Having patience and intention with Money

One of the hardest issues with money is having discipline and intention with money.  Most of us were raised in an environment where we were taught that you deserve anything you want when you want it.  Unfortunately that is not the path to success with money.      

Being intentional and patient with money has been on my mind a lot lately, with all the market and economy in turmoil and all the snow that we have gotten lately!  SNOW?!  Yes, snow makes me think of being intentional with our money because my car is awful in the snow.  Every year when it snows I talk about buying a new car.  (It is more like bitching about needing a new car, just ask my sister she get the pleasure of hearing it every year.)  So you may wonder why I have not made the move to a different car in the past six years.  Because we are very deliberate with our money, we have two very specific long range goals (have a beach house and retire early) that we gear most of our decisions towards.  We know that we cannot get there in our desired timeframe without doing the necessary planning and forgoing of stuff now.  So how do we handle being intentional with our money? 

1.    Taking lots of time on big purchases – I would have had a new car on Monday night if we did not have a belief to do things slowly.  Stop and ask yourself do you really need this, how else can this money be used, is it a want or need – really grill yourself like a coach or financial planner would.  Most of the time you can talk yourself out of the purchase.

2.    Cash rule – we do all major purchases with cash, no debt for us.  This really makes you think about your purchases, it is harder to spend cash out of your bank account than to sign up for payments.  I had to stop and think if a new car for the handful of times that is snows was a smart move with our cash; the car is fabulous every other day of the year so why waste the money! 

3.    Long term planning – every year we sit down and decide what projects we would like to do with our cash AFTER we invest what we need to in order to reach our goals.  Sometimes this means putting wants on a list that may not get done that year.  For example, we have wanted new kitchen counter tops, back splash and a new sink for going on 4 years now.  But it never quite makes the list of projects even though we really want them.  Using credit or not investing money takes us away from our goals not to them, and the planning helps keep us on task.

4.     Adjust our planning when the unexpected happens.  We had planned on doing the kitchen this past summer, but on June 27^th were hit by a storm that caused damage that our insurance company was not going to cover (that is an entirely different blog post to rant about).  So we had to sit down and redo our list of wants to pay for the damage that was not covered.  Doing this allowed us to manage the unexpected without adding debt or stress to our lives.  We keep our list year round in the order of when we want to do it and how much it will take so that when we need to it is just a quick review and adjustment.

5.    Build in fun and wants to our list.  Our list includes things we enjoy so that we do not feel like it is all work and no play!  We love to travel, so part of our planning includes a good vacation budget every year.

6.    Allow room for error – if we make a mistake with our money we forgive ourselves and readjust to get back on track.  Small mistakes are not worth beating ourselves up over.  So we forgive and move on.

I encourage you to be intentional with your money in the New Year.  Set goals and really focus on achieving them – even if it means making hard decisions about where your money is spent.  Financial health is possible for everyone with a little bit of attention to your finances!

Live on less than you make

To me the best thing that you can do during a recession is to make sure that you are doing what you need to do to become financially healthy.  Even if you don’t feel the pressure of a lost job, or a postponed retirement, use this time to confirm that you are on the right track with your money.  Where to begin?  In my opinion the best place to start is to make sure you are living on less than you make.  The best way to live on less that you make – is to start living on a budget (or spending plan if you prefer those words).  Budget forms are all over the internet, grab one and start going. 

Need one?  Get one from our site:  http://www.smartstepomaha.com/budget

Use of Coupons

What am I doing differently now that the economy is slowing?  Honestly not much, why?  We have always lived below our means and tried to save as much money as possible.  However there is one big change that I have made to try to increase our savings – more coupons!  I have always used coupons, but now I am using more of them and seeking them out versus my old method of just using them when they came along.  

One of the ways I do this is by signing up for the email list at stores I frequent.  For example, I am on the Borders mailing list and they send out coupons via email.  So when I decided to buy my Dad a book for Christmas I waited until the coupons for the month came out and then went in and bought the book.  The savings might not have been much but I figure every $4 that I save is that much more in my savings and puts us that much closer to retiring early with no financial worries.  Most stores have these lists and it can be an easy way to save money on things you were already going to purchase!  So how can you save $4?

