car 105% – I even financed the sales tax!

That decision helped me write the “I Was Broke” part of my book I Was Broke. Now I’m Not.!

If you are just getting started on your Debt Freedom March, I want you to pay attention to another form of impulsiveness that can keep you broke – the impulsive desire to become debt-free.   Let me explain.

I see people who take our classes or participate in the I Was Broke. Now I’m Not. Group Study who catch a vision of what life would be like with a written life plan, a written spending plan, and free of debt.   They understand the freedom that this delivers, so they want it NOW!   It is so inspiring!   So exciting!   So motivating!   Yet, I have seen this impulsive desire to become debt-free become financially harmful.

How has it become harmful?   Here are some common ways I see people (who have great intentions) hurt themselves financially because they want to become debt-free NOW!

  • Cash in the 401(k) I have seen countless examples where people cash in the 401(k) to pay off credit cards or other debts.   There are two problems with this.   (1) They ROB themselves of their retirement savings! and (2) There is a tremendous cost – taxes PLUS a 10% federal tax penalty if the person withdraws it before turning 59-1/2 years old.   It usually means that 40% or more of the 401(k) ends up leaving to the government!
  • Cash in the whole life insurance policy I have seen people cash in a whole life insurance policy and NOT have other life insurance in place (I own 30-year level term life insurance).   There are two problems with this.   (1) Without another life insurance policy in place, there is a gap in coverage.   Gaps are terrible.   (2) The immediate debt problem is addressed, but if the individual does not address the behavior that led to the debt in the first place, they will usually end up right back in debt.   Only now they will not have the cash value built up to bail them out.
  • Apply all of the tax refund to debt pay-off The first step toward financial health is to have at least $1,000 in an emergency fund ($2,500 if you have kids or a house).   Too many times I see individuals become consumed with becoming debt-free and they fail to save money.   As a result, they might pay off more debt at the beginning, but something will happen like a car breakdown or appliance failure.   Without any savings, the individual will have to turn to debt again.   Make sure that you save money FIRST.

Financial impulsiveness rarely works out favorably.

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Personal Financial Discipline- Do You Have It?

Personal discipline.  Do you have it?  Or do you lack it?

Signs of personal discipline in personal financial management:

  • Waiting at least overnight before making a large purchase decision
  • Balanced checkbook
  • Monthly spending plan
  • Saving every paycheck
  • Giving every paycheck
  • Organized financial documents – including insurance EOBs
  • Credit cards paid off in full every month
  • Regularly obtain credit report to ensure it is accurate
  • Married couples – both know where the money goes and how much they have saved
  • Singles – established accountability

Signs of poor personal discipline:

  • Overdrafts
  • Disorganized records
  • Late payments
  • Credit cards balances not paid off every month
  • Spouses not working together
  • Impulsive spending decisions
  • Little or no saved money
  • No giving

What would you add to either list?

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SERIES: I’ve Declared Bankruptcy – Now What? – Part Three

I’ve declared bankruptcy. Now what?”

This is a combination “statement – question” that millions of people have made over the past few years. According to the United States Courts website (HERE), 1,221,091 individuals and companies declared bankruptcy in the U.S. in 2012 alone. We’re launching this series to help people who have went through bankruptcy so they never go back and so they can prosper!

Part Three Fix the root cause.

Identifying the root cause is very important, but fixing it is even more important. Statistics indicate that nearly half of all individuals who declare bankruptcy will declare it again at some point in their life. You can ensure that this statistic is lowered by ensuring that you address the root cause and prevent it from leading to bankruptcy again.

Did a pile of medical bills incurred while you were without medical insurance send you into the financial ditch? Address the root cause (not having medical insurance) by ensuring that you never again allow medical insurance to lapse.

Did you get laid off from the job you held for years and a lack of savings sent you into a downward financial spiral? Address the root cause (not making savings a top priority) by ensuring that you save money every time you are paid money in the future. It is a bill you owe to yourself!

