Finance

This is a series written for those who are struggling mightily with their finances and tough decision are being made about who will and will not be paid. It is my hope that this series will provide practical steps that can be taken to walk out of this situation and into financial freedom.

PART ONE  Evaluate
Why are you stuck? It’s important to understand why and evaluate the root cause of the situation.

PART TWO  Plan!
Planned money accomplishes far more than unplanned money. There is so much power in a written spending plan – a budget!

PART THREE  Prioritize
When you have an extremely limited amount of funds, it is important to remember the priorities. I have met a lot of people who have been tricked, guilted and shamed by credit card companies into paying the credit card bill instead of their house payment.

Here is my suggested order of priority for spending when there just is not enough to pay everything.

1. Housing – Must take care of the mortgage and utilities first. Now if the mortgage payment has run out of control and it is 60% of one’s take home pay, then it is high time that the house be sold or income be tripled within a couple of months.
2. Food/Prescription Medicine – I am going to eat before one single bill is paid! We must be able to eat. I am not talking about Olive Garden or fast food. I am talking about groceries bought with coupons and attention to frugality.
3. Transportation – If transportation is required to produce income, then it is imperative that the vehicle payments, insurance, taxes, gasoline and maintenance be funded.
4. Back Taxes – Owing the government back taxes is a terrible thing, and it must be addressed. I would rather owe anyone besides owing Uncle Sam!
5. Secured Debts – If there is additional money remaining after housing, food, and transportation are taken care of, it is time to pay the secured debt payments. This is debt where the lender can come take something – like a car, boat, motorcycle, tractor, etc. If the lender repossesses the item, they will sell it at a wholesale auction and come after you for the difference.
6. Family & Friends Debts – If you owe family and friends and you still have some money left, it is essential to pay on debts owed to family and friends. Unpaid debts to family and friends have been the cause of untold relationship issues since time began. Avoid this!
7. Unsecured Debts – It is time to address the unsecured debts – credit cards, student loans, signature loans, etc. One thing to note is that unsecured debt holders will be screaming and hollering the loudest because there is nothing they can come take from you. As a result, they will try to play upon your emotions to get you to pay them before you pay anyone else. And it works! I have met with a lot of people who have kept their credit cards current while letting the house payment fall behind. Not good!

Who is the manager of YOUR money? It should be YOU! Not your creditors! YOU choose where it goes.

Go back to your spending plan you have prepared and ensure your priorities are in order.

Even if you don’t have enough money to pay all of the bills, go ahead and put all of the bills into your spending plan. This is a KEY step! You need to clearly understand how large the gap is between you INCOME and your OUTGO. We will address this in Part Four.

This is a series written for those who are struggling mightily with their finances and tough decision are being made about who will and will not be paid. It is my hope that this series will provide practical steps that can be taken to walk out of this situation and into financial freedom.

PART ONE  Evaluate
It’s extremely important to understand why you are stuck.

PART TWO  Plan!
Now that you have identified the reasons you are stuck, it is time to prepare a written spending plan. That’s right, a budget.

Here is something I have learned – planned money accomplishes far more than unplanned money. There is so much power in a written spending plan! I never realized where all of my money was going until the day I began planning my spending.

A spending plan will ensure you know the actual situation instead of the imagined situation.

I know what you have is limited, and in some cases, very limited. It is imperative, however, that you plan what you do have.

There are free tools available on the I Was Broke. Now I’m Not. website (just click on TOOLS). 

Monthly Budget Form (Excel) If you are paid once per month, this is the budget tool for you.

Weekly Budget Form (Excel) If you are paid multiple times per month (twice/month, bi-weekly, bi-monthly, weekly, etc), this is the budget tool for you.

My newly revised book, I Was Broke. Now I’m Not., has four chapters devoted specifically to teaching you how to use a budget to thrive financially.

Have you ever been stuck financially? I mean STUCK. Do you feel so stuck that you can’t gain traction to get control of your finances?

