Weekly Money Challenge…

I have to be honest, I did not come up with this nor did I create this awesome chart. I saw it floating around in Facebook world and thought I’d share it here. I’m not sure where it originated but the concept is EXCELLENT. It’s kind of how I started saving. I didn’t do it exactly this way but maybe I should have.

As you can see from the chart, you start off small. That’s how it always start….SMALL!

52 Week Money Challenge

recuperating from holiday “gift giving” debt..

With the holiday’s behind us, reality sets in. You’ve over spent-now what!?

I’m just going to get right into it. Let’s be honest for a minute….REALLLLY HONEST. The gifts that you bought your friends, relatives, co-workers, etc, was it to “impress” someone? Was it because if you bought a gift for them that you could ACTUALLY afford, you were afraid they would judge you? Did you want to continue the facade that you are “doing well” and could afford to buy that for them? If you answered yes, you were guilted into buying a gift..maybe not by them, but by the voice inside your head. I think it’s important to recognize that so that you can recognize it when it happens again. I love that we SAY it’s not about the gifts, it’s just about the “time we spend together”, it’s not about the gifts, “it’s the thought that counts”….and yet, our bank account tells us differently.

Ok, so now what? You’ve spent it, it’s gone..let’s more forward. What can you do to get back on track?

1. Assess the damage: gather up all of your receipts, credit card statements, etc. and get real with where you stand.

2. Cut back: I know this isn’t what you want to hear. But just like when you need to lose some holiday pounds (totallllly guilty), you  need to cut back in some area.  You’ll notice I use dieting as a comparison to getting financial fit.   It takes discipline and determination to do better, and to cut back when necessary. Some areas you can cut back on are: eating out, pizza delivery, gourmet coffees, prepackaged foods, new clothes, travel, car washes, movies, sporting events, you get the picture.

3. Create a list when you go shopping and then STICK to that list. Do you know that 60% of people’s spending are impulse buys and that the average person impulse buys around $100? Get smarter than the stores and stop grabbing that last minute stuff off the shelves while you’re standing in line to check out. You know you’ve done it!!! Pre-plan your trip, get in and get out!

4. Get off the mailing lists of your favorite stores. This is a hard pill to swallow…..but it’s all about temptation. I mentioned in a previous post that learning to be content with what you already have is a HUGE factor into helping you get out of debt. Imagine being content with what you have and then BAM your inbox has a sale for 75% off of <insert want> and you think “OMG, that’s a great deal, I can’t pass it up!” and before you know it, the card is out and you’re even further in debt. You didn’t really NEEED it, but it was a great deal.

5. Use those gift cards you got from over the holidays. We all get some form of a gift card and a large amount of people never redeem them. But be careful, hold on to them until you NEED something and then instead of buying them on credit, use your gift card. If it’s for a store you will never shop or a card you know you’ll never use, there are sites that you can exchange them such as Plastic Jungle. https://www.plasticjungle.com

6.Think ahead to next year and start with this year-create a holiday budget. Start stashing money away here and there so that when Christmas rolls around, you have CASH to pay for the gifts you want to buy. Then get real with what you can actually afford, don’t try to impress people with gifts you can’t afford,  and set a budget for each person…..because remember, it’s not about the gifts, it’s about “spending time with the people you love”.

you don’t have to be perfect….

You don’t have to be perfect, you just have to get started!

That saying….prompted me to start this blog. I always wanted to have a personal finance blog to share the little golden nuggets I’ve learned along the way, but I always thought it needed to be perfect right out of the gate. The truth is, this is pretty bare bones at the moment, nothing fancy, but I decided to put myself out there and TRY.  The same holds true for getting your debt paid down…..you don’t have to be perfect at it..just get started.  Any little change you make in the way you think about your money is going to earn you some return on investment. Peace of mind, financial freedom, flexibility-I mean think about what life would be like if you just got that monkey off your back.

I also wanted to share this with you. In any journey (business or personal) I’ve set out to accomplish, I’ve always found myself to succeed MORE if I surrounded myself with people who will encourage me when I’m doing well, support me when I’m struggling, and hold me accountable to my own personal goals when I’m wavering.

So stop trying to be perfect and surround yourself with positive, encouraging friends.

And here’s a picture of my dog with a monkey on her back!

gracie with a monkey on her back

it feels better to…..

One of the hardest things to do when trying to “save money” and get yourself out of debt is to say NO to things you would have jumped on back when you had your old habits. That new T.V., the vacation with friends, the new boots or purse, the latest <XYZ>…you get my point.