To save Detroit or not?

With all the talk of bailouts and Detroit I think it is time we really evaluate if it is good for us to give Detroit any money.  I believe it is time for a BIG change in Detroit.  If small business ran their companies like the big 3 run theirs we would have been out of business a long time ago.  Inefficiencies, large payroll costs, lack of forward thinking have killed them and if they can’t fix that then why let them stay in business (this is not a new issue that they are facing).  The result of them closing would be bad at first, but the American economy and people will move on and prosper!  Let them suffer their own bad management, why throw good money after bad money.  Not only that but if we do let one of them go down for their poor management then maybe the other two would wake up and try to really reform their businesses.  If nothing else it will alter the supply and demand equation thus making it easier for the other two to survive.  Give it a thought do you want your tax money going to companies that are poorly run and most likely will not change that fact?

 

Don’t Spend it Save it!

As we all head into the holiday season and some of us out for Black Friday I wanted to just give you some numbers to maybe get you to not spend as much.  And maybe even start a savings plan!  All of these numbers are done based on a 10% rate of return, which is below the market average for the long term, which is just under 12%.

Save $25 a month

Years	Value	Amount Invested
5	$1,935.93	$1,500
10	$5,121.12	$3,000
15	$10,361.76	$4,500
20	$18,984.22	$6,000
30	$56,512.20	$9,000
40	$158,101.99	$12,000

Save $50 a month

Years	Value	Amount Invested
5	$3,871.85	$3,000
10	$10,242.25	$6,000
15	$20,723.52	$7,500
20	$37,968.44	$12,000
30	$113,024.40	$18,000
40	$316,203.98	$24,000

 

Imagine what would happen if you saved more, made the 12% and started saving as early as possible? ($50 a month over 40 years at 12% is $588,238.63) Start saving today (All 25 year olds can have half a million by retirement if they do nothing more than $50)!

How to stay calm in a financial crises

I know everyone is getting tired and depressed about the current financial rollercoaster.  So how do you get through in a calm fashion?  The short answer?  Ignore the media.  The long answer has a couple more details to it!

1. Ignore the media – If you do not subject yourself to the over analysis done by the media of what is going on it is harder to become depressed and easier to stay calm.  Liken it to a watched pot never boils, nothing major is going to change in one day.  Check in on what is going on once a week and spend the rest of your time focusing on you! (See number 4)
2. Remember what your timeline is – Investing is for the long run.  If you don’t need the money for five years there is nothing to worry about.  The market will come back and we will move on.  If you need it before 5 years you should not have been in the stock market.  It is a volatile investment in the short term and a great investment in the long term.  What to do if you are in it and you do need the money?  Sit for as long as you can, but then take it when you needed.  Exhaust all other responsible options first.
3. Use your extra time that you are not watching the news to educate yourself about how markets work and other money matters.  All economies must have their ups and downs.  We have been very lucky to have had a long period of growth; it was inevitable to have a down turn.  It has happened before, it will happen again and we will all be okay.
4. Remember that YOU create your destiny.  Take this as a time to move forward when everyone else is drowning in their tears.  Take a minute, determine where you are and then get out there and move yourself in the direction you want to go!

Need more help with that?  Check out our MoneyFit package at http://www.smartstepomaha.com/services

Where does the Money come from?

With all the talk of bailouts – they never seem to stop!  Every time I hear about Congress spending more money one thought comes up.  Washington does not create any money, all the money that is there is because we paid taxes or fees.  So every time they spend money and put us in debt it has to come from us latter.  SO congress spends money and our taxes go up.  End of story – there is NO other way for Washington to get money.  So please if you are listening Washington STOP spending money.  Assuming they are not listening then it is up to us to call them and tell them to STOP!