Perhaps you have no income because you have lost your job. Maybe you’re in college and accumulating debt to pay for it. Perhaps your spouse spends money faster than you can make it. Or maybe you’re just lost when it comes to managing money. It might even be the fact that you have so much unsecured debt that you feel completely helpless. Maybe you’re disabled, and can’t figure out what to do to earn more money.

This series is written for those who are struggling with their finances. You might even be making tough decisions about what will and will not be paid this month. It is my hope to provide practical steps you can take to walk out of this situation and into a fully funded life.

Let’s get started on the journey and get unstuck!

PART ONE  Evaluate
It is extremely important to understand why you are stuck. You must ask yourself challenging questions. There are some situations that have definite ends to them (college) and other situations that may continue on indefinitely (job loss, disability, and overwhelming debt).

When I’m coaching a person who says, “Help! I can not pay my bills!” my immediate response is to evaluate the root cause of their situation. I ask questions to grasp the real issues. Here are some of the questions I ask to help move you along in your financial journey. These are not in any particular order.

“What was the cause of this situation?” Is your financial situation the result of a long series of poor financial decisions or the result of a catastrophic event like a job loss, medical issue without insurance, death of income provider, etc.? Can you point to a particular poor financial decision that has led to your financial challenges?
“Is this an INCOME or an OUTGO issue?” Prepare a budget to help you more clearly determine the answer to this question. Identify where your money is going using your credit card and bank statements. As you identify you monthly income and total expenses from the previous month, it is important to challenge each expense with the question, “Was this expense absolutely necessary?” While most people in financial challenges believe their issue is an income problem, I’ve learned from experience that in most cases, it is an OUTGO issue.
“What are the required debt payments?” As you identify all of your debt payments, determine if each one is unsecured revolving debt (credit cards) or installment debt on an asset (car, boat, motorcycle, etc)?

As you identify why you are stuck, write the reasons down on paper.

Do you have other questions that you would add to this list?

Today marks the first full day that the completely revised and updated I Was Broke. Now I’m Not. is available!

As part of the festivities, we are offering the “Release Special” for people who purchase a copy of the book.

We’re also launching a contest called “Guess The Number Of Exclamation Marks!!!!!”

As you know, I am a big fan of this form of punctuation. I tend to speak with exclamation marks and my writing reflects. As I began the process of rewriting the book, I could not believe how many of those little “!” I had used in the original copy of I Was Broke. Now I’m Not.

So, in honor of my complete overuse of this punctuation, we’re going to award a free copy of the completely new I Was Broke. Now I’m Not. to two people:

1. The person who most closely guesses the number of exclamation marks in the original book
2. The person who most closely guesses the number of exclamation marks in the newly updated book

Enter your guess below. Only one entry per person. You must provide a valid email address so we can contact the winner. Contest ends at 11:59 PM Eastern on Thursday night, January 15, 2015. Can’t see the the entry form? Copy and paste the following link in your favorite browser: http://goo.gl/forms/zyaYx7VpSr

Welcome to the latest series here at the wildly popular JosephSangl.com – “Managing Money As A Single Parent”!

Part Seven  Establish accountability

It is clear within all sports that only those athletes and teams with a great coach achieve success. The same is true for your finances. As a single parent, it can be easy to avoid financial accountability with any one. Don’t fall into the trap that you can do it all yourself. You carry such a tremendous load as it is. Meeting with a financial coach on a consistent basis (at least once a year) will ensure you stay on track to achieve the financial goals you’ve established for yourself and your children. Solomon shares great insight again in Proverbs 15:22: “Plans fail for lack of counsel, but with many advisors they succeed.” A financial coach will help you identify “financial blind spots” – areas you may not even see but can have profound implications for your future. Submit to a coach, and you will make financial progress much more swiftly and with far less mistakes.

A financial coach will help you identify “financial blind spots” …

Most single parents deal with exhaustion and lack of free time on a near-continual basis. Anything that is not extremely urgent is usually pushed aside. Important financial principles and tools are usually not urgent until a financial event occurs. A lack of accountability to living by a budget, automatically saving and investing, and other key personal finance tools is then exposed and creates a financial mess.

PRACTICAL STEP TO TAKE:

1. Obtain a financial coach and meet with them at least once each year