One thing that sometimes gets lost when talking about money issues is the real reason why money management is so important. Most people would say, it’s to get rich. And although I actually prefer the words “build wealth” over “get rich” I suppose it all means the same thing, to be financially comfortable.
But what is the real definition of “rich” or “wealthy?” Sure, anyone could look it up in the dictionary and get Websters take of the literal definition about having abundance and treasures, etc. But is that really what being rich means?
This week on the news there was a headline story of what I believe is the true definition of “rich” is. It was a story of a young 15 year old girl, who lives in a secluded neighborhood in Central Florida. She had had been surfing the internet as most kids do now days. The computer was in the family’s living room in plain site of mom and dad, and dad even knew what sites she was surfing, but admittedly he knows nothing about computers or how to get to any of the websites she was on. None-the-less, they felt all was okay since it was in view of the family.
The 15 year old told her parents she had a boy friend, and even told her friends at school she was in love with someone she met online, and that she was going to run away with this person. But nobody knew how serious it really was, or who this boy was until tragedy happened.
The young girl slipped out of her house early Monday morning to meet this “boy” and disappeared. Authorities were notified and AMBER alerts went out state wide. Thirty hours later and 400 miles away from her home, this young girl was found in a Wal-Mart. She had run away from her home to meet someone she thought she was in love with, to discover he was a gun carrying 46 year old convicted sex offender. It is believe he was scared off by the state wide publicity and that is why he let this young girl go.
She was quickly reunited with Mom and Dad. When her Dad was asked “how does it feel to have your daughter back?” he was quoted as saying “ Go ask that guy who won the Megaball lottery up North somewhere, all right? I feel ten times better than that.”
Do you think he feels RICH? Yes. Is he rich, you bet he is. He may live on modest means, or maybe not, but regardless of the amount of money or possessions he has, he is an extremely rich man. The whole family is rich because they are together, safe, as a family.
Being loved having your family and friends safe and healthy is really what it means to be rich and wealthy. I hope with all this blogging here and all over the internet regarding debt and wealth building that the real definition is not lost or forgotten.
Tags: family, reality, rich, safety, wealth, what's important
Today a friend of mine talked to me about his debt situation and in the same breath stated he wanted to lease a new car. I won’t mention his name but he is a smart individual, well established family man who makes a good salary, close to six figures.As we continued our conversation, he stated that he wanted to become more aggressive in getting out of debt, that he needed to get a job where he made more money so he could pay more on his debt and eventually become debt free like me.
I made mentioned that he could become debt free now, after all he is making a very good salary, but that he just needed a little bit if spending discipline and sacrifice a little bit now, such as not leasing a new car but keeping the perfectly good car he currently has which will be paid off in three months.
“Why should I make sacrifices, I work hard and deserve nice things for me and my family” he said, then he went on to say “who am I kidding, debt is a normal part of life, you are the one that isn’t normal by not being in debt.” I replied and said, “yep, you’re right, I am not normal when it comes to money, normal is broke!”
My dear friend then said “So your are debt free, you made sacrifices what if you die tomorrow, you wouldn’t be alive to enjoy your efforts” I said ” But I am not died and I am enjoying it now and when I do die, debt free, I will be able to leave something positive behind for my family, instead of something negative like debt, I will die with dignity and be known as and individual of character and responsibility who took care of their business while alive and did not leave a mess behind for my family to handle”
From there the conversation went down hill, he was getting upset at my thought process and I was confused as to why since he was the one that brought up his debt in the first place.
One minute he is telling me he “wants to be debt free” but in the next breath he is all but stating he will never be debt free because it isn’t normal, and what is the point in attempting to be debt-free you may die and not enjoy the efforts. Maybe he needs to read a little bit about having a positive mental attitude because that thought process will keep him in debt for sure.
Sadly, it is this thought process that is causing millions of people to continue to live with debt. They believe that having car payments, credit card payment, second mortgages, etc, is a normal part of life.
