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!

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
www.BudgetingYourFinances.net

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!

mah

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.’”

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.

rjs

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!

Three Stupid Reasons for Not Saving Money

"I deserve to buy “insert item here” because I work hard and I deserve it."

We hear this one all of the time. It comes from an immature attitude and one that will lead you into a place where you have a whole lot of stuff that you don’t need and a lifestyle that will eventually have you living in your son’s basement! Believe me, I am not advocating that you never buy something that you “want” but make it part of your plan. Saving a little bit of money from each paycheck will start adding up quickly. Take some of your windfall cash (tax returns and gift money) and stash away half of it and blow the rest.

"I’m young. I can start saving money later."

Another immature statement! Start when you are young and enjoy the mathematical explosion of compound interest. I have review chart after chart for saving money and every single one of them show that starting a lifestyle of saving money early in life will bring you financial freedom. Save $2,000 a year beginning at age 20 and do it for 6 years – never save another dime – and you will have more than $1,000,000 by the time you are 65! The problem is that “life” happens and we tend to dip into that money for “stuff” and it never makes it until we retire. Start young and begin a lifestyle of savings.

"I don’t make enough money to save anything."

If you have a job and earn a paycheck, you can start saving some money. Start small and put back $5 from each paycheck. You won’t even miss $5! Suddenly you will look at your account and realize that you have a few hundred dollars. Work up to a little more and start putting back 15% of each check. Slowly and gradually, you will amass a small fortune.

How nice would it be to not have to worry about money? YOU are your greatest obstacle. Step out of the way and change the way you are doing things now and learn to save a few bucks! You will be glad that you did.

mah

Eating Away at Your Savings

I am constantly amazed at the number of people that we talk to that say, “We make good money, but I have no idea where it all goes.”

Before ever looking at their checkbook or at their bank statement, I can almost always say, “You eat at restaurants too much” and be correct.

Managing a budget is not an easy process – it is, quite frankly, a difficult task. Little expenses get in your way and keep you from meeting your financial goals. Eating in restaurants can be a “deal breaker” and one that nibbles (sorry for the pun) away at your budget, your goals and your plans.

Let’s say that over the course of a quarter, you eat a meal at a restaurant 3 times a week and spend $10 per meal – that is more than $350 each quarter and more than $1,400 per year! It is surprising to see how quickly it all adds up. By eating at restaurants, you could easily destroy your savings goal and obliterate your financial security in a few short months.

What options do you have? I am not advocating that you eat ramen noodles at every meal. And I am not advocating that you stop spending money on food or never enjoy time at your favorite restaurant. Within your budget, you should have a SPECIFIC dollar amount that you are willing to spend monthly on food. This category should include money spent at the grocery store to stock up your own kitchen and on meals that you eat away from home. Set a goal and then stick to it. Don’t go over that dollar amount and live within your plan. If this amount isn’t enough – it is YOUR plan! Change it and make it work.

Another way to beat this budget buster is to plan ahead. If you know that you are working late hours, plan ahead and be prepared. Avoid a quick impulsive trip through McDonald's and make sure that you have “sandwich fixins” in the fridge. Pack a lunch a few days a week and stock your cabinets with quick and easy meal options. A little bit of planning will help you to avoid spending money on this expensive non-essential.

Watching where you are spending your food budget is one of the quickest and easiest ways to save a few bucks within your budget. Make a few changes, and you will add several hundred dollars to your budget each month and help you to achieve your financial goals much quicker.

Don’t let food eat away at your financial successes!

Four Steps to Financial Success

Over the course of the last several years, my wife and I have spent time with more than 120 families as they have walked through the steps of achieving their own Financial Peace. Here are four steps that I believe will help any family move farther down the road!

1. Get a Plan and Write It Down. A dream is just a dream until you write it down and then it becomes a goal! Every family that we meet with WANTS to improve their financial situation but seldom do they take the initiative to put a plan together, write it down and work together to accomplish the goals! We follow Dave Ramsey’s proven principles of giving every dollar a name by spending it first on paper and on purpose before the month even begins. Write the plan down – your memory isn’t that good!

2. Start Out Slowly. About once every six months, I get motivated to get back to the gym. I write down my workout, head to the gym and always work out too hard too fast! I don’t have enough patience to do it systematically – I want results immediately and see a difference after my first visit. Working your budget is the same process. You must work slowly and methodically in order to win. You didn’t get into this shape overnight, and you won’t work your way out of it quickly. If you try to take shortcuts, you are setting yourself up for disappointment. Get a plan, and stick to it.

