Becoming wealthy is not about the amount of money you make.

Stop laughing, it is true, as soon as you stop thinking you are going to gain wealth by making more then the quicker you will gain wealth.

You get rich from educating yourself. You must learn how to manage your money, discipline yourself with money, learn how to invest your money.

Education is the key in becoming wealthy. Now I can guarantee if you have a loser type thought process you just tuned out and probably left this page. That is why 90% of America is poor and/or living paycheck to paycheck….most people are lazy and don’t want to learn.

Face it, we all want that pie in the sky idea of the “get rich quick” solution. One tenth of one percent of people stumble onto that quick solution. Of those that do “get rich quick” say the lottery winner, historically loose all there winnings within 5 to 10 years if not sooner because they were not educated in how to handle the money.

If you can’t manage $20,000 a year, how can you expect to know how to manage a win-fall of $500,000 a year? You just can’t. Also, if you “think” you know everything there is to know about money, you are lying to yourself. Nobody knows everything about any one topic. Sure, some of us are smarter about certain topics than others, but we all have room to learn regardless of the topic. As soon as you get arrogant about your knowledge on any one topic, that is a good sign that you are really ignorant and getting lazy.

So, if you are still reading then I owe it to you to give you some of my recommendations of ways to gain education about how to handle money and become wealthy. Now this is just a select few, and as I blog through the days and weeks ahead I will continually add more, it is a never ending list.

Of course, being a Dave Ramsey Certified Financial Counselor I am going to recommend Dave’s book The Total Money Makeover – great book for the beginner who is in debt and needs an idea of where to start to learn how to get out of debt

Another great read is Larry Winget’s Shut Up, Stop Whining, and Get a Life I love this book, it is an in your face reality check. If the book makes you mad, great, that means you are reading it, and it is touching a nerve. It is all about some good old tough love, and I believe in tough love. You have to focuses on handling yourself, after all, you have to be able to handle yourself before you can begin to handle money.

Learn about money with the whole family by playing Cash Flow 101 by Robert Kiyosaki, he is the author of Rich Dad Poor Dad another great book on how to educate yourself on what money is. You have to learn how to think, if you say to yourself “I can’t afford it” you have just turned off your brain..it is a defeatist thought. Instead, focus on “how can I afford it” this get your mind’s creative juices flowing and opens your eyes to money making possibilities.
Education is worthless if you don’t put what you learn into practice. It is easy to become a lifetime student, reading and learning for years, but it won’t help you unless you get past the fear, get off the couch and put what you learn into practice. Make mistakes, learn from your mistakes and move forward

So a friend or even a relative has come to you explaining how they found this great car.  They tell you it has low mileage, ice cold air, runs smooth.  It has new tires, and for a three year old car the price is fantastic.

They go on and on about the car, how it is just what they were looking for.  They ask if you will come take a look at the car, take it for a test drive so you can give them your honest opinion about the great vehicle.

You are flattered that they value your opinion and are glad to take them up on the offer to help.  You look at the car and even agree it is in great shape and the price isn’t bad and mention that with a little bit of negotiating they price would be perfect.

Now that they have you agreeing with them about the car they mention that they have the down payment, and remind you about that new job they just got five months ago so making the payments will be not problem.  They finish that statement with a “but.”  Even though they have the down payment, and can make the payments, they don’t qualify for a loan and they ask if you would be willing to co-sign for them.   They give you every assurance that they can make the payments and that you would have nothing to worry about.  Can you help them out and just “give them a signature?”

Now, lets take a look at this.  They have the down payment, and income from a job of five months that will more than cover the monthly payments.  Why would they need a co-signer?  Simple, contrary to the surface indications that they can afford this car, the bank as proof that this person does not make payments on time or maybe not at all.  The bank considers this person too high a risk to lend them money without the guarantee, in the form of a signature, from someone who has a proven track record of making regular on time payments.  That way, when your friend or relative misses a payment or two, or three (and they will, otherwise they wouldn’t need the co-signer) the bank can and will count on you to cover the loan.

This concept of co-signing isn’t a new one.  For thousands of years people have been guaranteeing the loans of others and are then stuck holding the bag (paying off the loan)

It’s stupid to guarantee  someone’s loan. Proverbs 17:18

So if the concept of co-signing or guaranteeing has been something so bad and common that God felt it necessary to put a warning in the Bible about it, why would any one co-sign a loan for anything? After all, we have been warned it is “stupid.”

So since the Bible is what I consider “Basic Instructions Before Leaving Earth” and more importantly, God’s word, I would never co-sign a loan, regardless of amount, for anyone.

