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Friday, December 24, 2010

Budgeting is a Team Sport!

When preparing your budget, it is important to remember that at least one other pair of eyes needs to look over your budget. There are several reasons for this. First, another point of view may notice something that needs budgeted for. You may have missed the need to budget for car repairs, or for the furniture needing replaced. This should be your spouse if you are married, or somone you know is good with finances as a single person.
Another reason, if you are married, to have your spouse look over your budget is to enhance the unity in your marriage. If you develop a budget and tell your spouse that the budget is done, you make your spouse feelcontrolled, rather than part of a team. Once you complete the first draft of your budget, your spouse then looks it over and gets to make changes to it! This keeps the budget from being the budget "I made" to the one "we came up with."

Wednesday, December 22, 2010

The Paradox of Giving

As we are in the time of year when we celebrate he birth of Christ, I would like to speak about giving. When Jesus came to earth, He was the greatest gift ever bestowed on mankind. Today, we give gifts as a tradition.
What does giving have to do with managing money? More than you may think. There is a tremendous link between generosity and prosperity. No, I am not talking about sending a hundred dollars to a TV preacher expecting back $10,000. What I am saying is that we need to treat our money as it is. It is not our money. It is truly God's money, and He has entrusted us with a certain amount. The reason I am so passionate about saving and managing money correctly is because it's is not mine to use as I please. It is my Lord's money, and I must manage it in a way that pleases Him.
In his Financial Peace University course, Dave Ramsey explains how rather than grasping the money in our possession, we need to carry it with an open hand. The rationale behind this change in attitude is that while no money can leave your hand while it is clinched tightly in your fist, neither can any more enter. In Dickens' A Christmas Carol, Ebenezer Scrooge is introduced as " a squeezing, wrenching, grasping scraping, clutching covetous old sinner!" This is the attitude of someone who won't be generous with their resources.
When you hold money with an open hand, it's true some may leave, but it also the only way that money can come to you.
What are some practical ways to live generously? Here are just a few ideas. How about the next time you go out to a sit-down restaurant, like Cracker Barrel or Bob Evans, why not leave at least  a 100% tip? If you hear about a couple trying to adopt, either donate to help them, or organize a fundraiser to help with adoption costs. Just last week, someone dropped five checks wrapped up in a one-dollar bill. The five checks were written out for $20,000...each.
These are just a couple of ideas. If you can think of grander ideas than these, go for it! You just need to make generosity a way of life.

Friday, October 1, 2010

It's Gonna Rain!

This past Sunday night, I started leading Dave Ramsey's Financial Peace University at our church. The lesson was the importance of saving. I know, I know, this is a familiar road, but it's also major highway that must be taken when getting to our financial destination.
I cannot stress the importance of saving up for when emergencies come across your life. How many of us had parents or grandparents who admonished us to save up for a rainy day?
I'm not some doom and gloom guy, but we all know that cars break down, medical bills can get high, appliances need replaced, kids need trips to the emergency room, and layoffs happen. Life has this habit of happening, and usually, in combination within a short time frame.
I'm not saying you need to save for the sake of beating you over the head. I'm saying you need to save now, so when life does happen, you can have at least some sense of peace that what you're going through can be dealt with and not lead to financial stress.

Sunday, July 18, 2010

Budgeting Software

I've been harping about getting on a budget for some time. For those who would like to start on a budget, there's a link at the bottom of the blog to use Dave Ramsey's starter version of his Gazelle budgeting software. Enjoy.

Tuesday, July 13, 2010

Can't Plan To Use What You Don't Have

After the last entry on planning your cash flow, some of you might be thinking, "That's great, but I've got too much month at the end of the money! In fact, I can't even pay everyone!" For those of you, I know how that feels. I've been there. In fact, if anyone needs to have a budget, it's you!
First, you need to prioritize who gets what out of your money. The top priorities are food, shelter, utilities, clothing and transportation. Don't eat every other day to make sure Discover gets paid. Don't get behind on your rent or mortgage to stay current with your student loan.
Once you take care of the top priorities, then you pay off the unsecured debts with what you have left. This can be handled a couple of different ways. One is to prorate your payments based upon what remains. Another is to simply make a list of who you owe. Just pay people until the money runs out. Those remaining will get placed at the top of next month's list. if you like working with forms, you can find some samples at, as well as his books.
I would like to give you a couple of reminders. First, you are morally and legally obligated to pay legitimate debts.  This is not an option.
Second, if you are in collections, do not let collector's intimidate you. They cannot call whenever they want, say whatever they want, or threaten whatever they want. Study the Federal Fair Debt Collections Act, passed in 1977, the same year as the Fair Credit Reporting Act. This law states exactly what a collector can and cannot do.
Just stick with it and you will get out of this hole.

Thursday, June 10, 2010

Plan it Out and Write it Down!

You knew it was coming. I write about managing your money, so, in the back of you're mind, you had to know this topic was coming up. If not, you are living in denial.
If you want to manage your money, instead of having it manage you, you need to have a written budget. Now, don't go running off to Mommy to snitch on me that I said the "B" word. A budget is not something to cause you to assume the fetal position. If that word scares you, call it a "cash flow plan" or "a spending plan." I don't care what you call it, but you have to do it!
A budget does not have to be scary. The first time I went through Financial Peace University, Dave Ramsey quoted author John Maxwell's definition of a budget as "telling your money where to go, instead of wondering where it went." Your budget is simply a flowchart to show you where your money is going.
There are two aspects of youer budget. First it should be planned ahead of time. Whether you do your budget Annually, weekly, or somewhere in between, you need to do it ahead of time. I recommend doing a monthly budget. A monthly budget is good, bcause each month is different. The expenses in March will not be the same as December's expenses. So, before you get you first paycheck each month, plan out how you are going to spend this month's income.
Second, a budget should be a written plan. It needs to be written down. You need to have a hard copy of your budget that can be easily referred to. This way, you can say, this is my budget, and I will stick to it. Now, before the hands start going up, I will be dealing with some budgetary objections in my next few entries. but remember to plan your expenses and to write it down.