My secret?             Learn to be content. Be content with what you ALREADY have….appreciate what you ALREADY have. You may not think you have “enough” ….but reality check-you have more “stuff” than other people around the world.

If you follow Suze Orman, she suggests that you get an 8 month emergency fund (enough money to get you thru 8 months worth of living expenses) set up so that you can have a peaceful piece of mind that if you come to any bumps in the road, you have a fund to draw from instead of going further into debt on your credit card. But don’t let that overwhelm you, having ANY money in an emergency fund is better than having NEGATIVE money in your emergency fund.  Until you have your “stash” saved up, do this…….If you get the urge to go out and buy something (a want)-go home and wait two days. Then when you finally come to your senses and realize that you don’t really need it and that it was just a want, take the money you WOULD HAVE SPENT and put it in your savings account. It would have been gone anyways right?

And then remember this after you see the money start to build up……..

If feels better knowing you COULD HAVE  it but you choose to say no…… than it does to WISH you could have it but can’t because you didn’t have the money. In other words, it feels better knowing that I COULD buy a brand new car if I wanted to because I could go get a loan than it does to be told NO by the bank because I can’t get a loan. Do you see the difference? It’s what helps me say NO more often and helps me watch my savings account beef up.

hidden rules of social classes…

“How much do you really know about the day-to-day struggles of the poor in the U.S.? If, like me, you find yourself comfortably in the middle class, you might find it difficult to understand the worldview of a person in generational poverty.  This raises serious questions about the appropriate moral responses to such situations, given our call to be in solidarity with the poor and to transform sinful social structures.” -Ruby Payne.

I had the opportunity to listen to Ruby Payne speak once a few years ago. I sat in awe as she spoke on stage. Before I became solely self employed, I once had a job in the human service field. Part of our training requirements was to go to this training that dealt with learning more about the hidden rules of social classes. I left there with a headache as I tried to absorb everything like a sponge. The topic of her entire presentation (that day) was to have a hands-on approach to seeing what it was like for families to live on minimum wage. We were given (fake) money and had to allocate where it was going to go and what was going to get paid. We were learning how to work with families of all social classes so that we could have a better understanding to how they prioritized certain things over the other.

If you’re not familiar with Ruby Payne (and why would you be if you aren’t interested in this topic)- she is an expert on the mindsets of economic classes and overcoming the hurdles of poverty, she has trained hundreds of thousands of professionals who work with people from poverty, from educators and school administrators to community, church, and business leaders. She is amazingly awesome!

So why was I so intrigued? Well, everything she was talking about resonated with me to the core. I grew up on the left side of the chart……and as she talked about “the rules” I had so many ah-ha moments! You see being in poverty is not only a “money” issue…it’s also a mindset. Let that sink in…..a mind set. I truly believe that in some strange way, when you train yourself to think differently, it may affect how you look at your finances. By adjusting the way  you think about money could change the way you handle/manage your money.

I could go on and on about the things that I learned that day. And I will blog about them in future posts….but I’ll leave you with this today.

It’s a mindset……..shift the way you think!

hidden rules of social classes, ruby payne

a guideline to setting up your budget…

This one is going to be long….I apologize ahead of time….

I’ve had several emails from friends asking for some sort of guideline to help them set up a new monthly budget..and with the New Year officially here, getting financial fit is on the top of  a lot of people’s priority list-at least for now! But only the elite will stand strong after a few months…..it’s kind of like when everyone heads to the store to purchase their new treadmill and then several months later you see a whole bunch of them for sale on Craig’s list….haha!!

Below is a general guideline to help you to break up your budget into 12 categories. Keep in mind, it’s JUST a general guideline but if you follow this, you’ll get yourself started on a financial fit 2013.

A few notes before we begin:
-round up to the nearest dollar when estimating your line items within the categories
-figure out what your yearly net income (your income AFTER taxes) is and then divide that by 12. That will give you your monthly income to base the recommended  % from.

The 12 Categories:

1. Housing: this category should add up to be no more than 38% of your net/spendable monthly pay. This category includes things such as:
-mortgage/rent payment
-property + school taxes
-home owners/renter insurance
-ALL utilities:

  • electric
  • gas
  • water
  • cell phone
  • land line phone
  • trash
  • sewage
  • internet
  • cable/satellite
  • maintenance/repair
  • etc, etc.