When a bank requires a co-signer they are stating “this person can’t manage money can’t be trusted with this money”

Are you mean, unloving or not a good friend if you don’t “help out” by co-signing? Actually you are just the opposite.  You are a person who is not willing to enable your friend or loved one to continue to mis-manage their money as well as someone who is following Biblical guidance.

You are someone who just may be the person who helps your friend or family member begin a new journey in life. You can take this opportunity to sit with them and help them work a budget teach them how to handle their money so pay for a car on their own without the help of anyone else.

Give a man a fish feed him for a day. Teach a man to fish, feed him for a lifetime.

How do you want to help your friend or loved one?

Many people in debt think “I’ll just file bankruptcy and start over, it’s easy”.  The people who say that are in denial.  Sure, the process might be easy (actually easier than I think it should be) but the hard facts are that bankruptcy will change you life for a long time (by the way most bankruptcy lawyers won’t tell you that part cause even they just want your money).

If you are thinking about filing for bankruptcy or maybe in the middle of it right now, you know it is not fun. But did you know that it could effect your job? Yes it can, many employers frown on bankruptcy of their employees, thinking “if they can’t manage their own finances how will they handle those of the company?” Also, many employers consider financially distressed employees as a greater risk for embezzlement or theft. When searching for a new job if a credit report is run and a bankruptcy shows up, that could eliminate your changes for employment in some companies.

What about your marriage?  Bankruptcy can destroy that.  After all, how can a spouse have full and complete trust in you and  the relationship if money is so badly handled (sometimes secretly) that it comes to bankruptcy? What effect will it have on the kids when you try to enroll them in certain events, if you think no one will know, think again, it is public record.

Bottom line bankruptcy steals your peace of mind, your dignity, your comfort level in looking at yourself as well as how others will look at you, like your friends and family.

A former client of mine was determined to file bankruptcy. In her mind, her debts were overwhelming.  She had a mortgage and $16,000 in credit card debt as well as a $9,000 car loan. She was  46 at the time a single mom with two kids making $40,000 per year.  This poor lady was broke down and worn out and felt she had no where else to turn she thought she was  bankrupt. The truth is, she was not financially bankrupt, but emotionally bankrupt, she was just emotionally exhausted.  She had no budget, no idea of where her money was going and thought she didn’t have enough to go on the way she was.  So I worked with her, helped her design  a good budget.  She realized she had more money than she thought because she saw on paper where her money was going.  Long story short, she did not file bankruptcy and today, 2 years later, she is debt free except for her mortgage.

I don’t recommend bankruptcy.  That would be like recommending someone get a divorce (yes I know people do recommend and even encourage divorce, but I don’t)  Are there times when you may feel like giving up?  You bet.  Many people do give up and go that route because they just don’t know what else to do,  are drained emotionally.  They are too tired to do some “hard work” to get out of debt.  They lack the drive to be personally accountable for their debt mainly because society has made us believe “it’s not my fault” and given us the “bankruptcy out.”

I have friends who have as well as clients who have and are now in debt again.   One client even lost her marriage by not sharing  her financial mess with her husband before she filed, she even thought she could hide filing for bankruptcy from her husband, he found out.

Bankruptcy is listed a negative life-altering event, ranking up there with divorce, severe illness, disability, and loss of a loved one. Although I don’t believe that bankruptcy is as bad as divorce, it is certainly life-altering and leaves deep wounds both to the psyche and the credit report.

Bankruptcy, is for life.  Loan applications and many job applications ask if you have ever filed for bankruptcy. EVER, not in the last 7 or 10 years but EVER. You could lie then you commit  fraud (something else to add to the list of indiscretions),  I don’t know about you, but I have a higher power to be accountable to.

The good news is most bankruptcy cases can be avoided with proper help, such as a certified financial counseling, or even reading the book by Dave Ramsey “The Total Money Makeover: A Proven Plan for Financial Fitness“. As Dave Ramsy says,  and I agree, your money makeover will take some hard work and time, it may involve selling some stuff, it will involve changing your behavior,  it will be painful, but bankruptcy is much more painful and your personal payoff in the end with lessons learned will be priceless.

Most people don’t realize they really do have enough money and don’t need to file bankruptcy.  They just have poor money management habits.  Many people who file for bankruptcy to “start over” end up in debt again within two to five short years, why? Because the lack of money wasn’t the real problem, behavior about managing money was.

I personally have not gone through a bankruptcy, but have been in huge debt.  I worked hard to get out of debt.  Paid off all that I owned, took care of my financial responsibility as I agreed to do when I built up the debt. I learned from the hard work it took to get out of debt.  What did I learn?  Not so spend money I didn’t have (like on credit).  I learned how to manage money…you don’t learn that from filing bankruptcy.  I learned how to change my spending behavior.