3. Go Crazy and Get Intense. I am sure that you have heard the old saying: “If you always do what you always did, you will always get what you always got.” In order to be successful, you must change your behaviors and get a little crazy about it. What stuff can you cut out of your budget that you don’t really need? Can you live without a telephone landline for a while? Do you really need all of those cable channels? Pack a lunch. Eat dinner at home. Do it for a while, and see what a difference it makes. My wife and I have “Crazy Months” where we do anything and everything we can do to save money. What can you do with the money you saved? Pay down a bill? Save a little extra for Christmas gifts? Go crazy and see what can happen if you work together!

4. Get Support. Achieving personal financial success is about 20% head knowledge and about 80% behavioral change. People “know” what they need to do but seldom take the steps necessary to implement the new behaviors. You may need to grab some support to help you make the behavioral changes necessary to get you where you want to go. That is where The Sacks Group can step in and offer some assistance. We have programs specifically designed to help you stay on track. Worried that it will cost too much? Our first consultation is ALWAYS free, and our services are month-to-month – NO lengthy contracts. We want you to be successful, and we want you to win without feeling the constraints of a long-term agreement.

Losing Pounds of Debt

A recent report issued by the U.S. Consumer Study of Debt found that many Americans spend a large part of their day worrying about debt. Over 21 percent of consumers worry about how they will pay of their debt between 4 to 10 hours a day. The majority of consumers – 54 percent – worry about it between 1 and 3 hours a day.

High debt can create long hours of anxiety for most people, but there is a way to reduce and even eliminate those hours of angst over money troubles. Rather than throwing in the towel, you can choose to start from where you are and move forward. It’s kind of like losing weight. The past is the past. You can’t go back and change your bad decisions; you can only go forward to shed those unwanted pounds of debt.

While you are reducing your debt (calories), don’t let the rough spots drag you down so far that you can’t stick to the plan. If you hit a pothole as you are driving down the street, you don’t pull to the side of the road and quit driving! You have made it through some rough spots and now is the time to keep on going – forward!

Even if you have made a lot of past mistakes (and who hasn’t?), there are plenty of opportunities to make things right! Start out by making a conscious decision to change your behaviors. You’ve heard the old saying, “If you always do what you always did, you will always get what you always got.” The saying holds true for how you handle your finances. You won’t improve your situation until you try something different.

I bet you are saying, “This all sounds so good, but I have no idea where to start.” The first step toward recovery is admitting that you want things to change, and with that admission, you need to find some help. That is where we come in!

The Sacks Group has been in business since 1985, helping consumers and small-business owners find new solutions to life’s problems and struggles. Contact us today for a FREE one-hour consultation. We understand and can provide you with some direction.

www.BudgetingYourFinances.net

The Dangerous Allure of a Clean Slate

A new report in the Wall Street Journal finds that as the economic recession squeezed consumers, credit card companies, who usually do the squeezing, are getting squeezed a bit themselves. As a result, credit card companies are more willing now to settle consumer’s credit debt for a percentage of the actual debt, spurring many consumers to hire debt settlement companies to negotiate a lower comprehensive payment with their credit card firms.

In fact, the U.S. Consumer Study on Debt reveals that 5.13 million consumers have enrolled in such services, and The Association of Settlement Companies reported their industry helped settle more than $1 billion in consumer debt last year.

As I read these statistics and information, I wondered to myself how many of these families have REALLY made a decision to change the way that they handle their finances. The allure of settling debt for a lower amount or filing bankruptcy to erase past debts is enticing and can provide a tremendous sense of relief –- a clean slate, a do-over, a way to start fresh. All of these things sound great, but this will only be accomplished if you make a commitment to handle things differently the next time around.

As you contemplate the possibility of bankruptcy or debt settlement, I urge you to consider an alternative. Why? Because, the allure of a clean slate can be dangerous! If you are not committed to changing your habits of creating overwhelming debt, you will fall right back into the same trap again. I promise you that it will take some extra effort but, well worth it as you dig yourself out of the mess that you have created.

Look at the possibility of creating a real working lifestyle budget and sticking to the plan of attack. The Compass Project offers a program that will hold your family accountable to a budget -– one that YOU create, not us! You make the budget, and we help you stick to it.

Sound like a good alternative? Contact us today for a Free One Hour Consultation.

www.BudgetingYourFinances.net

Over Your Head!

After a nice dinner last night, I lumbered into the family room to catch the last couple innings of the baseball game. I eased back onto the couch, sipping away at my big glass of sweet tea when I was sickened by a commercial on TV!

The commercial showed several people as they were test driving a new car…each couple exclaimed, “Nice price” as they talked about the low monthly payment …. “Nice price”? Seriously? They were talking about the monthly PAYMENT not the PRICE of the car.