2. Food: this category should add up to be no more than 10-15% of your net/spendable monthly pay. This category includes things such as:
-groceries but NOT eating out-that’s for another category

3. Auto:  this category should add up to be no more than 10-15% of your net/spendable monthly pay. This category includes things such as:
-car payments
-auto insurance
-gas
-oil changes/regular maintenance
-depreciation allowances

4. Insurance: this category should add up to be no more than 5% of your net/spendable monthly pay. This category includes things such as:
-heath insurance

  • dental
  • medical
  • eye care

-life insurance
-disability

5. Debts: this category should add up to be no more than 5% of your net/spendable monthly pay. This category includes things such as:
-credit cards
-bank loans (not mortgage)
-student loans
-personal loans (from friends and family)

6. Entertainment: this category should add up to be no more than 5-7 % of your net/spendable monthly pay. This category includes things such as:
-this is a very broad category, it’s basically anything you do for fun or relaxation

  • vacation
  • club dues
  • movie tickets
  • music
  • computer games
  • restaurant meals
  • baby sitting costs
  • etc.

7. Clothing: this category should add up to be no more than 5-6% of your net/spendable monthly pay. This category includes things such as:
-work clothes
-casual clothes
-workout clothes
-school clothes
-shoes
-underwear/bras (I know, I know, but you got to account for them)
-seasonal clothing
-coats
-purses

8. Savings: this category should add up to be no more than 5% of your net/spendable monthly pay. This category includes things such as:
-save, save, save
-max out this category if you can *wink wink*

9. Medical Insurance Deductibles: this category should add up to be no more than 4-5% of your net/spendable monthly pay. This category includes things such as:
-these are the unpredictable and most insurances have you meant a deductible before picking up the rest of the tab..so plan for the unexpected!

10. Miscellaneous: this category should add up to be no more than 4-5% of your net/spendable pay. This category includes things such as:
-junk drawer of your budget, where you put things that won’t fit anywhere else

  • Christmas gifts
  • anniversary gifts
  • dry cleaning
  • hair cuts, mainicures
  • magazine subscriptions
  • etc, etc.

11. Investments: this category should add up to be no more than 8-13% of your net/spendable monthly pay. This category includes things such as:
-any money left over at the end of each month can be funneled into this category-when possible.

12: School/Childcare: this category should add up to be no more than 5-10% of your net/spendable monthly pay. This category includes things such as:
-college tuition
-private school tuition
-child care

So there you have it. I know it was LONGGGG, but it’s a guideline to get you started. If you’re over the recommended percentage in any of the categories..chances are that you need to make some adjustments because you can’t afford to continue going the route your going. Put on your sweat bands, hike up your yoga pants and get financial fit! Say it with me now, “I’m a Pony, I’m a Pony!!”  <insert Richard Simons music> tee he he!

 

refinance: skipping a payment….

Greg and I are in the process of refinancing our home loan to take advantage of the lowest interest rate possible so that we can pay as much as possible towards principal and not towards interest-you know, to help us pay it off faster . We thought we had a pretty low rate 3 years ago when we purchased our house but they have dropped to historical lows so we wanted to take advantage of that. It’s part of the next step for us to get even more in tune with our finances. So we have the home inspector coming later this week. I was chatting with a friend about the whole process of refinancing and the topic of when the first payment was due came up. She mentioned that her loan officer at the bank she deals with told her that she’d have a months grace period after closing before her first payment was due and that she was excited she didn’t have to make that payment because with the holidays coming up the extra cash would be nice. A huge red flag went off inside my head as she was talking……….seriously? I thought.

Ironically, this morning I wake up and start reading thru the news and I came across and article that is talking about the same thing and confirmed my initial reaction of why skipping a loan payment is BAD BAD BAD…and could cost you thousands of dollars.

Any of you who have gone thru the process of purchasing a home or refinancing a home in the past may know a little of what I’m talking about. When it comes time to discussing when your first payment is due on the new loan, sometimes things can be very wishy washy…..and they may tell you, “oh, you get to skip this month.

Real estate transactions are confusing enough-when to make your last payment on the old loan, when is the payment due for the first loan? Skipping a payment of just $500 on a $100,000  30 year loan is like  can cost you MANY of thousands of dollars later. Besides a possible late fee if the loan officer was wrong about your posting date. So even if you are told to skip a payment and there’s no way possible to apply your payment to your loan, save the money and then when you make your first payment….add in what you have saved.

Don’t be tempted to skip a payment….If you’re spending all the time researching to find the best deal, the best interest rate, why would you cost yourself thousands of dollars by skipping a payment.