Kids and Money

My blog today is more a question that each of us has to answer for ourselves.  Why do we feel the need to give our kids everything they want and more?  I wrestled with this for my son’s first year and a half or so.  I thought that I needed to show him my love by buying and also make up for the time I was at work.  Then I started to really pay attention to why I was buying?  It turns out I was buying for me not him, so I just stopped.  It was really hard at first, but eventually it just because part of life.  Not saying I don’t buy him stuff, just not on a regular basis. 

Plus is it good to spoil our kids?  I really do not believe it is.  First they begin to expect it, it does not replace quality time with us and then when they do eventually leave our homes they have a big misconception about what money buys and brings you.  I could probably keep going with how it is bad, but that is enough for now.  Ultimately I think everyone should to stop and think about why they are buying stuff.   Why are you spending money on your kids?  Do they need it or is it to appease your emotions?  Is it to avoid a fight?  Is it worth it?

 

 

What to do when your latest Financial plan does not work

It seems like no matter what financial plan you follow it does not work for you.  You have tried following Suze Orman’s advice, David Bach’s advice and even Rich Dad Poor Dad, but none of them seem to get you ahead.  Why not?  Are you doomed to never have great finances? NO!  The only problem is that you are not buying into these programs 100%.  Why not? Because it does not resonate with you.  How do you find someone that is just like you?  You don’t.  So what do you do to be financially successful?  Educate yourself on what everyone has to say.  Read, listen to podcasts, and talk to those around you.  Then decide for yourself what parts make sense for YOU.  When you believe in what you are doing it is easier to stick to and easier to get ahead with your financial plan.  So get out there and start learning! 

Need a few places to start?  Check these out:

www.daveramsey.com

www.finishrich.com

 

More resources on my site:  www.smartstepomaha.com  (more added everyday)

 

 

 

How to cut back on Expenses

Cutting back on expenses seems to be an issue we talk about frequently.  How the small expenses add up to a lot over the year.  I for one am amazed that every time you see this topic it covers the same things.  My problem with this is that I don’t want to give up my latte a day – I LOVE coffee.  Cutting back only works when you get to decide where you get to cut back – otherwise it is just painful!  So does that mean I am stuck with only a handful of other savings tips?  I for one hope not, so I challenge you to help us come up with as many ways to save money as possible to cut back on expenses.  Here are a few of mine!

1. watching my bank fees – I hate to pay bank fees, so I make it my business to ensure I do business with banks that give me free services!  This also includes reducing the interest paid out – why just give money to banks?
2. Coupons – but only for items I actually buy!  Coupons are a way to get you to try things that are not in your regular purchase habit, so only use when you actually use the item.  Don’t forget non grocery coupons such as ones for oil changes, restaurants, shoes – you name the coupon I try to use them.
3. Cook at home – this is hard for me as I am not a big cooking fan, but I know that when I need to cut back this is the easiest place to do it.
4. Shop your insurance – it is easy to ignore items that don’t require a lot of attention, but you may be amazed at the savings you can find.  Especially with term life insurance, the prices seem to just keep going down.
5. House energy use – invest in an automatic controller and adjust it when not home.  I even work from home and still turn the temp down during the day; I just add an extra sweater! (I also happen to like the cold) Don’t forget to shut out the lights when you leave the room.
6.  Turn the car off if you are waiting – save the gas
7. Consignment stores – especially for kids stuff.  I am always amazed at the quality and price I find when I hit the stores, some of them even carry toys in great shape at a wonderful savings!
8. When shopping in non consignment stores start in the back on the sales rack.  No need to pay full price!
9.  Don’t be afraid to ask stores what day they do mark downs, most stores have a very specific schedule on when things come in and are marked down.  Some stores (like baby gap) do it once a week!!!
10. When eating out try to go on Monday’s and Tuesdays – these are the slow days and many restaurants have specials to get you to come in.
11.  When eating out do lunch – it is cheaper than dinner!
12. When on vacation book lodging that has a kitchen – great place to save on breakfast, lunch, snacks and drinks.  I for one still always go out for dinner!

Okay, your turn how do you save money?