Last night, I had the pleasure of joining 20+ students as we went through our last session of Financial Peace University - a 13-week course that walks families through the process of taking control of their personal finances.
One of our class members came up to me before the class began and said, "Man, I wish that I was 25 again and could take this class!". I knew exactly what he was saying to me and he went on to add, "I am almost 52 years old and I have enough money in my 401k plan to last us about 2 years. I made a ton of money through my 20's and 30's and I had all of the best stuff that money could buy. Heck, I took 6 of my buddies down to Cabo San Lucas for a week of golf and I paid for it all. We had a great time but I don't have anything to show for it now. I've got a friend of mine that has 50 cents of every dollar that he has ever earned and he is already thinking about retiring early. I used to laugh at him because he was working so hard to save his money but, you know what, I'm not laughing at him anymore. I wish that I could go back and do this all over again and start when I was 25 years old! I would do things so much differently!"
I had to empathize with this class member! Every time that I sit back and realize how much money that I have wasted on "stuff" instead of establishing a plan and sticking to it, I get so mad at myself.
My advice to him? - It is never too late to start making great decisions AND teach your kids to make different choices! Your kids learn by watching you and how you handle your finances. Make sure that they know and understand how to put a plan into place for their finances. Lead by example and it is never too late to start!
Monday, June 28, 2010
Monday, June 14, 2010
The First Baby Steps
Anytime that someone undertakes any overwhelming task, that person has to set small obtainable goals - baby steps - in order to accomplish the task.
Getting out of personal debt can seem like you are swimming in the middle of the ocean. All you can see is water all around you and not even the slightest sliver of land in the distance! The easiest thing to do is to just give up and file bankruptcy - right? I mean, that is what everyone is doing these days!
As we have worked with clients over the last year or so, MOST of them are not in a position where they MUST file bankruptcy!
But, how can we possibly give them hope?? By taking "Baby Steps".
Baby Step #1 - Establish an Emergency Fund of $1,000
You may ask, WHY in the world would I put money in the bank when I feel like I can't pay all of my bills! Fair question! By putting $1,000 into the bank, it immediately provides you with a "cushion" to allow you to quit using credit if an the alternator goes out on the car. You simply take the cash out of the account and pay for the repair! This cushion will allow you to undertake your hardest challenge in Baby Step #2!
Baby Step #2 - The Debt Snowball
List ALL of your obligations and debts - everything! All collections, credit cards, student loans, house payments and car payments. List them beginning with the smallest to largest balances. Begin systematically getting rid of them and paying them off beginning with the smallest balance first. Why start with the smallest and not the one with the highest interest rates? Because you need some relief and some little victories in this process. Payoff and close those little annoying credit cards that you opened up to get the 15% discount at Christmas. Get rid of them and celebrate the victory! As you get a few little ones paid off, add those monthly payments to the next largest one until it is gone.
Be patient and don't get frustrated! It took you a long time to get to this place in your life and it won't get fixed overnight!
Don't fall for the Debt Consolidation Loan Scam. No one ever got out of debt by borrowing more money!! This may make some sense immediately because you have the opportunity to lower your monthly obligations BUT, if you don't change your spending habits, you will end up right back where you are today!
As a bank loan officer, I can't tell you how many people came into the office to take out a home equity loan to pay off their credit cards ONLY to return in another year wanting to do it again! They never changed their spending habits and once the cards were paid off, they started using them again!
If you have followed this blog for any length of time, you are probably SICK of hearing me say it BUT, "You've got to have a plan in place if you want to get where you are going!" You have got to have a budget in place, on paper and live by it monthly in order to WIN against personal debt!
Step up and START taking your Baby Steps Today!
Getting out of personal debt can seem like you are swimming in the middle of the ocean. All you can see is water all around you and not even the slightest sliver of land in the distance! The easiest thing to do is to just give up and file bankruptcy - right? I mean, that is what everyone is doing these days!
As we have worked with clients over the last year or so, MOST of them are not in a position where they MUST file bankruptcy!
