Posted in Budgeting for Everyone, Building Wealth, Credit Cards, Debt Free, Raising Your Income, Winning with Your Money, You and Your Money

Budget 101

Yes, I am writing about the dreaded “B” word.  Most of us hate the word budget and even more, we hate doing a budget.  However, I have found that a budget is one of the biggest wealth building tools you can have.  In my book, the chapter on budgeting is disguised under “S” for Spending Plan.  There are two reasons for this:  one is to make sure people read this chapter and don’t skip it and two is because a plan is a positive thing.  Budgets need to be thought of as positive tools, not negative jails.  If you went to build your dream home, you would not just start building and never have a plan.  You would plan everything out and only start building when it was to your liking.  And along the way, you would make changes as situations change, always improving.  The same is true to build your dream financial situation.  You must have a budget to lay out your money and tell it where to go.  You will always be making changes as you go.  Your budget will not be the same this month as next and in 5 years, it should be completely different.

Doing a budget is easy, 3rd grade math.  The hard part and the part we don’t like is the other 90%, the emotional part.  We hate to say no to ourselves and if we do a budget, we may have to say no sometimes.  But without saying no sometimes you will never be wealthy.  What if you make $3000 per month and you spend $3200 per month?  That is spending $2400 per year more than you make.  How will you know this if you don’t do a budget and how will you control this without a plan?  When you spend more than you make, you will never be wealthy.  It is not possible because there is nothing left over to save and invest.  This is also one of the two reasons we have debt – spending more than we make and using debt to make up the difference.

If you are tired of your financial situation and stress, I want to challenge you to start a budget today.  Start with July, but start today.  You can do it on the computer, on a piece of paper, or use our budget form (Tools tab on our website – www.abcsofpersonalfinance.com).  A budget is simply writing your income at the top, listing all of your expenses, and the difference is what is left over.  You want the difference to be zero.  Therefore, if you have a negative difference, you will need to cut some of your discretionary expenses or raise your income.  If you have a positive difference, you will need to decide which financial goal is next (saving, paying off debt, home project, etc.) and put the money in that line item for the month.

I had the same dream as most of you have – to be out of debt and become financially free.  I would never have achieved this goal without a budget.  I started with a spending journal first because I wasn’t sure where all of my money was going.  I did this for about 3 months and used that information to form my budget.  Knowing where my money was going helped me to pay attention to my money more and use it in a positive way to achieve my goals.  You work hard for your money; therefore, you should control how it is spent.  A spending plan is the best way to do this.  I know millionaires who still budget.  It usually isn’t written down anymore because they have formed good spending habits using their budgets as a tool, but they don’t just spend like crazy now that they have a little money.  If they didn’t continue to have limits (budgets), their money would be gone very quickly.

Begin building your financial dream house today with a good foundation – a spending plan!

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Posted in Budgeting for Everyone, Building Wealth, College & Student Loans, Credit Cards, Debt Free, Raising Your Income, Saving for Your Future, Winning with Your Money, You and Your Money

Liar, Liar

We lie to ourselves all of the time.  No, really, we do.  We are so used to doing it that we don’t even realize it.  Lying to yourself and not walking in your truth, whatever it is, can be harmful at times and will never move you forward in your life.  This is especially true when it comes to your money.  Lying to yourself in the area of money can cause debt, keep you in debt, make you spend more than you make, have zero to very little money saved for emergencies and retirement and more.

I was reading an article a few days ago that listed what they thought were the top lies we tell ourselves in the area of money.  I mostly agreed with them so I wanted to share them with you and why I believe (knowledge and experience) that these lies can be harmful.  I hope this will help you and give you the courage you need to walk in your truth today.