Like Dave Ramsey says “Normal is broke.”
Many people are short sited and only thinking of themselves with regard to the debt the carry rather than their family after they die. I would much rather change my family tree for the better now while I am alive, still having the things that I want by paying cash, giving wisely and also leaving something behind that will benefit my family as well as charitable programs rather then being selfish and spending what I don’t have and racking up debt. What does that tell loved ones in a non-verbal way? “When I’m dead I don’t care what you have to deal with or that I didn’t leave you anything to live on.”
I think it is a shame that people view debt as a normal way of life, that stress and working all the time to pay someone else is the way it is suppose to be. Debt is not “normal” it is not even biblical, Romans 13:8 says “Keep out of debt and owe no man anything” and Proverbs 22:7 “The borrower is slave to the lender” It doesn’t get much clearer than that.
Debt is not a badge of honor or a sign of success, it is a symbol of failure and a lack of discipline. It is time to change your view about debt if you are ever going achieve financial freedom and peace for you and your family.
Goal, intention, objective, destination, target, mission. No matter what word you use, it is a point in your future that you aim for success.
We have all set goals, we have successfully achieved many and we have all not met some of the goals we set for ourselves.
Goals are important both professionally and personally as they are a stake in the ground that we (or your employer) set to encourage growth and forward movement.
It has been said that most people believe in setting goals, however only about 3% of us actually set and write down goals for our personal life. There are many reasons for this; fear is very near the top of the list.
Most people who don’t set goals are afraid they will not meet the goals they set. They don’t want to fail. Yet, I think dong “nothing” is worse than trying to do something and missing the mark. It is always better to attempt to improve even if you fail, than stay stagnant as life passes you by.
We have all set goals like “I am going to lose weight” or “I am going to stop smoking” or “I am going to get out of debt.” What ever it is you feel you need to improve, you have probably set a goal about it. Or have you? Have you really set the goal to the point where it is attainable? It is safe to say, “I am going to be debt free” you haven’t really set a goal; you have just made a statement.
Goal setting is about being specific to what you want to achieve. Draw a line in the sand.
Be honest with yourself, look at your debt and your income, determine your behavior change and commit. Set your goal, write down your goal as well as a plan to achieve it. For example your goal should read something like: “I will pay off $18,000 by
Write your goal down on 3×5 cards and place them in multiple places around your environment. On the refrigerator, bathroom mirror, visor in the car, edge of your computer screen. When you see it, read it out loud as well as to yourself, positively reinforce your goal to yourself, remember PMA - Positive Mental Attitude.
Once you have your goal set, tell someone close to you. Now this is very important. When I say someone close, I don’t mean your spouse, after all you two are already in it together. Tell someone that is close to you, friend, parent someone who is not directly related to the debt, who you trust. By telling someone else what that goal is, you are placing accountability on yourself. You are making that goal real. It turns a general statement into something you must take action on and be accountable to yourself as well as admitting to someone else the status of your goal.
Set a goal to pay of a specific amount of debt by a certain date. Living with the stress and fear of debt is far more risky than setting a goal to begin your journey down the path toward financial freedom.
Tags: debt, debt free, finances, goal to get out of debt, Money, personal finances
In 1993 I was $48,000 in debt. I lived in an apartment, paid monthly car payment to the bank, and after expenses, rent, electric, phone, insurance; the rest went to paying on credit cards. I had no savings, and to say I was living paycheck to paycheck was an under statement because at times I was actually paying once credit card with another card. You can imagine, this scenario didn’t last long.
I was so much in denial about my financial situation; I actually thought that since I was making a pretty good salary, I was able to buy a house. Needless to say, the bank set me straight on that thought process pretty quick.
That is when I realized I had to get out of debt if I was going to be a successful individual in life. I had to “grow up” and begin to live within my means. But how?
Sure, it seemed easy to say, spend less than you make, or live below your means, but how? I didn’t have a financial coach, or even a money mentor, which I really needed. I had to figure it out on my own.
