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.

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?

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.

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."

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.

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