Friday, May 20, 2011

Spend Less Than You Make? Are you CRAZY!

I recently read an article in “Mens Health” about handling your personal finances and I stole their headlines and added my own comments. Good stuff and a great way to make sure that you are ALWAYS thinking about your finances. It isn’t rocket science but it seems hard to stay on track – doesn’t it?

Spend Less than You Make.

Kind of seems like a “no brainer”, huh? Creating a basic budget is a simple math problem. You have income and you have expenses. Take your income and subtract out your expenses. If you have a positive number at the bottom of the equation, that is a good thing. If you have a negative number, you have two choices – increase your income or reduce your expenses. If you are coming off of a bankruptcy, this math problem is what got you trouble. Make sure it never happens again.

Cash is king.

Studies indicate that you will spend up to 23% more if you use plastic instead of cash. There is no pain associated with plastic but we all build an emotional relationship with those green pieces of paper in our wallets. So stock your wallet with cash, bag your lunch, and call it a day.

Good debt is cheaper.

Dave Ramsey would shoot me for saying this BUT, good debt puts a roof over your head and a diploma on your wall. But the gray area between good debt and bad is wide enough to slide your new refrigerator through—because after all, you'll need a new fridge if the old one goes kaput. Try to use emergency savings to finance these purchases, and then replenish those coffers over time.

Next time we will look at your credit score, the cost of debt and how impulse shopping can shipwreck your finances.

Tuesday, May 10, 2011

The War of the Roses

As we work with families to take control of their finances, one of the biggest issues that they face is that one of the “significant others” does not want to get on board! What do families do to help correct this problem?

Some families never get to that point in their relationship. “Money Problems” account for nearly 70% of the divorces in our country and it is obvious that many families decide to call it quits before coming to any real agreement on how to handle their money. Realistically, here are some basic ground rules to help to start the process for you.

Establish SOME Common Ground
Money is divisive and can create problems within a marriage. One easy “first step” is to decide on ONE common goal together. Maybe it is to establish a budget or to eliminate all credit card debt. It needs to be something that works for both of you and one that can get you juiced up. Start working on it together and establish some parameters. It is important to remember that this can not be one sided – do it TOGETHER! There must be some “give and take” on both sides. Establish some realistic and workable goals and start plugging away at it. You will be amazed at the peace that you can gain together by making some small baby steps…Together!

Ultimatums Don’t Work
As couples walk into our office, it is apparent from the start, which one of them has decided to “put their foot down” about the money and has dragged the other person into our offices – kicking and screaming. Force isn’t the best answer and rarely works because it never seems to benefit both people involved. There is a verse in Judges that speaks to this situation – “With such nagging she prodded him day after day until he was tired to death.” Wives and Husbands are equally guilty of “nagging” and it doesn’t work! It simply wears the other one down until they are tired of working on it. Beware of the ultimatums and find common ground to start the process.

There is no “I’ in TEAM
Financial selfishness is common and it takes TWO people in a relationship to win with your finances. As we sit and counsel with families, we do as much “marriage” counseling as we do around “financial” counseling. All relationships need give and take. Living with someone that doesn’t want to be a team player is never a good situation and it creates anxiety, frustration and paranoia. Money Problems may simply be a symptom of a greater problem and it needs to be dealt with.

Everyone knows a family that struggles with their personal finances – a neighbor, a relative or a co-worker. Have them give us a call and let us know how we can help. We understand and can provide REAL direction for you to get your life back!

Tuesday, April 26, 2011

Blood, Sweat & Tears

I was unaware that April is “National Financial Literacy Month”. Actually, I was completely unaware that such a designation even existed. As we are in the business of assisting consumers and small businesses, I feel some responsibility to make some comments!

As we approach the spring and summer months, most families take this opportunity to do some “spring cleaning” – a time when we put away all of our winter clothes, pull the couch away from the wall and vacuum all of the dust “bunnies” and do a deep cleansing of each nook and cranny. Have you ever thought about doing this same thing with your finances?

Right about now is when you will stop reading this post and begin to check out. You have tried this a thousand times and it never works – right? The job is just too overwhelming and it never works. I never have enough money at the end of the month and I am destined to live paycheck to paycheck. We hear it all of the time from our clients. Here are three steps that you can take to help move you off of this starting point and BEGIN the process of gaining control of your money instead of your money having control of you:

1) Doing Something Different – You have heard Einstein’s definition of Insanity – right? “Always doing the same thing and expecting different results”. Make a REAL commitment to doing things differently. Have you identified the “leak” in your checkbook? For most families, it is spending money at restaurants and eating out. Make a commitment to spend a little more time at the grocery store and eat at home four more evenings per month. This little change will make a huge difference in your monthly expenses. Do it!