Maybe you entered into a business partnership based solely on trust and your partner left you holding all of the bills. Address the root cause (failing to seal a handshake agreement with a contract that clearly identifies ownership, roles, responsibilities, privileges, and liabilities) by never again entering into an agreement without a rock solid contract.

Perhaps poor spending behavior and impulsiveness finally caught up with you and left you with an overwhelming pile of debt. Address the root cause (failing to have a monthly budget that prioritized giving, saving, and investing) by submitting yourself to a financial coach who will hold you accountable to living and operating by a budget every month.

Changing behavior is rarely fun, but it is so worth it!

Read the entire series (available after 3/25/2013)

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SERIES: I’ve Declared Bankruptcy – Now What? – Part Two

I’ve declared bankruptcy. Now what?”

This is a combination “statement – question” that millions of people have made over the past few years. According to the United States Courts website (HERE), 1,221,091 individuals and companies declared bankruptcy in the U.S. in 2012 alone. We’re launching this series to help people who have went through bankruptcy so they never go back and so they can prosper!

Part Two Identify the root cause of what resulted in bankruptcy.

In your quest to move forward financially and to never again have to declare bankruptcy, it is vitally important that you conduct a detailed autopsy on what resulted in the death of your finances. What were the underlying real issues that created the financial mess? This can be a difficult process because you may have to sift through some painful memories, but this is what can help you never return to being totally broke.

The root cause is the real reason that bankruptcy occurred. If one is not really searching to fix the issue, they might say that the root cause of bankruptcy was that “they just felt overwhelmed.” Being overwhelmed is not the root cause. It is a feeling created by a deeper issue. For example, suppose this individual had purchased a new car and a new house, and then lost their job two months later. This situation certainly can create feelings of being overwhelmed, but we now have identified a contributing factor: job loss.

But the job loss is not the real root cause either! The REAL root cause is the fact that a new car and home were purchased without having any financial margin (savings) stored up “just in case of” a major negative financial event. Therefore, the real root causes of the situation are:

  1. NO SAVINGS  “Not having financial margin stored up”, and
  2. NO MONTHLY MARGIN  “Living against the edge by having all income pledged away to loans”

Do you see the process?

Here are some helpful questions to ask when determining the root cause(s):

  1. Did this happen because of one major poor financial decision or because of a series of poor ones?
  2. When did the situation become unmanageable? What made it that way?
  3. Why did you decide to declare bankruptcy?
  4. What could I have had in place that would have prevented bankruptcy from happening?

This is not about assigning blame and creating guilt. It is all about identifying the real culprit of bankruptcy so it can be addressed and prevented from ever causing bankruptcy again!

Read the entire series (available after 3/25/2013)

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SERIES: I’ve Declared Bankruptcy – Now What? – Part One

I’ve declared bankruptcy. Now what?”

This is a combination “statement – question” that millions of people have made over the past few years. According to the United States Courts website (HERE), 1,221,091 individuals and companies declared bankruptcy in the U.S. in 2012 alone. We’re launching this series to help people who have went through bankruptcy so they never go back and so they can prosper!

Part One If you are beating yourself up over declaring bankruptcy, STOP IT!

One of the biggest obstacles for anyone recovering from bankruptcy is overcoming guilt and embarrassment. In fact, many people never really get over these feelings. It is perfectly okay to say, “That was horrible. I’m never doing that again!” It is not okay to stay stuck. Acknowledge the very real feelings that come with the territory, and then resolve to move on. As the late great leadership expert, Zig Ziglar, would say, “Today is the first day of the rest of your life!”

Beating yourself up will tell you LIES. Here are some common examples (participate in the discussion by sharing others you’ve heard in the comments section):

  1. “I’m not smart enough to win with money.”
  2. “I hope I never get money again because I’ll just wind up broke like last time.”
  3. “My family and friends believe I’m a failure.”
  4. “The world is against me.”
  5. “I can’t trust anyone.”