Before you make a bankruptcy mistake, write a budget, get a good understanding of your actual financial picture, no lawyer will help you with that, but a financial counselor will.   Seek objective guidance before looking for a “quick fix” you will be far better off in the long run.

Becoming debt free, building wealth and taking control of your finances does not happen overnight, nor does it “just happen”, it takes planning, commitment, and dedication. It is important to set goals as I discussed in Debt Free Goal.

Setting goals requires you lay out and acknowledge your financial priorities, but how do you do that, start here:

1. Be realistic.

You probably won’t be able to achieve every financial goal you have ever dreamed of. Don’t just identify your goals, decide what is most important to you and your family. By concentrating your efforts, you have a better chance of achieving what matters most.

2. First goals are the one’s that matter.

It isn’t about what you want most, but rather what is most important. You may have to postpone the “fun” stuff like a new boat or a special vacation in order to pay off credit cards. This doesn’t mean you can’t have the fun stuff, it just means you have to do them on a different time table.

3. Prepare yourself for multiple goals with the same level of importance.

There may be multiple important goals which conflict with one another. When faced with such a conflict, you should ask yourself questions like: Which conflicting goal will benefit more people? or Which goal will cause the greater harm if it is deferred?

4. Time is on your side.

Building wealth does not happen overnight. Time is on your side. Money in interest-earning savings accounts or invested in mutual funds, stocks and/or bonds grows and compounds. The more time you have, the more chance you have of success. Your age is a big factor.

5. Choose carefully.

In drawing up your list of goals, you should look for things that will help you feel financially secure, happy or fulfilled. Some of the items that end up on your list may include building an emergency fund, getting out of debt, investing, paying off your home and paying tuition for your children. Once you have your list together, you need to rank the items in order of importance to you and your spouse.

6. Include family members.

This is very important, if you have a spouse or significant other, make sure that person is part of the goal-setting and priority process, if married, you cannot do this alone, it just won’t work. If you have children who are a little older, and are able to understand some basic financial talk, include them as well, it will be a good learning process for them in many ways, such as how to set goals, how to improve communication in a family unit, and how to manage money.

7. Tomorrow never comes – Start now.

Don’t put off to tomorrow what you can do today. The longer you wait to identify and begin working toward your goals, the more difficulty you’ll have reaching them.

8. Focus on your behavior.

Once you have prioritized your list of goals, build your budget and stick to it. Whenever you make a large payment ask yourself, “Will this purchase bring me nearer to my primary goals — or will it lead me further away from them?” If a big expense doesn’t get you closer to your goals then it is not in your best interest.

9. It is not all about long term planning.

Much of what I have discussed is based on long term planning and goals, however most of life is lived in the here-and-now. Most of what you spend be for daily expenses – including many that are simply for fun. Fun is okay, and should be part of your plan and priorities. We work hard for our money, and even though we have our financial goals and priorities, that doesn’t mean we can not have fun. Plan for the fun in your budget.

10. You change so should your goals and priorities.

Your needs and desires will change as you meet goals and as you age, I recommend you re-examine your priorities at the end of every year and possible re-adjust at least every five years so you stay in step with your life as you grow.

You will make mistakes, don’t beat yourself up to much when you do, but learn from them, and then get back on track as quickly as possible.

What do you do when a friend or family member continues to ask to borrow money from you?

It’s a great question and one that causes much guilt and sometimes hurt feelings on both sides. One thing I have learned is that if someone is continually asking to borrow money from you they are most likely asking others as well. Personally, I don’t lend money to friends or family, it changes the relationship. “The borrow becomes slave to the lender” Proverbs 22:7, and that is so true, it gets uncomfortable sitting at the dinner table next to someone that owes you money.

With that said, I am all for helping others in a wise way. If you are financially free and have the ability to help a family member or friend out of a tight bind and know they are good with money and are not in the financial situation due to their own stupidly but rather because they just happened to be put into some bad situations, such as a home fire, car accident, serious health issues, etc. then yes, by all means help, but don’t loan the money, give it to them as a gift.

If you know that friend or relative just can’t seem to get it together financially due to their own bad decisions and habits then I agree with and recommend you answer that friend or family member similar to how Abraham Lincoln answered his brother when he asked to borrow money. I have included that letter today.

