10 Reasons for Getting You Finances in Order

10 Reasons for Getting Your Finances in OrderEvery New Year, one of the most popular resolutions people make is to finally work on getting their finances in order.

Unfortunately like many other good resolutions we make, lots of people fail to follow through on their good intentions.

But I believe that when we have the right motivation for completing a task, we will be more successful.

What’s Driving You?

Any great endeavor has to be begin with answering a short but profound question: why?

Let me give you an example. As you may have read on the blog, I set some goals for weight loss this year.

That has involved eating healthier and exercising more. Now, I know of course making better choices with food and moving more is good for you.

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But that’s not enough of a “why” for me. Just having an intellectual grasp of the facts, did not cause me to do anything about it.

What got me going? What was my reason for taking action earlier this year?

Simple: I got a little scared about my health. As I get older, I know if I don’t deal with my weight issues it could mean a lot of health problems sooner than later.

That was the reason that caused me to take action because I have many things I want to do. I want to serve the Lord for as long as I can.

I want to be there for my wife for as long as I can. I want to be around my family for a long time.

What About Your Money?

When you think about your money, most people know that spending less and saving more is good for you.

Most people know that is better to live debt-free is better than being burdened by all kinds of debt.

But intellectual agreement is not enough. You need to find your “why” for getting your finances in order.

You need to find the motivation, the right reasons for you.

When you have the “why”, you will be willing to deal with the “what” and the “how”.

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10 Reasons for Getting Your Finances in Order

So let me give you something to think about. You may want to work on getting your finances in order because:

  1. You are sick and tired of living paycheck to paycheck.
  2. You don’t want to keep use credit cards or other borrowed money to cover emergencies any longer.
  3. You are stressed out about the amount of money you owe and you want to be free of the shackles of debt.
  4. You and your spouse constantly fight about of money and you are afraid your marriage won’t survive much longer.
  5. You want your kids to learn to handle money better than you and have a legacy of sound financial management.
  6. You want to go into your golden years with a home that is free and clear of any debt.
  7. You love your job but you want to have the option of leaving on your terms when you are ready for your next stage in life.
  8. You want to retire with dignity, without having to depend on the government or anyone else to take care of you.
  9. You want to be an extravagant giver to your church and/or to cause that matters to you. You want to be in a position to help others.
  10. You want to take care of your family now and even after you are no longer here.

Some of the reasons on this list may resonate with you. But I am sure you can find others.

Whatever, your reasons may be find them today.

Once you do, I can help you with the “what” and the “how” for getting your finances in order.

Question: What’s your main reason for wanting to get your finances in order?

Book Review: 5 Key Lessons from “How the Mighty Fall”

Book Review:  5 Key Lessons from "How the Mighty Fall"I recently finished reading “How the Mighty Fall” by bestselling author Jim Collins.

In this book Jim covers what makes companies that were once great decline and fall.

Through careful study of the companies, their decisions, and their results he identifies five stages of decline.

He also shows us that it is possible to reverse course and for those companies to go from decline to greatness again.

As the book says, “As long as we never get entirely knocked out of the game, hope always remains.

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As I went through the book I kept thinking that these stages of decline and their key lessons apply not only to companies and organizations, but also they could apply to individuals. In other words, you and me.

More importantly for the purpose of my financial coaching and of this blog, I believe these lessons can apply to our personal finances as well.

So here are the 5 stages of decline for companies that were once great, and the 5 key lessons from “How the Mighty Fall” that can be applied to our finances.

Stage 1: Hubris Born of Success

Hubris of course is another word for pride. In the book, Jim indicates that Stage 1 kicks in when people become arrogant, regarding success virtually as an entitlement, and they lose sight of the true underling factors that created success in the first place.

How could we become arrogant in terms of our finances? I can think of a couple of ways.

First, we may have a great income. We either have a great steady job or maybe we are great at sales. We think we can always earn what we have always earned and even more.

Second, we spend and spend without regard to optimizing our purchases. We just think we can always catch-up with the next paycheck or the next big bonus, so it does not matter what we pay for something today.

We just simply think that we can’t fail because of what we have earned in the past.

“Pride goes before destruction, And a haughty spirit before stumbling.”
Proverbs 16:18

Stage 2: Undisciplined Pursuit of More

The pride of stage 1, leads right into Stage 2: “the Undisciplined Pursuit of More –more scale, more growth, more acclaim, more of whatever those in power see as ‘success’.

I believe the application to our money management is clear for this stage. We all battle with the disease of wanting more things.

We want the newer car model all the time, so we fall into the trap of car payments or worse car leases.

We get the raise at work and we just want to move up in house right away, stretching our budget to the maximum instead of using the extra money for saving more or paying down debt.

Speaking of debt, because we all want more and more things now, we use credit cards without control and we fall into more and more debt.

“A good name is to be more desired than great wealth, favor is better than silver and gold.”
Proverbs 22:1

Stage 3: Denial of Risk and Peril

In this stage, “leaders discount negative data, amplify positive data, and put a positive spin on ambiguous data.