2) Dump the Negative Attitude – You have tried this before and it didn’t work – right? It never works for you. You will always live paycheck to paycheck. It is your destiny! It is true that 70% of all Americans live paycheck to paycheck. It is time to break from the norm and break away from that type of living. Establish a PLAN. Make a budget and live to it – religiously! Be patient because it normally takes a family about 90 days to figure out a real working lifestyle budget so you WILL go through some pains and you WILL make some mistakes. Don’t give up. Stick with it and you WILL see results.

3) Get Some Help – In most cases, you are not able to do this whole process by yourself. It took you months – even years – to get into this situation and you will not get out of it overnight. Find someone who can give you some direction and hold you accountable to your plan. Be wary of those “credit counseling” services that want you to stop making your payments. Those services only shipwreck your credit scores and lengthen your time of recovery. Do your research and dig around to find the “right” service to meet your needs.

The Sacks Group has created a program called “The Compass Project” that is designed to teach and train families on how to establish a plan and to live within their means. The program requires some “blood, sweat and tears” from all family members but IT WORKS! Contact us today for some references and let us know how we can help you. We all know a family that is hurting right now and are struggling with their personal finances. Grab them by the hand and provide them with some guidance and direction. We are available. We understand what you/they are going through and can help!

(636) 949-9949 – Office

Saturday, April 9, 2011

Budget - Schmudget...

I have been watching the news reports this week – with some angst, I must say – about the Budget Meetings and the possible “shut-down of the government”. The entire juggling process is very frustrating to me as I watch two groups of children fighting on the playground.

Unfortunately, “the playground” is our country and the children are our Senators and Representatives – elected officials whose responsibility it is to govern our country and keep it safe.

Late last night, news reports heralded the resolution as “historic” and “epic” while they were finally able to “trim $38.5 billion in spending”. Really? That is what all of this was about?

The initial Obama proposed budget was to be about $3.7 TRILLION dollars…so, this “historic” and “epic” reduction amounted to a little more than a 1% cut in spending?

Tell me…what if your spouse walked into the kitchen and proclaimed that he/she was going to shut down the entire household unless you were able to shave your spending by 1 penny out of every single dollar spent??

Just how ridiculous is this??

Budget, Schmudget….what you just witnessed had very little to do with the Federal Budget Process. It was the very first round of escapades associated with the 2012 Election Year process.

Bring on the bashing commercials! They will begin soon!


Tuesday, December 14, 2010

Just a Smidge of Self Control

Wanna be financially independent and successful? You have got to start with a smidge of self control and self denial. Without these essential elements, your impulses and desires will take over and defeat you every time.

Three Steps to Getting Started

Make a Commitment to Change

Sounds pretty simple, huh? Most of the time, this isn’t accomplished until you get angry or frustrated to the point where you FINALLY realize that you have got to do something different. The path that you have traveled keeps leading you to this point and you are not making any progress. Determination will help you have power over your purchasing impulses. It will not keep you from acquiring your wants and needs but it will help you establish a plan and stick to it.

Learn to Avoid Tempting Situations

You walk into a store to buy something that you need for work when suddenly something shiny catches your attention out of the corner of your eye. I could be anything – a set of golf clubs, a decorative pillow, new shoes – but it is something that you don’t need and didn’t plan on purchasing. Your natural inclination is to satisfy your urge and make the purchase. You must learn to decide if this is a “need” or a “want”. At first, this may not be an easy assessment but, as you develop financial self control, you will learn to step away from the situation and decide.

Reward Your Progress

Most people feel that living on a budget is restrictive and applies “shackles” to your lifestyle. The budget can actually provide you with a tremendous sense of freedom and control over your life – if you live according to your plan. Don’t be afraid to celebrate your victories and your progress. Set a goal and work toward it – rewarding yourself as you achieve each milestone.

Sound simple? It isn’t! Dave Ramsey says “This is not a game. Debt has become a part of who we are. It’s become that spoiled child in the grocery store with their lip stuck out: ‘I want it. I want it. I deserve it because I breathe air.’ It’s an uphill climb in our culture right now, to go against that and say ‘Hey, let’s be grownups here. Let’s be mature, learn to delay pleasure, save up and pay for things.’”