These are LIES. Ignore them. They only allow you to beat yourself up some more. Stop it! (because you can do this!)

Read the entire series (available after 3/25/2013)

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FOR CHURCH LEADERS: Generosity Learning Experience

I’m so excited about the opportunity to speak at the Generosity Learning Experience (presented by INJOY Stewardship Solutions) that will be visiting six more cities over the next two months. If you are a church leader (or know one to invite), I believe you could be helped in a tremendous way by attending one of these special events.

In this one-day event, you will have the opportunity to learn from some of the top leaders in the area of increasing generosity and raising major dollars to fund the mission and vision of your church.

We’re going to be talking about increasing your regular giving as well as how to conduct a wildly successful capital stewardship campaign. The day will be full of practical wisdom and real-world examples to demonstrate application.

Each event runs from 8:30AM – 3:30PM, and the locations and dates are:

  • April 16, 2013 (TUES)  Charlotte, NC
  • April 17, 2013 (WED)  Indianapolis, IN
  • April 18, 2013 (THUR)  Dallas, TX
  • May 7, 2013 (TUES)  Baltimore, MD
  • May 8, 2013 (WED)  St. Louis, MO
  • May 9, 2013 (THUR)  Houston, TX

Here’s what you’ll take away:

  • The latest unreleased ISS resource that will help your church take its generosity to another level! Once released, this product will retail at $99, but every church that attends will receive it FREE of charge!
  • FREE lunch! (Who doesn’t love Chick-fil-a?)
  • Practical steps you can immediately implement to increase giving in your church by 30%
  • A step by step guide to developing BIG TIME generosity leaders in your church.
  • Learn how to get your church ready for a major giving initiative
  • PLUS MUCH MORE!

For a limited time, you can receive HALF-OFF your first ticket purchase and to encourage you to bring your team with you, receive 75% OFF up to 3 additional tickets (through March 22, 2013). Space is limited so make sure you reserve your spot right away!

Learn more and register HERE (or click the registration link below).

SERIES: I’ve Declared Bankruptcy – Now What?

I’ve declared bankruptcy. Now what?”

This is a combination “statement – question” that millions of people have made over the past few years. According to the United States Courts website (HERE), 1,221,091 individuals and companies declared bankruptcy in the U.S. in 2012 alone.

Bankruptcy is an embarrassing, stressful, and humiliating process. It can make one feel like they are not just a financial failure, but a total failure as a person. That’s not true, of course. Many people have made the tough decision to declare bankruptcy (Dave Ramsey is a famous example in the world of personal finance – so grateful he shares about it openly!), and it became a catalytic moment in their life that launched them to an incredible future. This is the very reason the option to declare bankruptcy exists in the first place: to help people recover from extremely difficult financial decisions.

Because bankruptcy affects people so deeply, over a series of posts I’m going to help answer the question: “Now what?” The reason this matters so much to me is because a large percentage of people who declare bankruptcy once are likely to file again! In fact, 28% of the people who filed for bankruptcy in 2011 were “repeat filers.” It is my goal through this series to help bankruptcy filers become adept financial leaders and managers so that they can prosper and never be broke again!

To open this series, here are a few facts about the most common types of bankruptcy one can declare:

  1. Chapter 7 Bankruptcy  Liquidation of one’s assets (minus exempt items)
  2. Chapter 9 Bankruptcy  Municipality bankruptcy
  3. Chapter 11 Bankruptcy  Reorganization under the bankruptcy code
  4. Chapter 12 Bankruptcy  Family farmer or fisherman bankruptcy
  5. Chapter 13 Bankruptcy  Individual debt adjustment

And here are some interesting facts about bankruptcy:

  1. You can’t erase student loans by filing bankruptcy  This is true in almost all cases.
  2. You can’t erase taxes owed by filing bankruptcy  This is true in almost all cases.
  3. You can’t erase child support or alimony obligations by filing bankruptcy  This is true in almost all cases.
  4. More than HALF of bankruptcies are due to medical bills  The failure of our own bodies causes a financial collapse. Awful!
  5. Filings for bankruptcy have dropped substantially over the past few years (more than 10% each year)  Has the economic recession gotten our attention and made us better money managers?

