The Budget is the Key

The Budget is the KeyIf you were to ask me what is the key ingredient for financial success, I would tell you the same thing I have told everyone since 2008 when we finished paying-off our consumer debt:

The answer is you have to learn how to live on a monthly zero-based budget.

This means that every month before the month begins, you list all of your income on one column, and on the other column you allocate every dollar available to a category.

On your budget sheet, the equation of total income – total expenses should equal zero.

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Here is what will happen when you start living on a monthly budget:

  • You will be able to tell where your money is going and you will be able to see in which areas you are overspending.
  • You will have have the information needed to prioritize your spending and put your basic necessities first (food, shelter/utilities, transportation, clothing).
  • As you learn and adjust your spending patterns, you can start to allocate money to emergency savings.
  • With your spending under control, necessities covered, and savings built, you can then allocate anything extra to paying-off your consumer debt.
  • When you pay-off your consumer debt, you can then start working on saving for retirement and college expenses.

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Without a working budget you can’t control your money.

If you can’t control your money, you can’t build savings, you can’t pay-off debt, you can’t plan for the future.

A working budget is the key that will open the door to your financial wellness.

You can start today and I can show you how.

“Economy is half the battle of life; it is not so hard to earn money as to spend it well.”
Charles H. Spurgeon

The Ultimate List of Budgeting Resources

Ultimate List of Budgeting Resources

As you get ready for the new year, I wanted to give you a little help with what I know will be one of your New Year resolutions: get control of your money.

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If you are a regular reader of this blog, you know that the key for winning with your money, for getting control of your financial destiny is to have a working budget.

With that in mind, here my the ultimate list of budgeting resources:

  1. The Recipe for a Great Budget
  2. Back to Basics: Regain Control of Your Money with a Budget
  3. Back to Basics: Keep Track of Your Money
  4. Back to Basics: Pay Yourself First
  5. Budgeting Help: The Envelope System
  6. What if I don’t really have enough money to pay my bills?
  7. 5 Common Budgeting Mistakes
  8. What if I lose My Job?
  9. Budget Priorities: Protecting the Four Walls
  10. Budget Priorities: If I Had To, What Would I cut?

Make this upcoming New Year the best ever or your finances. You can start at the beginning by learning to live with a monthly budget.

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Year End Financial Checklist

Year End Financial ChecklistCan you believe we are near the end of the year already?

Time flies and I am sure that if you are like me,  you are looking forward to the holiday celebrations and some well deserved rest.

However, before the year runs out, I wanted to give you a year end financial checklist.

The great Zig Ziglar said: “It’s true. Spectacular preparation precedes spectacular performance.

These actions will help you prepare to  start the new year on the right foot with your finances:

1. Check your Credit Report

Have you checked your credit report lately? This is something you should do at least once a year.

According to the Federal Trade Commission (FTC):

A credit report includes information on where you live, how you pay your bills, and whether you’ve been sued, arrested, or filed for bankruptcy.

Nationwide consumer reporting companies sell the information in your report to creditors, insurers, employers, and other businesses that use it to evaluate your applications for credit, insurance, employment, or renting a home.

The Fair Credit Reporting Act (FCRA) requires each of the nationwide consumer reporting companies — Equifax, Experian, and TransUnion — to provide you with a free copy of your credit report, at your request, once every 12 months.

So take the time to request a copy of your credit report.

  • You can order your free annual credit report online at annualcreditreport.com, by calling 1-877-322-8228, or by completing the Annual Credit Report Request Form and mailing it to:
    • Annual Credit Report Request Service
    • P.O. Box 105281
    • Atlanta, GA 30348-5281
  • Get a report from each one of the agencies.
    • They are supposed to cover the same information but there can be differences.
    • In some cases entries in one report will not show up on the other reports.
  • In case you cannot get a copy of your report from the online website, proceed with the phone call or complete the form to request via  mail.
    • Just make sure you get your hands on that report.
    • If I had done this, I would have taken the steps to correct the problem before starting the mortgage refinance.
  • Review your report for any inaccurate entries.
    • Keep in mind that only entries that are inaccurate can be removed from the report.
    • Don’t fall for scams that promise to “clean-up your credit”.
  • If you find any inaccurate entries, contact the appropriate credit reporting agency.
    • Send a letter via certified mail, return receipt requested detailing the inaccuracies.
    • Consumer reporting agencies must correct or delete inaccurate, incomplete, or unverifiable information.
    • Inaccurate, incomplete or unverifiable information must be removed or corrected, usually within 30 days.
    • Additional information can be found at the FTC website.