Monday, November 15, 2010

I'm Having a Social Networking Crisis!

I’m having a social networking crisis.

This whole thing has kind of crept up on me. It started out as a distant rumble and ultimately turned into a major seismic event. I ignored Twitter and Facebook and Plaxo (remember them?) as long as I could but, then, the overwhelming peer pressure to play the game made me get my head out of the sand.

I approached it very cautiously. I couldn’t understand why someone would feel compelled to tell everyone that he went to the grocery store or picked up the kids from a soccer game. And, what such trivia had to do with anything related to business. It was no longer possible to catch up with someone only once a year at an annual event (which satisfied me just fine). Now I was forced to be aware of what people I barely knew were doing all year long. Too much information.

But, who am I to buck the trend? I joined Facebook and LinkedIn and Twitter and Tumblr and immediately began to build my network. This is where my crisis began.

Each of them has a similar way of “friending” someone. They give you a choice between “colleague” and “friend” (except Facebook which uses more of a social model, hence everyone is considered a “friend”) and there’s the dilemma.

When I ask someone to join my network I have to decide how to classify him. I’m always afraid that I will insult someone by picking the wrong option. What if, for example, I want to invite a close business acquaintance? Do I pick colleague or friend? If I’ve known him for years I think of him as a friend but I’ve never seen him socially so I guess he’s a colleague. But, what will he think if I call him a colleague and he thinks of me as a friend? It’s happened to me on the receiving end, where someone called me a colleague and I was slightly taken aback because I thought we were closer than that.

I’ve actually had someone accept my invitation and change the classification from colleague to friend (which I considered a promotion). I dread the day when someone changes me from friend to colleague. The demotion would be devastating.

I’ve decided we need a better classification system. More friending options than we currently have. Here are some suggestions:

BUSINESS FRIEND (NON-BUSINESS) – Some of my best friends over the years have been through business. I value them as much as I do my social friends and they’d be insulted if I fail to acknowledge them when I make this important decision. But don’t take advantage of my decision and start trying to sell me something.

BUSINESS FRIEND (BUSINESS) – Okay if you try to sell me something occasionally. This classification can easily drop to COLLEAGUE I DO BUSINESS WITH if I get a sales call more than once a year.

BUSINESS FRIEND (WITH BENEFITS) – Someone I know through business who has tickets to things or a boat.

BUSINESS FRIEND (PROBATIONARY) – Someone who was previously a colleague but is moving up to business friend because he sent me a referral. If I get another he’ll shed the probationary label. Also used if he’s buying a boat or condo at the lake.
COLLEAGUE – Someone I met once at Business After Hours. I don’t remember what he looks like but I have his business card.

COLLEAGUE EVERYONE WANTS – Someone who I don’t know very well but who looks impressive to others.

COLLEAGUE WHO CALLS ME WHEN HE NEEDS SOMETHING – Someone who’s my best buddy when he wants me to raise bail money to get out of some silly jail fund raiser.

COLLEAGUE I WANT TO LINK TO JUST TO PACK MY NETWORK – Someone I invite to join me because it’s embarrassing to have too few people on my contact list.

COLLEAGUE I DON’T CARE FOR – This is a great way to know where people you don’t like are going to be so you can avoid them.

I think that our culture would benefit from much better understanding between social networking buddies. It creates honesty where today we have deceit.

Ashton Kutcher eat your heart out.


Thursday, November 11, 2010

It's So Simple

Most people will look at a credit card and see only the ease and convenience with which they can painlessly get the things they want. It’s so simple – right? Every commercial on TV keeps telling you about how much “you deserve it” and with a simple swipe of the credit card, you can be suddenly whisked away by a gaggle of men in tuxedos into an awaiting limousine to be treated like “you deserve”.

When asked to list their debts, most people fail to list their credit cards. They list their mortgage, car notes and other installment loans but leave credit cards off of the list. Too many households in America carry far too much credit card debt and know very little about it.

A great many people have no idea what interest rate is being charged by their credit card companies or how the interest is calculated. In a recent study, 75% of Americans indicated that they carry a “substantial” balance on their credit cards while only 41% indicated that they have a savings account.

Paying interest on a credit card means that everything that you purchase with that card costs you more than it would have cost if you had simply paid cash or written a check for it. The best rule is to pay as you go but if you use your credit cards, pay off the balances before the interest charges are added!