How can see this in our financial management? Well, perhaps we get into tons of credit card debt, but we are ok because we have a great FICO score and if we need to, we can always borrow more money.

It is also possible that even though we have no emergency savings, we feel ok because we have equity in our home. We could always get a home equity loan if we really needed to do it.

And what about not having the proper amount of insurance? Well, we’ll just take a chance that nothing bad is going to happen.

We can deceive ourselves into thinking everything is ok, even when we don’t have a firm financial foundation.

“A prudent man sees evil and hides himself, the naive proceed and pay the penalty.”
Proverbs 27:12

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Stage 4: Grasping for Salvation

By the time you reach stage 3, the signs of decline are clear. In stage 4, the companies respond “by lurching for a quick salvation”. In other words, they want the quick fix, the magic pill.

With our money it might look something like this. We think we if we can just consolidate all of the credit card debt into one single payment, we will be ok. So we just move the debt instead of paying it down.

We can’t afford to send the kids to college, so we take a home equity loan and put our home at risk or we further delay saving for retirement.

Of course, the ultimate quick fix these days seem to be to just give in and declare bankruptcy. Now, there may be situations where we are forced to go into bankruptcy due to medical bills, a failed business, or a large tax bill.

But bankruptcy is not a panacea to heal all of our financial problems. It is a major financial decision with long term implications. It is not a simple quick fix.

“The naive believes everything, but the sensible man considers his steps.”
Proverbs 14:15

Stage 5: Capitulation to Irrelevance or Death

In stage 5, “Accumulated setbacks and expensive false starts erode financial strength and individual spirit to such an extent that leaders abandon all hope of building a great future.

An interesting finding in the book for me was that “Organizations do not die from lack of earnings. They die from lack of cash.

And that’s the key lesson of this. When we really on debt, on a quick fix, a risky investment, a government program, we are simply building on quick sand instead of building on a firm foundation.

When we get to this stage, there is no more leverage, no more credit lines, and no more home equity loans. So what do we do? Is there no hope?

“Hope deferred makes the heart sick, but desire fulfilled is a tree of life.”
Proverbs 13:12

So what, is There No Hope? Hardly

There is always help and hope for your finances!

In his book Collins reminds us that some of these companies fought their way out of decline and back to greatness.

They did it by getting back to the disciplines and practices that made them great in the first place.

You too can get back on the path towards financial wellness. You too can learn the basics of personal finance management.

You can get on a budget, save for emergencies, and get out of and stay out of debt.

You can apply discipline, focus, and sacrifice to get you and your family a better financial destiny. You never, ever have to give in and capitulate.

“Failure is not so much a physical state as a state of mind; success is falling down, and getting up one more time, without end.”
Jim Collins (“How The Mighty Fall”)

The Motivation for Giving

The Motivation for GivingHave you ever seen my budget template? If you take a quick look, you will see that the first line item is the category of “Giving”.

As I have written many, many times before, I believe the key to gaining control over your money is learning to live on a monthly budget.

But I also believe that the cornerstone of your budget is having a generous heart.

So I would like to give you my motivation for giving. These come from my Christian worldview and from my personal experience.

However, regardless of your faith and even if you are not a person of faith the principle still applies.

Generosity is a distinguishing mark of people who win with money.

I believe that we should give because God is the owner, provider, and the example.

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God is the Owner

I understand that I am a steward, an asset manager for God and that He owns it all (Psalm 24:1). He does not “need” my money. And by the way, it is not my money anyway.

But it is fundamental that I understand God’s ownership of all things:

‘The silver is Mine and the gold is Mine,’ declares the Lord of hosts.
Haggai 2:8

“But who am I and who are my people that we should be able to offer as generously as this? For all things come from You, and from Your hand we have given You.”
I Chronicles 29:14

Finally, as a steward, I also understand will give an account to Him as the owner.

I will have to answer for the sum of my life and finances are just a part of that account (2 Corinthians 5:9-10).

Giving is really a matter of obedience.

God is the Provider

Everything comes from God. He is the ultimate and perfect provider:

“But you shall remember the Lord your God, for it is He who is giving you power to make wealth,”
Deuteronomy 8:18a

24 The God who made the world and all things in it, since He is Lord of heaven and earth, does not dwell in temples made with hands;
25 nor is He served by human hands, as though He needed anything, since He Himself gives to all people life and breath and all things;
Acts 17:24-25

One of the great preachers and Bible teachers of our generation, Dr. David Jeremiah has put it best: “God is a God of grace. His grace provides strength to earn, generosity to give, and humility to receive.”

 Giving is really a matter of thanksgiving.

God is the Example

He gave the ultimate gift by giving His Son as the Savior of the whole world (I John 4:9-10).

And as we excel in the grace of giving, it makes us more like God and Christ. They are givers.

As we grow into the likeness of Christ, we should grow in the aspect of giving as we seek to be like Him (Romans 8:29).