  • Lie #1 – “I deserve it.”  We spend money we don’t have everyday just because we tell ourselves that we “deserve” something.  I would like to change this just a little.  I think the lie we tell ourselves the most is “I am entitled to it” and we hide that thought behind the “deserve”.  You may deserve a vacation – you have worked hard all year at your job and maybe you deserve a break.  However, you are not “entitled” to a vacation just because you exist on planet Earth.  This lie, in any form, can cause you to think that no matter what state your finances are in, it is okay to do whatever you want just because.  You can do anything you want, whether you deserve it or not, as long as you have the cash to do so.  If you are in debt and the only way you can go on vacation is to use a credit card, you shouldn’t go on vacation, even if you deserve it.
  • Lie #2 – “Money can’t buy happiness.”  Money can’t buy happiness, but it can buy freedom which causes happiness.  Therefore, money can cause happiness.  However, in most people, money causes stress and anxiety.  When you don’t owe anyone and you have money in the bank, you can be happy because you are not worried about paying a bill or dealing with any emergency.  Use you money for good by getting out of debt, saving and live on less than you make.  Then your money will buy you a “little happy.”
  • Lie #3 – “I don’t make enough to save or invest.”  This is a lie, plain and simple.  I teach children and teens everyday to take the $10 a week they make and save 10% of it, give 10% of it and spend the other 80%.  The problem is we spend 100% or more leaving us with nothing to invest or save.  If this is your excuse for not saving, the problem isn’t your income or what you make, it is your lifestyle and what you spend.  If you always live on less than you make, you will always have money to save and invest, even if it is only $10/week.  Start somewhere.
  • Lie #4 – “Debt is the new normal.”  I have written a lot about this because it is the number one myth about money in the country today.  Debt does not have to be a part of your life.  Debt is no longer in my life and I live just fine, great in fact.  We are taught to believe that we can’t function in the world without debt and we can.  You can live a better life without debt than you would ever live with debt.  Do not accept debt as the “norm”.  If you do, you will never be wealthy.  Wealthy people do not have debt, they have money.
  • Lie #5 – “College is a must and a loan is the only way to pay for it.”  This is a huge lie.  If you believe this, please read my blog “No Loan College”.  It is my most popular post to date because people believe this lie.  First step in life is to find your passion, what will make you smile everyday and will make you happy.  Then find out what you need (education, knowledge, certification, etc.) to do this out in the world.  And if it does require college, you can get a degree without ever taking out a student loan.  Don’t mortgage your future on an uncertainty.  Go for the gold, but be wise in getting there.  You will never regret it.

Love yourself enough to stop lying to yourself.  When I began my truth walk years ago, it was painful at first.  The truth hurts.  But I would never be where I am today, financially or personally, if I would have had the courage to begin that walk.  Begin your walk of truth today, push through the pain, all the way through to freedom.

 

**If you need help with your walk, give me a call or email me.  www.abcsofpersonalfinance.com

 

Posted in Building Wealth, Debt Free, Raising Your Income, Winning with Your Money

#1 Money Myth

Do you know what the number one money myth is?  Well, of course, that is a matter of opinion, but in my experience, I believe it is this:  You must have debt to function financially.

This is a big myth and I want to bust it right here and now.  You can live a very good, normal and wealthy life without ever having debt.

First of all, if you never have debt, you will always have money.  Your income, whether great or small, is your greatest wealth building tool.  Therefore, if you waste your money on buying things without cash and spending large fees and interest for that privilege, you are giving away your most important financial tool.

Many people, old and young, live with the notion that you can’t make certain purchases without going into debt and this is simply not true.  Even people who don’t use credit cards believe that the only way to buy a nice car or a home or to go to college is with a loan.  And this is simply not true.  If you never have debt, you can save up and buy a nice car or home with cash or work and cash flow your way through college.  This may take longer than debt would, but that means the truth is a lack of patience not a lack of ability.  For me, debt was the easy way out.  I wanted something so I just used debt to get it and figured I would deal with it later.  But nothing worth having ever comes easy.  And a life debt free and financially free is definitely worth having.

The other main justification for debt is that you have to have a FICO score in order to have anything.  This is not true. A zero FICO score is more impressive than a high FICO score because it means you have used cash and wisdom to get the things you have.  The only way to achieve a zero FICO score is to not have debt.  A FICO score is equal to a “I use debt for my financial solutions” score.  Every element that makes up the FICO score involves the word debt and debt equals risk.  You must have debt to have a high FICO score, but a zero score should be your goal.  You can have everything that you want and need with a zero FICO score with the added bonus of having wealth as well.

So now that the myth that you must have debt to exist, financially speaking, has been busted, what is going to be your excuse for keeping your debt?  I hope you can’t find one because this will be the first step in getting rid of your debt once and for all.  No matter what your debt situation is currently, with time and hard work, you can obtain the ultimate goal of no debt, a zero FICO score, and wealth.  What could be better than that?