I wrote down what my bills were and how much I made every month…is was rough, no where near the process that I described in “Money Management aka Cash Flow” I realized I had to change my spending habits.
Once I told myself “Kim the way you have been spending money isn’t working, let’s try something different” the change began to happen. After all, to continue to do the same thing over and over again expecting a different result is actually the definition of “insanity” and I am very sane and able to improve.
So I changed how I was handling money. I stopped eating out (which I was doing every day lunch and dinner.) I stopped going out on the weekends. If I needed to get out, I would go to a store with a friend and walk around with her as she shopped. Sometimes, I even put stuff in a cart, and then walked back around putting it all back on the shelves. It got me out of the apartment, I got to socialize, but I didn’t have to spend money. I changed my thought process and spending habits. I had a goal to get out of debt so I could buy a house. Guess what? It worked!
Two in half years later I had paid down that $48,000 debt to $18,000 and I was approved to purchase a house.
Now, did I do it right? Well, it was right because I paid a lot of debt in a small amount of time, but was it the best way? No. I made mistakes. I didn’t put any money away for savings so every time the bank owned car broke down, I had to charge the repairs. Not good.
Yes, I said charge repairs which meant I didn’t cut up those credit cards, mistake number two. I did close many of the accounts but not all of them.
I didn’t know how to properly pay off credit card debt; I just paid it best I could, focusing on the highest interest rate first. Not necessarily wrong, but it sure didn’t give me any short term “feel goods” by having paid off a smaller card first and seeing a success.
So what are the steps that I would now recommend to pay off debt?
1. Work your budget or cash flow plan every month.
2. Stop using all credit, no new charges, no new loans
3. Pay yourself first. Put at least $1000 in the bank to cover emergencies, and keep that amount there. If there is an emergency, then you have to replenish that amount so you maintain $1000 in the bank. Even if it means not paying a credit card or two for a month two - pay yourself first.
4. Change your spending habits, cut back on eating out, entertainment, and magazine subscriptions. Think frugal. Use coupons, buy generic. It all adds up. Put the extra you save by cutting back on debt.
5. Pay your smallest debts first. Put as much on your smallest debt as possible while paying minimums on the rest. That way when you pay off a small debt, it is an accomplishment, and you can see you are progressing forward.
6. Think of ways to bring in more income…we will touch of some of those areas in later blogs.
Stay focused, the process is not easy to start, but the payoff in the end is well worth it.
Tags: bills, collectors, debt, Money, paying off debt
Money Management, also know as cash flow management is the key to becoming debt free as well as successfully living in financial freedom.
Let me ask you a question. How much money do you make a year? Would you believe that most people can not answer this question? It’s true; most people, especially those in debt, have no idea how much money they make a year, or a month, or even per week. What they do know is they don’t have enough what ever the amount may be.
The good news is, most people have more money than they think they have, they just don’t know it because they are not properly managing what they have.
So the big question at hand. How do you start to properly manage your money?
The first thing you need to do write down, or if you are computer savvy, which you must be if you are reading this on the internet, use a software program to input all your financial information.
Either way you do it, by writing it down or using a software program, it needs to be a way that is easy for you and your spouse if you are married, to understand.
So where do you start?
First, only focus on one month at a time. Don’t worry about the whole year at once.
Next, pull out an 8 ½ by 11 inch notepad and starting with the basics you will need three sheets from this notepad.
On the first sheet write INCOME at the top of the page – down the left hand side write down the company name of your jobs, one on each line. Next to the company name write down the net amount you received in your last paychecks for the month. Do this for each job, you and your spouse have then total the bottom, this is your monthly income. (disclaimer, this is a guideline, some households have irregular income amounts, meaning the income changes each month due to working on commissions, contract work etc. that type of cash flow managing is for another blog, today we are focusing on coming up with a basic cash flow plan for a basic household.)