I look forward to this series. Please share your stories and comments as it will help thousands of people who are in this process right now!

Read the entire series (available after 3/25/2013)

The I Was Broke. Now I’m Not. Group Study Kit costs only $20 and can help you avoid bankruptcy and position you to prosper! Check it out HERE.

Joseph Sangl’s Current Investments – March 2013 Update

Anyone who has attended a Financial Learning Experience has heard me say that it is important to INVEST money and to do so every single time you are paid money. At the end of our live events, I am regularly asked or emailed the following question:

“What investments do you recommend?”

My answer is always, “I don’t recommend specific investments. I can only tell you the investments I own, and they have worked well for me. The investments you choose are up to you.”

Occasionally, I update everyone on the investments I currently hold. Below is a chart of the current investments we hold. If it is publicly-traded, I have included the ticker symbol. Click on the chart itself (or HERE) to see a larger version.

We have finally seen the market improvement that many people expected. With companies declaring record profits and sitting on record amounts of cash, I’m seeing that they are finally beginning to invest again. That should bode well for investors and the economy at large. At this moment, I will continue to purchase individual stocks as well as research private investments – particularly small businesses (my favorite!).

Here’s the pie chart showing the investment distribution:

My thoughts:

  1. The stock market has been hot, but nothing is ever hot enough for me to put all my eggs into one basket. I greatly prefer diversification beyond the open markets.
  2. A lot of day traders think they are incredible geniuses right now. That’s not because they are all awesome – it’s because it is hard to lose in this type of market! As enticing as day trading may seem, it feels a lot like gambling. I prefer being a “slow & steady” and “stay the course” investor.
  3. Tracking net worth on a monthly basis has made me a “first-hand witness” to the incredible momentum of my investments. Without consistently tracking net worth, I’m pretty sure I would have missed it!

Your thoughts?

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Disclosure

How To Become A Millionaire Using Compound Interest

“How to become a millionaire.”

That title can seem to reek of selfishness or greed, but what if you looked at wealth this way:

  1. Wealth allows us to serve and bless the less fortunate.
  2. Wealth enables us to fund the work of our church and other great causes.
  3. Wealth allows us to focus on doing EXACTLY what we’ve been called to do!
  4. Wealth provides income so we can meet our needs when we are no longer able to work.

Perspective matters, doesn’t it?

I’ve tried broke, and I’ve tried not being broke. I like not being broke much better!

With that said, here’s how YOU can become a millionaire:

INVEST and capture the power of COMPOUND INTEREST.

When it comes to compound interest, three things matter a lot:

  1. Amount of money invested (start with whatever you can and work to increase it from there)
  2. Time (start early!)
  3. Interest rate (growth rate of your investment)

Here’s how YOU can achieve $1,000,000 at a constant Interest Rate of 12%:

  1. Invest $85.00 per month for 40 years at 12% annual interest.
  2. Invest $286.13 per month for 30 years at 12% annual interest.
  3. Invest $1,010.86 per month for 20 years at 12% annual interest.
  4. Invest $4,347.09 per month for 10 years at 12% annual interest.

Here are some ways YOU can achieve $1,000,000 in just 20 years:

  1. Invest $1,697.73 per month for 20 years at 8% annual interest.
  2. Invest $1,316.88 per month for 20 years at 10% annual interest.
  3. Invest $1,010.86 per month for 20 years at 12% annual interest.
  4. Invest $768.54 per month for 20 years at 14% annual interest.