Wednesday, June 2, 2010

The Worst Car Accident

Do you know where the worst car accidents happen? AT THE DEALERSHIP!People make more financial mistakes buying cars simply because they are not informed. New car sales are just plain dumb for people who do not have money to pay for it outright. In his best-selling book, The Total Money Makeover, Dave Ramsey states that "a $28,000 car will lose about $17,000 of value in the first four years you own it. That's almost $100 a week in lost value." So, if you enjoy making payments on something that loses about $5,200 of value every year, something is wrong.
So, how can the average American buy a car without going into debt? Tom Stanley has made a career of studying the lifestyle and buying habits of millionaires. In his book The Millionaire Next Door, Stanley's research suggests that millionaires generally don't buy the latest model. In fact, less than one in four own a current model-year vehicle. First of all, to avoid car debt, buy used. you can still own a nice car without having a brand new model.
Second, pay with cash. That's right, I said save up and pay for it with cash. This is smart for a couple of reasons. First of all, you can probably get a better deal when paying with cash. If you pay with cash, which demonstrates immediacy, that the deal doesn't have to wait, you can usually get a great deal. Also, when paying with cash, You can eventually get a better car. Ramsey uses this example:
If you put $378 per month (the average car payment in America) in a cookie jar for just ten months, you have almost $4,000 for a cash car...Then you can save the same amount again and trade up to an $8,000 car ten months later and up to a $12,000 car ten months after that. In just thity months, or two and one-half years, you can drive a paid-for $12,000 car, never having made a payment, and never having to make payments again.
So which sounds better? Why pay for a Chevy that drops in value "like a rock" or Found On Road Depreciating Ford? Why not be smart, and pay for it?

Monday, April 5, 2010

Save, Save, Save

How do you win with money? Is it possible for the "little guy" to get ahead? Are there any secret formulas to winning? Well, there are things you can do. They aren't complicated, but they are difficult. Every finacial bbok I've read, from Dave Ramsey to Tom Stanley to King Solomon all say pretty much the same the same thing. In order to win you need to start by saving money. Acording to Robert Kiyosaki, author of the "Rich Dad" series, wealthy people save, and then pay their bills with what is left, while the perpetually broke save with whatever money they have left after paying their debts.
In order to win with money, you have to make saving it a vital priority. Dave Ramsey recommends having $1000 set aside for emergencies even before paying off debt. The ultimate goal is to have a fully-funded emergency fund. Dave Ramsey and Larry Burkett suggest three to six months of expenses. Suze Orman suggests a fund covering at least eight months of expenses. Mary Hunt suggests having enough to cover twelve months of expenses. The point is you need to save money to cover your rear in case something happens
Again, let's dream for a moment. How would it feel to have $10,000 set aside for emergencies? Would you react differently when the car starts belching smoke, knowing you some money? When the washer starts making funny noises, would you still spaz out? When the computer won't startup, would you start throwing things?
Saving for emergencies isn't a luxury. If you want to begin winning with money, it is unavoidable.

Friday, March 26, 2010

Livin on the Edge...of bankruptcy

According to the Wall Street Journal 70% of Americans consider themselves living "paycheck to paycheck." So what happens when you come home to tell your spouse that the income is gone? Is that leased car looking so cool? Is the "no-money-down-mortgage" you felt was a dream-come-true seem like such a blessing? Is the "no interest for 5 years" furniture looking as beautiful? Are you beginning to feel the weight of the gold and platinum plastic that you've been carrying around?
This is not the American Dream. This is the American nightmare. Sadly, far too many Americans have bought into it hook, line and sinker. Using Other People's Money for purchases isn't liberating, it's enslaving. It shackles you to a life of payments.
Debt is not a way to win. It's a way of guaranteeing a life of losing. As Proverbs 22:7 states, "the borrower is SLAVE to the lender."

Friday, March 19, 2010

The Expense of Stupidity

Ever paid stupid tax? Financial author Dave Ramsey defines stupid tax as "doing anything stupid that costs you money." I think everyone has paid stupid tax. The new cell phone you "needed." The "no-money-down" house. Waiting a little too long to have that squeaking noise coming from your wheels looked at. Blowing several hundred dollars you don't really have beacause you "deserve" a plasma TV. We've all done something stupid with our money.
The issue is not if something stupid has been done. The question is, will it end? Are you willing to delay pleasure? Are you willing to tell the tantrum-throwing, three-year-old kid inside you to shut up? Are you mad enough at your financial situation to actaully change your behavior?
It's time. It's time to stop spending money you really don't have to buy stuff you really don't need to impress people you really don't like. It's time to think before making a purchase, instead of dreading it after you made it. It's time to be done with the stupidity, and paying for it.

Sunday, March 7, 2010

Just Do It!

What is the key to effective money management? Are there secrets those who are winning with money have that no one else knows? Hardly. I'm not a mega-millionaire. I'm still learning what winning with money means. But this much I have learned. I have learned to win with money, the key is to modify behavior. If you want to win with money, stop doing what you are currently doing. If you are using credit cards to make most of your purchases, stop it! Imagine for a moment if you took all the money being paid to your credit card companies each month, and instead put it in a savings or money market account to catch all of life's emergencies. How much would be there in a year?
The key to being smart with money is not to fill your head with more information. Most Americans know they are overextended on credit, need to save for emergencies, and should live on a budget. The key to winning with money is to DO IT! Take what is in your head, and let it influence your actions. Money management is not theoretical. Money management is highly practical