Now on the second piece of paper right CASH FLOW on the top. On the left hand side of the paper, write down every single expense you have, each on a separate line. Example, charitable giving, savings, rent/mortgage, insurance, electric, water, phone, groceries, eating out, entertainment, etc. At this point don’t include unsecured debt such as credit cards, medical debt, student loan debt, that will come later. To the right of each item listed, write down what you spent on that item last month (or the current month depending on where you are when starting this process) Some categories you may be just “guesstimating” on but that will smooth out after you work this process for 3 or 4 months. Once you are done total the bottom. This is the amount of your monthly expenses.
Now on the third piece of paper write down DEBT SNOWBALL at the top. Down the left hand side of the paper write down the names of the smallest debt to the largest debt owed. To the right, write down the debt amounts and to the far right write down the monthly minimum payment due. Total the debt owed column and the minimum monthly amount column.
Now back on the CASH FLOW page your last category should be DEBT SNOWBALL, enter the total of the minimum monthly amount. Add total monthly expenses plus debt snowball, this is your total “spend” each month.
Subtract this amount from your monthly INCOME this is your bottom line when is comes to your income and outgo each month. If it is a negative number, some serious adjustment should be made in your cash flow categories…say eating out, entertainment to start.
If it is a positive amount, this is great news, you have money to use to build an emergency fund and then put the additional amounts on debt.
Congratulations, you just created your first cash flow worksheet aka your first monthly budget or cash flow plan, and you have begun the money management process.
Now to be honest, this is a tedious process when done manually on paper. There are a lot of programs on the market that you can install on your computer to handle budgeting, however most are far more than what most people need. One program that I found that is well written and flows very closely to what was described here is YNAB or You Need A Budget. YNAB was written by Jesse Mecham and is available as a Windows application. His program makes the monthly budgeting process a breeze and if you are looking for a computer based program that is easy to use for your monthly budgets YNAB
is the perfect choice.
Regardless of the method you use, start the cash flow process today and begin to management your money, it is your first step toward financial freedom.
Tags: budget, cash flow, Money, money managment
I mentioned yesterday that I had read an article in Entrepreneur Magazine about having a positive attitude. I want to continue on with that positive thought.
Positive thought does not come natural for most people especially in our negative world. Many times we have to work at having positive thoughts we must practice positive thinking daily.
The iron man is a marathon event that includes three competitions, a 2.4 mile swim, biking 112 miles, and a 26.2 mile run. The people that participate in this race practice and train daily, that is the only way that can build the strength and stamina to finish the race. Their persistence in doing so produces results and even miracles.
Positive thought is no different, it is a skill you have to develop. All your accomplishments so far you acquired through hard work and training.
Define where your mind needs discipline, and set up a regimen to train and practice positive thinking. Gain clarity and strength by observing what helps you maintain a positive mind-set, and do more of it. Whether it’s completing a sudoku puzzle, fixing a car, working out or even helping someone else with a problem, your self-confidence will improve, and the path to accomplishing your goals will be illuminated.
Tags: PMA, Postive Attitude, Success
Why do you think some people are more successful than others? I believe that personal success or failure goes hand in hand with mental attitude. I have yet to meet a successful individual who has a negative outlook on life.
A negative attitude will defeat you faster than anything else. Your mental attitude effects your facial expressions, how you walk, how you present yourself and the tone of your voice.
I recently read an article in Entrepreneur Magazine by Romanus Wolter where he says “A positive attitude enables you to believe your goals are achievable and to discover opportunities where others may not see them.”
Believe in yourself no matter what. There is negativity all around us. Build up your self-confidence with positive self talk that helps put you in a positive frame of mind. Be optimistic, that comes across to clients as self-confidence and encourages them to support your efforts. Self-doubt or hesitation is a deal breaker and will cause others to question your abilities. Always come across as strong and confident even if you don’t have all the answers. No one has all the answers but you can be confident in the fact that you know where to get the answers and that confidence will translate into success.
Be sure to read part 2 of PMA - Positive Mental Attitude
Tags: PMA, Postive Attitude, Success