Here is how YOU can achieve $1,000,000 with just $300 per month:

  1. Invest $300.00 per month for 473 months at 8% annual interest.
  2. Invest $300.00 per month for 404 months at 10% annual interest.
  3. Invest $300.00 per month for 355 months at 12% annual interest
  4. Invest $300.00 per month for 318 months at 14% annual interest.

For those familiar with investing, I already know one of the biggest questions you want to ask:

“Where on earth do I get 12% annual interest?”

It’s a great question! The number one way to get 50% or even 100% interest is to contribute to an employer-sponsored retirement plan where matching contributions are made. For example, if your employer matches your contributions “dollar-for-dollar” up to 3% of your pay, that is a 100% interest rate that AUTOMATICALLY HAPPENS with NO RISK! It’s called FREE MONEY! Beyond that, I like investing in mutual funds that are older than me and also in other great investments like residential and commercial real estate as well as small businesses.

In fact, I have spread my investments into most of these categories with small businesses and mutual funds being my preferred options. If you are interested, you can view my CURRENT INVESTMENTS HERE.

Are you wanting to break out of the ordinary into extraordinary? My latest book, OXEN: The Key to an Abundant Harvest, can help you grow what you have into an abundant harvest. Read more and purchase OXEN HERE.

QUESTION: What do YOU need to do to become a millionaire? Share with us in the comments HERE.

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Are You EATING Your Financial Freedom?

Most people struggle to save money. There are so many urgent and important items that compete for every single dollar in our wallet.

The kids are constantly growing out of their clothes, something in the house is continually breaking down, and the car seems to have a ravenous appetite for money. These are all items that consume our money, but the largest competitor for savings in most people’s household is FOOD. In fact, when someone completes their first-ever budget, they begin to review their actual spending patterns and nearly always come to the same conclusion that they’ve been spending way to much on food. They summarize their discovery by stating something like:

“I’ve found out where my savings account is – I’ve been eating it!”

I discovered this truth when I did my first budget way back in July 2003! The realization is as stark today as it was then. I was literally eating my savings (and my future)!

There are many ways to reduce your food costs (and I would love for you to share your great ideas with us all in the comments!):

  1. Don’t go to the grocery store when you are hungry!
  2. Split a meal with someone else while at a restaurant.
  3. Use cash envelopes
  4. Shop the sales at the grocery store!
  5. Use coupons (but buy things you will really use!)
  6. Make dinners from scratch (healthier and brings family together!)
  7. Designate one week as a “We’re eating all our meals using stuff in the pantry this week!” (you will quite possibly have the most interesting meals you’ve ever had!)

Readers: What additional ideas would you share? Click HERE to share in the comments!

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Food Stamps For Your Kitty Cat?

File this one under “Weird”.

I recently had an article sent to me by my friend, and I have been stunned ever since.

Did you know that there is a Food Stamp Program for PETS?

You can read an article about it HERE.

What are your thoughts?

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SERIES: “Fix The Economy” – Make Rip-Off Loans Illegal

Welcome to the latest series at the wildly popular JosephSangl.com: “5 Things That Will Help Fix The Economy” In this series, I will be sharing some principles I believe will help fix the economy long term.

The economy has been stuck for some time. The words “Great Recession,” “Fiscal Cliff,” “Sequestration,” “Stagnant,” and “Jobless Recovery” have become common everyday language.

Number 5:  Make rip-off loans illegal

I know this seems a little out of place when compared to the other four items, but I really feel this needs to be included. When economies allow organizations to charge OUTRAGEOUS fees and interest to citizens, it is positioned to eliminate the middle class.

In a coaching appointment, I had a person who had signed up for a “payday” loan. The loan agreement clearly outlines that the “annual percentage rate” was 782.14%. That is not a typo! The interest being charged to this person was 782.14%.

I’ve heard arguments from those who make these types of loans:

  • We help people who are “in a pinch”  You can actually say that with a straight face?
  • People voluntarily sign up for these loans.  This doesn’t make it right!
  • These are smaller loans, so it’s not that big of a deal.  Yes, it is!

