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.

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!