“Dear Johnston:

Your request for eighty dollars, I do not think it best to comply with now. At the various times when I have helped you a little, you have said to me, “We can get along very well now,” but in a very short time I find you in the same difficulty again. Now this can only happen by some defect in your conduct. What that defect is, I think I know. You are not lazy, and still you are an idler. I doubt whether since I saw you, you have done a good whole day’s work, in any one day. You do not very much dislike to work, and still you do not work much, merely because it does not seem to you that you could get much for it. This habit of uselessly wasting time, is the whole difficulty; and it is vastly important to you, and still more so to your children, that you should break this habit. It is more important to them, because they have longer to live, and can keep out of an idle habit before they are in it easier than they can get out after they are in. You are now in need of some ready money; and what I propose is, that you shall go to work, “tooth and nail,” for somebody who will give you money for it. Let father and your boys take charge of things at home, prepare for a crop, and make the crop; and you go to work for the best money wages, or in discharge of any debt you owe, that you can get. And to secure you a fair reward for your labor, I now promise you that for every dollar you will, between this and the first of next May, get for your own labor either in money or in your own indebtedness, I will then give you one other dollar. By this, if you hire yourself at ten dollars a month, from me you will get ten more, making twenty dollars a month for your work. In this, I do not mean you shall go off to St. Louis, or the lead mines, or the gold mines, in California, but I mean for you to go at it for the best wages you can get close to home, in Coles County. Now if you will do this, you will soon be out of debt, and what is better, you will have a habit that will keep you from getting in debt again. But if I should now clear you out, next year you will be just as deep in as ever. You say you would almost give your place in Heaven for $70 or $80. Then you value your place in Heaven very cheaply, for I am sure you can with the offer I make you get the seventy or eighty dollars for four or five months’ work. You say if I furnish you the money you will deed me the land, and if you don’t pay the money back, you will deliver possession– Nonsense! If you can’t now live _with_ the land, how will you then live without it? You have always been kind to me, and I do not now mean to be unkind to you. On the contrary, if you will but follow my advice, you will find it worth more than eight times eighty dollars to you.

Affectionately your brother,

A. LINCOLN.”

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 – Dictionary.com defines it as: “the result or achievement toward which effort is directed; aim; end.”

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 June 1, 2008. I will do this by using the money that I saved by not eating out and putting those dollars on credit card debt” Be specific. How much will you pay off, by what date, and how.

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.

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 one 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.

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.

Most of my clients at one point or another ask me about investing. First, I tell them that legally, I can not advise as to what they should or shouldn’t invest in. However, I do offer some valuable, common sense advise.

First and foremost, never give your money to someone else and say “invest it for me and make me a lot of money.” You must always make sure you are educated and understand the risks of what your money is being invested in. You and you alone are responsible for giving the go ahead in any investment. You are the only one who really cares about your money. Giving someone else full control over your money voids your risk comfort level. With that said, it is not a bad idea to work with licensed investment professionals. But you must make sure you know who it is you are working with and what their qualifications are as well as their own portfolio. Again, do you want to invest with someone who is in debt and struggling financially or with someone who is debt free, and making good returns on their own investments?

Interview several different people, get recommendations from successful investors as to who is good and successful to work with. You should never choose an investment broker based on relationship, I hear this a lot, “oh, my brother-in-law is my broker” and when I ask how they made that choice, I usually get an answer something on the lines of “well, he asked, and I just couldn’t say no, he is family” or “he was just starting out and I wanted to help him out a little bit” then they go on to complain about how much money they have lost. Now, don’t get me wrong, if your brother-in-law has a proven success record then that is one thing….but then again, do you really want to mix money into family matters, not a recommendation I would make.

This is your money we are talking about, would you choose to be the first open heart patient of a doctor who was just out of med school and who had never performed the surgery before? Of course not. So why would you choose a investment broker based on relationship rather than experience and a proven track record? Interview many different people, don’t just pick the first one you come by.

During your interview process, if you don’t 100% understand what the broker is telling you, or talking about, or if you don’t feel comfortable with them, then they are not the right choice. You must completely understand how they work, and how they will be bringing recommendations to you. Remember, it is your money, keep control of how it is invested and understand every step.

Never invest more than you are willing to loose. Lets face it, investing is risking, and risk varies depending on what you are investing in. You and only you know what your risk comfort level is. You are responsible for the investments that are made, take accountability for your choice. You can’t blame your broker if you just hand over money to him or her, and they make a bad choice and you loose it all. You can’t even blame them if you tell them what to invest in and then you loose it all. Bottom line is you and you alone are responsible for the choices you make in all aspects of your money, from spending to investing. If you make money you can pat yourself on the back, and if you loose money you have no one to blame but yourself because you and you alone made the choice as to what to invest in based on how you educated yourself. Take responsibility!