Have you noticed where these rip-off loan businesses are located? Near rich neighborhoods? Nope. They are located next to communities where people have little money education. It’s my goal to help educate everyone to the point that no one would ever borrow money with such horrific financial terms and these types of organizations have to go out of business!

This type of lending is awful, and it should be illegal. Who’s with me?

Read the entire series (available after 3/14/2013)

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SERIES: “Fix The Economy” – Incentivize Innovation, Job Creation, and Education (Especially Money Education)

Welcome to the latest series at the wildly popular JosephSangl.com: “5 Things That Will Help Fix The Economy” In this series, I will be sharing some principles I believe will help fix the economy long term.

The economy has been stuck for some time. The words “Great Recession,” “Fiscal Cliff,” “Sequestration,” “Stagnant,” and “Jobless Recovery” have become common everyday language.

Number 4:  Incentivize Innovation, Job Creation, and Education (Especially Money Education)

Economies that possess highly educated people who focus on developing emerging technologies are the ones who help drive job creation. For this reason, it is essential that countries incentivize this because it will result in global economic improvement.

There are so many great areas where we need innovation:

  1. Transportation: Rapid transit and mass transportation
  2. Energy: Electricity, Oil, Gas (improving the old ones) and Renewables (replacing the old ones)
  3. Housing: Improving efficiency and building materials
  4. Education: Improve teaching and learning methods – especially providing experiential learning and connecting theory to real-life application

Here’s why money education is so important:

People without sound money knowledge will do the only thing they have ever seen done with money – spend it. They will spend every dime they have earned, then open a credit card and proceed to spend all of the credit limit also. This WILL help power an economy – but only for a very brief period. Very quickly, those people who have little money knowledge will run out of spending power and have to repay their debts. This causes economies to experience short-term massive expansion followed by years of stagnant growth or even contraction. Sound familiar?

While steady growth is not nearly as exciting as massive expansion, it is sustainable.  That sounds like a good deal to me.

Read the entire series (available after 3/14/2013)

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SERIES: “Fix The Economy” – Build Substantial Financial Margin

Welcome to the latest series at the wildly popular JosephSangl.com: “5 Things That Will Help Fix The Economy” In this series, I will be sharing some principles I believe will help fix the economy long term.

The economy has been stuck for some time. The words “Great Recession,” “Fiscal Cliff,” “Sequestration,” “Stagnant,” and “Jobless Recovery” have become common everyday language.

Number 3:  Build substantial financial margin.

When an individual, organization, or government continually operates without a “margin of safety” financially, they are always are at risk of collapsing in the face of a financial emergency.

Over the past decade, the national debt of the United States has soared. The actual debt was:

  • In 2000: $5,757,000,000,000
  • In 2004: $7,097,000,000,000
  • In 2008: $9,472,000,000,000
  • Now: $16,614,000,000,000

This debt has increased in large part because the nation has been “against the wall” financially – with no real savings. Just like a person who has lost their job without having any saved money, the decision was made to “finance” the gap to keep everything running. However, just like a credit card has a spending limit, so does the nation.

Just as it is of first and foremost importance for an individual to build financial margin (even before attacking debt), it is vitally important that the nation build savings. Savings allows the nation to have “breathing room” that would allow for the conversations and dialogue that is very necessary to make the best and wisest decisions regarding income and outgo.

Here are ways that the United States could build margin:

  1. Pass a balanced budget that is REQUIRED to be followed. (This was part 2 of this series)
  2. Ensure that savings is included as an expense that is part of the balanced budget.

I would be more than happy to pay more taxes if the government’s leaders would commit to STOP incurring more debt, and my extra tax dollars would be utilized to build financial margin and to reduce debt. Anything to ensure that my children and grandchildren won’t be left bearing the huge financial burden of a bankrupt nation!

Your thoughts?

Read the entire series (available after 3/14/2013)

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