This kind of thinking is exactly what put thousands of families into financial crisis. Our society is now based upon determining if we can “make the payment” each month instead of seeing if we can afford to pay for it. There is a huge difference in the two methods of thinking and determining how items are purchased.

Our friends have new stuff, our neighbors have new stuff, and we all want more and more stuff. Let’s just take a look and see if we can squeeze another payment into our monthly budget and go get us some more stuff!

Wait a minute! You don’t have a budget in place? You’re not even sure what amount you spend monthly on gas, food and living expenses? Do you have a plan for your monthly income and expenses? Or did you sit down one desperate Sunday evening and scrawl one out on a yellow tablet. After the bills arrived in Monday’s mail, you tore it up and threw it away it because it didn’t work – right? Am I close? Sound familiar?

Thousands of families are in the exact same situation – right now! Many will never reach out for help because of embarrassment, fear or anger. “Just a little more in the paycheck, and we can pull out of this mess” – right? Trust me, a little pay increase will only give you cushion for a couple of months until you go right back to your old habits. You’ve got to do an about face – turn around and change the way that you handle your finances and try something different.

We hear this same story over and over and over again. Family after family who has tried desperately to get back on track but kept finding themselves with no money left at the end of the month.

Simply put, you need a plan – something REAL and something SIMPLE. It does not have to be an elaborate, 36 column spreadsheet with color graphics to make it work for you. Just a PLAN!

Do you find it hard to get started? Call us for a one-hour free consultation today, and get your family started on the real road to recovery and financial health. We know that you feel like the water is going over your head and you are drowning under a pile of bills. You can’t do it alone. We are here to help. We care, and we understand.

www.BudgetingYourFinances.net

Beware of the Bottom Feeders!

With record high unemployment, compounded with foreclosures and bankruptcies, there is no doubt that we are living in desperate times. But the old adage: “desperate times calls for desperate measures” seems to be getting people in trouble with their money lately.

I have spoken to a dozen people in the last week who have all said the same thing to me: "I have never been in this position before." Each of them have been unemployed for several months, their unemployment is about to run out, they are living on their last dime, and they are trying to figure out a way to save their car, house and marriage.

They are in a desperate situation and are beginning to turn to what we at The Sacks Group consider the bottom feeders of the financial industry.

You know the companies that I mean. We pass several of them every single day but dare not mention them. The payday and title loan franchises. In our circle of friends, we may even believe that they "serve their place in our society" to help the less fortunate among us. But if this is the place you think you need to turn when you are feeling desperate – please beware!

These title loan establishments and paycheck loan places are popping up all over the place lately. They are in almost every strip center -- right next to the nail salons. They represent where our society and our economy has landed – in an unregulated, desperate place where people "hoc" their car title or paycheck for enough money to make it through the end of the month.

These places charge astronomical interest rates. A recent article in the St. Louis Post-Dispatch shared the plight a St. Louis woman, aged 65, who was broke, and the rent was due. After deciding a car-title loan was her only option, she borrowed $800. (see "Loan wording circumvents law" in the Aug. 1, 2010, issue)

She's paid back close to four times that much, but she hasn't reduced the loan's principal. Although she stopped making payments — "I've paid enough already," she insisted — she fears the lender will seize her car.

Lenders like the one that she used skirt around the laws and regulations to avoid the restrictions placed upon title loan establishments. Instead these businesses utilize the "less restrictive" rules of consumer finance. These rules allow them to roll these loans over and over again to place individuals into a vicious cycle that never ends.

If life happens, and you feel that you have no other place to turn, make sure that you understand the contract in full. Ask lots of questions. In fact, since there's so much competition in the business, shop around. Don't be embarrassed ... whatever your situation is they've probably seen worse.

If you find yourself in a place where you have never been before, beware of the bottom feeders and know the rules (or lack of them) under which they play.

Wisdom from Ben Franklin's "Poor Richard's Almanac"

Benjamin Franklin’s adages in "The Way to Wealth" teach us that success is just the consistent application of hard work and thrift. Despite what late night infomercials claim, the principles to success haven’t changed much in 200 years. Below, I’ve collected all the maxims from The Way to Wealth in one list. Read through them, pick out a few favorites, and memorize them. They’re perfect for keeping you focused on becoming the most successful person you can be. Enjoy!