But, how can we possibly give them hope?? By taking "Baby Steps".
Baby Step #1 - Establish an Emergency Fund of $1,000
You may ask, WHY in the world would I put money in the bank when I feel like I can't pay all of my bills! Fair question! By putting $1,000 into the bank, it immediately provides you with a "cushion" to allow you to quit using credit if an the alternator goes out on the car. You simply take the cash out of the account and pay for the repair! This cushion will allow you to undertake your hardest challenge in Baby Step #2!
Baby Step #2 - The Debt Snowball
List ALL of your obligations and debts - everything! All collections, credit cards, student loans, house payments and car payments. List them beginning with the smallest to largest balances. Begin systematically getting rid of them and paying them off beginning with the smallest balance first. Why start with the smallest and not the one with the highest interest rates? Because you need some relief and some little victories in this process. Payoff and close those little annoying credit cards that you opened up to get the 15% discount at Christmas. Get rid of them and celebrate the victory! As you get a few little ones paid off, add those monthly payments to the next largest one until it is gone.
Be patient and don't get frustrated! It took you a long time to get to this place in your life and it won't get fixed overnight!
Don't fall for the Debt Consolidation Loan Scam. No one ever got out of debt by borrowing more money!! This may make some sense immediately because you have the opportunity to lower your monthly obligations BUT, if you don't change your spending habits, you will end up right back where you are today!
As a bank loan officer, I can't tell you how many people came into the office to take out a home equity loan to pay off their credit cards ONLY to return in another year wanting to do it again! They never changed their spending habits and once the cards were paid off, they started using them again!
If you have followed this blog for any length of time, you are probably SICK of hearing me say it BUT, "You've got to have a plan in place if you want to get where you are going!" You have got to have a budget in place, on paper and live by it monthly in order to WIN against personal debt!
Step up and START taking your Baby Steps Today!
Wednesday, June 2, 2010
The Definition of Insanity
The definition of Insanity is to do the same thing over and over again, expecting a different result.
How many times have you sat down at your kitchen table with a yellow legal pad of paper and swore to yourself that THIS TIME, you were going to set up a budget and handle your money differently?? Come on...be honest with yourself! I would imagine that it happened near the time when you got your income tax refund or when you received a nice bonus from work. You got all of your bills "caught up", felt some relief and promised to do it differently this time - remember??
Your new budget worked great for about 3 days. You watched every single penny and then "life happened" and something happened that you did not account for within the perfectly measured columns of your budget. AND, you gave up! You tore the yellow page out of the pad and threw it in the trash because "budgets never work"! Remember?
The process of creating and living with a "plan" usually takes 90 days to work through all of the kinks. It NEVER works right the first time but in order to "win" with money, you have got to put a plan together AND stick with it! Plan for adjustments and KNOW that it won't be perfect the first time through.
Want some help?
The Sacks Group would be happy to provide you with a One-Hour FREE Consultation to get you started and provide you with some insight and direction.
Contact us today at:
www.BudgetingYourFinances.net
You will be glad that you did!
How many times have you sat down at your kitchen table with a yellow legal pad of paper and swore to yourself that THIS TIME, you were going to set up a budget and handle your money differently?? Come on...be honest with yourself! I would imagine that it happened near the time when you got your income tax refund or when you received a nice bonus from work. You got all of your bills "caught up", felt some relief and promised to do it differently this time - remember??
Your new budget worked great for about 3 days. You watched every single penny and then "life happened" and something happened that you did not account for within the perfectly measured columns of your budget. AND, you gave up! You tore the yellow page out of the pad and threw it in the trash because "budgets never work"! Remember?
The process of creating and living with a "plan" usually takes 90 days to work through all of the kinks. It NEVER works right the first time but in order to "win" with money, you have got to put a plan together AND stick with it! Plan for adjustments and KNOW that it won't be perfect the first time through.
Want some help?
The Sacks Group would be happy to provide you with a One-Hour FREE Consultation to get you started and provide you with some insight and direction.
Contact us today at:
www.BudgetingYourFinances.net
You will be glad that you did!
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