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2. Assess Your Insurance Needs

As you work on your financial plan, I also want you to consider the need to manage the risks to your finances by evaluating the role of insurance in your financial plan.

What is the role of insurance? In simple terms, insurance is the tool that is designed to protect you and your family against what might happen.

Ensure you have the right type of insurance and the right coverage to protect your financial plan.

3. Check Your Retirement Plan

Understand how your plan is progressing and make adjustments as needed.

Even with all the focus on personal finances today, planning for retirement is one area where we continue to come up short.

The good news is that you can do better than average. Seven years ago, I was part of those statistics but now I have a plan that is yielding good results.

Here is how I am preparing for retirement.

4. Prepare a Will

Do you have a will? If not, you are among 50% of Americans with children who have neglected this important step.

So what are some of your reasons for not dealing with this issue? You might think it is costly (it is not), or complex (it is not), or that simply you don’t have anything to leave to anyone so you don’t need a will (oh but you do).

Or you might just not want to think about your own mortality.

However, the reality is that we will all face death and the sooner you face that fact, the better off you will be.

So here are the 3 Reasons you should prepare a will:

  1. Because it puts you in control:
    • If you die without a will, the state takes over deciding what happens with your property.
    • The state already has too much say in what happens in our private lives.
    • There is no wisdom in leaving the disposition of your assets to the government.
  2. Because it is simple and cost effective:
    • You don’t need a high priced estate lawyer to do this. For most of us it is really a simple process.
    • Personally I used an online service that provided my wife and I with the required state specific forms for our wills.
    • It just took a few hours and less than $50 and we are able to put our last wishes on paper.
  3. Because it shows love for your family:
    • Imagine if something were to happen to you. In the midst of the grief and sorrow of losing you, your family also has to deal with the legal ramifications of what to do with your assets.
    • Don’t leave a problem behind. Love your family to the end by taking care of your will preparation today.

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5. Get on a Budget

I have always told you, the budget is the key to your financial success.

If you can’t control your money, you can’t build savings, you can’t pay-off debt, you can’t plan for the future.

Make 2015 your best financial year by starting to get control of your money today!!!

What other steps could you take this month to help you make progress with your money in 2015?

5 Ways to Avoid Christmas Overspending

5 Ways to Avoid Christmas OverspendingAre you ready for Thanksgiving? I am looking forward to a welcome break and to spending time with the family.

But just thinking ahead a little bit, I wanted to get you some advice for what happens after Thanksgiving: the Christmas shopping season begins.

So whether you will join the crowds on Black Friday or whether you will take advantage of Cyber Monday, here are 5 ways to avoid Christmas overspending:

1. Establish a Budget.

You should have a list of people that will receive presents from you.

Determine how much you want to spend on each person and add the amounts to come up with a total figure.

That’s your Christmas gifts budget, meaning you can’t go over that overall amount.

You may also want to establish a budget for items such as Christmas decorations or entertainment (Nutcracker tickets anyone?).

2. Use Cash.

As we have discussed before, cash is king.

Using cash will keep you from overspending, which is easier to do than when you use plastic (either a debit card or credit card).

When your cash is gone, your shopping should stop.

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3. Take your Time.

Don’t just wait until Christmas Eve to do all your shopping.

Don’t try to just buy something just to get it done. Give yourself the opportunity to do some comparison shopping and find the good deals that are out there.

Plan ahead.

4. Leverage Technology.

In these Internet days, search online for the best deals and compare prices. You can also save time if you order items online and avoid the battles for parking and long lines at the mall (provided you give yourself enough time).

Also, take advantage of your smart phone, and look for the best Apps to help you shop during this holiday season.

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5. Plan for Next Year’s Christmas.

Ideally, you will be starting your Christmas sinking fund now so you have the cash ready for next year’s expenses.

These few steps will save you a lot of money, a lot of time, and they will reduce your stress levels. Focus on spending good quality time with friends and family.

Don’t let the disease of “more” rob you of having a great Christmas season.

Finally, remember what this season is really all about. It is about celebrating how God reached out to provide for mankind’s greatest need.

God knew we needed a Savior and and He gave us His Son Jesus. If you have not had the opportunity to meet Him, there is no better time than today.

He is the indescribable gift, the Prince of Peace, God with us.

He is all that you will ever need in this life and the next. Let me be one of the first people to say to you: Merry Christmas.

“She will bear a Son; and you shall call His name Jesus, for He will save His people from their sins.”
Matthew 1:21 (NASB)