1. God helps them that help themselves
2. Sloth, like rust, consumes faster than labor wears, while the used key is always bright
3. Dost thou love life, then do not squander time, for that’s the stuff life is made of
4. The sleeping fox catches no poultry
5. There will be sleeping enough in the grave
6. Wasting time must be the greatest prodigality
7. Lost time is never found again
8. Time-enough, always proves little enough
9. Sloth makes all things difficult, but industry all easy
10. He that riseth late, must trot all day, and shall scarce overtake his business at night
11. Laziness travels so slowly, that poverty soon overtakes him
12. Drive thy business, let not that drive thee
13. Early to bed, and early to rise, makes a man healthy, wealthy and wise.
14. Industry need not wish
15. He that lives upon hope will die fasting
16. There are no gains, without pains
17. He that hath a trade hath an estate
18. He that hath a calling hath an office of profit and honor
19. At the working man’s house hunger looks in, but dares not enter
20. For industry pays debts, while despair encreaseth them
21. Diligence is the mother of good luck
22. Plough deep, while sluggards sleep, and you shall have corn to sell and to keep
23. One today is worth two tomorrows
24. Have you somewhat to do tomorrow, do it today
25. Be ashamed to catch yourself idle
26. Let not the sun look down and say, inglorious here he lies
27. The cat in gloves catches no mice
28. Constant dropping wears away stones
29. Diligence and patience the mouse ate in two the cable
30. Little strokes fell great oaks
31. Employ thy time well if thou meanest to gain leisure
32. Since thou art not sure of a minute, throw not away an hour
33. A life of leisure and a life of laziness are two things
34. Trouble springs from idleness, and grievous toil from needless ease
35. Many without labor would live by their wits only, but they break for want of stock
36. Industry gives comfort, and plenty, and respect: fly pleasures, and they’ll follow you
37. Keep the shop, and thy shop will keep thee
38. If you would have your business done, go; if not, send
39. The eye of a master will do more work than both his hands
40. Want of care does us more damage than want of knowledge
41. Not to oversee workmen is to leave them your purse open
42. In the affairs of this world men are saved not by faith, but by the want of it
43. Learning is to the studious, and riches to the careful
44. He that by the plough would thrive, Himself must either hold or drive.
45. If you would have a faithful servant, and one that you like, serve yourself
46. A little neglect may breed great mischief
47. For want of a nail the shoe was lost; for want of a shoe the horse was lost, and for want of a horse the rider was lost
48. A man may, if he knows not how to save as he gets,keep his nose all his life to the grindstone, and die not worth a groat at last
49. If you would be wealthy, think of saving as well as of getting
50. What maintains one vice, would bring up two children
51. Beware of little expenses; a small leak will sink a great ship
52. Who dainties love, shall beggars prove
53. Fools make Feasts, and wise men eat them
54. Buy what thou hast no need of, and ere long thou shalt sell thy necessaries
55. At a great pennyworth pause a while: he means, that perhaps the cheapness is apparent only, and not real
56. Many have been ruined by buying good pennyworths
57. ‘Tis foolish to lay our money in a purchase of repentance
58. Wise men learn by others’ harms, fools scarcely by their own
59. Silks and satins, scarlet and velvets put out the kitchen fire
60. A ploughman on his legs is higher than a gentleman on his knees
61. Always taking out of the meal-tub, and never putting in, soon comes to the bottom
62. When the well’s dry, they know the worth of water
63. If you would know the value of money, go and try to borrow some
64. He that goes a borrowing goes a sorrowing
65. Pride is as loud a beggar as want, and a great deal more saucy
66. ‘Tis easier to suppress the first desire than to satisfy all that follow
67. Pride that dines on vanity sups on contempt
68. Pride breakfasted with plenty, dined with poverty, and supped with infam
69. The second vice is lying, the first is running in debt
70. But what madness must it be to run in debt for these superfluities!
71. When you run in debt; you give to another power over your liberty
72. Lying rides upon debt’s back
73. ‘Tis hard for an empty bag to stand upright
74. Creditors have better memories than debtors
75. The borrower is a slave to the lender, and the debtor to the creditor
76. Disdain the chain, preserve your freedom; and maintain your independency: be industrious and free; be frugal and free.
77. Poverty often deprives a man of all spirit and virtue: ’tis hard for an empty bag to stand upright
78. Creditors are a superstitious sect, great observers of set days and times
79. Those have a short Lent who owe money to be paid at Easter
80. The borrower is a slave to the lender, and the debtor to the creditor
81. For age and want, save while you may; No morning sun lasts a whole day
82. Gain may be temporary and uncertain, but ever while you live, expense is constant and certain
83. Tis easier to build two chimneys than to keep one in fuel
84. Rather go to bed supperless than rise in debt.
85. Get what you can, and what you get hold; ’Tis the stone that will turn all your lead into gold

Which of Franklin’s maxims really strike a cord with you? Let us know in the
comments!