What better motivation for giving could you have?

Giving is really a matter of spiritual maturity.

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“God is the great giver. The great provider. The fount of every blessing. Absolutely generous and utterly dependable. The resounding and recurring message of Scripture is clear: God owns it all. God shares it all. Trust him, not stuff!”
Max Lucado (Fearless)

The Opposite: Financial Wisdom From George Costanza

The Opposite: Financial Wisdom from George CostanzaIf you are a fan of the classic sitcom “Seinfeld, you are very familiar with the travails of George Costanza.

George was Jerry’s best friend and the prototypical underachiever, loser type.

George wanted all the benefits of a great life but was unwilling to pay the price required.

Instead, he would much rather lie and take the easy way to get there.

Only once did George experience some level of success.

In the episode “The Opposite“, George realizes that every instinct he has ever had, has been wrong.

He then decides from that moment to do the opposite of what his instincts tell him in every situation.

Here is the video:

What can we learn from George Costanza?

We could take a cue from George with regard to our financial wisdom.

If you do the opposite of what most people are doing with their money, you will succeed.

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Here are some examples. Statistics come from the 2014 Consumer Financial Literacy Survey conducted by the National Foundation For Credit Counseling):

  • 61% of Americans do not have a working budget to manage their money and keep track of their expenses. If you get on a budget, your money will work harder for you. Trust me, you will feel like you got a raise.
  • Only 29% of Americans are spending less than they make.
  • 34% of Americans do not have any non-retirement savings. This means that when an emergency comes, they have to borrow more money.
  • 32% of Americans do not allocate any money to retirement savings. This means they are relying on the Social Insecurity system to take care of them in their golden years.
  • 34% of Americans carry credit card debt from month to month. This means they pay more and longer for their purchases.
  • Many adults (41%) would give themselves a grade of C, D, or F on their knowledge of personal finance. Lack of knowledge leads to mistakes and lost opportunities.
  • Most Americans (71%) are worried about their financial situation. They lack financial peace.

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Are you in one of those groups above? If so, what will it take for you to change course?

You can get your finances on track, you can learn how to handle money. You can get out of your current situation.

Unlike George Costanza, your success does not have to be temporary. Make a decision today that will really change your life for good.

There is always Help and Hope for Your Finances!!!

“May he give you the desire of your heart and make all your plans succeed.”
Psalm 20:4 (NIV)

Missed Your Money Goals? Don’t Give Up: Review, Adjust, Push Forward

Missed Your Money Goals? Don't Give UpA little while back I shared that I had set a goal for losing weight this year.

I set a target amount and a target date of June 30.

Well the target date has arrived. I can report that I have reached about 30% of my goal. In other words, I missed my goal.

So the question is, do I give up?

Not a chance! Setting up an improvement goal helps you focus your efforts.

And even when you miss a target, you are still better off simply because you tried to get better.

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In game 6 of the 2013 NBA Finals, the San Antonio Spurs were 28.5 seconds away from winning their 5th NBA title in 2013. They ended up losing that game and eventually the series to the Miami Heat in 7 games.

The Spurs could have thrown in the towel, never think about it again and let that loss overwhelm them. Instead, that loss became a motivating factor.

This year, they went through an entire NBA season and 3 rounds of playoffs just to get a chance to play Miami again. But they were ready and won the 2014 title in 5 games.

So if you have missed your money goals so far this year, don’t give up. Instead, review, adjust, and push forward.

Review Your Results

In looking over the last 6 months, I can first focus on what went well with my weight loss goals.

I did lose some weight. My clothes fit me better. I feel great and I am more active. And I am making better choices with my food. I can celebrate all of that.

When you look at your money goals, you too can focus on what went well. Did you start using a budget? Did you finish your starter emergency fund?

Have you paid off any of your debts? Are you now paying more attention to your money?

When you focus on what results you have accomplished thus far, you can maintain your hope that you will win the battle to gain control of your finances.

Adjust Your Goals as Needed

For me now is time to see if my goals were realistic and adjust as needed. I am convinced I can do better and I can reach my ultimate goal.

It make me longer so now, I have set a new target date for around my birthday in September. And I also have added a new goal: I am going to run my first 5K this year.

With your money you also may need to adjust your goals. Maybe you need to add more extra hours so you can increase your income.

Maybe you need to trim your budget even more. Or simply your initial target for getting out of debt was a bit unrealistic.

It could also be that no major adjustments are needed. Whatever the case, do make sure you take some time to think about any changes you need to make.

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Push Forward

For me and my weight management goals, there is no going back to what I was doing last year. That was not working for me.

No, I am going forward. I have reset my goals, I have a plan, and I am pushing forward. No retreat, no surrender.

In the battle to gain control over your finances, you can’t give up either. You have to keep pushing forward.

Not having any control over your money, not having any savings, being deeply in debt is no way to live.

You can do better and I know you will. Just push forward and don’t give up!

Question: How will you keep pushing forward with your financial goals?