(Borrowed from "The Art of Manliness")

Credit Score Killers

Here are some Credit Score Killers - Avoid them ALL!

#1 - Foreclosure. Your home mortgage is probably your largest and most significant obligation. It also carries a significant amount of weight in regards to your credit score! A foreclosure signifies that you were not able to live up to your end of the agreement to make "substantially equal payments" over a specified period of time. It has been called the "Scarlet Letter" on your credit report. Communicate, Communicate and Communicate MORE with your lender if you get behind. Avoiding them does not make the problem go away and will only hasten their actions. Stay on top of this one!

#2 - Co-Signing for a Loan. Have you ever been contacted by a friend of family member to co-sign on a loan for them? Do you know why they are asking you to do this? It is because the bank/finance company doesn't think that they are worthy of establishing a credit relationship. Loan companies and banks are not in the business of making loans - they are in the business of being paid back for the money that they lend! If your friend or family members defaults on the loan, you will be responsible for a full repayment. Besides hurting your credit, it will also destroy the relationship. Don't risk either one!

#3 - Late Payments on Credit Card Bills. This one may not seem like a big deal but a few of these on your credit report can easily drop your score by 75-100 points! Stay on top of your payments and make sure that you get them made on time!

#4 - Maxing Out Your Credit Cards. Your credit score is a complicated calculation based upon the amount of your credit limits, along with the amounts that you have actually borrowed in addition to the timeliness of your payments - and several other factors. Maxing out your credit cards will lower your score because you have borrowed a greater percentage of the total amount of your credit limits and signifies distress in your financial health. This will lower your score significantly and should be avoided.

#5 - Settling Your Debt for Less than You Owe. This action can provide you with a tremendous sense of relief but it is not without consequence. Settling a Debt for a lessor amount indicates that you were not able to completely fulfill your obligation to a creditor and weighs heavily against your credit score. Make sure that you weigh all of your possibilities before moving in this direction because the impact on your credit score is substantial! This isn't a horrible option but just understand the impact that it will have for a long period of time on your scores!

Bottom Line - if you need help and direction, ask for it and make sure that you are dealing with someone who has your best interest at heart! Avoid "Credit Counseling Services" and "Debt Settlement Companies". They charge you a lot of money and it will take years for your credit scores to recuperate! Work with someone who has "the heart of a teacher" and who will walk you through and explain the entire process - all positives and negatives.

Contact us today for a FREE Consultation!

Oi Vay!

I enjoy reading through different articles on how to handle debt. Most of them are decent and offer generally good advice on ways to what to do. BUT, one that I read recently is completely off base and all wrong. I had to offer a rebuttal on the three steps needed to "Get Out of Debt".

DEBT CONSOLIDATION LOAN
#1 - No one ever got out of debt by borrowing more money! As a loan officer at a local bank, I always qualified "debt consolidation" customers by adding in their new payment along with all of their old payments - together - as though they never paid off the credit cards! Why would I do that? Because most of them would never change their behaviors and would be back in to see me in another year with the SAME problems! A lower payment may be enticing initially, but, in most cases, the payments are stretched out farther and you will pay more in interest than if you just buckled down and paid off the debt that you have now!

SETTLE YOUR DEBT
#2 - Debt Settlement messes up your credit! When you make an aggressive settlement with a creditor, it will show on your credit as "settled for a lesser amount". This reflects negatively within your credit scoring because you have not paid your debts "as agreed". This is not a way to work your way out of debt. It is a tactic used by credit counseling services who will handle the negotiation process for you. It is NOT a way to "Beat Debt".

USE A CREDIT COUNSELING SERVICE
#3 - Beware of Credit Counseling Services! You don't need the assistance of a Counseling Service to help lower your credit card interest rates! You can make a phone call and, if you are current on your payments and have not had a "late pay" in a while, they will work with you! Make this call yourself and save the fees charged by the services!

The Sacks Group created "The Compass Project" to help TRAIN families on how to better handle their own finances. We work with families every single day who (1) understand that the monies they borrowed are an obligation that they need to pay and (2) want to change the habits and behaviors that have gotten them into financial difficulties!

We work with families for a flat monthly fee to get them back on their feet again! Something lead you down the road to financial struggles - habits or circumstances - and we are here to help establish a new way of living and hand it right back to you after the dust has settled!

Don't fall for these "Credit Counseling Services" or these commercials about how you deserve to have your credit card balances lowered! Your credit will be ruined and they will charge significant fees for a service that leaves you in worse shape than before you began!

Contact us today and let us know how we can help you!

I Wanna Be 25 Again...

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!

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!

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!